Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: richywilts on February 08, 2012, 06:02:49 pm
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i may be stupid and some are prob gona laugh but i honestly didnt know that every invoice or job you do is classed as a sale
been in with the new accountant all day at my unit he said every job you do is classed as a sale so maybe this is where my opinions have been differing with others
i honestly thought that level of vat was taken from what you actually take after each job is cleaned and paid for not for every job that is cleaned
oh well you learn something everyday, finance side of things have never been my strong point of all the bookeepers etc i have used some accountancy firms have never got this message across, or the business coach i have used
im completely taken a back by it, i know you can use bad debtors against this figure
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i may be stupid and some are prob gona laugh but i honestly didnt know that every invoice or job you do is classed as a sale
been in with the new accountant all day at my unit he said every job you do is classed as a sale so maybe this is where my opinions have been differing with others
i honestly thought that level of vat was taken from what you actually take after each job is cleaned and paid for not for every job that is cleaned
oh well you learn something everyday, finance side of things have never been my strong point of all the bookeepers etc i have used some accountancy firms have never got this message across, or the business coach i have used
im completely taken a back by it, i know you can use bad debtors against this figure
i'm with you on that richy. didnt know that either and seems strange. :o
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richy are you vat reg
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no but i think i should be ok obv we have some quite big weeks thru the summer but we have also had some small weeks and weeks where not much been done so fingers crossed it should be below the 70000
plus i didnt gain most of the work till july-sept
hes taken every bit of paper work with him today anyway to go thru everything
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ask about setting a second company up( its legal) to keep your level below the vat threshhold sounds as if theres twice as much work but its only splitting what you have. its worth it to save vat surcharge you have to charge to custys and making yourself too expensive. a 12 job will become 14.40 and so on, vat for us guys is not an attractive option .
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ask about setting a second company up( its legal) to keep your level below the vat threshhold sounds as if theres twice as much work but its only splitting what you have. its worth it to save vat surcharge you have to charge to custys and making yourself too expensive. a 12 job will become 14.40 and so on, vat for us guys is not an attractive option .
It would be a major business error to follow this advice.
It's not legal.
Vin
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ask about setting a second company up( its legal) to keep your level below the vat threshhold sounds as if theres twice as much work but its only splitting what you have. its worth it to save vat surcharge you have to charge to custys and making yourself too expensive. a 12 job will become 14.40 and so on, vat for us guys is not an attractive option .
It would be a major business error to follow this advice.
It's not legal.why is not legal my friend
Vin
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ask an accountant about it. some people have multiple companys ,
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ask an accountant about it. some people have multiple companys ,
Not in the same business in order to stay below the VAT limit, they don't.
Vin
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ask about setting a second company up( its legal) to keep your level below the vat threshhold sounds as if theres twice as much work but its only splitting what you have. its worth it to save vat surcharge you have to charge to custys and making yourself too expensive. a 12 job will become 14.40 and so on, vat for us guys is not an attractive option .
some people have no idea.
the tax man would love you
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what rubbish.
your accountant needs the sack mate. how can a job be a "sale" untill any money changes hands. rubbish.
Vin is right. you cannot set up other accounts to get around vat.
However there are 2 ways you can
1. if you set up other companies they cannot have ANY and I stress ANY shared resources. for example if you had 2 window cleaning business and there were totaly separate but only shared so much as a printer in your office that would not be alowed. so you would have to have double of everything.
2 you can be a sole trader and "incorperate" a Ltd company. for example I am a sole trader. I am Lee Pryor trading as Pryors window cleaning. I am franchising my business at the moment and am setting up Pryors window cleaning Ltd to be just for the franchising.
I am vat registered but my incorperated Ltd company wont need to be untill it hits the threshold
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ask an accountant about it. some people have multiple companys ,
usually in differant trades or from seperate business address, must be completly seperate, no same tools, van or staff etc, always amazes me when people want to progress but think they can get out of the boring stuff like vat, your either running a business or not,
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what rubbish.
your accountant needs the sack mate. how can a job be a "sale" untill any money changes hands. rubbish.
Vin is right. you cannot set up other accounts to get around vat.
However there are 2 ways you can
1. if you set up other companies they cannot have ANY and I stress ANY shared resources. for example if you had 2 window cleaning business and there were totaly separate but only shared so much as a printer in your office that would not be alowed. so you would have to have double of everything.
