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ebay dropshipping and uk vat

Discussion in 'Dropshipping & Wholesale Hookups' started by Systemagician, May 26, 2016.

  1. Systemagician

    Systemagician Newbie

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    hi guys thanks in advance,

    i have a small ebay/amazon dropshipping business that i want to take to the next level, am reluctant to do so as i will have to register for VAT in the uk. i could do with thoughts on couple questions if you can help pls.

    i see sellers on ebay uk VAT registered and selling 10,000 items a month and more, they are uk based and are uk vat registered, my question is if they sell something for £20 vat inclusive there is £3.33 due to HMRC, the item they dropship may cost £17 on amazon vat inclusive of which you can claim £2.83 back in vat from there dropshipper. so theres 50p due to HMRC in vat. ( is this right )

    how are these sellers keeping track of all this surely an accountant is really going to have his hands full with 10,000 sales invoices a month and 10k purchase invoices a month to go through?

    1/ are they using a web based software ?

    2/ would i need to print every single order and purchase invoice off for records

    everything is done through paypal should it be quite easy?

    i feel am missing something but before i really do smash this i want to make sure i can make it work, am also confused about vat on profit ?

    thanks any help thoughts greatly appreciated
     
  2. Systemagician

    Systemagician Newbie

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    also my biggest problem is if the seller is not vat registered and the orders fullfilled via amazon i am actually going to make a loss after paying the £3.33 vat ?
    cant get my head around that one

    thanks
     
  3. Soundman

    Soundman Newbie

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    You would use an accounts package, for heavy lifting I would recommend sage.
    For that amount of invoices per month you would probably employ a book keeper to keep everything in order. I use one that charges by the hour.
    Then you click a button every quarter and it tells you how much to pay the vat man.

    I Suggest you read up a little on accountancy paying particular attention to uk vat rules.
    One bit of advice .. Don't try and screw the VAT man, you won't win!