[angela stone]

Hi guys,

Next year we will be at the point of having to charge vat on our prices.  Currently the majority of our business is domestic based, we do have some commercial contacts.  I am not worried about adding the vat to the commercial contracts as they will be able to offset it as they will be registered also.

I was wondering though how anybody else has dealt with the transition from charging x per hour to charging x per hour plus vat to domestic customers, as essentially this just puts the price up to them.

I know there is no way around it as it is law but I have a feeling we will probably lose a lot of domestic customers by being registered.

It also doesn't help the rate rising next year to 20%.  I am aware of the flat rate scheme but I think we will still lose a lot of custom as they will probably just say that the are going to go with someone who doesn't charge vat.

Ange

[Ian Rochester]

Angela,

The quality of your work will govern how going vat registered will be perceiveed by your domestic customers. 

If you are good then the majority will keep you as good cleaners are hard to find, if you are mediocre, then you will lose a lot to "cash in hand" cleaners.

We went VAT registered a few years ago and I can't remember us losing any customers on the domestic cleaning side.

Put a letter together for all your customers, give them plenty of warning about going VAT registered and explain that you understand the price hike is considerable, but your business is growing, etc, etc.

I think that the VAT threshold should be abolished as it doesn't encourage small businesses to grow and can even knock them backwards, a lot of businesses like yourselves will try and absorb some of the vat costs, therefore losing out on your profit.  Don't do this, if you lose customers, you lose customers, you will find new ones, target the commercial market.

Merry Christmas

[Pristine Clean]

Ian is right.

We did years ago do domestic cleaning - Never again it was not for us.
The VAT is a complete put off especially at the low scale end of the market.

If your clients are the type that have Aston Martins or Bentleys in the driveway it probably wont bother them.

It great to see business expanding. Remember to get the VAT in on time or you get fined. Our accountants do all of ours so its not a problem - Providing the monies in the accounts.

And yes target commercial work - we are only into commercial work and VAT is standard no matter what the rate.

Dave

[gordonswindows]

Hi Angela

Sorry to add to the vat burden but it is not when you reach the vat threshold that you have to register it is when you believe that you will reach the threshold

That said there is an up side. You want to join the flat rate scheme which if memory serves me correctly and if it doesn't someone else will , you charge 17.5% and keep 11% while passing on the other 6.5% .

We loved it because nobody blames you for charging vat its not your fault yet nobody realises you get to keep some of it

It is an actual price rise for you

Vat registered also attracts better quality clients so yes head towards the commercial market, just heed Pristines advice about paying it on time as you can get fined

Good luck

Gordon

[BDCS]

The £70k pa is a rolling 12 months so you need to keep the accounts up to date if you think you are close. I had a worry about it last year but I want to swerve it if I can because I don't want to add vat to my bouncy castle prices - I may have to seperate the two accounts. Its only the accountant and the Gov that wins if you register. If you go flat rate you can't claim vat back on what you spend. Depressing topic !

[richywilts]

carl how busy do u get with the bouncy castles??

[BDCS]

Enough 

[chrisham]

Hi Gordon

My first posting, so Hi to everyone. I have already found some invaluable info on here. I do hope I will be able to share some knowledge gained in time.

I just wondered where you got the VAT flat rate figures from or which sector you apply to your business.

Thanks

Chris

[heritagecleaning]

RE: Flat rate - it's now 20% and pay on 12.5%

[Alan McTernan]

Carl,

It would not effect your bouncy castle business as it is a completely different business/entity even though it is run by the same person.

As well as my cleaning i also have a seafront concession and they are both completely seperate even though i own both

Regards
Alan

[BDCS]

I want to stay under this year and then I will know whats happening with the drains side of things. I have never lost anything due to not being vat reg'd so I'm fine as I am for now but the accountant said to watch the rolling year figures and talk to her when we get too close.
  Interesting you also have a summer weighted side line - do you ever think its all a bit much working 7 days a week ?

[Alan McTernan]

Carl,

First year i bought the concession i worked 5 days cleaning 2 days kiosk as had staff to run kiosk Mon-Fri. And didn't get to see my new born son or wife much!!

So have now got a manager running concession 7 days weather depending on an annual salary and i have a guy with me cleaning so am home by 5 every evening and try to have fri,sat & sun off!!! Well sometimes

Are you going to the cleaning show?

Regards
Alan

[BDCS]

Yes I hope so - i will be your way quite a lot this summer ! Arlington anyway

[dandandan]

Best to have two small companies than one large one to stay under VAT threshhold.Same with staff,i find it best having four/six part time staff rather than two/three full time staff to stay away from PAYE.Suppose every companies different but most people i speak to say VAT`s a pain unless you spend out large amounts on stock etc were you need to claim it back.

[gordonswindows]

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm

Try this link for all you need to help with the vat

Two small companies is not always the answer you believe it to be to avoid vat threshold if there is any link between the two ie where did e money come from for the two or is the same person at the helm of  oth

Going vat rated increased our business overnight. There is no downside to being registered it attracts a much better quality of customer

Gordon

[Adam P]

i'm worried about vat when doing carpets and eot cleans and it's coming up close. one more decent sized contract clean and we'll be needing to do it.

doing a move out clean tomorrow nearly £400 for everything we're doing and that was a push to convince them to go with us rather then the £200 cleaners, when we go vat registered our cost would be £480!