June 2016
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Money matters<br />
Advertorial<br />
If you run a small business and<br />
wonder whether you should be VAT<br />
registered, Alan Patient can help<br />
In my last article I covered<br />
some of the basics of starting<br />
up in business. This time I will<br />
try to clarify VAT issues.<br />
In particular, the question<br />
I'm often asked is “is VAT<br />
registration necessary?” Well, if<br />
your annual turnover is below<br />
£83,000, VAT registration is not<br />
necessary, although voluntary<br />
registration is possible below<br />
that figure. This would enable<br />
you to recover the VAT you pay<br />
on many of your overheads,<br />
such as equipment and<br />
stationery costs, for example.<br />
However, you must weigh<br />
up the benefits of voluntary<br />
registration – if most of your<br />
clients are likely to be members<br />
of the public, you will effectively<br />
be adding 20% to the cost<br />
Some of the team: Chris James, Svitlana<br />
Matviychuk and Alan Patient (right)<br />
of your services – and your<br />
competitors will then be able to<br />
undercut you without too many<br />
problems.<br />
If you do become VAT registered<br />
it is usually worthwhile applying<br />
to use the VAT flat-rate scheme.<br />
This means that you charge<br />
and collect VAT at the standard<br />
rate of 20% and pay it to the<br />
Government at a lower rate –<br />
typically 13% – so in this case<br />
you make a “profit” on VAT –<br />
and all thanks to the Chancellor.<br />
Another tip: I would strongly<br />
advise opening up a separate<br />
bank account for the business.<br />
You will then see clearly<br />
the business income and<br />
expenditure without it being<br />
mixed up with supermarket<br />
bills and the like. Also you<br />
really need to be able to<br />
reconcile your bank account,<br />
at first probably to your<br />
business spreadsheets and<br />
possibly later to a cloud-based<br />
software package.<br />
There is a lot to get to grips with<br />
when you start up in business,<br />
but always remember – Alan<br />
Sugar and Richard Branson<br />
would have scratched their<br />
heads in confusion at first –<br />
and they certainly did all right.<br />
If you want to talk in more<br />
detail about this or any other<br />
accountancy matter, please<br />
do come to see us. Our first<br />
consultation is free.<br />
Next month<br />
How to use social media to drive<br />
your business forward.<br />
Alan Patient & Co<br />
9 The Shrubberies<br />
George Lane<br />
South Woodford<br />
E18 1BD<br />
020 8532 9843<br />
alanpatient.com<br />
LOVEEAST JUNE <strong>2016</strong> 37
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