Does not being registered for VAT mean other business wont trade with me?

niallkenny83

Hi All,

I hope you can all help.

I plan on setting up a small business - I will supply goods to retailers in Ireland. I will not register for vat at first because I wont exceed the threshold.

BUT IF I AM NOT REGISTERED FOR VAT WILL RETAILERS DEAL WITH ME?

IF I DONT PAY VAT THEN DOSE THAT MEAN RETAILERS I SUPPLY TO ALSO DONT HAVE TO PAY VAT ON THE GOODS THEY BUY OFF ME AND SELL TO CUSTOMERS?

IF THEY DEAL WITH SOMEONE WHO ISNT REGISTERED FOR VAT -ME-AND THEY HAVE TO PAY VAT THEN DOES THIS CUT INTO ANY MARGIN THEY CAN POSSIBLY MAKE ON THE PRODUCTS?

I appreciate any advice or comments,

Thanks,

Nk

J.Ryan

As all your customers are going to be VAT registered, why not register yourself?

niallkenny83

Thanks for that, Im considering it, but do you know the answer to this question;

IF I DONT PAY VAT THEN DOSE THAT MEAN RETAILERS I SUPPLY TO ALSO DONT HAVE TO PAY VAT ON THE GOODS THEY BUY OFF ME AND SELL TO CUSTOMERS?

smcgiff

niallkenny83 wrote: »

Thanks for that, Im considering it, but do you know the answer to this question;

IF I DONT PAY VAT THEN DOSE THAT MEAN RETAILERS I SUPPLY TO ALSO DONT HAVE TO PAY VAT ON THE GOODS THEY BUY OFF ME AND SELL TO CUSTOMERS?

If a VAT registered trader buys off of you and you are not registered there will be no VAT on your sales or their purchases off of you. If they sell the goods onwards, and are VAT registered they will add VAT.

In general the benefits of becoming VAT registered outweigh the cons.

The only trader to benefit from you not being VAT registered is a fellow non VAT registered trader.

barneystinson

niallkenny83 wrote: »

Thanks for that, Im considering it, but do you know the answer to this question;

IF I DONT PAY VAT THEN DOSE THAT MEAN RETAILERS I SUPPLY TO ALSO DONT HAVE TO PAY VAT ON THE GOODS THEY BUY OFF ME AND SELL TO CUSTOMERS?

SMcGiff has already answered your question above, but I think an illustration might help you to understand the situation:

(I am assuming you are going to have to pay VAT on the inputs for whatever it is you are selling to the retailers?)

IF NON-REGISTERED:

Lets say your materials cost you €50 + VAT (which is €60.50).

You work your magic and sell to retailer for €100 (no VAT if you aren't VAT registered).

Your margin is €39.50.


IF REGISTERED:

You can reclaim the €10.50 of VAT on your materials, so the cost of your inputs is €50.

You sell for €100 + VAT (€21), so that's €121.

However, if your customers are VAT registered, as most retailers are, then they will reclaim the €21 of VAT, so the cost to them is still €100.

Your margin is €50.

This doesn't include the VAT you can claim on other inputs such as phone, diesel, equipment etc... if you are registered.

The drawback is that you have to file VAT returns, and hand over the VAT you are collecting for the exchequer.

goat2

niallkenny83 wrote: »

Hi All,

I hope you can all help.

I plan on setting up a small business - I will supply goods to retailers in Ireland. I will not register for vat at first because I wont exceed the threshold.

BUT IF I AM NOT REGISTERED FOR VAT WILL RETAILERS DEAL WITH ME?

IF I DONT PAY VAT THEN DOSE THAT MEAN RETAILERS I SUPPLY TO ALSO DONT HAVE TO PAY VAT ON THE GOODS THEY BUY OFF ME AND SELL TO CUSTOMERS?

IF THEY DEAL WITH SOMEONE WHO ISNT REGISTERED FOR VAT -ME-AND THEY HAVE TO PAY VAT THEN DOES THIS CUT INTO ANY MARGIN THEY CAN POSSIBLY MAKE ON THE PRODUCTS?

I appreciate any advice or comments,

Thanks,

Nk

if you are calling your self a business, you have to charge vat, and be vat registered, and other businesses have to fill out forms with your vat number on them, everything you do has to have a paper trail, retailer has to show where everything came from as well as where it is going

barneystinson

goat2 wrote: »

if you are calling your self a business, you have to charge vat, and be vat registered, and other businesses have to fill out forms with your vat number on them, everything you do has to have a paper trail, retailer has to show where everything came from as well as where it is going

Not correct.

http://www.revenue.ie/en/tax/vat/registration/index.html

goat2

barneystinson wrote: »

Not correct.

http://www.revenue.ie/en/tax/vat/registration/index.html

thank you for that
so one does not have to register if they earn less than seventy five thousand euro for supply of goods,
and less than thirty five thousand for supply of services,

niallkenny83

Thanks all for your input - I really appreciate it very helpful indeed

bridster007

Being registered for vat may also make you look a bit more professional/credible as a business in retailers eyes.