understanding small business accounts

andyb123

Hi all

New here so please be gentle! Im trying to understand how turnover of a business is calculated. Is it:-

a invoice has a total cost of £500, materials for this job cost £200 and the labour was £300. As the materials had to be 'bought' and sold, is the turnover of this job £700 as the materials have been bought and sold

or

is the turnover just calculated at the invoice total cost of £500?

Also is the threshhold for VAT now £72,000

thanks in advance
andy

steve1980

The turnover is how much money you make BEFORE expenses.

The VAT threshold is £73,000

andyb123

so in the example, the turnover on that job would be £500?

steve1980

andyb123 wrote: »

so in the example, the turnover on that job would be £500?

You are correct

antrobus

Turnover = sales

andyb123

thanks all

got it now!
Cheers
Andy

property.advert

You are right to be wary of VAT. In my location, there are some good tradesmen who are regularly in demand, not only for their skills but because they are not VAT registered. Were they to raise their prices by 20%, then they would suffer a loss of business.

If you will be turning over way more than the VAT threshold then there is little you can do about it but if you are around the limit, then you should start to think laterally as to whether you can add 20% to your invoices and not lose business. If not, then you may need to look at alternatives.