Stationery, VAT & Accounting startup advice!

the_gasman_2

I am trying to set up a small business as a self-employed book-keeper and payroll manager. Also offering on-site Sage work and PA Services.

I am a member of the ICB and will be applying to use their logo on my stationery. I have been quoted £164 +vat for 1000 letterheads in full colour using 115gsm paper. This will be reduced by £50 for reprinting. Does this sound reasonable??

I am thinking about becoming VAT registered to give the appearence of being a larger firm and so that I can also reclaim VAT on purchases and obviously my customers could reclaim VAT on my invoices. Does anybody know of a reason why this would be a bad idea other than needing to keep VAT records?

Finally I have paid out for courses/exams/memberships etc. to get to this stage and wondered if I could reclaim the VAT (if reg) and put these through as an expense? I haven't declared myself as being self-employed yet so it's before the business start date.

So many hurdles to jump it's making me wonder whether to persue this at all!!!

I would really appreciate ya help.

ukbill69

Doesnt matter if the business claims vat or not on something bought, they add you as a contractor. I wouldnt get vat registered until you hit the 50 odd grand mark.

Bean_Counter

I can only see two main problems with voluntary VAT registration. Firstly is the paperwork aspect which you referred to above. Secondly, are any of your customers likely to not be VAT registered. Certainly worht careful consideration if you are going to target small businesses.

On recovering VAT prior to your start-up, I gleaned the following from HMRC notice 700:

11. Input tax: VAT paid on goods and services obtained before VAT registration

11.1 Can I recover VAT paid before registration?
VAT paid on goods and services that you received before you were registered for VAT is not input tax.

However, when you become registered you can treat this VAT as though it were input tax if you hold acceptable evidence (see paragraph 19.7) and can meet the conditions set out below.

You may only recover VAT you incurred before registration which is attributable to making taxable supplies. The partial exemption de minimis limits (see paragraph 13.1) do not apply to VAT incurred before registration.

Special rules apply if you become registered as a result of having exercised an option to tax certain property transactions. See Notice 742A Opting to tax land and buildings for details.

11.2 What are the conditions for treating VAT on goods as input tax?
You can treat as input tax the VAT on goods which you obtained or imported before you were registered if:

the goods were supplied to the person who is now registered for VAT;
the goods were supplied not more than 3 years before the business was registered (however, this condition does not apply if the business was registered before 1 May 1997 and you have not yet made the first return);
the goods were obtained for the business which is now covered by the VAT registration;
you still hold the goods or they have been used to make other goods which you still hold; and
you compile a stock account of the goods. This must show the quantities of goods and the dates when you obtained them. If you used any goods to make other goods, or disposed of them after you were registered for VAT, the account must give details, with dates.
Remember, you cannot claim VAT incurred on goods consumed before registration such as petrol, electricity or gas.

If the person who is now registered is a corporate body, you may still be able to reclaim VAT from before it was incorporated. See paragraph 11.4 below.

If you are buying an existing business you should also read paragraph 26.10.

11.3 What are the conditions for treating VAT on services as input tax?
You can treat as input tax the VAT on services which you received before you were registered if:

the services were supplied to the person who is now registered for VAT;
the services were received for the purposes of the business which is now covered by the VAT registration and related to its taxable activities. (If the services related partly to such taxable activities and partly to other activities, you must work out what proportion of the use of the services related to the taxable activities);
the services were received not more than 6 months before you were registered;
the services were not related to goods which you disposed of before you were registered (such as repairs to a machine which was sold before registration); and
you compile an account of these services. This must describe the services and the dates when you received them. If the services related to goods which you disposed of after you were registered for VAT, the account must give details, with dates.
If the person who is registered is a corporate body, you may still be able to reclaim VAT from before it was incorporated. See paragraph 11.4 below.

11.4 What are the rules for VAT on supplies before incorporation?
If your business is a corporate body (a company, charity or association), the rules above do not allow you to reclaim any VAT on goods or services obtained before the body was incorporated. But you can treat this VAT as input tax if the:

rules in paragraphs 11.2 or 11.3 would allow you to do so if the goods or services had been supplied to the person who is now registered for VAT;
goods or services were obtained or imported by a person who became a member, officer or employee of the body;
person was reimbursed for the full cost; and
person was not a taxable person at the time of the supply or importation.

WHA

Your training costs aren't allowable either for VAT or income tax. The only allowable costs are the ongoing costs of keeping your skills up to date, not the costs of acquiring those skills. So your costs to become a qualified book-keeper aren't allowable, but ongoing costs of keeping your book-keeping skills up to the standard will be.

Be very wary of becoming VAT registered before you have to. As a new start book-keeper, you will probably find that your clients will be small and new start businesses also, so they may well not be registered for VAT, so you make yourself 17.5% more expensive compared with the competition who may not be registered.

As an aside, I would recommend that you learn and use other packages as well as Sage. Sage may be the biggest and most well known, but many would argue it isn't the best. In my opinion, there are better, and cheaper, packages that are more suited for a book-keeper. For example, Moneysoft payroll is far cheaper, more functional, and quicker data entry - ideal for payroll bureaux. VT Transaction cash book is free and has exceptionally quick data input . Quickbooks is a far more user-friendly and adaptable integrated package and compares very well with Sage for functionality.