all depends on whether your clients are registered for VAT as to whether it's a sensible option.
If you clients are predominantly unregistered micro entities then registering for VAT may either (a) price you out of the market by needing to be 20% more expensive than your rivals or (b) give you 20% less profit.
There are some advantages of course such as your software being cheaper than your non registered competition.
I'm VAT registered but the so is my target market so it's not an issue. If I were aiming at micro businesses as my primary client base I think that I would avoid registering but such are only my own thoughts and really the decision is down to yourself rather than anyone else.
Good luck hunting down those first few elusive clients... Unless your in Staffordshire in which case they're all mine. lol.
All the best Christopher,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Personally I wouldnt register for VAT until you need too.
Thats what I did.
Though difficulty this year will be adding 20% onto clients fee compared to last year. Especially the smaller < £500 per year jobs as these clients tend not to be VAT registered.
Also is an issue for those bigger clients that are on the FRS as the extra VAT will just be an extra cost this year.
I have only went VAT registered in the last month or so because I had too.
I havent registered, certainly not at the t/o Mark is doing yet (and unlikely to be given I dont want to work full time!). I considered it but was worried about pricing myself out on the smaller companies, but ALL of my customers to date are VAT registered. You just never know what clients you will pick up. Yes good luck with getting your first one. Oh and as Shaun would say, hands off Cheshire!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Also is an issue for those bigger clients that are on the FRS as the extra VAT will just be an extra cost this year.
Oh the joys of being VAT registered! I have a client who will have to be VAT registered within the next 2 or 3 months. It's a cafe (well 2) and most of her purchases have no VAT on them, so effectively it'll be a 14/15% tax on her sales (FRS)
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I did not register initially but had to do so due to growth. For the smaller clients I halved the VAT impact on them and took a smaller cut in profit. Virtually all were happy with this. With the VAT registered entities it was simply a case of adding the vat to their normal fee rate.
It would be worth looking at your client profile to see whether it would be beneficial.
Ultimately, this is the type of advice you may need to give a client so it is a very good learning exercise
__________________
Phil Hendy, The Accountancy Mentor
Are you thinking of setting up your own practice or have you set up and need some help?
If so a mentor may be the way forward - feel free to get in touch and see how I can assist you.
And just to add that if your clients are predominantly not vat registered and you feel they would be ok to accept a 20% fee increase if you registered, then don't register for vat but increase your fee anyway! (but don't call the increase VAT as that's illegal!!)
Thanks to all for the comments, all helpful. Trouble is at the moment it's a bit chicken and egg in that I am not sure who my clients will be. Guess the first is the hardest!
