Calling all car dealers - advice for home dealing
Discussion
Simpo Two said:
KingRichard said:
How's it going for you anyway? Did you start out doing this then?
No, entirely different - corporate video production and now photography and new media as well. All I have at home, business-wise, is a desk, PC and a bedroom converted to a photographic studio. A lot of the video work is done elsewhere, eg filming on location.So apart from the fact that I'm in most of the time, there's no external difference.
I didn't think you were a car dealer, and a check of your profile gave no clues either
KingRichard said:
I didn't think you were a car dealer, and a check of your profile gave no clues either
Blimey, I hope you're not a detective! At my end it says:simpo's profile said:
'Occupation: Marketing Communications, Corporate and Social Photography
My Website: www.autograph.uk.com
Also featuring at www.blokewithacamera.co.uk for digital corporate and social photography.
My Website: www.autograph.uk.com
Also featuring at www.blokewithacamera.co.uk for digital corporate and social photography.
Simpo Two said:
KingRichard said:
I didn't think you were a car dealer, and a check of your profile gave no clues either
Blimey, I hope you're not a detective! At my end it says:simpo's profile said:
'Occupation: Marketing Communications, Corporate and Social Photography
My Website: www.autograph.uk.com
Also featuring at www.blokewithacamera.co.uk for digital corporate and social photography.
My Website: www.autograph.uk.com
Also featuring at www.blokewithacamera.co.uk for digital corporate and social photography.
KingRichard said:
I'm interested in bunging a few grand at some stock and see if I can make any money.
Drove a used car dealer home last night and he said it was the best thing he'd ever started from home. Sounds like there is plenty of money in it, and I'm well used to buying motors and selling them privately, but I guess it's a different matter entirely to sell them for an income.
What sort of margins should I aim for, and what are the best markets to concentrate on?
What do you need in the way of insurance, trade plates and what-not?
I'm fast becoming the Del Trotter of PH so I may as well start trading green Capri Ghia's
Hi, there is'nt as much money in it as you would like to think anymore. alot of people i know are chucking it in. Selling from home you'll be entirely internet based which makes it difficult as you need to sell them cheaper to be competitive as customers will always want to see the cheaper cars first. Also where will you be sourcing cars? the kind of niche you would want to sell is for the first timers, saxo's, clio's etc which in turn is what all traders want to buy and sell. What are your plans for warranty? you will need to give a minimum of three months, so a week later when they come back to your house banging on your door at 7pm that they've got "a noise" when your having your tea! you will have to get friendly with a local garage! Drove a used car dealer home last night and he said it was the best thing he'd ever started from home. Sounds like there is plenty of money in it, and I'm well used to buying motors and selling them privately, but I guess it's a different matter entirely to sell them for an income.
What sort of margins should I aim for, and what are the best markets to concentrate on?
What do you need in the way of insurance, trade plates and what-not?
I'm fast becoming the Del Trotter of PH so I may as well start trading green Capri Ghia's
M3MTH said:
so a week later when they come back to your house banging on your door at 7pm that they've got "a noise" when your having your tea! you will have to get friendly with a local garage!
Or just come banging on your door at 10am on xmas day. Or come banging on your door at 1opmm at night, with a few of their very heavy mates, pointing out that the car that you sold them a week ago has developed a major problem and its down to you to fix it or give them your money back.
Or the blokes that break in on a Saturday night after you sold a £7k car earlier in the day for cash.
I'm not saying don't do it, just that there's a lot more to it than meets the eye.
I sold my car showroom and sales site to a property deloper 12 months ago and began selling Merc's BMW'S and other prestige cars from home. I have a motor trade policy pay all my income tax VAT etc. Last week i received a letter from the local council Quote "Breach of town and country planning act 1990 section 171C " It points out the possibilty of a fine of up to £5,000, I tried to ignore it. They now have made a few phone calls, The council have a list of all the cars i have advertised from local papers also from internet tradng sites for the last 12 months.I have to arrange an appointment to see them and a 10 page document to fill in to declare all.
Not sure where this is going so i have now left my cars on SOR with a dealer friend. They may be looking to charge buisness rates back dated for the time i traded from home, My showroom used to cost £930.00 per month.
Not sure where this is going so i have now left my cars on SOR with a dealer friend. They may be looking to charge buisness rates back dated for the time i traded from home, My showroom used to cost £930.00 per month.
