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Value Added Tax
If your sales exceed the VAT threshold in a year you must register for VAT. In some cases it may be advantageous to be registered even though your sales are below this level. We can help you decide and help with completion of the forms. The main advantage of registration is that you are able to reclaim VAT on your purchases and expenses. The disadvantages are:-
1) You have to charge all customers an extra 17.5%
2) You have to keep records which satisfy Customs and Excise
3) You must complete VAT returns.
Preparing VAT returns can be a hassle and may be very complicated. We can, of course, complete your returns for you and provide assistance where appropriate.
Record Keeping
You are required to keep records of all your income and expenditure, but there is no fixed format which these records have to take. How detailed your records are will depend on your trade and your own needs and whether or not you are VAT registered. We can help you set up a system that will suit you. You will need to at least keep the following:-
1) Record of all sales
2) Details of bank lodgements
3) Bank statements and cheque stubs
4) Receipts for all expenditure divided between cheque and cash.
5) Records of funds taken from the business for your own use.
We can provide our own designed sheets for income and expenditure and can help you select and install a suitable computer package if appropriate.
Drawings
Finally, how will you know how much you can safely draw out of the business as your own "wage". You can take out, in rough terms, however much is left over when you have ensured that the value of your stock plus the money due from your customers plus your bank balance is sufficient to pay your suppliers and everyone else you owe money to including the Inland Revenue, Customs and Excise (and, most important of all, your accountant). You should also make sure you have a little put away for the unexpected.
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