Follow These Steps to Manage VAT Successfully
With Making Tax Digital compliance now a requirement for all VAT-registered businesses, it pays to get on top of your systems.
Houzz.co.uk, the leading platform for home renovation and design, including the all-in-one software solution for industry professionals, has teamed up with accounting experts at 5 Rivers Accountancy to share expert advice on managing VAT. As a member of the Institute of Chartered Accountants of England and Wales (ICAEW), the team at 5 Rivers Accountancy specialise in helping interior design and construction firms.
- Registering for VAT
First, consider if you need to register for VAT. If you’re in business in the UK and your turnover exceeds £85k in either a rolling 12-month period or the next 30 days, you need to register for VAT. If your annual taxable turnover is under £85K, you do also have the option of registering for VAT. The benefit of registering for VAT, is that you’ll avoid paying VAT on business expenses and be able to claim back the VAT on business purchases when you file your return with HMRC.
- Choosing the right scheme that works for you
Once you’ve registered, you’ll be asked which accounting scheme you’ll be using, so HMRC can calculate whether you owe VAT or are owed a refund. Most businesses will record the VAT obtained on each sale and paid on each purchase, and then submit a VAT return quarterly. However, there are also a number of other schemes that businesses can opt for, including annual, monthly, flat rate or cash accounting schemes.
- Keep accurate, up-to-date records
Good record-keeping is very important for any business, especially if your services mean you claim back more VAT than you charge in order to get a VAT refund from HMRC. HMRC do spot checks, particularly if you claim a refund, and will want to check invoices, bank statements, receipts and that bank reconciliations are being done.
Not keeping records that are accurate, complete or readable can lead to financial and legal consequences. HMRC can issue high penalties where mistakes are made with VAT filings and if you don’t keep records for the required periods of time. That’s why adopting an efficient and accurate accounting system is essential to ensure your company’s filings are error-free.
Houzz Pro, the all-in-one software solution for industry professionals is integrated with bookkeeping systems, Xero and QuickBooks, allowing you to easily sync your estimates, invoices and payments from your Houzz Pro account to your chosen accounting scheme. As well as eliminating the need to do double entry between your two tools, this latest integration improves accuracy, so you can be sure your accounts and VAT records will be error-free and up to date.
Syncing each and every business expenditure not only saves you time but also helps you avoid mistakes by ensuring every key transaction is accounted for. Houzz Pro’s built-in error centre goes one step further in solving inaccuracies and offering solutions to core problems.
For further information head to Houzz Pro to learn more.
