Sole Trader becoming VAT registered, any advice?

[Lexual]

It's looking like I will soon be breaking the £83k turnover threshold and will need to become VAT registered, I'm actually looking to start the process immediately.

It's certainly not my area of expertise but a bit of reading up on it and it seems I just do it online via HMRC and wait for my number. I will find myself an accountant for everything else.

Has anyone else gone through this process and can give any advice to make it as quick and painless as possible?

The other questions I want to ask... when can I actually claim the VAT back on materials from my suppliers? every 3 months on the VAT return?
As an example.. say I've paid £4000 in VAT on materials from my suppliers in a 3 month period, I just put that figure on my VAT return and 10 days later I get £4000 back from HMRC?

I've read that I can claim VAT back from previous years before being registered, is this only for items in the business such as laptops, phones, office rent etc, or does this include the materials I paid VAT on that I've then supplied to my customers?

I will get an accountant, I just want to make sure this is the right move or if staying below the threshold might be better for me, but the vast majority of my clients are VAT registered.

Many thanks.

[Lexual]

Thanks Ian, I'm a fairly bright chap but I needed that put simply and I get it now..

Pete, I'm selling printed materials and products of which the vast majority will be +VAT, I do very little design or 'time' work that I actually charge for.

The majority of my customers, and the customers I target are medium to large businesses that will be VAT registered, I also work with charities who need to have VAT invoices.

I would say all of my competitors are VAT registered.

As an example..

Currently I buy product A from my trade supplier at £25.00 +VAT - £30 cost

I sell at £50.00 - £20.00 profit - 40% margin

then I get VAT registered:

Buy product A at £25.00 +VAT - £30 cost

sell at £42.00 +VAT (£50.40) - £17.00 profit - c.40% margin +£3.40 VAT reclaim difference - total £20.40 profit.

So if I have this correct, I can make my prices look even more competitive and the total invoice be the same, the customer can reclaim the VAT, while I still maintaining my profit margin?

[Lexual]

The Moose said:

Lexual said:

Thanks Ian, I'm a fairly bright chap but I needed that put simply and I get it now..

Pete, I'm selling printed materials and products of which the vast majority will be +VAT, I do very little design or 'time' work that I actually charge for.

The majority of my customers, and the customers I target are medium to large businesses that will be VAT registered, I also work with charities who need to have VAT invoices.

I would say all of my competitors are VAT registered.

As an example..

Currently I buy product A from my trade supplier at £25.00 +VAT - £30 cost

I sell at £50.00 - £20.00 profit - 40% margin

then I get VAT registered:

Buy product A at £25.00 +VAT - £30 cost

sell at £42.00 +VAT (£50.40) - £17.00 profit - c.40% margin +£3.40 VAT reclaim difference - total £20.40 profit.

So if I have this correct, I can make my prices look even more competitive and the total invoice be the same, the customer can reclaim the VAT, while I still maintaining my profit margin?

You should be buying at £25 + vat so £30 outlay = £25 cost + £5 due from taxman

You then sell fro £50 + vat so £60 coming in = £50 for you + £10 due to taxman

You owe the tax man £10 and he owes you £5 so you pay him £5.

Before you were VAT registered you would be making £20 on the deal. Now you're making £25 and there's no difference to the majority of your customers (they reclaim the £10 of VAT they paid you from the taxman and they wouldn't have paid this in the first place before you were VAT registered).

I completely get this, and for many of my products the price wont change, perhaps it was a bad example but in my head I was thinking of a particular product that I would like to make more competitively priced but keep the same margin. On the whole my prices wont change and so the overall margin should improve.