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Starting up business, claiming vat off startup costs

  • 21-03-2007 8:04pm
    #1
    nusername
    Closed Accounts Posts: 45 ✭


    I think this is the best place to post this, but if not, feel free to move it mods.

    Hope someone here can help me out with some advice.

    I'm starting up a business soon (let's pretend it's carpet cleaning) & I want to buy some carpet washing machines from the UK. I'm also going to need a van to transport my equipment around.

    I'm going to be setting up as a sole trader & operating on my own, I have a company name I'll register in the Company Registrations office.

    My question is, then what? After I register the company I want to get the van & order the equipment by credit card over the internet, I'll have to pay vat on the equipment so I'll obviously want to get this back. Also, can I claim vat back on a 2nd hand van?
    What is my next step, can I just order the stuff by credit card & then register for vat & claim back at the end of the year when I'm doing my tax?!?
    Or would I have to register for vat before even thinking about purchases?

    Also, any of you guys any idea what Public Liability Insurance woud be for a sole trader doing carpet cleaning? hundreds, thousands, tens of thousands??

    All advice welcomed & appreciated!


Comments

  • #2
    information
    Closed Accounts Posts: 362 ✭✭information


    nusername wrote:
    What is my next step, can I just order the stuff by credit card & then register for vat & claim back at the end of the year when I'm doing my tax?!?
    Or would I have to register for vat before even thinking about purchases?

    Most companies do vat every 2 months not yearly, you should register before you buy your stuff.

    Ask the mods to move this to accountancy forum and you should get a better reply


  • #3
    flash harry
    Closed Accounts Posts: 511 ✭✭✭flash harry


    you need to register for VAT seperately.

    No VAT on inter EU transactions i.e. buy from UK = no VAT charged (unless a service)


  • #4
    nusername
    Closed Accounts Posts: 45 ✭nusername


    Cheers lads,

    So I'm wasting my time registering for vat it seems.


  • #5
    flash harry
    Closed Accounts Posts: 511 ✭✭✭flash harry


    really depends - if you are going to be spending significant amounts on products that will have vat on there price e.g. shampoo in your example, you may want to offset that against vat put onto your sales......


  • #6
    clarkey1980
    Registered Users, Registered Users 2 Posts: 73 ✭✭clarkey1980


    flash harry wrote:
    you need to register for VAT seperately.

    No VAT on inter EU transactions i.e. buy from UK = no VAT charged (unless a service)

    There is no VAT charged on inter EU transactions only if you are VAT registered yourself and can supply a VAT number. Otherwise VAT will be charged


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  • #7
    information
    Closed Accounts Posts: 362 ✭✭information


    nusername wrote:
    So I'm wasting my time registering for vat it seems.

    Reasons why you should register for VAT:

    1) You will have to register for VAT if you reach the required threshold.
    2) If you don't register for VAT and therefore don't charge your customers VAT, but half way during the year, you reach the threshold, you will have to pay the VAT on the first half of the years income, even though you never charged your customers VAT.
    3) You can buy goods less of VAT.
    4) If you are dealing with businesses VAT makes no difference, as they will be VAT registered.

    Reasons why you shouldn't register for VAT:

    1) you will not reach the VAT threshold.
    2) You are dealing with the general public, not being VAT registered will make your product 17% cheaper.


  • #8
    conical
    Registered Users, Registered Users 2 Posts: 378 ✭✭conical


    information wrote:
    2) If you don't register for VAT and therefore don't charge your customers VAT, but half way during the year, you reach the threshold, you will have to pay the VAT on the first half of the years income, even though you never charged your customers VAT.
    That doesn't sound right, are you sure about that? :confused:
    information wrote:
    2) You are dealing with the general public, not being VAT registered will make your product 17% cheaper.
    Surely you mean 21% cheaper, I presume the customers will be in Ireland.

    -C


  • #9
    information
    Closed Accounts Posts: 362 ✭✭information


    conical wrote:
    That doesn't sound right, are you sure about that? :confused:
    Yes.

    You are trading for 11 months and then you go over the threshold in the 12 month.
    You must pay the VAT you should have charged for the first 11 months, so you have to pay it yourself or go back and ask the customers for it.
    Thats why its always best to register for VAT if you think you will be anywhere near the threshold.

    conical wrote:
    Surely you mean 21% cheaper, I presume the customers will be in Ireland.
    Price without VAT = 100
    Price with VAT = 121

    If its 21% cheaper 121*.79 = 95.59
    If its 17% cheaper 121*.83 = 100.43

    VAT rate is 21% but the goods will be 17% cheaper to the purchaser as per above


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