Many small businesses have a turnover that comes in well under the VAT threshold and thus do not have to worry about this aspect of accounting. However, with that said, it is possible that it may prove financially beneficial to register for it anyway.
Even if you have a small business and you don’t pay VAT, you could end up in a situation where you hit the threshold for registration. When this happens, you have to register and keep records pertaining to the amount of VAT you pay on goods and services, and the amount you charge to your customers or clients.
If you’re at that stage now, you should seriously consider getting a software program designed to handle every aspect of VAT reporting for you. You probably already have a software program you use for your regular accounting. If so, look and see whether it includes a VAT section you haven’t yet used. This would be the ideal situation – to use just one software program that can do it all.
However, you may not do your accounts with a software program yet. If not, registering for VAT makes it the perfect time to start. Choose a program that will enable you to keep full records and will make quarterly VAT reporting easier as well (or monthly, if you decide to go down that route).
Many people are nervous of the additional work involved in reporting back to HMRC in terms of their VAT responsibilities. Yet if the proper software is in place for your other accounting needs, you may well find it is a whole lot easier than you thought. Much – if not all – of the information you need will be there anyway. Software like this is also designed to ensure you can record your purchases and keep accurate records of invoices sent and payments received. Whatever your business does, good record-keeping is important, and software programs can help make that a lot easier.
Look for a VAT program that supports every VAT scheme in use and is easy to use too. Of course, there will be a certain degree of learning to do, as is the case with anything new. However, you will find this easier with software than it would be to try and pick your way through it on your own.
Finally, make sure the program you pick will enable you to submit your VAT return online via the Government Gateway facility. The best ones will do this without you having to enter all your findings manually, thereby saving you even more time. As you can see, with a little software to help you out, registering for and sorting out your VAT returns may not be as difficult after all.