I have finally got my first customers and I am due to go to meet the first one tomorrow.
It is a small computer shop, not VAT registered.
What I want to know is, I do accounts on excel and I'm used to having a vat column in the sales and purchases. Even though he can't charge VAT or claim it back do I still account for it in the purchases? But not do anything with it apart from record it?
He has been trading since March 2010 and as yet hasn't appointed anyone to do his accounts. Am I allowed to recommend a good accountant and is there anything that will have come up in the year such as self assessment or anything else?
Also, what is the average price to charge for a full years books?
Firstly, if he is not VAT registered, then there is no point in making any entries for VAT. If he pays £50 for business cards, then that is the cost to the business straight up. However, you could usse the VAT columns as a pre-empt for when he does reach the threshold to see what the liabilities are likely to be - a bit of pro-activity but no, you do not account for any VAT unless he is registered.
There is nothing wrong with recommending an accountant if you are happy to do so - indeed, you could recommend me :)
If he starting trading in March 2010, then yes, a self assessment for 2010/11 would need to be done for the trading in that period; needs to be submitted by 31st January 2012 plus any tax due paid by that date also. It also depends on whether he is trading as sole trader or Ltd company in which case there could also be other work involved of a statutory nature.
Bookkeeping is usually charge at a per hour rate - could be anywhere between £10 and £15+ per hour depending on the experience of the bookkeeper.
In which my stance is that it's all down to market forces rather than a universally accepted charge rate.... But then again, I'm an advocate of Milton Friedman and the free market so my opinions will be biased that way... But I digress.
Not completely sure whethe your question implies one owner with two computer shops or two seperate computer shops? My answer assumes the former to be the case.
For small shops there can be a lot of initial work and as this client claims to have not yet reached the VAT threshold on two shops how high an hourly rate can they actually afford.
Firstly you need to confirm from the books that the client has not mixed up profit and turnover when deciding that they need to register for VAT!
I'm assuming that this client only wants to see you once a year in order to bring their books into a state ready to be taken over by the accountants.
Computer shops tend to have high turnover of peripherals such as print cartridges and low turnover of large items such as computers.
If the client has not managed to breach the VAT threshhold with two shops then thats going to be a pretty low turnover of computers.
You need to determine your hourly rate and stick to it as this client will say that they cannot afford the rate that you are going to quote.
Lets say that the shops really are only very low turnover. Sorting and writing up two shops books is still likely to take a couple of days of your time so at £15 ph that would be £225 and at £20 would be £300 (assuming 7.5 hour days).
Thats a starting point but you need to look at actual turnover and the amount of work really involved in these two shops to determine how long the work will take.
Don't budge from your set rate though or you will find yourself doing a weeks work for the equivalent of about £6 per hour.
Also remember that the 80/20 rule will at some stage kick in. In that you will spend 20% of your time doing 80% of the work then 80% of your time sorting out issues with the other 20%.
And remember, There is a reason that banks are adverse to lending to small computer shops as they go belly up faster than possums!
If the clients not on a standing order get your cheque before handing over the collated informations and make sure that it clears before giving back everything to the client. (The right of lien is actually very limited but clients don't know that!!!)
Good luck with the client.
All the best,
Shaun.
-- Edited by Shamus on Monday 18th of July 2011 09:15:53 AM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
