New business help please?

Not_tight_just_careful

Hello fellow money savers.

I am really after some help and advice if possible and any help would be very much appreciated at this stage.

Just recently I decided to start my own business as an eBay trader/seller. I have been using eBay to sell my old, unwanted items for some years. Recently it has occurred to me that I could be doing so much better at this than I do by buying items from here there and everywhere, car boot sales, Facebook friends etc.

Wanting to do this properly and all above board I registered with the HMRC as a Sold Trader. I have a full time day job but am due to be made redundant at the end of 2014, hence the need for further income.

I did quite a lot of research on all this over the internet before I started and as mentioned before; I wanted to do it all properly.

I have faced several problems already with what I wish to do and am really asking for some help.

1) There does not seem to be a company in the land who will sell me public or product liability insurance for the sale of second hand goods online! If its new items you are selling then no problem but second hand items I guess come with their own risks (electrical safety etc.)
This is something which companies like CEX and cash-converters (Pawn shops effectively) do this on a daily basis across the country, so I’m assuming you must be able to get cover for such things? I am contemplating going on a PAT testing (Portable appliance testing) course and buying the appropriate tester so that I can deem items to at least be safe for my customer. Would this be enough to cover me in the event of an injury and claim against me?
It is not limited to just electricals though, i would like to be covered fo all items I sell against a defect resulting in injury.

I know that "consumer to consumer" selling if very different to "Business to consumer" and I want/need to protect myself.

I even contacted B.I.B.A (British Insurance Brokers Association,not the troubled teen, singing sensation :-) and they told me that they do not have any brokers on their books who insure for selling second hand goods!

2) As my small business is registered to my home address, I read that you should tell your building and contents insurance company. I did this last week and in the post 2 days later was a registered letter cancelling my insurance without and prior warning!! Apparently no longer meeting the terms of my insurance. This I will be chasing today. What happens if I let my mortgage company know which is also advisable? Will they take my house off me??!!!

3) All of my items which I am purchasing to sell on at the moment are paid for in cash, no receipts. I simply log onto an Excel spread sheet where and when it was purchased and for what price. Is this going to be good enough should I be looked at by HMRC? I can't see what else I can do? Writing a hand written purchase receipt at a car boot sale etc. and expecting the seller to sign it just isn’t going to happen. If they even get the slightest inclination that you are going to be selling the item on for profit they simply will not deal with you!
Purchases are small, generally £1-20 so not large transactions. My consearn is that I could be seen as making the amount paid figures up to maximise profits, which I simply would not do but they don't know that.

I have never attempted to start my own business before so I dare say that maybe I have fallen into a couple of "pitfalls" already.

I would love any genuine advice and constructive help from members please. It makes you feel like giving up before you even start!

Regards,

Not tight just careful

Aquamania

Not_tight_just_careful wrote: »

Hello fellow money savers.

I am really after some help and advice if possible and any help would be very much appreciated at this stage.

Just recently I decided to start my own business as an eBay trader/seller. I have been using eBay to sell my old, unwanted items for some years. Recently it has occurred to me that I could be doing so much better at this than I do by buying items from here there and everywhere, car boot sales, Facebook friends etc.

Wanting to do this properly and all above board I registered with the HMRC as a Sold Trader. I have a full time day job but am due to be made redundant at the end of 2014, hence the need for further income.

I did quite a lot of research on all this over the internet before I started and as mentioned before; I wanted to do it all properly.

I have faced several problems already with what I wish to do and am really asking for some help.

1) There does not seem to be a company in the land who will sell me public or product liability insurance for the sale of second hand goods online! If its new items you are selling then no problem but second hand items I guess come with their own risks (electrical safety etc.)
This is something which companies like CEX and cash-converters (Pawn shops effectively) do this on a daily basis across the country, so I’m assuming you must be able to get cover for such things? I am contemplating going on a PAT testing (Portable appliance testing) course and buying the appropriate tester so that I can deem items to at least be safe for my customer. Would this be enough to cover me in the event of an injury and claim against me?
It is not limited to just electricals though, i would like to be covered fo all items I sell against a defect resulting in injury.

I know that "consumer to consumer" selling if very different to "Business to consumer" and I want/need to protect myself.

I even contacted B.I.B.A (British Insurance Brokers Association,not the troubled teen, singing sensation :-) and they told me that they do not have any brokers on their books who insure for selling second hand goods!

2) As my small business is registered to my home address, I read that you should tell your building and contents insurance company. I did this last week and in the post 2 days later was a registered letter cancelling my insurance without and prior warning!! Apparently no longer meeting the terms of my insurance. This I will be chasing today. What happens if I let my mortgage company know which is also advisable? Will they take my house off me??!!!

3) All of my items which I am purchasing to sell on at the moment are paid for in cash, no receipts. I simply log onto an Excel spread sheet where and when it was purchased and for what price. Is this going to be good enough should I be looked at by HMRC? I can't see what else I can do? Writing a hand written purchase receipt at a car boot sale etc. and expecting the seller to sign it just isn’t going to happen. If they even get the slightest inclination that you are going to be selling the item on for profit they simply will not deal with you!
Purchases are small, generally £1-20 so not large transactions. My consearn is that I could be seen as making the amount paid figures up to maximise profits, which I simply would not do but they don't know that.

I have never attempted to start my own business before so I dare say that maybe I have fallen into a couple of "pitfalls" already.

