Clean It Up
UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: maxcarpets on January 05, 2008, 06:45:15 pm
-
Hi Guys
I have been VAT Registered for many years but I keep seeing more & more people advertising NO VAT! To me this just says that their not that busy, or am I missing something. I just wondered how many people are registered for VAT.
Cheers
Justin
P.S Its a Pain in the A#@! VAT that is.
-
I use to be vat registerd, but not worth the paperwork, and I make more money being non vat registerd, even with offsetting every thing you can against vat
-
On commercial jobs add the VAT on price I give, on domestic I add it into the price and keep quiet, unless they want an invoice ( 99% don't). I give a price they pay, don't think it would help me if I gave a price to a domestic customer then at the end of the job added the VAT, and also don't think it would be beneficial to say that there is VAT on top as they would automatically presume I am 17.5% higher priced than someone who isn't.
-
You can only charge VAT if you are REGISTEREED. I had to register in order to tender for some of the work I do.
-
I think I know Gary is saying.
It is standard practice between businesses to give a net price and then expect the vat to be added (which they claim back)
With domestics yes give a total price but it should be stated includes vat. And your vat number must appear on paperwork where money is involved. Quotes,receipts etc
-
With some give you more credibility, but don’t like paying it.
gps01
Will it be worth it?
Len
-
We went VAT registered last April and now I wish that there was no threshhold, (currently £64,000) for being tax exempt as we are 17.5% more expensive than the competition and that annoys me, even though I was on the other side of the fence this time last year.
There comes a point when you cannot avoid going VAT registered if you want to grow your business and become a serious player in the market. However, it will always be an issue with domestic customers as they hate paying VAT, commercial is fine and that is where we are targeting our growth over the next 5 years.
Several of our commercial customers would not deal with a company that was not VAT registered. We have also went Ltd status lately and that has enhanced our standing as well.
-
If you aren't charging vat you aren't making "good" money.
-
If you aren't charging vat you aren't making "good" money.
I'd call 60k a year good money if I had very little overheads and was a one man band. Many others would be very happy earning that sort of money self-employed or employed.
-
and we all know that carpet cleaners are the most honest people in the world who declare everything they earn, so when they go just 1 penny over the limit they are straight onto customs & excise to register ;) ;)
but I wonder how many carpet cleaners are earning £75k+ and still not vat reg'
how many carpet cleaners have business's in their wife's name and split thing up ::)
-
Mike,
we will take the 75k as your earnings then.
Jim
-
I wish, I'm lucky to earn £60 a week :D :D (which on my £100/hr means I work 10mins day.... but its a hard 10mins ;D ;D)
my mate VAT reg;ed he's filing for bankruptcy, I would guess he's not earning 'good' money :-\
but he's a builder which is a 'materials' based business so he brings in a lot cash, but not so much profit.
-
Mike,
Ur a wild man better than a second hand car dealer never think of career change. How long u been at the carpet cleaning Mike, do u work with buddy or on ur own. Ur on early this morning.
Jim
-
12yrs, but my dad was in the game before me.
been up since 5, wife couldn't sleep so she decided to watch the TV, I asked her why she didn't just go in the lounge and let me sleep , she said she didn't want to wake the dogs ::)
-
ps; work as a 2 man team
-
Looking at the poll I'm surprised how many people are vat registered (almost 50% so far)
£60K is a good level of turnover, but even with the best will in the world your running costs, maintenance costs, advertising, etc, etc will eat into that by a fair amount.
Then, if you do manage to keep your costs down you are putting yourself into the higher income tax bracket.
Then, when you do come to retire what have you got to sell? A business with a turnover of £60K?, you might get £20K for it depending upon what contracts you have.
Going VAT registered is a BIG decision, however if your business is approaching the VAT threshold and if you want to have a business that is self sustainable for the long term with nothing to restrict you from growth, then you need to go VAT registered. We dillied and dallied around for about a year treading water to try and find ways to keep below the threshold, splitting the business in two, etc, however in the end we took the plunge and went for it. One of the best decisions I've made.
Now with nothing to hold us back our business is now turning over more that 3 times what it did this time last year, I would expect it to double again by this time next year. We now have 11 employees (and a wife) working for the business and I pay myself, as a director, a salary of £500/month, which keeps me on basic rate tax. I also get dividends from the business which attract corporate rate tax (20%), so I will never hit the 40% bracket.
