Do you need a VAT Number to sell to stores/wholesalers?

keepkeyyellow

Sorry if this has been asked before and it is possibly the 100th question about VAT but I'm currently looking into setting up a small business over the summer and am a bit iffy about registering as a sole trader and for vat.

Basically there's no way it'll earn over 5,000€ in a year but I'd be looking into selling the products to small stores. Would I need to be registered for VAT to do this ?

And also if I register for vat would I have to register as a sole trader ?

billybunty

keepkeyyellow wrote: »

Sorry if this has been asked before and it is possibly the 100th question about VAT but I'm currently looking into setting up a small business over the summer and am a bit iffy about registering as a sole trader and for vat.

Basically there's no way it'll earn over 5,000€ in a year but I'd be looking into selling the products to small stores. Would I need to be registered for VAT to do this ?

And also if I register for vat would I have to register as a sole trader ?

No you wouldnt need to be registered for vat to sell to them. You just dont charge vat.
If you were to register you would become a sole trader yes. To do this you would fill in tr2 (maybe tr1) , with revenue and submit.
If you were trading under a business name other than your own bame you'd have to register that with cro first for €20.
Hth

dbran

Hi

If your income from the venture is less then about €3000 then you do not have to register for self assessment but you woudl be obliged to file a return in October (Form 12).

You definately do not have to register for VAT.

However if you are looking to sell into large stores, you would presumably be trying to show that you are here for the long haul and that you are an established business. You also don't want to be giving away your hand by showing that you are a small business with less then the threshold amount of turnover.

Going in without a VAT number may give the wrong impression to a potential buyer and may damage your chances. You can always deregister afterwards if you need to.

Regards


dbran

MOH

You don't need to be VAT registered, but you may be uncompetitive unless you are.

e.g.
Not VAT registered, you want to make 50% profit:
You buy for €100, plus 23% VAT, so €123.
You set your selling price as €184.50 (no VAT).

If you sell to a business, it costs them €184.50.
You make €61.50 profit


To make the same profit VAT registered:

You buy for €100, plus 23% VAT, so €123.
You sell for €161.50, plus 23% VAT (€37.15), total €198.65.
You remit the €14.15 VAT (€37.15, less the €23 you paid).
Your profit is €198.65 - €14.15 (VAT remitted) - €123 = €61.50.

Your customer pays you €198.65, but since they're also VAT registered, they'll offset the VAT element (€37.15) of that against the VAT they charge on the sale, so it effectively only costs them €161.50 (€23 cheaper than the first example).


On the other, hand if you're also selling to non-VAT registered customers (e.g. small business or the general public) you're now charging more to make the same profit, so are less competitive there.

The key question is, will the majority of your customers be VAT registered or not.

(I'm not quite with it today, so someone may want to check those figures, but that's my understanding of it)

TheCostumeShop.ie: Ronan

Small stores are all Vat registered and the prices quoted B2B are always ex Vat. So to the buyers VAT is irrelevant, with the exception of maybe ego or showboating, now days small stores like to support the little guys anyway. So it wont affect their profit margin in any way, if they pay Vat they will claim it back.

The only advantage is on purchases, at under 5,000 im guessing it might be something like selling firewood etc. However if you have to buy stuff to either make the product by registering for VAT you can claim this VAT amount back. IE vat on a computer to email people etc. The decision is at under 5k is reclaiming the vat on purchases worth the effort of registering and filling returns.