Small Business

printerman · 07-01-2006, 10:20

Hi all,
Since leaving my full time employment i've been working on starting a small business (using some old contacts fro mmy old job!). I will be importing from China small electronic consumables.

I've been reading ALOT of stuff on business link HM Customs etc but i'm starting to loose track of what is going on. I know i need to a few more things but i'm asking for some first hand help...not links to websites 'cos i've probably read them already....so does anyone know the answer to these questions.....

Do i need to register for VAT? (i won't be making or spending a fortune).
How do i pay my VAT and claim it back.?
How much import duty will i be expected to pay for this type of item form this location and (where the HELL) are the forms i need to fill in)!?
Do i have to pay NI even though i have a part time job also.?

I know these may be basic questions (and its not all pie in the sky stuff) i've been sorting out more fundamental things like suppliers actually supplying me, cost of postage, payment methods etc....

Anyway, i know you guys are always helpful so i thought it wouldn't hurt to ask!

Thanks all

P.

tick · 07-01-2006, 11:37

Could you not use a banks small business adviser.
just a thought

printerman · 07-01-2006, 11:41

I thought they charged a big pile of money.?

tick · 07-01-2006, 11:42

not sure thought you might get a bit of advice for free

Escapee · 07-01-2006, 12:41

There is a turnover figure where it is cost effective to become VAT registered, only then are you able to claim back the VAT.

Although, I know very little about import duties I think you need to know more than simply about VAT. If you are importing from another country, you are not actually paying VAT on the item so you are unable to claim it back. A company has to pay VAT on an item before they are able to claim it back, a company manufacturing claims it back on raw materials etc.

I think you need to find out if you can claim anything back on the import duty, or it could be just a matter of claiming back the portion of VAT that you charge your end customer.

Not really sure just thinking aloud.

ian@huth · 07-01-2006, 12:42

I know that you didn't want URL's but at least one of your questions is answered at http://www.bizhelp24.com/business_st...s_how_to.shtml

printerman · 07-01-2006, 13:55

Thankyou! That site seems to cover the areas i was looking for.....

---------- Post added at 13:55 ---------- Previous post was at 12:59 ----------

So if i'm not registering for VAT does that mean i have to pay it on an item or just igonre it until i get to 56K ?

KingPhoenix · 08-01-2006, 15:55

If your not registered for VAT, you cant claim any VAT back, and you cant charge VAT to your customers. If you are registered for VAT, you need to pay the VAT man all the VAT that your customers pay you less what VAT you have spent...

I.e.

VAT you pay to suppliers = Z
VAT your customers pay to you = Y
VAT you pay to VAT man = X

Y - Z = X

Its not something you can just ignore until you get to 56k, you need to assess it every so often, if your taking around 50k a year (on average £4,200 a month) then i would say you need to be VAT registered. It is completely irrelevant of your outgoings, purely based on your incomings. Also dont forget, at the moment your pricing will be based on the fact that you dont need to pay VAT, however your prices will need to go up when you do, otherwise its you who will lose out, but if your selling to large companies who are VAT registered, they wont be bothered, as they can just claim it back from the VAT man....

Not sure if thats any help or not...

Bifta · 08-01-2006, 16:12

also, if you're a limited company don't forget you might also have to pay corporation tax.

printerman · 08-01-2006, 17:20

Bu, if i'm importing something i've read that before the items are released i have to pay the duty and vat on them. Due to china not being EC they don't pay the vat so i have to. Therefore i'll have to charge the customers (who are not vat registered) VAT ? Yes/no?

Bifta · 08-01-2006, 17:28

Quote:

Originally Posted by printerman

Bu, if i'm importing something i've read that before the items are released i have to pay the duty and vat on them. Due to china not being EC they don't pay the vat so i have to. Therefore i'll have to charge the customers (who are not vat registered) VAT ? Yes/no?

You pay VAT, you charge them VAT, you pay customs and excise the VAT you've charged your customers then you claim back what you've paid for the product, your customers don't need to be VAT registered to PAY vat.

printerman · 08-01-2006, 17:38

i'll get charged the VAT at customs before i actually recieve the goods though...i'm sure i do.

**Paul M** · 08-01-2006, 18:32

It costs nothing to register for vat, as long as you don't mind doing the paperwork then you can do it - this will allow you to claim back any vat you pay. You must also remember to charge vat on your sales. I ran and small business for three years and registered for vat, my turnover was only a couple of thousand per year.

printerman · 08-01-2006, 18:35

Thankyou! Thats what i thought....i've got 3 month to do that though i beleive.

SMHarman · 09-01-2006, 20:22

Quote:

Originally Posted by printerman

Hi all,
Since leaving my full time employment i've been working on starting a small business (using some old contacts fro mmy old job!). I will be importing from China small electronic consumables. Will they need CE certification?

I've been reading ALOT of stuff on business link HM Customs etc but i'm starting to loose track of what is going on. I know i need to a few more things but i'm asking for some first hand help...not links to websites 'cos i've probably read them already....so does anyone know the answer to these questions.....

