VAT issue for home business
- Thread starter gg_dagg
- Start date
You don't need to register for VAT until you go over the annual turnover threshold (around £55,000)
Most businesses are better off not registering for VAT until they have to (though there are some exceptions)
My tip would be, if selling to consumers, price up your goods/services as if you are paying VAT, so your customers dont suddenly get a price hike when you register for VAT, and you get to be extra profitable when just starting out
Most businesses are better off not registering for VAT until they have to (though there are some exceptions)
My tip would be, if selling to consumers, price up your goods/services as if you are paying VAT, so your customers dont suddenly get a price hike when you register for VAT, and you get to be extra profitable when just starting out
Upvote
0
B
BMS
Hi qq_dagg
As Top Hat says there are no VAT issues until you reach the turnover threshold (actually £58K) so you doon't have to worry about it until you get close to that.
If you mainly deal with LTD companies it won't matter to them if you are charging VAT as they will offset this against their tax liability anyway.
There are pro's and con's for vat registration or more specifically flat rat vate registration as you pay less to Custums than you charge to your clients hence the difference is an increase in profit margin
As Top Hat says there are no VAT issues until you reach the turnover threshold (actually £58K) so you doon't have to worry about it until you get close to that.
If you mainly deal with LTD companies it won't matter to them if you are charging VAT as they will offset this against their tax liability anyway.
There are pro's and con's for vat registration or more specifically flat rat vate registration as you pay less to Custums than you charge to your clients hence the difference is an increase in profit margin
Upvote
0
G
gj
Not sure I agree with some of the posts here - may just be terminology
If you deal mainly with VAT registered businesses then you would be better off registering voluntarily before you hit the registration turnover.
If you deal mainly with consumers, as one of the posts suggests, then they cannot recover the VAT so it is best not to register until you have to. Also as stated is is best to charge consumers the full price from the outset so there is not a price hike when you register and you make the extra profit in the meantime - though if you can charge £117.50 as it is the market price, I guess you wouldn't just charge £100.
Graham
If you deal mainly with VAT registered businesses then you would be better off registering voluntarily before you hit the registration turnover.
If you deal mainly with consumers, as one of the posts suggests, then they cannot recover the VAT so it is best not to register until you have to. Also as stated is is best to charge consumers the full price from the outset so there is not a price hike when you register and you make the extra profit in the meantime - though if you can charge £117.50 as it is the market price, I guess you wouldn't just charge £100.
Graham
Upvote
0
Upvote
0
B
BMS
Just to throw another thought into the pot.
Is this a VAT issue or a profit margin issue, if it is the latter and your prices are set to be as competitive as possible then adding VAT will cause you an issue, obviously a 17 1/2 % price increase (assuming your goods attract standard rate) will have an effect on any possible profit margin.
However if this is purely a VAT issure, ie do register or not to register then maybe you could also consider flat rate scheme.
If your input tax is predicted to be quite low then you may actually be better of with this shceme as you are assigned a flat rate perecentage depending on your business. This may be only as high as 13.5 percent and hence you will gain.
ie you charge your customer net + 17.5%
and you pay 13.5% of gross to Customs
charge £10 + £1.75vat = £11.75
pay customs £11.75 x 13.5% = £1.59
margin on VAT alone = £0.16
However it dependson the type of business you are in as to whether you would be eligible.
Is this a VAT issue or a profit margin issue, if it is the latter and your prices are set to be as competitive as possible then adding VAT will cause you an issue, obviously a 17 1/2 % price increase (assuming your goods attract standard rate) will have an effect on any possible profit margin.
However if this is purely a VAT issure, ie do register or not to register then maybe you could also consider flat rate scheme.
If your input tax is predicted to be quite low then you may actually be better of with this shceme as you are assigned a flat rate perecentage depending on your business. This may be only as high as 13.5 percent and hence you will gain.
ie you charge your customer net + 17.5%
and you pay 13.5% of gross to Customs
charge £10 + £1.75vat = £11.75
pay customs £11.75 x 13.5% = £1.59
margin on VAT alone = £0.16
However it dependson the type of business you are in as to whether you would be eligible.
Upvote
0
B
BMS
Hi Blacksheep
You might need to give us a little bit more information on the size of the business and the number of employees.
Not sure about the cost of payroll software but depending on the number of employees and the costs involved it might be cheaper to outsource the payroll side to a payroll bureau (sorry thats a bit of an indirect plug but it might be prudent to think about it)
There should be loads of accounts software advice here just keep watching.
You might need to give us a little bit more information on the size of the business and the number of employees.
Not sure about the cost of payroll software but depending on the number of employees and the costs involved it might be cheaper to outsource the payroll side to a payroll bureau (sorry thats a bit of an indirect plug but it might be prudent to think about it)
There should be loads of accounts software advice here just keep watching.
Upvote
0
If you are going to be running a company with 27 employees I would get someone else in to look after the payroll unless you are well up on legislation and will definately have enough time in between all the other activities that you will need to carry out. It may be worth getting someone in part time who can do the book keeping and payroll or if there isnt enough hours available for someone to do then outsource it to someone like BMS.
Upvote
0
B
BMS
Blacksheep
Would have been as easy to ask me direct rather than post the above link.
We are Business Management Solutions (UK) Ltd
You can get an idea of what we do by following the link in our URL, but to save you time we specialise in bookkeeping and payroll solutions for small companies and sole traders
We were incorporated in December 2004 and you can carry out a registration search by visiting companies house website.
If you require any more information please feel free to PM me.
Would have been as easy to ask me direct rather than post the above link.
We are Business Management Solutions (UK) Ltd
You can get an idea of what we do by following the link in our URL, but to save you time we specialise in bookkeeping and payroll solutions for small companies and sole traders
We were incorporated in December 2004 and you can carry out a registration search by visiting companies house website.
If you require any more information please feel free to PM me.
Upvote
0
Black sheep
Ewe obviously have to be careful about choosing suppliers to rely on. But usually on here its not like leading a lamb to the slaughter, I'm sure that Paul (BMS) will not fleece you. Just send hima PM and he will supply you with all info you need.
My light hearted relief to the end of the day. I just couldnt resist it...........Sorry
Ewe obviously have to be careful about choosing suppliers to rely on. But usually on here its not like leading a lamb to the slaughter, I'm sure that Paul (BMS) will not fleece you. Just send hima PM and he will supply you with all info you need.
My light hearted relief to the end of the day. I just couldnt resist it...........Sorry
Upvote
0
Latest Articles
-
Should you crowdfund? A framework for UK founders in 2026Three articles into a series on what crowdfunding actually costs, the...- Ozzy
- Updated:
-
The polls, the reframing, and the billion dollarsHow three letters from the early years of Star Citizen's development...
- Ozzy
- Updated:
-
The values trap: what the Punks actually ownedWhy BrewDog's Equity for Punks investors were structurally locked out...
- Ozzy
- Updated:
-
When belief is the business modelWhat BrewDog's collapse and Star Citizen's billion-dollar climb are...
- Ozzy
- Updated:
-
AI, Virtual Influencers and the Copyright Minefield: What Entrepreneurs Need to KnowI'll be upfront: this article was written with the assistance of an AI...
- Ozzy
- Updated:
