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expertgasman
It falls down because the VAT payable will be on £300,000, which is £50K
Self employed, Pro/cons of reg as Ltd company
- Thread starter PrenticeBoyofDerry
- Start date
It falls down because the VAT payable will be on £300,000, which is £50K
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I have a limited company, but not in the electrical contracting business. The main advantage of being limited is that you can take most of the income as dividends which is not subject to national insurance contributions. Your company can also make all your pension contributions.
If you have a wife or partner who doesn't work, you can make her an employee on a low salary just below the lower tax threshold so that income won't be taxed either.
Corporation tax rates for small business are coming down as well.
I have professional indemnity insurance & public liability insurance for about £600/year for £1m pounds cover.
Down side is you might have to pay an accountant, and the paperwork can be a bind, but the cost of that is also offset against tax.
Hope that helps.
If you have a wife or partner who doesn't work, you can make her an employee on a low salary just below the lower tax threshold so that income won't be taxed either.
Corporation tax rates for small business are coming down as well.
I have professional indemnity insurance & public liability insurance for about £600/year for £1m pounds cover.
Down side is you might have to pay an accountant, and the paperwork can be a bind, but the cost of that is also offset against tax.
Hope that helps.
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expertgasman
So, VAT registered:
Overheads / mats £ 200,000 Inc. Vat = £166,666 nett
Turnover £ 300,000 inc vat = £250,000 nett
Pretax profit = £ 84,334
NON Vat reg:
Overheads / mats £ 200,000 Inc. Vat
Turnover £ 300,000
Pretax profit £ 100,000
Which takes us right back to my 1st post where I said the difference between reg & non reg is approx. 16.66%
Overheads / mats £ 200,000 Inc. Vat = £166,666 nett
Turnover £ 300,000 inc vat = £250,000 nett
Pretax profit = £ 84,334
NON Vat reg:
Overheads / mats £ 200,000 Inc. Vat
Turnover £ 300,000
Pretax profit £ 100,000
Which takes us right back to my 1st post where I said the difference between reg & non reg is approx. 16.66%
That's right, and I am VAT registered. If the clients are themselves VAT registered, just pass on the VAT to them and they claim it back from HMRC.
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And a Ltd too - never had/have problems with getting credit - from the earliest days most suppliers kind of insist you are Ltd and VAT registered - and never had problems charging VAT on products or services to our clients. It might be the numbers, but it's not only "the price" clients are interested in.
I think to conclude it would appear that VAT registered businesses think that is better and non-VAT think that their way is better. I am not VAT registered but my turn over is too low anyway.
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expertgasman
It might be the numbers, but it's not only "the price" clients are interested in.[/quote]
You are perfectly correct. VAT, and the benefits or otherwise, is about tyhe numbers, but creating and maintaining a clienty base is far more than that.
When I first started up back in 1990. I imagined 2 things:
I have to be cheaper than the rest
To keep busy I have to do EVERYTHING
I very quickly noticed that when clients moaned about other plumbers, and trdes in general, the most cpommon thing was not MONEY. it was RELIABILITY. They complain that Mr. x hasnt returned calls to give quote, he;'d been and measured but not come back or he had promised to be here at a certain datye and hadn't showed.
I nolw make a point of NEVER giving a time, except for the 1st job of the day. If you make promises, you'll either be spending muuch more travel time, hopping around, or you WILL let someone down.
I am a gas serice engineer, not a plumber. When I started, I did the same as everyone else, and did everythiong from boilers to bathroom. I hated most of the plumbing stuff, because I simply was not experienced enough. I stopped all that and concentrated on GAS only. It works
You are perfectly correct. VAT, and the benefits or otherwise, is about tyhe numbers, but creating and maintaining a clienty base is far more than that.
When I first started up back in 1990. I imagined 2 things:
I have to be cheaper than the rest
To keep busy I have to do EVERYTHING
I very quickly noticed that when clients moaned about other plumbers, and trdes in general, the most cpommon thing was not MONEY. it was RELIABILITY. They complain that Mr. x hasnt returned calls to give quote, he;'d been and measured but not come back or he had promised to be here at a certain datye and hadn't showed.
I nolw make a point of NEVER giving a time, except for the 1st job of the day. If you make promises, you'll either be spending muuch more travel time, hopping around, or you WILL let someone down.
I am a gas serice engineer, not a plumber. When I started, I did the same as everyone else, and did everythiong from boilers to bathroom. I hated most of the plumbing stuff, because I simply was not experienced enough. I stopped all that and concentrated on GAS only. It works
Absolutely.
Figure out what you're best in and keep doing that
This way the money chases you and not vice-versa.
(Meaning, you'll become known as the expert and most customers want to deal with an expert, therefore your price can reflect this perception).
Figure out what you're best in and keep doing that
This way the money chases you and not vice-versa.(Meaning, you'll become known as the expert and most customers want to deal with an expert, therefore your price can reflect this perception).
also, talking about numbers, do you know that if your raise your price with say 10%, and your costs stay the same - therefore your margin/profit increases, you can afford to have fewer clients and still make the same profit/earnings in a year.
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