[8weekly]

Telling your custys their prices are going up 20% because you're now vat registered is daft , I get you been honest and having to increase prices but they will think you're earning far to much money for a windy and are surely more likely to dump you .

I would be selling some work off surely better to stay slightly under than the headache and cost of been over .

d
No, as I intend to push on . If I was going to stop with two vans then I'd do as you suggest but actually I'm looking for further growth.

If I lose a few customers then so be it. Incidentally I am not passing on the full 20%. New customers in the last 6-8 months were mostly priced with the VAT in. Only early customers are getting the 20%. Some are getting 10-15%. I expect to lose some, but over a 12 month period I am well over the Vat threshold so I'd have to sell 1/3 of my work to get it back down,

[David Beecroft]

There is a HMRC  scheme that allows you to charge a lower rate of VAT, I think something like 11%.  The downside to it is that you agree not to claim back any VAT you are charged for goods and services. You would still be better off though. Its designed for Businesses like ours that don't carry "stock" as do retail outlets.
The VAT threshold is a blunt tool that prevents many small businesses from expanding. You have to decide whether to stay small or really expand in order to make it worthwhile. As they say on Dragons Den, you can either have 100% of  a small pot or 80% of a big pot.
My choice is to keep a simple eye. 

[SeanK]

Just because your going into vat threshold  you can't make your customer s pay your vat, if you do that then your gonna be back under vat threshold because you will lose so many customers by increasing your prices,

It's not my VAT. The idea of VAT is that the customer pays it, not the service provider.

It is your VAT, the customer is still only paying a price to have their windows cleaned just because you tell them a percentage
is going to the tax man makes no difference.
They will either pay it or they wont and if they do then there's no reason why you couldn't be getting that price Vat reg. or not.

[SeanK]

There is a HMRC  scheme that allows you to charge a lower rate of VAT, I think something like 11%.  The downside to it is that you agree not to claim back any VAT you are charged for goods and services. You would still be better off though. Its designed for Businesses like ours that don't carry "stock" as do retail outlets.
The VAT threshold is a blunt tool that prevents many small businesses from expanding. You have to decide whether to stay small or really expand in order to make it worthwhile. As they say on Dragons Den, you can either have 100% of  a small pot or 80% of a big pot.
My choice is to keep a simple eye. 

Excellent post.

[Rich Wilts]

It's all down to the individual. What they want in their business life and personal life. How comfortable they feel about expansion or to maintain their level of turnover. (With expansion comes hassle and more of it) Depends on what their ambitions are. 8 Weekly is one of the more ambitious on here in my eyes, and probably one of those on here with a decent business head on his shoulders.

I'm in a position of change at the moment and am hoping to implement some business changes in the next week or two which are not what 8 Weekly would do (as he's told me). But Im not 8 Weekly and neither is he me. Maybe if he were in my shoes he might do things my way. Saying that, if I were in his shoes I'd like to think I might do things the way he is doing them, but then again Im not him - and I'm not even in his shoes - so maybe I wouldn't

[8weekly]

Just because your going into vat threshold  you can't make your customer s pay your vat, if you do that then your gonna be back under vat threshold because you will lose so many customers by increasing your prices,

It's not my VAT. The idea of VAT is that the customer pays it, not the service provider.

It is your VAT, the customer is still only paying a price to have their windows cleaned just because you tell them a percentage
is going to the tax man makes no difference.
They will either pay it or they wont and if they do then there's no reason why you couldn't be getting that price Vat reg. or not.

No, you're wrong. The point of VAT is that it's paid by the consumer. In a business like this it's a risk to pass it on, but it doesn't change the fact that it is intended to be a tax on the consumer. Apple for example don't pay the VAT on an Ipad. The consumer does. Similarly the local dealership doesn't pay the VAT on labour prices. You do.

[SeanK]

The thing is I don't think 8 weekly has give this enough thought, you don't go VAT reg. unless your looking to expand
to a point well beyond where he is now, so why worry about taking a small hit in the short term.
He has a got a price range that's good enough to get him to the Vat threshold so instead of faffing about with prices he should now
be concentrating on upping his workload as quickly as possible.
Yes if he thinks he is in a position to demand higher prices then put them up but it shouldn't be about trying to pull back the VAT.

[8weekly]

The thing is I don't think 8 weekly has give this enough thought, you don't go VAT reg. unless your looking to expand
to a point well beyond where he is now, so why worry about taking a small hit in the short term.
He has a got a price range that's good enough to get him to the Vat threshold so instead of faffing about with prices he should now
be concentrating on upping his workload as quickly as possible.
Yes if he thinks he is in a position to demand higher prices then put them up but it shouldn't be about trying to pull back the VAT.

It's the early customers taking the hit to bring them in line with a pricing standard that's been in place for somne time.

[SeanK]

Just because your going into vat threshold  you can't make your customer s pay your vat, if you do that then your gonna be back under vat threshold because you will lose so many customers by increasing your prices,

It's not my VAT. The idea of VAT is that the customer pays it, not the service provider.

It is your VAT, the customer is still only paying a price to have their windows cleaned just because you tell them a percentage
is going to the tax man makes no difference.
They will either pay it or they wont and if they do then there's no reason why you couldn't be getting that price Vat reg. or not.