2 you can be a sole trader and "incorperate" a Ltd company. for example I am a sole trader. I am Lee Pryor trading as Pryors window cleaning. I am franchising my business at the moment and am setting up Pryors window cleaning Ltd to be just for the franchising.
I am vat registered but my incorperated Ltd company wont need to be untill it hits the threshold
Take some advice from this fella, he seems to know his stuff ;)
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Your accountant is wrong , taking your figures which would include your VAT threshold from monies recieved rather than jobs invoiced is very common and most businesses including mine do it and it is called cash accounting. In our business why would you not do this?
You cannot split your business to stay under the VAT threshold. Regardless of whether the business does or doesnt share any resources if the businesses is linked and is seen to offer similar services under the same management then they will come down on you.
Many people do it though and it is ultimately up to you though my view is if you are a growing business why waste your time and effort trying to avoid this threshold surely better to embrace the inevitable and put that time and effort in growing and improving a profitable business.
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what rubbish.
your accountant needs the sack mate. how can a job be a "sale" untill any money changes hands. rubbish.
Vin is right. you cannot set up other accounts to get around vat.
However there are 2 ways you can
1. if you set up other companies they cannot have ANY and I stress ANY shared resources. for example if you had 2 window cleaning business and there were totaly separate but only shared so much as a printer in your office that would not be alowed. so you would have to have double of everything.
2 you can be a sole trader and "incorperate" a Ltd company. for example I am a sole trader. I am Lee Pryor trading as Pryors window cleaning. I am franchising my business at the moment and am setting up Pryors window cleaning Ltd to be just for the franchising.
I am vat registered but my incorperated Ltd company wont need to be untill it hits the threshold
LEE THATS WHAT I THOUGHT MATE HOW CAN IT BE A SALE IF MONEY HASNT BEEN EXCHANGED
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Hello Lee ,
Good luck with the franchising! It can be a rocky road though , you should speak to Matt at Matt's mowing , im sure you have seen his vans , he is a home sevices company in our area and he has done a lot in the franchising field and would be an excellent resource for you.
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Something is wrong there richy,
We are VAT reg but only pay the VAT on invoices paid,
I don't personally deal with it the mrs does but I think its called cash accounting.
I'm already distressed enough with the window cleaning side of it. :-o
Dean.
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Why not just go for flat rate VAT?
It's simpler. I think it's 12%.
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window cleaning can be so distressing ;D ;D ;D sorry dean had to pinch your line
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window cleaning can be so distressing ;D ;D ;D sorry dean had to pinch your line
Haha ;D ;D
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Why not just go for flat rate VAT?
It's simpler. I think it's 12%.
Yes that's correct, its 11% for the 1st year, you raise the invoice at 20% vat but pay the VAT man 11%. You cannot claim any VAT back though on purchases under 2k though.
That alone can also be very distressing.
Dean.
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though not as ditressing as payin the VAT man 20% and having to do a proper longwinded PITA VAT return every quarter!
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though not as ditressing as payin the VAT man 20% and having to do a proper longwinded PITA VAT return every quarter!
providing youve not spent the money ;D its not too difficult, i can do our vat return in a morning, nice to be working in office, cuppa whenever i want, nice and warm, just need to check agian if ive spent there money or not ;D
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Rogue Trader , are you Dave Morris ?
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what rubbish.
your accountant needs the sack mate. how can a job be a "sale" untill any money changes hands. rubbish.
Vin is right. you cannot set up other accounts to get around vat.
However there are 2 ways you can
1. if you set up other companies they cannot have ANY and I stress ANY shared resources. for example if you had 2 window cleaning business and there were totaly separate but only shared so much as a printer in your office that would not be alowed. so you would have to have double of everything.
2 you can be a sole trader and "incorperate" a Ltd company. for example I am a sole trader. I am Lee Pryor trading as Pryors window cleaning. I am franchising my business at the moment and am setting up Pryors window cleaning Ltd to be just for the franchising.
I am vat registered but my incorperated Ltd company wont need to be untill it hits the threshold
It's not rubbish at all. There are two forms of Vat accounting, cash and accural. Accural s compulsory at around 1.6m turnover but a choice before then.
Cash = you pay on what your paid,
Accural = you pay on what you invoice. Meaning, you'll pay vat on money you haven't recieved.
