MegaSack DRAW - This year's winner is user - rgwb
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Anyone (and im sure there are plenty on here) familiar with the pros and cons of VAT Registraion? My wife is in the process of setting up her own Beauty Studio from home, and whilst turnove is never going to approach the £73k mandatory threshold, to my mind i cant see any disadvantage other than having to submit a VAT return, whilst saving the VAT on anything business related must be a good thing?
Is anyone out there with a small business not VAT registered, if so, what advantage do you gain?
Are there any downsides to registering?
If you are not selling to other VAT registered businesses than being registered will add 20% to the price (registered companies would claim it back so ignore it).
Do everything you can to stay under the threshold.
If the value of the goods she supplies on each job outweighs the labour charge then registering is worthwhile, otherwise don't.
I'm not an accountant but that seems to make sense to me.
I'd keep it as simple as possible while you start up. Once she's done a few months you can look at the numbers.
As Murray pointed out you will be less competitive in your market if your clients aren't VAT registered too. A beauty studio will only get vat registered clients such as photography and film studios for models/actors makeup who can claim the VAT back.
Most of your profit will come from her expertise rather than the products you use or sell so you will either 20% more expensive or make less profit than a similar setup who isn't VAT registered
Avoid being VAT registered at all costs - it's a record keeping pain and eventually no matter how diligent you are you'll miss a VAT return deadline and get fined.
Some reasonable advice on this thread, but ignore teef. Record keeping is hardly any more involved than normal book keeping - and ensures you stay on top of it every quarter. Filing a VAT return online takes 10 minutes.
Not sure what bedmaker is on about.
Personally, I had to register as all my customers are VAT registered and hiding the +20% on materials meant I wasn't competitive. As others have said though, if your customers aren't, then don't.