VAT Query?

[amadmin]

Hi

I am starting a small business but am not intending to be VAT registered.

I understand that I cannot charge VAT on any invoices to customers, however how do I handle VAT on purchases for example materials, stationery etc?

I am using Sage V11

Thanks
Craig

 

[Kent Accountant]

The VAT is just part of your cost. If you buy an item for resale for £10 + £1.75 VAT you just enter the total of £11.75 to cost of sales. No need to split out the VAT on any of your costs. Watch the VAT registration threshold of £61K

 

[amadmin]

Thanks for that prompt response!

Regards
Craig
www.amadministration.co.uk

 

[Jonathan9]

If you find you are buying a lot of supplies (or supplying items which are expensive like computer hardware etc), it may be worth VAT registering so you can claim it all back.

VAT isn't complex at all, a good accounts, or even spreadsheet, makes it easy, 4 returns a year, put in one box VAT you charge your customers, and other what you spend on outgoings, and that's it!

 

[Kent Accountant]

If you find you are buying a lot of supplies (or supplying items which are expensive like computer hardware etc), it may be worth VAT registering so you can claim it all back.

It's only worth registering when you are under the threshold if all, or most (but then you need to do the calculations), of your clients are VAT registered and able to reclaim the VAT you charge them

 

[Jonathan9]

Good point

Therefore if you are under the threshold and most of your clients are end-users and not VAT registered, it's not worth registering, otherwise your prices will increase by 17.5% to the end user.

However if you serve and sell primarily to businesses, VAT registation will be worthwhile.