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VAT Moss and E-Commerce Business

Disclaimer: Policies discussed are as of the January 8 2016 changes to the HM Revenue and Customs VAT MOSS guidelines for E-Commerce businesses in the United Kingdom. All UK VAT and VAT MOSS guidelines can be found here.

In 2015, as an answer to large companies driving sales through countries with low VAT rates, the European Commission issued changes to VAT laws forcing E-Commerce businesses to apply VAT rates to their digital services based on the consumer’s location in the European Union, as opposed to the business’.

In essence, the same £100 service would now be £120 if sold to a customer in the UK (20% VAT rate), £121 if sold to a customer in Spain (21% VAT rate), and £124 if sold to a customer in Finland (24% VAT rate). This proposed an immediate problem for every E-Commerce business across the EU- there were 28 different countries with 81 different VAT rates, the prospect of accomplishing the admin work alone seemed insurmountable. As opposed to registering for VAT in every country your business sold a product in, the EC offered the highly attractive option of registering instead for a VAT Mini One Stop Shop (VAT MOSS) to E-Commerce businesses. While VAT MOSS did solve a huge problem for e-commerce businesses across the EU, much confusion arose and remains about its exact operation and regulations.

What to Know & When to Register

The main goal of VAT MOSS is to simplify things for the business, and it only applies to business to consumer sales of digital services. If you aren’t sure if your product qualifies as a digital service, HMRC defines them in extensive detail here.

VAT MOSS was introduced as a platform to distribute quarterly VAT returns directly to each country digital services are sold in, as opposed to you submitting VAT reports individually to each country. VAT MOSS requires you to submit one return quarterly that identifies your business’ total VAT accumulation in each country digital services were sold.

In order to register, your business must already be VAT registered in each country you have a fixed establishment. There are no thresholds for the new VAT laws, so even if your business falls under the £82,000 UK VAT threshold, you must still pay VAT on digital services sold in other countries. This means if you own a micro e-commerce business under the threshold, then you must voluntarily register for VAT (don’t worry, you won’t have to pay VAT on services sold in the UK) in order to use VAT MOSS.

Remember, you only need to register for business to consumer sales of digital services. A consumer is any person or business that is not VAT registered, so if you are selling services to a business that is not VAT registered, you must treat it as a business to consumer sale. There are also exemptions if your sales fall under non-business activities, which are explained here.

VAT MOSS Returns

HMRC requests when using the VAT MOSS scheme that your business keeps records of each sale for up to 10 years. These records must include the member state of sale or the member state of consumption, the date, the taxable amount and currency, the VAT rate applied, the VAT due and currency, the payments received, the invoice issued, and the information used to determine the customer’s location. The list seems extensive, but most of the information is required on your service invoice. Apart from the data on your invoice, documentation of the customer’s location is the primary record that must be kept. Most businesses must keep two sources of information, but businesses under the UK VAT threshold only need to keep one. This may be information provided by the payment service provider, an IP address, billing information, etc. Almost any documentation that confirms your customer’s location will suffice.

When filing your VAT MOSS return each quarter, you will require, for each member state services were sold in, the VAT rate type (standard or reduced), the VAT rate percentage, and the total of all taxable digital services sold. You must also submit a separate VAT return for services sold in the UK (micro-businesses who had to voluntarily register for VAT may submit nil returns). If you are leery about filing your first return, the HMRC provides a detailed walkthrough for first-timers using the VAT MOSS scheme.

While VAT MOSS remains imperfect, as evidenced by continual EC gatherings and amendments to the laws, learning to use it has become essential to reporting and paying VAT returns across the EU. It is our hope that some of the trepidation regarding VAT MOSS has been alleviated, and that you now possess an understanding of the benefits VAT MOSS can have for your e-commerce business.

Top 3 Ways to Optimise Your Recruitment Business Profit

Are you looking for tips to augment your income and increase your recruitment business profit? Do you feel your business’ income is high enough yet stagnant and unprogressive? Well, it could be because you have followed every conventional method in the book but not yet tried any novel ideas to make your business grow. Having your own website, a regularly updated blog, marketing your services to target businesses are certainly important to acquire new clients. However, it’s the inventive ideas that could add value to your business operations and bring in more money.

