Anyone’s round effected by VAT to your domestic round ?

[scottish cleaning service]

I do odd jobs as well as window cleaning and I'm looking for £200 a day for labour and that's in Scotland. Folk will pay if they know you are reliable and leave a good job because not many around now. Today I quoted a grand for new ceiling and wetwalls in a bathroom. The fireman said he would need to think about it or sell a kidney. I replied, if you were a woman then I would charge 2 grand because they spend thousands on kitchens and bathrooms. I am only doing it because its you or I would have dodged it, as I don't do kitchens or bathrooms. What do you think his reply was? It was this, can you do it in 4 to 6 weeks. I said ok will put you in my diary. He must have realised that I wouldn't have done the job it he haggled and he wouldn't have got anyone else to do it for the price I quoted. Truth works wonders. :1f609:

 

[Teaboy]

We are fully vat reg it’s a bit hit and our domestic work suffers

You have to be 20% better than next person to earn the same


All this bull about oh you can claim it back haha

If your grafting already and don’t want to get really big stay under it.

If you want to be big then you have to take the hit, there’s no fudging or bodging...




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[Guest]

We went vat this time year. I put as many domestic prices up by 10% as I could, then took the hit.

All window cleaning work is now priced as high as possible to incorporate the vat.

Dont forget there’s loads of commercial work out there that vat isn’t issue for.

Also, there’s a fair bit of time taken to process.

 

[Part Timer]

Anyone looking to go VAT registered look at the Fixed Rate Scheme. Far easier to run and, when I was registered, made a profit doing it this way. However have a word with your Accountant first, not all Accountants know about it though. 

 

[tench0771]

Split your round in to and change name of your business so it's to business not one I'm shore that's how dragons den do it [emoji23]

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[Teaboy]

Split your round in to and change name of your business so it's to business not one I'm shore that's how dragons den do it [emoji23]

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If only it was that easy




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[Nudel]

I know I'm in a different boat than all of you, as here on the Islands the VAT-equivalent threshold is ~£3500, so really anything more than hobby business is going to be registered. It's second nature, and people accept VAT on window cleaning as much as VAT on a litre of milk and a loaf.

I also understand your concern about the VAT threshold, not wanting to have the hassle of accounting, etc. 

Still, what I don't get is the amount of energy a lot of you seem to put into skirting around the threshold, trying to avoid it, working right up to the edge of it finding all sort of creative ways to avoid it. You can live well fed and with a couple of children and still stay below the threshold, no?

Either you: 

1. Make sure you stay well under the VAT threshold, by dropping or selling off your worst work (both worst pay, and worst mentally). As times go by you will slowly get better paid work, and can thus work less for more money, spending your time elsewhere (family time is always a good option!).
   
2. Talk to an accountant and get the VAT transition done right, well before you reach the threshold.
   

:1f44d:

 

[Dave Shaw]

I know I'm in a different boat than all of you, as here on the Islands the VAT-equivalent threshold is ~£3500, so really anything more than hobby business is going to be registered. It's second nature, and people accept VAT on window cleaning as much as VAT on a litre of milk and a loaf.
 
I also understand your concern about the VAT threshold, not wanting to have the hassle of accounting, etc. 
 
Still, what I don't get is the amount of energy a lot of you seem to put into skirting around the threshold, trying to avoid it, working right up to the edge of it finding all sort of creative ways to avoid it. You can live well fed and with a couple of children and still stay below the threshold, no?
 
Either you: 

1. Make sure you stay well under the VAT threshold, by dropping or selling off your worst work (both worst pay, and worst mentally). As times go by you will slowly get better paid work, and can thus work less for more money, spending your time elsewhere (family time is always a good option!).
2. Talk to an accountant and get the VAT transition done right, well before you reach the threshold.

:1f44d:

It’s simple. We have massive profit margins as domestic window cleaners in England and could easily run a domestic round on 5-10 grand expenses meaning 75-80 grand pure profit per annum. You could even take on an employee and still have a really good wage. By vat registering yourself then your either gonna be 20% worse off than most of your competitors or 20% more expensive than them. Which ever you choose neither is good for business. If you want to be a business man and not a grafter then vat reg is the way to go as your overheads are gonna be massive before you even take your cut. That being said imo I wouldn’t choose window cleaning if I wanted to be a business man. There’s a lot easier businesses and more financially rewarding stuff out there for the work you will be putting in to building an empire.


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[Green Pro Clean Ltd]

There’s a lot easier businesses and more financially rewarding stuff out there for the work you will be putting in to building an empire

I could not possibly disagree more Dave.  