-
Great for commercial but as Ian says makes you 17.5% more expensive than the competition. Which i found when i first registered 2 years ago a real problem, as my prices are higher than most of my competition. However if you want to grow you need to register.
-
Ian sounds like the you have the business all sorted out. 11 staff, my god, I use to employ 18 when I had the computer business down south, and that was a nightmare, but 11 carpet cleaners, do they all work full time?
Aidan
-
Not carpet cleaners, I wish they were!!
I have one lad who helps me or works by himself on carpets, 4 on Window Cleaning and 6 on regular commercial and domestic cleaning.
Carpet cleaning is now proportionally becoming a smaller part of our business
-
I am very happy to say, in our £300k turnover business, we are VAT exempt, but are a limited company, which I would NOT recommend, shortly reverting to non-limited
-
I try not to make a big thing of it, small print " All prices are subject to 17.5% V.A.T". I saw a window cleaning Co that did the opposite and had " YOU CAN TRUST US WE ARE A BONAFIDE VAT REGISTERED COMPANY!"
Cheers!
Justin
-
Carpet Guy how come you have not had to register?
-
The only way I think you can be vat exempt is by splitting you business into so many smaller companies that they are all under the threshold.
-
Is that legal?
-
If you split a business to try and keep under the threshold then if you are investigated then The Revenue will presume this was tax evasion (as opposed to tax avoidance, which is legal) and the onus is on you to prove otherwise.
Ian, I am with you on your replies.
Of those who are VAT registered, how many have gone for the flat rate level of VAT? My VAT liability under the scheme is only 11.00%
If you don't know what I'm talking about then let me know and I'll give a fuller response.
-
Fire away, Doctor carpet.
-
I dont think there is anything wrong having a business in your name and one in the wifes name.
Too much paperwork for me in the VAT scheme of things.
-
Back in the 80's early 90's when I was an employer, I had to be V.A.T. registered. I was so worried that it would have an adverse effect on my residential work. It made no difference at all. Joe and Josephine Public just accepted it. I always quoted £xxx plus V.A.T. Back in those days, it was a legal requirement to show V.A.T. as a seperate item on all invoices over £50, so I didn't want to mess around with two different systems.
As for administering the V.A.T. system, it was a piece of cake. So easy to do. As long as you are disciplined and don't spend the tax you've collected, you can use the extra cashflow to either minimise your overdraught charges or to gain interest in a savings account. Overall, I reckon it took about 10 minutes extra a week in paperwork and perhaps an hour or so at the end of every quarter.
Organising your business under different names to evade V.A.T. is, as Doctor Carpet points out, illegal. Or it certainly was back in the 80's. Penalties can be severe.
If you de-register from the system, remember that as you are unable to reclaim the tax paid, your costs will increase, so your charges will need to go up to compensate.
Safe and happy cleaning :)
Ken
-
OK
Flat rate VAT scheme is open to any business with t/o less than £150k. Paperwork is minimal. Your VAT liability is 11.00% (10.00% for your first year only. Different industries have different rates but always with the 1% discount for the first 12 months) of your gross t/o.
You cannot claim back your input VAT (except for large capital expenditure). Payable at the end of each quarter you pay the 11% of what you have paid into your account NOT what you have invoiced for but not been paid for yet. (this means your cash low isn't knackered.)
For any other VAT registered businesses that you clean for you invoice for whatever you agree, add VAT at 17.5%. Here's the good bit, having charged 17.5% you then only pay over to HMRC the 11.00% as mentioned above. Non VAT registered businesses/private customers you simply charge them as before. You may or may not add on 11% or 17.5% depending upon your pricing structure/ competitiveness (or add on indeed any othe figure) and again simply pay what's due on what you have banked at the end of the quarter.
Of course 11% works out at a slightly higher rate than it sounds becasue you are charged on gross t/o not net of VAT t/o.
The scheme is specifically geared to people like us where most of the t/o is value added because of labour and not selling "widgets".
In summary the paperwork is simple and it's cash-flow positive.
Hope that helps, let me know if you want further explanation.
-
Im on the flat rate and as the doctor says its a piece of cake. If you where doing only commerical and charging VAT you could even be making more money from the difference. It suits our business as expences are much lower as a % of turnover with labour being the main element.
Yes it may seem daunting charging residential more or doing a little more paperwork but if your anyway half 'successful' in this game you'll reach the threshold quickly. The services of a good accountant which you should have anyway, will help you with the paperwork etc.
Purchases over £2000 ie. machine, van etc you can claim the VAT back so makes these purchases less 'taxing'.
