I hear this all the time from business owners:
- “I’m staying under the VAT threshold”
- “If I have to charge VAT my clients would go to my competitors”
- “There’s so much extra work I’ll have to do if I’m VAT registered”
My first reaction is why only limit yourself to only earn £85k? (this is the current VAT threshold).
Yes registering for VAT for some business owners is a big step, but you should look at it as a celebration that you’ve reached this important milestone. This is something you should definitely be proud of – you’ve hit a milestone in your business and now the world is your oyster!
Most business owners just focus on the fact that they will be charging VAT to their customers but also don’t forget that you will also now be able to reclaim any VAT on your purchases too (on the standard and cash accounting VAT schemes).
A few things to consider when you are nearing the VAT threshold:
- Too much extra paperwork? Not at all! By running your books in an online cloud accounting software it’s a doddle! Even more so if you outsource this to a bookkeeper/accountant. Plus your VAT return can be filed online too through the software
- But I may lose clients and have to rethink my prices?? Yes this may be something you have to think about but not in a negative way! Your loyal customers and clients will most probably be happy for you and it won’t make a difference to them if. They are also VAT registered. Even is a few clients go, the credibility of being VAT registered will increase your sales and your increased turnover will make up for any initial shortfall.
- o Working out your VAT liability is actually quite simple! Put simply, your VAT bill is the difference between the VAT you charge on your sales minus the VAT you receive from your business expenses.
If you need any help or advice on becoming VAT registered or which VAT method is best for you, then please contact us, we’ll be happy to help.