 

[Teaboy]

It’s simple. We have massive profit margins as domestic window cleaners in England and could easily run a domestic round on 5-10 grand expenses meaning 75-80 grand pure profit per annum. You could even take on an employee and still have a really good wage. By vat registering yourself then your either gonna be 20% worse off than most of your competitors or 20% more expensive than them. Which ever you choose neither is good for business. If you want to be a business man and not a grafter then vat reg is the way to go as your overheads are gonna be massive before you even take your cut. That being said imo I wouldn’t choose window cleaning if I wanted to be a business man. There’s a lot easier businesses and more financially rewarding stuff out there for the work you will be putting in to building an empire.


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That’s open to interpretation

I wouldn’t mind being £1 behind mr tasker or some of the other bigger players


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[Dave Shaw]

I could not possibly disagree more Dave.  

Everyone’s entitled to their opinion but I’ve spoken to many local business men in all trades and I’m just repeating what they have told me from actual experiences.
I’ve an example from one such guy that used to be like yourself, a vat reg, limited window cleaner that had around 20 lads working for him at any one time. He decided to sell up and go into selling cars, specialising in ex mobility cars. He’s now a millionaire within 2 years of selling his rounds and says it’s the best thing he’s ever done as it was running him into the ground both mentally and financially.
As a sole trader you will not find much else to get better profit margins but as a business man trying to make a lot of money fast then there are far better ways to do it.
Obviously everyone’s gonna have their own take on it but I’m just giving accounts of my own experiences plus those of people that have bin there and got the t-shirt.


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[Dave Shaw]

I’m just gonna throw this out there but I’m guessing most that are disagreeing are vat registered limited company owners with around ten employees or less. If yes then answer me this, how many of you are paying yourself £75,000+ a year wages without lifting a finger?
If your answer is yes I am then fairplay as all your hard work has paid off but if no then what have you actually got compared to your average one man band sole trader apart from a load of stress? Alls I can think of is that you’ve give a few people a job and become an unpaid tax collector. You may say yes but I’ve got an income that runs itself, but really have you? I wouldn’t have thought that with only ten or less employees you would be able to pay yourself that sort of wage plus all the extra staff needed to run the business for you.
Please correct me if I’m wrong but do so with actual facts and figures and not just some sarcastic comment or opinions.


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[Green Pro Clean Ltd]

Dave, why are you so desperate to make such a meal of this?  Although text has no tone or inflection it seems you're almost desperate to be proven right.  However you cant be proven right cause in my opinion you are wrong, however in your opinion I am wrong, however what suits me proves you wrong but then again what suits you proves me wrong and round and round the merry-go-round goes.  

You asked for mate so here it is.  

1 x Employee can EASILY turnover £5k per month working in a van by himself.  This is based on a very easy £250 per day and a 20 day month so this gives a turnover of £60k per year.

Now we are going to assume that the van is on HP or leased and is shiny and new for the following equation and that the van covers an area of a 10 mile radius (reasons behind these facts are I have done the math already as I am planning to add a van and want to know the exact cost prior to doing so) 

The total monthly cost for running one employee in a van (and this includes insurances cost of water taxes fuels etc) is £2'680 per month 

This gives an annual running cost of £32'160 - So with a £60K turnover this leaves £27'840 of profits after your salary of £680 per month (this keeps you below TAX and NI Thresholds) you are left with £19680 of taxable turnover - at 20% this leaves you £15'744 plus of course your tax free income of £8160 (your £680 per month) so a total £23'904 in your pocket.  

Here's the problem -  Put a second van out and now your turning £120K per year and you're well into VAT territory -- 

So here we go V.A.T. has nada to do with profits but purely turnover --  and for arguments sake we are going to assume no claimbacks so we are going to work on the maximum of 20%  

20% of £120'000 is of course £24'000 this is you VAT bill for the year.  

The cost of the second employee is exactly the same as the first so we simply double the £32'160 and this gives a cost of £64'320 for the year. 

So takings post VAT = £96'000 - less costs of £64'320 total - £31'680 --- Not a huge jump from £27K (In fact pretty shite) as your pay rise for the year is only about £2k in real terms after taxes.  (getting to lazy for exact maths now) 

Now we bang out van number 3 -- Based on all the same rules we are now turning over £180K per year with a vat bill of £36'000 Total left £144'000

So 3 vans at £32'160 each per year = £96'480 -- so after costs we are left with £43'520 -- so all told after your personal tax liability your left with around £35'000 in cold hard coin your bank account.  

Now we are through the hard part so before we add in van 4 let's take a look at our position.  You're now earning middle management money for what in any other company of any size (managing a team of 3 guys) would be considered a middle management job.  So you are pretty much on track.  You're now clearing £35K a year, (without all the ducking and diving BS that sole traders get up to with cash jobs etc) for pretty much supervising 3 vans.  

