VAT

[JDP]

The main "VAT is hell" myth comes from the more complex end of sales where some are rated at various different rates, exemptions etc etc, not so much a problem in this industry.

 

And because everywhere you look on TV, whenever the VAT word is mentioned, the person 'doing' it seems to be having nightmares... On soaps and dramas admittedly, but it doesn't send very good signals out, I guess due to poor research....

 

If you do as Gareth suggests and have detailed accounts its easy. If however, when the return comes in, you need to find your receipts and invoices and log it all then, your likely to have a nightmare. If your organised, and make clear records of everything perhaps on a weekly basis when its logging a few receipts and 1 or 2 invoices, you will find it to be very easy, you just need to make your maths on the spreadsheet add up.

[zonino]

could therefore write off the VAT that I charged them

 

its not written off, its claimed back, they're quite different!

[Pattern123]

Having run a Ltd Company for 6 years, I can confirm that VAT IS Hell! It think it comes down to the person having to do the returns. Sure you can pay an Accountant or Book keeper to do it for you, but who can afford it? The more successful you are, the worse the VAT returns get, because you are away for weeks at a time, mountains of paperwork pile up and need INPUTTING to Sage. Sage or any other books software is only as good or easy as the operator, and you won't use it regularly enough to get to grips with using it fluidly, which means you sit there for hours, knackered, at 2am, inputting data. When my business hit half a million turnover a year, the wheels came off.

 

If you don't do much work, and only have half a dozen reciepts and invoices a week, and spare time, and you have that kind of mind, I am sure it's fine. But if like me you'd rather saw off your bits with a blunt butterknife than do paperwork, don't register. It may seem like you will get lots of money back, but remember VAT isn't yours, you are just collecting it for the Govt, you will have to pay it quarterly or annually, and if you don't have it, it HURTS.

[paulears]

I really don't understand this - if you can't find the time to do the paperwork, then it's not just the VAT that's causing problems, it's your entire accounts system. You cannot use things like Sage by saving up all the paper and then trying to enter it in one go? They're built for little and often use - especially as all the features they have that you paid so much for are designed to tell you how you're doing. I don't use Sage - it offers lots of stuff I don't need, although my accountant wants me to use it so they don't have so much to do.

 

If you do the accounts as I do, then the day to day stuff is easy. I find the end of year reconciliation with the bank accounts a real pain, but all the receipts I've entered are numbered and it's just a case of sorting them into months and making sure none are missing. I really don't think VAT adds anything at all - maybe a couple of hours a year if the state of the accounts is right up to date.

[TonyMitchell]

Having run a Ltd Company for 6 years, I can confirm that VAT IS Hell! It think it comes down to the person having to do the returns. Sure you can pay an Accountant or Book keeper to do it for you, but who can afford it? The more successful you are, the worse the VAT returns get, because you are away for weeks at a time, mountains of paperwork pile up and need INPUTTING to Sage. Sage or any other books software is only as good or easy as the operator, and you won't use it regularly enough to get to grips with using it fluidly, which means you sit there for hours, knackered, at 2am, inputting data. When my business hit half a million turnover a year, the wheels came off.

 

If you don't do much work, and only have half a dozen reciepts and invoices a week, and spare time, and you have that kind of mind, I am sure it's fine. But if like me you'd rather saw off your bits with a blunt butterknife than do paperwork, don't register. It may seem like you will get lots of money back, but remember VAT isn't yours, you are just collecting it for the Govt, you will have to pay it quarterly or annually, and if you don't have it, it HURTS.

 

I struggle to get my mind around any of that. In this age, paying a book-keeper to key Sage data is like spending the afternoon dictating shorthand to a secretary rather than doing your own emails - a waste of time and profit. We process around 1,500 sales invoices and 500 POs a year on Sage Line 50, similar turnover to what you've mentioned, with myself and one other colleague having Sage open & minimised all day every day - we use it as a live system and an integral part of the business. I'm sorry, but if you're pulling your hair out at 2.00am on the day before your VAT return is due, you're making what should be a very simple process, incredibly difficult and unnecessarily so. IMHO.

[Pattern123]

I struggle to get my mind around any of that. In this age, paying a book-keeper to key Sage data is like spending the afternoon dictating shorthand to a secretary rather than doing your own emails - a waste of time and profit. We process around 1,500 sales invoices and 500 POs a year on Sage Line 50, similar turnover to what you've mentioned, with myself and one other colleague having Sage open & minimised all day every day - we use it as a live system and an integral part of the business. I'm sorry, but if you're pulling your hair out at 2.00am on the day before your VAT return is due, you're making what should be a very simple process, incredibly difficult and unnecessarily so. IMHO.

 

I can see why you would struggle to get your mind around it, you obviously are in an office all day with computers running, processing Invoices as you say 'Live'. I was running a Production Company which involved being on the road 50-60% of my time, being in the Office sporadically with 'online' that consisted of a dialup modem. Most of my time when in the Office would be spent writing cheques to suppliers, raising PO's for upcoming jobs and raising Invoices. Paperwork for VAT would, quite literally, pile up in an 'In' tray. If you have a system which can generate your Invoices & PO's etc and reconcile all of that to books and generate a VAT return at the touch of a button I can see how you would find this alien. You are very lucky, and probably better organised and suited to running a business than me! Sadly, that's not true for most of us.

[zonino]

See, if you're using sage to its full advantage it CAN do all of that for you, including prepares & even printing the cheques for you.

 

if you use sage properly your vat paperwork LITERALLY takes 15 minutes tops.

 

(I am available for financial systems training & planning if no conflict of interest arises with my full time employer <_<)

[Ahten]

See, if you're using sage to its full advantage it CAN do all of that for you, including prepares & even printing the cheques for you.

 

if you use sage properly your vat paperwork LITERALLY takes 15 minutes tops.

 

(I am available for financial systems training & planning if no conflict of interest arises with my full time employer <_< )

 

I echo the sentiment but why pay to use Sage when you can Microsoft Accounting package for FREE. The VAT bit is a doddle, it took me longer to figure out what the help file meant exactly by "change the date" to get a quarterly return then generate the data.

I'm so impressed with the freebie version of Microsoft accounting that I have paid for the Pro version to get the stock control option but even that was only £150.

Any accounting package is a pain to set up first time around - only you know who your customers are, how you want to account for all the bits and pieces but once set up it saves so much time and effort.

Make sure you download the UK version and be warned the Step by Step book details the USA version.

 

If you are not sure about what HMRC (the tax man) want then go on a FREE course run by them for half a day or a course run by Business Link.

 

Neil

http://www.msofficeaccounting.co.uk/Express.aspx

[Pete McCrea]

I echo the sentiment but why pay to use Sage when you can Microsoft Accounting package for FREE....

 

Because I don't know of any accountant that uses it? And that said Instant Accounts ain't expensive.