The Dropship Unlocked Podcast

Tax Secrets Every UK Dropshipper Needs to Know With Joseph Cox (Episode 84)

• Lewis Smith & James Eardley • Season 1 • Episode 84

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🗣Hosts Lewis Smith and James Eardley welcome Joseph Cox, Founder & Managing Partner of Ecommerce Accountants. Joseph shares his expertise on the crucial tax secrets every UK dropshipper needs to know.

👉 Prefer to watch this on Youtube? Check it out here  ➡️ https://youtu.be/db-cMaNqK8Q

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Topics Discussed:

★ Understanding Tax and Accounting for Shopify Dropshipping Businesses: Overview of tax obligations specific to Shopify dropshipping. Importance of accurate bookkeeping and financial records. Key financial statements every dropshipping business should maintain.

★ Specialising in Ecommerce: Joseph's personal background and experience in ecommerce. Challenges faced by ecommerce entrepreneurs in finding knowledgeable accountants. The unique needs of ecommerce businesses that traditional accountants may overlook.

★ Best Practices in Financial Management: Importance of cash flow management and budgeting. Regular financial reviews and strategic planning. Leveraging financial data to make informed business decisions.

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Links and Resources Mentioned:

Pick up a copy of Lewis’ book: https://htabook.com 

Get Shopify for £1 a month for 3 months: https://www.dropshipunlocked.com/shopify 

Get a free trial with a professional phone line: https://www.dropshipunlocked.com/circle 

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Key Takeaways:

★ Specialised Knowledge: Ecommerce businesses have unique needs that require specialised accounting knowledge. Finding accountants with ecommerce expertise can help navigate complex financial challenges.

★ Financial Best Practices: Effective cash flow management and regular financial reviews are critical.

Use financial data to make strategic business decisions and ensure long-term success.

★ Compliance and Avoiding Mistakes: Stay aware of filing deadlines and requirements to avoid penalties. Common mistakes in tax compliance can be costly; seek professional advice to avoid them.

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★★★Dropship Unlocked - Lewis Smith★★★

🌏Watch Our Free Training ➽ https://www.dropshipunlocked.com/training?el=podcast-84-ecom-accounting-with-joe-cox

