[HampshireWindowCleaning]

I'm thinking once i'm full to the brim would it be worth getting another van and taking on a worker.
The only problem seems to be the VAT threshold, once I go VAT registered then HM gets 20% of the turnover so i'd lose 20% of takings from van 1, the new van would lose 20% of its takings, by the time i've paid wages and expenses for van 2 i'm not sure I would even earn as much as I would running just 1 van.
Anybody already done this and made a success of it, or is it not worth the hassle.
Or is it more about looking longer term and maybe the 3rd van is where you will see a bit of profit?

[LBWCS]

Answer seems simple then, keep it just below the threshold, earn 20% more and save some stress

[dave0123]

You dont loose 20% of your turnover because for example

a house at £10.00 will become £10.00 + Vat once you become vat reg so it would become £12.00 for the job

[HampshireWindowCleaning]

You dont loose 20% of your turnover because for example

a house at £10.00 will become £10.00 + Vat once you become vat reg so it would become £12.00 for the job

In theory yes, but I think most of my customers would not be happy if I told them the price was going up 20%

[♠Winp®oClean♠]

Answer seems simple then, keep it just below the threshold, earn 20% more and save some stress

+1

[Dave Willis]

My neighbour only uses tradesmen who don't charge vat - he says it's cheaper and doesn't see why he should give twenty percent of his pension to the Government. He has a point.

[davids3511]

You dont loose 20% of your turnover because for example

a house at £10.00 will become £10.00 + Vat once you become vat reg so it would become £12.00 for the job

20% Increase that easy? As T Cooper would say 'just like that'. Plus it will limit when you can next put the price up. Custy doesdnt care if it is because of vat, all they know is a price increase.

[S.A.J]

Are you domestic only or do you do commercial too? What's the %

[Scrimble]

you dont lose 20 percent,

 you get all the vat back on expenses, your van, diesel, equipment etc etc etc

[8weekly]

You can go on the flat rate scheme. Not sure wat the % is for windowcleaning though.

It isn't far off 20% as overheads are a small cost relative to t/o.

[HampshireWindowCleaning]

you dont lose 20 percent,

 you get all the vat back on expenses, your van, diesel, equipment etc etc etc

Yes I know you can claim anything you have already paid vat on, but that is probably quite a small percentage

[Pete Thompson]

you dont lose 20 percent,

 you get all the vat back on expenses, your van, diesel, equipment etc etc etc

This.

Alternatively you can go on a flat rate scheme where you just hand over about 12% (I think) and don't claim anything back.  Probably better for a business like window cleaning where you don't purchase much on a day-to-day basis.

[HampshireWindowCleaning]

Are you domestic only or do you do commercial too? What's the %

About 95% domestic at the moment.

[Dean Taberner]

If you really want to push your business on then its the only way to go.

I wouldn't recommend it for solely domestic customers though as it would be a massive chore.

[dave0123]

Quote
you dont lose 20 percent,

 you get all the vat back on expenses, your van, diesel, equipment etc etc etc

This.

Alternatively you can go on a flat rate scheme where you just hand over about 12% (I think) and don't claim anything back.  Probably better for a business like window cleaning where you don't purchase much on a day-to-day basis.

Still have to charge 20% to customers though which is a very big hit for them £4 increase on 20 pound house.. or take that hit your self  

[DG Cleaning]

The only logic I can see if you want to break the vat threshold would be to smash straight through and take turnover above and beyond 100k asap.

[HampshireWindowCleaning]

Interesting, sounds like that might be the way to go

you dont lose 20 percent,

 you get all the vat back on expenses, your van, diesel, equipment etc etc etc

This.

Alternatively you can go on a flat rate scheme where you just hand over about 12% (I think) and don't claim anything back.  Probably better for a business like window cleaning where you don't purchase much on a day-to-day basis.

[HampshireWindowCleaning]

The only logic I can see if you want to break the vat threshold would be to smash straight through and take turnover above and beyond 100k asap.

Unfortunately as we all know it can take a while to build a full round of decent paying customers, so it won't be easy to get the 2nd van in to profit especially with the vat killing it aswell.

[Pete Thompson]

Still have to charge 20% to customers though which is a very big hit for them £4 increase on 20 pound house.. or take that hit your self

No, not really.  You are only paying the vat man 12% of your turnover, so you only need to raise your prices by 12%.  Yes you are right in that the vat rate is always 20% on sales, but you still only raise your prices 12%.

For example, say you have your £20 house, and you vat register on the 12% flat rate scheme.  Each time you do that house you now have to give 12% to the VAT man, so you only put your price up to 12% of £20 = £22.40, which is not too big a hit.

So in order for you not to lose any money, the prices only have to go up by 12%.  Its designed to take into account the fact that some businesses (like cleaning, and other services) dont buy much stuff for resale.

I know a mate who has done this and he said it works out fine, and is easier from a paperwork point of view than keeping track of every single purchase you make.

[HampshireWindowCleaning]

Thanks Pete, I will definitely explore this as it sounds like it might be the answer.

Still have to charge 20% to customers though which is a very big hit for them £4 increase on 20 pound house.. or take that hit your self

No, not really.  You are only paying the vat man 12% of your turnover, so you only need to raise your prices by 12%.  Yes you are right in that the vat rate is always 20% on sales, but you still only raise your prices 12%.

For example, say you have your £20 house, and you vat register on the 12% flat rate scheme.  Each time you do that house you now have to give 12% to the VAT man, so you only put your price up to 12% of £20 = £22.40, which is not too big a hit.

So in order for you not to lose any money, the prices only have to go up by 12%.  Its designed to take into account the fact that some businesses (like cleaning, and other services) dont buy much stuff for resale.

I know a mate who has done this and he said it works out fine, and is easier from a paperwork point of view than keeping track of every single purchase you make.