Pricing rounding

[L.H.M]

Hi all, I have a question about pricing. I buy items at trade price and sell at a markup. The purchase prices are down to the exact penny but they look odd on a quote after I have added the markup. Should I be rounding them up, for example I purchase an item at a cost of £10.34, then add 15% markup which then takes my sales price to £11.89, should I round it to £12.00 or leave it at the exact sales price? I’m also confused about VAT, I have read on here to exclude it from calculations but surely I need to include on a quotation? Any afvice appreciated, thanks

 

[g]

Should I be rounding them up, for example I purchase an item at a cost of £10.34, then add 15% markup which then takes my sales price to £11.89, should I round it to £12.00 or leave it at the exact sales price? I’m also confused about VAT, I have read on here to exclude it from calculations but surely I need to include on a quotation?

On rounding... either is ok and it's your choice. In the £12 example you'll do a 'backward calculation' to ensure that the appropriate amount of vat is charged/collected/remitted to HMRC.

On quotes... vat should be clear and hence shown as price + vat = total. Example: £100 + £20 vat = £120.

 

[Socio South West]

The one piece of information you don't give is your VAT status.

You will almost certainly be paying VAT on your items regardless of your VAT status.

If you are not registered for VAT you cannot reclaim the VAT element of your item purchases and you are effectively an end user. Your quotes therefore should not mention VAT and you should not be charging VAT on anything.

However, if you are registered for VAT your quotes should either show the VAT as a separately calculated element, or (the most common way) a clear statement that VAT at the prevailing rate will be added to the total. Your VAT registration details must be on the invoice, and preferably on the quote as well.

 

[L.H.M]

Hi as a contractor transitioning to small business I am on the flat rate scheme but about to make the move to the normal scheme. hanks so much for the information. I wish I’d have found this lovely community sooner