Lets toss van 4 into the mix.  So we jump from £180K to £240K turnover - VAT bill is now £48'000 So total post VAT is £192K 

Costs are now 4 x £32'160 so £128'640 -- So £192'000 (post vat turnover) less costs £128'640 = £63'360 --- At this stage you are in the higher tax band so now your only taking home - £44'768  

Now I done all the hard work for you above with the math and cant be bothered to go on but for each additional van your take home goes up by approx £10K per month.  

--------------------   

Onto fun facts -- You have to put out 5 vans to get to aporx £45K take home -- Working one van solo over 12 days gives me a turnover of £48'000 (paying off van etc) so around £30k take home with none of the work.  

If I wanted to stay as a one many van then happy days, if I didn't care about losing money when taking vacations or off sick then no problem, If the only asset I ever wanted to own was a round with a value of 3 - 4 x the monthly turnover then that's fine I could stick with that.  

However for me that's not enough, this is my retirement and what's going to look after my family during those golden years so I want it to be large and to be a self perpetuating entity that runs itself one day, I want it to be something that will financially take care of my family once im gone weather they sell it or leave it run itself so for me remaining a one man van is no no and hence how you want to run your business is totally WRONG...... for me, that is.  However from what you have stated previously how I am choosing to build a business is totally WRONG...... for you, and that's just the way it is.  

So now on to the part that peaks my curiosity, why do you seem so aggressively adamant that going into the realms of VAT is so wrong?  (at least that's the impression you give)    

 

[Tuffers]

I remember a poster on here saying they'd have 8 vans on the road this time last year.  Seems like there's a lot of dreamers on forums. Just saying like....

 

[P4dstar]

Everyone’s entitled to their opinion but I’ve spoken to many local business men in all trades and I’m just repeating what they have told me from actual experiences.
I’ve an example from one such guy that used to be like yourself, a vat reg, limited window cleaner that had around 20 lads working for him at any one time. He decided to sell up and go into selling cars, specialising in ex mobility cars. He’s now a millionaire within 2 years of selling his rounds and says it’s the best thing he’s ever done as it was running him into the ground both mentally and financially.
As a sole trader you will not find much else to get better profit margins but as a business man trying to make a lot of money fast then there are far better ways to do it.
Obviously everyone’s gonna have their own take on it but I’m just giving accounts of my own experiences plus those of people that have bin there and got the t-shirt.

Firstly you trusted the words of a car salesman? Whatever he told you he makes, divide that by three and that is the true figure or closer too.

I left my job as a phone shop manager a few years back to be a car sales manager for Evans Halshaw. The staff turnover was horrific. I lasted 2 months and in that time I saw 7 people leave. Met a chap there who used to run a very successful dealership of his own. He leaned too far towards not working but taking a wage and his sales team ran the dealership into the ground. He went from driving an RS6, taking a healthy wage and living in a million pound house with a wife and kids to living in his dads spare room, divorced, working for minimum wage + commission (as a sales assistant for Evans Halshaw) and tryna sell some dodgy second hand motors that he paid far too much for from his dads drive in his spare time....

You have asked a lot of questions similar to me recently Dave so I assume you are relatively new to this game although I could be wrong. You cross me as someone who is looking for a quick buck, you want to find the elevator to success. Spend too long looking for the lift and you will realise how far you could have got taking the stairs. I mean this with the greatest of respect because you've never crossed me as a rude or arrogant chap but if there was a magic ticket everyone would buy it. 

 

[Teaboy]

Nobody is right and nobody is wrong,

Talking from Experiance it’s not as easily as everyone makes out chucking vans on the round if it was there would be more people doing it

You have to make the best decision for you only you can make the judgement.

People should talk from experience and guidance not grapevine or **** wangling


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[Part Timer]

Nobody is right and nobody is wrong,

Talking from Experiance it’s not as easily as everyone makes out chucking vans on the round if it was there would be more people doing it

You have to make the best decision for you only you can make the judgement.

People should talk from experience and guidance not grapevine or **** wangling


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Don't want to get involved with who is right and who is wrong. All I will say is both sides have got their figures seriously wrong. They also seem to be simplifying both the physical and stressful sides of their argument. 

 

[scottish cleaning service]

My uncle was telling me Arnold Clark used to come into his hotel with his overalls on. I think he was a mechanic and then opened up his first garage in Giffnock. I don't believe he ever thought he would grow so big. The reason it did grow was because he was swimming with the tide, thus the demand was there. No one can tell the future but there is a lot of people who think they can and that's when they get into financial trouble! :1f609:  

 

[Part Timer]

I remember a poster on here saying they'd have 8 vans on the road this time last year.  Seems like there's a lot of dreamers on forums. Just saying like....