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Mr Industry,
Are you the VAT man? :o :o
Only joking ofcourse. ;D
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question ????if you have 5 vans grossing over 200k you need to be vat registered . and there is no legal way to avoid going vat registered .the reason i ask is i know someone who is doing that
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as far as the taxman is concerned, what they want you to record is work done and invoiced, it doesn't matter if you have been paid there and then.
At the end of the tax year you can claw back the ones who haven't paid you and you only pay tax on what money you have recieved minus your expenses.
The vat man and vat is a different creature, in the old days you could register for vat if you thought you would hit the vat threshold in the coming year.
This was stopped a few years ago, because of a loophole that many businesses where exploiting, me included ;D
Now you only have to register when you reach the vat threshold, but this threshold is set on work done not paid.
If you look at it this way, if you do work you expect to get paid, the vat man has the same opinion.
Yes you can run to businesses at the same time and not register for vat, but you have to prove to the vat man that they are not connected in any way.
If both are window cleaning rounds then you will have a major problem, because the vat man will not believe you, and as far as they are concerned you are guilty.
You will spend a fortune trying to convince them otherwise.
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as far as the taxman is concerned, what they want you to record is work done and invoiced, it doesn't matter if you have been paid there and then.
At the end of the tax year you can claw back the ones who haven't paid you and you only pay tax on what money you have recieved minus your expenses.
The vat man and vat is a different creature, in the old days you could register for vat if you thought you would hit the vat threshold in the coming year.
This was stopped a few years ago, because of a loophole that many businesses where exploiting, me included ;D
Now you only have to register when you reach the vat threshold, but this threshold is set on work done not paid.
If you look at it this way, if you do work you expect to get paid, the vat man has the same opinion.
Yes you can run to businesses at the same time and not register for vat, but you have to prove to the vat man that they are not connected in any way.
If both are window cleaning rounds then you will have a major problem, because the vat man will not believe you, and as far as they are concerned you are guilty.
You will spend a fortune trying to convince them otherwise.
Nice post
Richie
http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#7
Visit the HMRC site loads of info on their site
Main point
Do not avoid registering for VAT by artificially separating business activities
If you run more than one business the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.
However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT-registered.
If HMRC decides that you have artificially separated one business into smaller parts to avoid registering for VAT, it can decide that the entire business is a single taxable person and therefore must be registered for VAT. See the description of 'taxable person' in the section in this guide on who can and can't register for VAT
Situations that HMRC may consider a single taxable person for VAT purposes include:
Separate entities selling to registered and unregistered customers.
The VAT-registered entity sells only to VAT-registered customers, and the entity not registered for VAT sells to customers who are not registered for VAT.
The same equipment or premises being used by different entities on a regular basis. The premises and/or equipment are owned by one of the parties, who charges rent to the others. This situation may occur in businesses such as launderettes and takeaway food operations.
Splitting up what is usually a single sale.
This is common in industries such as the bed and breakfast trade, where one business supplies the bed and another the breakfast.
If you deliberately avoid registering for VAT, you may be liable to a penalty. For serious offences, the matter will be investigated and you may be prosecuted.
Andy
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i may be stupid and some are prob gona laugh but i honestly didnt know that every invoice or job you do is classed as a sale been in with the new accountant all day at my unit he said every job you do is classed as a sale so maybe this is where my opinions have been differing with others i honestly thought that level of vat was taken from what you actually take after each job is cleaned and paid for not for every job that is cleaned oh well you learn something everyday, finance side of things have never been my strong point of all the bookeepers etc i have used some accountancy firms have never got this message across, or the business coach i have used im completely taken a back by it, i know you can use bad debtors against this figure
Rich get a grip :)
Example you do £100 worth of work and you are vat registered on flat rate, cash accounting, not full rate.
£100.00 nett
£20.00 vat
£120.00 Gross
A)You get paid £120.00
The £100 nett figure is your nett turnover.
The £120.00 gross figure is what you pay vat against (flat rate is a %)
B) You get paid £80.00 of the £120.00
The £100 nett figure is still your nett turnover etc etc
You pay personal tax and vat against the £80.00 on cash accounting.
Not nagging, but you have to get your head round these things, you can't just leave it to someone else, even an accountant. Speak to this accountant and ask him about flat rate vat ; :)
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richy
the taxman has free courses you can go on, even if you have other people who deal with your business, you still need to know some basics.
