How do you account for VAT on online sales? Reply

Online Shopping

Firstly, if you are an online trader and its not just a hobby, makesure you register and pay tax.

The criteria used to assess if an activity is a hobby or a business are:

  • The size and commerciality of the activity.
  • The frequency of the activity and transactions
  • The application of business principles.
  • Whether there is a genuine profit motive.
  • The amount of time devoted to the activities.
  • The existence of arm’s-length customers (as opposed to just selling your wares to family and friends).

You must register for VAT with HM Revenue and Customs (HMRC) if your business’ VAT taxable turnover is more than £83,000.

So once you are VAT registered and trading online with Ebay, Amazon or other platforms how do you work out how much VAT you should account for on sales?

Let’s take an example:

Sales are £5,000

Postage £500

Online Platform Commission £500

Is your VAT able income:

a) £5,000 (Goods)

b) £5,500 (Goods plus Postage)

c) £4,500 (Goods net of Commission)

The answer is b) Goods plus Postage = Total Sales Value

Assuming its a UK customer and goods are standard rated the VAT would be £5,500/6 = £916.67 because when you sell to consumers the price is inclusive of VAT.

If your platform provider is based outside the UK but in the EU their fees will subject to ‘Reverse Charge‘ VAT.

When you buy services from suppliers in other countries, you may have to account for the VAT yourself – depending on the circumstances. This is called the ‘reverse charge’, and is also known as ‘tax shift’. Where it applies, you act as if you are both the supplier and the customer – you charge yourself the VAT and then, assuming that the service relates to VAT taxable supplies that you make, you also claim it back. So there’s no net cost to you – the two taxes cancel each other out. [HMRC]

steve@bicknells.net

 

 

Does your accountant understand Construction? Reply

Business Accountant

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Perhaps one of the most important things an individual can do when self-employed is to keep meticulous accounts. This means not only keeping a record of income and expenditure, but also work in progress at the end of the tax year. The case of Mark Smith v HMRC [2012] TC02321, which was an appeal heard in the First Tier Tribunal of the Tax Chamber illustrates the potential ramifications of failing to keep one’s accounts in sufficient order.

 

The appellant in this case was trading as a builder. He sought to appeal against assessments to tax and amendments to self-assessments in respect of the years ending 5 April 2001 to 5 April 2007 inclusive.

 

The central issue before the tribunal related to the appellant’s computation of profits. It was admitted that his accounts understated the profits gained in a particular tax year. However, it was his contention that this…

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Are you selling online? 20% more will be sold online in 2014 Reply

dreamstimefree_111433

Last year in was reported by BBC News….

A record amount of online shopping was done in December 2013, says the British Retail Consortium (BRC).

Close to one in five non-food items was bought online last month.

There was also a 19.2% growth in internet purchases from a year earlier, the fastest increase in four years……..

According to Law Donut….

Online sales in the run up to Christmas this year are expected to grow by 19.5% over 2013, with UK shoppers expected to spend £17.4 billion online.

Total Christmas sales are predicted to reach £74.3bn according to research conducted by the Centre of Retail Research for RetailMeNot, with the average UK household spending £775 on all of their Christmas shopping.

Are you trading online? do you have a website? do you have an App?

steve@bicknells.net

Sales Forecasting using Weighted Averages 2

Profitability

For project based businesses you need to understand the sales pipeline inorder to produce a forecast, a typical sales pipeline looks like this:

  1. Prospects and Leads
  2. Qualified Opportunities
  3. Visits/Meetings
  4. Proposals
  5. Revised Proposals
  6. Sales

In many cases larger contracts require a Prequalification Questionnaire (PQQ) and Tender.

If you want to forecast Sales you have to start by recording the volume of activity at each stage of the pipeline and your success rate at each stage.

Sales is all about activity, the more Prospects you can find the more Sales will be achieved.

Finding propects will be different for every organisation but Social Media and Linked In are increasing being used to find Prospects.

To prepare a Weighted Average forecast you simply use you success ratios and apply them to each stage of the process, so for example if you win 1 in 3 proposals that means you need 3 proposals to get one sale.

You can use this approach to set targets for your sales team.

On submitted proposals you can also apply a probability of success assessed by your sales team.

The key to Sales is to Always Be Closing!

steve@bicknells.net

How to Monetize a Blog 1

Online Shopping

Basically research shows that you have the following options:

       Advertising

       Paid Content and Affiliate Marketing

       Donations

       Paid Subscriptions

       Consulting

       Journalistic work for other media

Advertising is the most popular and is based on:

Popularity of the Blog (number of visitors)

Stickiness (time spent by visitors)

Loyalty (number of repeat visitors)

The visitors are measured in CPM (cost per thousand visitors)

Adverts are 125 x 125 Pixels

A blog with 100,000 monthly hits might charge 50p CPM which works out to £50 per month (£600 per year)

 

eMarketer estimates that retail sales via smartphones and tablets have more than doubled to £8.2 bn in 2013, accounting for 18% of total UK ecommerce sales. Tablet commerce has seen particularly high growth, reaching £4.8 bn. In 2014 mcommerce is expected to increase by 53.3% in 2014, more than triple the 15% growth rate for retail ecommerce.

