The Dorset bed and breakfast interview: VAT and being neighbourly

BusinessesForSale.com: Why did you decide to run your business?

AA: I have ran my B&B on the Dorset coast for three and a half years after living in London for about 15 years I was ready for a change. I wanted to have a different type of lifestyle and I didn’t want to have a boss anymore. I wanted to do something on my own. 

BFS: Was there anyone that you went to for advice?

AA: Well I have some fantastic neighbours. In terms of viewing the competition as friends or foe, I am very much in the friends [camp]. Some of them have been fantastic to me in terms of teaching me things and introducing me to people and helping me with builders.

We don’t see ourselves necessarily as competitors but people who are all trying to do something. Usually people have managed to find a niche so there is not a huge amount of crossover.

The typical Weymouth guest is pretty loyal. Once they go somewhere and they're happy there then they go back and back and back

BFS: How did you decide the right price for the rooms?

AA: It’s about comparing yourself to your neighbours. In the last year the prices have gone up including my neighbours because all of a sudden we’re VAT registered at 20%.

The cost of food and the cost of energy have also gone up. One of the reasons that we close in winter is that it is so expensive to heat and light the building. Check out the competition and see where you put yourself. 

BFS: What should potential B&B owners know about VAT registration?

AA: You can turnover £70,000 this year without paying any VAT. If you have any rolling 12 month period where you have turned over £70,000 then you need to register for VAT. That means 20% of what you take you pay to the VAT man.

Equally you can reduce that expenditure where you’ve paid VAT yourself. In this type of business it is hard to reduce my VAT because my main costs are wages and food.

There is a scheme available for small businesses where you can apply for a VAT flat-rate that is at a different rate for different types of industry. You need to check with your accountant to see what the flat rate is for you.

BFS: what advice would you give someone considering buying a B&B for sale?

AA: I think clarity of communication between you and your guests is required to match their expectations. You really want to make your website reflect genuinely what you are, so that when people come they think ‘oh that is what it looks like in the picture and it is what it says it is’. And quality is important. 

Browse BusinessesForSale.com for a B&B for Sale

Read Running a B&B: guests’ marital status & other pitfalls