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Hello Lee ,
Good luck with the franchising! It can be a rocky road though , you should speak to Matt at Matt's mowing , im sure you have seen his vans , he is a home sevices company in our area and he has done a lot in the franchising field and would be an excellent resource for you.
Hi matt
Rogue trader?? lol yes I know of him. wasnt he involved with nice n strippy? wasnt that his business?
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ask about setting a second company up( its legal) to keep your level below the vat threshhold sounds as if theres twice as much work but its only splitting what you have. its worth it to save vat surcharge you have to charge to custys and making yourself too expensive. a 12 job will become 14.40 and so on, vat for us guys is not an attractive option .
Be VERY VERY careful. Absolutly NOT legal
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My account advised me to split my company up into SAJ Commercial & SAJ Domestic,
I decided not to as 1 I did not think it was legally right and 2 the ball ache to do it
2 names 2 vans 2 sets of accounts 2 computers 2 bank accounts, one company cant use the other company's equipment unless it is invoice for if i did work for the other company then i will have to bill them for the job + labour
and soooo on
to much hassle for whats its worth so we ended up going fully VAT reg and has probably been the best decision I have ever made, for some reason commercial clients take you more seriously ???
As for domestic we just hide the vat in the cost but we dont think oh a £10 has got to be £12!!! we just clean like normal and at the end of the day minus the vat out of the days turnover!!
That's my way of doing things some might agree some might not ;D
Stuart
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Stuart, I really don' think some people appreciate the amount of work that can be involved when splitting business, let alone the risk of HMRC catching up with them.
As for accountants advising to do this, I guess it all depends on what sort of accountant you have...... as you said 2 lots of accounts, 2 businesses etc etc . Accountant gets 2 lots of fees for dealing with 2 businesses :)
We went vat registered on flat rate and as you say it's been really helpful when gaining commercial. With higher end domestic we find that they like the fact we are vat registered. it gives them extra peace of mind in a strange sort of way.
The vat issue was discussed this year with our accountant and HMRC are now looking into making the "person" (which can be human, partnership of 2 or more people, the company) vatable.
We hope not as our 2 businesses are totally different, and one is not vat registered, but I wouldn't bet against it happening though :)
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My account advised me to split my company up into SAJ Commercial & SAJ Domestic,
I decided not to as 1 I did not think it was legally right and 2 the ball ache to do it
2 names 2 vans 2 sets of accounts 2 computers 2 bank accounts, one company cant use the other company's equipment unless it is invoice for if i did work for the other company then i will have to bill them for the job + labour
and soooo on
to much hassle for whats its worth so we ended up going fully VAT reg and has probably been the best decision I have ever made, for some reason commercial clients take you more seriously ???
As for domestic we just hide the vat in the cost but we dont think oh a £10 has got to be £12!!! we just clean like normal and at the end of the day minus the vat out of the days turnover!!
That's my way of doing things some might agree some might not ;D
Stuart
At last- the voice of reason!! ;D
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Lee ,
That is right , that is the fella , nice bloke actually and always willing to impart his wisdom, you should give him a call as he will be happy to talk to you im sure.
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sod splitting my business into two running this one has been hard enough!!!!!
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sod splitting my business into two running this one has been hard enough!!!!!
Good decision,make sure you stick with it ;)
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looks like im downsizing to just me helen the usual good worker who hits big amounts doesnt seem to like working in the cold become so unreliable since coming bk after xmas so im working on refining the rounds right down and maybe hoping this contract comes off
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looks like im downsizing to just me helen the usual good worker who hits big amounts doesnt seem to like working in the cold become so unreliable since coming bk after xmas so im working on refining the rounds right down and maybe hoping this contract comes off
hey richy, if your guys gone have you considered Bob Plum's son to help you get thru your round whilst your sorting things? Just an idea to help you out in the short term.
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all the posts have been an eye opener regarding hmrc . i really dont know how the guy i know is getting away with it. he comes across as very honest, there is obviously a way of doing it . but a lot of hassle , if you hit vat threshold and you have to go vat registered then i guess its best to swallow it in your existing turnover .at least you get your vat back on expenses . thanks guys for making me not making a huge mistake .
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looks like im downsizing to just me helen the usual good worker who hits big amounts doesnt seem to like working in the cold become so unreliable since coming bk after xmas so im working on refining the rounds right down and maybe hoping this contract comes off
Only just seen this...... could be the best way forward for you.....oh and Happy Birthday :)