E-commerce Tax Advisor guide

E-commerce Specialist Tax Advisor

Taking Specialist advice when starting an E-commerce business is important. It can be challenging to select which platforms to trade on as there are a wide range of platforms. It is important to get your tax affairs in place before trading. As you have options on a few different type of structures, you can choose to trade as a limited company, sole trader, partnership and a Limited liability partnership.

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What structure should you choose?

This will be dependent on your profit, but a sole trader is a simpler model and costs less to operate. But with a limited company, you will benefit from the veil of corporation (protection against your personal assets).  A limited company may suit you if you are in employment and have this as a secondary income, you can take advantage of withdrawing dividends at a lower rate than employment income.

What challenges will you face?

If you are importing stock from overseas , then you will need to ensure that you have an EORI number to allow stock to be collected.  You may use an agent to collect and ship your stock. If you have decided to be vat registered then it is important to work out of your place of supply. As the vat treatment is dependent on the place of supply, if you are trading on platforms that ship your stock to other European countries, then you will need to assess whether these are distance sales or if you need to be Vat registered in that country.

What tax planning ideas can you take advantage of?

Its important to assess whether the expenses you are incurring are remote to the business and don’t have a dual purpose. HMRC defines this as wholly and exclusively for business purposes. Apportionments will be needed if the criteria is not fulfilled.

If you have full personal allowance then you can take advance of the small salary and divided strategy which is the most tax efficient strategy for small businesses.

Plan for Action

1) Market research

2) Hire a good accountant

3 Form a structure as explained above

4) Tax planning

5) Prepare for Vat and accounting deadlines

GM professional accountants are highly rated as we specialise in this sector and provide specialist advice on all forms of tax and vat fields. Speak to one of our tax experts and we will ensure that you are guided efficiently through the whole process. We have office is London, Manchester and Essex.

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