There are some people that hopped on the recruitment bandwagon with a hope to grow their venture into a successful recruitment firm. Some of them made it, some of them didn’t. It’s the way they set their priorities that separated them. Today in this article, we are going to give you some great pointers on how to increase the profitability of your recruitment business and have it aiming for the stars.

Get Someone to Guide You

Recruitment agencies involve a lot of people on all sides. In order to sustain and grow in an industry that deals primarily with so many people, it is necessary that you have both solid knowledge and experience in the industry and also that you consider taking on the services of a non-executive director.

An ideal non-executive director is someone who is able to advise on both operational and strategic aspects of your recruitment business. Since the methods of job hunting are ever evolving, a tech-savvy person, possibly with some financial acumen would be a well-suited runner for the position. It goes without saying that having a non-executive director onboard would be another fee you have to pay. However, it is the returns they can bring your business that matter in the end.

Before you get started, make sure your non-executive director signs a confidentiality agreement. It will prevent them from associating themselves with your competitors while they are working with you.

Niche vs. Diversification

Up until now, owning a niche recruitment business has made sense. It’s simply not feasible to help your clients find potential employees to fill the positions that are out of your specialty. As a manager, you had to say ‘no’. Imagine you are a specialist marketing recruitment agency and your client asked you to find them a finance manager! It would be tough to decline their request, but you have to say no because you do not have a track record in finance. If at all you do oblige, you would have to commit your time and resources, engage in networking, go through a new set of applicants and get them interested in the opportunity etc for filling just one position. Once the position is filled, all your painstaking efforts wouldn’t reap any long term benefits whatsoever.

The current scenario has been changing and it’s only wise for a recruiting business to diversify. We know that diversification could mean a lot of work. It has become incredibly easy to operate across multiple specialties and be a jack of all trades with the advent of the dedicated professional services businesses. For example, you could entertain all kinds of clients and help them fill positions right from housekeeping and cafeteria to sales & marketing, finance and administration. You can simply associate with professional services businesses that specialize in housekeeping, accounting & bookkeeping, engineering, finance, etc. You could broker it out by recommending any of these professional services businesses to your clients depending on the kind of vacancy they want to fill. This strategy would not only help you diversify efficiently and cost-effectively but also earn you twice as much. Your clients will still pay you a recruitment fee and the professional services businesses pay you a referral fee depending on what you agree. a win-win situation for everyone. This concept is fairly new but we are sure it will catch on soon. We have a referral programme set up that can work excellently with recruitment agencies. If you want to know more about how our referral agreement could increase your income, please get in touch by emailing us at You could also call us on +44 1624 616620.

Identify and Eliminate Non-Profitable Clients

In the recruitment industry, the quality of clients matters way more than the number. As a manager of your business, there will be times when you have to deny service to certain clients, i.e., the businesses with a bleak prospect. The probability of filling all the available positions is usually very low. Your consultants would give their best to fill up 15-20 vacancies simultaneously. However, only 2-3 vacancies get filled in the end. You need to concentrate on quality rather than just the number of vacancies. Committing your staff to work on all the proposals would prove futile, that is why you need to sift through all the available live vacancies and pick those having the best change of actually being filled. It’s difficult to turn down customers, but with time, you would know how important it is to have a base of genuine with robust businesses.

Apart from all the other activities such as marketing your services to potential and existing clients, attracting the best talent and consistently training on your own staff to keep up with the changes, the above three ideas would certainly do a lot of good to your recruitment business. It will not only wider your market, but also reduce cost and enhance revenue and profitability to a considerable extent. We hope you found this article helpful. If you need to contact us with any queries please get in touch, we’d love to hear from you.

Are you a small business struggling to get to the next level and deliver sustainable growth? Here are 10 keys to unlock your growth phase.

  1. Get a growth mind-set

It might sound obvious but you can only grow if you want to. Get a growth mind-set and change the status quo.  To grow, small businesses need to challenge their processes, look for opportunities to exploit existing resources and learn from mistakes. The growth mind-set comes from the top and the vision of the successful business needs to be shared by all. Make a conscious decision to grow, and sell your vision with its benefits to your staff. Go ahead have that first staff meeting. It is just the beginning, to quote Lao Tzu, “A journey of a thousand miles begins with a single step”.

