Should I register for VAT????

[GreenFingeredMummy]

OK bit confused. I want to start work cleaning peoples homes and holiday lets, but not sure about tax etc. Should I register for VAT as I can claim tax back on my purchases, or is it not worth it?? I want to appear as professional as poss.

Any advice appreciated.

Registering for VAT creates a lot of palaver - you have to complete quarterly VAT returns and pay over the VAT you have collected (less the VAT you have paid on supplies). And of course it means higher bills for your customers. If you are not going to spend a lot on supplies then I would say it's not worth it.

You only need to register for VAT if you are being paid over £58k pa. With respect while you start up you won't be. However you should consider starting yourself up as a limited company, which will protect your assets if it all goes tits up and someone sues you. Also you need liability insurance in case you set fire to someone's house etc. Your local business link office is a good place to get advice on all this. Also bear in mind you need to put around 30% of your income aside for tax/NI.

Registering for VAT is not optional if you are earning over the threshold, btw!

Cheers pretty much what I was thinking, thanks for your help.

Bit confusing for a novice

Oh it's a complete minefield, I've been the finance director for five years now and I still don't get everything about it.

For example, if you deregister because you aren't making enough money to hit the threshold you have pay HMRC 17.5% of all the purchases you've had relief on less depreciation at an indexed rate. Lost? Yep me too, which is why my accountant is driving a newer car than me

Seriously get in touch with your local business link service - they do free one day courses on this stuff when you are starting up and you can also meet up with others starting up and develop a peer group (and find customers!)

You can register for VAT if you under the threshold too.

VAT is a simple tax and the books and records in your type of business would be straightforward to maintain.

The benefits for you are in the main being able to claim the VAT back on your purchases eg: clenaing products etc.

The main benefit would be being able to claim back the VAT on any large purchases/outlay you would have at the beginning. Such as carpet cleaners/hoovers, Computer, any office furniture etc etc.

A lot of people like the Kudos of a VAT registration no - and customers view it as a professional business.

I disagree, it basically means you are 17.5% more expensive to most customers unless they themselves are VAT registered and so can reclaim the tax.

If you are cleaning for individual householders, it's just an extra cost. Yes you can reclaim VAT on large purchases but if you then close the business you owe the HMRC that money back it's not a free discount on stuff.

Customers will view a business as professional on many levels, for a cleaner to have a VAT number isn't high on the list of priorities though I'd think.

Not unless your turnover is over the threshold, currently £67k

WWW is right - oh and that's the other thing -the threshold changes and it's actually quite complex to register, deregister and then re-register.

I would hardly call it complex to register, deregister etc.

from gfm's point of view

• being vat registered will mean she can claim back vat on what she has bought

BUT

• she will cost 17.5% more to her non-vat registered customers than if she wasn't. if she is cleaning homes and holiday homes then they are unlikely to be vat registered so this will make her relatively expensive.

So on teh VAT I would say no unless you expect your TURNOVER to above the threashold in which case it's compulsory, or if all your business is going to come from businesses who can claim back your VAT, which seems unlikely

To appear professional get printed stationery and act in a professional manner - don't let the kids answser your business phone etc. Do some Terms and COnditions and make sure you get paid on time.

Only register if you're over the threshold. Lots of businesses aren't registered as they don't have enough turnover. IMO it doesn't make you look more professional if you have a VAT number.

Really hf128219 - ever done it?

The HMRC will soon ask her to register if it becomes apparent it's appropriate to her income.

Many, many times.

You may register for VAT voluntarily if (amongst other things):

your turnover is below the £67,000 threshold required to register

Ok dear think Ive started a bit of an argument. Im not going to register for VAT as I dont expect to reach anywhere near the threshold and wont be buying that much expensive stuff.

Thanks for all your comments though, will be getting in touch with business link and keeping fingers crossed that it all works out.

Ok dear think Ive started a bit of an argument. Im not going to register for VAT as I dont expect to reach anywhere near the threshold and wont be buying that much expensive stuff.

Thanks for all your comments though, will be getting in touch with business link and keeping fingers crossed that it all works out.

I was on a VAT training day last Tuesday! Man, I was bored.

Anyway, there's a lovely scheme called the Flat Rate Scheme which you can use when your turnover creeps over £150k a year. It may end up costing you a smidge more but well worth it because it makes VAT calcs ridiculously simple! Hairdressers and similar businesses use it, apparently.

Greenfingeredmummy - you didn't start an argument, we're quite capable of doing that on our own

Where abouts are you based, I need a cleaner!