VAT & Cash Accounting Question

blue_monkey_2

Hi all,

I have a question and sure VAT people are getting sick of my ringing asking questions so thought I would pose it on here.

I have an online business which is about to go over the VAT threshold this month for the last 11 months. I might be able to get an exeption as sales have gone down so much over the last 8 months and whereas we was originally doing around 8k per month this has dropped to maybe 2-3k max. However, I have just started a market stall which at the moment has been pretty dire but I am hoping I will be known locally with things picking up in the summer (I sell lingerie and swimwear you see). I want to get more of a name for myself for people to visit than just being stuck working from home, I also sell mail order.

My question is this. I know if I sell something online I have to supply an invoice with the VAT number but if I sell on the market stall do I have to give a receipt (is this called Cash Accounting?)? what do I do when someone pays? Do I have to write a receipt out every time. None of the other traders do it and I am sure a lot of them nust be over the limit for VAT. It is all very confusing. Obviously I cannot have a till as I have no power and wondered if this was a problem. I dread to think writing receipts for everyone and was not sure where I went from here. Can someone offer any advice. Thanks.

dollybird

Try posting you question here https://www.ukbusinessforums.co.uk I am sure someone will be able to help.

WHA

You can only charge VAT and give a VAT receipt or invoice if you are registered for VAT.

VAT Cash Accounting is nothing to do with "cash" as in notes and coins - it is simply that VAT is calculated using amounts received and paid (whether cash, cheque or credit card) on the dates paid, rather than being based on the standard system which is when the transaction occurs (i.e. invoice date rather than payment date).

Once registered, you don't have to give receipts or invoices for every transaction - you just have to be able to give one if someone asks for it. Most market traders/shops etc will have some pre-printed hand-written papers or a duplicate book with stamp/ink pad where the trader name and address and VAT number are pre-printed and you just write it the amount of the sale (like the old petrol station less-detailed VAT receipts).

What is important, though, is that you do keep proper accounts of your takings - you should really be keeping a small note book showing what you are selling so you can balance the cash in your pocket to the sales you've made. The tax offices can be very hot on market traders to make sure that takings are being fully declared and not put in the "back pocket" so the more detailed your records are, the better.

blue_monkey_2

Many thanks for getting back to me. I have been sitting here doing all my accounts so only just got the chance to pop in. I am nearing the limit and not yet going to go over so I think I might be OK this month again. Sales has been carp the last few weeks (a bonus in one respect) but was thinking about the invoicing side of things really. I already use Sage for everything I do through eBay and I do keep records of everything in, out and the like and also use the reports to do my sales that are available on their websites. At the moment we are not really selling anything on the market but we are hoping as the weather gets warmer it will start to take off. I just bought a duplicate book today for telephone orders and one for the market as well but I was worried that I might be getting busy all day (one can hope right) and making people wait if I had to write receipts for everything. I guess I have a specialised market, men hate aiting for their wives to look at underwear, but I am giving leaflets and doing brochures so they can look in their own time and not in hubbies. I am hoping it gets us more well known locally.

Obviously I dread doing anything wrong that the tax man will be coming down on me, that is my worst nightmare, it is not worth the hassle which is why I wanted to make sure I got EVERYTHING right in the first instance. I know I am getting to the limit so everything I have been 'putting aside' for another time has to be done now and I am going to keep a daily account on sales rather than weekly. What a headache, still it has to be done. Your explaination is great so thank you for that. and thanks for the explaination about Cash Accounting, I thought it was accounting for cash taken only, LOL. I guess you have to learn somehow.

Many thanks once again.