Hey, so I just recently registered my reno business and am very excited. I'm looking for some help tho in billing my customers for tax purposes and what not.
So basically my question is when billing a customer do I just write a receipt for them for my labour cost if they're getting material?
Also if I price out the material they need in my quote/invoice and they give me the money to buy it, would I put that on the receipt, or again would the receipt just be for my labour cost, since im not technically making anything off the material just getting it for them with there money?
This is where I am having a hard time finding an answer to. Any help would be greatly appreciated it.
From an accounting point of view, you should invoice your clients for the full amount that is due. Labor and material inclusive. this is your "revenue"
For tax purposes you can expense all materials and other expenses (gas, advertising costs, etc.) make sure your keep all your receipts.
at the end of the year your "taxable income" will be you revenue minus all your your expenses.
if you are registered as a sole proprietor, your earnings will be taxed as personal income.
make sure you set aside enough cash to cover your taxes at the end of the year, very important!
Best of luck with your company!
If you're ordering and/or purchasing material, then you should be marking it up. This is YOUR time you are spending. YOUR gas in picking it up. Whether you mark up your material separately from your labour, is up to you. But you need to make sure your markup covers your overhead.
You should always have a payment strategy with your customers. 40/40/20, or 10/40/40/10. It's up to you. Just make sure you collect enough ahead to purchase the materials with your customers money. If you use your own credit card, chances are you may not put that money back onto the card, then you're paying interest on their material.
Hope this helps.
Ok so basically I invoice the customer for material and labour if im picking up the materials? And if its just me doing labour then just labour cost for invoice correct? also so im understanding this I keep all the money the customer pays me and at the end of year or when I do my income tax? I pay it all back that is stuff like CPP and other stuff they normally take off? from experience how much should I set aside each time a customer pays me to cover thos cost at the end of the year thanks.
Yes for the invoicing you have it right, in regards to the amount it depends on how much you make in taxable income. for the rates check out: http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html
CPP and EI are contributions that employers make, you dont have to do this... however i do suggest you get an RRSP of something of that sort so that youre looking out for your future aswell...
It is a good idea to get an accountant at least for the first few times so that you are able gain the most out of your taxes.
So for invoicing customers for material say I need 50 sheets of drywall and they are $8.49 a sheet plus tax are like $9.60 on my invoice do I put full price of drywall including tax? Which would increase my total income by a lot if my labor cost is $500 and material cost is $1500 with tax included for a total invoice of $2000 do I just keep the receipts for the purchases of materials so it can cancel out the material cost at the end of the year so they don't say its $2000 you made when its actually $500 I made.
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