Mark
-
I dont think there is anything wrong having a business in your name and one in the wifes name.
Oh yes there is if they are similar busesses, run from the same address. We did that for a while. The window cleaning side was in my wifes name and the carpet cleaning in mine. Both were under the VaT threshold on their own BUT our accountant warned us what the inspectors would do if we had an inspection. They would in effect take the 2 names as one and back track back to where Vat wouldn't apply then give us the bill for unpaid Vat.
So we created one business PDQ.
I think we made about £600 last year on the difference between charging the customer 17.5% and paying the Vat man at 11%. Not a bad deal really for a bit of paperwork and being disciplined enough to put the money back.
-
Interesting Neil.
It was my accountant (an ex tax man) who suggested split the business (general cleaning) which was initially joint names into one joint names and one my name.
So we did split the business on a geographic basis.
During the period we had that in operation we had a visit from the In Rev for a complete check and everything OK.
That would be about 13 years ago.
-
I am very happy to say, in our £300k turnover business, we are VAT exempt, but are a limited company, which I would NOT recommend, shortly reverting to non-limited
please can you explain why you are vat exempt? :)
-
Sorry for the delay, but I've been doing boring work on the computer all day.
Didn't mean to mislead you, but there are a few businesses which are exempt from VAT and our MAIN business, is one of these !
What Joe says is correct, as long as the businesses are clearly TWO SEPARATE entities, run by different peope.
-
A diverse way is to do what a friend does although not in our trade.
He set up a company and he was a director which is an employee of the company which was vat registered then he set himself as a sole trade under his own name not vat registered, domestic jobs go to him and commercial go to the company although i don't know how they share equipment perhaps only he knows :o
Shaun
-
That's very similar to my wifes husband, if you know what I mean
-
domestic jobs go to him and commercial go to the company although i don't know how they share equipment perhaps only he knows :o
Shaun
Perhaps for the paperwork one business rented the equipment to the other.
As long as the charges were kept reasonable that would probably be ok.
-
i went VAT reg in march last year when i got my truckmount
i thought it would have a big affect on bookings but domestically i find people never ask and commercally most can claim it back anyway
i find that the commerciall market take me more seriously since going VAT
and if you want to grow your business, then theres no way round it
like someone said earlier, the more VAT you pay, it follows the more you are earning
or am i wrong? ??? ???
-
That was how I see it, surley if you use NOT VAT TO PAY on a leaflet you really mean, I'M NOT VERY BUSY!
-
i find people want a quality job done, price normally is not an issue, if it is then you don't want them as clients anyhow
-
Splitting the business into 2 with one in the wifes name is a no go if the wife isn't actually doing the work. This would be seen as evasion.
However as mentioned already, having a limited company whereby you are classed as an employee and also having a seperate business as a sole trader which is under the vat threshold is perfectly legal.
-
carpet guy is always going on about curing every back problem known to man ::) ::) so probably has a business which is health/medical orientated or perhaps a nursing home, these are exempt from VAT
-
Thought I'd made that clear, often enough. We have a Care agency and we employ about 18 regular staff. We include cleaning activities within the business and yes I'm a qualified Pelvic / Spinal Correction Therapist, something your average Osteo', or Chiro isn't trained to do.
-
Rob
Have you also got a carpet and upholstery business, or is your cleaning soley down to in house work within the agencies buildings?
-
Paul, I started in1983 with a cleaning business, looking after "common areas in " New Build " and Restored Properties, which grew very quickly and out of this evolved, carpet / upholsery and window cleaning.
Over the past 5 years I've been cutting back steadily on workload and have been concentrating more on leather, which I've done for 20 years and dropping commercial work, or " heavy " works.
We also do " environmental cleans " for social services.
-
Rob would you email me, I would be interested on your thoughts regarding enviromental cleans.
-
I am bailing out of the VAT.
Last quarter cost me £1100.00 with little or no benefit, my accountant keeps saying stay in you are better off.
Cant see it. Just getting in front and then whap!!! VAT to pay and little or no benefit from it.
Sorry I'm out.
Murky
-
But if you've charged VAT it shouldnt of actually cost you £1100?
-
I BREAK EVEN WITH VAT AFTER PAYING ACCOUNTANT. Feel like an unpaid tax collector. ???
-
I BREAK EVEN WITH VAT AFTER PAYING ACCOUNTANT. Feel like an unpaid tax collector. ???