Joe's expertise in E commerce tax and accounting is exactly what every UK Shopify store owner needs to hear. As a business owner, you are doing this to make money, right? So you really need to be making sure you're focusing on profit from the very beginning. What do we need to be aware of when it comes to tax and accounting as business owners of Shopify dropshipping businesses? Now where someone comes in, I've had got a lot of clients who are you know, 18 to 25, making hundreds of K a year. So Joe's advice, somebody that every serious entrepreneur needs to keep in mind. This episode is gonna be packed with actionable steps to help you manage your finances better and avoid those common pitfalls. Welcome to the dropship unlocked Podcast. I'm Louis Smith, the founder of dropship unlocked and with me is our Client Success Coach James Eardley. Now, when we're not recording the podcast episodes, we're running our own e commerce businesses and helping aspiring entrepreneurs build their own high ticket dropshipping businesses keen to build your own six or even seven figure business. My book the home turf advantage is your blueprint for launching a profitable online store. Grab your copy at h t, a book.com to date, and let's get you started. Now sit back, relax, and let's unlock your potential with the dropship unlocked podcast. In today's episode, we have the pleasure of speaking with Joe Cox, the Founder and Managing Partner of E commerce accountants LLP. Joe's expertise in E commerce tax and accounting is exactly what every UK Shopify store owner needs to hear. Absolutely, Louis. It is a topic that we get requested to talk about a lot by listeners so people understand what is required of them as an E commerce business owner. And so in this conversation with Joe, today, we're talking with an expert. His firm is known for helping specifically e commerce businesses navigate the complexities of tax and financial management. Today, he'll be sharing some crucial insights into what we need to be aware of as Shopify dropshipping business owners from managing taxes to smart financial practices, it should be a really good one can't wait to hear Joe's practical advice for e commerce Store owners. This episode is gonna be packed with actionable steps to help you manage your finances better and avoid those common pitfalls. So make sure you're taking notes throughout this one. And stick around until the end to learn how you can implement these strategies and set a strong financial foundation for your E commerce business. So let's dive into it. Today. We're excited to be joined by Joe Cox, who is the Founder and Managing Partner of E commerce accountants LLP, which is the UK's leading accountancy firm for online businesses. Joe, it's fantastic to have you with us today to share your insights on E commerce, tax and accounting. Hi, James. Thanks so much for having me. Yes, yes. Thank you, Joe. Appreciate your time today. So we'll just start with the basics, then please, a really important fundamentals for tax and accounting for E commerce business owners. So what do we need to be aware of when it comes to tax and accounting as business owners of Shopify dropshipping businesses? That's a great question. And I guess to give some people some context, quickly in terms of the introduction, so as as you mentioned, I'm the Founder and Managing Partner of ecommerce accounts means we're the number one account out seed for E commerce and online businesses in the UK. We work currently work with around 600 online and ecommerce businesses, including around 100 or 200 dropshippers. So when you're kind of asking us questions about drop shippers, we've got a wealth of experience. I'd like to think we know what we're talking about the fundamentals and basics you need to be aware of with dropship and or Shopify business, our there are quite a few. So to boil it down to I suppose the very, very basics that for a business owner, there are a few different taxes you need to think about. So first of all, there's tax on the individual. So that would be income tax or National Insurance, you'd have if you have a company, that B Corporation Tax, and then regardless of whether you're a company or or an individual, there's also VAT. So there are quite a few different things Inc. About Yeah, 100% there's there's lots to be aware of and and before we start a lot of people that that are brand new business owners, they may not be aware of the differences between necessarily a limited company or if they just start dropshipping without getting any legal entity in place. First of all, would you recommend to people that are serious about dropshipping that they register a limited company in the UK? Again? That's a great question. I would honestly say no, ultimately, the tax advantages aren't great these days. So while if you are the A successful business, I would recommend being a limited company. If you're getting started. It's an extra barrier, I would say start as a sole trader and then kind of look at incorporating later. There's nothing to stop you doing it that way. And it's a relatively straightforward process. Interesting. He said, if somebody decides to stay as a sole trader, then for a little while just to get the business off the ground, what would the tax implications look like? How would they be taxed on the profits that they generate as a sole trader? So typically, and for this, I'm going to assume that the person we're speaking about is a UK based person, because again, if you're outside the UK, there's gonna be different roles. If you're a UK sole trader, your income will be taxed at essentially, on the income tax and National Insurance. So the way that works is all of your income is then combined. So if you have a full time job, that income also get gets added and considered in the calculation. And most people, when they have a full time job will be aware of paye and you get taxed. Yeah, but on your pay slip. But to answer the question, the you would pay initially 20% tax when on your income up to 4050 grand, roughly. So 20% tax up to around 50 grand, then 40% tax thereafter, you also pay national insurance, which ranges it's around nine or 9%. There's different thresholds and things like that, but in general, the main tax rates about 20% 40%, and then the national insurance, which is nice and, and one extra thing there, where I mentioned that your income gets combined, let's say you've got a job that pays you 25 grand a year, if you then earn 25 grand, that the two bits of income are sort of combined. So really, you're earning up to that limit of 50. Let's say you owe more than 50, we've combined it's only the segment of the income that's above 50, that gets taxed at 40%. So if you earn, like an extra pound, it