[Crystal-clear]

Lee I remember there was a time when you didn't like leafleting I think it was over 100000 leaflets that you dropped from Royal Mail and you went back to canvassing I'm talking a good 10 years ago though:))
Obviously things changed but financially looks like that particular drop didn't work for you what made you go back to it? Because you've also given a lot of encouragement for others to do the same thing that you've done recently on a smaller scale of course with leaflets

[Splash & dash]

Lee I remember there was a time when you didn't like leafleting I think it was over 100000 leaflets that you dropped from Royal Mail and you went back to canvassing I'm talking a good 10 years ago though:))
Obviously things changed but financially looks like that particular drop didn't work for you what made you go back to it? Because you've also given a lot of encouragement for others to do the same thing that you've done recently on a smaller scale of course with leaflets

😛😛😛👅👅👅

[Plankton]

On the subject of vat has anyone just setup another company to avoid hitting the threshold, perfectly legal if under separate names.
Ok not suitable for those who want to grow beyond 170k but for those with say a window cleaning business and a partner with a gutter/pressure cleaning business?

[Smudger]

Plakton  - no chance the businesses are to similar - it will be seen as tax avoidance - been many a thread regarding that


Crystal - intrigued - how does getting commercial help with the vat ?


Darran

[Crystal-clear]

Plakton  - no chance the businesses are to similar - it will be seen as tax avoidance - been many a thread regarding that


Crystal - intrigued - how does getting commercial help with the vat ?


Darran

AS above plank has to be completely different you won't be able to separate your add on services. but for example if you open up a chicken shop that's fine.

Smudger basically you can charge (the going rate) plus VAT without having to actually charge more if that makes sence..
For example you charge a price which is in line with other businesses below the threshold and in line with the popular self-employed single operators who are below the threshold
Except because you are over the threshold you now have to take a hit on the turnover which they don't.Way around it is to be little more expensive but then you may not obtain as much.

When it comes to Commercial you can charge the same as what your local non registered tradesmen charge plus vat (as they claim it back) then you pay the duty = you're making same profit as before.
Hope it makes sense what I'm trying to say. Obviously there's ways around it and ways to make it work but I'm just trying to explain the viewpoint here on how commercial work can be beneficial.

[Plankton]

Smudger, Legally it's a different business a separate entity running out of the same address but the wife has south city areas and the husband has north city areas.
If she were to sell dolls and I started my own business selling action men! Then it's a different business.... ?

[Plankton]

Vat, Basically with domestic customers you absorb the vat or take the hit if you like and with commercial your adding the vat on to the price as it doesn't make a jot of a difference as they're claiming it back.

Unless of course you turn ltd and add the 20% on to the domestic customer, then you'll not be liked!

[Crystal-clear]

I need to use a big figure example here obviously both of these people are doing well and surely cant complain but we're talking vat.

Window cleaner 1)

Earns £600 per day serving businesses only.
After about 6 months accountants advice is to register for VAT so he now charges £720 Inc.
His clients are all VAT registered and so it's not a price increase they claim the VAT back and he's making the same profit as he was before.

Window cleaner 2)

Earns £600 per day serving domestic only 8 months later accountant advises him to register for VAT. He also doesn't want to take a hit on his turnover which will now be down to £480 and so decides to up his prices to adjust and make it the same £720 as window cleaner 1 But by doing this he has lost some clients because they feel hes a little too expensive now thus potentially finding himself turning over £480 per day (because of the cancellations) leaving him with £384 after he pays vat.

basically in this scenario fictional but probably realistic if you decide to up your prices by 20% over night window cleaner 2 is now making almost half as much as he was before he was VAT registered compared to window cleaner one who only services commercial clients is still making the same amount of money as he was months ago.

I'm purely talking about financial here the setbacks of fully commercial what they may or may not have
And why plenty push domestic rather then commercial perhaps given the waiting time of payments or maybe the competition involved with big national companies is a completely different scenario.

[Smudger]

yep cc -you defo read far too much into it - the commercial jobs can claim back vat you charge but that does nothing to help you - that only helps when buying vat items

if you can't manage your accounts and see when vat is looming then thats pretty poor management - you can get a year on reduced rate (11% if remember correctly) if your forecasting hitting vat in a rolling 12 months you prep - basically put in a price increase on existing customers before vat starts then any new business (just like you going and getting commercial work) has the vat in the price or you issue a price and say its +VAT ( I have no problems with this for add on works - either way works fine ) and the difference between prices for common window cleaning is pretty minimal - so just work the vat into new residential works - doing more commercial does not help you pay the vat bill - I agree IT WILL open up more commercial opportunities

Planky - NO still won't work the businesses "share" too many things and are too similar - I promise you this has been debated on here a dozen times - I've checked with accountants ( my own ) and others I have met through networking - you might get away with it, but if they (tax man) decide to look closer you could be in for big fines  -HTH

Darran

[Crystal-clear]

yep cc -you defo read far too much into it - the commercial jobs can claim back vat you charge but that does nothing to help you - that only helps when buying vat items

if you can't manage your accounts and see when vat is looming then thats pretty poor management - you can get a year on reduced rate (11% if remember correctly) if your forecasting hitting vat in a rolling 12 months you prep - basically put in a price increase on existing customers before vat starts then any new business (just like you going and getting commercial work) has the vat in the price or you issue a price and say its +VAT ( I have no problems with this for add on works - either way works fine ) and the difference between prices for common window cleaning is pretty minimal - so just work the vat into new residential works - doing more commercial does not help you pay the vat bill - I agree IT WILL open up more commercial opportunities

Planky - NO still won't work the businesses "share" too many things and are too similar - I promise you this has been debated on here a dozen times - I've checked with accountants ( my own ) and others I have met through networking - you might get away with it, but if they (tax man) decide to look closer you could be in for big fines  -HTH

Darran

yep cc -you defo read far too much into it - the commercial jobs can claim back vat you charge but that does nothing to help you - that only helps when buying vat items

No Of course it doesn't help it helps you maintain the same price you charged before because they will claim the VAT back. If it was a domestic customer you would need to charge plus VAT to make the same amount of money as before.
I never said it helps the window cleaner other than the business you are charging wont look at it as a price increase.

Regarding the 11% flat rate it's my belief that this has been increased to 16% and it's not worth it anymore as it used to be as you won't be able to claim on purchases on that rate.

[Splash & dash]

I need to use a big figure example here obviously both of these people are doing well and surely cant complain but we're talking vat.

Window cleaner 1)

Earns £600 per day serving businesses only.
After about 6 months accountants advice is to register for VAT so he now charges £720 Inc.
His clients are all VAT registered and so it's not a price increase they claim the VAT back and he's making the same profit as he was before.

Window cleaner 2)

Earns £600 per day serving domestic only 8 months later accountant advises him to register for VAT. He also doesn't want to take a hit on his turnover which will now be down to £480 and so decides to up his prices to adjust and make it the same £720 as window cleaner 1 But by doing this he has lost some clients because they feel hes a little too expensive now thus potentially finding himself turning over £480 per day (because of the cancellations) leaving him with £384 after he pays vat.

basically in this scenario fictional but probably realistic if you decide to up your prices by 20% over night window cleaner 2 is now making almost half as much as he was before he was VAT registered compared to window cleaner one who only services commercial clients is still making the same amount of money as he was months ago.

I'm purely talking about financial here the setbacks of fully commercial what they may or may not have
And why plenty push domestic rather then commercial perhaps given the waiting time of payments or maybe the competition involved with big national companies is a completely different scenario.

Stick to cleaning the windows and let the people who do the sums do there job  you are making life very hard for yourself

[Crystal-clear]

I need to use a big figure example here obviously both of these people are doing well and surely cant complain but we're talking vat.

Window cleaner 1)

Earns £600 per day serving businesses only.
After about 6 months accountants advice is to register for VAT so he now charges £720 Inc.
His clients are all VAT registered and so it's not a price increase they claim the VAT back and he's making the same profit as he was before.

Window cleaner 2)

Earns £600 per day serving domestic only 8 months later accountant advises him to register for VAT. He also doesn't want to take a hit on his turnover which will now be down to £480 and so decides to up his prices to adjust and make it the same £720 as window cleaner 1 But by doing this he has lost some clients because they feel hes a little too expensive now thus potentially finding himself turning over £480 per day (because of the cancellations) leaving him with £384 after he pays vat.

basically in this scenario fictional but probably realistic if you decide to up your prices by 20% over night window cleaner 2 is now making almost half as much as he was before he was VAT registered compared to window cleaner one who only services commercial clients is still making the same amount of money as he was months ago.

I'm purely talking about financial here the setbacks of fully commercial what they may or may not have
And why plenty push domestic rather then commercial perhaps given the waiting time of payments or maybe the competition involved with big national companies is a completely different scenario.

Stick to cleaning the windows and let the people who do the sums do there job  you are making life very hard for yourself

At least it's keeping the forum busy 
The numbers won't lie if you are 100% commercial vs is 100-percent domestic when the time comes for VAT registration you're better off having the 100% commercial if you want to maintain the same profit and not risk losing customers due to increasing your prices to now inc vat.

Sorry but which part of this isn't making sense?

[Smudger]

How likely are you to be 100% commercial and not vat registered ?

and by that I mean big contracts direct with the end user not subby to another subby

you can do a lot of commercial works for the high street and some businesses - for example b&b's here in coastal towns - tell them your going vat reg and they will drop you like a hot turd (most are not vat themselves  )

Also before being vat reg, I couldn't get certain work as they insisted I had to have a vat number to be considered regardless of the price

As I said - you don't wake up one day and go Oh god! ive hit the vat you can see it coming a mile off and adjust accordingly

( I do get your point - but in reality has it stopped Lee? NO - to a lesser degree myself ? NO )

I will say your posts did (to me) make it sound like you could claim more vat back by doing commercial - but hey ho - you'll get there

Darran

[Splash & dash]

I need to use a big figure example here obviously both of these people are doing well and surely cant complain but we're talking vat.

Window cleaner 1)

Earns £600 per day serving businesses only.
After about 6 months accountants advice is to register for VAT so he now charges £720 Inc.
His clients are all VAT registered and so it's not a price increase they claim the VAT back and he's making the same profit as he was before.

Window cleaner 2)

Earns £600 per day serving domestic only 8 months later accountant advises him to register for VAT. He also doesn't want to take a hit on his turnover which will now be down to £480 and so decides to up his prices to adjust and make it the same £720 as window cleaner 1 But by doing this he has lost some clients because they feel hes a little too expensive now thus potentially finding himself turning over £480 per day (because of the cancellations) leaving him with £384 after he pays vat.

basically in this scenario fictional but probably realistic if you decide to up your prices by 20% over night window cleaner 2 is now making almost half as much as he was before he was VAT registered compared to window cleaner one who only services commercial clients is still making the same amount of money as he was months ago.

I'm purely talking about financial here the setbacks of fully commercial what they may or may not have
And why plenty push domestic rather then commercial perhaps given the waiting time of payments or maybe the competition involved with big national companies is a completely different scenario.

Stick to cleaning the windows and let the people who do the sums do there job  you are making life very hard for yourself

At least it's keeping the forum busy 
The numbers won't lie if you are 100% commercial vs is 100-percent domestic when the time comes for VAT registration you're better off having the 100% commercial if you want to maintain the same profit and not risk losing customers due to increasing your prices to now inc vat.

Sorry but which part of this isn't making sense?

Just focus on building your business  let the accountant deal with the figures , that’s what they are there for and that’s why we pay them . We do domestic and commercial  and trust me it doesn’t make any difference in the long run , vat on domestic if you use for thought you gradually increase your prices before hitting the vat threshold so you don’t suffer from it , or if you do it’s  minimal , you just need to plan ahead . 

[Crystal-clear]

How likely are you to be 100% commercial and not vat registered ?

and by that I mean big contracts direct with the end user not subby to another subby

you can do a lot of commercial works for the high street and some businesses - for example b&b's here in coastal towns - tell them your going vat reg and they will drop you like a hot turd (most are not vat themselves  )

Also before being vat reg, I couldn't get certain work as they insisted I had to have a vat number to be considered regardless of the price

As I said - you don't wake up one day and go Oh god! ive hit the vat you can see it coming a mile off and adjust accordingly

( I do get your point - but in reality has it stopped Lee? NO - to a lesser degree myself ? NO )

I will say your posts did (to me) make it sound like you could claim more vat back by doing commercial - but hey ho - you'll get there

Darran

Yer no sorry if I wasn't writing out clear enough!.
But yeah I was purely only talking the numbers not the various other pitfalls of being commercial
End of the day there must be a very good reason why lot of people stick to domestic and essentially well take that "potential" hit Or adjust.

Certainly agree with what you're saying it didn't stop Lee yourself or others also It's true some very low-level commercial may not be VAT registered themselves or could be on a flat rate in which case it would be the same conundrum!.

One thing you mentioned about the flat rate though unfortunately I'm pretty sure that we are not eligible anymore?  some new rules came into effect where we're classed as a limited cost business (removable goods less then 2%) of turn over and the lowest rate you can get is 16.5 %
1% discount so 15.5% but then you won't be able to claim back so not quite as attractive as before Unless I'm wrong i know it's only 4 and a half percent more but the 11% would have been really useful if they kept it.!

[Pete Thompson]

if you decide to up your prices by 20% over night

You don't "up your prices by 20%" because that ignores the VAT you can now claim back on your purchases, such as fuel, equipment etc etc.  After that is taken into account, its more like a 15% increase

A 15% increase on a property charged at £20 is £3. 

I'd pass that cost on and not even worry about it.  Or possibly absorb half and pass on half for a year, then pass it all on after that.

Also, Crystal, you are over-thinking this.  If you're nearing the £85k turnover then you're also in a turnover bracket where proper tax planning is worthwhile, and you can save more than 15% by going Ltd and implementing the many tax-reducing options that being a corporation opens up.

