How To Write An Invoice

curver82

Hi. I need to do out an invoice and just want to clear something up. If I do a job in someone's house, is it just the labour that is 13.5% or parts and labour?
EG: Light = 10 + 21%
Socket = 5 + 21%
Labour = 60 + 13.5%
Total = 75 + 11.25 vat

Or Light = 10 + 13.5%
Socket = 5 + 13.5%
Labour = 60 + 13.5%
Total = 75 + 10.13 vat

Any help would be much appreciated.

mari2222

the 10 that you paid for the light already included VAT, so you were charged (say) 8 cost plus 2 VAT : you can invoice the customer for the same amount, you then receive back the 2 VAT you already outlaid; you can set these off each other so you will not owe Revenue VAT on the light - do you see?

curver82

Yes but say I bought 10 lights for 100 and want to sell them for 120.

mari2222

Ok, you bought the light at 8 plus 2 VAT (for example): you sell for 12 plus VAT. Just say the VAT works out at 3 euro(so customer pays 15) - you then owe 1 euro to the revenue for VAT. Profit is 4 euro; the 3 VAT and the 4 profit is the difference between what the customer pays (15) and the basic cost to yourself (8).

curver82

Right so is my first example correct? If he wants an itemized invoice it's parts at 21% and labour at 13.5%.

barneystinson

curver82 wrote: »

Hi. I need to do out an invoice and just want to clear something up. If I do a job in someone's house, is it just the labour that is 13.5% or parts and labour?
EG: Light = 10 + 21%
Socket = 5 + 21%
Labour = 60 + 13.5%
Total = 75 + 11.25 vat

Or Light = 10 + 13.5%
Socket = 5 + 13.5%
Labour = 60 + 13.5%
Total = 75 + 10.13 vat

Any help would be much appreciated.

For supplies of services the Two Thirds Rule applies (I've borrowed the following from an earlier thread on this topic):

This basically means that if the cost of the materials in a job exceeds 2/3 of the VAT excl price to the customer then the standard 21% rate will apply and not the reduced 13.5% rate. It's to stop a situation where, say, you have a repair job replacing a burner on a heating system. The burner costs 200+VAT. The labour charge is say 50 + VAT, if you apply 13.5% to the total in that case, the person billing the work gets back more VAT than they pay.

You need to take (a) the cost of materials, add (b) the labour charge and see if (a) / (a)+(b) > 66.67%. In the above example 200/(200+50) = 80% which > 66.67% so in that case the job should be charged at 250+21% VAT.

In your case the 21% parts are (say) €15 (before VAT) and the 13.5% labour is €60 (before VAT). Since €15/€75 is less than 2/3, then 13.5% applies to the whole lot.

curver82

Thanks very much (and mari2222).

mari2222

there is a guide to invoicing and it shows a sample invoice on the revenue website:

revenue.ie/en/tax/vat/charging/keeping-records.html

your local enterprise board might have a booklet or guide on it. Also your bank might have a booklet on tax or accounts.
Good luck with your new business!