Becoming a Motor Trader - Help needed please

[Jibb90]

Hi all!!

I am looking for some information on becoming a legitimate motor trader. I have been buying and selling cheap cars (sub 1k) for around 6 months now, i want to keep on doing this but don't want to get in trouble for it so what i'm wanting to know is what i need to do in order to be able to do this without the risk of getting bitten by the authorities. I also want to grow into a proper car dealer within the next few years!

I'm otherwise unemployed (not on jobseekers though). I have a trade motor insurance policy so thats all ok. But I want to start declaring my earnings/profit - do i need to register as a sole trader? I really no nothing about this whole thing.

I will be working from home as i have a large driveway and some land, garage etc.

Thanks a lot in advance guys.

 

[bigsigh]

Register with the Inland Rev as self employed
Start paying Class whatever national insurance
Fill in a Self assesment every April and be taxed

 

[scoobyman]

and u will now have to give warranty

 

[Jibb90]

and u will now have to give warranty

'unless otherwise stated' - is this not the case?

i am sure dealers can sell cars with no warranty

 

[Jibb90]

Register with the Inland Rev as self employed
Start paying Class whatever national insurance
Fill in a Self assesment every April and be taxed

is there no registering as a motor trader lark to do then? is registering as self employed the same as registering as a sole trader?

do i have to register as a ltd company or can i just make up a company name and go on ahead?

 

[bigsigh]

not sure on the specifics of the Motor Trade , if there is a regulatory body to register with or something, dont know.

You would either register as a limited company (costs involved) or a sole trade which ever you decide works best for you. limited company need to register with companies house and file books annually

Sole trader is much more straight forward.

Business support, information and advice | nibusinessinfo.co.uk

HM Revenue & Customs: Self Employed

Start a Business

 

[Jibb90]

thanks very much mate

 

[bigsigh]

No Prob, i did the Go for it Program through Invest NI as did a brave few others on here, different people had different exeperiences with it but personally i found it to be useful. Good place to start anyway. Good luck with it

 

[Jibb90]

for car sales?

i called HMRC there and registered as a self employed sole trader and set up my national insurance contribution so thats that done!

just need to find out now whether i need to register with someone as a motor trader. is there such a thing as a motor traders license over here or did i just make that up?

self assessment should be fun times!

 

[bigsigh]

No its just for starting out in business in any field,

SA is ok, i do mine on line and if you have a note of all outgoings and incomings all year its straightforward enough

 

[DaddyCC]

Unless you're gonna have a massive turnaround i wouldnt bother and stick it out as long as you can, as only the honest folk get shafted for trying to be decent law abiding folk

 

[Jibb90]

been risking it long enough i feel.

wanting to take it up a notch anyway!

nobody declares everything now DaddyC, just want to cover myself

 

[PeteMoore]

Agree with DC

Although I do everything in my power to stay above board

Dont claim benefits, registered self employed, every penny i get is split and i put 30% to one side in an account to ensue my tax bill is covered.

KEEP EVERY RECEIPT - and i mean every receipt. Every penny you can claim as an expense is another penny you dont pay 23% income tax for.

keep your books right so you only require a 3-line tax return each year. 10 minutes on a sunday doing your books will save you weeks at the end of the year trying to work out what money to claim.

all invoices (or a note of sale amount) should be kept for 3 years minimum.

You will be surprised just how little income tax ou pay at the end of each year just by going through your expenses.

You cannot claim fuel if your working from a single place of work, but your fuel to go and see vehicles, picking them up and costs for labour for someone to drop you off and collect you can all be taken into account.

Remember every penny the business earns is now your income, not the businesses, unless you register as a ltd company.

Registering as a ltd will be around £250 through an accountant, but you will then have to set up PAYE to pay yourself, dedicated bank accounts, and really in the end, unless you are required to be a ltd company it isnt worthwhile.

 

[Jibb90]

Agree with DC

Although I do everything in my power to stay above board

Dont claim benefits, registered self employed, every penny i get is split and i put 30% to one side in an account to ensue my tax bill is covered.