No, you're wrong. The point of VAT is that it's paid by the consumer. In a business like this it's a risk to pass it on, but it doesn't change the fact that it is intended to be a tax on the consumer. Apple for example don't pay the VAT on an Ipad. The consumer does. Similarly the local dealership doesn't pay the VAT on labour prices. You do.

Your missing the point, if you can get £20 for a clean without being VAT reg. then what's the difference getting it VAT reg.,
 its a tax on product/service but it still comes from our profits.

[Rich Wilts]

Is all of your work priced to the maximum your customer base will tolerate Sean?

[Smurf]

Is all of your work priced to the maximum your customer base will tolerate Sean?

Good question as if your current domestic customers have not had a price increase for a long while the cost of VAT could be absorbed into the price increase surely?  Just means your firm don't benefit from the price increase but vat man does.

[SeanK]

Is all of your work priced to the maximum your customer base will tolerate Sean?

I honestly don't know do any of us ? I'm not for one minute saying 8 weekly wont get the price increase was just pointing out
that its still him who will be paying the VAT from his profit as if he wasn't VAT reg. that price rise would be going to him.

Doesn't really mean anything at the end of the day if your plan is expansion other than to bring it home that its still costing
you money and that the real way to get it back is by expanding as quick as possible.

[Smurf]

Is all of your work priced to the maximum your customer base will tolerate Sean?

I honestly don't know do any of us ? I'm not for one minute saying 8 weekly wont get the price increase was just pointing out
that its still him who will be paying the VAT from his profit as if he wasn't VAT reg. that price rise would be going to him.

In simple terms once vat registered all you are is an unpaid tax collector so have to charge vat on every bill regardless. Then have to hand it over whatever you claim off the customer.

[Rich Wilts]

But the price is only being implemented because he's going VAT registered. Thats how it is with any business that charges VAT.

Charge for the service or goods provided + VAT charge. You're playing with words in reality Sean, just twisting the scenario about. Of course we could all no doubt improve our earnings by upping our rates but we do not know if anyone will swallow those charges. If they do does then mean we ought to then smack the customer with ANOTHER 20% charge, tell them its for VAT, and see if they swallow that too. Its just games. Your price is your price, its probably different to mine, it might be the same as Bill Bloggs down the road, but if your VAT registered its gonna have a surcharge on it as well.

Go VAT registered Sean, up your rates and see if you're profit margin is down.

[8weekly]

Whatever point Seank us trying to make is irrelevant anyway. I've exceeded the Vat limit and I have to register. I have been trading  over the limit monrh on month for over a year so this is well planned for (whatever seank thinks).

[SeanK]

I am not playing with words QL I am only pointing out that going VAT reg. has a cost to your business and upping
your price doesn't remove that cost.
Yes 8 weekly's price increase will take the sting out of it as he will be no worse off financially but the cost will still be there.
Doesn't matter what he charges he will now have to make between 11% and 20% more just to break even and that extra can
only be justified by expanding, put it this way you would be a very foolish person to go VAT reg. if you goal was to reach £100k.

[Smurf]

Whatever point Seank us trying to make is irrelevant anyway. I've exceeded the Vat limit and I have to register. I have been trading  over the limit monrh on month for over a year so this is well planned for (whatever seank thinks).

How much grace do they acutal give you then if you have been over the vat threashold for over a year 

[Smurf]

I am not playing with words QL I am only pointing out that going VAT reg. has a cost to your business and upping
your price doesn't remove that cost.
Yes 8 weekly's price increase will take the sting out of it as he will be no worse off financially but the cost will still be there.
Doesn't matter what he charges he will now have to make between 11% and 20% more just to break even and that extra can
only be justified by expanding, put it this way you would be a very foolish person to go VAT reg. if you goal was to reach £100k.

You don't really have any choice in the matter do you seank irrespective of how much turnover you want once you reach the vat threshold surely?

[SeanK]

Whatever point Seank us trying to make is irrelevant anyway. I've exceeded the Vat limit and I have to register. I have been trading  over the limit monrh on month for over a year so this is well planned for (whatever seank thinks).

Mate I am not against what your doing, if your plan is to expand and keep expanding then you have no choice and like I said upping your prices will at least take the sting out of it for a while.
Personally I would have taken the hit price wise and went more along the lines of building a bigger business with a trusted
price but that would be my choice, either way your now going to have to grow your business to make this decision
worthwhile which is a gutsy move in my books.

[SeanK]

I am not playing with words QL I am only pointing out that going VAT reg. has a cost to your business and upping
your price doesn't remove that cost.
Yes 8 weekly's price increase will take the sting out of it as he will be no worse off financially but the cost will still be there.
Doesn't matter what he charges he will now have to make between 11% and 20% more just to break even and that extra can
only be justified by expanding, put it this way you would be a very foolish person to go VAT reg. if you goal was to reach £100k.

You don't really have any choice in the matter do you seank irrespective of how much turnover you want once you reach the vat threshold surely?

How do you not have a choice ? once you reach the VAT threshold your choice is to keep expanding or stay below it, now if
your plan is to only expand by 20% then your not going to be any better off so going VAT reg. would be a bit silly, that's why
its something not to be taken lightly.
There is a point where it becomes worthwhile but I'm sure somebody on here who has already gone down that road would be
better qualified to say what it is.