That's is exactly what we are!! Wait till you start employing people and you're taxing them, taking NI off them AND you are paying NI for them as well. All three are detailed out separately then you bung the whole lot on the same cheque because it's all the same thing to go into a huge pot somewhere. Most probably to finance something you don't agree with.
If your accountant is advising you to stay VAT registered and you disagree go and see another one and see what they have to say. If they both say the same thing then you should follow the advice, it's what they're for!
-
Paul, I started in1983 with a cleaning business, looking after "common areas in " New Build " and Restored Properties, which grew very quickly and out of this evolved, carpet / upholsery and window cleaning.
Over the past 5 years I've been cutting back steadily on workload and have been concentrating more on leather, which I've done for 20 years and dropping commercial work, or " heavy " works.
We also do " environmental cleans " for social services.
What are envvironmental cleans is this the same as trauma cleans
-
I am bailing out of the VAT.
Last quarter cost me £1100.00 with little or no benefit, my accountant keeps saying stay in you are better off.
Cant see it. Just getting in front and then whap!!! VAT to pay and little or no benefit from it.
Sorry I'm out.
Murky
Murky
If you are above the VAT threshold £64000 then you have no option but to stay in.
If you are below the threshold then why on earth are you registered in the first place. We have little or no input VAT to claim back in this business.
Is your accountant chartered or simply a gloried bookkeeper?
Roger
-
Ian
Some enviro' cleans are like trauma cleans, without the blood, we do get some blood and when this is the case, the charges go up, to allow for the cleaning of machines, dumping of clothing, etc.
-
Rob, interesting comment about raising prices for the cleaning of machines.
I am all for raising prices as you know but I have done some pretty gruesome crime scenes in my day and the norm would not entail using a machine. Not one that needs any more cleaning than it shold be having anyway. Under all circumstances extraction machines shouldnt be used for this type of work so again was wondering what machines that you use that would need cleaning? By the time the machines come into play the "contaminate" should have already been removed. To charge more for the job itself, then fine, but to charge for what doesnt need doing I find odd.
As to the VAT. I registered for VAT before I had even cleaned a carpet. If you are in business for yourself I dont know of a good reason why you wouldnt be registered.
Best, Dave.
-
With my "simple" hat on today -
if I was doing commercial work most of the time it would probably be beneficial to be VAT registered.
but
if I was doing mostly domestic, why would I want to charge the customer an extra 17.5% and be at a disadvantage to my competitors who did not charge VAT.
(I know being VAT regd allows you to recoup VAT on business purchases so there are advantages)
-
Thought I'd posted a reply to this, but it's not showing.
Dave
Two points..................if your business is VAT exempt, why would you wish to add an unnecessary expense and additional accountancy costs if you don't have to.
You always find something "odd" about my posts, particularly if they contain the following ....CFR, or Bonnet Mopping.
Don't think I mentioned Crime Scene cleaning anywhere
-
Rob, you mentioned trauma which is the same thing. You also mentioned blood and charging more for cleaning the machines accordingly. I only asked what machines you were using. I didnt mention cfr or bonnet sytems. you did. Again just curious what machines you are using to clean up blood when you shouldnt be using a machine. I know we clean up some sort of blood from time to time, many times un knowingly but you were refering to a blood clean up.
Wasnt a difficult question so why the avoidance?
Best, Dave.
-
If you are earning a good living from CC why would you be VAT exempt? you have to be turning over at least £64K to have a good (ish) living
Justin
-
Dave
Why should I not be using a machine to clear up residue from blood ?
What difference would it make, if the machine being used was an Extracta, Ninja, or other, they would still require more cleaning after that kind of job, than an average clean.
-
Rob, when you are dealing with specifically blood clean up the blood is or should be physically removed.
If it is in a carpet then the carpet area contaminated is cut out and then bagged and then disposed of, if through the underlay then the same thing. If it is furniture then the same procedure should be followed.
No machines are used as machines themselves exhaust into the ambient air that which has been picked up causing more contamination.
There isnt a machine that can be used to cause total removal which is why it is done as I have mentioned above.
If you or we are just cleaning a carpet that has blood in which happens daily I am sure then just normal cleaning is fine. But then, do you clean your machines every day or after every clean? Nor do I.
Simply and I know it isnt done, if we as cleaners are asked for total blood removal then a machine isnt used.
Hey, charge 200 quid if you want to for having to wear nitrile or latex gloves, thats justified, its just not justifiable to charge for cleaning a machine when it shouldnt have been used to be contaminated itself.
Best, Dave.