Accounting Software? - Construction CIS? VAT?

Pennywise

Gareth83 wrote: »

What would be your option 2 and 3 for me to look at and compare?

Many thanks

Xero and Quickbooks

Gareth83

I've now setup Freeagent as recommended. I found (on the actual website) that if I pay 5 months upfront I get 12 months. Sounds good to me! Having a quick play around it looks very simple and straightforward.

A few questions:

Is it worth registering for VAT even though I don't actually know my anticipated income as yet? My accountant suggested for simplicity not registering unless I really need to or a client specifies I must be VAT registered.

However, already I have a £5000 (net) job allocated to me from my client. If I was VAT registered I could be allocated the full amount £5000 + VAT, the labour I have to pay out is £2000 and materials have cost me £1500 (inc. VAT)
Surely in these circumstances being VAT registered would be beneficial as a) I'm getting paid more and b) I can reclaim the VAT on materials

In part of that I got allocated £400 for one lot of materials, plus VAT if I was VAT registered. The materials actually cost me £400inc VAT so I see that as I lost out on that particular element?

Second question, when invoicing my client I won't know the exact breakdown of labour/materials does it make a real difference for CIS if it is applied on the full amount or do you generally take a view of say 70/30 split or 80/20? This also applies to paying my subcontractors....
My instinct says over the year it will balance out of CIS paid v CIS received?

00ec25

do you really have no idea how much mark up you intend to put on the materials you sell? Of course you cannot invent a materials and labour spilt when it is simple to track what materials you used and therefore estimate what your labour should be

you don't get to choose the split applied to a sub contractor. Either they give you an invoice showing their split, or you apply CIS to the total because they have not split it and therefore you don't know.

please talk to your accountant before you make some big mistakes. Even if you have to pay them, it is obvious you are still way out of your depth on the basics of Vat and CIS

Gareth83

Well I'm not really out of my depth, they're genuine questions.

Where I worked previously the bookkeeper used to do the CIS, of course I can work out materials used but given I'm in the construction /maintenance sector I'm not sitting down on jobs around £15,000 in value and then working out materials to the nearest screw...

So my question is does an 80/20 split or 70/30 all balance out in the end? For a star how can I even invoice for labour element to my client when I don't actually do the work myself as it's subcontracted out?

phill99

Gareth83 wrote: »

Well I'm not really out of my depth, they're genuine questions.

Where I worked previously the bookkeeper used to do the CIS, of course I can work out materials used but given I'm in the construction /maintenance sector I'm not sitting down on jobs around £15,000 in value and then working out materials to the nearest screw...

So my question is does an 80/20 split or 70/30 all balance out in the end? For a star how can I even invoice for labour element to my client when I don't actually do the work myself as it's subcontracted out?

I run a property maintenance company and do a lot of PM within it also.


I would suggest that you ARE out of your depth. If you do not know how much your materials and labour are on a job, I can guarantee you will soon become insolvent. Surely when you price a job, you will have worked out your material cost, added your labour cost and profit to give you an overall cost.


You speak of a £5000 job. How did you arrive at that figure? What are the material and labour costs? What is your margin? Have you allowed for business operating costs?


Doing a basic 60/40 split for labour/materials is incredibly niaive. You could buy a door for £800, yet only be charged £100 to fit it. So how does your apportionment work then?


You have got some serious learning to do.

Pennywise

As OOec25 said, if you can't accurately split the cost between time and materials, you apply CIS to the whole amount. You can't just guess.

Gareth83

Well you're entitled to your opinions, but I know for a fact I'm not out of my depth I know full well how to price jobs, I've been doing it for over 14 years.

I just don't know about CIS because I've never had to do it... As the companies I've worked for have been big enough to have their own accounts and bookkeepinf department.

Also as I've already mentioned, a lot of materials are from stock so if I only use 10 screws out of a box of 100 I'm not going to be charging 10% of a box I'll factor in a whole box and some....

However the nature of my work just for the record is insurance work, I'm on set schedules which are very decent. I already know the profit levels given my only overheads are my time, laptop and fuel. The work is subbed out on a % of what I get or I'll arrange materials and they provide labour.

I'm getting the same rates the company I used to work for and they had vans, staff, pension etc etc. I'll do alright

So my question just relates to CIS and if 80/20 or 70/30 as general guide works? I can guarantee no company works it out to the nearest screw

Pennywise

Gareth83 wrote: »

So my question just relates to CIS and if 80/20 or 70/30 as general guide works? I can guarantee no company works it out to the nearest screw

No you can't just guess. No one works it out to the nearest screw because that's trivial. But THEY WILL break down the costs into significant parts to avoid the CIS deduction on what really matters and ignore it on what doesn't (trivialities such as odds and sods, or what are most commonly known as consumables). Just concentrate on the stuff with higher values.

00ec25

Gareth83 wrote: »

So my question just relates to CIS and if 80/20 or 70/30 as general guide works? I can guarantee no company works it out to the nearest screw

continual repeating of the question will not make us alter the answers we have already given you. There is no "general guide" because each job is based on its own requirements, yes you may do repeat business, but your finger in the air approach simply will not stand up to scrutiny.

produce a costing supported by your actual input costs if you want to be credible. As said, this does not need to be to the penny, but it needs to be a lot more convincing than 80/20 because I feel like it ?


your business model now appears to be subbies are labour only, and you procure the materials.
So 100% deduction from the subbies, and your own sales will be based on your actual materials costs.

Gareth83

Pennywise do you have a referral code for freeagent when I sign up to the year?

00ec what do you mean by 100% deduction from the subbies? Surely it'll be 20% on their labour element?