The Wholesale Forums

[gripped]

Hi all

I'm in the process of starting a small business. I will be importing goods and selling through a website and ebay, possibly amazon also.

I understand that I have to register as self employed within 3 months.

I understand that I don't have to register for VAT unless my sales are over £67,000 in 12 months (not likely unless things go swimmingly)

What I can't seem to work out from the business link website is what is actually profit.

I intend to plough back every penny earned into buying more stock. Expanding my range.
So I would be taking nothing out of the business, just putting the money back

Assuming I did this over the course of a financial year would I be liable for any tax ?

Or do I have to put aside a percentage of every sale I make to pay the tax at the end of the year ?

Sorry if this seems a daft question but I have been PAYE all my life and just don't know !

[hardwareheroes]

You should put money aside to pay tax no doubt.

Taxable profit is defined as the difference between the taxable income you recieve less the allowable expenses incurred in the generation of that income.

Putting all the profit into more stock does not reduce the tax charge - it just makes it more difficult for you to find the funds to pay it.

For example, if you make £20k profit and use it to increase your stock by £20k, you have still made that amount of profit in the eyes of the taxlords!

[phatstereo]

basically, revenue - costs = income (profit). income is then taxes and you are left with net income. this is known as retained earnings. you can use all the retained earnings to re-invest and grow the business, but you are using after tax money though. if you use the retained earnings and pay yourself by issuing a dividend, then your dividend is taxed again through your personal taxes.

[gripped]

Ok guys. Thanks.

I suppose it has to be that way. I'm still not sure how they can know exactly which costs match which sales ?
But I will keep some income to one side.

How long do you get to pay the tax, in the UK, after you get the bill ?

[phatstereo]

Originally Posted by gripped

Ok guys. Thanks.

I suppose it has to be that way. I'm still not sure how they can know exactly which costs match which sales ?
But I will keep some income to one side.

How long do you get to pay the tax, in the UK, after you get the bill ?

I suggest taking an intro accounting course and your questions will be better answered.

[papverpoppies]

I have been offered a free half day basic course run by the Inland Revenue (they offered me this, when I rang to register my business)!

Ring them up and see what is available in your area.

I am also attending some free courses run by my Chambers and Commerce which covers ALL aspects of running a business. Again might be worth contacting yours.

Also great for networking and meeting the people who might be able to help you.

Poppy

[gripped]

Originally Posted by papverpoppies

I have been offered a free half day basic course run by the Inland Revenue (they offered me this, when I rang to register my business)!

Ok I'll look into this. I intend to register as self employed next week once I receive my first shipment. I'm waiting for my Pseudo Turn number, applied for on Thursday so I'm hoping I should get it tomorrow.

A lot to learn.

Thanks

[papverpoppies]

A lot to learn.

Me to - not sure how it will all fit in up top! But, I will give it ago.

Good Luck

Poppy

[Tracy]

Originally Posted by gripped

Ok guys. Thanks.

I suppose it has to be that way. I'm still not sure how they can know exactly which costs match which sales ?
But I will keep some income to one side.

How long do you get to pay the tax, in the UK, after you get the bill ?

Get an accountant. It makes it much easier for people like you and me, who dont know all the in's and out's

[pro-print]

Tax and accountancy courses are all very well but the info is out there, its a very simple process. As soon as you notify inland revenue you are self employed they will send you all the info you need, as well as NI contributions.

Dont worry about it, its good fun. Just keep ALL reciepts so to claim relief on EVERYTHING!