Finding it hard to compete with Non VAT registered sellers

System

ILW wrote: »

Sell the different products thru separate companies possibly.

but is this legal?

morgani

This is a problem normally with EBay. Due to the non-VAT registered competition you need to absorb the VAT into your selling price so as not to cause a slump in your sales.
You need to look at the bigger picture. Realistically can you divert any returning customers away from eBay and to your own website. You can then start to save in other areas that usually cost a lot when selling on eBay such as their fees and paypals.

Don't go down the route of separate companies as this is classed as artificial separation and it will catch up with you sooner or later.
Presumably at this level of business you have an accountant? If so they should know your history and your present situation and should be able to offer more detailed advice mainly based around the above as a starting point.

System

I don't have an accountant

ILW

berbastrike wrote: »

but is this legal?

Many do it, some of them most likely your direct competition.

real1314

"On 1 item I buy for £6 and sell for £12. There is a £1 vat blow, net around £60p after I claim some back. This 60p, they can sell at £11.40, I have to sell at £12. And they get the sale, because they don't have to pay the £1(60p net) in VAT."


They can sell at £12, £11.40, £11, £10 or anything they like. You have to match the competition, and if it's profitable, you carry on.

Your 60p net reference suggests you are making enough to pay 40% tax, whereas with <£75k turnover, you wouldn't be.

If you're making over £44k net income (or profit) on £250k turnover, you're not doing too bad really.

£250k turnover and you can't work out basic business calculations means you need to get an accountant.

morgani

The nature of the question suggests getting an accountant may very well be useful. There are other useful things as well such as the business structure. If you are making decent profits then there are many other tax savings that can be had which may help with improving that net profit percentage better.

The best thing is to go and chat to a few and get an idea of prices. I suggest not going on price alone but their experience with eBay traders and businesses of your size. You also need to weigh up if you can get along. If the first few don't feel right then keep looking.

Prices will depend on the tidiness of your records amongst other things but I would say somewhere around £500 - £1000 per year would be a ball park figure. Below this and they probably won't want to put the time in to help with the profitablility issues and above and you may be paying more than you need to.

Check for PII cover and they having a practicing certificate. Understand how they charge beforehand. Fixed fees are common place but some still charge by the hour. Also confirm what is and is not included in the fee.

Mistral001

The OP has a good point. Many ebay sellers are just doing it as a little bit extra on the the side of their full-time job and as long as they make a few extra pounds for an additional weekend break or an Ipad they are nort too worried. If they had to pay the mortgage from it they would struggle. Also, I think some ebay sellers must use family labour at little or no cost to pack orders. I cannot see how they can do it otherwise, judging by their prices.

Congratulations on getting £250K of turnover in the first place though. You must be doing something right just to keep the cash flow going.

Just one thing, rather than looking at your smaller competition, what does your bigger competition do? they will be VAt registered. How do they survive? Can you learn anything from them? i know it is difficult to know as they might be financial difficulties and you would not know it, but you might get some clues from them.

Wywth

berbastrike wrote: »

what would their answer be?

turnover is vanity, profit is sanity

By jove, I think you could claim that as your lightbulb moment

(Especially when this earlier thead of yours is considered:
https://forums.moneysavingexpert.com/discussion/4234469 )

Wywth

berbastrike wrote: »

I don't have an accountant

By jove, I think you could call that your second lightbulb moment.

2 lightbulbs in one day! This way you'll soon be on your way to having your own chandelier :cool:

System

it would be a luxury in my opinion having an accountant. They are not going to save me a lot of money. Its very easy to print off the ebay sales records for VAT returns. I keep purchase receipts seperately and fill in an excel spreadsheet with purchases. Yes they could answer questions but thats what the internet/hmrc helpline is for