You´re working hard and building your trades business from the ground up. But guess what? As your business grows, you might find yourself approaching that seemingly elusive VAT threshold. Yeah, those three letters may make you break into a sweat, but fear not – we’ve got your back and ways to tackle crossing that VAT threshold like a pro.
VAT, More Like “Very Anxious Tax”
So, VAT – Value Added Tax – is like this extra layer of responsibility and paperwork. The idea of managing it might feel like dealing with a giant pile of tangled wires. But here’s the deal: it’s not as scary as it seems.
Hitting the VAT threshold means you’re making a good amount of money. But with that comes worries about managing the financial side – paying VAT on time, keeping track of everything, and not drowning in a sea of numbers.
Price Panic
The most common fear about going VAT registered is the worry that adding VAT to your prices will drive your customers away. Nobody likes seeing a sudden price hike, right? But there are ways to handle this without scaring off your loyal clients.
Ways to overcome these barriers
1. Get Clued Up – First things first, get to know how VAT works. Do a bit of reading, chat with an accountant. There are different types of VAT schemes and some will benefit you more than others. Understanding the basics will make it feel less like staring at a foreign language.
2. Update Your Systems – Embrace technology. If you have a competent bookkeeper they will deal with all your paperwork on a monthly basis in an online digital software, this means that not only does your VAT get dealt with correctly and on time but you get all that time back that you were sorting your accounts to continue to build your business.
3. Smart Pricing – Okay, so adding VAT to your prices might make them jump. But you can be clever about it. You can reclaim the 20% VAT on supplies and expenses, so realistically there is only a jump on your labour.
4. Plan Ahead – If you see that VAT threshold approaching on the horizon, plan for it. Set some money aside each month to cover the VAT bill. This way, when the time comes, you won’t be hit with a huge financial shock.
Benefits when you cross that threshold
1. Level Up Your Business
Hitting the VAT threshold means you’re doing something right – your business is growing! Look at it as a sign of success. You’re climbing up the ladder of success, my friend.
2. Boost Your Credibility:
Being VAT registered can actually boost your business’s credibility. It shows that you’re legit and playing by the rules. This can attract more serious clients who value professionalism.
3. Strategic Pricing:
Remember, other businesses are also VAT registered. You’re not alone in this. And guess what? Clients often compare prices with VAT included. So, you’re all on a level playing field.
Crossing that VAT threshold might feel like a leap into the unknown, but it’s a natural step in your business’s growth journey. Embrace the challenge, get your finances in order, and keep your clients in the loop. Remember, TI Accountancy has got the tools, technology, and expertise to make this transition smoother for you than you think. So, go ahead and conquer that threshold – your thriving trades business is ready for the next level!
