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Discuss invoicing help? advice from the businessmen/women sparks in the Business Related area at ElectriciansForums.net

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This is more for accounting reasons rather than customer convenience, how detailed does an invoice have to be?

for example, if I quote someone £80 to install a new light fitting (fitting included) on my invoice can I just put the whole amount "Parts and Labour" and rely on material receipts to work out how much would be taxed?

In your experience what would an accountant expect to see on invoices so they could work out what labour charges can be taxed? I'm a novice at the whole business side of things so any help would be greatly appreciated :)
 
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pirate

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Arms
Esteemed
Just do cash for all jobs and declare nothing!
No, seriously, it depends on how big your business is, and how easy you want it to run.
For me, the labour and parts are separate. This means I don't mark up the parts. That means i lose out a little, but the customer can see that I have not overcharged for parts...I can show the supplier invoice. Also, that makes it easy for your accountant. You can show him/her an invoice with, say, £200 labour, on which you will be taxed, and you can also show him/her the invoices for the parts, where the total will match the invoice to the customer. All nice and easy and above board.
You will always have "sundries"...but these are small items like connectors or a back box you forgot to add...pennies really, and the taxman will allow you some leeway on those. Travel expenses should be kept separately. You wouldn't put them on the customer invoice normally, but at the end of the year, all fuel receipts and parking costs and other associated expenses will be allowable, subject to deduction for personal use, as will be tools, calibration costs, repairs and an allowance for using part of your home as an office. Your accountant will advise on these.
You need 3 boxes, one with invoices rendered, which stay there until paid, one for paid ones. If you are registered for VAT you may have to pay part of the rendered pile, but your accountant will attend to that. Another one with all the bills you have paid like new tools etc as above...expenses really.
Simple, and traceable, easy to reconcile with the bank statements and suppliers invoices.
However, if Mrs McGlumpher asks you to change a plug, for a cup of tea and a biscuit, don't bother to lodge the fiver in the bank...LOL!
 
O

Octopus

Op ... bit of an odd question tbh

For each tax year, you need to keep all receipts for materials bought for customers, all receipts for ALL items you spend money on to run your business, and all invoices sent to customers

Then

Total invoices, less total materials bought, less business costs equals your taxable profits ...

Rule of thumb, keep your figures per month, then take your net profit, deduct £1000 for your tax free allowance, then save 30% of what’s left for your tax and NI bill.

I would also recommend you consult an accountant to make sure you claim all the start up costs too ...
 
O

Octopus

Sound advice Murdoch. Income less expenses, put a bit aside...sleep easy
Thanks mate.

I buy premium bonds with my tax savings and cash them in when it’s due .... and yes I do win occasionally
 

Charlie_

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Arms
Small jobs/new customers; hand written invoice there and then or if you have the right software email them one instead..
Bigger jobs; time + materials or stage payments for % of quotations
 
Tyrone Thompson
For your accounts use a very simple system called Quickfile. Its free and you simply select the version for your business.


Most Companies will add on a small percentage for procuring and managing materials, typically in the range 5 to 15%. Your system will record the value you spend on materials, components, etc and will then add on the handling costs.

Now for payroll.
Use a system called Brightpay, which is free.
Many people operating on a Ltd Company basis find it best to pay up to the value of NI contributions. The remainder is paid as a dividend.


To calculate the figure you need to run a trial balance (this is an automatic programme. From profits available take less than the full value and deduct 19% for Corporation Tax. Remember that YOU will pay additional tax once you total pay (salary plus dividends) exceed your tax free allowance, plus £2000. At the end of the year you will pay tax on amount above that at 7.5%

If your wife or other family member is not working you can put them on the payroll on the same payment basis, as long as they are shareholders.

https://www.quickfile.co.uk/

https://www.brightpay.co.uk/
 
O

Octopus

And remember HMRC expect you to keep your records for 7 years ..........
 
Not sure if it’s any help; I use QuickBooks and my accountants have access to the parts they need. All receipts are electronically stored as are invoices - which QuickBooks can generate and keep track of. As a sole trader I find it great!!
 
T

The Ghost

To answer your question regards content on the invoice. It annoys me to see an invoice that says just parts and labour and a total. I want a breakdown of the labour costs and the materials (itemised) listed with the cost. That way I know what I am paying for. As I expect this I accordingly afford the client/customer the same courtesy and state the hours or days worked and the cost of each unit multiplied by the amount. Then I list the materials and the cost for all the major items. So they can go around and measure how much conduit I put in or sockets/switches and see if that tallies if they are of a mind to. Fiddly and time consuming, yes but then I like to be diligent and transparent but that's just me.
 
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To answer your question regards content on the invoice. It annoys me to see an invoice that says just parts and labour and a total. I want a breakdown of the labour costs and the materials (itemised) listed with the cost. That way I know what I am paying for. As I expect this I accordingly afford the client/customer the same courtesy and state the hours or days worked and the cost of each unit multiplied by the amount. Then I list the materials and the cost for all the major items. So they can go around and measure how much conduit I put in or sockets/switches and see if that tallies if they are of a mind to. Fiddly and time consuming, yes but then I like to be diligent and transparent but that's just me.
I respect your opinion but I think it can be limiting in terms of mark up etc, some clients would compare the price to materials online, maybe even question you on individual prices
 

telectrix

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Mentor
Arms
Esteemed
i use quickfile. all invoices and purchases entered. end of year quickfile does your profit/loss account for taxman.
 
T

The Ghost

in terms of mark up
As I say "transparent" I am happy for the customer to know that I put a mark up on goods I convey to them. I have no reticence about that. I even tell them I am putting a mark up on the goods supplied. This has never been a problem. They usually still get it at a better price than comparisons online.
I am perfectly clear that my time in researching and physically getting goods delivered on site is my time and petrol/diesel, tax, MOT and insurance which as a business I would not contemplate delivering for free. Most customers are perfectly ok with that and appreciate those costs as well as the transparency.
 
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