As a small business owner you are most likely very aware of paying VAT on the stock you buy and the services you use. Are you considering becoming a VAT vendor to claim it back? The decision of when to register for VAT can be a tricky one for new small businesses.
The VAT system is not simple and, if you get it wrong, very expensive. It is not something you can easily pick up and run with. And, like most hard-pressed business owners, you are probably daunted by the plethora of regulations, requirements, obligations and administrative hoops to jump through. You’ve come to the right place, though, as our Diga professionals know these processes very well! Here, we give you some pointers.
Basically, you have 2 options when to register for VAT:
- When your annual turnover is over the current threshold of R1 million, you don’t have a choice: it is compulsory for you to register. It is advisable to seek professional assistance with the ongoing admin and to ensure all regulations are complied with.
- If your annual turnover is over R50 000 but under R1 million, registration is optional: you don’t have to register as a VAT vendor, but you may if you want to.
In this instance, you decide when it is beneficial to voluntarily register as a vendor. Your decision will depend on many of factors, such as the nature of your business, your cash flow situation, and the type of expenses you incur.
Here are some advantages to being a VAT registered vendor to consider:
- You can be refunded on the VAT you paid out for your business.
- It is necessary to be VAT registered to do business with certain organizations and businesses.
Should you require any VAT related assistance, email us on firstname.lastname@example.org and let us know your specific needs.