doesn't mean your whole payslip changes, and which is a question we get quite a lot. So for somebody that's keen to get started as a sole trader and not to necessarily put the legal entity together, would it make sense, I guess the more that you earn with your day job, the higher the tax would be on the income that you generate. So would you say as a general rule of thumb, the more you earn with a day job, or the nine to five job that you have, the more likely you'd be to, to register a company from from the start, I suppose it depends on how seriously you want to take things and what your budget is, like I said, there is there are extra costs. As a business owner, I would try to say to someone, if somebody asks for my advice, I would say, look, kind of ignore the tax initially, like what you want to do, you don't add pressure to yourself, what you should really do is just focus on getting the business up and running and worry about making a tax efficient later. A lot of people almost use it as a bit of a barrier, and then an excuse to not do anything and they'll spend time worrying about setting up an entity and doing all these different sort of weird and wonderful things instead of just focusing on starting a drop shipping business. And, you know, once you've got a successful business, then you can worry about at some I get tax efficient and structure out and that sort of thing. So yeah, in general, my advice would be as bad as an accountant, right. Don't worry about the tax, but just focus on getting a successful business first, and then revisit later. Yeah, I like that. I like that a lot. I think with the tax situation, or certainly the timeframes. We get to complete tax reports and everything else that we need to do as business owners. We are allowed to make profit first focus on getting the business up and running. And then worry about the the tax side of things, accounting and making sure that we're all everything's aboveboard afterwards. Would you agree with that, that order that we're saying there? Yeah, absolutely. And on that note, the thing, suppose to bear in mind for someone who's new to this is that the tax year in the UK goes from the sixth of April, until the fifth of April every year, why they chose the fifth and the sixth. No idea, but that's what it is. And so right now, so it's the it's May 2024. We're in the tax year ending April, so fifth of April 2025. Now, that means that if you started this moment, you don't have any findings that you need to do that the earliest you could file would be when the tax shift finishes, and on the sixth of April 2026. So 205 Now, you then actually have the deadline, which is nine months after that. So January 2026. So there's plenty of time to decide what you're doing. So again, I strongly recommend not trading there it goes for a few months some people do really well at their sales pop and it goes mad, some it doesn't go well. One of the benefits to trading as a sole trader is that if you do have a full time job and you're paying tax at source, and you sadly if you make a loss with your with your business, there is a way of offsetting that loss you make against your tax or income. Obviously, this isn't tax advice on this call speak with your counsel, that another advantage really for cash flow is if you do make a loss in that first year and spend a lot of money on testing ads and that sort of thing, it can come off of your alpha income. So if you are paid more, I know the question was, oh, would it be better to be a limited company sooner, but actually, you're paying more tax, so you might get more tax relief? So interesting. See, there are still tax benefits if you're a sole trader, which I hadn't considered before, necessarily. Okay, fantastic. In terms of that timeframe that we talked about, then, before you need to get an accountant or complete your first confirmation statement, etc, etc, after the 12 months point, would it work where whatever part of the year you start your business, you've always got until April? So it wouldn't be a full 12 months? You say you start in February? Would you just have two months? And then you need to complete the first return at that end of that tax year? Is that right? Strictly speaking, yes. So if you sell to trade in in that tax year, yes, there is an old school way of doing it, where you would then have set accounts up until February. And you can kind of do it a year later. But there's new legislation that they keep saying they're going to be bringing in. And so for the part called Making tax digital for income taxes assessment, where they're going to try and align everything. So now it's really not advice to take that old school approach. They have been pushing it back. This was meant to come in before the pandemic. And every year it gets postponed by another year or two. But eventually it will come in. And it's always better to just have it all aligned. So yeah, and I suppose the app one other thing to bear in mind is that if you're, if you make less than 1000 pounds, strictly speaking, you don't need to register. But it's kind of rare for that to happen, especially in a few months. So that'll come in eventually. And so, I want to go back to why you set up initially your accounting firm. So you specifically help ecommerce entrepreneurs and people working and building ecommerce businesses. What led you specifically to focus on this niche? So I'm aware we've only got half an hour, so I'll try and keep this bit short. I initially started out the reason I started ecommerce accountants was because I was training accountant in London. And I started an online business with my friends. And we so we read The Four Hour Workweek. I don't know if you've read that book by Tim Ferriss. And it sort of inspired us this was in like, 2010 inspired us, we started an online business, it wasn't drop shipping. Although Tim Ferriss does speak about that a lot. It was private label FBA, so we'd buy goods in China, private, label them and sell them on Amazon. And that went really well for us. We me and my business partners, we quit our jobs. We did that for a few years full time. And I basically didn't want to do accounting. And so I wanted and I know that as a business owner, you should really outsource as much as possible, like there's no value. Sadly for me, right, there's no value in us doing your VAT return or bookkeeping. It just takes that sort of headache and also the job off of the business owners blade. So I wanted to outsource that. And at the time, so 2012 to 2016. Couldn't find there was not there were no accountants in the UK that specialized in at the domain, e commerce accountants was available, I saw that I bought it just because I thought that was mad. I didn't intend on starting an