Register for VAT and gain credibility for your business
Although business taxation is a confusing aspect to handle, it is important for a business to register for VAT if it intends to gain credibility. Especially, from a small business’s perspective, such credibility is exceptionally important for its expansion. While it is a prerequisite for any business in UK to register for VAT, very few business owners are completely aware of the rules and regulations inside this process. Many of these business owners wonder when and how to register for VAT. Unawareness of the rules and regulation is not an excuse when it comes to legal matters; VAT registration is a key reason for a smooth business operation.
When does a business need to register for VAT?
There are different types of registrations and that seems to be the most influential reason to confuse people about taxation. When a particular business falls under ‘compulsory registration’ category, just like the name suggests it becomes compulsory to register for VAT. All the businesses in UK that has taxable commodities and services over £86,000 per year are supposed to obtain compulsory registration. Also, if a particular business expects to reach the aforesaid turnover during the forthcoming year, it is obliged to register for VAT.
As per the law, you don’t have to register your business for VAT if it does not reach the minimum threshold (£86,000). However, there is an option called voluntary registration for businesses to consider even when they do not reach this minimum amount. Voluntary registration is associated with both advantages and disadvantages. Although business experts recommend businesses to obtain voluntary registration, it is finally the business owners to analyse all the facts and decide if it is the best move.
What voluntary registration brings you?
Most of the business owners go for a voluntary registration (even when they don’t reach the minimum threshold) when they have to deal with other VAT registered companies. In fact, after obtaining voluntary registration, these businesses can claim back the VAT amounts they were charged on the issued invoices. It becomes highly beneficial for them directly from financial perspective.
Voluntary VAT registration adds credibility to your business and increases the potential of the business. In fact, when your business name is portrayed with the VAT registration, it will appear as if you have a higher turnover than you actually do. This is a great way to acquire more business opportunities from larger scale companies that are willing to do business with reputed and established businesses only. So, voluntary registration can be a considered to be an investment that uplifts professional profile of your company.
Getting voluntary VAT registration helps businesses to stay ahead in the competition too. Since large scale business partners give prominence to VAT registered businesses, with voluntary registration you can simply overcome your competitors who don’t possess VAT registration.
The only downside of the voluntary registration is that the requirement of submitting a VAT-return form annually after the registration. Because of this requirement, you will need to attend some seriously time consuming paperwork and form filling obligations which are added weights to your existing workload. If you are a small business owner, such devotions may be too much for you. However, thanks to the technology, there are enough facilities provided to register for VAT online and submit these reposts online.
When shouldn’t you voluntary register for VAT?
The main fact to determine before voluntarily registering for VAT is the type of the customers your business deals with. If you solely deal with general public, you don’t have any possibility to reclaim the VAT they pay. Also, your business may become uncompetitive among the rest of the businesses as you have to add extra 20% on the services and goods you sell. Therefore, the best option for such business is to wait until the compulsory registration arises. When your annual turnover exceeds £83,000 you will have to register for VAT online or offline and ensure you maximise your commerciality.
Regardless of the size of the business, it is important for you to think seriously before registering to vat. This is when you need the assistance of a professional. If you have a well qualified accountant who has a perfect awareness about taxation, you need to sit with him and analyse the present situation.
If you don’t have a qualified and experienced accountant, you should hire a reliable and dependable third party to look after your VAT registration process. With the latest developments of the HMRC, business owners now can register for VAT online. These experts will thoroughly analyse the status of your business and advice with the future proceedings. They are further capable of handling annual form submissions and other documentation work allowing you to focus on other work related to your business.
