When to add vat

Kerrytony77

Hi I’m starting to think of starting up a business of supplying and fitting of carpentry items.

My question is.

Let’s say my material list is as follows:

Door €25
Unit €25
Worktop €25
Accessories €25
Drawers €25
Delivery €25

Total € 150 (A)

Do I now add vat at 23% meaning. Material total is € 150+23% = €184.50 (B)

Labour

Workshop 3 hours @35 per hour €105
Fitting 3 hours @35 per hour €105

Total €210 (C)
Plus vat @13.5%
Total €238.35 (D)

Do I know add A + C together and add 13.5%
Making sale price to customer €408.60

Or do I add B + C and add 13.5% = €447.75

Or do I add B + D and add 13.5% = €479.93

Quite a different in sale price in all 3 options so any advice welcomed as not sure how too price with vat added.

Also how is vat applied to delivery and do I add vat to markup.

Tia

Kerrytony77

Kerrytony77 wrote: »

......
Do I know add A + C together and add 13.5%
Making sale price to customer €408.60

.....

Tia

This


Dunno what you mean about delivery.

Kerrytony77

Augeo wrote: »

This


Dunno what you mean about delivery.

I was told delivery is charged at 23% all the time.

Delivering what?
Surely you turn up with the stuff, supply & fit.

Or is there a courier or something?

Kerrytony77

Augeo wrote: »

Delivering what?
Surely you turn up with the stuff, supply & fit.

Or is there a courier or something?

Turn up with stuff and fit it yes. But it needs to be charged for delivery as I’m not bringing it in the van for free. And the time it takes to load and unload.

Marcusm

Kerrytony77 wrote: »

Hi I’m starting to think of starting up a business of supplying and fitting of carpentry items.

My question is.

Let’s say my material list is as follows:

Door €25
Unit €25
Worktop €25
Accessories €25
Drawers €25
Delivery €25

Total € 150 (A)

Do I now add vat at 23% meaning. Material total is € 150+23% = €184.50 (B)

Labour

Workshop 3 hours @35 per hour €105
Fitting 3 hours @35 per hour €105

Total €210 (C)
Plus vat @13.5%
Total €238.35 (D)

Do I know add A + C together and add 13.5%
Making sale price to customer €408.60

Or do I add B + C and add 13.5% = €447.75

Or do I add B + D and add 13.5% = €479.93

Quite a different in sale price in all 3 options so any advice welcomed as not sure how too price with vat added.

Also how is vat applied to delivery and do I add vat to markup.

Tia

Are you Vat REGISTERED? When do you expect to exceed the registration threshold? You are putting the cart before the horse.

Kerrytony77

Marcusm wrote: »

Are you Vat REGISTERED? When do you expect to exceed the registration threshold? You are putting the cart before the horse.

I will be vat registered and it’s fitted kitchens and robes so I’d expect to be well over the threshold.

Still awaiting an answer to to OP

You were told...

Kerrytony77

Augeo wrote: »

You were told...

In last work place it was mentioned by accounts

Bonzo Delaney

Kerrytony77 wrote: »

In last work place it was mentioned by accounts

Does total A 150e include vat you paid to the wholesaler already At 23% or is that less vat

Kerrytony77

Bonzo Delaney wrote: »

Does total A 150e include vat you paid to the wholesaler already At 23% or is that less vat

Less vat.

Bonzo Delaney

Kerrytony77 wrote: »

Less vat.

So basically delivery goes in as labour as your not engaging another contractor
So it's material at 125 plus labour at 235 plus vat at 13.5 % equals 408.60 total cost to client

You pay your supplier 153.75e (125 + 23% vat) nd claim back 28.75 from revenue but also pay revenue 48.60 the vat you charged the client
The trick is to try and have your materials 2/3s and labour 1/3 to cancel out

Kerrytony77

Bonzo Delaney wrote: »

So basically delivery goes in as labour as your not engaging another contractor
So it's material at 125 plus labour at 235 plus vat at 13.5 % equals 408.60 total cost to client

You pay your supplier 153.75e (125 + 23% vat) nd claim back 28.75 from revenue but also pay revenue 48.60 the vat you charged the client
The trick is to try and have your materials 2/3s and labour 1/3 to cancel out

So if my labour isn’t a 1/3 I’m at loss in vat as in about.

