03 Jul Why should your business consider voluntary VAT registration?
You will probably already know that becoming a VAT registered company is a legal requirement after your business reaches a taxable turnover of £85,000 (as of 2018/2019).
But businesses can actually register for VAT before that – are there any benefits of doing so?
Well, actually, there are – here are some of the key benefits of early VAT registration you should consider.
Unless you keep a very close eye on your finances, it’s easy to miss your business crossing the threshold past the point where VAT registration becomes a legal requirement. You have a 30 day window where if your taxable income is expected to be above the threshold, you must register – but this is easy to miss. Early VAT registration essentially “gets it out of the way” if you anticipate your business is going to be profitable at a certain level.
Charging and claiming VAT
A key benefit of becoming VAT registered is, of course, that you can begin to apply VAT to the goods and services that you offer customers and clients. You will also be able to claim VAT back that you pay on a large number of goods and services your business uses. In certain cases, you may even be able to claim VAT retroactively over the last few years of your business operation, providing you’ve kept the necessary records.
Becoming a bigger fish
Being VAT registered is a good way of making your business appear bigger and more successful than it actually might be. Whether it’s right or wrong, there are many businesses, lenders, suppliers, and investors that simply won’t provide their services to companies that aren’t VAT registered – which might make them seem like they’re “too small”. Becoming VAT registered has the potential to open the door to a wider pool of businesses and services.
Is VAT registration right for you?
Voluntary VAT registration has many benefits to potentially enjoy, but it’s not right for every business. If you’d like a detailed discussion about your small business, and whether voluntary VAT registration is the right move, contact the friendly and experienced finance professionals at SQK Accountancy.
If you’re looking for more help, then please get in touch. We’re small business accountants who understand VAT registration and how it affects you.