Registering as a company/vat

Allan87

Are there any advantages of registering with companies house? I've started an alcohol delivery service which isn't going to exceed the vat threshold, is there any benefits to registering and how difficult is it to keep on top of?

lcharm

Who are you going to be delivering booze to? If it's to other businesses then they are more than likely going to want to reclaim their VAT on the purchase so you would need to be VAT registered (unless it's an exempt product?)

With regards to how difficult it is, well that all really depends on you and how busry you are and how good with bookkeeping. Usually a good accountant is a must but is it worth the expense based on your turnover.

Ltd companies also offers you a level of protection in case something goes really wrong so you personally don't get financially affected, compared to being a sole-trader.

petwencal

You don't need to register if your turnover is below the threshold. You can voluntarily register, which means you can claim the VAT back on your outgoings. (including commercial vehicles)
If you are organised and don't mind paperwork the VAT return isn't difficult.

ks62uk

Hi

As you probably know, registering at Companies House (forming a limited company) and registering for VAT are two completely separate things.

Whether it is worth trading through a limited company would depend upon your profitability as there is extra administration involved (PAYE, submitting accounts to Companies House, dividends, annual returns etc). If you are below the VAT registration threshold (currently £67k) then your profits may not be high enough to make "going limited" worthwhile. The current corporation tax rate is 21% whereas being self employed you would pay income tax and class 4 NIC (the rates would depend upon your profit) and the fixed rate Class 2 NIC. Also as you would be an employee of the company, your salary would need to have PAYE deducted and the company would pay NIC also unless your salary was below the NIC threshold. The company could pay you a low salary and the balance in dividends but you would need to discuss this with an accountant.

VAT:
Is you business the delivery part? i.e. you do not supply the alcohol. If so, then presumably you are invoicing the alcohol supplier/shop who will be likely to be VAT registered themselves. In this case it may be worth voluntarily registering so that you can reclaim any VAT charged to you on your business costs. The net cost to your clients will not change as they will be able to reclaim the VAT (in most circumstances).

K

Allan87

Thanks for all your input. The deliveries are to Joe Public, much like your local takeaway, so not selling to other businesses at all.