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Chrisshep76

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

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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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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. 

I don’t need to trust him, his house,car and lifestyle kinda tell the story.
Even though I’ve been in this game since leaving school nearly twenty years ago I am relatively new to the business side of things and over the last couple of years I’ve been thinking about vat reg’s, employees etc and if all seems like a bit of a minefield with all the restrictions and stuff and I just wanna gather as much info as possible rather than jumping in feet first and then having regrets or even getting in too deep that there’s no way back. Anything I have said is not from my own experiences or opinion but just a repetition of advise from many other business/tradesman in all different trades.


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1 hour ago, Dave Shaw said:


I don’t need to trust him, his house,car and lifestyle kinda tell the story.
Even though I’ve been in this game since leaving school nearly twenty years ago I am relatively new to the business side of things and over the last couple of years I’ve been thinking about vat reg’s, employees etc and if all seems like a bit of a minefield with all the restrictions and stuff and I just wanna gather as much info as possible rather than jumping in feet first and then having regrets or even getting in too deep that there’s no way back. Anything I have said is not from my own experiences or opinion but just a repetition of advise from many other business/tradesman in all different trades.

I'm just saying some things are a little different once you scratch below the surface. I could put a £2K deposit down and lease a Nissan GTR for a grand a month, that doesn't mean I can afford it. Every time I log into my bank account it tells me I am pre approved for a 50K loan, again that doesn't mean I can afford it. Sales people like to brag, trust me I was one until 6 weeks ago when I went full time with this.

 

I'm not saying there aren't other options to make money but a wise person once told me 'if someone tells you they're poor take money from them, if someone tells you they're rich give them some'.

 

I don't share with people the hourly rate I have made in this job, not even my best friends! I might tell them when I've had a busy day or that I picked up 12 customers last week etc but the financials are private. With 20 years experience you shouldn't give this up for something else but I think it is worth investing in a few things. A plumber mate of mine bought a house in Merthyr Tydfil for 25K and rents it out, small investment as investments go but it gives him a little trickle income into another account and he does very little for it. It is run as an independent business so won't touch his VAT etc. There are little nuggets like this everywhere but most success stories are people who started from the bottom and worked up the ladder. @scottish cleaning service mentioned Arnold Clark, Duncan Banatyne is another favourite of mine. Sure there are some people who get lucky, my next door neighbour won a million on the lottery, he's still a pillock haha. People who rush to the 'top' are very quick to flash the cash and tell you all about it, people who work hard for it are more modest and much quieter about their money. You also find that they look after things a lot more. Just don't be blinded by what people like that tell you about their riches, its normally fools gold.

 

I think both arguments surrounding VAT are valid. I can see why people want to stay below it. I personally think when you are nearly there it is time to squirrel away some money to launch into paying VAT correctly. @Green Pro Clean Ltd talked about multi vans etc but those vans wouldn't have full rounds immediately so having some money behind you before you tip the VAT threshold would be pretty handy!


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Dave I have 20 staff(we do internal aswell and 3 vans of 2 lads if you want to ask any questions dm me for my mobile.

There’s so many factors that go into it

Training staffing expenses weather staffing staffing staffing lol


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Cheers buddy. I’m sure I’ll be picking your brain in the near future. Like I said I’m still very undecided on we’re I want to go as of yet.


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I'm just saying some things are a little different once you scratch below the surface. I could put a £2K deposit down and lease a Nissan GTR for a grand a month, that doesn't mean I can afford it. Every time I log into my bank account it tells me I am pre approved for a 50K loan, again that doesn't mean I can afford it. Sales people like to brag, trust me I was one until 6 weeks ago when I went full time with this.
 
I'm not saying there aren't other options to make money but a wise person once told me 'if someone tells you they're poor take money from them, if someone tells you they're rich give them some'.
 
I don't share with people the hourly rate I have made in this job, not even my best friends! I might tell them when I've had a busy day or that I picked up 12 customers last week etc but the financials are private. With 20 years experience you shouldn't give this up for something else but I think it is worth investing in a few things. A plumber mate of mine bought a house in Merthyr Tydfil for 25K and rents it out, small investment as investments go but it gives him a little trickle income into another account and he does very little for it. It is run as an independent business so won't touch his VAT etc. There are little nuggets like this everywhere but most success stories are people who started from the bottom and worked up the ladder. [mention=6216]scottish cleaning service[/mention] mentioned Arnold Clark, Duncan Banatyne is another favourite of mine. Sure there are some people who get lucky, my next door neighbour won a million on the lottery, he's still a pillock haha. People who rush to the 'top' are very quick to flash the cash and tell you all about it, people who work hard for it are more modest and much quieter about their money. You also find that they look after things a lot more. Just don't be blinded by what people like that tell you about their riches, its normally fools gold.
 
I think both arguments surrounding VAT are valid. I can see why people want to stay below it. I personally think when you are nearly there it is time to squirrel away some money to launch into paying VAT correctly. [mention=1930]Green Pro Clean Ltd[/mention] talked about multi vans etc but those vans wouldn't have full rounds immediately so having some money behind you before you tip the VAT threshold would be pretty handy!

I hear you mate I really do but I’m not talking £80000 Nissans, I’m talking limited edition Ferrari’s and £450000 Bentleys and his 2million house that he built himself. All that’s beside my point though and that was not how much he’s now makin but how much hes financially achieved in a few years of selling cars compared to fifteen years as a domestic window cleaner. I’m not saying it can’t be done just there are many other things I would look into if I was starting a business and planning to go big.


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On 21/05/2018 at 07:04, Dave Shaw said:

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 pos

This isn't about pulling anything off m8 this isn't about 'throwing around figures' either it's about mean averages.    

Operators I know 'down south' have double digit vans out and lads comfortably doing £400 plus a day.  These aren't imaginary figures but matters of public record when you run checks on large Ltd companies.  

Then there are lads I know 'up north' (Newcastle, Sheffield etc) doing a leisurely £250 per day (again public record) 

The math is not 'what may happen' the math is what will happen if you want to grow into VAT territory Dave.  At end of day how you go is your choice and yours alone but the figures don't change. 


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This isn't about pulling anything off m8 this isn't about 'throwing around figures' either it's about mean averages.    
Operators I know 'down south' have double digit vans out and lads comfortably doing £400 plus a day.  These aren't imaginary figures but matters of public record when you run checks on large Ltd companies.  
Then there are lads I know 'up north' (Newcastle, Sheffield etc) doing a leisurely £250 per day (again public record) 
The math is not 'what may happen' the math is what will happen if you want to grow into VAT territory Dave.  At end of day how you go is your choice and yours alone but the figures don't change. 

I know you wasn’t just plucking numbers out of thin air as I can achieve those numbers myself. Things start to change when you factor in vans breaking down, equipment failing and temperamental staff. Even with things running smoothly and hitting your ten grand a year profit per van then you would still need at least 8 vans to be able to earn more than an unregistered sole trader(that’s if you wasn’t working yourself of course which is what I’m guessing that your aiming for). I’m not trying to put you down and I really hope it works for you. Just sayin it’s not for me.


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