I've worked as an electrician for 20 years, and have just taken over the company I worked for, but almost starting from scratch.
With VAT, I charge it on materials and labour, as usual.
I can claim back on business expenses.
Stupid question though, with materials I purchase for jobs, I pay VAT. Do I claim this back, as am charging it to customer, and paying this to HMRC?
Never got involved in the accounts side before, and while I am getting an accountant to do my end of year, the VAT I was going to attempt to do myself.
Hi Martin
You have stumbled onto a forum which is for bookkeepers and accountants to raise questions/help each other out, but I must say if you already have an Accountant do not be afraid to ask any such questions you have. I would also add that you should consider getting yourself a bookkeeper who can do the necessary day to day work, until your Accountant takes over to complete the final accounts and perhaps your tax return too.
The money that you will spend on good professionals will probably more than offset any costly mistakes you might make with the VAT return etc. In fact they can often save you money in tax by making sure everything is done correctly. Lets face it for you to have a really successful business you should be out there doing what electricians do best, so us bookkeeping bods can do what we do best.
If you are determined to do it yourself, have a read of the VAT Guide 700 and the guide how to fill in the return before you do anything else. A dry read, but a must! Also after having a look at the guides - put your name down for one the HMRCs free webinars - a good way to learn a few extra bits!
I assume that you are using the standard VAT scheme? You should be adding VAT to all your invoices, regardless of whether or not it is for materials and/or labour. You bill the client for the job as a whole, so add VAT to all of it. Dont forget to quote your VAT number on the invoice. Essentially you can claim VAT back on any purchases that you make that are wholly and exclusively for the business, that you have a VAT receipt for. Key is ensuring you get and retain ALL of the paperwork and always ask for a VAT invoice/VAT receipt. You need to be careful about the dates on sales/purchase invoices on the VAT return - the guide will give you more detail (there is too much to cover here).
Flat rate/VAt cash accounting schemes work differently so double check that before you start.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
don't know why but for some reason only the first line of my post got posted then? Oh well, try again... Although I can't now remember the next line that "what's free" led into and back page is giving me diddly squat.
I think that Joanne did a good job there of both answering the poster and encouraging them to seek professional help.
I'm seeing it a lot at the moment where clients have tried to do it themselves but in the long run have cost themselves more than what our fee's would have been if they had employed one of us from the get go.
Personally I would encourage everyone who is thinking of doing their own bookkeeping to do the ICB qualification (in the same way that I encourage everyone who is thinking of doing this professionally to do (at least) the AAT one).
It would be nice to get to a stage where clients are coming to us because they are successful and just don't have the time to do their books anymore rather than coming to us when their books look like they have emptied a can of spagetti out onto the paper.
So, whilst the assistance shared on here is as you say free to each other I think that the best service that we can do for those who want to do their own bookkeeping is to encourage them to first study it with an entry level qualification rather than giving them answers to questions which may not (in some instances, not this one) be the whole question.
-- Edited by Shamus on Monday 9th of November 2015 12:03:07 PM
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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.
Hi. Thanks.
I have always intended to have my yearly accounts done by my accountant, and complete their spreadsheets monthly. The VAT used to be done by my old boss, and I was going to try and follow that. To be honest I am now unsure if to or not, as the accounts fee every 3 months for this is quite reasonable.
I have neglected looking at this as have been busy, another reason to be passing it to the accountant.
Hi Shaun, Totally agree with you that Joanne did a good job.
But I still think that if a trader wishes to deal with VAT return on their own it is OK, and my personal attitude is to be helpful. My help is free.
I agree that it is better to leave these things to professionals, but maybe Lectrician needs to come to that decision on his own.
Kind regards
Hi Julie
I am (maybe wrongly and despite the first line) getting the impression you disagree with the stance that I took in this regard?
First and foremost this site is supposed to be a discussion forum for Bookkeepers and Accountants - as it says in its title.
Despite that I do try to guide the few non practitioners who wander in and I think that quite a few of my many posts have done so in the past. Indeed I have mentioned on more than one occasion that I am a firm believer in clients understanding the numbers and what is behind them for if they do not understand this then they cannot actually get the best out of their businesses.