  1. Have courage

In a recent TED talk in Vancouver, Simon Sinek stated that the only common trait amongst great leaders is courage. Growing a small business takes significant time commitment and financial resources, but above all it will certainly take courage. Courage to make that bold decision, lead from the front or implement a new key process, whichever it may be.

The key is to have conviction in your decisions, and stand by them. If it works out then great, if not then learn and move on without dwelling on it.

  1. Take advice, listen and lead

Ok, so this is 3 rolled into 1 but the point is that they’re interlinked. People don’t expect everyone to know everything, not even the Managing Director or the CEO. The important thing is to know who to ask when you don’t know the answer, to trust their judgement and lead people in such a way that they are inspired and driven by your vision.

“Working with an external finance partner, an expert in bookkeeping and accounting enables improvements in many areas of the business.”

You’re really only as good as your team. If you work on your own you may need to look to others for guidance or outsource just to lighten the workload but we’ll look at this a little further on.

  1. Be open to opportunity

This is important because the key is the skill to recognise opportunities and act on them quickly before they disappear. These opportunities could be income producing like a new potential customer, a new market segment or taking a loss leader for a new future source of income. Cost reduction opportunities could be a new low cost supplier, new more efficient premises or outsourcing services. Collaborating with outside parties to assist with your marketing or managing your bookkeeping and accounting can not only reduce your staffing costs but result in resources being redirected to income producing activities – these are also opportunities.

“The really great thing about outsourcing bookkeeping and accounting during periods of growth is that an outside company can easily flex its service provision to meet your business needs as and when needed; it can quickly scale up in such a way that you won’t notice the additional workload.”

  1. Know your customers

Being in tune with your customers and what they want is crucial for business growth.  Knowing what they want or what they might want means that you can adapt to their needs.

Good relationships with customers are vital.  This value to enhance the customer experience needs to be shared top down in the business.

Customer knowledge is also about knowing how profitable your customer is to your business. You should not be afraid of increasing profitability, if necessary, by reducing service offering, finding more efficient ways of managing the current workload or increasing the prices.  If you can’t make a customer profitable you should consider letting them go.  Yes that’s right – letting a customer go if they are not profitable.  Don’t forget to consider other business they may bring.  If they are an unprofitable customer but still provide a number of good referrals or complimentary business they may not be that unprofitable.

  1. Focus spending

Realistic cost budgets are critical to financial planning and focusing expenditure.  Often during start-up or in times of rapid growth, a business can become a victim of its own success, struggling to pay bills before revenue has been collected.  Cash flow can become a very real problem and so it becomes especially important to control your limited resources and review spending in terms of return on investment.

Decisions should be framed by “will this spending improve/ increase revenue or reduce costs?” Consider the purchase of new capital equipment, will this save production costs?  Will it open up new markets?  Will it increase capacity without increasing floor space?  These are all valid questions when making decisions, for instance you may have to choose between buying new equipment or re-painting your building. I can imagine which of these options are likely to have the greatest return.  Bear in mind of course that some costs are necessary…insurances, taxes, certifications etc.

Sometimes these decisions are difficult especially with a limited budget. For example, deciding between customer satisfaction/retention or marketing to attract new customers; ideally you should be doing both. For a cash strapped business a short-term compromise would be developing sales and up-selling to existing customers.

HR costs also need to be budgeted. Should you hire, manage and motivate an in-house bookkeeper at a higher cost or outsource to a dedicated virtual bookkeeping organisation at a lower cost requiring less time commitment?  Both have benefits but which has the greater return on investment?  Which makes your bookkeeping simpler?

  1. Monitor cash flow…very carefully

This seems almost too obvious to include, but it can be the critical success factor for a business as it struggles to balance payments out with payments in.  Let’s look in more detail at some areas where gains can be made.

Accounts Payable.  Pay your suppliers as close to their due date as possible, negotiate extended credit terms with established suppliers, request electronic invoices to improve budget planning and control – these are all actions to improve your cash flow.  Occasionally suppliers offer discount incentives for early payment, you should weigh up the benefit of the reduced cost against the benefit of extended payment terms at a higher amount.

