Should a new company opt for VAT registration VAT registration comes with a number of pros and cons. Hopefully these pointers should help you decide whether VAT registration is best when you form 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 recommended as they can talk over the advantages and disadvantages.
What is the projected turnover The projected turnover is above all the biggest factor in deciding whether a company needs to go VAT registered. VAT registration is mostly decided by turnover. And not just for the first year- think long term over three years. The current VAT threshold is 70,000 pounds. At the level of 20,000 pounds, VAT registration might not be worth considering. 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 such a situation, it saves lots of time registering for VAT from the beginning.
Consider your client base
One reason for VAT registration is your client base. Consider a lot of businesses expect to be charged VAT. They are able to claim it back and does not cost them anything. Turnover in many cases says a lot about a company. Companies may choose to only do business with those which are VAT registered. While on the back you have the price sensitive home customer, who can't claim VAT. By being VAT registered it can make you more expensive than non registered competitors. As above with the turnover, you really don't want to have to up your prices because you become VAT registered further down the line. Fees for accountancy
Chances are your new company won't be flush with cash - so registering for VAT might be a bill that you can do without. It is possible to do your own VAT returns online. Although expert advice from an accountant is invaluable for new companies. Your account will know the rules of what you can and cannot claim back. Something that yourself will not be sure of.
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. However, as a VAT registered company, you are able to claim this back against whatever VAT you owe when you do a VAT return. Speak to accountants The above are just a few points to consider when registering a new company. The above advice should be kept in mind but it is always recommended to seek advice from an accountant when dealing with company formations.
What is the projected turnover The projected turnover is above all the biggest factor in deciding whether a company needs to go VAT registered. VAT registration is mostly decided by turnover. And not just for the first year- think long term over three years. The current VAT threshold is 70,000 pounds. At the level of 20,000 pounds, VAT registration might not be worth considering. 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 such a situation, it saves lots of time registering for VAT from the beginning.
Consider your client base
One reason for VAT registration is your client base. Consider a lot of businesses expect to be charged VAT. They are able to claim it back and does not cost them anything. Turnover in many cases says a lot about a company. Companies may choose to only do business with those which are VAT registered. While on the back you have the price sensitive home customer, who can't claim VAT. By being VAT registered it can make you more expensive than non registered competitors. As above with the turnover, you really don't want to have to up your prices because you become VAT registered further down the line. Fees for accountancy
Chances are your new company won't be flush with cash - so registering for VAT might be a bill that you can do without. It is possible to do your own VAT returns online. Although expert advice from an accountant is invaluable for new companies. Your account will know the rules of what you can and cannot claim back. Something that yourself will not be sure of.
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. However, as a VAT registered company, you are able to claim this back against whatever VAT you owe when you do a VAT return. Speak to accountants The above are just a few points to consider when registering a new company. The above advice should be kept in mind but it is always recommended to seek advice from an accountant when dealing with company formations.
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For guidance with company formations, check out Optimum Formations, who expertise in UK company formations.