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Does anyone know of any LBS that operate under the vat Threshold of £85,00? Just wondering if this is viable
I Think this would be possible if selling 2nd hand bikes and concentrating on the workshop side of things plus higher mark up parts and accessories
Given you will pay VAT on parts you buy to fit not being registered would be a down side?
Other problem would be making a living if your only turning over 85k, you will have a lot of set up costs which would be much better offset against your VAT
But you wouldn't need to charge VAT on the final bill so this would more than out weigh having to pay VAT when you buy the parts?
Making a living while turnover is under £85,000 is were I have doubts
The only way that could be viable* would be if you weren’t really an LBS and were just a repair shop so that the majority of your turnover was man hours. Even then as soon as you are more than a one man band you’d be looking at adding 20% to your prices.
* I guess it being a hobby business not open full time, or a partnership that pushes up the limits might also be possible if unlikely
In my opinion you aren't going to make a living selling stuff with a turnover of less than £85k, what do you think the margin is?
Workshop only where the majority of the turnover is service rather than parts I'd think perfectly possible.
if not looked at then there is a scheme for low turn over businesses with turnover above the 85k called the simplified vat scheme
My old lbs was non vat, perfectly viable if your cost base is such you can live on the margin and a one man band with low costs. Low rent, no rates, but I wouldn’t worry about vat that won’t make or break business. Just do it if the numbers stack up and worry about the vat when it becomes an issue.
There was a nice thread on retrobike about a guy that set up a bike repair business, think he tried to keep under the threshold.
http://www.retrobike.co.uk/forum/viewtopic.php?f=8&t=347464
But you wouldn’t need to charge VAT on the final bill so this would more than out weigh having to pay VAT when you buy the parts?
Depends what the major cost is. The VAT on the parts still has to be paid. Your just not charging VAT on your labour element (but at the same time can't offset the VAT paid on items purchased).
This is the same issue as small builders/tradesman face. As soon as you go away from a primerally labour only basis and start supplying goods, buying tools and vehicles etc. You many as well be VAT registered.
As crc etc sell stuff cheaper than trade its possible if you are a repair business.
Customers can even source their own parts a day you just fit them.
Being a cash business it's easy to have less than £85k turnover 🤔
But I think a lot of lbs use the vat they claim back to keep them going. They also offset tools, vehicles etc.
I guess it all depends on how much you want to make from it and if you need a separate premises, insurance etc?
There was a nice thread on retrobike about a guy that set up a bike repair business, think he tried to keep under the threshold.
Great read!