Sunday, 30 November 2014

Life gets harder for small businesses

I'm sure most of you have now heard about the new VAT rules which are sadly affecting so many businesses in our community.  If you haven't find out more here, essentially these rules mean that from the 1st of January small businesses selling digital products (such as patterns, e-books, e-courses etc) to anyone in the EU will be compelled to VAT register, regardless of how small their turnover.  The hassle of having to submit VAT accounts quarterly, and having to increase prices by 20% to cover the VAT has meant that many small businesses have taken the decision to close down, close aspects of their business or cancel their expansion plans.

Fat Quarterly Magazine will be taking a hiatus

Fat Quarterly Magazine will be suspending sales from 31st Dec, so if you have your eye on any back issues grab them quick.

U-Handbag will be closing her pdf pattern site down.

Numerous sewing, knitting and crochet designers are saying that they too will have to close down.

I have had to put my plans for running craft business e-courses in 2015 on hold.

All in all this is very bad news for our industry, even if you do not sell digital products I'm sure many of you use them.  You will suddenly find that from January onwards there will be a big reduction in the number of pdf patterns available.  Those that are still available will most likely have to increase their prices so it will cost you more to buy.  The creative world as we know it will change, and I suspect not for the better.   There's a petition here you could sign to encourage them to introduce a lower limit to keep smaller business exempt.

Then following on from this news Facebook have just announced that from January they will be reducing the reach of posts which they consider promotional, any about giveaways, products available for purchase etc  Making it even harder for businesses to reach their page fans, fans who have joined their page because they want to know the latest news and offers from that company.   So for those who do manage to keep trading despite the VAT rules they are going to have to work even harder to get news of their new products, offers, giveaways etc to their customer base.

I have decided to now run my website giveaways 3 weekly rather than fortnightly, to allow more people time to find the details of my competitions and enter before the deadline.  You can always find the latest giveaway on the news section of my site.  You can also join my newsletter (sign up here) and I will let you know the details of the current giveaway, and details for the next giveaway too so you don't miss it.  Plus details of any offers, new products, fabric sales etc from my customers, new projects and content on the site and industry news.

2015 is going to be a tough year for small craft businesses so please do help them out as much as you can.  Tell your friends about them, visit their Facebook pages if you don't see any updates for a while, buy from them where possible and help keep our community growing and thriving. 

If you run a small business yourself this cartoon from Dave Walker gives a great summary of your options.


Wendy said...

Excellent post Fiona - thank you. The impact on small businesses can't be emphasised enough. The idea of a sole trader being able to jump through all the accounting hoops necessary to manage this tax is laughable (but not funny). The impact hasn't even been considered. My tiny digital business was going to enable more flexibility so I could look after Mum & Dad (late 80's, both with Alzheimers). Multiply this problem by the hundreds of thousands affected and we have a huge problem.

Indigo Blue said...

Hi Fiona,
Many thanks for this post. I did not realise this and typical that my humble little website is giving me more commissions this Autumn.
Am I right in thinking that if I just sell to UK buyers then I not not need to sign up for VAT?
Last year I paid £40 for my website upkeep and sold nothing yet HMRC still charged me £35 tax. Based on that track record and yes they do that every year regardless of whether I sell anything, if I have to register for VAT I shall have to stop my website completely. If I can sell just to UK buyers I will just do that to keep going until this stupid ruling is altered.

I am not political or a member of any Political party but the EU really annoys me. Is there a think tank that just sits and comes up with ways to upset everyone? I am 44 years old and I can not remember at any point during my life where the EU doing anything useful or helpful to Europe or did I blink at the wrong time and missed it!
Happy crimbo everyone and I hope all digital sellers do well in the next few weeks then have a chance to see how they can survive this.

Lucy @ Charm About You said...

I have signed the petition. It's madness.

Bossymamma said...

Good points well made, Fiona. I have been spreading the word about the VAT and urging people to sign the petition.

Sewing Directory said...

Thank you all for your support and helping to spread the message. We can only hope that the government will realise that this will kill many small businesses and help us fight for a way to keep small businesses exempt.

Sandpiper Sewing said...

Thanks for explaining Fiona I've heard about it but didn't totally understand. It's a crazy rule, seems there no logic when it comes to tax sometimes !

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