accountancy practice. And as I'm sure you found, when you do really well online, you try and get your friends to do the same. And we kind of got all of our friends starting online businesses. And basically before I knew that, because I couldn't find the fun that I could give everything to. I had a portfolio of clients, and it just started from nothing, basically. And so in 2016, Amazon, which is where we mainly sold, they changed their terms of service. And they made it more difficult for us to launch our products, because we sort of had a way of gamifying how to get to the top of the search results for Amazon. And me and my business partners are kinda lazy. And so when we wanted a new, we wanted the new thing to work on. So I decided to go and do this. And those guys went off and did some other things. And here we are today. So here we are fantastic. So you've got experience of being an E commerce business owner yourself and running e commerce businesses. And then you also create and fix the problem that you created initially, not having an E commerce specialist accountant, which is obviously the best type of businesses when you're fixing a problem that you have yourself. And now you're there then for specifically e commerce business owners to do you find that having that experience or running an E commerce business initially helps you day to day in your accountancy practice. Yeah, massively. And I would say it's not one it's understanding the business models and taking people seriously because one thing I actually struggled with as a young entrepreneur, was that going to these fuddy duddy accountants and you're making a lot of money, they almost don't believe you or you're storing goods all about that world, because they just didn't get it. And for us we didn't have the benefit of a drop shipper. model because we haven't owned a lot of physical products. So having to say to someone look with three young guys in our early 20s, we've got goods stored all around the world, like, people didn't take it seriously. So now where someone comes in, I've had got a lot of clients who are, you know, 18 to 25, making hundreds of K a year, you know that, just because they're young, it doesn't mean, you know, to sort of ignore them or not take them seriously. And in terms of like, business models, I think, because I've had to figure out a lot of processes myself for our own businesses. So downloading some reports, like every single platform, Amazon, Shopify, Tiktok, they all have different reports that are done, and there's no standardized way of doing it. Myself, and now my team of fat. So we've got so much experience helping to roll our sleeves up and actually figure out how to process the data in a certain way. And that was started when I had my own business, because essentially, back then I couldn't pay anyone to do it. Because nobody did it. Like Amazon. On the Amazon in the Amazon space, there's a software called a to x or my books. And now, Dex commerce, like, those things weren't around, you just had to figure it out. And now when a new platform comes out, that's exactly what we do. Yeah. I think, obviously, that entrepreneurial mindset that you've got from the very start, you can apply that into your accounting practice now, in terms of fixing problems, and making things and making processes and putting processes in place to make it as smooth as possible. The whole operation. Just fascinating. So yeah, I think just somebody to pick up on as well, that you mentioned is that when you go to an accountant, and you want to start with an accountant, if you find somebody they're specializing in E commerce from the start, you haven't got to go through all of the explanation of the business model. Did you find when people come to you and they say drop shipping, now you've got it straightaway compared to perhaps a more traditional accountant that would take some time to really understand how you are able to sell these products from suppliers around the world. Yeah, absolutely. And what I suppose the benefit of working with us all now, you know, some of our competitors in the space is that where, again, where I would say to an accountant, as a business owner, we do Amazon FBA or private label, or we do dropship. And they would then say to me, Oh, well, what reports to do I need or how does that work? Whereas for us, if you're a drop shipper, and you say, Hey, I'm a drop shipper, we kind of say to right, what platforms do you serve on what payment gateways to use? Give us this, this, this, this, this, this is how you do it. And, and you're sort of paying for that reassurance of just knowing that someone knows what they're doing, and you can just focus on running your business. So suppose to put it another way, we sort of tell you how to do it, rather than you having to ask us 100% It makes it so much quicker to onboard. And yeah, I'm gonna explain the business model straightaway. So yeah, it's we're lucky now that you fix that problem for E commerce, business owners. And the market has matured now to a point where we can get up and running a lot more quickly nowadays. So in terms of what we should do as dropshippers, as E commerce business owners, when it comes to financial management, and keeping an eye on the finances in our business, what do you think are the best practices that you see the best business owners do? While that is a huge question? Sounds silly, but making sure that you are making a profit. So making sure that when you do sell something, you do take into account VAT. So VAT is a sales tax that is calculated based on the selling price of the product. And the sort of rule of thumb for calculating how much that is, is to divide the selling price by six. So if you sell something 12 pounds, if you divide 12 by six, that's two. So that means that you're actually selling the product, 10 pounds, and two pounds VAT. VAT is 20%. And I have seen it where people don't think about that, or they're, you know, when you're selling before your VAT registered, it could still be selling it for 12 pounds or keeping all of that. But then when you do register, you suddenly, if you've not baked that into your sort of profit margins or calculations, then if you're selling every single product for a loss, even if it's a penny lots, if you're throwing advertising that out and generating sales, every single sale is costing you money, and it can very quickly become a nosedive. And sometimes people don't think about this for a little while, and it's a bit of a nasty surprise. So that's definitely something that needs to be thought about. And ultimately, as a business owner, you are doing this to make money, right? So you really need to be making sure you're focusing on profit from the very beginning. And