EBAY questions

[cj]

I have done some selling on ebay over the past few years in my spare time, buying and selling secondhand items from car boot sales and the like.

I am interested in turning this into a fully fledged business, selling many new items as well as secondhand but I have some questions which im not sure of the answers to.

Im currently selling some items, and doing this from home. If I registered as a small business, would I still be able to continue selling from home, or would I need to rent business premises?

I was under the impression that VAT was in some way paid on ebay, as VAT is taken on the fees which eBay charge, and the Final Value Fees. If you sell, say for example, a secondhand item on ebay, which originally cost you £2 at a car boot and you manage to get £20 for it, should you declare the £18 in your accounts as being the profit, and then you have to pay 17.5% VAT on the profit sale to the government?

If I went into business, I would like to manage my accounts myself, to maximise profit (i.e. not having to hire an accountant) do you think that this would be feasible?

I was also looking at the "Trading Assistant" programme on ebay, as I feel that I have great skills when describing, photographing and advertising items for sale, I am considering offering my services - I presume I would have to declare any money that I made out of this venture, and how would I go about doing that?

I currently have a "business-sounding" name on ebay - is there any way I can register this name, so that nobody else can use it (or a similar name) ?

I would be very grateful for any advice given, and I may have more questions.

[Andrewgadd]

Hello.
Quite a few questions here, and this will be a very long answer! I'll answer them in the same order.

1) You can run any business from home, as long as you don't make changes to the dwelling, and it doesn't 'take over' your house. The real 'rule of thumb' is - don't annoy the neighbours. This answer assumes you are living in a freehold property. If it is leasehold (ie. a flat) the lease will say 'Thou shalt not run a business from these premesis'. I wouldn't recommend you break your lease, but if you don't advertise the fact you are working from the flat, no-one will notice... will they? You might be interested in a bit more info on -
http://syob.mysite.wanadoo-members.co.uk/page2.html

2) VAT. If you have a turnover (NOT profit) above a certain figure, you MUST register for VAT. As the turnover threshold is about £60,000, you can see why aBay is registered! But they only have to account for their turnover, which comes from their fees. If your turnover exceeds the threshold, you will have to register. (Check with HM Customs to confirm the threshold figure.) If you are VAT registered, and you sell something for £20, you have to charge £20 + Vat. Vat on £20 is £3.50. If you bought the item for £8 + Vat, you will have already paid out £1.40 in Vat, so you will actually give £3.50 minus £1.40 = £2.10 to the Government. For a more detailed answer try -
http://syob.mysite.wanadoo-members.co.uk/page8.html

3) Your accounts. If you trade as a sole trader, there is nothing to stop you doing your own accounts - providing you have the skills. What a lot of people do is get an accountant to do the accounts (and fill out your self assessment tax return) for the first year. Once you have a 'worked example' you might have the confidence to tackle the second year accounts yourself. But it really does depend on your own skills.

4) Trading Assistant. Yes, any income that you make from any activities, must be declared as income, and tax will be assessed on any profit you make.

5) Trading name. There isn't a system for registering a trading name of a sole trader. You could trademark the name. You'll see a little (r) next to the word eBay on their web site, showing that they have trademarked it. But it is very expensive and time consuming. When I trademarked my business name and logo in the 1990's, it cost me several thousand pounds.
One option is to register your business as a Ltd Co. If you don't trade under the Ltd Co umbrella, it can remain dormant for as long as you like. All you'll pay is the initial registration fee (maybe £100) and the yearly admin fee (£25?) for returning your annual accounts to Companies House. Of course, you'll be writing £0.00 in the Ltd Co's turnover and profit sections, so you won't have an accountants fee. But, as you'll own the Ltd Co name (which, by coincidence, will be the same as your sole trader name...) you'll have the moral right to it.

Does this answer your questions? It feels as though it's been a huge answer, but if you have any further questiosn (or need clarification) just let me know.

Regards - Andrew