Are any of you VAT registered and do you adivse to be?

[judithbl]

Hi

Just wondered if any of you are VAT registered and is it worth becoming registered as a small business with low turnover?

Thanks

Judith

[Ravenfire]

TBH Judith I thought you had to earn over a certain threshold before you could be VAT registered, although I could be wrong!

[Bunny]

I'm pretty sure the threshold is around £59,000, if you go over that and expext income to remain high you should be VAT registered, otherwise I would not recommend it as it could be too much hassle for you.

[Ravenfire]

Yes I was just looking on a business forum I go on and they mentioned the new threshold is £60,000

[Bunny]

from 1st April 2006 it is £61,000 (I wasn't too far out with my guess)

[judithbl]

Yes, but you can register under that and just wondered if anyone else was,

Thanks

Judith

[Bunny]

if your sales are under that limit and you know you are making a good profit on your sales you would end up having to pay VAT over to the b*****d VAT man all the time

[judithbl]

Yes, it's probably as broad as it is long - the only things with VAT are the dolls clothes and taggies, but then I would save on stationery,advertisiing etc,

Judith

[funkydorydawn]

If you have lots of purchases on which you pay vat, then you may end up better off if you are VAT registered as you will be able to claim the VAT back.

My DP's business was VAT registered until recently - and as we don't have many purchases (his is business is service related), we ended up with big VAT bills to pay every quarter, and of course, we never put aside the VAT we were paid by our customers.

We use Sage software which calculates the VAT for you so it wasn't a problem administration-wise - it was only a struggle finding money for that extra bill.

You have to remember the VAT your customers pay you really belongs to the govt and not you IYSWIM.

dawn

[Daffs]

I'm not but my H is keen to talk me into it. I think the paperwork would be a drag and I don't earn enough to start paying the tax man yet..

[feistygal]

I've voluntarily registered as I'll be selling quite a few VAT exempt items - nappies, clothing, bibs etc and in the future possibly some on the lower rate.

For a while at least I'm expecting to get refunds due to input being way more than output!

[trogette]

If you sell to other VAT reg business that won't notice if you add on the VAT to your prices or mostly exempt stuff then it can pay to register, but it does increase your paperwork.

[judithbl]

Hmm....just bought some software so think I will set up as charging vat as an experiment to see if I would be charged lots or whether I would be better off.

It's really just the dolls clothes and Taggies that I have to charge VAT on - everything else doesn't have VAT as they are kids clothes.

Thanks for everyones advice
Judith

[Arianna]

Being VAT registered can create a lot of extra hassle - especially if you're just a small business. You will need to keep track of all the vat that you pay out and pay in (if you have software it should do this for you), you need to file returns every quarter, you need to keep your paperwork carefully filed in date order in case the VAT man wants to inspect you. It can be very hard sometimes to keep track of what you're doing etc and then you have to rush around like mad sorting it out. This is the case with one of my client's who is a rather large limited company - he's useless at filing things and by the time I get around to doing it for him he's stacked up month's worth and it's a nightmare.

Personally I see no point in becoming vat registered until you have. If you do become vat registered, you either have to make your prices include VAT and therefore not really making as much profit or you need to add VAT to your prices which could mean you aren't as competitive.

I hope that helps!

Arianna

[Lynne Webb]

We're VAT registered which allows us to claim all our VAT back and I must say during the early years its saved us by paying a few bills!

I would if I were you as the admin required in proportionate to your turn over. If you have a relatively low turnover, there's not a lot to be done.

Do it!

[swimstar]

I am a small business and have registered for VAT from the start. I sell nappies (zero rated like kids clothes) so can get the VAT back on everything I buy - Fax machine, stationery etc.

If you register you are allowed to claim back VAT on equipment that you are still using in the business even if it was bought up to 3 years ago. If your turnover and expenses are small its easy to keep track of your cash payments and receipts on a spreadsheet, then total them at the end of each quarter, that is what I'm doing!

Also for those of you that have to pay over VAT check out the governments "Flat Rate Scheme". You pay a lesser percentage of gross income, but do not reclaim anything, so is "cheaper" for some and it is easier to administer. - No good for us zero-raters though.