Starting a New Business

gw12

Hi all , I hope I am posting this in the correct section.
So when you get a ready to go phone or your bill contract is finished you can enter in a special number to make your phone accept any sim card.
I am in the middle of trying to set up my own company selling mobile phone unlock code's.
I am trying to figure out the VAT / Profit I make on the unlock code's.
I will try to explain.

I buy the unlock codes that are only numbers i.e 2342245 from china ( it is not a physical item but virtual ).
It is emailed to me and I sell them online and email the code to the customer.

So buying from China and selling 99% of them outside Ireland ( again not posting anything , only emailing the code? )
So how do I work out the profit / vat.
My company will not be VAT registered as I will not go over the 75,000.

Buttercake

gw12 wrote: »

I am trying to figure out the VAT / Profit I make on the unlock code's.

My company will not be VAT registered as I will not go over the 75,000.

You said your not charging vat?

if you buy and unlock code for €1 and sell it for €5 = €4 Margin - Cost of Sale = profit $$$$$$$

jimmii

As Buttercake says you only pay VAT after you have registered. Are you 100% sure you aren't going to go over the threshold in the next 12 months? Sounds like you might have found yourself a nice little middle man position!

gw12

Hi Buttercake , Thanks for the reply.
I know this is a stupid question but how much is the tax man going to get.
My margins are going to to very low with this.

gw12

Hi jimmii
Looking at my figures it will not go over the 75,000
It can also be looked at been a service , so that is 35,000 I think.
I will also be selling accessories.
So will I be able to stay with the 75,000 even though it is also a service.

Thanks to the 2 of you for the advice

Buttercake

gw12, Sign up for one of these courses: https://www.localenterprise.ie/Discover-Business-Supports/Training-Programmes/Start-Your-Own-Business-Programme/

Look at Workshop 5 & 7

they should answer all your questions and more

gw12

Thanks Buttercake

jimmii

Would definitely agree on doing some courses so that you know you are doing everything right when starting a business you definitely don't want to screw things up with the revenue!

pedronomix

VAT is not the only tax you may or may not have to pay, PRSI, Levies and Income Tax are for everybody!!

DubTony

gw12 wrote: »

Hi Buttercake , Thanks for the reply.
I know this is a stupid question but how much is the tax man going to get.
My margins are going to to very low with this.

gw12 wrote: »

Hi jimmii
Looking at my figures it will not go over the 75,000
It can also be looked at been a service , so that is 35,000 I think.
I will also be selling accessories.
So will I be able to stay with the 75,000 even though it is also a service.

Thanks to the 2 of you for the advice

I'd suggest you call the VAT people. They aren't scary, and will tell you exactly what you need to know. They'll be able to tell you what threshold applies (I think your codes are a product, not a service, as you're simply supplying and not actually doing any physical work)

Something to be careful of is setting your retail price too low. If you find yourself having to register for VAT, you'll be adding 23% to whatever price you've set.

So if you buy for €2 and sell for €3, and that's competitive in your market, adding 23% VAT to that will bring your retail price to €3.69. Is that still competitive? I would set my retail and add 23% as a cushion. Until such time as you have to register for VAT, look at it as extra profit. Maybe use that extra profit as part of a marketing budget, or to pay for a decent digital marketing course.

Hope that helps.

pedroeibar1

gw12 wrote: »

.............
So when you get a ready to go phone or your bill contract is finished you can enter in a special number to make your phone accept any sim card.
I am in the middle of trying to set up my own company selling mobile phone unlock code's.

Have you looked at the legality of this? The phone owner/purchaser clearly would be in breach of contract were s/he to do this before the original contract is over and would have a liability to the Carrier. Would many do this? Could you be implicated by providing the unlock service? If so it would be easier for the Carrier to go after you rather than your individual customers.

pedronomix

Once your bill pay contract is up, the carrier is obliged to provide you with an unlock code FOC under EU law!! Not sure about RTG!

hubba_bubba

I got my phone unlocked by my carrier last week free of charge when I bought it. I just said I was going abroad and would need to put a foreign sim into my phone to use it.

Just thought this may be relevant for you to know that it's possible to get it done free of charge from the carrier.

gw12

True but not many people know about it

dbran

If you are purchasing a service from abroad there is no vat threshold and you are obliged to register for vat.

makeandcreate

hubba_bubba wrote: »

I got my phone unlocked by my carrier last week free of charge when I bought it. I just said I was going abroad and would need to put a foreign sim into my phone to use it.

Just thought this may be relevant for you to know that it's possible to get it done free of charge from the carrier.

But they run you round the houses to do it most of the time. I paid about €9 to unlock my galaxy a couple of years ago - didn't think twice about it for the convenience.
Last week my aunt paid someone in a shop £15 to put a screen protector on her i-phone. She was gutted when my BIL pulled out a pile of them and said he'd have done it for £10
Lots of people will pay a premium for something that wouldn't really cost much to do.

pedronomix

makeandcreate wrote: »

But they run you round the houses to do it most of the time. I paid about €9 to unlock my galaxy a couple of years ago - didn't think twice about it for the convenience.
Last week my aunt paid someone in a shop £15 to put a screen protector on her i-phone. She was gutted when my BIL pulled out a pile of them and said he'd have done it for £10
Lots of people will pay a premium for something that wouldn't really cost much to do.

and be delighted until they realise they have been "had". GREAT BUSINESS MODEL!!

makeandcreate

pedronomix wrote: »

and be delighted until they realise they have been "had". GREAT BUSINESS MODEL!!

But most people don't have a BIL or similar ... it's a need/demand thing - my mate is a courier and will not be without a phone - you can charge him top dollar for his need - cos he will walk in with a "need for a phone". Me - nah.
Phone unlocking online is not really a return business.