Your eBay & eCommerce Questions Answered #54

Welcome back!

Another Friday, another Questions & Answers blog post!

Tomorrow is a BIG day for eBay sellers, as the new performance standards go live on eBay. And earlier this week we had something of an anomaly online – a post about eBay that was positive! Feel free to have a read of it now if you don’t believe me 🙂

Back to our Q&A and today we’ll be covering the following questions:

• How to organise shipping when importing from China to the US?
• What documents do you need to open an eBay Business account?
• How to sort out accounts with HMRC on your own?
• Can I split shipments to avoid paying import tax?

Let’s get started!

Hello Andrew,

My name is Chelsea and my friend and I are looking to start importing from Alibaba.com, with the goal of selling on eBay or Amazon.

We both work from home so see this as a good opportunity to make more income for our families. We have been researching importing from China to the US, but do you have any advice for us as to the best way to do this?

We’ve looked at FedEx but aren’t sure if they’re the best courier to use? We want a company that will take care of all the paperwork for us as far as customs goes.

At the moment we’re just getting started so any advice to point us in the right direction will be greatly appreciated.

Thank you!
Chelsea and Candice

Hi Chelsea and Candice,

Any courier company will do the “paperwork” for you – i.e. clear goods through customs and deliver them to your door. So from that perspective, it doesn’t matter which company you use.

Price does of course matter though, and you really want to spend as little as possible on shipping, provided the service is the same.

What I recommend you do is ask your supplier to get the BEST quote for your order. Usually suppliers work with specific couriers who give them the best possible prices, far lower that what we could ever arrange from our end. So really there’s no point in trying to do this yourself as you’ll just end up paying more.

So the simple answer is – just ask your supplier to get a quote for shipping via courier and add the cost to your invoice.

Hi Andrew,

Do you know what documents eBay require to open a business account with them?

I have registered as self employed with HMRC 2 weeks ago but haven’t heard a peep from them since then, nor have I received any paperwork.

Any advice or suggestions would be appreciated.

Jay

Hi Jay,

eBay does not ask for any documental proof of your business, so don’t worry about that. All you have to do is upgrade your account to Business – it will happen instantly and no one will ask you for any documents.

Dear Andrew,

First of all I would like to say that you have an amazing blog with lots of information! I would really appreciate if I could have 5 minutes of your time and advice.

I recently started selling on eBay for fun, to try it out and hopefully make a little extra money (£50-£100) each month. From April to December last year I sold over £2k and in the last 90 days I’ve done roughly £4k in sales. That puts me at about £7k for my first year.

The reason that my turnover increased a lot recently is because I’ve started to sell higher value items.

Well anyway, as I was approaching a year of trading I went to see an accountant and was told they would charge me £600 to register me as self-employed, calculate my expenses, and do a tax return. But my problem is if I use their service then I’m going to be at a loss for the year as I haven’t made a lot of profit from my sales so far.

And in terms of proving expenses I don’t think I even have much, other than PayPal, eBay and the cost of my products. I used a pre-paid option for postage.

Is there any solution to this? Based on your experience what are the chances of me getting caught by HMRC?? What should I do? I of course don’t want to create any problems for myself, I just never knew I had to save receipts…

I would be most grateful to get some information from you!

Thank you in advance,
Michael

Hi Michael,

First of all, I won’t even discuss the “chances of getting caught by HMRC” as you and me both know that’s not the right way to look at this situation.

£600 as a yearly fee for eBay business registration + tax return is a fairly typical quote. It’s definitely not the most expensive I have heard but not cheapest either. So you may want to shop around a bit, as maybe you can find someone cheaper.

The FREE option is another thing you can consider – registering as self employed is a VERY simple process. You can do it online in less than 30 minutes, so there’s really no need to pay for this service at all.

And then your tax return – you can do it on your own too, if you’re willing to spend some time and learn the basics from HMRC’s website. Again, for sole traders it’s not that difficult to do, especially when you have all sales records online in PayPal & eBay accounts.

I’m not sure how you can solve the shipping costs issue though if you don’t have receipts for postage. You may want to ask an accountant on the best way to set this up, maybe you can self-invoice for this to properly book these costs and not pay tax on profit you haven’t made.

Hope this helps Michael!

Hi Andrew,

Could you tell me if I would be able to import dresses under the £135 threshold, but order very often, i.e. many days consecutively?

I have £1000 to spend but if I order everything in one go then I’ll have to pay all the duty, plus VAT and I also noticed you said not to become VAT registered.

Basically I want to avoid this while still getting enough stock so that I can offer my customers next day delivery. The average cost per dress is about £20 and I’m looking to spend £1,000. They’ve also asked me what I want to declare as the value, but I’m not sure what this means?

Please help me so that I don’t get into any trouble.

Thanks,
Zoe

Hi Zoe,

You’re trying to start a business Zoe, so thinking about ways to AVOID paying tax is not the way to go. You simply need to accept that when you import goods from China for business purposes, in your case for re-sale, you’ll have to pay import duty & VAT. Period.

You could of course try to split up your order in many small shipments but in long term that’s not a viable model and could get you in trouble anyway as HMRC may look at this as an attempt at tax evasion.

But you DON’T have to worry about registering for VAT! You can import goods and pay import duty & VAT on these imports WITHOUT being VAT registered, that’s perfectly fine.

Hi Andrew,

Just a note to say that, like many others, I have learnt a lot from your online blog, which is full of useful explanations on things everyone needs to know and think about when selling on eBay.

I also decided to buy your course and templates as I definitely agree with you that presentation is incredibly important when selling on eBay, based purely on my own experiences as a buyer.

Noelle

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And that’s it for today!

It’s always nice to receive messages like the one from Noelle. I really appreciate your support!

If you want your question to be featured in the next Questions & Answers blog post, feel free to get in touch with me directly via the contact form on this page. I will get back to you within 24 hours, Mon.-Fri.

Enjoy your weekend! 🙂

Thanks,
Andrew