KEEP EVERY RECEIPT - and i mean every receipt. Every penny you can claim as an expense is another penny you dont pay 23% income tax for.

keep your books right so you only require a 3-line tax return each year. 10 minutes on a sunday doing your books will save you weeks at the end of the year trying to work out what money to claim.

all invoices (or a note of sale amount) should be kept for 3 years minimum.

You will be surprised just how little income tax ou pay at the end of each year just by going through your expenses.

You cannot claim fuel if your working from a single place of work, but your fuel to go and see vehicles, picking them up and costs for labour for someone to drop you off and collect you can all be taken into account.

Remember every penny the business earns is now your income, not the businesses, unless you register as a ltd company.

Registering as a ltd will be around £250 through an accountant, but you will then have to set up PAYE to pay yourself, dedicated bank accounts, and really in the end, unless you are required to be a ltd company it isnt worthwhile.

thanks for your time mate! appreciate the post!

you say 3-line tax return, what does this mean?

 

[PeteMoore]

Income: £x.xx
Outgoings: £x.xx
Taxable Amount: £x.xx

Done

 

[bigsigh]

NineK is right on the money. Also look into all you can claim for , a room in ur house as an office means you can claim tax relief on a percentage of rates , home heating oil , electric bill etc etc , declare as little as you have to and claim for as much as possible

My first year I thought it was better to make out I made a great profit .... The tax man was so impressed he bent me right over!! You learn fast !! As ninek says keep every reciept and count every expense you can

 

[PeteMoore]

End of the day, if you dont keep everything right and claim everything you can against your end of year bill, you are only shafting yourself.

The other thing about keeping good book work is that you can see anywhere where you can keep stuff off the books, providing you dont get greedy and start taking the piss, then there is no reason why you should ever be investigated.

General rule of thumb is if the tax man is getting his cut, and your not rolling round looking like a drug dealer then everyone stays happy

 

[PeteMoore]

Double post sorry

 

[scubbay]

To be a successful car dealer you will need to have your heart removed and your conscience locked away in a cupboard.
On a serious note you will have to vat register unless you are selling only one or two low priced cars a month. Prepare to be bent over and royally shafted by the system as there are no allowances for any losses made on a particular deal.

 

[PeteMoore]

To be a successful car dealer you will need to have your heart removed and your conscience locked away in a cupboard.
On a serious note you will have to vat register unless you are selling only one or two low priced cars a month. Prepare to be bent over and royally shafted by the system as there are no allowances for any losses made on a particular deal.

You only need VAT registration if you are showing a taxable income of over £70k.

Again, one more thing to stay as far away from as possible.

It can lead to a lot of advantages, such as the tax on fuel, etc, but in the long run, it is just a book balancing tool, in small business there is no advantage or disadvantage to VAT registration, its just a legal requirement and therefore a pain in the hole

 

[sacodetoro]

You only need VAT registration if you are showing a taxable income of over £70k.

Again, one more thing to stay as far away from as possible.

It can lead to a lot of advantages, such as the tax on fuel, etc, but in the long run, it is just a book balancing tool, in small business there is no advantage or disadvantage to VAT registration, its just a legal requirement and therefore a pain in the hole

It's turnover over £70k so its sales rather than taxable income. however you can't register for VAT if you only sell goods/services that are exempt from VAT. Are used cars exempt or zero rated?

Agreed, pain in the hole and it also makes you more expensive to the non registered consumer.

 

[PeteMoore]

Cars are not zero rated - 20%

 

[Ben P]

Maybe Marky and others should look into registering too lol

cant see him/them registering or offering a traders warranty..... even though they buy and sell more than 6 cars in a year.....

 

[Jibb90]

Cars are not zero rated - 20%

does this effect me?

 

[Barnsy9]

I would suggest the Ltd Company route. You don't have to use an accountant to set one up, plenty of places online do it very cheap. I am an accountant am I am using them to set up mine. They can also set up your business account.

Main benefits of a Ltd company are obviously limited liability. You as a person will not be responsible for any debts the company 'may' occur.

Also if worked right the Ltd company route works best for tax reasons.