Calculating prices

I have read up on how to price items including postage etc, but I am a bit worried about getting a big tax bill at the end of the year.

I know that I am being optimistic but if I make lots of money will I be liable to pay vat (sales tax) for the items I have sold as I haven't included any yet in the items I have sold.
Am I correct in assuming that I will have to pay income tax on my earnings?

I know that I should speak to an accountant but I would like your advice as I haven't made any money yet, but I will be doing so asap

Hi Ron

VAT is something your customers will have to pay, if applicable, bit you as the seller. Income tax is certainly something you will have to pay if you are operating as a registered business, so an accountant would be the person to speak to to ensure you keep accurate records

Cheers

i also would like to point out too that marc did not mention is tax is only needed to pay if you get over a certain amount over here in new zealand if i get over 100,000 or so a year i'd have to register for tax but its a bit hard to charge tax when i deal with international buyers not from nz. so might be a good idea to read up from the area you are based to see if you need to charge tax or not.

If i sell an item for instance on ebay, the customer pays using paypal into my account and i get their address. Then i contact the dropshipper with the customer address and pay for the item with for instance, my debit card. My question is, will the dropshipper not send the item to the card payment address. How do i overcome this because they will now have two addresses. How do i communicate this because it will mostly be an automated process.

Hi James,

When dealing with a dropship supplier they are well aware that the need to bill their client, which is you, and then send the the order to your customer. They aren't like a retailer selling directly to the end user and will send the order to a card's billing address,

When somebody buys an item using paypal, can i access that money right away or does it have to be cleared first. My account is a business account and linked to my bank, and card, and is verified.

If it's a new account, then chances are that it will get a hold for 28 days. That's just PayPal protocol to do so for new accounts, in fact I've heard of it happening to established accounts as well in some circumstance. I suggest speaking with PayPal upfront, tell them what you are doing and ask if there is anything they would like to see upfront before you start.

You may find they will be interested in looking at your supplier/s details.

fudjj wrote:If it's a new account, then chances are that it will get a hold for 28 days. That's just PayPal protocol to do so for new accounts, in fact I've heard of it happening to established accounts as well in some circumstance. I suggest speaking with PayPal upfront, tell them what you are doing and ask if there is anything they would like to see upfront before you start.

You may find they will be interested in looking at your supplier/s details.

I have tried contacting paypal and not got very far, i get better advice and more help from the forum. My account is not a new one, i have had it for aprox a year as a business account but not used. I do not want to contact suppliers untill i have everything ready. I do not want to sell something and not be able to pay for it. I am trying drop-shipping because of the no need for much money. I have picked 19 suppliers and i am almost ready.

Yeah, PayPal don't have a great reputation for being all that helpful, but you get lucky sometimes lol

What will trigger the hold on your business account is the change in activity. If it's been unused for some time, then all of a sudden starts to see money flowing, that will trigger a red flag at PayPal for sure. I would at least inform them that I am about to start using the account, so when they notice a change in activity, that's what is happening.

What you can do to get past the hold is perhaps sell one or two small things that you can afford to pay for yourself. Then wait until the hold clears before listing anything further. Just remember, get proof of shipping on those first item that ship out to customers, that will help get the hold taken off your account as quickly as possible.