Ive worked from home for 6 years selling cars now since packing in my garage, (I live semi rural and only have two neighbours) best thing I did, got sick of being in garage 7 days a week waiting for customers to waste your time or not bother showing up . Im in the house now with my family , cars outside and if people dont show up Im not bothered..
insurance costs me £1500 a year for myself and my missus for anything we own or dont own, this includes my personal car cover is limited to £30k per car (could up it for higher premium but I dont need to ) Do your research though its not as easy as what people think, cars are easy to sell if priced right but hard to buy to sell at this price, Buying is the tricky bit, the easiest cars to sell are the hardest cars to buy. I rarely buy from auctions as the prices are simmilar to selling prices leaving small margins or forcing you to sell at higher prices making the job twice as difficult, Ive been doing this for 20 years and built up trade contacts , without them I prob couldnt survive ,most of my sales come from word of mouth and past customers with repeat business.
insurance costs me £1500 a year for myself and my missus for anything we own or dont own, this includes my personal car cover is limited to £30k per car (could up it for higher premium but I dont need to ) Do your research though its not as easy as what people think, cars are easy to sell if priced right but hard to buy to sell at this price, Buying is the tricky bit, the easiest cars to sell are the hardest cars to buy. I rarely buy from auctions as the prices are simmilar to selling prices leaving small margins or forcing you to sell at higher prices making the job twice as difficult, Ive been doing this for 20 years and built up trade contacts , without them I prob couldnt survive ,most of my sales come from word of mouth and past customers with repeat business.
911 Turbo LE said:
I sold my car showroom and sales site to a property deloper 12 months ago and began selling Merc's BMW'S and other prestige cars from home. I have a motor trade policy pay all my income tax VAT etc. Last week i received a letter from the local council Quote "Breach of town and country planning act 1990 section 171C " It points out the possibilty of a fine of up to £5,000, I tried to ignore it. They now have made a few phone calls, The council have a list of all the cars i have advertised from local papers also from internet tradng sites for the last 12 months.I have to arrange an appointment to see them and a 10 page document to fill in to declare all.
Not sure where this is going so i have now left my cars on SOR with a dealer friend. They may be looking to charge buisness rates back dated for the time i traded from home, My showroom used to cost £930.00 per month.
reading between the lines it appears you've still got a pretty good deal...unless they stop you from trading of course.Not sure where this is going so i have now left my cars on SOR with a dealer friend. They may be looking to charge buisness rates back dated for the time i traded from home, My showroom used to cost £930.00 per month.
Edited by jamesw2000 on Tuesday 26th February 22:52
reading between the lines it appears you've still got a pretty good deal...unless they stop you from trading of course.
[/quote]
The next step is an Enforcement order section 172 of the act. It is very difficult to get planning permission to trade from home, any one doing so with out is breaking the law.It only takes one jealous neibour to call them
They have said i can not have more than 4 cars on my drive at any time.
Also now you can not get trade plates because you need trade premesis before they issue them.
Edited by jamesw2000 on Tuesday 26th February 22:52
[/quote]
The next step is an Enforcement order section 172 of the act. It is very difficult to get planning permission to trade from home, any one doing so with out is breaking the law.It only takes one jealous neibour to call them
They have said i can not have more than 4 cars on my drive at any time.
Also now you can not get trade plates because you need trade premesis before they issue them.
another thing to remember is if you buy a car for £5k and sell it for £6k, sounds good on the face of things you have made an easy £1000.
BUT you pay vat and tax on the profit so if you are in the upper tax bracket with what you earn all ready you will pay 17.5% vat and 40% to the tax so your £1000 profit has dropped to under £450 less any prep /advertising/cleaning and any other mechanical expenses you may incur.
BUT you pay vat and tax on the profit so if you are in the upper tax bracket with what you earn all ready you will pay 17.5% vat and 40% to the tax so your £1000 profit has dropped to under £450 less any prep /advertising/cleaning and any other mechanical expenses you may incur.
JeffC said:
another thing to remember is if you buy a car for £5k and sell it for £6k, sounds good on the face of things you have made an easy £1000.
BUT you pay vat and tax on the profit so if you are in the upper tax bracket with what you earn all ready you will pay 17.5% vat and 40% to the tax so your £1000 profit has dropped to under £450 less any prep /advertising/cleaning and any other mechanical expenses you may incur.
Bloody hell, so fairly quickly you're going to want to go Limited and minimise your tax liability. Cheers. I doubt there will be many things you can reclaim VAT on... because you buy without VAT but then have to stump up when you sell. Value added tax my arse. Swizz more like BUT you pay vat and tax on the profit so if you are in the upper tax bracket with what you earn all ready you will pay 17.5% vat and 40% to the tax so your £1000 profit has dropped to under £450 less any prep /advertising/cleaning and any other mechanical expenses you may incur.
Sounds like you need to do some homework on this .
You only have to charge VAT when your annual turnover/sales exceeds £64,000. However, in the car trade, it doesn't take that many individual transactions to occur before this threshold is reached.
VAT on 2nd hand cars is charged on a "margin scheme" where (unlike most other businesses) the VAT is charged on the difference between the buying price and the selling price (the margin).
Once registered, you can reclaim VAT on business costs that contain VAT - but that won't, on most occasions, include the purchase of your car stock as you will be buying these with no VAT included in their purchase price.
Companies pay tax on their profits too - and it will soon be at a Corporation Tax rate of 22% (from 1 April 2009). On 1 April 2008 it is increasing from the current 20% to 21%.
Finally, what you draw personal income (as a director or a shareholder) from your company you will be subject to personal Income Tax - although there is quite a bit of flexibility in how you decide to remunerate yourself and how much Income Tax and National Insurance you end up paying.
