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simonm

going vat registered

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I've been told by our accountant that we need to register for vat in the new financial year, I am a little concerned as se have a blend of commercial and domestic, commercial I don't see a problem but increasing my prices by 20% to private customers means I will outprice us on jobs!

Since being vat registered has it affected your profitability?

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Firstly congratulations. If you're hitting the threshold you're obviously doing something right.

 

Don't be too concerned about losing custom.' Sure there will be the odd one that you will lose but it's kinda irrelevant really as you don't have a choice in the matter by the sounds of it. You will also save a lot of money in vat..each one of those diesel receipts you get will become like a £10 note for starters. And let's not forget the nice lump sum you pick up when you back claim for the past couple years when you register.

 

Onwards and upwards Simon!

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Firstly congratulations. If you're hitting the threshold you're obviously doing something right.

 

 

 

I know Simon well and I am sure he is doing it well but

 

Turnover = profit, Discuss

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I went through vat reg last year and had same concerns. Work did drop off a bit but it soon picked up again. My profit has gone up because I realised a 20% price hike was significant so I went through my pricing again and came to the conclusion that if a customer can take a 20% increase they will probably a bit more. So far a year later it's still working. I find you loose the middle type of job - the small ones say £100 it doesn't make enough difference. The £300 ones I don't get so many, but I get more of the larger £700 jobs (talking domestic).

 

As Steve said think how much vat you pay out every month, and it all comes back.

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I've been told by our accountant that we need to register for vat in the new financial year, I am a little concerned as se have a blend of commercial and domestic, commercial I don't see a problem but increasing my prices by 20% to private customers means I will outprice us on jobs!

Since being vat registered has it affected your profitability?

 

It will balance out somewhat because as Steve points out, your running costs will be lower

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I've just had the same but having to back date registration as tipped over the threshold on the rolling 12month basis without realising, talking to the accountant we are actually going to be a lot better off and when I've gon and told some of my regular big clients they have allowed me to send them a backdated vat invoice which is a big relief!! + the reclaim of vat on assets still owned going back 4 years so a decent reanbursment to go into some new bits of gear.

Like you said to commercial clients it won't make any difference and private you just give them a total price and it's up to you in you only raise it by say 10% nd swallow the other 10% or just up it by what you think you'll get away with.

Another good thing is it will stop me worrying about big hired in plant bills to keep turnover down or just subbing jobs nd taking a skim off the top as I'd tried to avoid that as quickly boosted turnover without mega profit.

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On domestics if you still want to price keenly you can just give a quote inclusive of VAT, which would be the same amount you used to quote.

So a £600 job is still £600, but it's now made up of £500 + VAT.

Good for the customer, who can't do anything with the VAT, not so good for you because you've dropped £100, but you can now claim back on fuel, tools, vehicles etc. so it's not too sad, and the domestics keep rolling in.

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I went VAT registered in July last year. A couple of the annual customers took a deep intake of breath but I just told them that I would hold the same price as last year but I had been forced into VAT registration so the price this year would be £last year + VAT.

 

All apart from one said no problem. I have found that the number of commercial contracts has gone up and if you look to get CHAS and Safecontractor (or AAAC) registration at the same sort of time you will be seen by more commercial companies who don't care about the VAT.

 

Be aware that your accounts now needs to be done quarterly for the VAT return so your accountancy bill will go up.

 

I wouldn't change it but the £5k+ VAT bills each quarter certainly bite a bit. Just get into the mindset that the VAT isn't yours, never has been yours and never will be yours. You are looking after it for the VAT man

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Best decision I ever made

 

Yesterday we planted 1,700£ worth of trees (cost to me) for a vat regd company

With the mark up and labour they would never pay for the dead vat I would have to charge on top or I would loose I profit if not in vat club.

 

By keeping off vat I think your stunting your buissness growth and capability unless you want to do pure domestic for eternity

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Your domestics dont need to go up by 20%.

 

Remember your can claim back the VAT that you pay out to do the job.

 

Realistically you would be looking at a 15-18% rise. If you still add on the full 20% for the commercial you will actually be making more money on those jobs.

 

Prob time for a price rise anyway.

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