Registering for VAT worthwhile if...

EIREHotspur

...I am going into Tech Business....Photography, Videography etc and will be buying a lot of Tech Equipment such as Cameras, Laptops, Sound Equipment etc.

I will be quiet a bit under 37k threshold the first year I'd say.

Thing is it would be really worthwhile for me to register and claim back the VAT on all the Tech Equipment.

Worth the hassle of VAT Bookkeeping?

Gloomtastic!

If you're dealing primarily with Joe Public, and you are going to stay under the 37k limit then I would say no, don't register.

VAT is currently 23%. That's 23% you have to add to your fees which might make you uncompetitive, or alternatively, it's 23% profit you have to give away with every transaction.

However, if you are dealing primarily with other businesses, then adding the VAT shouldn't be an issue. And the rebate may help your cashflow.

If you think you are going to hit the 37k threshold near the end of your first year, or early in your second year then you should register well in advance.

rovoagho

I agree. VAT is a distraction for a small business, the only reason you'd need it at the outset is if you're dealing with businesses that insist upon VAT receipts.

DubTony

Gloomtastic! wrote: »

If you're dealing primarily with Joe Public, and you are going to stay under the 37k limit then I would say no, don't register.

VAT is currently 23%. That's 23% you have to add to your fees which might make you uncompetitive, or alternatively, it's 23% profit you have to give away with every transaction.

However, if you are dealing primarily with other businesses, then adding the VAT shouldn't be an issue. And the rebate may help your cashflow.

If you think you are going to hit the 37k threshold near the end of your first year, or early in your second year then you should register well in advance.

EIREHotspur, considering that your business doesn't require regular ongoing purchases of supplies, I'd be careful with Gloomtastic!'s strategy of pricing your service at a price that doesn't reflect VAT.
This is ok in a retail environment where the VAT on your purchases isn't reclaimed and so is effectively represented in the retail price when you add your margin and so keeping prices close to competitors.

A service provider who charges at a reduced rate because he doesn't have to charge VAT, can find himself having to increase prices suddenly and drastically as he reaches the threshold and has to register. The very act of "being cheaper" can be the reason you have to register sooner, and so would effectively wipe out your advantage.

I would be of the opinion that you can use your non vat status to increase your profits until such time as you have to register. The increased profits should be looked at as further financing, or to allow you to take something from the business at a time when you may not normally do so.
But it must be kept in mind that it's temporary and will eventually disappear when you register for VAT.

And VAT book-keeping isn't really a hassle in a business like the one you propose. A simple spreadsheet can look after it for you quite effectively.

Gloomtastic!

DubTony wrote: »

EIREHotspur, considering that your business doesn't require regular ongoing purchases of supplies, I'd be careful with Gloomtastic!'s strategy of pricing your service at a price that doesn't reflect VAT.
This is ok in a retail environment where the VAT on your purchases isn't reclaimed and so is effectively represented in the retail price when you add your margin and so keeping prices close to competitors.

A service provider who charges at a reduced rate because he doesn't have to charge VAT, can find himself having to increase prices suddenly and drastically as he reaches the threshold and has to register. The very act of "being cheaper" can be the reason you have to register sooner, and so would effectively wipe out your advantage.

I would be of the opinion that you can use your non vat status to increase your profits until such time as you have to register. The increased profits should be looked at as further financing, or to allow you to take something from the business at a time when you may not normally do so.
But it must be kept in mind that it's temporary and will eventually disappear when you register for VAT.

And VAT book-keeping isn't really a hassle in a business like the one you propose. A simple spreadsheet can look after it for you quite effectively.

A rock and a hard place created by Revenue with a threshold that's far too low IMHO!