A word of caution, regularly not paying suppliers on time can lead to suppliers putting your account on credit hold or stop supplying you altogether.  This opens up many wider issues around your supply chain and can affect your reputation.

Accounts Receivable.  The starting point for managing accounts receivable (otherwise known as debtors), for credit sales, is to reduce the risk of default on invoice payment and check the credit history of the prospective customer.  If there is a history of non-payment then consider whether you need the sale more than the money in the bank.

Contrary to accounts payable, the aim is to expedite the payment of invoices, reduce payment terms if possible and minimise overdue payments.  Making it as easy as possible for customers to actually pay your invoices helps and there are a number of practical things that you can do to achieve this.  Contact us if you wish to discuss this further.

Inventory.  Try not to tie money up in too much stock, after all money sitting in a warehouse in the form of stock can’t be spent on things which will move the business forward.  Only enough inventory/stock necessary for firm orders (unless it’s standard and can be used across various product lines) should be kept on hand. This requires effective supply chain management. Investing large amounts of cash in holding large inventory increases the risk of obsolescence and theft. Moreover it can increase the costs associated with storing, managing and securing the inventory.

Managing cash flow can make or break a business.  An experienced bookkeeper should be able to assist with cash flow management.

  1. Outsource your support functions

Identify your core business.  Maybe you are in engineering, manufacturing, online retail, recruitment or medicine, the list is endless, the point is that your core business is what you provide your customers and it earns the revenue. Therefore all other functions are support functions.  Many small to mid-sized business owners keep all support functions in-house which can be time consuming to plan, learn and execute. Ultimately this detracts from the energy used to drive the core business forward and hinders growth.

Indeed managing these support functions in-house can save money but is this a false economy?  If in fact your customers get less attention, sales either don’t grow or are lost and the real cost to the business is the lost revenue. You could outsource to a service provider who would do the job quicker and more effectively because your support function is their core business.  This may be Customer Service, Graphic Design, Recruitment, Legal support, Marketing, IT, or Bookkeeping and Accounting.  Any of these areas are prime candidates for outsourcing.

Take Bookkeeping and Accounting as an example. The really great thing about outsourcing bookkeeping and accounting during periods of growth is that an outside company can easily flex its service provision to meet your business needs as and when needed; it can quickly scale up in such a way that you won’t notice the additional workload.  It is not the same for an in-house bookkeeping system where increasing resources takes time and money.  Outsourced accounting not only gives a simpler bookkeeping system, it saves time and best, it presents valuable information and reporting in a manner that you may not previously have considered. Indeed working with an external finance partner, an expert in bookkeeping and accounting enables improvements in many areas of the business. Ultimately, it will take the headache of accounting away and give you more time to focus on growing your business.

  1. Embrace new technology

It was only the early 1990s when the World Wide Web found its way into wide stream usage, by 1995 there were an estimated 45 million users, just 0.8% of the world population. Today there are approximately 3 billion internet users, around 41% of the world population. Potential for further significant growth remains on the cards as the types of devices used to access the internet increase as users look for more convenience and mobility, moving from laptops to tablets and smartphones and now to smart watches. Cloud based technology, as a result, is gaining more users daily. The market is estimated to grow from around $58bn in 2013 to $191bn in 2020.  These are the high technological advances that have changed the way the world works and does business; not adopting this could leave you behind.

Advances in other areas are also more than noteworthy; consider nanotechnology, RFID’s, CNC machinery, robotics, automated production lines, predictive analytics.  More than enough for an entirely separate post.

It is fairly likely that most businesses have embraced some change in technology, with the more successful companies being either early adopters or in the early majority.  There are few businesses today that don’t have a PC or phones, have manual accounts or use steam to power machinery.

Identifying and adopting new and useful technology can help give your business a competitive advantage. It can reduce costs, production time and improve service delivery and the customer experience – all leading to a healthier business.

  1. Tie it all together

Do all of the above as part of a defined and deliberate strategy and give your business the best chance to grow to its true potential.

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