I work for a labour broker. Currently we invoice as follows:
Income sales code - full amount (i.e. R 50,000.00), and charge VAT on the full amount.
Of the 50k, about 40k is paid to employees as wages, 2k for UIF, PAYE etc., and only 8k is our service fee.
This makes our annual turnover and sales HUGE. Lots of VAT, and a very high turnover for B-BBEEE.
I want to know if this is the correct way to invoice. I believe the invoice should be as follows:
Liability account or expense account code/wages - 40k - no VAT
Liability account or expense account doe/emp201 - 2k - NO VAT
Sales income code - service fee - 8k (with VAT)
Received mixed views and opinions from several people on this... Any comments welcome.