Vat on Drop shipping Business

Deepwinter

Im Starting a Dropshipping business, and im not sure how the VAT is going to work.

They way the business will work is as follows, a customer orders a product from us, we then send the order to our supplier who is in China.
Our supplier then ships the product directly to our customer. with our paper work.

I know from getting samples from China that when the product arrives I would have to pay VAT at the door.
We want to avoid customers having to deal with this.

So on our website we have the option of charging the VAT and for us to pay.

We are not currently registered for VAT is this something we can do, or do we have to be registered for VAT to Charge VAT.

Our sales will not be limited to Ireland and could come from anywhere.

I'd really appreciate some guidance on the best way to move forward on this.

Thanks

barneystinson

Deepwinter wrote: »

Im Starting a Dropshipping business, and im not sure how the VAT is going to work.

They way the business will work is as follows, a customer orders a product from us, we then send the order to our supplier who is in China.
Our supplier then ships the product directly to our customer. with our paper work.

I know from getting samples from China that when the product arrives I would have to pay VAT at the door.
We want to avoid customers having to deal with this.

So on our website we have the option of charging the VAT and for us to pay.

We are not currently registered for VAT is this something we can do, or do we have to be registered for VAT to Charge VAT.

Our sales will not be limited to Ireland and could come from anywhere.

I'd really appreciate some guidance on the best way to move forward on this.

Thanks

1. Talk to your accountant. They should be able to advise you, and if they can't then proceed to;
2. Get a new accountant.

Deepwinter

barneystinson wrote: »

1. Talk to your accountant. They should be able to advise you, and if they can't then proceed to;
2. Get a new accountant.

I don't have an accountant at the moment.

You'd be surprised how much contradictory information i have been given from "accountants"

nompere

Deepwinter wrote: »

I don't have an accountant at the moment.

You'd be surprised how much contradictory information i have been given from "accountants"

So find one who understands VAT. The penalties Revenue will extract from you if you get it wrong make that very important.

Shane732

Deepwinter wrote: »

I don't have an accountant at the moment.

You'd be surprised how much contradictory information i have been given from "accountants"

Well sure if "accountants" aren't up to the task give it a lash yourself, I'm sure it'll be grand.

Alternatively, you could use an internet forum mainly by "accountants" to try and answer your question.

Get a decent accountant.

Deepwinter

Thanks to everyone for there input,

I was actually looking for someone who knew something about VAT and Drop-shipping to various countries, hence me asking in an accountancy section of this forum.

The suggestion to "find an account" as much as i appreciate the response is something that I could have figured out myself,

Im trying to get to grips with the mechanics of the business and VAT before i go head long into the venture.

If its my business i want to understand the outline of these aspects as ultimately i'll be responsible.

I want to learn anything i can, then when it is time to move forward i'll know what is needed and not waste my time or an accountants time. Im also on a tight budget and do not have the money to just throw at a problem,

Deepwinter

nompere wrote: »

So find one who understands VAT. The penalties Revenue will extract from you if you get it wrong make that very important.

Which is why I'm trying to get as much information as i can on the subject, which will also make it easier to find an accountant when it comes time to get one.

thanks

barneystinson

Well you'd better get reading then! This is a fairly fiddly area of taxation, hence the repeated advice to get a decent accountant who is familiar with it - most small practices would have limited exposure to this type of business, as they would be dealing with domestic traders. Proper professional advice is going to be an administrative overhead that you'll just have to factor in if you're going to go ahead with this business...

http://www.revenue.ie/en/tax/vat/vat-international-transactions-foreign-traders.html
http://www.revenue.ie/en/tax/vat/vat-european-union.html

Deepwinter

barneystinson wrote: »

Well you'd better get reading then! This is a fairly fiddly area of taxation, hence the repeated advice to get a decent accountant who is familiar with it - most small practices would have limited exposure to this type of business, as they would be dealing with domestic traders. Proper professional advice is going to be an administrative overhead that you'll just have to factor in if you're going to go ahead with this business...

http://www.revenue.ie/en/tax/vat/vat-international-transactions-foreign-traders.html
http://www.revenue.ie/en/tax/vat/vat-european-union.html

First of all thanks for the response
I understand its not simple, what I'm looking for is anyone with any experience in the area.

I could log onto any sub-forum myself and give advice ("get a professional") which wouldn't help them and doesn't help me, although I appreciate the time you took to respond.

In this market unfortunately access to credit is not easy saying its an overhead doesn't make the cost go away. Starting a company in this country is not easy keeping startup costs down isn't easy either but that is a priority.
This is something some close friends and I are looking at doing with our redundancy money we received after the company we all worked for went out of business.

Getting an accountant is something we intend to do when the company is trading and can finance the cost on going, on what ever level it requires.

But for now were confident we can get the company into that position without the additional upfront cost, all we need is a little help and guidence.

barneystinson

Deepwinter wrote: »

barneystinson wrote: »

Well you'd better get reading then! This is a fairly fiddly area of taxation, hence the repeated advice to get a decent accountant who is familiar with it - most small practices would have limited exposure to this type of business, as they would be dealing with domestic traders. Proper professional advice is going to be an administrative overhead that you'll just have to factor in if you're going to go ahead with this business...

http://www.revenue.ie/en/tax/vat/vat-international-transactions-foreign-traders.html
http://www.revenue.ie/en/tax/vat/vat-european-union.html

First of all thanks for the response
I understand its not simple, what I'm looking for is anyone with any experience in the area.

I could log onto any sub-forum myself and give advice ("get a professional") which wouldn't help them and doesn't help me, although I appreciate the time you took to respond.

In this market unfortunately access to credit is not easy saying its an overhead doesn't make the cost go away. Starting a company in this country is not easy keeping startup costs down isn't easy either but that is a priority.
This is something some close friends and I are looking at doing with our redundancy money we received after the company we all worked for went out of business.

Getting an accountant is something we intend to do when the company is trading and can finance the cost on going, on what ever level it requires.

But for now were confident we can get the company into that position without the additional upfront cost, all we need is a little help and guidence.

Its a wider issue than just your VAT queries, and the point of the advice given by myself and others has clearly eluded you; best illustrated by the comment that you intend to talk to an accountant AFTER you commence trading. The whole point of a good business advisor / accountant is that they should be able to pay for themselves via good help & guidance, and often the most valuable advice you get from them will be at the initial setup stage.

It won't be much good to anyone if you go looking for an accountant a few months in, and they sit you down and say, "Why didn't you come to me before you did X, Y and Z, I could've saved you 5grand by doing A, B & C instead".

You say this business will effectively be a partnership - who is going to draw up a shareholders' agreement for the company before ye all commit money to it?

hairyslug

Im in the same boat myself, except im passing the customs cost directly onto the customer, sorry if im hijacking the thread but what price range are we looking at for getting an accountant in to help us start out or is it like asking how long a piece of string is.

I dont want to start off and in 5 months time have the revenue down on me like a tonne of bricks

al22

I would suggest it will be easier
1. Get goods yourself and forward to your customer
2. Supplier deal with customer (at your prices) and you get a commission from the supplier after