so yeah, that's how I got back to him. 100% Yeah, I think it's sometimes people will overlap and don't understand that the accountant that we work with isn't there to make sure you're making profit. It's very much your job as the business owner How to run the business and make it profitable, then you need to work with a accountant for for guidance along that journey is ultimately up to you to keep an eye on on the profit line and making sure that you're profitable day in, day out and month in, month out. And so yes, I mean, in terms of like keeping spreadsheets keeping a good close eye on the Shopify reports, that also would you recommend that that business owners get set up with certain software tools like QuickBooks and Xero, from from an early stage or can that wait until you get an accountant on board, I would say if I was starting, I would hold back. Well, five, starting now nine, everyone could do it, I do it straightaway. And I do my businesses but and that's because I'm still quite hands on with some of those things. My advice to someone getting started, especially if they're on a limited budget would be don't do it initially. Keep a spreadsheet or, or sort of look at the reports, if you're using Shopify really good, as long as you put your sort of landed costs, cost of goods, figures in all of these bits of software, even if death eight pounds a month, it all sort of adds up. So really, that money is better reinvested in sort of trying to launch a successful product. So yeah, we would sort of hold back and use the the out of the box reports from Shopify really to begin with. So for a new business owner that's trying to work out cash flow, in terms of drop shipping, how would you suggest that we manage cash flow as a drop shipping business? Obviously, we have many benefits, because we don't have to outlay the stock. Initially, we can wait to receive orders before we we buy the first order. But in terms of cash flow management? How would you suggest that ecommerce and dropshippers in particular, manage the cash flow in their business? Again, it's a very tough question. Because business owners have different appetites for risk. Some people are very risk seeking and and almost try and generate as many sales as possible and as little profit as possible. So really depends on on that, like if you are looking for growth, if you've got a manager, you've got a mortgage and kids, right, you're gonna be more risk averse than risk seeking. And there's a really good book, which I've got no affiliation with called profit fast. So if anybody hasn't read that, they're quite disparaging towards accountants. So if you're an accountant listening, it's quite a difficult read. And the essential premise is you would set certain percentages and put that money aside, I personally wouldn't go through the faff of opening in six or seven bank accounts and moving stuff aside. But the idea of assigning you know, a percentage of your revenue to market in a percentage of your revenue to operating expenses, a percentage of revenue to profit, I think is quite a good one. Because you do want to get a reward, even if it's on pounds a month, it's quite nice present, we've all done some work, and I've got something for it. I suppose as a rule of thumb, you should be looking for like 15 to 25% profit. And that's after all your expenses, what we usually see is about 1/3 Is Cost of Goods Sold 1/3 is advertising. And then to sort of balance until the profit is overheads walk around expenses. I say fantastic. So it's a margin that we've touched on there is obviously crucial for a dropshipping business. If you if you're looking at the the statements of a dropshipping business, and you're noticing that they're they're not really following those profit first principles. And they're too heavily reliant on or too focused on the revenue that they're generating as a business. What sort of guidance would you give them as an accountant to steer them in to really look at their their accounts and and make sure that they're, they're profiting first, it's a bit tough really to say that because it would, again, it depends on the service level of the client, like, I don't have it to hand but this is a sort of an image that I usually use, which is a sort of pyramid. And, and it's sort of how an optimal business should work. So at the very base of the pyramid, you've got your bookkeeping. And that's something that all businesses need to do. And bookkeeping is essentially processing all of the transactions to know what they are. Above that you've got accounts in which is all your compliance and your annual reports and calculating your taxes. And then as you get above that, to the sort of top of the pyramid, things become a bit more strategic. So when you're looking at your reports, whether that's financial reports or non financial reports. And then as you go beyond that, it's it's more like looking at what we would call advisory on what you've said, there is more of an advisory sort of standpoint, like helping someone run their business. Most people would treat that accountant more on a compliance, you know, they come to us we sadly, we spend most of our day chasing clients for records. And we're dealing with historic information. It's a bit difficult to say to someone you should change when the information is 18 months old. For the client, far more successful clients that we work much more closely with. It's more of an active discussion. So we're not there. Say you're the business owner. We we don't tell you how to run your business, but we might ask a question. Or we might say oh, it looks like your goods are too high or your Looks like you've got a loss making on this particular platform. What are you doing about it? We're not really there to say you're doing it wrong. Because ultimately, we're advisors to our clients. We're not that yeah, we otherwise would be actually owning a stake in that business or a percent. Yeah, got it. It's about compliance, making sure that we're paying the right taxes is a lot of it. But then you have that option to work more closely with a higher up that pyramid. So that's really useful framework to share. Thank you, Joe, for that. So for new business owners, and we'll start off we'll talk now about people that have registered a limited company, just make it a bit more specific, the question, what taxes and we'll come to VAT afterwards as well, I think we'll put that to one side for now. But what what taxes do business owners with a incorporated registered limited company in the UK, what taxes to business owners need to be aware of? So first of all, for a limited company in it pays corporation tax on its profits, that is currently, well, it ranges from 19% up to 25%. So if your company earns