did you know...

….you can be more profitable as a business by registering for VAT?

In our view, if you are selling to the public, then you should avoid VAT registration until your sales exceed the level where this is required, currently annual sales above £68,000. Registering early in this case would either increase your prices by 15% or lower your profits if you absorb the rise. In either case, you would be less profitable (except where you had very large costs where the VAT could be recovered – but this is unlikely).

If, however, your customers are other businesses, it is likely that they will already be VAT registered and therefore able to reclaim the VAT you charge them on your sales. This means your prices remain unaltered leaving you with the benefit of lower purchases due to be able to reclaim the VAT charged to you by many of your suppliers. The result is lower costs to the business, meaning greater profits – the trade off is having to record your sales and purchases in a more detailed manner and to prepare VAT returns to HM Revenue & Customs. If this is your only concern, then please contact us about a bookkeeping service.

Inca helps its clients decide whether registering for VAT is beneficial and if so, holds their hand through the registration process and preparing their first VAT return in a way that means they can do so in future. The initial advice is free so if you’d like some guidance as to whether registering for VAT would benefit you and your business, please feel free to get in touch on 0845 644 3579.