A brief introduction:

Bill Henry · Post by **Bill Henry** » Thu 29 Mar, 2007 3:24 pm

My name is Bill Henry. For twenty-two years, I have owned and operated a small, independent frame shop in Litchfield, New Hampshire, U.S.A., and am a frequent contributor to The Grumble - America’s equivalent to this, The Framer’s Forum.

Some of you guys are known to me like John Turner (Roboframer), Osmond, Les (realhotglass), and Dermot – just to name a few, and, of course, some of the other Yanks who may poke around here sporadically like John Raines and Jim Miller.

Having lurked here for a few weeks, it appears that we all seem to share the same problems and complaints – from the all too frequent “oops” to the occasional lunatic customer.

I have a few questions, however, not necessarily related to framing:

How does your VAT work? I live in a state which has neither sales nor income tax, so, even if I purchase supplies from a state which does have a sales tax, I am exempt from paying it. If I were located in, say, Devon, and purchased supplies for $30 (sorry, I can’t find the £ sign - oh, wait, there it is) and sold a frame for £100 pounds, would I, as a business owner, have to pay tax on the whole £100 or just the £70 profit?

As you probably know, we Americans have obstinately and irrationally clung on to the British system of weights and measures. I notice that in those posts where dimensions are discussed, you are using the metric system. Has that come about from reason and logic, or has it been mandated by the European Union?

I note that some of you find screw eyes abhorrent. What is the generally accepted method of hanging in your neck of the woods? D-rings? WallBuddies?

Because of geographic, cultural, and demographic differences, I may not be able to chime in with too many thoughts on too many issues here, but I may be able to contribute some in small part to technical questions and problems. I am nothing if not opinionated. I look forward to popping in from time to time.

Also, because of geographic, cultural, and (goodness knows) spelling differences, I apologize for any faux pas (faux passes?) that I make, have made, or will ever make. (There! … that should absolve me from any and all future screw-ups.)

Spit · Post by **Spit** » Thu 29 Mar, 2007 4:01 pm

VAT is in effect a tax on the profit, as you can claim back the VAT paid on materials. There's a lot more to it than that, of course, as you can claim back VAT on most VATable items & services (electric, fuel, stationery etc).

Dermot · Post by **Dermot** » Thu 29 Mar, 2007 5:16 pm

Bill

Welcome

The off set of VAT 21% in the South of Ireland and 17.5% in the North of Ireland and the UK is an off set for business in other words I can off set my purchase VAT against my sales VAT…..that providing I’m a registered for VAT …..Consumers and a limited selection of business cannot off set VAT.

As a registered VAT business I don’t pay VAT on cross border purchases say from the UK, Holland, Denmark….ie all the EU countries….

Here is the link to the Irish Revenue Commissioners have a search around for VAT the site is very good….. http://www.revenue.ie/

Most of the Irish VAT information is common to the rest of Europe…..rates and some small differences but by and by the same…

foxyframer · Post by **foxyframer** » Thu 29 Mar, 2007 5:35 pm

Welcome Bill

Over here we charge v.a.t @ 17.5% on the total. Hence your £100 frame would have an additional £17.50 on top. This is country wide here as in Europe where rates of sales tax vary.

Businesses here have to register for sales tax when the turnover currently exceeds £60000. It does pay to register whatever your turnover as the business can claim back tax from others who supply you.

You sure you don't pay income or sales tax in New Hampshire. If so then we are all coming over on the next plane.

We like feet and inches in our gallery. The more mature customers appreciate it.

Still use screw rings on small frames; but D-rings as standard on most everything else.

You may have gathered Bill that some of us are opinionated, having read some of our posts; like you it comes from being in the trade for a lengthy time.

Roboframer · Post by **Roboframer** » Thu 29 Mar, 2007 8:36 pm

Hello Bill, nice to see you here,

A few things are VAT exempt, like most books, food (not restaurant ...) kids clothes....... struggling now!

What types of weights and measures you use, or should I say relate to depends a lot on your age. Legally we have to price by the metre, kilogram etc, but can sell by the foot.

Our pubs sell pints of beer, not litres, our road distances are marked in miles, not kilometres, so we are not a totally metric country.

Most of us know our body weight in stones and pounds and not just pounds like the US. A stone is 14 lbs, I'm 11 stone, or was the last time I chose to believe what the scales said!

Most framers use 'D' rings, but a large percent use cord with them, unlike the US where practically all framers use wire.

So, anyway, if you don't have sales or income tax in New Hampshire, how exactly DO you get screwed???

realhotglass · Post by **realhotglass** » Thu 29 Mar, 2007 10:28 pm

Interesting discussion.

