You may already be aware that you don’t have to register for VAT unless your business reaches a certain level of turnover. However, you can register below this level if you like. Some people do this if they are buying stock or other items for their business, so they can reclaim the VAT they paid.
If your business is relatively small, you may have been going along well under the VAT limit for some time now. You may never have considered registering because you weren’t spending a lot of money on your business. Not all businesses have outgoings on stock and other items.
But what should you do if you have plans to expand this year? Might an increase in profits and turnover put you close to or in this new territory?
If you are planning to expand or develop your business to any extent during 2016, it would certainly be worth considering how much more income you might receive as a result. Remember, the VAT threshold kicks in at £82,000 at present, and it applies to your turnover, not your profit. It also applies to turnover that is taxable for VAT – not all sales are. It will depend on the type of business you run as to whether your entire turnover, or only a portion of it, is relevant in this case.
The best course of action is to start finding out more about how to register and when to do it. You might want to look into this even if you don’t think you will hit the threshold. If you might come close to it, it will help to be prepared just in case your business expansion goes rather better than you might think.
While many small and micro businesses aren’t registered for VAT, there are a number of businesses that would tip over the threshold if they were to expand in any way. If this includes you, and you want to boost your sales during the coming year, now is a great time to learn more about what you should do with regard to VAT. The more you know in advance, the easier the changes will be to accommodate when you do finally reach that stage.
Even if it turns out you are still below the threshold – for this year at least – you will become far more adept at understanding how the whole system works. This will put you at an advantage if you do eventually reach that level. Knowing what to expect always makes life a little easier, especially in the business world.
No doubt you have plenty of business goals for the year ahead. Now you know to make learning about VAT one of those goals, if you are approaching the £82,000 threshold already.