{"id":29663,"date":"2022-03-03T12:55:19","date_gmt":"2022-03-03T12:55:19","guid":{"rendered":"https:\/\/www.clearbooks.co.uk\/blog\/?p=29663"},"modified":"2022-03-03T12:55:20","modified_gmt":"2022-03-03T12:55:20","slug":"why-it-pays-to-be-a-vat-registered-business","status":"publish","type":"post","link":"https:\/\/www.clearbooks.co.uk\/blog\/why-it-pays-to-be-a-vat-registered-business\/","title":{"rendered":"Why it pays to be a VAT registered business"},"content":{"rendered":"\n<p>VAT registration: for many business owners it feels like a \u201csomeday\u201d thing. It\u2019s something you\u2019ll take care of way down the line, when you\u2019re closer to the threshold for registration, when you have more staff, when your business is bigger, when it feels like you\u2019re ready for such a complex undertaking.<\/p>\n\n\n\n<p>But here\u2019s the surprising thing: There are actually numerous benefits to becoming VAT registered <em>before<\/em> you technically need to \u2014 and it\u2019s far less complicated than you might imagine.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The benefits of VAT registration<\/h2>\n\n\n\n<p>Under current guidelines, UK businesses must register for VAT when their turnover exceeds \u00a385,000. However, what many small business owners don\u2019t know is that unless everything you sell is VAT exempt, it\u2019s possible to register even before you reach that threshold.<\/p>\n\n\n\n<p>And there are several compelling reasons for doing so.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">You can add VAT to most of your products and services<\/h2>\n\n\n\n<p>Naturally, adding VAT to your products and services will increase your cash flow, which will be helpful if you\u2019re trying to attract investors. And if you primarily deal with other VAT registered businesses, they won\u2019t flinch at your price increases because they can reclaim the VAT.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">You can reclaim VAT<\/h2>\n\n\n\n<p>As a VAT registered business you\u2019ll be able to reclaim the VAT you pay on most of the products or services you purchase from other companies. Depending on your expenses, this could be a significant amount.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">You can backdate your claims<\/h2>\n\n\n\n<p>Businesses that register on a voluntary basis can backdate certain VAT claims for up to four years. So you might be able to reclaim the VAT you paid on any recently-purchased equipment you\u2019re still using.<\/p>\n\n\n\n<p>Note: we always recommend you check in with your accountant before doing so, just to be sure you\u2019re keeping yourself on the right side of the regulations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">You\u2019ll be required to keep more accurate records<\/h2>\n\n\n\n<p>While this might initially sound more like a disadvantage, accurate record-keeping is invaluable for those who want to run their business in the most efficient way and keep abreast of their financial situation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">There\u2019s a psychological element<\/h2>\n\n\n\n<p>Registering for VAT sends a message to both your potential customers and to yourself.<\/p>\n\n\n\n<p>When you take that leap, you\u2019re mentally setting yourself up for growth. Whether you\u2019re skating close to the \u00a385,000 or nowhere near it, you\u2019re proving to yourself that you are more than ready to start swimming in a bigger pool.<\/p>\n\n\n\n<p>Also, as unjustified as it may be, some organisations make assumptions on your business based on whether you\u2019re VAT-registered and view registration as a sign that you\u2019re the type of company they\u2019re comfortable doing business with.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">VAT made easy<\/h2>\n\n\n\n<p>While these benefits are certainly convincing, you may still have reservations. And it\u2019s understandable; even before the advent of Making Tax Digital (MTD), which currently applies to VAT registered companies, VAT registration was widely viewed as an administrative headache.<\/p>\n\n\n\n<p>However, while it\u2019s true that you will need to increase the amount of documentation you keep \u2014 and be very strict about keeping it up-to-date \u2014 it doesn\u2019t have to be the trauma you might imagine!<\/p>\n\n\n\n<p><strong>The right online accounting software can actually make the whole process feel effortless.<\/strong><\/p>\n\n\n\n<p>Clear Books is recognised by HMRC as <a href=\"https:\/\/www.clearbooks.co.uk\/blog\/mtd-vat\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">Making Tax Digital<\/a> compatible software. As such, you can create, review, and submit VAT returns in just 3 easy steps:<\/p>\n\n\n\n<p><em>1. Track your sales and purchases.<\/em><\/p>\n\n\n\n<p><em>2. Select your VAT return dates.<\/em><\/p>\n\n\n\n<p><em>3. Review the 9 box return the software generates for you and submit it directly to HMRC.<\/em><\/p>\n\n\n\n<p>You can also automatically apply fixed or variable VAT rates to your invoices so you know your calculations are correct and included in your monthly, quarterly, or annual VAT return.<\/p>\n\n\n\n<p>VAT registration won\u2019t be right for every business. However, if you\u2019d like to take advantage of the benefits of VAT registration but are wary about having to deal with the extra admin that goes with it, please rest assured that it absolutely doesn\u2019t have to be the headache you were expecting!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Clear Books Online Accounting Software<\/h2>\n\n\n\n<p><strong>Clear Books is an award-winning online accounting software for small businesses. Thousands of business owners, contractors, freelancers and sole traders across the UK use our easy-to-use online accounting software to manage their business finances. All users benefit from the outstanding free telephone and email support. Clear Books was launched in London in 2008 and offers a free 30 day trial with free ongoing support and bank feeds. We\u2019re rated as \u2018Excellent\u2019 on Trustpilot.<\/strong><\/p>\n\n\n\n<p><strong><a href=\"https:\/\/secure.clearbooks.co.uk\/account\/register\/home\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">Get a free 30-day trial of Clear Books online accounting software here<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>VAT registration: for many business owners it feels like a \u201csomeday\u201d thing. It\u2019s something you\u2019ll take care of way down the line, when you\u2019re closer to the threshold for registration, when you have more staff, when your business is bigger, [&hellip;]<\/p>\n","protected":false},"author":145,"featured_media":29668,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[9111,9134,9150,9113,9117,9149,9151],"class_list":["post-29663","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-accounting-software","tag-making-tax-digital","tag-mtd-vat","tag-online-accounting-software","tag-online-accounting-uk","tag-vat","tag-vat-return"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why it pays to be a VAT registered business | Clear Books<\/title>\n<meta name=\"description\" content=\"There are lots of benefits to becoming VAT registered before you 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