Turnover...

[gensetsteve]

I heard that reinvesting as much profit as possible is the best way to keep it out of the Taxman's hands. So, big turnover but makes your business appear as though it is running at a loss! Does that sound right. I'm a Sole-Trader who's only recently started trading and would be interested to hear from anyone if this is how they run their company.

 

Yes to a certain degree. But in my opinion a business is an activity that pays you a living. Dont rape it but dont moly coddle it either. Not everything is tax deductable in one year and then its only 25%-40% of the spend off your tax bill. What ever you spend you will be putting in at least 60% of the cost. The way I look at it averaged over the year I normally earn to the 40% tax brkt by thursday so friday is alot of work for not much money. The choice is often a new truck for 20k or 12k in your bank.

[gensetsteve]

I heard that reinvesting as much profit as possible is the best way to keep it out of the Taxman's hands. So, big turnover but makes your business appear as though it is running at a loss! Does that sound right. I'm a Sole-Trader who's only recently started trading and would be interested to hear from anyone if this is how they run their company.

 

Yes to a certain degree. But in my opinion a business is an activity that pays you a living. Dont rape it but dont moly coddle it either. Not everything is tax deductable in one year and then its only 25%-40% of the spend off your tax bill. What ever you spend you will be putting in at least 60% of the cost. The way I look at it averaged over the year I normally earn to the 40% tax brkt by thursday so friday is alot of work for not much money. The choice is often a new truck for 20k or 12k in your bank.

[Tom D]

To a large extent the overheads of a two man team ought to be similar, you may add more equipment which may increase turnover but will also add to costs. Profit is far more important than turnover.

 

I do think that if you are not reaching the vat threshold of around 80K you are probably not really making the money that you deserve. The running costs of a van, chipper, groundy etc are going to be fairly similar around the country. Like Skyhuck I also think many people don't really know what their costs are.

 

Last year I did £250k (3 man team and occasional subbies) this year won't be anywhere near as much, the year before was around £130k in previous years I had done 80-90k and TBH I had not made as much as I would have liked. I think for a 2 man team around the 100k mark ought to be ideal.

 

FWIW I would rather bring the vat threshold down to 50k so it was a fairer environment for everyone, it would be hard to operate a serious business turning over less than 50k whereas a higher threshold merely punishes those who climb above it. Hardly an incentive to expand your business and contribute more to our ailing economy....

[Tom D]

To a large extent the overheads of a two man team ought to be similar, you may add more equipment which may increase turnover but will also add to costs. Profit is far more important than turnover.

 

I do think that if you are not reaching the vat threshold of around 80K you are probably not really making the money that you deserve. The running costs of a van, chipper, groundy etc are going to be fairly similar around the country. Like Skyhuck I also think many people don't really know what their costs are.

 

Last year I did £250k (3 man team and occasional subbies) this year won't be anywhere near as much, the year before was around £130k in previous years I had done 80-90k and TBH I had not made as much as I would have liked. I think for a 2 man team around the 100k mark ought to be ideal.

 

FWIW I would rather bring the vat threshold down to 50k so it was a fairer environment for everyone, it would be hard to operate a serious business turning over less than 50k whereas a higher threshold merely punishes those who climb above it. Hardly an incentive to expand your business and contribute more to our ailing economy....

[Johny Walker]

how much of the £250k was profit ,

[Johny Walker]

how much of the £250k was profit ,

[Tom D]

Haven't done the books yet, I bought 65k of kit to try and soak some up and was then told by the accountant that "they" have changed the rules so you can't get 100% capital allowances anymore.... 60-70K of that turnover was subbys...

 

I made decent money last year though...... for once..

[Tom D]

Haven't done the books yet, I bought 65k of kit to try and soak some up and was then told by the accountant that "they" have changed the rules so you can't get 100% capital allowances anymore.... 60-70K of that turnover was subbys...

 

I made decent money last year though...... for once..

[Albedo]

That was a really good well thought out post Tom D.

 

I'll be looking out for your thoughts on life, the universe and everything in future:thumbup1:

[Albedo]

That was a really good well thought out post Tom D.

 

I'll be looking out for your thoughts on life, the universe and everything in future:thumbup1: