[daveappleby]

Hi all... just a quick question.

When you are giving a quote, lets say, you want to make £20 in your pocket, do you then add the tax on top of the £20 and tell the customer that it will be say £24 (20% added on for tax) for the job price?

If this is what you do, what percentage do you charge?

Many thanks

[williamx]

Dave you have other expenses as well as tax.

You need to do a business plan, which should give you a figure that you need to charge.

[Chris Galloway]

Dave you have other expenses as well as tax.

You need to do a business plan, which should give you a figure that you need to charge.

insurance (liability, motor, employee)
wear and tear on equipment
consumables
accountant (if you have one)

the list goes on!

[daveappleby]

I hear what you are saying...I was factoring all those additional costs into the £20 "in pocket" price. What I want to know is when all your costs/expenses/profit have been factored into a price, then what percentage do you add on for tax? We get charged 20%  for self assessment purposes so I was just guessing add 20% onto the price of a job so the customer pays the tax and not me??

[williamx]

Dave

You cannot just add your tax bill of 20% onto each quote you do, there are many reasons why.

You do not know what your tax bill is going to be a year ahead, because what you spend on your company will have so many varients, example breakdowns and stolen- broken equipment.

Also if you have worked out that you need to charge £20, if the other cleaners are also asked to quote for the job and they quote £20 you will miss out because of your 20% tax add on.

A good rate to earn is roughly £35 per hour, so you can quote on this figure, but beware, there are others who charge a lot less.

[AJ]

I reckon if you said 60% of your days earnings was your wages, you'd be quite close.

[AuRavelling79]

I reckon if you said 60% of your days earnings was your wages, you'd be quite close.

As an owner-operator that's not a bad rule of thumb. I reckon your first 10K of earnings gets you 70% but as you pass the tax/nat ins. thresholds you should look at 60%.

[daveappleby]

Dave

You cannot just add your tax bill of 20% onto each quote you do, there are many reasons why.

You do not know what your tax bill is going to be a year ahead, because what you spend on your company will have so many varients, example breakdowns and stolen- broken equipment.

Also if you have worked out that you need to charge £20, if the other cleaners are also asked to quote for the job and they quote £20 you will miss out because of your 20% tax add on.

A good rate to earn is roughly £35 per hour, so you can quote on this figure, but beware, there are others who charge a lot less.

Is that £35 in your pocket or gross?

[kris martin]

no just give them a price your customer shouldnt have to foot your tax bill.

[williamx]

Gross

[Paul Coleman]

Hi all... just a quick question.

When you are giving a quote, lets say, you want to make £20 in your pocket, do you then add the tax on top of the £20 and tell the customer that it will be say £24 (20% added on for tax) for the job price?

If this is what you do, what percentage do you charge?

Many thanks

In addition to what the others have said, bear in mind that once you have taken a certain profit (about 6k I think) there is also extra NI to pay (think it's currently 8% but check this).

[daveappleby]

no just give them a price your customer shouldnt have to foot your tax bill.

then why do we all have tax added to items we buy? If as you say the customer shouldnt have to pay my tax bill then why do shops add on the tax to items, why dont they pay the tax? My point being, that you quote a price, and then you have to pay tax on that figure. If you have a job that you quote at £20, then you do you either add on the 20% (£24 quote) for tax or take the 20% off the quote (£16 in pocket) and be happy that this is the real figure you have in your pocket?

[Niall McAllister]

In my humble,
the cust pays for the work you do, so what ever you charge they pay your tax ( no cust, no tax)
the best way is to work out what you need your hourly to be, £5, £30, £150 what ever. then work out how long the job will take and divide that into your hourly. your hourly should include your outgoings plus what you want in your pocket.

niall
or
if one train leaves the station at 3pm and tavels at 50mph, and you have 6 apples in your bag, what is the first number i thought of?

[seandyer2003]

if you charge 24, now you have to pay more tax on the 24, so you need to charge more again to cover that then more to cover that and on and on lol, charge £100 an hour that should cover everything

[Ian_Giles]

You don't 'add' tax to your quote unless you are VAT reg!

Working out what you want to earn and how to charge accordingly is not really an easy thing, and although you may charge £20 for a house, maybe the same as the next window cleaner, that guy might knock it out twice as fast as you, so although he is charging the same, he is earning more money (pro rata that is)

You have to take into account how many hours on average you will work each week,and that isn't as easy as it sounds, you may be out for 8 hours but you won't have worked for 8 hours, you have remember that you only 'earn' money when you are actually cleaning windows, you don't earn any driving to and from various accounts or sitting in the van because it's pouring with rain or you are having a tea break. Or the customer is chatting to you...
Then you have to add in all of your business expenses (much bigger than most realise)

At the end of the year you only pay tax on your profits, and at the start of the year you'll have no idea what those are going to be.

Ian

[daveappleby]

In my humble,
the cust pays for the work you do, so what ever you charge they pay your tax ( no cust, no tax)
the best way is to work out what you need your hourly to be, £5, £30, £150 what ever. then work out how long the job will take and divide that into your hourly. your hourly should include your outgoings plus what you want in your pocket.

niall
or
if one train leaves the station at 3pm and tavels at 50mph, and you have 6 apples in your bag, what is the first number i thought of?

ha ha ha...very good, is the answer a pear tree???

[Niall McAllister]

imagine that tax return.
earnings= a pear, 3 chickens, and 1 lettuce.

hmrc calculate that you a nice bowl of salad by 31 jan09