Taking on another engineer/ VAT registration

[wizard]

Hi Guys. I’ve been a sole trader for the last 7 years previously having worked for Bosch & Hotpoint. Work has steadily increased and I now find myself in the very lucky position of having too much work. This year I am getting very close to the VAT threshold and regularly turning work away even if only a mile out of my normal area.
So I can either start being even more picky about the work I take and upset more customers, or expand. Has anyone got any advice on taking on staff & what the going rate is for engineers is these days as I’m a bit out of touch.
Also does anyone have any thoughts on VAT registration and whether the extra charge is likely to put customers off.
Many Thanks, Wizard.

[Martin]

Re: Taking on another engineer/ VAT registration

wizard wrote:This year I am getting very close to the VAT threshold and regularly turning work away even if only a mile out of my normal area.

Being “very close to the VAT threshold” and taking on another engineer do not necessarily go together. By that I refer of course to the threshold currently being £68,000 per annum. Now you would therefore have to be taking an income way way in access of that overall to even begin thinking on taking on another helper. It’s a costly business taking on staff what with PAYE, Pension Plans, paid annual holiday leave, new van, tools and work clothing, uncle tom cobbly and all that follows along with it.

It’s great that you have work coming out of your ears and lots you are forced to turn away right now. Therefore my advice would be to think very very carefully about first registering with the VAT man. Once they’ve got you on that tack then you have to jump through hoops and be accountable for every bit of money you earn and you spend. All in triplicate of course and all very daunting from the outset.

Once you’re in the VAT man’s clutches and are stuffing wads on revenue in their direction, running round in circles wondering how you can possibly cope, then and only then do you venture the next stage and employ another engineer. He (or she) can then take on some of your workload whilst you shuffle the VAT paperwork into the correct pigeon holes. It should all fit into place in a matter of a few months I expect the only downside to all the effort you’ve gone to by that stage is if the phone stops ringing, that the work drops off? You have at least to factor that potential into any equation prior to signing along any dotted line.

There’s many more pitfalls and loopholes to avoid but we can deal with them as they manifest themselves. But I will conclude by saying from my own personal viewpoint that it’s best not to take that route. Best to stay under the razor wire by not going into the VAT threshold level. Best to keep all your money in your pocket and turn away what work you can’t cope with. You can’t be in two places at any one time. Take on all of the above at your peril.
l
Good luck with whatever you decide! 😀

[Lawrence]

Re: Taking on another engineer/ VAT registration

Before you take an engineer on asses your costs by that I mean work out EXACTLY what it costs you per job to get to the door ,there is a calculator on here somewhere -in downloads I think its the best thing I ever did .
once you know that then you can work out exactly how many jobs you need your engineer to complete to cover themselves for salary ,van,stock etc before they start making you a profit ,you will also encounter the 1/2 man syndrome by that I mean you don’t just need enough work for one engineer you need enough for one and a half ,this helps you to cope when things take a slight downturn.
The trouble with turning work away is that you are giving not just that immediate call away to your competitors but also any additional appliances as well as reccomendations.
As for the VAT Take advice from your accountant or bank manager we have always been VAT registered so know no different .
hope that helps ,if you are able to get to Coventry for the meeting on the 26th there will be a few of us there only to willing to have a chat over a beer or two.
Lawrence

[wizard]

Re: Taking on another engineer/ VAT registration

Thanks Martin, you’ve highlighted all the points I’ve been concerned about. I was intending to vat register first and see how much the work drops off before employing someone else. The paperwork side doesn’t worry me as the in-laws do book-keeping and have already offered their help/ use of relevant accounts software, but I am concerned about the vatman’s claws in my ass once I have registered !

Anyone else got any comments ??

Wizard

[wizard]

Re: Taking on another engineer/ VAT registration

Thanks Lawrence, I’ll have a look at the downloads. I did have a rough work out and it looked like 4 completed calls a day would cover costs but you’re right I need to do it properly. I think the VAT registration is inevitable cos I’ve been getting closer and closer to the theshold for the last 3 or 4 years and this year is a bit too close for comfort, plus it’s unlikely to rise much in the budget again this year.
Won’t be able to make Coventry as the missus is working and I’ll be on sprog duty.
Thanks again for your input, Wizard.

[john10671]

Re: Taking on another engineer/ VAT registration

rather than employing someone its better for you to use someone who is selfemployed no holidays to pay no transport to provide or sickness.

I am self employed and i do alot of work for service force they pay me £25.00 a call only if completed i am currently doing between 10-12 jobs a day it works great for both parties just another thought for you.

John

[wizard]

Re: Taking on another engineer/ VAT registration

Thanks for your input John, it is some thing else I am considering. Nice to know what the going rate is.
Wizard

[microgerry]

Re: Taking on another engineer/ VAT registration

I would say avoid taking on extra staff if it can be avoided. Some can be nothing but a pain in the a**e, and may even cost you money!

Been there, done that. Gerry

[wizard]

Re: Taking on another engineer/ VAT registration

Thanks Gerry.

[Author]

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