Personally I'd never ever let a fear of losing 15% to the tax man limit my ambitions or push me into a business model I wasn't suited to (such as going for commercial) nor would it prevent me from continuing to grow.

I also would not try to come up with some dodgy scheme to avoid it (like setting up two companies LOL they are all over that old trick).  It's just a step on the path of growth that you have to take.

[Crystal-clear]

I need to use a big figure example here obviously both of these people are doing well and surely cant complain but we're talking vat.

Window cleaner 1)

Earns £600 per day serving businesses only.
After about 6 months accountants advice is to register for VAT so he now charges £720 Inc.
His clients are all VAT registered and so it's not a price increase they claim the VAT back and he's making the same profit as he was before.

Window cleaner 2)

Earns £600 per day serving domestic only 8 months later accountant advises him to register for VAT. He also doesn't want to take a hit on his turnover which will now be down to £480 and so decides to up his prices to adjust and make it the same £720 as window cleaner 1 But by doing this he has lost some clients because they feel hes a little too expensive now thus potentially finding himself turning over £480 per day (because of the cancellations) leaving him with £384 after he pays vat.

basically in this scenario fictional but probably realistic if you decide to up your prices by 20% over night window cleaner 2 is now making almost half as much as he was before he was VAT registered compared to window cleaner one who only services commercial clients is still making the same amount of money as he was months ago.

I'm purely talking about financial here the setbacks of fully commercial what they may or may not have
And why plenty push domestic rather then commercial perhaps given the waiting time of payments or maybe the competition involved with big national companies is a completely different scenario.

Stick to cleaning the windows and let the people who do the sums do there job  you are making life very hard for yourself

At least it's keeping the forum busy 
The numbers won't lie if you are 100% commercial vs is 100-percent domestic when the time comes for VAT registration you're better off having the 100% commercial if you want to maintain the same profit and not risk losing customers due to increasing your prices to now inc vat.

Sorry but which part of this isn't making sense?

Just focus on building your business  let the accountant deal with the figures , that’s what they are there for and that’s why we pay them . We do domestic and commercial  and trust me it doesn’t make any difference in the long run , vat on domestic if you use for thought you gradually increase your prices before hitting the vat threshold so you don’t suffer from it , or if you do it’s  minimal , you just need to plan ahead .

Essentially it's not a humongous increase to the end user but it is a bit of a chip if you know what I mean. What was your strategy? Did it not annoy you that all of a sudden the extra van going out was being taxed was there a time where you increased your prices to adjust ?im Basically trying to be in the middle price wise staying very mindful

Absolutely agree with using a good accountant it does allow you to just Focus purely on work which means you make more money which means you hit the VAT threshold a lot faster than you thought lol! He feels our pain because he knows we can claim his VAT charge back!

[Crystal-clear]

if you decide to up your prices by 20% over night

You don't "up your prices by 20%" because that ignores the VAT you can now claim back on your purchases, such as fuel, equipment etc etc.  After that is taken into account, its more like a 12% increase

A 12% increase on a property charged at £20 is £2.40. 

I'd pass that cost on and not even worry about it.  Or possibly absorb half and pass on half for a year, then pass it all on after that.

Also, Crystal, you are over-thinking this.  If you're nearing the £85k turnover then you're also in a turnover bracket where proper tax planning is worthwhile, and you can save more than 12% by going Ltd and implementing the many tax-reducing options that being a corporation opens up.

Personally I'd never ever let a fear of losing 12% to the tax man limit my ambitions or push me into a business model I wasn't suited to (such as going for commercial) nor would it prevent me from continuing to grow.

I also would not try to come up with some dodgy scheme to avoid it (like setting up two companies LOL they are all over that old trick).  It's just a step on the path of growth that you have to take.

Hey Pete! I am LTD its defo much better for where things are.

Unless you talking about the flat rate scheme which I don't think it's viable anymore

For the normal rate of 20 percent
It's true it's not quite 20% but it's close on a normal month prob works out to 17-18% (of course everyone's business is different)
Surely You would have to spend a lot of money on VAT items to break that payout to 12% on a £10,000 turn over £4,000 on vat purchases vat due £2,000 claim back £800 leaves you with about 12%!. A £1,200 payout on £10,000

And yes I think planky was talking about two separate businesses doing similar things in different areas absolute no no there. Although I'm sure some people have done it before however I would say it's too risky and the receiver would take the view of avoiding VAT you would have to have a very very convincing setup
As smudger said this topic has indeed been covered before and wasn't it someone on this forum who said even a different pen!

[jay moley]

They dont last and dont clean as well.  We need to buy things that can take being hammered all day every day.

Lee,

Are the stiff brushes ok on leaded lights?

Is it the 26cm or 35cm brush?

Cheers,

Jay

[SB Cleaning]

Very nice.

Just need to upgrade from that Nokia 3210 phone  now