How do I set up a VAT Direct Debit Payment?

The advantages of VAT registration are:

• It enhances the perception of your business: Registering for VAT tends to lend credibility to your business, and makes your company appear larger and more established.
• You can reclaim VAT: You can reclaim VAT on goods and services you've purchased from other businesses, and this can be advantageous in certain situations.
  

The drawbacks of VAT registration are:

• Administrative burden. As a VAT-registered business, there are VAT rules and record keeping requirements you'll need to comply with.
• It makes your goods or services seem more expensive. Charging VAT can make your goods and services more expensive-and therefore less appealing, particularly if your customers or clients are not VAT-registered business, or are end consumers who aren't able to reclaim VAT.
• You may be faced with an unexpected VAT bill. If your output VAT is higher than the input VAT, as it nearly always will be, then you need to pay the difference to HMRC. This can create cash flow issues if you're unprepared for an unexpected VAT bill.

A completed VAT Return will either show how much is owed to HMRC or whether you're due a refund.

"What are the rules around holiday pay?" is a common question often asked by employers.

It can be confusing, as regulatory changes mean that employers now need to consider additional elements when working out an employee's holiday pay.

Simply put, employers now need to include regular commission and regular overtime payments when calculating an employee's or worker's holiday pay.

This is explained in further detail below:

A contractor working through their own limited company can pay themselves through a couple of ways such as paying a salary and paying dividends. There are a few factors that need to be considered when deciding the best way to go about this.

For example, when operating inside IR35, contractors will be restricted to paying themselves a salary however when operating outside IR35 the doors are opened to maximise tax efficiencies.

To pay a dividend, you need to:

• Hold a directors' meeting to ‚Äòdeclare' the dividend.
• Keep minutes of the meeting, even if you're the only director. For smaller companies, this may often be just a case of getting the paperwork completed.
• Issue dividend vouchers.
  

There are various ways to pay your suppliers. Common payment methods include bank transfers, credit card payments and Letters of Credit.

You'll first need to check that you're eligible for the VAT Flat Rate Scheme.

If you're eligible, you can join the scheme online when you register for VAT, or submit the VAT600 FRS through one of the methods below:

• By email to frsapplications.vrs@hmrc.gsi.gov.uk
• By post to:
  

BT VAT

HM Revenue and Customs

BX9 1WR

You'll receive notification that you've joined the scheme through your VAT online account, or by post if you did not apply online.

For employers, the deadline for paying National Insurance will vary depending on the amount payable.

If the amount payable exceeds £1,500, the deadline will fall on the 22nd of the month (or the 19th if payment is made by post).

If the amount payable falls below £1,500, you can make quarterly payments instead of monthly ones. The quarters end on 5 July, 5 October, 5 January and 5 April, and payments are due on the 22nd of the month (or 19th is payment is made by post). For example, for the quarter ending 5 July, the payment must be made by 22 July.

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Working out the VAT

With our calculator, you can work out your VAT in just a few quick clicks.

If the price doesn't include VAT:

• Select the ‚ÄòAdd VAT' option
• Select the rate of VAT on the slider
• You'll obtain the gross price (inclusive of VAT) and the VAT element of the bill.
  

If the price includes VAT:

• Select the ‚ÄòExclude VAT' option
• Select the rate of VAT on the slider
• You'll obtain the pre-VAT price (exclusive of VAT) and the VAT element of the bill.

VAT basics: What you need to know

VAT, or Value Added Tax is a consumption tax that is applied to most goods and services. While the standard rate (20%) applies in most cases, there are items-such as children's car seats and sanitary products-that are charged at the reduced rate of 5%. Using the slider on our calculator, you'll be able to calculate the VAT and gross or net prices for different VAT rates. If you're unsure about the correct rate you should apply, refer to HMRC's resource on VAT rates.

Resources:

• How to deal with VAT if you are a small business
• Flat rate VAT Scheme: A beginner's guide for small business owners

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Healthy cash flow is one of the most powerful weapons in a small company's arsenal.

In fact, cash on hand can be the deciding factor in a customer's choice to buy from your company or a competitor.

For instance, imagine landing the large order of your dreams, but losing the business to a competitor because you lack the capital necessary to prepay for the products needed to fill the customer's order. Fortunately, you can avoid this pitfall by making a few simple changes in your operations.

Below is a look at seven ways to grow your monthly cash flow by reducing expenses.

As a limited company director, you can access the money in your company bank account through a facility known as a director's loan.

This can come in handy in instances when your personal finances are in need of a boost, yet taking out a director's loan is a decision that requires careful consideration. That's because there are tax and accounting implications, and it's best to speak to an accountant so that you fully understand the consequences.

But before you dive into the details, you'll need to have an understanding of the basics-such as what a director's loan account is, what the loan can be used for, tax rules you need to be aware of and more.

Here's where our guide comes in:

You can cancel your VAT registration online, or by sending form VAT7 via post.

To pay an overseas supplier, you need to:

• Decide on a payment currency
• Select a payment method: There are various payment methods and payment service providers available, including bank transfers, credit card payments, PayPal and TransferWise. When you're choosing a payment method or provider, you need to think about the currencies available, fees, exchange rates, speed of international transfers and payment reconciliation capabilities.
• Obtain the information you need to process the payment: You may need to obtain different types of information from your supplier, depending on the payment method you agree on. These may include their full name and address, bank account number, routing number and branch number and address.

As a limited company director, you pay yourself through drawing a salary and receiving dividends from your company.

Drawing a salary from your company is fairly similar to how you'll be paid if you were employed elsewhere-you'll run payroll, submit the required information to HMRC each month and receive your salary (after income tax and NIC have been accounted for).

Most businesses can register for VAT online, or appoint an accountant or agent to complete your registration and deal with HMRC.

There are certain instances where you must register by post. You should use the form VAT1 if you want to apply for a ‘registration exception', are joining the Agricultural Flat Rate Scheme or if you're registering the divisions or business units of a body corporate under separate VAT numbers.

Refer to the HMRC website for information on when you need to register by post using the form VAT1A, VAT1B or VAT1C.

You can register for VAT online through creating a VAT online account (also known as the 'Government Gateway' account). You'll need your online account to submit your VAT returns.

The tax you pay is calculated by multiplying your VAT flat rate with your VAT-inclusive turnover. The flat rate you use will depend on the sector your business falls under.

There are three VAT rates: standard rate (20%), reduced rate (5%) and zero rate (0%). VAT is not charged for exempt or out of scope items, and the standard rate applies to most goods and services. Refer to HMRC's resource for further information on what VAT you should charge based on the type of goods or services you provide.

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