Selling second-hand items between private individuals happens regularly, but what if your company buys a second-hand item from a private individual?
The purchase can be anything, such as a vehicle, laptop, cell phone, printer, etc. Buying something from a private person is possible, as long as you take a number of things into account. If you do so, this kind of purchase will not adversely affect your accounting.
No VAT on purchases from a private individual!
The private person you are purchasing from charges a price without VAT. It is therefore only natural that you cannot recover VAT on this purchase.
Not even if that private person provides the original purchase invoice. That person first purchased from the store and received the purchase invoice, and you as an entrepreneur then purchase from that person. The private individual you buy from cannot charge VAT, that is not legally possible. Consequently, you as a business owner cannot recover VAT on the purchase from that private individual.
Still an expense for your accounts
Here it makes no difference at all whether you purchase something from a supplier with a company number or from a private person, both purchases count perfectly as an expense for your accounting.
Attention, you do need a supporting document! You must be able to provide proof (in case of a tax audit) that you have actually purchased something and at what price.
You will therefore need to draw up a document together with the private individual from whom you are buying, containing a number of details. These include the seller’s details, a description of the purchase & the price.
We are happy to help you get started, here is an example of such a proof of purchase!
Without proof of purchase, you cannot proceed to enter the cost into your accounts! It will be insufficient for tax audits if, for example, you simply present the bank statement showing payment to the private individual.
And if you are repurchasing something from yourself?
That is certainly possible, then you are also just buying from a private individual, only in this case it is yourself. Presumably there are two reasons why you are doing this:
1) You made the purchase before you started your self-employment
The item you purchased back then, you are now going to use for your self-employed activity and thus could have a place in your accounts. We wrote an article on expenses before start-up, ready for you with all the tips & tricks!
Would you like to launch your business as soon as possible? Then know that Dexxter is here for you to take control of your sole proprietorship accounting yourself!
2) You have already launched your business
You are already engaged in your self-employed activity in this situation, you go to the store and purchase something for your business. Walking out of the store, you unfortunately notice that your company number does not appear on the invoice.
Or you haven’t even received an invoice, but only a receipt, for example. So in this case, you actually purchased something as a private individual. The store you purchased from registered their sale to you as a private person.
Don’t worry, this purchase can still be entered into your accounts AND you don’t have to buy anything from yourself, which saves you from an administrative hassle.
You can include the purchase directly in your accounts, but there are a few things to watch out for depending on your VAT status. Find out more in our article on deductible expenses.
Dexxter to the rescue
In Dexxter’s learning center, you can find a great amount of content and information. There are many different articles, for example about purchases from a private individual.
We also invest strongly in video material, so you can also view the explanation of a proof of purchase below.
Do you have more questions about purchases for your accounts?
Did you know that in Dexxter we have created a community especially for these questions? It is a place where all Dexxter users can freely ask their questions and get them answered!
When you create a profile on Dexxter, you immediately get a 30-day free trial. This gives you the opportunity to check out the community and discover for yourself what questions are being asked by your fellow entrepreneurs.
