February 16, 2011
New Businesses And VAT Requirements – Is It Neccessary
Should a new company opt for VAT registration There are several advantages and disadvantages for becoming registered for VAT. These pointers should help you to decide whether VAT registration is for your new company. While it should be noted in the UK, you can become registered at anytime, planning in advance can save a lot of hassle, and of course paperwork. A good accountant is always recommended as they will be able to cover these points when forming a new company and more.
What turnover are you projecting?Probably the biggest factor in deciding whether your new company should go VAT registered is what your new company’s projected turnover is. And not just for the first year- think long term over three years. 70,000 pounds is the current VAT threshold. If your new company is only going to be turning over 10,000 pounds or at best 20,000 pounds in a year, it might not be worth the paper work. However, if you are anywhere near the threshold, if you don’t hit it in year one, you are more than likely to hit it in year two. In this case, it’s best for a new company to go VAT registered from the very beginning.
Consider your client base
The client base you deal with is an important consideration for VAT registration. Many businesses will be expecting to be charged VAT. They are able to claim it back and does not cost them anything. The turnover of a company can say a lot. Some companies will only do business with VAT registered companies. On the reverse is the price conscious home user, who are unable to claim VAT. Being VAT registered may make you more expensive than competitors that aren’t VAT registered. With turnover you want to avoid having to change your pricing at a later date if you should become VAT registered.Accountant fees for your company
If your new company is short on cash, it’s worth considering being VAT registered means needing an accountant – a bill you could do without. You can perform your own VAT returns online. However the expert advice of an accountant is invaluable for a new company owner. All good accounts know what your able to claim back and can’t inside out. This is something that you might not know yourself.
Think about if you end up with a VAT inspection?
A good accountant is invaluable should a VAT inspection arise. The proportion of VAT billing
What are your outgoings and how much can you save from being VAT registered?
You did read it correctly, you are able to save money by being VAT registered! At the current time of writing, 17.5% on top of the price of the product or service is charged in VAT. You can not claim this back if your not VAT registered. But by being VAT registered you are able to claim this money back against any VAT you owe on the VAT return. Speak to accountants My points above are just some things to look at when registering your company. While the above advice should be beared in mind, its always recommended you seek the advice of a good accountant when setting up a company.
For assistance with company formations, check out Optimum Formations, who specialise in UK company formations.
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