Soffit downlighters

[JohnW2]

I still confess I don't understand, your overheads are purchases.

1...(essentially) 'fixed' overheads
2... purchases of materials used for jobs.

All electricians have the former. Only electricians who supply materials have the latter.

I'm not sure why you have emboldened "your" - I am not an electrician.

Kind Regards, John

 

[EddieM]

it was a general "your". In no way personal.

 

[JohnW2]

it was a general "your". In no way personal.

Fair enough - but do you now understand what I've been saying?

Kind Regards, John

 

[JohnD]

in the world of business, "overheads" are not purchases of materials. They are business costs you have to pay regardless of how busy you are. For example rent and rates on your business, salaries of office staff, lease payments on your van, affiliation fees, interest on loans.

Purchases of materials are (part of) Cost of Sales.
If you were running a shop, your purchases would be most of your Cost of Sales.

Your gross profit on trading has to be (should be) enough to cover your overheads. If not you have nothing left for your net profits and you are in trouble.

 

[EddieM]

Fair enough - but do you now understand what I've been saying?

Kind Regards, John

With all due respect. No I don't.

 

[JohnW2]

With all due respect. No I don't.

OK. Let's try again.

Two sole traders each with total turnovers (total 'sales', total billed) of £83k (i.e. just below VAT registration threshold).

Both have 'fixed' overheads (subscriptions, insurances, vehicle-related costs etc.) of, say £15k (whether that be realistic or not).

The first supplies materials costing £30k (and includes them in his/her bills), as well as labour, whereas the second does not supply (hence doesn't bill for) materials (only labour). I accept that the figure's I'm using may be 'unrealistic', but I'm stuck with them unless/until an electrician can suggest some more realistic figures.

The net profit (hence potential gross income) is the:

For the first .... £83k - £15k - £30k = £38k
For the second .... £83k - £15k = £68k

Is that any clearer? In other words, the first can make a net profit of only just over £38k before having to register for (and charge) VAT, whereas the second can make a net profit of just over £68k before having to register for (and charge) VAT.

Kind Regards, John

 

[EddieM]

ah, I think I see where the disconnect may be coming from. "I" (not of course in the legal sense, or indeed for the purposes of HMRC) am a limited company.

 

[JohnW2]

ah, I think I see where the disconnect may be coming from. "I" (not of course in the legal sense, or indeed for the purposes of HMRC) am a limited company.

Ah .... if you look, I think you'll find that the term "sole trader" has occurred many times in this discussion!

Having said that, I don't see that the concepts are particularly different for a one-man limited company, particularly if the one 'worker' were paid (if any) a salary (from the company) below tax and NIC thresholds and the worker was paid the entirety of the company's net profit (gross profit minus corporation tax) as a dividend. To compare that with the figures I presented above, you would have to subtract from those above figures (gross income) the self-employed NIC and income tax figures.

Kind Regards, John

 

[flameport]

but I'm stuck with them unless/until an electrician can suggest some more realistic figures.

Figures depend entirely on what kind of work and therefore materials are supplied.

Two extremes for domestic type installations would be
a. someone who mainly installs electric heating such as storage heaters. Cost of materials (i.e. the heaters) is huge compared to the amount of labour.
b. someone who mainly does smaller maintenance/inspection/repair type work. The majority will be labour, very few if any materials.

Another point about VAT is that if you are close to the registration threshold, going over and having to register means you then need to increase your turnover significantly just to make the same amount of profit. In that situation, it would be highly desirable for the person to remain below the threshold and not register, unless they were intending to significantly increase their turnover.

 

[JohnW2]

Figures depend entirely on what kind of work and therefore materials are supplied.

Yes, of course. That's why I had to just pull some figures of the air, but when they were accused of being 'unrealistic', I thought I had better see if someone could offer me some more 'realistic' ones .

Another point about VAT is that if you are close to the registration threshold, going over and having to register means you then need to increase your turnover significantly just to make the same amount of profit. In that situation, it would be highly desirable for the person to remain below the threshold and not register, unless they were intending to significantly increase their turnover.

That's true if you use "turnover" to refer to the total amount that customers pay you, including the VAT, but "turnover" conventionally does not include VAT.

The real point is that to achieve the same profit you would need to do the same amount of work and hence achieve the same 'conventional turnover' (i.e. excluding VAT), but the problem is that your customers would be having to pay you 20% more (than if you weren't VAT registered) for that work, which would make you less competitive with non-VAT registered electricians - which might make it less easy for you to get that work.

Kind Regards, John

 

[ban-all-sheds]

Indeed - but I suspect that BAS was probably thinking that an electrician's profit would be inadequate as "an acceptable income" if his/her turnover was less than the VAT registration threshold.

Well I don't know, which is why I asked.

I would have thought it was info that people could divulge - I'm not asking for their actual turnover, or their actual profit, just what, in their experience, a typical ratio is, or is between.

If it's 2:1 then an £84,999 turnover gives a nice income, and I can see how someone might strive to stay below the registration threshold

If it's 10:1 then it very much does not, and they'd surely be striving to drive their turnover way above it.

 

[MFRacing]

Can anyone recommend some good led soffit lights with drivers built in? I’m looking for the same.

 

[MFRacing]

Anyone?

 

[aptsys]

Soffit as in outdoor? If so you'd ideally need some IPX5 or higher rated units. If they are GU5.3 or other 12V LED you'll also need the transformer(s)/LED drivers.

Why would they need to be IPX5? Why would anyone be subjecting them to water jets?

 

[JohnW2]

Why would they need to be IPX5? Why would anyone be subjecting them to water jets?

I suppose there's never any harm in going beyond the minimum IP rating that would appear to be adequate.

I have to say that during some of the storms we've had in recent years, rain (sometimes high speed and near-horizontal!) has probably sometimes exceeded what IPX4 is designed to be able to cope with (and has, indeed, got into some of my IPX4 enclosures).

Kind Regards, John