If you turnover less than £85,000 you don’t have to register for VAT. Many choose not to seeing it as an unnecessary admin and tax burden, but you should at least consider it as registering for VAT can be advantageous.
Your cashflow, a key metric for any good business, could see an uptick. If all of your customers are VAT registered, or you only make zero rated supplies, then you can recover the VAT incurred on business expenditure.
Many forget that you can also reclaim VAT on pre-registration expenses for four years for goods and six months for services. And you can backdate your registration by four years; potentially allowing you to recover the VAT on your start-up costs.
Working out when you hit the threshold for registration, £85,000, is tricky and easily forgotten by many a business. Registering beforehand mitigates the risk of being penalised and the administration issues that would arise from going through historic records and amending for any VAT.
And finally, it can be good for marketing your business. If you are pitching against established businesses for work, being registered for VAT can make you appears more established and larger than you are at that moment.
If your business isn’t registered for VAT, it’s hugely important to plan ahead prior to hitting the threshold and to ensure you’re not missing out on any benefits that may flow. If you want to focus on your business and not worry about your VAT, you probably should get in touch with an accountant who likes tax.
Find your local AIMS Accountant today.