Martin is not a child and can come to decisions on his own, but I think I wouldve been doing him a dis-service not suggesting what I did. Given there is a massive skills shortage in the UK in his particular field of expertise and that the business he is taking over is a long term going concern I built into my response to him such a suggestion on the back of the fact that he would be all consumed with dealing with clients and have very little if no time for being able to upskill himself sufficiently as well as complete all of the necessary bookkeeping (for want of a better word) work. Plus its surely better to hear some of what I said now eg to get help with his VAT return now rather than when it is 3 days off being due or indeed already late. Had this been a brand new business being built up from scratch my response would have been perhaps a little different.
All of our help on here is given for free, but we are also all professionals looking to earn a living. Just as much as Martin is in his chosen field.
Martin - Did you get to page 5 of the VAT guide and fall asleep? I reckon I did the first time round. Great to hear you have been busy....whichever way you decide to go, just dont miss the deadline. You have just over a month from VAT period end to get to the return submitted AND PAID, (eg VAT period end October - by 7 December) unless you set up a Direct debit in which case you get a couple of extra days to pay. If you do consider going down the professional route - you could combine the bookkeeper option with Accountant at year end or Accountant for the whole lot. Whichever way you decide - good luck with it all.
-- Edited by Cheshire on Monday 9th of November 2015 09:54:04 PM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I am sorry Joanne, I really have nothing else to add to my posting on this subject.
People can disagree. I hope we agree on one thing: I don't have to agree with you or anyone else on every each point.
It would be a very boring site if we all agreed with each other Julie.
Thankfully we generally only get that scenario during certain rare planetary allignments.
Even though we don't always agree I think that all of the regulars here respect each others opinions.
To quote (#1) Voltaire "I may disagree with what you have to say, but I shall defend, to the death, your right to say it."
feel free to agree or disagree. So long as everything remains always professionally respectful then the site has very light touch moderation.
very much looking forwards to challenging your opinions over the coming months.
kindest regards,
Shaun.
#1 Although there is debate over whether Voltair actually said that at all but he said similar to this so to attribute it to Evelyn Hall as many do I feel gives credibility to a stolen quote thats origins (if perhaps not the exact phrase) were Voltairs.
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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.
Dont have a problem with people disagreeing, was just the fact that you hinted at a possible disagreement with the 'my help is free' comment so I sought to clarify. No matter, Im not really fussed.
BUT I would take this opp to say I would like to see more (free) help for all from someone of your calibre/background on here. Despite not agreeing.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
All of us have strengths even if we haven't perhaps identified what they are yet
No matter what path we tread we all study, we all pick up knowledge along the way and we can all answer some of the questions on here.
You're ACCA Julie, you've done some of the hardest exams of any professional body. You work as an accountant and come accross situations all of the time that could be of help to members on here.
Really, what you know will help the readers here.
Yes, at times we will disagree and debate, but only by doing that do we all get stronger at what we do.
Looking forwards to hearing some more of your advice to members on here.
All the best,
Shaun.
__________________
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.
There are two systems for claiming VAT - invoiced based and cash based.
Invoice basis means you use the invoice date to determine which quarter the item falls into
Cash basis means you use the date paid to decide which quarter the item falls into
The first thing you need to consider, is... if you took over the business and it is already VAT registered, what VAT system were they using? You will want to continue with this, as trying to transition might be difficult, if you don't quite understand what you are doing.
Let me know this answer, and I can give more focused advice on how to record this. Are you taking over,or, intending to use any software?
Also, consider that you don't have to register for VAT until your sales in any 12 month period hits £82k, and you can de-register if your 12 months turnover will fall below £80k - I mention this because you haven't included CIS on your post, and I wonder if your clients are mainly non VAT registered domestics? Being VAT registered, if you don't have to be, adds 20% onto your quote, and can make you uncompetitive. If you are working for VAT registered commercials, then it is better to be VAT registered, but note that you calculate VAT on your labour and materials, and not after the CIS deduction!
Hope this helps, come back to me with some more details, and I will try to help further.
Just wanted to clarify my position: I am for helping out business owners, but I don't like encouraging employees who take bookkeepers roles when they have got a little or no training in bookkeeping.
If they are employed by a practice that would be a different story because then they would normally be trainees.
I am surprised that such people are able to get answers to their questions here.
