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Rob B

Member

Registered: 8th Jan 04
Location: Area Motorsport Drives: Race EP3
User status: Offline

23rd Jun 11 at 00:37

Hi guys, so i'm starting a company selling automotive parts.

Just a few questions to help me out as i don't want to spend money on crappy financial advisors.

So, am i right in thinking that when starting a business the only cost to register the company is £18 to HMRC and just provide your company name, address, shareholders etc?

Secondly, if i have a trade account with a company and i buy a product from them, am i right in thinking i my purchase price from them would exclude VAT?

I'm just slightly confused that when i sell the product onto a customer, they are then charged VAT by myself, is that something i have to keep record of and then pay back to HMRC on a quartely basis?

It says on there site if your earnings are suspected to be under 70k you don't need to be VAT registered but i don't understand how this would work?

If what i've said is pretty way out of depth,

Can someone simply explain to me how you deal with VAT from buying it trade to then selling it to a customer.

Thanks Rob

Rob B

Member

Registered: 8th Jan 04
Location: Area Motorsport Drives: Race EP3
User status: Offline

23rd Jun 11 at 00:41

Is this pretty much correct:

Example

Buy item £50 plus vat = 8.75 = 58.75

Sell for £100 plus vat 17.50 = 117.50

So pay over vat of 17.50 and claim vat of 8.75 = £8.75 net

Value added on good = £100 selling price less £50 cost price = £50

Vat on this is £8.75

Neil

Member

Registered: 2nd Nov 03
Location: Newcastle Drives: E46 MSport Coupe
User status: Offline

23rd Jun 11 at 01:03

Isn't VAT currently 20% not 17.5% .. ?

Dan

Premium Member

Registered: 22nd Apr 02
Location: Gorleston on Sea, Norfolk
User status: Offline

23rd Jun 11 at 07:01

You do not need to worry about vat until you are turning over about 70k. Can't remember exact figure.

Adult GiftsClick here to vist us

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 07:06

My company doesn't turn over 70k a year (yet) but I'm still VAT registered because it helps to keep costs down both for me and my customers that are VAT registered.

Also in IT (don't know about other trades) a lot of trade suppliers require you to be VAT registered anyway.

Yes you should keep hold of the 20% extra you charge to customers and pay back any VAT due each quarter - remember you can claim back VAT paid on things by the company so all you pay is the balance outstanding, if any.

My advise to you would be to set up a meeting with a local accountant, they can go over all this with you (for free) and if they are good they'll also advise you the best way of forming your company etc.

I see that you're in Tamworth, I use an accountant in Dudley so not a million miles away from you and he is shit hot TBH. If you want his details U2U me.

[Edited on 23-06-2011 by Sam]

jrsteeve

Member

Registered: 3rd Apr 02
Location: Manchester
User status: Offline

23rd Jun 11 at 08:23

In your line it'd be worthwhile being VAT registered so you can claim it back on stock purchased.

Gary

Premium Member

Registered: 22nd Nov 06
Location: West Yorkshire
User status: Offline

23rd Jun 11 at 09:08

quote:
Originally posted by jrsteeve
In your line it'd be worthwhile being VAT registered so you can claim it back on stock purchased.

But then you have to pay it out on stock sold so its swings and roundabouts.

Would prob need to be VAT reg or most businesses wouldnt trade with you. Unless your just planning on selling to the end user

fazza

Member

Registered: 7th Feb 08
Location: Plymouth
User status: Offline

23rd Jun 11 at 09:49

What Gary said, most companies will not trade with you unless your VAT registered.

adiohead

Member

Registered: 28th Sep 01
User status: Offline

23rd Jun 11 at 11:01

I don't buy unless the company is vat registered

Matt L

Member

Registered: 17th Apr 06
User status: Offline

23rd Jun 11 at 11:27

You will be charged vat on your purchases and you will have to charge it on your sales aslong as they are vatable goods (which car parts are)... so basically you will claim back the vat on your purchases and have to declare the vat you charge to your customers on a quaterly basis and difference you either claim back or pay over.

basically... get an accountant to do a vat return for you as it wouldnt cost a great deal and you can be safe in the knowledge its right and the revenue arent going to come back at you if its wrong.