If I pay 48.60 and claim bk 28.75 in at At loss of 19.85.

So I take that from 408.60 I charge the client which in fact means I get 388.75

Bonzo Delaney

Kerrytony77 wrote: »

So if my labour isn’t a 1/3 I’m at loss in vat as in about.

If I pay 48.60 and claim bk 28.75 in at At loss of 19.85.

So I take that from 408.60 I charge the client which in fact means I get 388.75

That's it .
The only way vat helps the small guy is in expenses such as diesel, van, tools, services related to the business.
There's no point in trying to make money out of vat unless your supplying a lot of material. Even on a 6k to 1k ratio the final return to you in vat is only 340e. You've already charged for your labour costs the vat is revenues cut out of it

Kerrytony77

Bonzo Delaney wrote: »

That's it .
The only way vat helps the small guy is in expenses such as diesel, van, tools, services related to the business.
There's no point in trying to make money out of vat unless your supplying a lot of material. Even on a 6k to 1k ratio the final return to you in vat is only 340e. You've already charged for your labour costs the vat is revenues cut out of it

But if I add 23% vat to material at the start. My material will be higher in value.

Kerrytony77

Bonzo Delaney wrote: »

That's it .
The only way vat helps the small guy is in expenses such as diesel, van, tools, services related to the business.
There's no point in trying to make money out of vat unless your supplying a lot of material. Even on a 6k to 1k ratio the final return to you in vat is only 340e. You've already charged for your labour costs the vat is revenues cut out of it

How do you work out only 340

Bonzo Delaney

Kerrytony77 wrote: »

But if I add 23% vat to material at the start. My material will be higher in value.

Not allowed charge vat on vat
The only time 23% comes in to it is say you made the unit in your workshop and the client bought it from your workshop then you would charge 23% to the client.
I think you can deliver it but once you don't assemble anything on the clients property.

Bonzo Delaney

Kerrytony77 wrote: »

How do you work out only 340

Sorry meant 5k materials plus 1 k labour 6k total + vat at 13.5%

Kerrytony77

Bonzo Delaney wrote: »

Not allowed charge vat on vat
The only time 23% comes in to it is say you made the unit in your workshop and the client bought it from your workshop then you would charge 23% to the client.
I think you can deliver it but once you don't assemble anything on the clients property.

Really. This is the information I need lol. Thanks for that.

Kerrytony77

Bonzo Delaney wrote: »

Sorry meant 5k materials plus 1 k labour 6k total + vat at 13.5%

Thanks for your input.

And last one then. Do you add margin/markup before you apply vat at 13.5% or after the vat is added

Kerrytony77

Kerrytony77 wrote: »

Thanks for your input.

And last one then. Do you add margin/markup before you apply vat at 13.5% or after the vat is added

Maybe I’m not explaining this properly to you.

I charge 35 per hour and that covers labour taxes and overheads. Do I add a markup as well.

You have to look at things in an exVAT fashion.

Buy something at 100 + VAT @ 23% ..... you get the 23% back.

You install/fit that thing for 50 labour, total 150 + 13.5% VAT....you give the VAT over in your returns.

You don't make or lose money on the VAT portion.

Kerrytony77

Augeo wrote: »

You have to look at things in an exVAT fashion.

Buy something at 100 + VAT @ 23% ..... you get the 23% back.

You install/fit that thing for 50 labour, total 150 + 13.5% VAT....you give the VAT over in your returns.

You don't make or lose money on the VAT portion.[/quote

But I do lose in vat. If I’m paying in more than I’m getting back.

“So if my labour isn’t a 1/3 I’m at loss in vat as in about.

If I pay 48.60 and claim bk 28.75 in at At loss of 19.85.

So I take that from 408.60 I charge the client which in fact means I get 388.75”

Kerrytony77

Augeo wrote: »

You have to look at things in an exVAT fashion.

Buy something at 100 + VAT @ 23% ..... you get the 23% back.

