Originally Posted by
Paddy
Not quite.
A lot of small businesses I know steer away from the threshold that requires you to go over to being VAT registered. some smaller businesses actually start up seperate companies to avoid paying it -or rather to avoid all the issues that arise [all quite legally].
thats what im looking at, i have an accountant but didnt want to bother them with initial thoughts....
Vat registration is quite simple
Non Vat Registered:
You buy an item for £10+vat - you pay £11.75
You sell an item for £100 - you make £88.25
You Buy diagnosis equipment of £30+vat = £34.25
Total Profit = £100 - £34.25 - £11.75 = £54
Vat Registered:
You buy an item for £10+vat - you pay £11.75
You sell an Item for £100 - You pay vat of £14.89
You Buy diagnosis equipment of £30+vat = £34.25
Vat you pay to the taxman: £14.89 - £1.75 - £4.25 = £8.89
£100 - 30 - 10 - 8.89 = £48.89
You will be slightly worse off - however it is something any growing business has to take into account - unless you sell b2b like we do, in which case you simple write +vat on all of the quotes lol
maybe worth the hastle for the difference...