Should I register for VAT?
VAT (Value Added Tax) is always a bone of contention for companies, should I register when below the threshold, should I not etc.
I have heard a range of myths about this discussion and hope this can clarify some of them for you.
If you don’t claim VAT back you lose it……. WRONG
You purchase something at €123 (100 plus VAT)
There are 2 possible outcomes
1. You are registered you claim your €23 on your vat return as purchases and at the end of the year the €100 goes in on your Annual Profit and Loss
2. You are not registered so you can’t claim the €23 back. Therefore on your profit and Loss you claim €123.
Clients prefer to deal with you if you are not registered as it is costing them less:
This is a regular bone of contention. There is no right or wrong answer. For every person who says they prefer someone not registered for VAT, there is another who prefers one who is.
The cut off VAT rates are €37,500 for providing services and €75,000 for selling products.
If your business has a TURNOVER of more than this then you MUST register for VAT.
So you do register, what can you claim back?
To qualify for claim back the expense that was charged on must be wholly and exclusively for the use of the business. While Diesel is claimable forVAT Petrol is not. This does not stop you from claiming your petrol on your annual profit and loss account.
I hope this offers some clarity for people.
Devlin and Associates are happy to discuss your individual needs and requirements at any time, without obligation or charge for first consultation.