Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: Jack Judd on September 07, 2020, 07:44:48 pm
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Loved the post on BIG business and how do we go big. They appeared to be opposite ends of a spectrum. I agree work life balance is so important. My dad is a millionaire, probably multi but I never saw him and have a crap relationship with him now. I have a autistic son which takes up time and energy, but I have also been knocking on the VAT door for 2 years. Covid kept me under this year with time off etc, but I cant add more comercial customers without going over. I dont want the hassel of running a 200k profit business, but I would like to run a 60k profit business rather than the current 45K proffit. Can I split gutter cleaning and window cleaning or commercial and domestic to take the VAT pressure off. 2 ltd companies, 1 ltd and 1 solet trader 2 sole traders. if you are going to go VAT registered how much more than the 85k do you need to make to make it worth while. arrrrrrrrrrrr
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Best to ask a decent accountant.
I think that the businesses have to be 2 completely separate and maybe even unrelated businesses.
I would be especially careful as HMRC will be doing their best to stop any sort of iffy behavior to claw back some of the gov expenditure due to covid!
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Best to ask a decent accountant.
I think that the businesses have to be 2 completely separate and maybe even unrelated businesses.
I would be especially careful as HMRC will be doing their best to stop any sort of iffy behavior to claw back some of the gov expenditure due to covid!
I agree. HMRC will see this as a tax avoidance scheme . They will see it exactly as the o/p is - a tax fiddle.
Its a question that has been raised before on this forum.
You might be able to get away with say a family member running the commercal business side under a different name, from different premises and a different bank account. As Ched says, you need to enlist the services of an accountant.
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You are not allowed to have anything to do with one of the businesses.
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It sounds like you need to reduce your expenses?
If you are making £45k and nearing the vat threshold, what’re you spending £35-40k on? Or are you talking take home after tax?
I should think £60k pretax profit and staying under the threshold should be achievable.
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Your right. My cost are to high. But I had 2 guys working for me and I was in the office 20% of the time generating business. That worked as the business grew quickly, but meant I was on 50% costs, heated water, labour etc. Saving my back and tennis elbow but financially worse off. I think lower costs would be a way forward, but then i will have to pay more tax!!!
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Are you still employing? and do you plan to continue employing in the future? If you do it sounds like you need to bite the bullet and go VAT registered, you might be able to use the flat rate scheme to soften the blow while your business adjusts.
Otherwise if you are working alone cut down the expenses streamline your work and perhaps focus on just one area rather than spreading yourself across commercial & domestics & gutters & etc.
It’s a false economy to spend money on your business just to reduce your tax bill, if it’s unnecessary spending it’s still not going in your pocket.
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No is the short answer.
Because HMRC will ask, why did you split them, do you have any commercially viable reasons?
Umm no, just to Avoid vat :-X
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You can’t have anything to do with one of the businesses I’ve already talked to an accountant about this,IMO if you employ especially in the south there’s something seriously wrong if just 2 people out in 1 van aren’t going over the threshold if they work a 7-8 hour day.
10-15 years ago you’d easily stay under it people used cash way more than they do now.
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I was told you must have no contribution at all to the other business in any way that it functions.
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Go to 1 of the car washes pay one of em a couple of grand for their ID set up a business the 2 grand will seem like peanuts 🤣🤣,you won’t be the first to be doing it.
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Legally you can’t do this but I know people who do and have done so for years. Problem is when the tax man finally catches you and he will, you have all those years of “unpaid tax” to pay and they ain’t patient.
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Those that have broken through the vat threshold successfully and tell about it seem to power through it by biting the bullet.
It's not like you lose 20% because you can claim some vat back.
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I was told you must have no contribution at all to the other business in any way that it functions.
Pretty much, there need to be no link from one to the other. Whilst technically you can do it, to be able to achieve it in reality would be impossible.
You cant share anything, not even a pen or a swivel chair.
The only way you can do it is if you prove its for commercial reasons, so maybe if you had 1 company down south and another up north, one being window cleaning another being gutter cleaning with separate staff, websites, customer bases etc you might be able to do it.
But again it's so dodgy, if a customer from business A puts you into a job that you complete via business B, there's a link and would be so hard to pull off you would spend all your time worrying about artificial separation.
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It’s being done all over the place you have a business that needs work to be carried out it gets carried out by the other said business,1 generates work for the other and then invoices the other it goes on and has been since the year ........ it’s illegal but so is armed robbery it won’t stop it happening.
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It’s being done all over the place you have a business that needs work to be carried out it gets carried out by the other said business,1 generates work for the other and then invoices the other it goes on and has been since the year ........ it’s illegal but so is armed robbery it won’t stop it happening.
Theres all sorts of dodges that go on when it comes to tax a lot of it will be walking a thin line between whats legal and what isnt...from big corporations to the sole trader sticking a tenner in his back pocket.
Doesnt mean tax evasion is advisable though, personally i couldnt sleep at night wondering when the tax man was going to come knocking.
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Buy a block of flats convert it into an office stay there 5 years get tax relieve through having it as business premises let the businesss pay the mortgage convert it back jobs a good”n” lol,loophole crazy country we live in if you actually said what you were intending on doing long term they wouldn’t allow it that’s the mad thing 🤣🤣
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Buy a block of flats convert it into an office stay there 5 years get tax relieve through having it as business premises let the businesss pay the mortgage convert it back jobs a good”n” lol,loophole crazy country we live in if you actually said what you were intending on doing long term they wouldn’t allow it that’s the mad thing 🤣🤣
Thats how the rich get richer, they dont give their money away easily.
