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VAT registration for a new buisness (sole trader)

  • 09-01-2018 7:34pm
    #1
    digitalnative
    Registered Users, Registered Users 2 Posts: 39 ✭


    Hi guys
    I’m new to this so please bear with me.
    I have a question re:registering for VAT
    I am starting up my own business as a sole trader offering web marketing services to companies.
    It is highly unlikely that I will earn as much €37,500 (the VAT threshold) in my first year. However if I get close I am aware I need to register with Revenue
    My questions is if I am fortunate enough to earn more €37,500 in my first year then am I liable to pay VAT retrospectively on every invoice I have issued since the business began?
    Or
    Should I register for VAT regardless of whether I hit the threshold or not?
    Many thanks in advance


Comments

  • #2
    Synode
    Closed Accounts Posts: 7,967 ✭✭✭Synode


    digitalnative wrote: »
    Hi guys
    I’m new to this so please bear with me.
    I have a question re:registering for VAT
    I am starting up my own business as a sole trader offering web marketing services to companies.
    It is highly unlikely that I will earn as much €37,500 (the VAT threshold) in my first year. However if I get close I am aware I need to register with Revenue
    My questions is if I am fortunate enough to earn more €37,500 in my first year then am I liable to pay VAT retrospectively on every invoice I have issued since the business began?
    Or
    Should I register for VAT regardless of whether I hit the threshold or not?
    Many thanks in advance

    You have to register for VAT as soon as you suspect you will go above the threshold at some stage in the year (could be months in the future when you do). No, you don't have to go back and pay VAT on invoices before that time


  • #3
    digitalnative
    Registered Users, Registered Users 2 Posts: 39 ✭digitalnative


    Thank you very much for your response


  • #4
    digitalnative
    Registered Users, Registered Users 2 Posts: 39 ✭digitalnative


    I have one more quick question and sorry if I'm not putting this in the right way: if I were not to reach the VAT threshold in a given tax year does that mean that in the following year I do not have to register for VAT until again my earnings hit €37,500 or will they also take my previous years earnings into account in reaching the €37,500 threshold

    Many thanks again


  • #5
    mickdw
    Registered Users, Registered Users 2 Posts: 23,686 ✭✭✭✭mickdw


    digitalnative wrote: »
    I have one more quick question and sorry if I'm not putting this in the right way: if I were not to reach the VAT threshold in a given tax year does that mean that in the following year I do not have to register for VAT until again my earnings hit €37,500 or will they also take my previous years earnings into account in reaching the €37,500 threshold

    Many thanks again

    Its yearly turnover. So if you turnover 25k each year, no requitement to register.
    As far as im aware its not profit you need to count but turnover.


  • #6
    digitalnative
    Registered Users, Registered Users 2 Posts: 39 ✭digitalnative


    Thank you, very helpful


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  • #7
    Synode
    Closed Accounts Posts: 7,967 ✭✭✭Synode


    You only register for VAT once. When you're registered, you're registered. If you don't reach the threshold in the year you registered and you don't expect to again the following year then you need to contact Revenue and ask to un-register.

    Yes the thresholds are based on turnover, not profit.


  • #8
    L.Jenkins
    Moderators, Computer Games Moderators, Technology & Internet Moderators Posts: 19,242 Mod ✭✭✭✭L.Jenkins


    Synode wrote: »
    You only register for VAT once. When you're registered, you're registered. If you don't reach the threshold in the year you registered and you don't expect to again the following year then you need to contact Revenue and ask to un-register.

    Yes the thresholds are based on turnover, not profit.

    Would it not be worth while to have a VAT number and file nil values with each filing period. To have the VAT number would be a just in case and if the OP does reach the threshold, they don't have to wait on a registration.


  • #9
    Synode
    Closed Accounts Posts: 7,967 ✭✭✭Synode


    L.Jenkins wrote: »
    Would it not be worth while to have a VAT number and file nil values with each filing period. To have the VAT number would be a just in case and if the OP does reach the threshold, they don't have to wait on a registration.

    If you're VAT registered it means you have to charge VAT. This doesn't suit some people who will not go above the threshold as it will increase their selling price


  • #10
    mickdw
    Registered Users, Registered Users 2 Posts: 23,686 ✭✭✭✭mickdw


    Synode wrote: »
    If you're VAT registered it means you have to charge VAT. This doesn't suit some people who will not go above the threshold as it will increase their selling price

    Yes in my own case, i stay under threshold. I work 95 percent for private not business customers and vat would simply be an additional direct cost making me less competitive.


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