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Sales tax
Comments
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As others have said it is not that simple. You have just put your first variable into the equation. Corporation tax is on profit, if you break one of your items that comes off the profit so you really need an overall business plan with total profit and loss forecasts rather than working out the tax on each item.Dannycelluk wrote: »We havnt got an accountant yet as we want to wait until we are trading, so the business will pay for itself, At present we have no business loans and have set the business up completly from our own money.
Yes sorry the 2.5% paypal fee was just an example i believe it is between 3.4% and 1.4% depending on the monthly sales. hopefully 2.9 for us.
I just thought there might be a rule of thumb or such like to calculate the figure, rather than trial and error to try and work out a percentage.0 -
Dannycelluk wrote: »I was also under the impression that my brother could take a dividend and i didnt have to if i didnt want to? is this correct?
No.
Dividends must be allocated strictly in accordance with shares held.
How did you allocate the shares?
As regards your other comment about a formula - You need to know your costs - ALL of them - before you can work out a percentage markup. At the moment you haven't thought this through properly.0 -
Dannycelluk wrote: »We havnt got an accountant yet as we want to wait until we are trading, so the business will pay for itself, At present we have no business loans and have set the business up completly from our own money.
Yes sorry the 2.5% paypal fee was just an example i believe it is between 3.4% and 1.4% depending on the monthly sales. hopefully 2.9 for us.
I just thought there might be a rule of thumb or such like to calculate the figure, rather than trial and error to try and work out a percentage.
It typically starts at 3.4% + £0.20. If you want to work out what to sell the product for to make £7 then use that figure.
If you were paying basic tax then £7 profit becomes £8.75.
So after PayPal fees you need £11.75. The total you would have to sell for is £12.37.0 -
Taking the basic idea of buying at £3 and selling at £10, making a £7 profit. You want to increase the selling price to cover your overheads so that you still make a £7 profit.
How do you know that people will buy at the higher price? And if they're happy to buy at the higher price, then why not sell at that price regardless of the overheads?No longer a spouse, or trailing, but MSE won't allow me to change my username...0 -
It typically starts at 3.4% + £0.20. If you want to work out what to sell the product for to make £7 then use that figure.
If you were paying basic tax then £7 profit becomes £8.75.
So after PayPal fees you need £11.75. The total you would have to sell for is £12.37.
Sorry but those figures are WRONG.
£12.37 sales price (less 3.4% + 20p) = £11.75 less 20% Corporation Tax = £9.40 leaving a profit of only £6.40
And again the figures are meaningless unless you take into account your other costs of sale such as delivery costs, advertising, etc., etc.
Unfortunately, these are all things you should have investigated BEFORE rushing into setting up a company.0 -
As others have said it is not that simple. You have just put your first variable into the equation. Corporation tax is on profit, if you break one of your items that comes off the profit so you really need an overall business plan with total profit and loss forecasts rather than working out the tax on each item.
Ok.
So lets say we are charged a paypal fee of 3.4% as that is worst case scenario, means we sell less than £1500 a month so anything less than 3.4% is a bonus.
If a product "breaks" i can send it back to the supplier.
Maybe im not comunicating what i mean effectively enough.
Surely you need to know what price to sell each item before you can forecast?
I guess it will just have to be trial and error....
Product 1 buy for £3
Make £7 profit.
£10
+ 20% of £7 for corp tax £1.4
£11.40
+3.4% of £11.40 for paypal fees £0.387
= About £11.78 total sales price
but now because i have to take the percentages off a higher number the after tax profit will go down.0 -
trailingspouse wrote: »Taking the basic idea of buying at £3 and selling at £10, making a £7 profit. You want to increase the selling price to cover your overheads so that you still make a £7 profit.
How do you know that people will buy at the higher price? And if they're happy to buy at the higher price, then why not sell at that price regardless of the overheads?
Thats exactly what i was trying to say.
They should pay the higher price, but we want to be able have a baseline figure so we can provide discount but we know not to go down below a certain figure as then it will eat into our baseline profit.
Sorry i dont know all the technical terms0 -
No.
Dividends must be allocated strictly in accordance with shares held.
How did you allocate the shares?
As regards your other comment about a formula - You need to know your costs - ALL of them - before you can work out a percentage markup. At the moment you haven't thought this through properly.
Shares are 50-50 privately limited0 -
Sorry but those figures are WRONG.
£12.37 sales price (less 3.4% + 20p) = £11.75 less 20% Corporation Tax = £9.40 leaving a profit of only £6.40
And again the figures are meaningless unless you take into account your other costs of sale such as delivery costs, advertising, etc., etc.
Unfortunately, these are all things you should have investigated BEFORE rushing into setting up a company.
The costs i have given are an example only.....
Our other costs are minimal as we will be an online business.
Delivery cost will be covered by the customer and could also provide an extra source of profit.
Advertising costs are small, our website costs £30 a month and we have signed up on alot of free sites such as thompson local and 192.com, facebook, twitter.0 -
I think you're going about things the wrong way.
The question you should be asking is; 'how much can I sell this product for?'0
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