Soletrader Registering for VAT (Options)

paul7g

Hello,

I have a few questions around VAT for soletraders, and i would be very grateful if someone could help me with the following please.

1 - how do you (soletrader) register for VAT
2 - how much does the registration process cost
3 - what benefits / advantages does the soletrader get when they are VAT registered (if any)
4 - how do your customers (other businesses) benefit from you being registered for VAT
5 - i work within the Web Development industry, so lets say i was usually charging €1,000 for a website, what do i charge now? €1,000 + VAT or €770 + VAT

Very grateful to any help on each of the questions above.

nompere

1) Fill in a TR1 - online at www.revenue.ie
2) It doesn't need to cost anything.
3) You get to recover the VAT charged to you.
4) None really. But it's mandatory once your turnover is likely to exceed €37,500 in a 12 month period.
5) If they're registered for VAT themselves then you charge €1000 plus VAT. It makes no difference to them whether you're registered or not. If they're not registered, or not entitled to a credit for VAT, you have to consider your competition. If they're all unregistered then you might have to think about your pricing. But if you're good at what you do, then the price becomes less important.

paul7g

Great, thanks for answering all of those.

So am i right in saying that basically a customer (another business), won't care about the VAT on the price, as they'll simply recover the VAT amount, however if the customer is not registered for VAT, then they will care, as they will have to pay the VAT price (without recovering it)?

Also, if my competitors are not VAT registered, they will be able to go in with a cheaper price too?

barneystinson

paul7g wrote: »

Great, thanks for answering all of those.
...
Also, if my competitors are not VAT registered, they will be able to go in with a cheaper price too?

It depends on the inputs, how much cheaper they can go in. If you're registered then your phone, Internet, business diesel, professional fees incurred etc. all cost you about 19% less than theirs.

paul7g

Thanks, i really need to get clued up on this... i'll speak to an accountant, thank you.

paul7g

nompere wrote: »

3) You get to recover the VAT charged to you.
.

Hi, could explain how this works please.

Let's say i take in €40,000 in the year, and after my expenses etc, i have a tax bill of €15,000 - however i have not taken into account all the VAT that i paid on business items for the year.

1 - do i calculate all of the VAT i paid on business items and subtract it from €15,000?

2 - do you have to wait until the end of the tax year to reclaim the VAT paid on business items

Thank you for your help.

barneystinson

paul7g wrote: »

Hi, could explain how this works please.

Let's say i take in €40,000 in the year, and after my expenses etc, i have a tax bill of €15,000 - however i have not taken into account all the VAT that i paid on business items for the year.

1 - do i calculate all of the VAT i paid on business items and subtract it from €15,000?

2 - do you have to wait until the end of the tax year to reclaim the VAT paid on business items

Thank you for your help.

Holy jebus. Talk to an accountant, or your local enterprise board, or anyone!!

You file a periodic VAT return every 2, 4 or 6 months (depending on turnover) and on it you account for the VAT you've collected for the exchequer (you are essentially only a collection agent for the VAT due on your sales), and the VAT you've paid on your inputs that you are entitled to deduct. You then pay Revenue the difference (or if input vat is higher they pay you).