Hope this is the right place - PAYE and going VAT registered

HannahIOW

Hiya sorry if I've put this in the wrong place. Here goes.

My OH has a relatively new business. He has asked me to set up 'PAYE' for him (this covers national insurance conts too?) and also it is time to go VAT registered.

I have no idea where to start. Currently googling paye but going round in circles...

Please help?

Thanks

MrsManda

Have you looked on the HMRC website on how to get started with PAYE and how to operate PAYE?

HannahIOW

Thanks for that link am reading through it now - it's a lot to take in on a friday morning lol.

Horace

Hannah - has your OH set up as a limited company? If not and he has no employees then he doesnt need PAYE - he pays Class 2 NI instead although he can claim an exemption if he is on a low income.

There is no need to register for VAT if he is below the threshold of £64K, however, he can voluntarily register for VAT if he wants too but in most cases there is no need until he reaches the threshold.

The self employment line at the HMRC is very helpful as is the website.

HannahIOW

Hi, nope not a limited company but does have employees.

I read online that the threshold is £70k? I could be wrong. But anyway we are around the £60k mark as it stands, that was over a period of 10 months.

JasonLVC

HannahIOW wrote: »

Hi, nope not a limited company but does have employees.

I read online that the threshold is £70k? I could be wrong. But anyway we are around the £60k mark as it stands, that was over a period of 10 months.

The current VAT threshold is £70k over a rolling 12 month period so of you are saying your turnover in the last 10 months is £60k then you've only got another £10k over the next two months and then you'll need to register for VAT.

1. What is the trade sector of the business? (ie, consulting, IT, building trade, etc)?

2. Who are your main customers - Joe Public who cannot reclaim VAT or are your sales mostly with other businesses (Business-2-Business)?

3. Depending upon the answers to 1 and 2 and you definate have to register for VAT, then consiedr the Flat Rate Scheme as an option which is a bit easier to administrate for new businesses.

HMRC website is terrible, you will do much better using the businesslink website which is written in simple language and offers some useful decision making tools and shows each stage of the process:-

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073863071 - this is a simple 'do I need to register' page. Answer the questions and it'll give you some basic answers as to what you should do.

http://www.businesslink.gov.uk/bdotg/action/layer?r.s=m&r.l1=1073858805&r.lc=en&r.l3=1073863071&r.l2=1073859188&topicId=1073859188&r.i=1077722988&r.t=BLTTOOL - and this page links to all sorts of other pages and subjects to do with VAT and you'll be pretty much an expert at the end of the day after reading it all.

HannahIOW

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Hammyman

HannahIOW wrote: »

Thanks for that reply JasonLVC - very helpful.

The trade sector is motor trade, as in repairs etc etc but not bodyshop. Servicing etc and MOT's at a later date.

Vast majority of customers are just the public, a very small amount is occasionally other businesses.

Thanks for those links I will have a look now. Got a lot of info written down so far, how to register as an employer with hmrc, how to register for PAYE online for employers etc and how to go vat registered but this has all been by looking on the hmrc sites so will look at those other ones now.

Personally, I'd turn the company into a Ltd company if for nothing else than reducing your exposure to bad payers.

VAT registry is easy - a single form to fill in.

JasonLVC

HannahIOW wrote: »

Thanks for that reply JasonLVC - very helpful.

The trade sector is motor trade, as in repairs etc etc but not bodyshop. Servicing etc and MOT's at a later date.

Vast majority of customers are just the public, a very small amount is occasionally other businesses.

Thanks for those links I will have a look now. Got a lot of info written down so far, how to register as an employer with hmrc, how to register for PAYE online for employers etc and how to go vat registered but this has all been by looking on the hmrc sites so will look at those other ones now.

Ok cool.

If customers are general public and trade is motor/automotive then best stick with the ordinary VAT scheme (when you apply you are automatically on the ordinary scheme, you have to send another form in if you want the flat rate scheme which will not be beneficial to you).

Clearly, registering for VAT will put your prices up by 17.5% so you may annoy some customers. On the flip side, you can now reclaim the VAT charged on your purchases (spares, overheads, etc) and so the VAT reclaimed on your purchases may help in reducing the price you sell to customer whilst maintaining decent profit margins.

paulwf

OP now would be a really good time to have a chat with your accountant. If you don't have one then now is a good time to get one. You can still do things like registering for VAT yourself (as it is free and fairly simple yet an accountant will charge) but they will be invaluable in discussing with you the best way forward for your business. Don't do anything like changing to a Ltd company until you have spoken to them.