You install/fit that thing for 50 labour, total 150 + 13.5% VAT....you give the VAT over in your returns.

You don't make or lose money on the VAT portion.

Or should I be charging 23% vat for this example

Bonzo Delaney

Margin of 10% or what ever you think you'll get away with before Vat .

Sit down write out every thing for the years costs
Insurances
Pensions
Transport costs incl Service, tax, DOE, repayments, fuel
Tools and equipment yearly cost
Rent
Sundries
Office equipment
Accountancy costs

Then add your desired yearly wage to all that.
Divide by 48 allowing for 4 weeks holidays a year incl bank holidays and sick days
Then divide that by 40 avg hourly working week
That's your hourly rate min 8 hrs a day 5 days a week can be a scary enough figure to have in your head starting out .
I was there myself, tbh you'll find yourself putting in at least 60 hrs a week min to attain that figure but best of luck with the new venture

Kerrytony77

Kerrytony77 wrote: »

...

But I do lose in vat. If I’m paying in more than I’m getting back.

“So if my labour isn’t a 1/3 I’m at loss in vat as in about.

If I pay 48.60 and claim bk 28.75 in at At loss of 19.85.

So I take that from 408.60 I charge the client which in fact means I get 388.75”

Look at the figures ex VAT

Kerrytony77 wrote: »

Or should I be charging 23% vat for this example

It's 13.5% as you are installing / fitting the thing. Parts & labour all at 13.5%

You'll be buying stuff at trade / discounted prices exVAT...you can charge RRP for it so there's some "profit" there too.

Kerrytony77

Bonzo Delaney wrote: »

Margin of 10% or what ever you think you'll get away with before Vat .

Sit down write out every thing for the years costs
Insurances
Pensions
Transport costs incl Service, tax, DOE, repayments, fuel
Tools and equipment yearly cost
Rent
Sundries
Office equipment
Accountancy costs

Then add your desired yearly wage to all that.
Divide by 48 allowing for 4 weeks holidays a year incl bank holidays and sick days
Then divide that by 40 avg hourly working week
That's your hourly rate min 8 hrs a day 5 days a week can be a scary enough figure to have in your head starting out .
I was there myself, tbh you'll find yourself putting in at least 60 hrs a week min to attain that figure but best of luck with the new venture

I have all that worked out to be €25 but I will charge €35.

So I put the markup before the vat is added

Bonzo Delaney

Kerrytony77 wrote: »

I have all that worked out to be €25 but I will charge €35.

So I put the markup before the vat is added

Yep.
One last time on the non existent vat loss for you the original job broken down and reversed... bear with me.

Material 125
Labour 235
13.5% vat 48.60
Total cost 408.60

Revenue gets 48.60
Your left with 360
Pay suplier 153.75 (125 + 28.75 (23% vat) )
Your left with 206.25
Here's the magic......
Plus the vat back 28.75
Equals the original 235e labour cost.

No loss just revenue getting their cut

Keep track of every thing in Excel.....in & out..... exVAT & the applicable VAT alongside.

Kerrytony77

Bonzo Delaney wrote: »

Yep.
One last time on the non existent vat loss for you the original job broken down and reversed... bear with me.

Material 125
Labour 235
13.5% vat 48.60
Total cost 408.60

Revenue gets 48.60
Your left with 360
Pay suplier 153.75 (125 + 28.75 (23% vat) )
Your left with 206.25
Here's the magic......
Plus the vat back 28.75
Equals the original 235e labour cost.

No loss just revenue getting their cut

Thanks for making that out.

What sort of excel sheet can I make out.

Ps I’m more of a tradesman than office man lol hence the questions

Kerrytony77

Bonzo Delaney wrote: »

Yep.
One last time on the non existent vat loss for you the original job broken down and reversed... bear with me.

Material 125
Labour 235
13.5% vat 48.60
Total cost 408.60

Revenue gets 48.60
Your left with 360
Pay suplier 153.75 (125 + 28.75 (23% vat) )
Your left with 206.25
Here's the magic......
Plus the vat back 28.75
Equals the original 235e labour cost.