less than 250, grand profit, it will be 19%. And then it sort of goes upwards from there. If you own multiple companies, that will change. But for now, let's just say it's 19 to 25%. As a business owner, you're usually the shareholder. If you take money out, that's usually known as a dividend. Dividends can only come out of post tax profits. So let's say your company makes 100 grand. And then rep tax rates 19%. That'd be 19 grand of corporations x, that means you the business owner are left with 81 grand, you can then pay out a dividend might not advise that but let's say you do, you would then pay income tax on those dividends. And then income tax is taxed similar to like I said earlier in the 20% 40%. And then 45%. dividends are taxed at a lower rate than than those void trying to throw those numbers at people. But the 20% tax is 8.75% of dividend 40% tax, it's about 350 4% tax, but there's no national insurance in terms of is it tax efficient to run a company, which is sort of the question people would ask, or to the company versus a sole trader, honestly, my answers, usually it's tax neutral, especially if you're going to take all of the money out. And so if in that 81 grand example, if you would take them out every year, I would say probably it's better to be a sole trader. However, the main benefit of being a company is that if you because it pays corporation tax, if you leave the money there, it's not taxed again. So that 81k can be reinvested in some new products if you're a product based business or in terms of suppose dropship in your ad campaigns. And you can grow the business faster. And so if we go back to a really bad example, we're speaking about if someone had a full time job, if you've got a full time job on your own and enough income, you might not want to pay more tax, you might not actually want more income at the moment. So that company sort of be self contained, it pays tax on itself on its profits, and then grows and sort of the the company is a separate legal entity. And the main benefit is that you can essentially choose when to pay tax. So if you then quit your job at a later stage, then you can start to extract money from the business. And the most ultimate way to then extract the money from the business is when you sell it or when it closes, which I'm sure we'll talk about in a bit. But there are some quite tax efficient things to do that. Fantastic. So yeah, I agree. I think there are some tax efficiencies that we can we can leverage if you have got a registered company. And the type of dropshipping that we do is domestic drop shipping with retailers or suppliers that are based in the UK. So often they'll want to work with companies instead of sole traders. So that would be a reason to incorporate that a lot of people listening would would, would have or would be thinking about now, something that you mentioned I wanted to bring up as well is the idea of choosing when you pay tax in a way because you can choose how much you withdraw and how much you reinvest profit wise. Yeah, I want to ask you about some of the handy tips and tricks that we can do to reinvest more into our business to prevent us pain, perhaps as much tax. So have you seen some nifty ways that business owners will maybe buy certain equipment for their business or you know, certain things that they can pass by as being used for the business that you can recommend potentially for people, there is no magic wand sometimes to stop paying tax. However, there are some things you can do. And as you said it's there are some choices you can make. What we do when we work with our clients is as they approach a year end we sort of have that discussion. Business owners are busy. They forget that when the year end is so right now if your year end is May that decision you made today, and it's towards the end of the month could impact you If your year end is May will impact you, you know, your tax that's due in nine months time. Whereas if you make it a week later, it's going to impact a year in nine months time to actually answer the question. There are things like buying company cars or that tops, maybe doing a new ad campaign, where you'll sort of put in expenditure that might happen next week or next month, just making those decisions a bit sooner. There are also things you can do in terms of investing into your pension, which is probably sounds a bit more advanced, but there would be a tax deductible expense for the company. There are some things you can do. Yeah, follow up thing that I want to touch on now in the podcast is more so about at the 12 month mark, what is required for us, what do we need? What does hSrC need us to do? When we get to the end of 12? Months? What What would you be doing on behalf of a client when they have something due at the end of their first 12 months, in terms of what you need to do at the end of each tax year. So there are that we're gonna need to again, set rate as individuals, and then there are companies. So for the individuals, it's not necessarily at the end of 12 months, it's based on when the UK personal tax year for April, and it's in terms of that, we would send out checklists to our clients, everybody's situation is different, different. Some people are property, some people have crypto income, like some people have a job. And so we have a sort of comprehensive checklist that goes out to the client, they will complete as much as possible. And then we prepare your self assessment tax return whenever you complete that. So the deadline is January each year, that's when you have to submit and pay. If you submit it early, some again, it's may now some people have submitted it, it doesn't change your payment deadline, it just lets you know what you have to pay. So you get more time to plan. So we really do sort of recommend trying to do that sooner. That's for individuals, for companies, it is every 12 months, the sort of process or what needs to be done, you need to file counts with Companies House and their tax return with HMRC. There's also something else known as a confirmation statement that needs to be filed with Companies House, we deal with all of those for our clients, the process behind the scenes is very much your bookkeeping needs to be complete, you then need to send through a bunch of source statements to your accountant to confirm. And we're quite in depth and thorough. So some firms might sort of take this approach, but we pride ourselves in doing everything and making sure everything's super accurate. So we'll get loads of statements, make sure that everything at the year end is correct. There's a lot of work behind the scenes that goes into sort of making sure that all your financial statements are correct. And then we submit it and that