Taxes are a big part of small business, and understanding them is essential if you’re going to avoid sleepless nights and last minute panics. In a previous blog we shared our insider tips on reducing your tax spend (have a read of it here). This week we’re focusing on VAT and helping you answer the ultimate VAT question... “Should I be VAT registered?”.
When you’re busting a gut running your business it’s important to be mindful of the VAT threshold. After all, VAT registration liability is based on turnover rather than profits you may not immediately ‘feel’ your business clipping the threshold.
In the early years of a business just trying to make a profit can lead areas such as VAT to be ignored… However, if it’s only just occurred to you that you might need to be VAT registered don’t delay! You could incur penalties and become liable for VAT that you’re too late to charge your customers.
How do you identify if you’re nearing the VAT threshold? Here are two simple tests:
1) At the end of every month look back 12 months. If your turnover in the last 12 months or less has reached £83,000 then you are likely to be required to register for VAT.
2) If in the next 30 days you know your ‘taxable’ turnover is going to exceed £83,000 then you are highly likely to need to register for VAT.
Could you benefit from being VAT registered?
Even if you don’t reach the VAT threshold many businesses can still benefit from being VAT registered. If any of the following apply to you your business you may want to check with your accountant whether you’d be better off being VAT registered.
Here at the Chichester Accountants we work with a range of business owners, both VAT and non-VAT registered. If you have any queries about whether your business should be VAT registered we’re always happy to help. Give us a call on 01243 532490, or email email@example.com.
This blog was written by Monica Jervis, small business owner, founder of the Chichester Accountants and qualified accountant. If you’ve got any questions don’t hesitate to get in contact on Twitter, Facebook or Google+.
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