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Confused by the term turnover

Discussion in 'Black Hat SEO' started by Smart SEO, Jan 28, 2014.

  1. Smart SEO

    Smart SEO Senior Member

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    Hello,

    My dad told me that i should start thinking about registering for VAT in the UK. Now i am stupid when it comes to managing money/tax etc so i had to do a little research.

    It says that you will need to be VAT registered when your business reaches a turnover of £79,000.

    So say that my business is buying a product for £450 and i sell that product for £500 (free delivery to keep things simple), so £50 profit for each item right?

    I manage to sell 160 of this product which gives me around £50*160 profit which would be £8000 profit. But its £500*160 worth of stock which is £80,000.

    So my question is what the hell is the turnover, would it be £8000 or £80000?

    Help would be greatly appreciated
     
  2. mickyfu

    mickyfu Jr. VIP Jr. VIP Premium Member

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    I may be wrong but I think the turnover is the amount of money made before tax. So £8000.
     
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  3. tahworld

    tahworld Regular Member

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    Not sure about the UK but they are about 2 bucks in America.

    turnover1.jpg
     
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  4. mickyfu

    mickyfu Jr. VIP Jr. VIP Premium Member

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    Probably about a quid from Gregs.
     
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  5. tahworld

    tahworld Regular Member

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    Ah good to know, now I can finally plan my trip overseas :)
     
  6. Smart SEO

    Smart SEO Senior Member

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    Make sure your try the Steak bake from greggs lol having one right now!
     
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  7. Smart SEO

    Smart SEO Senior Member

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    thanks so much man
     
  8. tahworld

    tahworld Regular Member

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    Will keep this in mind ;)

    Found you this by the way:

    According to the Companies Act, turnover is: "The amount derived from the provisions of goods or services within the company's ordinary activities after deduction of trade discounts, VAT and other relevant taxes"

    What does that mean in plain English? Your turnover is basically:

    • The total amount you bill to your customers <----- this is probably the answer you are looking for.
    • LESS any discounts
    • LESS any VAT
    Link to article:
    http://www.starfishaccounting.co.uk/2012/06/what-is-turnover.html
     
    Last edited: Jan 28, 2014
  9. mickyfu

    mickyfu Jr. VIP Jr. VIP Premium Member

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    Think it means the money you are left with once you have paid everything. I am not too good with all this shit, I just make money and let others sort out all the crap.
     
  10. tahworld

    tahworld Regular Member

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    Yeah I have no idea either, same here :)
     
  11. igniteimages

    igniteimages Regular Member

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    Turnover is turnover, ie what you bill not your profit - two very different things - so I think most (all?) people above are wrong.

    My mate is VAT registered because a large part of his turnover is expenses paid by a newspaper for things like hotels, flights etc.
     
  12. boomboomer

    boomboomer Executive VIP

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  13. Kn9Isler

    Kn9Isler Junior Member

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    VAT should be included in the price, that means if you sell an item for 500 it should 500 + VAT.
    If you sell the item for 500 it means that the price includes the VAT and your profit should be lower.
    VAT has nothing to do with profits, it's a "consumption tax".
    Beware I'm not an expert, just brainstorming based on my experience im my country (I may be wrong!)
     
  14. hpv222

    hpv222 Power Member

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    Turnover -> £80,000. Once your company reaches an annual turnover of £79,000, you need to register for VAT. Whether you make 8,000 profit or no profit all (you can even sell at a loss if you want to), you still have to register for VAT.
     
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  15. Asif WILSON Khan

    Asif WILSON Khan Executive VIP Premium Member

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  16. IamNRE

    IamNRE Jr. VIP Jr. VIP Premium Member

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    £80k is your turn over
    £8k is your net profit (or gross profit if you have yet to deduct the running of the business i.e hosting, domain, insurance, rent etc.).


    Hire an accountant.
     
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  17. kappa84

    kappa84 Power Member

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    It's dead simple. Based on what you said:
    "So say that my business is buying a product for £450 and i sell that product for £500 (free delivery to keep things simple), so £50 profit for each item right?"

    After you have sold 154 products each at £500 you should register for VAT. You will then charge for the same product £500+VAT.

    You can add me on skype if you need any more info mate, I just registered for VAT in December as self employed :)
     
    Last edited: Jan 28, 2014
  18. SEOWhizz

    SEOWhizz Power Member

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    This.

    Straight from the horse's mouth:

    Code:
    http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm

    'VAT taxable turnover' depends on your circumstances. In a simple case scenario:
    Your turn over = gross sales = £80,000 (in your example)

    But it's not that simple. There are specific regulations to do with distance selling (online sales) i.e. if your customers live in the UK or live abroad.

    Which is one of the reasons it's a good idea to get advice from a UK tax specialist (accountant).
     
  19. SuperFreaky

    SuperFreaky Newbie

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    hey buddy, im based in the UK, I would suggest go speak to a local accountant, your dads right its best to get regged up for tax just so its all legit, check though yellow pages or whatever and look for local accountants in your area with either no website or a very bad one, arrange a meeting, tell them your new to the business side of things but you want too and can with your product earn a killing, tell them to do your books in exchange for a website + hosting whatever, now to set up as a sole trader its free, just ring HMRC and do it, an accountant normally charges you anything between £30-50 for this which isnt right as you can do it for nothing, best thing to do is set up a sole trader and then when you got some dimes running though the account then convert it too a LTD company
     
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  20. fxphil

    fxphil Senior Member

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    Why are you not running it out of a shell company?