With #workingfromhome trending more than ever, now’s the time to start your own online business. UK’s ecommerce is booming and has been forecasted to have the highest online shopping rate in Europe by 2021 with 93% of the UK’s internet users making purchases online.
That’s an audience you don’t want to miss out on. In this guide, I’ll go over the main steps of starting an online store with print-on-demand dropshipping. To help you set up as quickly and smoothly as possible, I’ll also explain a few key factors about taxes within the UK.
To set your business up for success, first, you need to find your niche. Your future customers will come to your store with a certain need or problem in mind, and your job is to provide them with products that solve it.
To find out what people need help with, there are few leads you can follow:
For a more detailed step-by-step, read our guide on finding your ecommerce niche.
Disclaimer: This does not constitute professional tax advice. We strongly advise consulting a tax specialist to find out your specific obligations.
UK residents have to register their dropshipping business. Your options are:
Most dropshippers in the UK go with sole trader because of the fast setup and easy operation. If you’d like to explore the other 3 options, check out the UK government’s official blog for business owners.
After your business is up and running, you’ll have to pay 2 main taxes:
The UK has a progressive tax system, meaning your income tax depends on how much you make. The income is divided into 4 parts known as bands. Tax is deducted according to these bands. The bands are:
Say, you make £70,000 a year with your dropshipping business.
You pay no taxes for the £12,500 of your whole income—this is your personal allowance. Moving on to the basic rate, you then have to pay 20% of the £37,500(£7,500 in taxes). And finally, the higher rate which is 40% for the rest £20,000 (£8,000). In total, you have to pay £15,500 in income tax.
Since the UK is no longer a European Union member state, changes in taxing are due. For now, the taxation remains the same as in the rest of the EU, but as of January 1st, 2021, different rules apply when it comes to VAT.
When dropshipping in the UK, your VAT is 20%. You add this to your retail price. Say you’re selling canvas prints in the UK for £19. Your VAT for this product is £3.8, making your final canvas price £22.8. If you’re planning on selling only to UK shoppers, then you’re good to go from here.
In the EU, VAT rules and rates differ per country. If you want to sell products to customers in the EU, first get acquainted with these requirements to make sure your store runs smoothly.
Don’t be intimidated—I’ve got good news. There’s a revenue threshold for each country before you can be charged with a sales tax. In the UK, that amount is £85,000, in Spain—€35,000. Here’s a full list of VAT thresholds for sales in the European Union.
Once you’ve come up with your market niche and got the hold of managing taxes, it’s time to work on your online shop.
First, you’ll need to decide on your platform. There are three options you can go with:
To help you make your choice, let’s look at the main pros and cons of each option.
An ecommerce platform is a software that helps business owners build their online store. Ecommerce platforms have changed the game by allowing business owners to create sleek and functional store websites with little to no web development skill requirements.
On ecommerce platforms, customers can shop within a single store without ever being aware of any other online shops hosted by the same platform. Online marketplaces, on the other hand, are like a shared space for online sellers where customers can easily find and compare similar stores.
Here, a business owner builds their website from scratch and hosts it on a server or a web hosting account. There are apps available that provide essential parts of an online store like the shopping cart, coupon systems, payments, and more.
To find the best option for your store, check out our integration comparison where you’ll find the best ecommerce platforms, online marketplaces, and open-source platforms for self-hosted stores.
Print-on-demand (POD) dropshipping is a great way to start your own business.
A print-on-demand dropshipping supplier is responsible for your order fulfillment and shipping. This means you don’t need any printing equipment or product storage space, and can easily manage your business from the comfort of your home.
Since all products are made to order, the startup costs are minimal, lowering financial risks in case your store doesn’t succeed on the first go. POD dropshipping also offers you to add products to your store instantly, so it can be a quick option for a side income.
Here’s a recap of the main terms.
Dropshipping—a business model where the store owner hires a third-party supplier to handle order fulfillment and shipping, as well as the inventory storage.
Print-on-demand—a dropshipping model where the store owner creates a design which the supplier then prints (and often embroiders) on a variety of products.
Yes! Print on Demand Worldwide forecasts an estimated £114.8 billion increase by the year 2022. Due to increased interest in sustainability and minimizing product waste, more businesses turn to this model as products are created on demand.
There’s also growing demand in the global market for personalized gifts (an estimate of over $31 billion value by 2021). Print-on-demand can help businesses make a profit off this trend without calling for a big investment since there’s no need for large pre-orders of products.
To finish your store setup, you now have to pick a print-on-demand supplier. To help you with that, we’ve created a list of top print-on-demand providers that will help you dropship custom products in the UK.
Printful has 1 fulfilment centre in Birmingham, UK, which ensures fast fulfilment and shipping for your UK-based shoppers. We also have other fulfilment centres and partner facilities all over the world for when you’re ready to expand to other markets.
Streetshirts is a UK-based t-shirt printing company that prides itself with organic, vegan-friendly, and toxin-free product printing.
Inkthreadable provides on-demand product printing services in the UK. It grants 1–3 day shipping within the UK and supplies its customers with products like t-shirts, leggings, beanies, home decor, and more.
Music Glue is a UK company helping musicians sell music, print-on-demand merch, and tickets. A great option for artists expanding their business to custom merch.
Based in Blackpool, UK, Two Fifteen is a print-on-demand service provider with products ranging from your classical tees to decor, mugs, and more.
Contrado provides its customers with print-on-demand products as well as fabric printing for business owners looking to sell personally hand-made products as well.
Printsome specializes in select apparel and tote bag printing for brands to sell online.
As the name already suggests, this UK print-on-demand company specializes in printing and embroidering design onto clothing. This company has been announced as the UK’s leading supplier of ethical and sustainable clothing for custom branding.
Part of the Prodigi family, Kite prints and ships merch like apparel, home decor as well as provides photo printing.
Now that you’re all good to go and excited to start your business, there’s not a moment left to lose.
Chances are, you’re not the only one eyeing the UK market! Do yourself a favor by starting your business sooner rather than later, and establish your brand as a force to be reckoned with in your niche.
Content Marketing Specialist
Una’s a Senior SEO Content Writer with a knack for SEO-friendly copywriting and building stunning landing pages. In her spare time, she's an avid reader and keeps close tabs on all things social media and mental health.