Income Tax expense, Client expense & VAT

A

artdes

Registered User
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I am currently completing accounts as a Sole Trader and would like to clarify if I am correct in calculating an expense as per the following example.

Just say I purchased paint and tile samples for a client project, paid for on my credit card for €200. Say my fee is €1000 and I invoiced client for fee + expense = 1200.

When completing my accounts I input the credit card payment of €200 as an expense against my income. AFAIK I should then input the entire €1200 as income received due to the fact that I have already claimed the €200 as an expense?

I have also recently registered for VAT, so given the above scenario should I invoice client for VAT on fee only as I am already claiming VAT refund on 200 expense?
i.e. my invoice should read?
Fee 1000.00
VAT 230.00

Sub Tot 1230.00
Expense 200.00
Tot 1430.00
Is this correct?
The above may be basic to most but I would like to get this right in my head!

Thanks
 
If in the construction sector (painting/tiling) You need to follow the 2/3 rule and in this case labour is greater than 2/3 therefore you should bill the whole job at 13.5%. For your accounts you would show the net income and the net expense. Does this answer your question?
 
Thanks NumbrCrunchr. I am actually in the service industry, I was carrying out a design proposal for a client and my VAT rate is 23%. Does this change your advice?

Can I take it so that the entire job is billed at 23%.... or fee only? So I can claim this expense against my income tax even though the client has reimbursed me for it? I would have thought that expenses like these which are not part of the everyday running of my business could not be claimed for?
 
A very, very simplified version of your business is:-

Your paint and tile Samples cost you €200.
That was a Gross amount Goods(net) €163 and VAT @ 23% €37 =Total €200
(yes I know, the amounts are rounded for demonstration purposes only!;))
So you invoice your client:
Fees €1000
Samples €163
NetTotal €1163
VAT@23% €267
Gross Total €1,430

Your Income is: €1163
Your Expenses are: €163
Your Profit is €1000

Your VAT Return is
VAT Collected: €267
VAT Paid:€37
VAT Due to Collector General: €230
 
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