 

UK mobile ad spend is expected to pass the £1bn mark in 2013, according to eMarketer, reaching £1.2bn (19% of total digital) – a 126.1% YoY growth. Mobile ad spend is expected to nearly double again in 2014 to almost £2.26 billion (32% of total digital).

 

 

Would you sell advertising on your blog?

 

steve@bicknells.net

 

Are you benefiting from the Online Sales Boom? Reply

Online Shopping

Just in case you haven’t been watching the BBC News….

A record amount of online shopping was done in December 2013, says the British Retail Consortium (BRC).

Close to one in five non-food items was bought online last month, according to the BRC survey.

There was also a 19.2% growth in internet purchases from a year earlier, the fastest increase in four years……..

The online retail boom was very much in evidence in late 2013, with many High Street chains expanding their internet offerings, and some shops reporting record figures for the amount customers purchased online around Christmas.

In a recent AccountingWEB survey on average survey respondents said more than 80% of their customers use a smartphones or a tablet and almost all expect this number to increase over the next 12 months.

Without an online presence your business is likely to be become invisible to your customers.

Its not just about having a website either, there needs to be something that will keep your customers visiting your website and you probably need an app….

steve@bicknells.net

10 ways to maximise sales revenue 2

Value

Before you can sell you need to master the sales process, the following is a link to a 9 step process to help improve your sales process – WikiHow

Or you might prefer the 1941 Chevrolet approach

Once you are selling, how can you maximise your sales revenue…….

  1. Understand your clients needs and wants, sell products that they want, or make them want what you have to sell
  2. Keep your promises and earn your clients trust
  3. Look for opportunities to sell additional services and products
  4. Offer good value and service
  5. Get testimonials, recommendations and referrals
  6. Use your contacts and social media and tell them your success stories
  7. Credit Check your clients, a clients isn’t a client if they don’t pay and you aren’t running a charity
  8. Bad Debt Insurance could help reduce your risk but its not appropriate for all businesses
  9. Set up a customer rewards program and offer incentives
  10. Follow up leads within 24 hours

steve@bicknells.net

How do you get new clients? take part in this poll and lets find out Reply

This is a great opportunity to find out what techniques are being used and what your views are, I look forward to your comments and votes

steve@bicknells.net

 

 

How do you market your business? Reply

Bartercard give a 100% guarantee of sales included as standard in their membership, what do they do to get those sales?

Did you know Bartercard promote your products and services in 17 ways?

Yes thats right, 17 ways and here they are:

1. Members Directory
2. On line Directory
3, E Auction
4. Account Managers (TCOs)
5. E Mail Campaigns
6. Mail shots
7. Fax Campaigns
8. Networking events
9. Trade Shows
10. International Hot Deals
11. Value Added Services
12. Moving Inventory
13. Last Minute Deals
14. The Barter Bulletin Magazine
15. Member Referrals
16. Offers to Supply
17. E Market Place

Thats why Bartercard confidentially guarantee that they will generate sales from their members for you, if you want to know more or want to link in my e mail is steve.bicknell@uk.bartercard.net

Whats the Return on Investment from Bartercard? Reply

To join bartercard there is a “once only initial investment” so how can we quantify our return on investment?

Every business has had to make an investment in their business to get it started, for example a hairdresser would need to fit out her shop with fixtures, fittings and equipment, so in accounting terms how can we evaluate the investment that we make when we join bartercard?

1. Pay Back Period – how many years does it take to get back our initial investment in profits – for normal investments anything less than 3 years is considered good – because Bartercard specialise in selling spare capacity and as such only product replacement costs are relevant, its likely that the profit on each sale will be around 70% profit (as used in our hairdresser/accountant trading story) – as Bartercard guarantee to get more than the joining fee in sales in the first year, the payback period is likely to be less than 2 years – so thats an excellent return on investment

2. Average Rate of Return (ARR) – this method of appraisal takes the average of the profits made over say a 3 year period (or the life of an asset) and shows the result as a % of the initial investment I estimate a 70% ARR, obviously this will vary from business to business, but I am sure you will quickly be able to work out the return for your business

3. Net Present Value/Discounted Cash Flow – this method of appraisal takes into account the time value of returns, its often considered the best and most precise way to assess returns, to calculate the Net Present Value you create a cash flow table year 0, shows the investment as a cost, then the net profits are shown in the subsequent years and a factor is applied to remove the effect of inflation, the higher the NPV the better the investment

4. Internal Rate of Return – this is also described as the effectie interest rate, to calculate this we increase the Discount Rate in the DCF (3 above) until the NPV equals zero and that produces the return rate

If you need help doing this analysis for your business drop me an e mail

steve.bicknell@uk.bartercard.net