As a small business, we don’t actually exceed the vat limit, but would like others opinions on this.
I understand you can voluntarily register for VAT - but is this recommended?
The way I’m seeing it at the moment (which could be completely wrong) is if I’m VAT registered, it suddenly makes me a lot cheaper for our clients who are also registered, in the way that the whole VAT on our stock is effectively passed on.
Have i got the right understanding of this? What do others think of voluntarily registering?
If you are B2c then wait till you have to vat register, if you are B2B then it makes sense to register now
I voluntarily registered around 8 years ago as most of my customers were commercial/business customers so I was instantly cheaper and I also invest heavily in plant and equipment so there are a lot of benefits there if you are VAT registered.
If I was just issuing invoices to customers in the private sector and didn’t really bother buying any tools ever then I wouldn’t even consider it.
I can certainly see the advantages. Majority of my clients are commercial, with only a few being small sole traders and not VAT registered.
Is it easy enough to account for and sort out? I just don’t want to register and end up it costing more than what it’s worth
The other reason I went VAT registered was that I had subcontractors working for me who were registered so I was losing VAT on that front as I had to pay the VAT inclusive amount to them but couldn’t claim the VAT back.
It’s a lot easier and simpler if you use a decent accounts/bookkeeping package, say Quickfile for instance!
As for costs, pretty sure it costs me the same to have accounts prepared either way.
If you dont have much vat to reclaim on your expenses / inputs then flat rate scheme can save you more money as well
It is worth looking at yearly VAT to take the stress out of quarterly declaration, you then have 2 months at the end to declare.