[RSWindows]

Input as to what advantages/dissadvantages are when VAT registered please...

What expenses can be reclaimed....tools...vans...poles...WFP...Fuel

Dont know if i would be better vaulenteering for VAT registration just now of just wait till i reach the maximum threshold

comments please...

Colin.

[Pristine Clean]

Well,

We are VAT registered. There are good points and bad points. But the bad point can also be good points, depending on how you look at it.

Anything you buy for the business, that has VAT on you get to claim it back..

But every 3 months you have to have your books upto date and submit your VAT RETURN along with the money you owe. Thats the bad bit. But it good as our books are upto date all the time.

If you work in the commercial sector.. they will love you if you are VAT registered. If you work in the domestic feild, no they wont as VAT yu will be 17.5% more expensive.

Get  a seperate account and put thae vat in there and do not spend it.

You also cannot think you can spend the VAT monies as the HMRS want it.. if your late you get a warning then a fine then get de registered.

Hope it helps


Dave

[RSWindows]

thanks!

[Mick (UHPS)]

You may want to look into the flat rate VAT scheme.

Its ok up to around £100K turnover excluding VAT
You collect VAT in at 17.5%
You then pay VAT at a flat rate probably about 10% (-1% for your 1st year) on everything.
You can only claim VAT expenses on items over £3k

More info here http://www.hmrc.gov.uk/manuals/bimmanual/bim31585.htm

[RSWindows]

yeah thanks for that, i was just looking into the flat rate scheme yesterday and it looks the most viable option, however i will speak to my accountant see what they think (just in case)

[Mick (UHPS)]

It does depend a lot on your business.

If you do mostly VAT registered commercial work then its no problem as you will be able to add the VAT and they can claim it back.

If you do mostly domestic work then it is a problem. You either have to start adding VAT to your charge, which may cost you some customers especially in the current climate, or absorb the cost yourself.

If you have a 50 50 split Dom/Com you can calculate how much extra you would get from Commercial and then work out how much you would pay out on the total income.

I calculated if you are close to the VAT threshold and your business is 50/50 based on income, you add 17.5% for commercial and leave existing domestic (you pay the vat). You would just about break even.

Have you considered having 2 businesses?
Commercial paying Vat
Domestic Non Vat
It is possible in certain circumstances and could buy you some time.

[RSWindows]

you hit the nail on the head to be honest with you.

Im incorperating other services into the RSWindows business at the minute but i think im going to set up a parent company "RS-Services" which will work like a "holdings" company and have smaller branches that specialize in specific departments (RS-Windows, RS-Guttering" etc)

[niceandclean]

I would be careful splitting the two businesses, ie domestic and commercial. If you have two sole trader businesses HMRC will view this as a single business (ie you, the self employed trader) and will expect you to account for VAT on all your turnover. If you want to split the businesses, at least one will probably have to be a Limited Company, as the HMRC will probably see this as tax avoidance. Speak with your accountant.

[RSWindows]

no, no what i meant was Window cleaning is a single business and gutter cleaning etc will have specific business identification and accounts. It is perfectly legal and provided i dont own/operate them (alone) then its fine.
But yeah i will clarify this with acountant

[Ian Rochester]

I wouldn't recommend registering for VAT until you need to, generally the only types of business who do this are exporters who pay vat on their purchases but don't get vat back from their exported sales.

For a window cleaning business flat rate is the way to go and you can stay with it up to £185,000 turnover.  The primary reasons for being flat rate are your costs are pretty low in comparison to your income and you can still claim the VAT back on purchases over £2000. 

You charge your customers vat at 17.5%, you only pay the vatman back 10%, only downside is you can't claim vat back on smaller purchases, fuel, equipment etc, but the 7.5% difference should still work very much in your favour.

Finally the best reason is that it is very, very simple to do.

Do a calculation on your last 6 months figures and see if you would be better off flat rate or standard rate vat.

[WavieDavie]

Hope I'm not too late . . .

Investigate combining the Flat Rate with the Yearly Scheme - there's a joint application form for that somewhere on the site. It's much better for cashflow if you don't trust yourself to keep the vat element of your takings separate for three months at a time, as you pay a tenth of the estimated vat for nine months with a balancing final payment.

PLUS
There's been a 1% drop in most flat rate classifications until the vat rate goes up again in December09/January10