Self Employeed VAT

CiaranC33

I recently registered as self employeed back in January. I set up a business in my local town where I provide a web design, graphic design and printing service. The Web and graphics side of the business is straight forward but as I havent invested in Prininting equipment I sub contract the printing work to a printer in another town 20 mile away. Here I am charged at trade prices for the work rather than customer prices. This provides me with the oppertunity to make a profit from from providing this service.
When I pay my invoice with the Printer I am charged Trade prices plus VAT. My earnings are not greater than €35,000 per annum which mean that I am not registered for VAT.
So should I be paying VAT on my invoices with the Printer?
Or should I add the VAT on to my clients invoice?
Slightly confused here!

Any help here would be greatly appriecated

Thank You.

Niamh.W

If you are not VAT registered, you will be paying VAT when buying from your Printer Trade Service and you will NOT be able to claim VAT back.
You are also not allowed to charge for VAT on your invoices to your customers, since you are not VAT registered.

If you are VAT registered, you can claim the VAT back of (almost) anything your company bought, but on the other hand, you need to charge your customers VAT, and at some point you need to pay that VAT to the revenue.

You'll see, either way, on one end you will have to pay or charge for VAT, no way around it Registering for VAT will give you a better cash flow to start off with, since, depending where you buy from, will not be charged VAT in the first place, and if, you will be able to claim that VAT back.

----
Basically
- If you're VAT registered, you can buy stuff 21% cheaper (claim it back). But when selling things, you pay the revenue 21% VAT of each item you sell.
- If you are not VAT registered, you pay 21% VAT when buying things, but must not pay the revenue 21% VAT when you sell things, unless you are over the annual cut off point, in which case you MUST become VAT registered.

CiaranC33

Hi Niamh,

Thanks for your reply. Thats answered my question.

Digitaljunkie

You should register for vat anyway for b2b

dbran

Hi

Whether or not you register for VAT can be a difficult question. But usually if it is B2B you will be better off registering even if you are below the threshold.

I have written a blog about this here.

http://www.irishaccounts.ie/blog/2010/04/vat-whats-the-deal/

Hope this helps.


Kind Regards


Dbran

I Drink It Up!

Okay I just read through this thread and it is very informative. Thank you.:cool:

I have two basic questions:

1. If I register for VAT, is this "cash flow" benefit a real and tangible benefit? In other words, will they not charge me as soon as my stuff arrives into the country? Do I genuinely get 2 months stay-of-execution

2. Do I have to tell the consumer/buyer that I am charging them VAT, or can I just include the appropriate figure in the final fee/cost for the goods/items in question?

Thanks.

mickbyrne

Chances are that you will buy the printing and resell it in the same vat period so the cashflow shuld be neutral assuming you pay and get paid in the same time span

You have to provide the customer with a vat invoice showing the breakdown. Just look at invoices you receive from your printer as an example

In relation to youre first post you mention vat regitration being based on earnings of 35k. Vat registration is based on TURNOVER of 35k so if you are reselling printing along with web and graphic design you're sales will be greater than 35k if you are to make any sort of aliving from the business.

dbran

I Drink It Up! wrote: »

Okay I just read through this thread and it is very informative. Thank you.:cool:

I have two basic questions:

1. If I register for VAT, is this "cash flow" benefit a real and tangible benefit? In other words, will they not charge me as soon as my stuff arrives into the country? Do I genuinely get 2 months stay-of-execution

2. Do I have to tell the consumer/buyer that I am charging them VAT, or can I just include the appropriate figure in the final fee/cost for the goods/items in question?

Thanks.

If it is "VAT at the point of entry" then you will be able to claim it back on the next VAT return you file with revenue. But they will obviously have to actually charge you the VAT before you can claim it back.

Technically you just need to show the VAT element on the invoice together with your VAT number and other details.

But if you register for VAT you must charge VAT on all your sales. You cannot pick and choose for those customers who are OK with it.

Kind Regards

dbran

dbran

mickbyrne wrote: »

In relation to youre first post you mention vat regitration being based on earnings of 35k. Vat registration is based on TURNOVER of 35k so if you are reselling printing along with web and graphic design you're sales will be greater than 35k if you are to make any sort of aliving from the business.

Small point here but the actual threshold for services is €37,500 and €75,000 for goods. Also this figure is actually itself net of VAT.

Kind Regards

dbran

Gloomtastic!

If you are a self-employed individual, as opposed to a limited company, I would strongly advise you to not buy print on behalf of AN Other. What if client doesn't pay you for a large order? This is so common in the print industry, where a client, for some stupid reason, refuses to pay. Do you think the printer will let you away without paying? Not bloody likely!

Get the printer to invoice the client directly and pay you commission equal to the trade price difference. Plus you'll get around this VAT problem.