Liquor store

[Pitbull]

Do they make money ?

I read somewhere online they have a markup of 23% Of which i guess 14% is tax. Do they honestly make money ?

 

[bwana]

The markup is probably higher and I cant see them not being VAT registered.

 

[Krimpiekat]

The markup is probably higher and I cant see them not being VAT registered.

33% and up in some cases (depending on the booze and the owner) and yes they are

 

[Veroland]

My father in law had a liquor store once and he made a fair bit and onther one of my friends also have one, he's not getting rich but is getting by comfortably.

 

[Pitbull]

The markup is probably higher and I cant see them not being VAT registered.

So you think their markup is somethink like 23%+14% or what do you mean by VAT registered. The business still needs to pay VAT, does that mean the store pays % tax on revenue and do you know what that figure is ?

Reason I'm asking:

1. The person buying the bottle is paying VAT at 14% right.
2. This 14% is already owed to SARS by the owner.
3. Then the owner still has to pay X% of his revenue on TAX also.

Or am I missing something ?

 

[scotty777]

I thought booze also gets sin tax, so like vat is close to 20%?

 

[bwana]

So you think their markup is somethink like 23%+14% or what do you mean by VAT registered. The business still needs to pay VAT, does that mean the store pays % tax on revenue and do you know what that figure is ?

Reason I'm asking:

1. The person buying the bottle is paying VAT at 14% right.
2. This 14% is already owed to SARS by the owner.
3. Then the owner still has to pay X% of his revenue on TAX also.

Or am I missing something ?

My understanding is that the store owner claims back the VAT he paid when purchasing the stock so he in turns only pays SARS VAT on the difference between what he paid and what he is selling it for - IOW 14% of the profit.

 

[Pitbull]

My understanding is that the store owner claims back the VAT he paid when purchasing the stock so he in turns only pays SARS VAT on the difference between what he paid and what he is selling it for - IOW 14% of the profit.

Right..... I missed that

Ty bwana

So in essence he then will be paying only TAX on the 23% markup in this example. Let's say he had a turn over of R 300 000.00 and Profit was R 69 000 (23%) for a month. What would the TAX rate be ? Is it also based on brackets like income TAX ? Or how does it work ?

 

[Veroland]

Right..... I missed that

Ty bwana

So in essence he then will be paying only TAX on the 23% markup in this example. Let's say he had a turn over of R 300 000.00 and Profit was R 69 000 (23%) for a month. What would the TAX rate me ? Is it also based on brackets like income TAX ? Or how does it work ?

As far as I have it VAT is on turn over and not profit. That is why vat gets added to the price of the item after markup

 

[hoegh]

Right..... I missed that

Ty bwana

So in essence he then will be paying only TAX on the 23% markup in this example. Let's say he had a turn over of R 300 000.00 and Profit was R 69 000 (23%) for a month. What would the TAX rate me ? Is it also based on brackets like income TAX ? Or how does it work ?

companies are taxed at 29%(last I remember, although I should know this seeing as I own a cc ) on any profit, no brackets of any sorts

edit: with vat, you have 2 types, input vat and output vat, input vat is the vat that you/the company pays out to suppliers in the purchasing of services/materials/stock for your business, output vat is the vat that you charge to your clients, output vat minus input vat gives you the amount you must hand over to SARS, if your input vat exceeds your output vat then you get a refund

 

[Pitbull]

companies are taxed at 29%(last I remember, although I should know this seeing as I own a cc ) on any profit, no brackets of any sorts

That sounds a bit low. But Cool none the less

R 69 000/100x29= R 20010.00 TAX then, leaving a monthly take home of R 48 990.00 before paying rent/levies and what not.

Ok they make a shyt load of money

 

[web]

My understanding (limited I might add of VAT is this)

You buy stock at say R14,000.00 made up of ( R12280.78 + R 1719.22 Vat ) you claim the R1719.22 back from the Tax man.

Now you sell that same stock for R20,000.00 made up of ( R17543.85 + R 2456.14 VAT ) you pay the Tax man the R2456.14 VAT amount.

 

[hoegh]

i reckon there is a bit of money to be made, what you gotta ask yourself is how many bottle stores do you actually see closing down, not very many, we are a nation that enjoys a good drink and I would assume that they make money. but I think they are heavily regulated as to where they can conduct business, hours etc.

 

[hoegh]

My understanding (limited I might add of VAT is this)

You buy stock at say R14,000.00 made up of ( R12280.78 + R 1719.22 Vat ) you claim the R1719.22 back from the Tax man.

Now you sell that same stock for R20,000.00 made up of ( R17543.85 + R 2456.14 VAT ) you pay the Tax man the R2456.14 VAT amount.

spot on, but you will do a return and match up the two amounts and in this case, give R736.92 to SARS. its all about making the final consumer pay the VAT

 

[Hoof-Hearted]

Right..... I missed that

Ty bwana

So in essence he then will be paying only TAX on the 23% markup in this example. Let's say he had a turn over of R 300 000.00 and Profit was R 69 000 (23%) for a month. What would the TAX rate be ? Is it also based on brackets like income TAX ? Or how does it work ?

In respect of the 2008 year of assessment, companies are taxed at a rate of 29%....

Small-business corporations (those with an annual turnover of less than R14-million) benefit from a graduated tax rate of 0% on the first R43 000 taxable income, 10% from R43 001 to R300 000 taxable income and R25 700 + 29% in excess of R300 001 taxable income, and can write off certain investment expenditure in the year in which it is incurred.

SARS

Obviously a whole lot of moving and shaking occurs when calculating "taxable income" for a company, but that's probably a whole discussion on it's own.

I doubt there's any "average" markup from bottle store to bottle store (evidenced by the price variance depending on where I buy my Glenlivet) but the bigger suppliers can obviously afford to drop their markup the higher their turnover is (just go down to Makro on a Saturday month-end to see all the dop moving out through their doors)

 

[2CentsWorth]

My understanding is that the store owner claims back the VAT he paid when purchasing the stock so he in turns only pays SARS VAT on the difference between what he paid and what he is selling it for - IOW 14% of the profit.

That's normal, and every business pays VAT on the value added amount. Claiming back VAT on the pre value determined amount doesn't change the value of the item It's not like he is scoring anything.

Sin taxes: these taxes are added as levies by the government at manufacturing level. Obviously these costs will be passed on to the consumer through the chain.

Some liquor stores are franchises, so there will be franchise fees applicable in those cases as well.