Quick one on VAT

Atomico

Hi folks,

Think I know the answer to this but just want to quickly check. Say I set up an online store tomorrow, and I am selling products but don't expect my turnover to reach or exceed the €75k that should trigger you to register for VAT.

Does this mean that I can trade without charging customers VAT up until such a point where my revenue exceeds the threshold, or around when I envisage this is about to happen?

The store would also sell and ship worldwide.

marymary1984

My understanding is you do not have to register for vat until the threshold is reached however, you would have to pay vat on all aspects of your business, website, hosting, and most importantly your stock you intend to sell. Unlikely to be an advantage unless your producing and selling your own goods.
Most businesses would register to claim vat back and reduce their expenses.

Atomico

marymary1984 wrote: »

My understanding is you do not have to register for vat until the threshold is reached however, you would have to pay vat on all aspects of your business, website, hosting, and most importantly your stock you intend to sell. Unlikely to be an advantage unless your producing and selling your own goods.
Most businesses would register to claim vat back and reduce their expenses.

Thanks for that. That's my understanding too. At the start the plan would be to just purchase the items we plan to sell online from shops and retailers. Later we would probably try to source from suppliers, if things took off.

It sounds like we don't need to charge VAT to consumers purchasing on the website anyway, and that we can just sell at whatever price we choose, without having to add VAT on.

jimmii

Atomico wrote: »

Thanks for that. That's my understanding too. At the start the plan would be to just purchase the items we plan to sell online from shops and retailers. Later we would probably try to source from suppliers, if things took off.

It sounds like we don't need to charge VAT to consumers purchasing on the website anyway, and that we can just sell at whatever price we choose, without having to add VAT on.

As long as you're under the threshold then you don't have to. Are you going to buy from another shop and add some mark up or just sell at the same price for proof of concept or something? Keep in mind the threshold is over any 12 month period you don't want to get caught out if in a year you're flying!

Atomico

jimmii wrote: »

As long as you're under the threshold then you don't have to. Are you going to buy from another shop and add some mark up or just sell at the same price for proof of concept or something? Keep in mind the threshold is over any 12 month period you don't want to get caught out if in a year you're flying!

Hey jimmii, the plan would be the former - to buy from another shop and add some mark up. We'd also have to add postage and packaging on as well of course.

I take it you can register mid-year though or something, if you project forward and see you are going to reach the threshold within 12 months of launch? Would really depend on how it goes!

jimmii

Atomico wrote: »

Hey jimmii, the plan would be the former - to buy from another shop and add some mark up. We'd also have to add postage and packaging on as well of course.

I take it you can register mid-year though or something, if you project forward and see you are going to reach the threshold within 12 months of launch? Would really depend on how it goes!

Its any 12 month period so you can get caught out. Last thing you want to do is get lumped with a large VAT bill!

Its hard to make money buying from one shop to sell in yours why don't you want to go straight to suppliers?

Atomico

jimmii wrote: »

Its any 12 month period so you can get caught out. Last thing you want to do is get lumped with a large VAT bill!

Its hard to make money buying from one shop to sell in yours why don't you want to go straight to suppliers?

The plan would definitely be to source from suppliers sooner rather than later, but I'm guessing there would be minimum orders involved there potentially? As it stands it's more important to prove the concept first than maximise margins (although that will come into play pretty quickly of course, once we see the traction / interest!).

jimmii

Atomico wrote: »

The plan would definitely be to source from suppliers sooner rather than later, but I'm guessing there would be minimum orders involved there potentially? As it stands it's more important to prove the concept first than maximise margins (although that will come into play pretty quickly of course, once we see the traction / interest!).

Its often surprisingly low and every now and then you even find suppliers with no minimum. Always good to prove proof of concept first but its worth getting in touch with some suppliers to see what sort of numbers they are looking for. Would also suck if you got to the stage where you wanted to go with a supplier and you then found the minimum order was 10k units or something.

Zolando started out buying flipflops in a shop and selling them for the same price as proof of concept so you never know where it can lead!