Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: Mist A Bit on January 10, 2011, 09:37:30 pm
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Just a quick question, is it worth doing? Im still a one man band with a full time round.
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No need to unless you turnover more than 70k in one 12 month period.
Dean.
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Dont mean to nit picking Dean but i heard its 64k per annum? I may be wrong though mate....
Danny
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Would it be worth it to get the 20% back at least from the fuel?
Or would it be more hassle than its worth?
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its 70 k
http://vat-threshold.co.uk/ in a rolling 12 months period
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Cheers blue monkey......im usually wrong :( ;D
Danny
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i think it use to be 64 k
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Id say its not worth it! VAT man very powerfull but i know you get 20% off fuel/costs but you also be charging customers 20% more so a £30.00 job would now become 6.00 extra its a very big increase for customers at this time of year and with recession.
at the end of the day we dont really buy much stuff were not like a stock business such as shops etc
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Just a quick question, is it worth doing? Im still a one man band with a full time round.
DONT DO IT :-X
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Thats one big head ache for a one man band...plus think of all the custys you will upset by adding 20% vat to there bill....
:'( :'( :'(
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Thats one big head ache for a one man band...plus think of all the custys you will upset by adding 20% vat to there bill....
:'( :'( :'(
I've recently done it on the flat rate.
Not through choice mind you.
Dean.
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Email from accountant
Hi Dean/Judy
A business can register for the flat rate scheme of VAT if its annual turnover, excluding VAT, is less than £150,000. The rate of VAT for your business from 4 January 2011 would be 12%. This is the rate for all other businesses which were not listed as specialised by H M Revenue and Customs and is also the same percentage as the laundry and dry cleaning businesses which is in a similar sector.
An example of how the flat rate scheme would be calculated is:-
A sale of £100 net would be charged at £100 + 20% VAT, a total of £120. This is how you would raise your invoice.
When you come to complete your VAT return, you calculate the VAT based on the total VAT inclusive amount of £120 (so £120 x 12% = £14.40). This amount is payable to H M Revenue and Customs leaving you a net amount of £105.60.
There are two methods of calculating the VAT, the basic turnover method and the cash based turnover method. This means that you would either pay when the invoice is raised or when the monies are received. Given that you normally have a gap between invoicing your customers and receiving the payment from them, I believe the cash based turnover method would be better suited to your business. In this instance, you will only pay over the VAT amount when any monies are received and this should not affect your cash flow.
You cannot reclaim any input VAT on any normal purchases however you can reclaim the VAT you have been charged on a single purchase of capital expenditure goods where the amount of the purchase, including VAT, is £2,000 or more.
With regards to your current non commercial customers, unfortunately you will either have to pass the price increase on to your customer’s, or reduce the net price to these customers (so effectively suffer a loss in income for yourselves). One way to minimise the impact on these customers would be to increase the gross price to your customers by 13.64%, rather than adding on 20% on top. This would mean that you are still receiving the same net amount after paying over the VAT as before and the price rise would not be so substantial. An example of which would be:-
For what was previously a £100 sale, you would now charge £94.70 + 20% VAT, a total of £113.64.
You calculate the VAT based on the total VAT inclusive amount of £113.64 (so £113.64 x 12% = £13.63). This would mean that after you have paid the VAT over to H M Revenue and Customs, you would still be left with the same net amount as to what you were receiving previously and the customer has suffered a lesser price rise.
One other option would be to possibly set up the limited company now and have two sets of accounts, one with the commercial contract work and one for your domestic work. As these are two separate entities, we could keep the sole trade business below the VAT threshold so no price increase would need to be passed on to your domestic customers. However, this does come at a cost and more administration and without looking at the numbers for each, I do not know whether this would be a viable option.
If you would like to discuss any of the above or would like any further information, then please do not hesitate to contact me.
Kind regards,
James
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a few things i didnt see her mention which my accountant didnt mention, you get it discounted for 1 year by 1% importsnt you remember this has its 1% in your pocket.
also any assets bought in the last 5 years over 2k you can claim the vat back on but MUST be done on first return, now i wasnt informed about this so i never did and im in the process of claiming back or trying via the vat correction team.
but its imoportant you look it up your self its possible the account will forget things.
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Hi Ronnie,
Yes he's told us about the 1% discount and other things since.
This was an email sent when weighing things up.
Its all good fun though.
Dean.
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Good on you Dean hope all goes well mate...
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Unless you have hit the threshold then you don't want to register for VAT, it is invariably not in your interest.
The only times that registering for vat below the threshold level may be recommended is if:
- you manufacture goods in the UK but export them as you can claim the vat back on materials but the goods you are selling are vat free.
- you are predominantly serving the commercial market and want to "appear" as a big VAT registered company when really you are a man with a van and a set of ladders or possibly a big pole...........and some window cleaning gear!
Other than those I can't think of a good reason!
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Unless you have hit the threshold then you don't want to register for VAT, it is invariably not in your interest.
The only times that registering for vat below the threshold level may be recommended is if:
- you manufacture goods in the UK but export them as you can claim the vat back on materials but the goods you are selling are vat free.
- you are predominantly serving the commercial market and want to "appear" as a big VAT registered company when really you are a man with a van and a set of ladders or possibly a big pole...........and some window cleaning gear!
Other than those I can't think of a good reason!
.....or if you spend more than you earn.
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Dean
One other option would be to possibly set up the limited company now and have two sets of accounts, one with the commercial contract work and one for your domestic work. As these are two separate entities, we could keep the sole trade business below the VAT threshold so no price increase would need to be passed on to your domestic customers. However, this does come at a cost and more administration and without looking at the numbers for each, I do not know whether this would be a viable option.
If you are considering the above as an option, I would ask your accountant to clarify as we were informed by our accountants that this would not be an option if we were using the same equipment/manpower for both domestic and commercial.
Neil
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That's what i wondered.
How is this not artificial seperation?
There is a revenue guy on here, perhaps he'll tell us.
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Dean
One other option would be to possibly set up the limited company now and have two sets of accounts, one with the commercial contract work and one for your domestic work. As these are two separate entities, we could keep the sole trade business below the VAT threshold so no price increase would need to be passed on to your domestic customers. However, this does come at a cost and more administration and without looking at the numbers for each, I do not know whether this would be a viable option.
If you are considering the above as an option, I would ask your accountant to clarify as we were informed by our accountants that this would not be an option if we were using the same equipment/manpower for both domestic and commercial.
Neil
Same here. We were also told you can not use the same vehicles, equipment or manpower.
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That's what i wondered.
How is this not artificial seperation?
There is a revenue guy on here, perhaps he'll tell us.
Thanks slumps that was the phrase our accountants used.
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Yes I did think that too,
2 sets of accounts wouldn't be where I want to head anyway as I've hardly got enough time write an invoice out at the moment,
Cheers,
Dean.
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Thank you Darren Bradley for the encouragement mate,
Bed time to watch shameless and an early start tomorrow.
Dean.
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Dean
One other option would be to possibly set up the limited company now and have two sets of accounts, one with the commercial contract work and one for your domestic work. As these are two separate entities, we could keep the sole trade business below the VAT threshold so no price increase would need to be passed on to your domestic customers. However, this does come at a cost and more administration and without looking at the numbers for each, I do not know whether this would be a viable option.
If you are considering the above as an option, I would ask your accountant to clarify as we were informed by our accountants that this would not be an option if we were using the same equipment/manpower for both domestic and commercial.
Neil
we was told that if you ran it from same adderss it would be classed as one business so all would have to be vat registed,