Here in Aus, we have GST (goods & services tax) on almost everything, and it sounds like it's the same as VAT (value added tax).

Thankfully, for the sake of ease, our rate is 10%, and applied to everything but basic foods (fresh fruit & veg, meat, raw ingredients etc), and some financial services. Probably a couple of extra little things too.

So, a supplier brings in moulding and materials for a cost of $25, pays gst to Aus suppliers ($2.50) with his payment, and usually pays gst as it comes into the country ($2.50, paid to Customs), then makes a sale to a framer for $50, there is gst of $5 added to the invoice.
The framer pays the supplier $55.

Framer assembles the - 4 sticks of wood and glass

- and sells this to their client for $100 + $10 gst, $110.

At GST 'time' (either each qtr or month as arranged) a business will add up all its gst 'inputs', parts it has used in process of business, and this includes all utilities, overhead gst paid, then offsets this against all gst collected with cash sales invoices paid by clients.

So in the example above, the supplier would claim gst inputs on overhead gst and $2.50, and this is taken away from the tax collected $5, and either pay the difference (profit made) or get a refund (made a loss).

The framer likewise claims all input gst paid for overhead and supplies ($5 above), this is taken away from the tax collected $10, and either pay the difference (profit) or get a refund (loss).

The absolute end user can't make a claim for gst.

So ultimately, if a good imported or mined etc costs $10 originally, and ends up selling for $1000, Govco will get $100 (goods and services) tax in their basket.

It really is a lot simpler than the old wholesale tax system here, but the US must be difficult at times with all the different levels of state taxes.

Bill Henry · Post by **Bill Henry** » Fri 30 Mar, 2007 2:04 pm

Roboframer wrote:Hello Bill, nice to see you here,
So, anyway, if you don't have sales or income tax in New Hampshire, how exactly DO you get screwed???

Property taxes!

We pay a bit more than the national average, BUT the State of New Hampshire has a laissez-faire attitude for most things (Don’t want to wear a seat belt? No problem! – Want public assistance? Here are the Want Ads!) and leaves funding for most services (except for road maintenance) to the local towns and cities.

BUT, since the budgets for such things as schools and police salaries are voted on at town meetings, and any expenditures come out of our pockets, taxes tend to be kept down to the barest minimum and accountability is closely scrutinized.

Most people in town know where our Selectmen live, and they know easily their cars can get “scratched” in parking lots.

realhotglass wrote:
It really is a lot simpler than the old wholesale tax system here, but the US must be difficult at times with all the different levels of state taxes.

Not so much. I am luckier than most not having to deal with collecting sales taxes, but anything I would have to pay to vendors (which, in my case, is zero) usually gets lumped in with their invoices. Since all supplies are deducted as business expenses, I doesn’t take much effort. Off the top of my head, the only taxes I pay are from telecom companies which, too, are deductible.

In all fairness, I should say that New Hampshire does have a Business Enterprise Tax, but the threshold for for profits is somewhere about USD$ 200,000. Unless you’re silly enough to hire your brother-in-law as your accountant, virtually no small business has to pay it.

kev@frames · Post by **kev@frames** » Fri 30 Mar, 2007 7:53 pm

Hi Bill

ps. with reference to Robos comments on the metrification of blighty, Wizard are even promising the writing of a software update for the plight of us poor brits using the american machine that wont convert inches to mm on the fly

Most of our customers talk in a mix of inches, millimetres and centimetres.
Frame sizes are usually standard sizes as Inches, unless they are 20x16 or 16x12 in which case they will just as likely be a 50x40 or 40x30cm these days.

Likewise a lot of prints are in metric sizes, probably for pan-european sales reasons.

Its enough to drive a man to drink.

Bill Henry · Post by **Bill Henry** » Fri 30 Mar, 2007 9:46 pm

kev@frames wrote:Hi Bill
Its enough to drive a man to drink.

So, there is an upside, it seems.

Roboframer · Post by **Roboframer** » Fri 30 Mar, 2007 10:42 pm

I like the sound of New Hampshire - what is the weather like and do they have any Welsh Male Voice Choirs?

Bill Henry · Post by **Bill Henry** » Sat 31 Mar, 2007 6:43 pm

Weather’s getting better, but it’s still in the 40° F. range (~ 4° C., if I’ve done the math correctly) with a little snow still on the ground.

We don’t have any Welch Male Choirs that I know of. But, there is a kid in the neighborhood who practices his bagpipes every evening. I’ve heard that the sound is pretty much interchangeable.