No loss just revenue getting their cut

Should I have charged vat @ 23% in this example as labour is more than material

Sleeper12

Kerrytony77 wrote:

So if my labour isn’t a 1/3 I’m at loss in vat as in about.

You are thinking about vat in the wrong way.

The vat is separate to your price in that it's not yours. You collect it for the tax man. It is never your money so you can't be at a loss.

Bonzo Delaney

Kerrytony77 wrote: »

Thanks for making that out.

What sort of excel sheet can I make out.

Ps I’m more of a tradesman than office man lol hence the questions

I'm in the same boat as your self Carpenter/Builder
I just write everything down in ledger where I can see all the details and let my accountant deal with revenue .

Forget about charging 23% anywhere out to a private client on a supply and fit basis
The only time I've seen it happen (mods look away) is if your supplying to a principle contractor and it's worth their while to circumvent the RCT system and engage your services in a " supply only" arrangement but that's a whole different ball game and a grey area legally .

Kerrytony77

Sleeper12 wrote: »

You are thinking about vat in the wrong way.

The vat is separate to your price in that it's not yours. You collect it for the tax man. It is never your money so you can't be at a loss.

But I can be at a loss if I’m paying more than I’m collecting.

It’s it meant to be the other way around.

Bonzo Delaney

Kerrytony77 wrote: »

But I can be at a loss if I’m paying more than I’m collecting.

It’s it meant to be the other way around.

It softens the cost on your expenses to run your business
Go over the break down I done for you again you'll see there's no loss
Welcome to the world of self-employed otherwise known as a bag man for the tax man

Kerrytony77

Sleeper12 wrote: »

You are thinking about vat in the wrong way.

The vat is separate to your price in that it's not yours. You collect it for the tax man. It is never your money so you can't be at a loss.

In my last place of employment there were paying out 1000s of vat each term. There accounts package was calculating the vat. But it was always way higher than they expected. So I just don’t want to go down same rd. It calculated the difference and they paid over

Sleeper12

Kerrytony77 wrote:

But I can be at a loss if I’m paying more than I’m collecting.

No you can't be at a loss. You claim back anything that you pay (in real terms you aren't paying any vat if you get to claim it all back) & charge 13.5 percent.

It takes a bit of getting used to but as I said none of the vat is yours. Its treated totally separate. You only collect it for the revenue.

Kerrytony77

Sleeper12 wrote: »

No you can't be at a loss. You claim back anything that you pay (in real terms you aren't paying any vat if you get to claim it all back) & charge 13.5 percent.

It takes a bit of getting used to but as I said none of the vat is yours. Its treated totally separate. You only collect it for the revenue.

I understand that. But what I’m asking is am i charging the right vat rate and applying it rightly. I know I don’t keep the vat.

But why so as an example where my last employer paying out more vat than he was getting back.

Kerrytony77

Kerrytony77 wrote: »

....

But why so as an example where my last employer paying out more vat than he was getting back.

VAT on sales/services/labour was greater than VAT on purchases.

That's generally to be expected in business TBH unless you don't charge hour clients VAT.

Sleeper12

Kerrytony77 wrote: »

But why so as an example where my last employer paying out more vat than he was getting back.

Most business pay more than they than they get back. VAT would be a pointless & expensive tax to collect if it didn't work this way.

If your materials cost two thirds the overall price you charge 13.5 percent & you'll always be it a claim back situation.

Materials 100 ex vat claim back 23 vat
Labour 50 ex vat
Total 150 Ex vat
Total 170.25 inc vat 20.25 Vat charged You make 2.75 on the vat

Charge 71 labour on the same job & you'll owe revenue 9c

relax carry on

https://www.revenue.ie/en/vat/vat-on-services/services-taxable-at-the-rate-of-the-goods-the-two/index.aspx

Where the Value-Added Tax (VAT) exclusive cost of goods used in the provision of a service exceeds two-thirds of the total VAT exclusive price you charge to your customer then the full price is taxable at the rate of the goods.

Where the VAT exclusive cost of goods used in the provision of a service does not exceed two-thirds of the total VAT exclusive price then the full price is taxable as a supply of services. This is known as the two-thirds rule.