wow. My income has a sole trader is boosted by having one guy work for me self employed 5 days a week. This under scrutiny should be ok as he also has his own business and works most nights after finishing with me. He is autistic and one heck of a work ethic.
Second guy works for me one day a week and has is own gardening business , so strictly speaking their are sub-contractors but really helps push up revenue which I am now thinking is not brilliant as they probably help generate 20-30% extra revenue compared to me on my own.
Frees up my time, but this increased revenue will be eaten by VAT.
VAT seems to be something I am kicking my self about. Too busy working and generating income and it then just creeped up. My accountant should of been on it. I thought it was tax year to tax year and was going to take some time off in the winter months. Rolling year as meant, possibly gone over. If I have, will I be hit with 20% on everything I have earned in that 12 month period?
with 85K turn over, - costs - income tax, it is not that amazing what is left. My costs run at about 40% so take home is ok but i have some heavy out going due exceptional circumstances. It would seem that VAT registered will work it you are way above 100k and around the 85k mark you can be left quite a bit worse off.
Am I able to set up 2 LTD companies, windows and gutters and have them operate as separate companies or is this illegal. I already imagine the answer! Why would I choose a flat rate?
No only income after £85k will be liable to 20 percent VAT Any assets which you hold within the last 4 years purchased you can claim back so big purchases like a van poles batteries anything like that not fuel and consumables but on going your running costs once you're registered which include VAT that will be refunded against the bill.
So if you're holding any large assets like a van too you may well get a VAT refund first submission.
Setting up two limited companies has and can be done but essentially you're asking for trouble and isnt recommended as they are similar businesses and it's too obvious that you've separated it to literally avoid VAT. This has been covered on the forum before Think of vat as your favourite food how would you feel if someone takes it away from you? Vat is the government's favourite tax because it's purely on income lol regardless on how much profit you're making !
A flat rate is beneficial if you have low costs as windys do actually.. however since 2017 they have made that a lot less attractive for us by stating unless we have have goods that we retain that's more than 2% of our turnover flat rate is 16.5 but if your spending over £2000 on goods you'll qualify for the lower rate 12% 1% discount first year so 15.5 and 11 respectively. However you cannot claim anything back unless it's over £2,000 on goods purchases (I believe) but things like leafleting marketing fuel you won't get that back. Forcing yourself to spend 2% of your turnover on poles for example maybe a false economy as it's definitely surplus stock if this was before 2017 flat rate would be much more beneficial but right now hmm not sure..
most people go for the standard 19% first year because it would probably average out to 16% with the claim backs anyway.
But then if you're spending money leafleting it could go down quite a lot more than that more like the 11 percent which is the low flat.
Whichever way you look at it it's definitely a slight hit on your profits to find the balance make sure your expenses are reasonable including your wages I understand you won't be able to change those. Generally if you're going into VAT it's expected that you spend more and grow at least a bit more otherwise if you have no intention then it would make sense to simply take some time off and stay under the threshold.
Sorry for the lengthy reply but I hope this helps somewhat make sure you consult your accountant best of luck
