We have recently VAT registered and whilst we are celebrating achieving this huge milestone, we know that it can be daunting for many business owners. In this blog we explore why you may need to become VAT registered and how we can help to make it stress free for you and your clients…
We are delighted to announce that we have become VAT registered as for us, it marks an exciting step in the growth of our business. We were actually close to registering before the pandemic but held off due to the uncertainty and the costs that could effect our clients during an already tough time. We also backed off because we felt our energies were better spent on supporting and focussing on guiding our clients through the pandemic, but now is a great time to make this change for us and our clients.
Does Your Business Need To Be VAT Registered?
Whether your business needs to register for VAT depends on a number of factors, but the main one that everyone thinks of first is that your business turnover exceeds £85,000 in a 12-month period.
As we work with our clients on a monthly basis we are well placed to see the need for registration in coming months in advance and help you to prepare your business and your clients for the change. This is where we are different from your traditional accountant who look at this retrospectively and let you know once you’ve exceeded the threshold, leaving you to make the change from a reactive perspective. However, this may not necessarily work from the perspective of your business particularly if you are selling to individuals or non-VAT registered businesses.
It may be that you’ve been scared off from becoming VAT registered in the past, or it’s something you don’t want to do – which is absolutely fine – but we would then need to look at how we maximise the return you get on your business from the cap put on it from keeping you under the threshold.
My Clients Won’t Want To Work With Me If I’m VAT Registered
This is something that we come up against with clients in certain sectors, where their clients are private consumers or not VAT registered themselves. If you deal predominantly with other businesses who are VAT registered, there is no real change to your business dealings. However, if your customers are not registered then you may feel that you will face resistance or competitiveness. Many of our clients have looked at this and created a range of options to soften the blow for their clients including:
- Providing extra content or an extra service to increase the value of the business along with the cost
- Absorbing a portion of the price increase into the business
- Absorbing ALL of the price increase
- Smashing over the threshold by taking on extra clients to cover the shortfall
How you communicate the changes to your clients will determine how the business grows in the future
How We Can Help You
Our method of working with clients encourages a proactive, rather than reactive approach to your business finances. Because we work so closely with you and plan your growth, we can see far ahead and highlight the potential for VAT registration. We can discuss if you want to register and if not, how to ensure that you have capped the growth so that this is not an issue. We can help you to communicate to your clients and strategise how to navigate this new chapter.
We aim to make your business finance as stress free as possible and making changes such as VAT registration is relatively simple when you have the foresight and the help needed to do so. So, is your business one of the many that will be registering for VAT this year, and do you need someone to help make it easy? Contact us to arrange a time to chat.