Small business...... should I charge VAT ?

[Sam James]

I will be selling greetings cards soon and I am wondering about charging VAT to look more professional as apposed to not and looking like a small business to people or would my clients think is fairly usual a small greetings card supplier would not charge VAT from the outset, I wont run into takings that would make charging VAT compulsory for some time.

Thanks for any help
Sam

 

[WaveJumper]

People generally except paying VAT as one of the necessary evils when buying goods and services, but for some also to be avoided were ever possible. However this is not your issue, how do your retail prices compare to those your competitor s are they charging VAT. There is many a thread on the forum where people ‘thought’ they had a good business going until they did reach the VAT threshold only to find either suddenly adding the VAT to their products made them to expensive and they couldn’t absorb the hit as they could not produce the item then at a profit.

Don’t forget it works both ways whatever you are buying that includes VAT you will be able to offset. Is this business just going to be a smallish side hustle or are you planning for bigger and greater things I would check out the competition, check your own pricing and profit margins how would you compare adding the extra 20%

 

[Mark James]

I think wondering whether you should be charging vat is the real issue here - who buys greeting cards anymore would be my worry.

 

[HFE Signs]

If you're B2B then yes, if you're B2C then avoid until you reach the vat threshold.

 

[japancool]

Remember - to charge VAT, you must register for VAT!

 

[Sam James]

People generally except paying VAT as one of the necessary evils when buying goods and services, but for some also to be avoided were ever possible. However this is not your issue, how do your retail prices compare to those your competitor s are they charging VAT. There is many a thread on the forum where people ‘thought’ they had a good business going until they did reach the VAT threshold only to find either suddenly adding the VAT to their products made them to expensive and they couldn’t absorb the hit as they could not produce the item then at a profit.

Don’t forget it works both ways whatever you are buying that includes VAT you will be able to offset. Is this business just going to be a smallish side hustle or are you planning for bigger and greater things I would check out the competition, check your own pricing and profit margins how would you compare adding the extra 20%

Thanks Wave, this is a new product in the greetings card market its a card that folds to a 3D playable toy. I have orders coming in well and yes I am pricing it as a die cut printed card which in the small beginning runs turns an ok margin as it is but if I go to bigger print runs and lazer cut my costs will come right down again. So on the invoice for now I wont charge VAT and just put "VAT N/A", or "Not VAT registered" by the total?...Thanks again

 

[japancool]

So on the invoice for now I wont charge VAT and just put "VAT N/A", or "Not VAT registered" by the total?

No. You don't put anything.

 

[DontAsk]

So on the invoice for now I wont charge VAT and just put "VAT N/A", or "Not VAT registered" by the total?...Thanks again

Don't mention it al all.

 

[Banksbroo]

In your market, if you are going for a mix of direct-to-end-user and trade sales I wouldn't become VAT registered just because it makes you look like a bigger company. If your expected sales value in the first year is under £20k, I'd just take the hit on the VAT element in production costs, and factor it into my (non VAT) sales price. If this is a side-line for you, keep it simple, and keep proper accounts. If it's a core businesses, do what you do best, get reliable suppliers and keep proper accounts! Best of luck.

 

[japancool]

My advice - price your offering as if you are VAT registered, and enjoy the extra margin while it lasts. That way, when you reach the threshold, you won't have a sudden shock because you won't need to increase your prices by 20%.

 

[GBLE LTD]

I agree with @japancool. If you are planning on making this a proper enterprise it would be better to start planning for things now. Price changes can scare off customers.

 

[Paul Kelly ICHYB]

My advice - price your offering as if you are VAT registered, and enjoy the extra margin while it lasts

Yup - too many businesses fall over at this point, when they hit the threshold.