hi i am 100% domestic on both gardening maintenance and landscaping and wondering just myself and 2 others employed, wondering if both legal and viable to keep my sales totals down by not including materials which i dont charge money off anyway, by carefully wording that whilst we dont supply any materials weve negotiated rates for our clients with suppliers and to have clients pay supplier direct for any materials for any landscape materials ( i order almost everything from same supplier).
clearly i would put order in and then give order reference, and for myself to invoice for labour only.
not sure if im breaking any rules given im not vat registered and i have not paid for materials so duly not obliged to charge for them.
i dont want to become vat registered for simple reason i will be adding onto my price that none of my clients can claw back and also make myself more expensive than quite a few rivals.
im fully aware of what i can claim back but what ever way it goes you end up paying out more than you would have been if not vat registered.
i dont see it as putting any client off as some take deposits , this way the client thinks they are getting great deal obtaining materials at cost price. im only pondering on the idea at moment, clearly if going to break rules or look sus to hmrc i would rather just go vat registered...
clearly this wont affect my garden maintenance clients so really applies to landscaping only
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hi tom yes i know that i would have to charge vat overall, i didnt word that clearly i meant with gardening i only charge labour currently ( no materials )
A brain dump;
- you really, really need to think this thru (from a image prospective)
- 3 of you already must put you near the threshold limit already, so you will raise an eyebrow with HMRC.
- You can't grow. You've totally restricted / capped yourself. How can you employ more staff ?
- how would you 'warrant' any goods - who takes the hassle of defective goods (you can't as you didn't buy them). Would a client want that hassle?
- why see it as a problem ? A similar VAT thread was started a few weeks ago. Worth reviewing.
- the clients that are 'restricting' you as you feel they would not pay VAT - why not phase them out and go after more profitable clients ?
- will new clients think you are equally 'dodgy' for playing around with them ordering and invoicing ?
- you'll never gain legit commercial work
- being VAT registered (whatever anything thinks) is a sign of growing, profitable business
- watch for any artificial separation of business - you'll get whacked hard by HMRC (ref Garden Maint Vs Landscaping).
Matt, I do not mean this in any nasty way - but I think it would be a crazy idea. Any positives are surely outweighed by the negatives ?
i have no intentions to grow any bigger or too big rather im content with team i have and certain flow of work ( tried once and was nightmare for me with staffing,damages to tools, complaints etc so put me off ) quite content keeping it simple and profitable way it is.
regards defective goods we have good and close relationship with merchants and if anything defective we deal with it, customer is merely paying for goods in their name which is under rates negiotated with merchants and we have good relationship with them.
im not saying clients would not pay vat, just means a simple grass cutting client of £40 now paying £48 times that by 20 visits thats an £160 rise per year, sure anyone would raise an eyebrow to that -
dont think anyone would consider it dodgy than asking for a deposit before ive turned up
commercial work is not something im looking at venturing into at present
i wasnt planning on seperating the business, sorry i worded it wrong i meant doesnt affect gardening as currently only pay for labour anyway.
and not taken in nasty way, any feedback is helpfull.. as i say just pondering on ideas. thanks :)
If a Resident Management Ltd company offered the chance to maintain a block of flats and this pushed you over the threshold - you'd refuse the contract ?
Normally ownership of goods purchased remains with who pays the bill. What if the Manager at that Depot changed?
If I, as a client, had several contractors bidding for some landscaping work I needed and one came to me such a scheme - would I go forward with them ? a big question mark for me.....
Really not sure then, I understand the Gardening Vs Landscaping and your references to VAT ?
You can't engineer who does and doesn't pay VAT from services from a single entity ?
Do some maths for 3 people; your internal charge rate; 2080 working hours per year & VAT threashold. You're so, so limited in your turnover, hence what you can earn...
VAT Threashold is not per financial year, it's a rolling year. So high T/O say in Q1 & Q2 could mean you are forced to register anyway.
I'm challenging you on purpose to make sense of this ;)
if a contract came up and i was in position to undertake it clearly i would take it on then go vat registered if what i was gaining exceeded what i was about to lose on price increases to domestic clients.
i deal with two suppliers and about 3guys on each counter and everything on system so even if newbie starts rates are all on computer. and regardless who pays name its on, im a good client so they know i brought the custom in and never a hassle sorting any defects out etc.
their is no gardening v landscaping or being separated, i was merely saying gardening side not a problem as all labour no materials being added onto bill pushing up sales figures
will have a look at that thread , thanks...
If we take average pay (8.75/hr) and charge out (25/hr) rates;
2080 working hours (min) per employee per year
= > £52k t/o per year per person
* 3 people
= £156k t/o
So immediately you're into the VAT scenario ?
Accept I am assuming running at 100% capacity...but you'd have to be sitting around for 50% of time not earning to fall back under the radar...
Remember that the actual cost increase caused by going VAT registered does not have to be +20%, typically it is between 10-18% as you offset input VAT (ie your costs, fuel, machinery, waste). i.e. you can buffer the increase or you change (=better) clients and pass on the lot....
im no where near those hours of figures, 1 staff full time 1 part time/casual march-nov , big downturn in work dec-feb comes in dribs and drabs plus lack of daylight means hardly ever out jan/feb. march - nov 100% on go .maybe thats another reason i should be gearing myself towards commercial work more winter pruning autumn tidys etc. def alot food for thought there and alot to look into :)
Cool.
Seriously, start thinking now about how you can set up and market services and what jobs you can push out to/for next Nov-Feb. The more you can sensibly offer the easier it becomes to gain an income during those hard months.
Finally, If the comments above have made you question things, generate ideas then job done :) - at least you can mull over and consider options as and when it feels right....
This thread is also worth a read..........
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