.You only have to charge VAT when your annual turnover/sales exceeds £64,000. However, in the car trade, it doesn't take that many individual transactions to occur before this threshold is reached.
VAT on 2nd hand cars is charged on a "margin scheme" where (unlike most other businesses) the VAT is charged on the difference between the buying price and the selling price (the margin).
Once registered, you can reclaim VAT on business costs that contain VAT - but that won't, on most occasions, include the purchase of your car stock as you will be buying these with no VAT included in their purchase price.
Companies pay tax on their profits too - and it will soon be at a Corporation Tax rate of 22% (from 1 April 2009). On 1 April 2008 it is increasing from the current 20% to 21%.
Finally, what you draw personal income (as a director or a shareholder) from your company you will be subject to personal Income Tax - although there is quite a bit of flexibility in how you decide to remunerate yourself and how much Income Tax and National Insurance you end up paying.
Eric Mc said:
Sounds like you need to do some homework on this .
You only have to charge VAT when your annual turnover/sales exceeds £64,000. However, in the car trade, it doesn't take that many individual transactions to occur before this threshold is reached.
VAT on 2nd hand cars is charged on a "margin scheme" where (unlike most other businesses) the VAT is charged on the difference between the buying price and the selling price (the margin).
Once registered, you can reclaim VAT on business costs that contain VAT - but that won't, on most occasions, include the purchase of your car stock as you will be buying these with no VAT included in their purchase price.
Companies pay tax on their profits too - and it will soon be at a Corporation Tax rate of 22% (from 1 April 2009). On 1 April 2008 it is increasing from the current 20% to 21%.
Finally, what you draw personal income (as a director or a shareholder) from your company you will be subject to personal Income Tax - although there is quite a bit of flexibility in how you decide to remunerate yourself and how much Income Tax and National Insurance you end up paying.
So, simplified example... but let's say I'm a sole trader who has broken the £64k turnover threshold (that's based on sale price of car I would guess?) and is VAT registered..You only have to charge VAT when your annual turnover/sales exceeds £64,000. However, in the car trade, it doesn't take that many individual transactions to occur before this threshold is reached.
VAT on 2nd hand cars is charged on a "margin scheme" where (unlike most other businesses) the VAT is charged on the difference between the buying price and the selling price (the margin).
Once registered, you can reclaim VAT on business costs that contain VAT - but that won't, on most occasions, include the purchase of your car stock as you will be buying these with no VAT included in their purchase price.
Companies pay tax on their profits too - and it will soon be at a Corporation Tax rate of 22% (from 1 April 2009). On 1 April 2008 it is increasing from the current 20% to 21%.
Finally, what you draw personal income (as a director or a shareholder) from your company you will be subject to personal Income Tax - although there is quite a bit of flexibility in how you decide to remunerate yourself and how much Income Tax and National Insurance you end up paying.
I buy a car for £1000 cash, from a private owner. I then have the car valeted by a VAT registered valeters for £50. I buy some parts for the car at a total of say £100.
I then sell that car for £1800. My margin is £650 so I am then liable for a VAT payment of £113.75, but I can claim £26.25 of that back on my next VAT return?
You are not clear in your figures whether the expenses incurred in valeting and repairs to the car are VAT Inclusive or VAT Exclusive. I have assumed they are VAT Inclusive. The figure will therefore work out like this:
Sale Price of Car £1,800.00
Purchase Price of Car £1,000.00
Margin £800.00
VAT Content of Margin (£800.00 x 17.5/117.5) = £119.15
Valeting Costs (VAT Inclusive £50.00)
Reclaimable VAT Content (£7.45)
Repairs/Parts Cost (VAT Inclusive £100.00)
Reclaimable VAT Content - £14.89)
Total reclaimable VAT (£7.45 plus £14.89) = £22.34
Therefore the VAT payable is £96.81 (£119.15 less £22.34)
Your profits will be calculated as follows:
VAT Exclusive Sales - £1,680.85 (£1,800.00 less the VAT on the sales of £119.15)
Purchase Cost £1,000.00 (No VAT Content)
Valeting (VAT Exclusive) £42.55
Parts (VAT Exclusive) £85.11
Total Costs £1,127.66
Profit £553.19 (£1,680.85 less £1,127.66)
Sale Price of Car £1,800.00
Purchase Price of Car £1,000.00
Margin £800.00
VAT Content of Margin (£800.00 x 17.5/117.5) = £119.15
Valeting Costs (VAT Inclusive £50.00)
Reclaimable VAT Content (£7.45)
Repairs/Parts Cost (VAT Inclusive £100.00)
Reclaimable VAT Content - £14.89)
Total reclaimable VAT (£7.45 plus £14.89) = £22.34
Therefore the VAT payable is £96.81 (£119.15 less £22.34)
Your profits will be calculated as follows:
VAT Exclusive Sales - £1,680.85 (£1,800.00 less the VAT on the sales of £119.15)
Purchase Cost £1,000.00 (No VAT Content)
Valeting (VAT Exclusive) £42.55
Parts (VAT Exclusive) £85.11
Total Costs £1,127.66
Profit £553.19 (£1,680.85 less £1,127.66)
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