Vat

[Tia 203]

Are any of you geeks registered for VAT?
Has it had much of an impact on your business?
I'm getting close to the threshold and starting to worry a bit about it.
I just wonder if I'm going to be skint forevermore!
By the time you've paid wages, bills etc, there really isn't much left. I feel I do all the work for the least money!
How did you go about putting prices up to absorb the Vat or did your business absorb it.
This is all new to me so any advice would be gratefully appreciated.
Thanks.

 

[Ruth Mills]

From what I've read on other threads so far, VAT is one of the reasons that bigger salons tend to have noticeably higher prices than smaller salons or home-based/mobile therapists. And I seem to remember larger salon owners cursing the fact that they have to pay it, as it mullers their margins and the amount of profit they are able to make, because a lot of that money goes to the VAT man instead!

Incidentally, I am VAT registered, but I'm in a different line of business (IT consultancy and web design) and was advised by my accountants to register for VAT (it makes no difference in terms of the consulting work I do as the companies I do that for tend to be VAT registered anyway and just claim the VAT back)...

 

[persianista]

Vat is the scurge of salon owners. Our biggest expense is of course wages, which cannot be offset, so we are hit probably the hardest. My accountant told me many years ago that once you got your turnover to 60k and had to register, you need to get it to 100k before your profit would reach the same level.
It's the bane of my life.

 

[junejuno]

You can always split your business into two (or three, or whatever) separate businesses to keep yourself under the threshold. Many businesses do this as they grow to the VAT limit. It's perfectly legal and is a used widely practice.

 

[fufa]

Good plan....that's what I was going to suggest....avoid VAT like the plague...it's a nightmare!!! Lol xxx

 

[Blue Rose]

You can always split your business into two (or three, or whatever) separate businesses to keep yourself under the threshold. Many businesses do this as they grow to the VAT limit. It's perfectly legal and is a used widely practice.

This is also what I would suggest. Although, you can't run multiple businesses as a sole-trader. Well, you can, but if the combined turnover reaches VAT level you'd need to register.

You'd need to set up an/other one/s as a partnership or some other trading entity.

 

[persianista]

I think you will find that the rules cover people attempting to split their businesses to avoid vat. It only works if you have different addresses and company directors. I took huge amounts of advice on this subject.

 

[kimi1101]

my business advisers from Bgateway say I should register for VAT even though I'm not at the threshold but I really am not sure...Think I'm gonna hold off for the meantime. Would have been beneficial to claim back VAT on start up costs but as I didn't get VAT receipts for any of it....doh.

 

[Tia 203]

Did you put your prices up to cover the Vat element? Did you do it gradually or in one go?
Has it made a difference to your clients? Did any/many leave because of price increases?
I'm at the stage where I'm calculating takings daily and discouraging the staff from retail, which is ridiculous when this is what I've pushed them for!
Sorry for the barage of questions, but I'm really lost here.
I want to grow my business, but don't know if I take the leap into Vat can I grow enough to get a reasonable living out of it.
How have the rest of you fared?

 

[Blue Rose]

Have you spoken to your accountant about it? They might have some suggestions how you can legally get around it.

For instance, if you did say pamper parties or children's pamper parties you could possibly run this as a separate business.

 

[jes]

You're treading on dangerous ground here. There's no way that one person, based at the same address can can split their business into smaller, very similar, companies.

HMRC will see this a VAT avoidance (and probably tax) and will take a very dim view of it:cry:

 

[Tia 203]

Thanks for all the replies.
Yes, I did speak to accountant and it seems there is no way around it. He has suggested ways of growing the business to compensate for the amount of vat I'll have to pay. I've sent all my accounts to him and now wait for his advice.
Thanks again.