New Firms And VAT Requirements – Is It Advisable
Does a new company need to be registered for VAT
There are a number of pros and cons to registering for VAT. Hopefully these pointers should help you decide whether VAT registration is best when you form your new company formation. You can register for VAT anytime before you hit the threshold in the UK. A good accountant is always recommended as they will be able to cover these points when forming a new company and more.
What turnover is projected?
Probably the biggest factor in deciding whether your new company should go VAT registered is what your new company’s projected turnover is. And not just for the first year- think long term over three years. At the current time of writing, the VAT threshold is 70,000 pounds per annum. 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 this case, it’s best for a new company to go VAT registered from the very beginning.
Consider your client base
The client base you deal with for your new company formation scotland is an important consideration for VAT registration. Many businesses will be expecting to be charged VAT. They claim it back, so it’s of no cost to them. Turnover in many cases says a lot about a company. Some companies will only do business with VAT registered companies. While on the back you have the price sensitive home customer, who can’t claim VAT. Being VAT registered may make you more expensive than competitors that aren’t VAT registered. 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.
Accountant fees for your company
Chances are your new company formation england won’t be flush with cash – so registering for VAT might be a bill that you can do without. Performing your own VAT return can be done online. However the expert advice of an accountant is invaluable for a new company owner. 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.
What proportion of your bills charge VAT
What are your outgoings and how much can you save from being VAT registered? That’s right, you can save money from 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. Should you not be VAT registered, unfortunately you are unable to claim this back. But by being VAT registered you are able to claim this money back against any VAT you owe on the 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.