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Loved the post on BIG business and how do we go big. They appeared to be opposite ends of a spectrum. I agree work life balance is so important. My dad is a millionaire, probably multi but I never saw him and have a crap relationship with him now. I have a autistic son which takes up time and energy, but I have also been knocking on the VAT door for 2 years. Covid kept me under this year with time off etc, but I cant add more comercial customers without going over. I dont want the hassel of running a 200k profit business, but I would like to run a 60k profit business rather than the current 45K proffit. Can I split gutter cleaning and window cleaning or commercial and domestic to take the VAT pressure off. 2 ltd companies, 1 ltd and 1 solet trader 2 sole traders. if you are going to go VAT registered how much more than the 85k do you need to make to make it worth while. arrrrrrrrrrrr
Why try and avoid VAT? If you are running a VAT Registered business and paying VAT every quarter you are making money, it is that simple. Nobody appreciates being a mini tax collector for HMRC but that’s just the way it is. My advice is stop worrying about it, register for VAT and get on with the important things in life like looking after your Son. After all if You find out later it was the wrong move you can always deregister!
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Loved the post on BIG business and how do we go big. They appeared to be opposite ends of a spectrum. I agree work life balance is so important. My dad is a millionaire, probably multi but I never saw him and have a crap relationship with him now. I have a autistic son which takes up time and energy, but I have also been knocking on the VAT door for 2 years. Covid kept me under this year with time off etc, but I cant add more comercial customers without going over. I dont want the hassel of running a 200k profit business, but I would like to run a 60k profit business rather than the current 45K proffit. Can I split gutter cleaning and window cleaning or commercial and domestic to take the VAT pressure off. 2 ltd companies, 1 ltd and 1 solet trader 2 sole traders. if you are going to go VAT registered how much more than the 85k do you need to make to make it worth while. arrrrrrrrrrrr
Why try and avoid VAT? If you are running a VAT Registered business and paying VAT every quarter you are making money, it is that simple. Nobody appreciates being a mini tax collector for HMRC but that’s just the way it is. My advice is stop worrying about it, register for VAT and get on with the important things in life like looking after your Son. After all if You find out later it was the wrong move you can always deregister!
The problem is domestic customers will suddenly be paying 20% more! So you might loose some!
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as others have said.
1. get a decent accountant (if you haven't already) and ask them
2. you cant really split them. you'll be fine doing so .. as long as you don't get looked into. you might get lucky, but not worth the stress.
3. if you want to grow get VAT registered and make the savings where you can. if you split them you have 2 sets of accounts, 2 mail boxes, separate insurance, separate fuel cards etc etc. lots of your time wasted
i went VAT registered about 5 years ago. it was a massive strain for me agonizing over the decision you're making now. make sure you have your accounts and business running smoothly before you do, and make sure you put your prices up (i wouldn't recommend 20% though, i did £1 per domestic client which brought in about £450 extra a month)
now my accounts are running very smoothly and my business is simpler as a result. i pay VAT monthly myself so i dont get behind
R
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There’s no debate about this Richard you cannot split the business it’s fraudulent and someone would be trying to make it look like they have no income from the other one for Tax reasons,if it was a simple case of being able to do this I would have done this years ago not really a good idea to say you might get away with it but you might get looked into m8.
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There’s no debate about this Richard you cannot split the business it’s fraudulent and someone would be trying to make it look like they have no income from the other one for Tax reasons,if it was a simple case of being able to do this I would have done this years ago not really a good idea to say you might get away with it but you might get looked into m8.
i dont think i ever said there was a debate?
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yes you can split into different business if you are LTD. My wife is an accountant and has several clients at work with multiple business so they can avoid paying higher tax , one has five I think she mentioned
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There’s no debate about this Richard you cannot split the business it’s fraudulent and someone would be trying to make it look like they have no income from the other one for Tax reasons,if it was a simple case of being able to do this I would have done this years ago not really a good idea to say you might get away with it but you might get looked into m8.
i dont think i ever said there was a debate?
As long as you don’t get looked into that’s not good advise really is it.
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yes you can split into different business if you are LTD. My wife is an accountant and has several clients at work with multiple business so they can avoid paying higher tax , one has five I think she mentioned
You can have more than one biz - but they can't overlap
For example you may have a bakery biz and a drain clearing biz - running totally different staff etc..
But if you have a bakery and a cake making biz both running from the same premises and staff ( or anything shared for that matter ) Will been seen as tax avoidance - there are some accountants that if you push them say you can argue this, but when push comes to shove they will tell you it's unlikely you will win any case brought against you and of course they make it clear you were advised not to it by themselves - accountants will never, ever back you up each year you sign to say they did the accounts on information you provided so they are never in the firing line when the tax man calls
Darran
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A good accountant will say I can claim anything for you within reason you tell me what you want to claim for and I’ll advise you whether or not it’s plausible and the likelihood of it being looked into,as Smudger has said a window cleaning business running alongside a cleaning business is an accident waiting to happen,if you had a garage that repairs cars and a window cleaning business that’s a different ball game but gutter cleaning or any other cleaning side I wouldn’t go there.
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yes you can split into different business if you are LTD. My wife is an accountant and has several clients at work with multiple business so they can avoid paying higher tax , one has five I think she mentioned
You need to qualify that statement with your wife. I have two businesses, they are both limited companies and technically they both do different things. In fact one business buys Goods off the other. However, the key is that the same directors run both so as far as HMRC Are concerned there COULD BE a possible conflict of interest so I play safe and made sure both are VAT Registered.
I would caution anyone trying to cross the VAT Department of the Revenue! If you do and they even think something hooky is going on they will start digging deep so you had better be squeaky clean because the onus is on you to prove you don’t owe them the money not vice versa. I have seen 2 good friends go under through VAT and whilst I wasn’t certain about one I know that other one was as straight as a die and in the right. However, it took him 3 1/2 years to prove it and by then it was too late and he lost the business anyway.