VAT calculation

WhatsTheVAT

martindow wrote: »

Normally you pay VAT quarterly. I trust you are not doing this at the end of the tax year like accounts. When did you start trading?

I should also note that I never recieved a Certificate of Registration (VAT4), which may explain the VAT Notice of Assesment of Tax.

Aquamania

WhatsTheVAT wrote: »

I should also note that I never recieved a Certificate of Registration (VAT4), which may explain the VAT Notice of Assesment of Tax.

I think certificate of registrations are obtained online nowadays - at least that's how we got our latest amended one.

No VAT4, no charging or reclaiming of VAT

I'm sure your accountant is explaining that to you as I post

thunderella

So let me just clarify matters?

You've only been in business 5 months
You already are on target for turnover of £350k (perhaps £400k) p.a
You seem to be flipping deals within the week
and you are making over 70% gross profit?

I don't think you need any of our help.
I think with figures like that you could well teach not just MSE Martin a trick or two, but even George Soros.

Lets just hope you have your figures correct, else you could have a business plan more akin to Willy Wonka!

WhatsTheVAT

Aquamania wrote: »

I think certificate of registrations are obtained online nowadays - at least that's how we got our latest amended one.

No VAT4, no charging or reclaiming of VAT

I'm sure your accountant is explaining that to you as I post

The letter I was originally sent told me that the VAT4 would follow (in the post) shortly, it just never arrived. Maybe they were in the process of switching over and I got caught in the middle. Either way it's not a problem, accountant is going to get hold of them on the phone and sort it out.

thunderella wrote: »

So let me just clarify matters?

You've only been in business 5 months
You already are on target for turnover of £350k (perhaps £400k) p.a
You seem to be flipping deals within the week
and you are making over 70% gross profit?

I don't think you need any of our help.
I think with figures like that you could well teach not just MSE Martin a trick or two, but even George Soros.

Lets just hope you have your figures correct, else you could have a business plan more akin to Willy Wonka!

Clarification;
We have been trading for 27 weeks.
Taking the average for the 27 weeks we are on target for a turnover of £450,329.88. Of course this is going to fluctuate due to weather, Bank Holidays, major events and other events outside of our control, and besides, as they say, "Turnover is vanity, profit is sanity." so I'm not getting too caught up on TO.
I'm not sure what you mean about flipping deals within the week?
Around 70% is industry standard gross profit and is--give or take--what we're aiming for. As we become more efficent I would hope that our GP will incease, even if it's just by a couple of points.

There's no need to get sarcastic. I created and posted from this account as I'm a reasonably longstanding user of these forums and didn't want anything being linked together. I posted asking a perfectly reasonable question and the first response from InsideInsurance clarified the formular I was worrying about. I really can't see why you've taken a dig at me?

Suarez

Can I have a job?

paddyrg

Frankly if you're on course to turn over best part of half-a-mil, I'd be tempted to pay a bookkeeper for a couple of hours a week to handle the day-to-day book work - meaning you can concentrate on those sales :-)

In the meantime, if you put a sixth of your gross take into the VAT account, you'll have your reclaimed VAT as a bonus each quarter. If you don't want that buffer, then based on your GP of ~66% (wholesale £1 sold for £3 retail), then save £1 in every nine (cost £100+VAT = £120, sold at £300+VAT = £360 - £60 VAT to HMRC but £20 to reclaim on supplies, £40 to HMRC in balance. £40 on £360 is £1 in £9)

DCodd

OP If you want an easy way to work out the vat, just get a calculator with a vat function and get one with a cost, sell and markup function too.

Or just times the gross figure by 0.16666666666

WhatsTheVAT

paddyrg wrote: »

Frankly if you're on course to turn over best part of half-a-mil, I'd be tempted to pay a bookkeeper for a couple of hours a week to handle the day-to-day book work - meaning you can concentrate on those sales :-)

In the meantime, if you put a sixth of your gross take into the VAT account, you'll have your reclaimed VAT as a bonus each quarter. If you don't want that buffer, then based on your GP of ~66% (wholesale £1 sold for £3 retail), then save £1 in every nine (cost £100+VAT = £120, sold at £300+VAT = £360 - £60 VAT to HMRC but £20 to reclaim on supplies, £40 to HMRC in balance. £40 on £360 is £1 in £9)

It's something I've looked in to and may consider again in future but for now I can handle it.

I think for peace of mind I will stick I'll stick to how I'm doing things now; Turnover / 6 = VAT due - Cost of Goods / 6 = Total VAT due... so...
TO of £9158.20 / 6 VAT due £1,526.37 - COGs of £1,497.53 / 6 = £249.59 so Total VAT due = £1,276.78

So as long as I put the final figure aside there won't be any nasty surprises, and once I've claimed on everything else (utilities etc.) then happy days?

DCodd wrote: »

OP If you want an easy way to work out the vat, just get a calculator with a vat function and get one with a cost, sell and markup function too.

Or just times the gross figure by 0.16666666666

Thanks for the advice but I think I'll stick to spreadsheets and my laptop's calculator.

paddyrg

As long as you only reclaim actual VAT - you'll find your rent, utilities etc do not attract VAT. Beware, if some supplies (eg potatoes) don't attract VAT, then this would unbalance your sums above.

System

Who needs an accountant or book keeper when there is the internet!


ps. what is your net profit margin?