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Replies
Firstly, well done with the expansion, that's good going as things are at the moment with many struggling.
The VAT element is a pain with regard to private maintenance, simply because 90% of the work is labour and you will need to put your prices up by 20% to stand still!
With landscaping projects however, it isnt so harsh, as probably 50% of a job is materials which the customer will be charged as VAT inclusive anyway. You can now claim your portion of VAT back.
There are no clever ways round it, as far as I know I'm afraid. A good while back we investigated splitting the business into private and commercial, but were told that, as they had the same directors, the HMRC would eventually just lump the two together and hit you back tax, which would be painful!
I have found it better to give private customers a VAT inclusive price tho........it seems to cut down the conversations that start "Now, can we do anything about the........."?
Apart from that, we just get on with it............. be good, be polite and be professional.
Tony, go read this :
http://www.landscapejuicenetwork.com/group/keyobjectivesprivategrou...
May help you in your situation (if you do not belong to group, go join it)
Thanks andy! its hard work and im still not 100% sure its going to pay off.
Thanks for the link gary very useful tips in there!
My biggest problem is ive shot myself in the foot a bit by setting my rates too low to start with. My customers are currently paying £13.50 per hour and of course i have since realised that its nowhere near enough. I am now in a huge dilemma as i need to increase prices to at least £16 but i am also registering for vat at the end of february so obviously a big jump for them. I think i may just have to take the plunge, increase the prices and see what happens!
Hi Tony,
Congrats on expanding the business so quickly. Have you already crossed the VAT threshold? If not why don't you put your prices up first as you may find that you will lose a proportion of your customers which will keep you under the threshold anyway and you will be earning more for your time. I'm in the same boat and sadly my largest commercial client is not VAT registered so I would lose their business. I am looking into marketing to larger companies that are VAT registered themselves as then the crossover might be smoother? Good luck - I'd love to hear how you get on.
We found that we lost most of our small clients who only wanted a few hours here and there but 3 years later we are still in business and have less customers but all pay a better rate and most of our work is a minimum of a days work or more. As a rule I think I lost 12% of customers overnight who did not want to pay VAT but gained work from the larger estates where we now pitch our business today.
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