Buying materials on behalf of customers

NeptunesMoon

Im wondering about this part of the business, hope to get a bit of help. I am wondering what the situations is with buying materials on behalf of my customers from the supply shop as part of a job. For example buying decking at the suppliers, with my own cash, then getting that cash back off the customer - I won't be addin extra to the price to make extra profit :eek: or any of that carry on, just be takin the cash from them to save them the trip, to give them an overall better service basically.

So I go to the suppliers, buy the materials, deliver and assemble the materials and just charge for delivery and assembly give them the receipt of the materials in case they need it. Wouldnt be a problem with doing that would there?

cheers

NeptunesMoon

dbran wrote: »

Hi Neptunesmoon

If you can get the receipt from the supplier to be made out to the customer I suspect that it would be fine.

But if you have an account with the supplier and they invoice you the goods you will then need to invoice the customer for the goods.

If the materials are more then 2/3 of the sales invoice then VAT is at 21% if it is less then 2/3 VAT is at 13.5%.

Kind Regards

dbran

Thanks for the reply mate. Can I ask you, what's the situation in places that just do it off the till like a small DIY shop or Ikea etc?

cheers

Lorelei

Bill the customer the same net as you paid charge him 21.5% VAT which will be the same as you paid. Most labour intensive industries charge 13.5% VAT check with the VAT man if you come under that. It is this last part i.e. VAT you charge extra that you pay.
The 2/3rds bit applies to C2 registration once again check with the revenue if you need C2 registration.

NeptunesMoon

just coming back to this as stilla bit unsure..

the whole 2 thirds thing is confusing

say if I do a job for Mr Adam, he wants me to do a service which I charge him 200eur for, but needs 800eur of material. I pay for the material from my laser.

is it ok to just write on my invoice

service cost xx + 13.5% vat = 200

then separately on the invoice put down cost of goods 800eur and give them the receipt for 800eur and I have the note of goods written in my invocie book, or do i need proof of purchase? is laser transaction with shop name enough?

will the vat % change then if I have service cost 200eur and goods 80eur?

ssbob

NeptunesMoon wrote: »

just coming back to this as stilla bit unsure..

the whole 2 thirds thing is confusing

say if I do a job for Mr Adam, he wants me to do a service which I charge him 200eur for, but needs 800eur of material. I pay for the material from my laser.

is it ok to just write on my invoice

service cost xx + 13.5% vat = 200

then separately on the invoice put down cost of goods 800eur and give them the receipt for 800eur and I have the note of goods written in my invocie book, or do i need proof of purchase? is laser transaction with shop name enough?

will the vat % change then if I have service cost 200eur and goods 80eur?

I understand that you are not charging any mark-up on the materials however you are buying them so therefore they are yours to sell. Then because you are being charged 21% on the material ie your total is €661.16+€138.84VAT giving you €800 you will have to put the following on your invoice:

• Materials and labour supplied €837.37 @ 21% due to 2 thirds rule €175.85 giving you a total of €1,013.22

I can see your problem in that you want to be able to give people the cheapest price possible, but this the way it has to work unless you get your customers to actually physically go in and pay for the items.

NeptunesMoon

cheers for the reply. in the case that im not actually buying the goods with my money, say the customer puts the exact sum into my bank and then i use that money to buy the goods with the account laser card, does that change things?

The Apprentice

What happens when u purchase for someone and have a surplus of 100 euro of stock, returns, hassle, etc etc.. ?? Your out of pocket !!

What happens if you do a larger order of lets say €5000 and there is a bereavement and the job is stalled for 3 weeks, ? Can u afford this on your credit card, will u charge extra for the payments, if you cant return the goods your stuck with it.

Trust me, i have heard a dozen stories of hardship and pain on the above subject, you either create an account with the supplier and charge the customer cost where you can claim the vat back and make a little extra for those hiccups OR, u let the customer buy what u desire.. no ifs or buts.

Its not something i,d even suggest, because its a pain in the hole. I think fair play you want to get good value for your customers well then thats fine, but your eventually going to lose out on this in the long term. Some good advice would be either to utilise option A or just to let them handle the pain in option b

ssbob

One of my clients is a carpenter and he explains both options to the customers beforehand and lets them decide what to do, think thats the road you should head down!