I would love any genuine advice and constructive help from members please. It makes you feel like giving up before you even start!

Regards,

Not tight just careful

In response to your numbered points.

1. Public liability insurance. You don't need this if selling online as the public are not coming to you.
This covers things like a customer tripping over and injuring themselves in store, a shard of metal off something you are machining injuring a visitor etc.
Product liability insurance. If you are selling items you did not make (you say you are selling second hand goods) then you do not need this.
Product liability insurance covers the manufacturer against a design/manufacturing fault in the item they make that causes injury to someone.
You are responsible for the items you sell. A quick google for "insurance for second hand goods" indicates a number of providers of this form of insurance.

2. You need to get yourself business insurance for the building. Perhaps your insurer doesn't offer such insurance so go elsewhere.
As regards the mortgage, that depends. A residential mortgage is primarily for buying your home. If you are now using your home, at least in part, for business, then you may need a commercial mortgage instead.
Whatever the case, the mortgage company will want the premises insured.

3. Get a receipt for everything you purchase. No receipt, no money. Simples! :cool:
(You may also wish to report to HMRC anyone offering goods for sale who are not prepared to provide any form of receipt of payment)

Mistral001

When you sell secondhand goods the phrase "buyer beware" usually applies. I think there are some secondhand goods where this does not applies, such as a car bought from a car dealer. I also notice on those Flog it type shows they cut off the plug on electrical equipment if they suspect that it could be faulty, so there may be some regulations regarding selling used electrical goods.


If you are buying goods secondhand and selling them at a profit on ebay, you must be a good trader as I know that is very difficult to do when you include postage and packing costs.


You have to remember that you must describe the goods as secondhand or used for "buyer beware" to apply. If the customer thinks they are new, "buyer beware" will not apply.

poggles

Mistral001 wrote: »

When you sell secondhand goods the phrase "buyer beware" usually applies. I think there are some secondhand goods where this does not applies, such as a car bought from a car dealer. I also notice on those Flog it type shows they cut off the plug on electrical equipment if they suspect that it could be faulty, so there may be some regulations regarding selling used electrical goods.


If you are buying goods secondhand and selling them at a profit on ebay, you must be a good trader as I know that is very difficult to do when you include postage and packing costs.


You have to remember that you must describe the goods as secondhand or used for "buyer beware" to apply. If the customer thinks they are new, "buyer beware" will not apply.

Sorry, but I don't really understand any of this post.

When you sell on ebay, you have to describe the goods accurately. One section details the condition. 'Used' is one of the permitted categories.
Get that wrong and you won't last on ebay very long, and you will spend all your your time refunding unhappy customers who are reporting you for SNAD and giving appropriate feedback.

As a business, it doesn't matter whether you are selling new or used goods, the same laws apply.

Mistral001

poggles wrote: »

Sorry, but I don't really understand any of this post.

.

Could you be more specific.

soolin

Mistral001 wrote: »

Could you be more specific.

Just to jump in- I think it is the use of the term 'buyer beware' for ebay. This does not exist. On ebay sellers must describe their items accurately, if not they will be subject to returns. As a business it is further complicated by the fact that buyers can return for any reason, item doesn't even have to be misdescribed.

Second hand electrical items are subject to even more rules, see here:

http://pages.ebay.co.uk/help/policies/electronics.html

Sellers of electrical and electronics equipment also have certain other obligations, for example, under the Waste Electrical and Electronic Equipment (WEEE) Regulations 2006. See the Additional information section for more details on WEEE.

AS a successful business seller, I still don't think I would be brave enough to start out selling 2nd hand electricals online.

Savvy_Sue

Aquamania wrote: »

3. Get a receipt for everything you purchase. No receipt, no money. Simples! :cool:
(You may also wish to report to HMRC anyone offering goods for sale who are not prepared to provide any form of receipt of payment)

I think reporting car boot sellers to HMRC is going to be an interesting exercise, especially as many of them will not be of the least interest to HMRC because they are just selling their own stuff, not buying to sell.

However, if the OP carries a duplicate book around in his pocket and writes each purchase in, with any details, I'd have thought that would be adequate. Chances of HMRC ever asking to see the actual receipts is unlikely, the OP has to have them, but they don't have to be submitted with the tax return.

fishybusiness

I am contemplating going on a PAT testing (Portable appliance testing) course and buying the appropriate tester so that I can deem items to at least be safe for my customer. Would this be enough to cover me in the event of an injury and claim against me?
It is not limited to just electricals though, i would like to be covered fo all items I sell against a defect resulting in injury.

To my mind ensuring products are electrically safe is an absolute necessity, rather than a possible. PAT testing and product performance testing should be your aim IMO, so that you know the the products you sell are safe.

Savvy_Sue

My understanding is that the training for PA testing isn't that expensive or difficult, but the equipment needed and maintaining it in a compliant way may be.

fishybusiness

but the equipment needed and maintaining it in a compliant way may be.

£300 for something like a Kewtech KT71, second hand, £60 a year for a calibration.

Lomast

Not_tight_just_careful wrote: »

I read that you should tell your building and contents insurance company. I did this last week and in the post 2 days later was a registered letter cancelling my insurance without and prior warning!!

That is unfortunate as you will now have to declare when asked that you have had an insurance policy cancelled everytime you renew any insurance policy and that is likely to cost you more money