Has VAT registration Ruined my business - Tradesman
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- čas přidán 13. 06. 2022
- so how exactly has VAT registration affected my business?
in the video I dive deep into how its potentially ruined my domestic electrical business
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This video is for entertainment purposes only and is in no way intended as a guide or 'how to'.
VAT shouldn't be that tricky for any business. Managing what is owed is done by every accounts package with ease as it's not exactly new. Ways to reduce VAT bills ... if you're above threshold and under £150K, register for Flat Rate VAT scheme - it's 9.5% for an electrician with > 10% materials as turnover. That makes VAT returns trivial, and means you retain a good chunk of the money - and helps you essentially phase in being VAT registered... but also, if you are VAT registered work to build up a "VAT" account (another current account, a business savings, whatever) and put the VAT amount in a separate account when you're paid. Then you've always got the money and aren't caught out. Another great way to reduce this problem is to stop letting customers pay you on long terms - they don't need 28 days or whatever you offer - and whilst you might have time to pay your trade suppliers, you don't have extra time to pay VAT so work to get customers paying more promptly... cashflow is king.
You can voluntarily register if you're below the threshold - this can be an advantage if a lot of your clients are also registered, as they can claim back the VAT you charge, and you can claim the VAT back on everything you "buy for the business", if you know what I mean...;-)
Im not even in the trade, just stumbled across a video one day and find it quite interesting, just thought I'd get that out there, keep up the good work 👍🏻
I'm a sole trader sparky, and have worked for myself for 14 years. I went VAT 8-9 years ago and haven't looked back. I opted to be registered even though my turn over was under the threshold, as the type of clients i wanted to attract ( quality higher end domestic , small commercial and industrial) were not keen to trade with businesses they can't claim back from. A good bookkeeper will help you, and as soon as you have a decent system setup, it will fall into place. What i claim back from tools / materials / vans etc is all worth it + you certainly attract clients where your not penny pinching on quotes!!!!
I feel your pain, I had the same issue 30 years ago and worked silly hours away from the family ... Working alongside other VAT-registered companies proved to be the way out for me.
Thanks for the video Nick, I have been over the £85k in 2020 and claimed an anomaly, last year I was a couple hundred under.
Nick I feel your pain, I was working as a CIS Systems Security Consultant from my limited company and after 3 years I cleared the threshold and compounded with the changes to IR35 it literally shutdown my company almost over night. I could no longer compete with the prices of the of the self employed who managed to stay below the threshold and couldnt compete with the bigger companies who had multiple staff and were able to be more competitive than me on timelines as well. I think its like the tax code, once you just get over the threshold its a massive hit that can cripple your business but if you can weather it and push on well past the threshold then your Company can thrive
Great video nick.. You are bang on!.
Love your work and channel 💓
I found after having to go vat opened the gate for more customers who only wanted dealt with vat rated tradesmen,and if we got a biggish job it was no problem for them to buy the materials,as long as you have a good accountant then fine 👍
Thanks for explaining nick 🙌🏻🙌🏻
A defo thumbs up for that pal 👍 personally as a now solo electrical contractor who as been avoiding the VAT threshold now for 20+ years I know exactly where you are coming from. Its bad enough competing with the incompetent bodgers
Not read other comments but sure someone must have suggested just open a 2nd business. (Legally)
Sorry to hear it's causing you grief Nick :-(. Some people (customers) say they see it a sign of dealing with a more established, trusted set-up. I've even been told by some firms they only deal with people who are VAT registered. All the best.
I feel your pain Nick. I turned over approx £110 k in 2021, However after speaking to my accountant he said that If part of the turnover was a one off. ( for me it was I had two jobs worth 28K between them which would never ever be repeated) then I could apply for an exemption. My accountant done this on my behalf and Voilla, I am not paying VAT .
Great job Nick as usual, but remember your private customers only pay vat on your labour/profit, you should be discounting the materials vat in your pricing
I’d be more worried that I wasn’t turning over more than £85000 if I had the overheads you must have with unit to pay for a van apprentice etc
Great video Nick, I'm pretty close atm and moving to solar soon so I'm sure I'll be over, keep up the good work
Good video !
I've been VAT registered for 20 years, never had a problem with it. Yes, a bit more paper work every 3 months, but I have used cashflow manager software supplied by my accountant. At the year end, I send them a copy of the year and from that they sort out my return.