New Business

mossysheehan

Hey,

I've a few questions i'd be delighted if someone could answer or give me a link to somewhere i'd find them.

Myself and a friend are both civil engineering graduates. We're looking at setting up a business which would involve buying a piece of equipment worth about 4000 euro and probably a van. The equipment would most likely be bought from the US.

Should we be registering for VAT? is it true a lot of companys won't contract us if we're not registered as they can't claim our fee against their own profits then? Do you have to be earning over a certain amout to be allowed register?

As this business would be set up mainly to give us some experience in our field so as when jobs come around again we'll be in a better position to be employed, is there any way setting up this business (or registering it for VAT) would have any effect on either of us setting up a "proper" business in years to come?

I'm sure i have a million more questions I'll post up when i think of them but for the moment these are my main queries. Any link to a good website for starting new business' would also be great.

Thanks for reading...

oscarBravo

mossysheehan wrote: »

Should we be registering for VAT? is it true a lot of companys won't contract us if we're not registered as they can't claim our fee against their own profits then? Do you have to be earning over a certain amout to be allowed register?

You probably should. The main drawback is the nuisance factor of having to submit bi-monthly VAT returns.

A company (with certain exceptions) can deal with a supplier who isn't VAT registered, and can offset your fee as an expense against profits; they simply can't claim the VAT back (because you're not charging it).

There isn't a minimum earning to VAT register, but there is a turnover threshold beyond which you must register. It's probably better to get registered up front, because it can be complicated to change your fee structures later - I know of a business that deals a lot with the public, who were forced to register for VAT after being in business for a while. They couldn't add VAT onto the normal price they were charging the customers, so they had to make it a VAT-inclusive price, and give a big chunk of it straight to the taxman.

Other aspects - you can claim back VAT on your own purchases, including the van and the diesel for it. You'll probably have to pay VAT at point of entry on your imported equipment, and if you're VAT-registered you can clam that back too.

DubTony

Rule of thumb. If you're business is serving other businesses, it's best to be vat registered. If you're purchasing goods for resale in Ireland, you can claim the vat back. If your purchased goods come from another EU country they won't charge vat when you provide your vat number. This goes for your expense items as well. It also means that your goods cost you less if you're vat registered i.e. you're not really paying the full vat inclusive price. And your customers will probably prefer to see proper vat invoices. There's something a little bit "questionable" when dealing with guys who aren't vat registered.

By the way there are different time periods for returning vat these days. I think it depends on your turnover. 3 times a year is quite common these days.