Do i need to register for VAT? (i won't be making or spending a fortune). Not until you turnover over 64k but you will be paying out irrevoverable VAT - are your customers business (VAT registered or consumer?)
How do i pay my VAT and claim it back.? You register for VAT, account for it and pay it. Many VAT schemes, or just through a 1/4 ly return
How much import duty will i be expected to pay for this type of item form this location and (where the HELL) are the forms i need to fill in)!? This should to an extent be handled by the shipper, they define the product by international product catagorisation codes and these define the duty
Do i have to pay NI even though i have a part time job also.?You need to pay ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â£2.45 odd a week in Class 2 (or 4) if you earn enough you pay Class 4 (or 2) on the profits also. You can get exemption from this if you part time job pays you over the upper NI limit (so your class 1 ee's is fully paid)

I know these may be basic questions (and its not all pie in the sky stuff) i've been sorting out more fundamental things like suppliers actually supplying me, cost of postage if this is postage then RM/Parcelforce will collect the VAT and Duties on the import for you. http://www.cableforum.co.uk/board/sh...458#post664458 to borrow someone elses post., payment methods etc....

Anyway, i know you guys are always helpful so i thought it wouldn't hurt to ask!

Thanks all

P.

---------- Post added at 20:11 ---------- Previous post was at 20:11 ----------

Quote:

Originally Posted by tick

Could you not use a banks small business adviser.
just a thought

If you open your business account with HSBC they give you a phone line for advice for free. Are you becoming a company or a sole trader?

---------- Post added at 20:13 ---------- Previous post was at 20:11 ----------

Quote:

Originally Posted by Escapee

There is a turnover figure where it is cost effective to become VAT registered, only then are you able to claim back the VAT. You can choose to register before you hit the turnover limit if it is beneficial for you and your customers.

Although, I know very little about import duties I think you need to know more than simply about VAT. If you are importing from another country, you are not actually paying VAT on the item so you are unable to claim it back. A company has to pay VAT on an item before they are able to claim it back, a company manufacturing claims it back on raw materials etc.You will have the products shipping value assessed for duty, then the shipping + duty + product cost will be assesed VAT, that will be your input vat.

I think you need to find out if you can claim anything back on the import duty, or it could be just a matter of claiming back the portion of VAT that you charge your end customer.Import duty is a sunk cost, you cannot recover it from anyone but the customer in the price you charge them.

Not really sure just thinking aloud.

---------- Post added at 20:15 ---------- Previous post was at 20:13 ----------

Quote:

Originally Posted by printerman

Thankyou! That site seems to cover the areas i was looking for.....

---------- Post added at 13:55 ---------- Previous post was at 12:59 ----------

So if i'm not registering for VAT does that mean i have to pay it on an item or just igonre it until i get to 56K ?you will have to pay it on your inputs but cannot charge VAT to your customer

So if you sell something for ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â£100 that is yours to keep, no need to pay any of that to the VAT man, but in your cost of sales you have the price you paid for the item, the shipping, the duty and the VAT you paid to get it in the country.

---------- Post added at 20:17 ---------- Previous post was at 20:15 ----------

Quote:

Originally Posted by printerman

Bu, if i'm importing something i've read that before the items are released i have to pay the duty and vat on them. Yes to make sure HMCE get their money - shrewed heh - normally your shipper will handle this. Due to china not being EC they don't pay the vat so i have to. Yes Therefore i'll have to charge the customers (who are not vat registered) VAT ? Yes/no?

Only charge it if you register.

---------- Post added at 20:18 ---------- Previous post was at 20:17 ----------

Quote:

Originally Posted by Bifta

You pay VAT, you charge them VAT, you pay customs and excise the VAT you've charged your customers then you claim back what you've paid for the product, your customers don't need to be VAT registered to PAY vat.

This is only true if you are registered.

---------- Post added at 20:20 ---------- Previous post was at 20:18 ----------

Quote:

Originally Posted by printerman

i'll get charged the VAT at customs before i actually recieve the goods though...i'm sure i do.

Yes - if you are shipping with a DHL / FedEX / UPS type company they will pay the fees and invoice you and charge you a few ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â£ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â£ÃƒÆ’Ã¢â‚¬Å ¡Ãƒâ€šÃ‚Â£ for the privelage. If you are shipping postal then RM/Parcelforce do the same but will not release until they have a cheque in their hands (top tip here, make sure it is a cheque, they take ages to bank them and lose about 50% of them so you save paying!). If you are bringing boat / container loads of stuff i have no clue - out of my field of experience.

---------- Post added at 20:22 ---------- Previous post was at 20:20 ----------

If your customers are businesses that are VAT registered then register immediately. If they are consumers then you may want to hold off as at least initally you can be about 8% cheaper than the competition, though if you have lots of startup costs you may want to register to recover the VAT on those startup costs.