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Yes on both counts.1. Enter the Sales excluding VAT
2. Enter purchases excluding VAT
Purchases are items purchased for resale. Expenses are other items.How do I identify the difference between Purchases an Expenses.
Indeed you do. Doing a Form 11 is risky unless you (1) know what you're doing (2) have braced yourself for the fallout if you make errors, such as calculating your tax position incorrectly.I think I need an accountant
Can you afford to overpay your income tax by €500-€600 or more?but because sales were only approx 7000 euro including VAT - I cant warrant that fee. Any ideas?
Sometimes it can be an advantage to register for VAT even if you are below the threshold....From a turnover point of view you should not be registered...
thoses cases are surely few and far between. Unless you are selling a zero rated product there can't be much sense in it.
What are the advantages?
Purchases can be equiptment and other items than can be capitalisedPurchases are items purchased for resale. Expenses are other items.
If your customers are all vat registered, it can be a very significent benefitWhere a business's turnover is very low, such as the above example, the benefits of registering are likely to be minimal.
...not for the purposes of Form 11, which was the original query.Purchases can be equiptment and other items than can be capitalised
If your customers are all vat registered, it can be a very significent benefit in term of cash flow when you are starting out and turnover is low.
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For a €10K per annum turnover business...
A benefit? yes - but usually only in the very short-term. Very significant ? No.
The lower the turnover the more significant it would be.
Well, from my own point of view, I am a self-employed Graphic & Web Designer and all my clients are businesses. I charge 21%, they claim 21%, so it's never even discussed or becomes an issue. Where it becomes an advantage to me, is that every expense I have is VAT claimable (eg; broadband, mobile phone, stationery, diesel, computer equipment/software).thoses cases are surely few and far between. Unless you are selling a zero rated product there can't be much sense in it.
What are the advantages?
If someone is sailing that close to the wind financially, you would have to wonder why they are self-employed in the first instance. The VAT system is rarely a dependable source of finance for any business of this size.
The only valid reason to be vat registered is to give your clients the impression that you are a bigger business than you are.
I completely agree.The worst thing any person could do is look at their vat on sales as a source of funding.
This is a very strange statement. I don't agree with this. As I have outlined in my own example above (I'm sure there are many more businesses like mine), registering for VAT can be an effective way of reducing expenses costs.The only valid reason to be vat registered is to give your clients the impression that you are a bigger business than you are.
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