you know how much you have, you've got to pay. Yeah, that's really helpful in terms of making that that payment for a business owner, how do they actually go about making the payment to HMRC for the tax that they have to pay HMRC. So we would usually give you a link to HMRC website, and HMRC do have the various sort of payment options there. The reason we do that is because emails can be sort of intercepted and hacked and things of what we don't want to do is to hear the bank details for us. And then something happens. So we would always say, Here's now here's the reference to us, or here's how to find your reference clear step by step instructions is how to pay is the URL, we try to spoon feed people to sort of reduce risk of something bad happening. Perfect. So yeah, that was able to know exactly the breakdown of what's required then for people at the end of the 12 month mark for registered companies. And he mentioned it's slightly different than for sole traders or individuals, when they get to the end of that their year end. How would that look on what would be required of those individuals at the end of that initial year. So for individuals, the way HMRC look at it, they look at all of your income. So if you've got multiple businesses, all of that gets combined onto your self assessment tax return. As I mentioned earlier, we send out a sort of comprehensive checklist to ensure stuff doesn't get missed on that we've got things like Direct Trust funding calm or have you got a racehorse of nobody's actually responded to the racehorse comment yet. But yeah, somebody might one day and all you would need to do as someone with the sole trader is the same as if you're a director as a company, you submit an annual tax return. And it's yeah, kind of just let your accountant deal with it as one's fantastic. The racehorse questions intrigued me So is there some sort of tax advantage to having only a racehorse? Yes, from memory. It's not that there's necessarily advantages leave because they're known as waste in shatel, which means that so race horses and race are dogs, you don't pay capital gains on them. If you make a sell, obviously, there's a huge investment that comes with that. And but it's why I think you'll see a lot of famous footballers or TV pundits kind of also owning racehorses and dogs I'm pretty sure it's because the sort of gains you make on selling them and breeding them are will be tax free, and can to be technical. The reason that they're known as wasting chattel is that they die. And so as opposed to car which sort of can have longer in life, so there may be taxed upon a car that was a racehorse might not be the I think it will be rushing out to buy racehorses potentially after this podcast episode, but learn something new today. That's That's fantastic. So really, as we bring this discussion to a close, then if somebody wanted to work with your E commerce, accountants LLP, what would that onboarding process look like? So the way we work initially, if anyone wants to work with us, ecommerce scanners, that code at UK, there's a button at the top, I think there's like Cannes Archer book a call, you initially have what we call a discovery course that's either with myself or my colleague, Chris, it's a free call, we sort of find out a bit more about you and your business festival, find out whether we can help and whether there'll be a sort of position to help where someone's new, is still happy to have a chat. Usually what we do is we're very, we're very bad salespeople we don't try and sell. So we will just point you in the right direction and say, Look, come back to us in six months is the things you need to do. Again, right now, it's May so we might be saying, Look, if you've just started, you've got a year until you need to do something. The times we say you need to get an accountant with the if you've breached the VAT threshold, which is 90,000 pounds. Or if you've finished an entire tax year, then then speak with someone and sort of go back to answering the question. Once you've had that call, we sent her a proposal outlines our costs, you can digitally sign it. And then it sort of begins an onboarding process. And then we deal with all the admin and everything like that and sort of get to work. Amazing, very much for jumping on the podcast today. Joe really appreciate it. And that's a great approach for anyone thinking about whether they need an accountant onboard that non salesy call just to get some fantastic advice. I'm sure people will take you up on that offer. So thank you, Joe, for joining us today. Mr. James, thanks so much for having me. Well, Louis, that was a great conversation that I had with Joe is expertise in E commerce accounting specifically, is so helpful to enable us as E commerce business owners to know exactly what is required of us and to make smart financial decisions. Yeah, really good episode there from Joe, I really enjoyed how he broke down that the stuff like tax obligations and best practice, but keeping on top of our finances, as well as some really great advice. So thank you, Joe, for joining us on the podcast, and helping us leverage financial data to make better informed business decisions. Yes, and we learn all about the relevant taxes that apply to us, which we need to be aware of as business owners in the UK. And we learned that from somebody working in the field day in day out. So Joe's advice, somebody that every serious entrepreneur needs to keep in mind. Exactly. So now you're prepared you understand their tax obligations. And if you're ready to dive even deeper into these strategies, then combining what you learned from Joe today, with the business framework laid out in my book, the home turf advantage, it will really give you a comprehensive roadmap for success. So anyone who's serious about mastering e commerce pare what you've learned in today's episode, and head over to H T A book.com. As your place to start enjoying the podcast, we'd love to hear from you leave a comment or a review, and we might just feature it on an upcoming episode. Also, for detailed show notes and resources, head to dropship unlock.com forward slash podcast. If you found value from any episode of this podcast, please take just 10 seconds to leave us a quick five star review on your podcast app of choice. It helps us more than you could imagine. And who knows, you might just hear your comments on the show. Thanks for being part of our community. Your support helps us keep delivering a new episode every week. Now it's that time of the podcast episode where we answer a question from our listener. And remember if you have a question, and you have to ask it to either myself or Louis, all you need to do is comment beneath the YouTube video version