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 11:31

This is all pretty much what I've already said...

Dave

Member

Registered: 26th Feb 01
Location: Lancs
User status: Offline

23rd Jun 11 at 11:33

Search around for new business start up help/ enterprise schemes. There was one in my area that I went to when I first became self employed. They are free and give good advice on accounting, marketing etc.

Mad Moe

Member

Registered: 14th Jun 01
Location: Northumberland
User status: Offline

23rd Jun 11 at 12:14

Dont waste you money on an accountant for doing your VAT return, buy Sage Instant Accounting for £120, make sure you input all of your purchases/sales and it'll do your VAT return for you.

You can also buy any Sage product interest free over 12 months.

[Edited on 23-06-2011 by Mad Moe]

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 12:19

A good accountant will be able to give you advice and help when you need it - Sage is just a piece of software.

If you fuck your VAT return up HMRC will do you dry up the ass so it's worth paying an accountant to make sure your VAT returns are done properly.

[Edited on 23-06-2011 by Sam]

Mad Moe

Member

Registered: 14th Jun 01
Location: Northumberland
User status: Offline

23rd Jun 11 at 12:23

I wasn't stating Sage will offer advice on how to set up and run you business but it will save on bookeeping fees that simply aren't necessary with even just the slightest bit of common sense.

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 12:36

OK mate.

Fad

Member

Registered: 1st Feb 01
Location: Dartford Kent Drives: 330cd
User status: Offline

23rd Jun 11 at 12:52

quote:
Originally posted by Gary

quote:
Originally posted by jrsteeve
In your line it'd be worthwhile being VAT registered so you can claim it back on stock purchased.

But then you have to pay it out on stock sold so its swings and roundabouts.

Would prob need to be VAT reg or most businesses wouldnt trade with you. Unless your just planning on selling to the end user

No the Vat is charged out to your customers then you pay it to the tax man when you do your tax return.

Basically you claim back input VAT (on purchases) and pay (output VAT) charged on goods and services sold.

Basically some people dont become VAT registered so that they are competitve in the market place (i.e not chargring VAT on their Output.sales. However in this instance you cannot claim back the VAT on your purchases.

In this case you may get an unofficial "trade" account where your purchases/materials will be at a lower rate and then your end product is cheaper hence more attractive to the purchaser. However some parts places will request your VAT regustration details before offering you VAT free parts.

What you need to consider is whether you will benefit from being VAT registered.

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 13:54

You don't pay VAT in tax returns, you pay them in VAT returns.

Mad Moe

Member

Registered: 14th Jun 01
Location: Northumberland
User status: Offline

23rd Jun 11 at 14:05

A VAT return is a Tax return

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 14:23

quote:
Originally posted by Mad Moe
A VAT return is a Tax return

HMRC and most people refer to it as a VAT return

Mad Moe

Member

Registered: 14th Jun 01
Location: Northumberland
User status: Offline

23rd Jun 11 at 14:44

Yes, a Value Added Tax Return

Fad

Member

Registered: 1st Feb 01
Location: Dartford Kent Drives: 330cd
User status: Offline

23rd Jun 11 at 15:28

quote:
Originally posted by Sam
You don't pay VAT in tax returns, you pay them in VAT returns.

:-P Douche

Sam

Moderator
Premium Member

Registered: 24th Dec 99
Location: West Midlands
User status: Offline

23rd Jun 11 at 15:40

Jesus wept

Rob B

Member

Registered: 8th Jan 04
Location: Area Motorsport Drives: Race EP3
User status: Offline

23rd Jun 11 at 16:02

Cheers guys

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