Accounting Software? - Construction CIS? VAT?

Gareth83

Gareth83 wrote: »

Adding in FRS calculation

Job value = 5000 net
Labour = 2000
Materials = 1250 net

Vat calculation = 6000 * 9.5% = £570
FRS Calculation = 1000 - 570 = £430

Gross profit = 5000 - 2000 - 1250 - 570 + £430 = £1610

So £110 better offer than being non-VAT registered?

I think that finally got me there?

I just don't understand why the £1250 is wrong?

My VAT calculation is right of £570?
FRS calculation is right? VAT received - VAT owed, this is then classed as income

So to calculate gross profit on that one job as we deal in VAT figures becomes:

5000 - 2000 - 1250 - 570 + 430 = 1610?

What is actually wrong with that? If you know why can't you say?

phill99

Gareth83 wrote: »

I just don't understand why the £1250 is wrong?

My VAT calculation is right of £570?
FRS calculation is right? VAT received - VAT owed, this is then classed as income

So to calculate gross profit on that one job as we deal in VAT figures becomes:

5000 - 2000 - 1250 - 570 + 430 = 1610?

What is actually wrong with that? If you know why can't you say?

People have said. You just don't want to listen.

Gareth83

No they haven't

phill99

Gareth83 wrote: »

No they haven't

But that is because of your interpretation.


Reading your posts makes me concerned that you are actually in business. If your approach to financial management is reflected in how you deal with your clients, then God help them.

Gareth83

That's your opinion of course. I've amended my calculations as I've read up and received feedback. Looks like I'm almost there but now the £1250 has been highlighted but with no actual reason why? It's all well and good providing a link but the link doesn't show a working example. So why not just say what the issue is or what error has been made.

I've already demonstrated on my model in better off being vat registered so the refinements to my workings are more for understanding.

Once I've seen one calc. then the prices is the same.

Gross profit is my sales - cost - VAT flat rate calc.

00ec25

Gareth83 wrote: »

Well I've just been on the website to check and I cannot find anything that goes against what I have put?

the answer is on the first bit of the page, disappointing you are really struggling with spotting /understanding the implications of such clear concepts (my red inserting and bold)

The amount of VAT a business pays or claims back from HM Revenue and Customs (HMRC) is usually (under the standard scheme) the difference between the VAT charged by the business to customers and the VAT the business pays on their own purchases.

With the Flat Rate Scheme:

1. you pay a fixed rate of VAT to HMRC
2. you keep the difference between what you charge your customers and pay to HMRC
3. you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000

look learn this:
accounts are prepared using NET values
the meaning of NET depends on what scheme you are in
std: everything is net
FR: income is NET, expenditure is GROSS

LISTEN to your accountant. Join the Flat Rate because you simply do not know enough to be trusted to operate the std scheme correctly. I'd bet it would take seconds to find an instance of an invalid expense claim if you were std and HMRC Vat inspectors have more power/rights than anyone other than the police when it comes to investigations

The FR scheme is designed precisely for what it says: to make it easier for business owners who are too tight to employ accountants to avoid ending up in jail for tax fraud . That is because you don't need to know what you are doing, you just apply the %

You state your business is that of "surveying" and "project management". You confirmed you are not a QS, so i assume you are not a qualified surveyor, so possibly are some sort of estimator?

LISTEN to what your accountant tells you is your flat rate. It should be based on the predominant type of work you do, you cannot use different rates for different bits of work
There are 2 categories you could belong to. I could crucify you if you pick the wrong one given the 5% difference in rates.
https://www.gov.uk/vat-flat-rate-scheme/how-much-you-pay

I strongly urge you to rely on and pay for an accountant for at least the first year as it is clear you really are out of your depth.

Goodbye, good luck, I hope you make money.

BoGoF

Gareth83 wrote: »

Looks like I'm almost there

After 00ec25 comments you can see you're clearly not. After 3 pages of you getting it wrong please take the advice given and don't DIY. Your perceived profit will soon be lost in HMRC fines.

Gareth83

Finally thanks for a detailed answer so I was almost there.

So for gross profit it becomes:

5000 - 2000 - 1500 - 570 + 430 = 1360

So now I'm 140 worse off than being non vat registered.... When I mention gross profit I'm just trying to compare being vat registered or not...

So really I shouldn't be vat registered....

And yes I'm picking the 9.5% VAT rate, well 8.5% to begin with.

comeandgo

Are you also taking into account in your costs that you may have CITB levy to pay and using net subcontractors will cost you more than direct employees or gross subcontractors?

Gareth83

Yes but I don't know my actual wage bill yet so will wait to see what it is after 12 months.

My general pricing system is the boys get the work for 50-60% of the price I get it for on the labour element.

The materials I then get are allowed a mark up. But there's a lot of extras that can be added that don't actually have any cost.

Like I said, I've been working in this sector for a while and the model works. The issue was I was just trying to see if there was a more profitable way to operate cis and vat