VAT is an important aspect of bookkeeping for any small business. Even if they do not meet the VAT threshold, many small businesses choose to register for the potential benefits – including claiming back money!
Want to know how to get VAT registered and the benefits? Our VAT registration guide has all you need to know. All you need to do is carry on reading.
What is VAT for my small business?
VAT stands for ‘value-added tax’. It refers to tax that is collected on goods and services. The standard rate for VAT is 20%, though this can be a smaller percentage depending on the sector.
Do I need to register my small business for VAT?
You must register for VAT if your business turnover is more than £90,000 annually – this is a legal requirement. It’s important to note that you could be fined if you do not.
However, if your turnover is less than £90,000 annually, you can choose whether you wish to register.
Note: if your business solely sells VAT-exempt services or goods, you cannot register for VAT.
What are the benefits of registering for VAT?
Before we go on to how to get VAT registered, you’ll need to know the benefits for your small business:
- You can claim back VAT for business expenses when you file a tax return with HMRC.
- Good for the image of your business, including future investors and shareholders
- Builds trust with clients
How will being VAT registered affect my small business?
Next, you need to know how registering for VAT affects your small business. This includes both bookkeeping and it affects your customers.
- Keep a digital record of your VAT invoices – this is a government scheme called Making Tax Digital which all businesses must be registered for. See our guide for more information.
- Ensure you give your customers invoices
- Add VAT to your prices
- Pay your VAT to HMRC quarterly
Of course, being VAT registered will add to your bookkeeping workload. That’s why we’re here to take it off your hands. Simply contact our knowledgeable accountants here.
How to register for VAT
You’ll need to visit the UK Government website to register your small business for VAT. The good news is that registering is completely free.
How to register VAT for a limited company
When you’re registering your limited company for VAT, you’ll need a couple of things to hand:
- Your company registration number
- Business bank details
- Annual turnover figure
- Self-assessment information
- Corporation tax information
- Unique Taxpayer Reference
- PAYE
How do I get my VAT number?
You will get your 9-digit VAT number once you register for VAT. You will need this for all invoices. If you’ve misplaced your VAT number, you’ll need to contact HMRC via call or email.
How to get VAT registered with the right accounting scheme
When you register for VAT, you’ll notice that you’ll need to pick a scheme. We’ve listed them with an explanation below.
Standard VAT accounting
For this scheme, you’ll need to keep a record of every business purchase. You’ll then get a VAT return every quarter
Annual VAT accounting
You could submit your books annually. You may, however, still need to pay quarterly. This could be calculated on an estimate by HMRC.
Flat-rate scheme
This scheme could be ideal if you have a smaller business. You simply pay a percentage of your turnover as VAT.
We hope this VAT registration guide was helpful. If you need any more guidance or want your bookkeeping (including small business VAT) taken care of for you, simply contact our dedicated team of accountants. We’ll be more than happy to help.
Next, take a look at our guide on capital gains tax here.