of this episode. Now that's exactly what Saara bean has done. And she has asked, I am considering dropship envelopes, but I am nervous about investing. Can you break down? What makes it worth it? Yeah, of course. Thank you for your question, Sara. And I guess here's what you can expect from investing in the dropship unlocked masterclass because, like you I was nervous about investing in myself when I first started out in business, but here's what we kind of cover inside the masterclass that will really help you understand how about investment can help build a better future for you and your family and help you replace your income. So, first thing is the comprehensive support that's included. So we have twice weekly coaching calls ensuring you receive personalized answers to all of your questions to help you stay on track. There will be questions in business that you come across. And so if we can be there to help you every single step of the way that's going to supercharge your results and fast track your route to success and the net cuz this we have detailed step by step, video modules guiding you through every aspect of building and scaling your E commerce business with success. So think of those as like over the shoulder tutorials. It's like you're sitting at the desk next to me watching my screen as I build a business like this. And then you're just following every single click of the mouse. And building the business on your side is like having us right by your side helping you whenever you need help. And remember, we're there, if ever, you get stuck as well. But we're not just there, you have access to a huge and powerful supportive community, providing reassurance that you're never left to figure things out on your own. So you'll have access to that community to get that help whenever you need. It is a proven system. And so the program teaches the home turf advantage model that I use that James uses that all of our members now use to give you that clear path that's already helped many members achieve six figure revenues with their business, we've got over 30 hours of screenshare tutorials showing you exactly what to do, how to do it, and make that learning process as smooth and efficient as possible for you. So you're not wasting time. The other thing is we've built it around a six week step by step framework. So that gives you the structured plan to follow with flexibility to revisit the content whenever you need to in the future, and ensuring that long term support but ensuring that you get up and running within six weeks, we're there to hold your hand but also to hold you accountable. That's one of the big benefits you get from investing in the masterclass. The other thing is the direct access that you get to coaching calls as well allowing you to gain insights from our experience running our own seven figure ecommerce businesses, but also helping you apply the proven strategies that we teach inside your own business, you're gonna get personalized advice and accountability. And that will keep you motivated or keep you on track and keep you consistently moving towards your goals. So I guess finally sorrow. The way to think about this is that you're fast tracking your success with the masterclass, you're condensing your learning journey into weeks rather than years. So if you don't want to spend the next few years and 1000s of pounds trying to figure this out on your own, and you want to just avoid that frustration of prolonged trial and error, and cut out all the expensive time consuming mistakes, save money and effort by following a tested and refined process. That's why investing in the MasterCard is a smart decision. The investments designed to pay for itself. Think of it as a drop in the ocean, of the profits of your business. Once you're up and running, it helps you achieve the results that recoup your investment within the first few months once you follow the six week roadmap, and then help you turn that initial investment into a profitable venture. So really help you build that sustainable business. And ultimately, is to create you a reliable source of income that supports you long term, rather than chasing those short term gains. So if you're serious about taking action, and transforming your life, the master class is your roadmap to success. Now, if you want to learn more about it, you can head over to dropship unlocked.com. Forward slash masterclass. Thank you, Luis and great question there. Sorry. And yeah, I think the fast track element is such a key part of why a lot of people join the masterclass. I know for myself, I recorded a video testimonial. And I watched it about recently, Lewis actually, three years ago when I first joined, and one of the main reasons I cited for joining the master class back then, was because I wanted to learn from all of your mistakes and not have to make them myself. So that still stands. And it's such a big reason why people join the master class. So it's now time to highlight a recent review for the podcast. So big thank you to Julian for the Apple podcast review. And Julian Mac G said dropshipping truly unlocked. Honestly, this is the best ecommerce podcast available. If you are attracted to the idea of starting up your very own online drop shipping business. This is the place to be you will find all the information and guidance that you could possibly require. And by following the process and putting it into action, you will find your dream has turned into a reality. Fantastic support from Louis and the tea. Wow. Thank you so much for your review, Julian. Before we go. I have a tiny favor that I'd appreciate if you could help me with. Have you left us a review yet? If not, please leave our podcast a review. Wherever you're listening to us. It should take you about 10 seconds max, but it does wonders and is a big part of what continues to drive us. So if you'd like us to continue with the podcast and you haven't yet left us a review. Please take just a moment to do so now. And hopefully we can read out for you on the next episode. Thanks for joining us on this episode of the dropship on lot podcast. We hope you're walking away with insights and inspiration. to kickstart your E commerce journey. Grab a copy of my book The home of turf advantage at H T A book.com is a distilled guide based on real experience to help you build your E commerce venture. Don't forget to hit the subscribe button for more strategies and success. Stories. If you like what you heard a five star review would mean the world to us and you might just get a shout out on an upcoming episode. And finally, thank you for deciding to spend your time with us today. We can't wait to bring you more insights on the next episode of the dropship unwrapped podcast.