VAT registration
hey i have got a question, if we get registered for VAT and than we need to collect VAT on our sales from the customers as well than our profits decrease as we have to include to include the VAT in our sale prices and if we increase the sale price to accomodate the VAT than due to high competition we wont be able to sale much. I am very confused as what to do. should i register for VAT or not. ??
5 replies
Seller_64jziShTiTjOq
Unfortunately, that’s the way it is! Only you and your accountant know enough about your business to decide whether or not you should register
Seller_esvgLzKXw2YAl
You don’t just register for VAT, unless you have to, or it is advantageous to.
A brief summary.
Firstly, you don’t need to register unless you are turning over 85k per year, or are storing stock in the UK and you are NOT UK based.
Vat is not as simple as you think.
Firstly, though you have to charge 20% extra on each sale, you also deduct the 20% you pay on the purchase. You also deduct the vat from any expenses the business has required, so in effect, you should be paying vat at around 14% or so.
There are also different schemes that can help.
However, I would strongly advise that you speak to an accountant about this before you do anything.
The below link gives you a better idea of what VAT actually is.
But for full information, you need to visit HMRC.
Seller_7VbclcPFFRTnc
Are you a UK based seller ?
Living here too ?
Seller_rGtEcZnu0JTRD
One factor to consider is what market you are selling to, if you sell to individuals then they can not reclaim the VAT so the price paid is the true price to them, however if you are selling to business then they re-claim the VAT so are effectively paying less, and this may increase your sales. Your expenses also then go down as you are re-claimimg VAT on all your purchases and expenses.
As others have mentioned VAT can be a minefield, whatever you decide make sure you do your research before jumping in.
