The Wholesale Forums

[rfowler]

Hello All,

Might sound like a few silly questions but it had to be done

1. What is the advantage\disadvantage of being V.A.T registered?

2. Should I register my business as a LTD and if so again what are the advantages\disadvantages?

[PT]

It all boils down to your business. The best person to talk to would be an accountant.

Being VAT registered will allow you to claim back any VAT paid, but as a result, you will have to charge your customers VAT.

If you're selling retail, being VAT registered will be of little benefit and I would advise registering only when you need to. If your selling wholesale, then not being VAT registered could hold you back in terms of who's willing to deal with you.

A few advantages of being a Limited Company: http://www.taxtips.co.uk/content/Ltd-Advantages.htm

Being a Sole Trader, I really can't tell you much about Limited companies.

[pablow123]

If your plan is to get into wholesale VAT registration is a must because most if not all the big suppliers will not deal with you if your not registered.

[nusaint]

Originally Posted by PT

It all boils down to your business. The best person to talk to would be an accountant.

Being VAT registered will allow you to claim back any VAT paid, but as a result, you will have to charge your customers VAT.

If you're selling retail, being VAT registered will be of little benefit and I would advise registering only when you need to. If your selling wholesale, then not being VAT registered could hold you back in terms of who's willing to deal with you.

A few advantages of being a Limited Company: http://www.taxtips.co.uk/content/Ltd-Advantages.htm

Being a Sole Trader, I really can't tell you much about Limited companies.

I find this very interesting.
Thanks

[greedyboy]

If you are selling to businesses you should be VAT registered to remain competitive. If you are selling to consumers it is not so important.

[consultant]

Base your VAt decision on 2 things:
accountants advice
amount of business costs with VAT.

As mentioned, if you supply to consumers, not as much as an issue, but if trade, I would say a must.

re ltd status, it does involve more paperwork and compliance issues, and, potentially, a different tax structure, however, it gives a greater protection to the shareholders if things go wrong.

[hardwareheroes]

You will have no choice if your turnover reaches 64k though - you MUST be VAT registered.

Being a ltd company is handy if you think there is a chance you will fail and get into debt as it protects you personally. Effectrively, you are merely an employee of your own ltd company. It may be harder initially to get credit accounts from suppliers if you are ltd however.

[consultant]

It may be harder initially to get credit accounts from suppliers if you are ltd however.

I have never heard that one before!

[hardwareheroes]

Originally Posted by consultant

It may be harder initially to get credit accounts from suppliers if you are ltd however.

I have never heard that one before!

A brand new ltd company has no trading history and if it goes bust with no assets, the creditor has no way of getting money back.

If , however, you are a sole trader and you go bust, they can take your house, car and any other material posessions so you are a much better credit risk and more likely to be offered credit accounts.

You sure you've never heard of that before - its actually VERY common.

[greedyboy]

It's swings and roundabouts as I know of some companies who will NOT deal with NON LIMITED companies.