Facts and fiction aren't easy to separate for some. 

 

[Guest]

There will be both easier ways and harder ways to build a business, than scrubbing glass.

 

[Dave Shaw]

Dave, why are you so desperate to make such a meal of this?  Although text has no tone or inflection it seems you're almost desperate to be proven right.  However you cant be proven right cause in my opinion you are wrong, however in your opinion I am wrong, however what suits me proves you wrong but then again what suits you proves me wrong and round and round the merry-go-round goes.  
 
You asked for mate so here it is.  
 
1 x Employee can EASILY turnover £5k per month working in a van by himself.  This is based on a very easy £250 per day and a 20 day month so this gives a turnover of £60k per year.
 
Now we are going to assume that the van is on HP or leased and is shiny and new for the following equation and that the van covers an area of a 10 mile radius (reasons behind these facts are I have done the math already as I am planning to add a van and want to know the exact cost prior to doing so) 
 
The total monthly cost for running one employee in a van (and this includes insurances cost of water taxes fuels etc) is £2'680 per month 
 
This gives an annual running cost of £32'160 - So with a £60K turnover this leaves £27'840 of profits after your salary of £680 per month (this keeps you below TAX and NI Thresholds) you are left with £19680 of taxable turnover - at 20% this leaves you £15'744 plus of course your tax free income of £8160 (your £680 per month) so a total £23'904 in your pocket.  
 
Here's the problem -  Put a second van out and now your turning £120K per year and you're well into VAT territory -- 
 
So here we go V.A.T. has nada to do with profits but purely turnover --  and for arguments sake we are going to assume no claimbacks so we are going to work on the maximum of 20%  
 
20% of £120'000 is of course £24'000 this is you VAT bill for the year.  
 
The cost of the second employee is exactly the same as the first so we simply double the £32'160 and this gives a cost of £64'320 for the year. 
 
So takings post VAT = £96'000 - less costs of £64'320 total - £31'680 --- Not a huge jump from £27K (In fact pretty shite) as your pay rise for the year is only about £2k in real terms after taxes.  (getting to lazy for exact maths now) 
 
Now we bang out van number 3 -- Based on all the same rules we are now turning over £180K per year with a vat bill of £36'000 Total left £144'000
 
So 3 vans at £32'160 each per year = £96'480 -- so after costs we are left with £43'520 -- so all told after your personal tax liability your left with around £35'000 in cold hard coin your bank account.  
 
Now we are through the hard part so before we add in van 4 let's take a look at our position.  You're now earning middle management money for what in any other company of any size (managing a team of 3 guys) would be considered a middle management job.  So you are pretty much on track.  You're now clearing £35K a year, (without all the ducking and diving BS that sole traders get up to with cash jobs etc) for pretty much supervising 3 vans.  
 
Lets toss van 4 into the mix.  So we jump from £180K to £240K turnover - VAT bill is now £48'000 So total post VAT is £192K 
 
Costs are now 4 x £32'160 so £128'640 -- So £192'000 (post vat turnover) less costs £128'640 = £63'360 --- At this stage you are in the higher tax band so now your only taking home - £44'768  
 
Now I done all the hard work for you above with the math and cant be bothered to go on but for each additional van your take home goes up by approx £10K per month.  
 
--------------------   
 
Onto fun facts -- You have to put out 5 vans to get to aporx £45K take home -- Working one van solo over 12 days gives me a turnover of £48'000 (paying off van etc) so around £30k take home with none of the work.  
If I wanted to stay as a one many van then happy days, if I didn't care about losing money when taking vacations or off sick then no problem, If the only asset I ever wanted to own was a round with a value of 3 - 4 x the monthly turnover then that's fine I could stick with that.  
 
However for me that's not enough, this is my retirement and what's going to look after my family during those golden years so I want it to be large and to be a self perpetuating entity that runs itself one day, I want it to be something that will financially take care of my family once im gone weather they sell it or leave it run itself so for me remaining a one man van is no no and hence how you want to run your business is totally WRONG...... for me, that is.  However from what you have stated previously how I am choosing to build a business is totally WRONG...... for you, and that's just the way it is.  
 
So now on to the part that peaks my curiosity, why do you seem so aggressively adamant that going into the realms of VAT is so wrong?  (at least that's the impression you give)    

Fair play you know exactly what you want but it’s all good throwing a few figures around but the real task is actually implementing it and pulling it off.
When you do I’ll be the first to pat you on the back but until then your not really on a position to be giving advice on what “might” happen.
I’m so adamant on pushing this discussion as I’m still sat on the fence with which way to go and don’t want to think to myself in ten years that I made it he wrong decision and have regrets.


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