Still looking into this sole trader v limited company and VAT registration.
I've just had a mail from someone who I will be doing work for and he says that his accounts department do not pay for work done unless they are registered for VAT.
If I'm VAT registered (despite earning under the threshold of compulsory VAT) does this mean I willl have to charge all my clients VAT?
- If you are VAT registered whether you reach the threshold amount or not, you must add VAT to your invoices. You can register for VAT whether you reach the threshold or not though - that does not matter.
- Is this likely to be problematic when trying to obtain work?
I'm thinking of:
A) Companies that aren't VAT registered and don't therefore fancy the idea of paying an extra 17.5% (or whatever it is) for my services
B) Getting freelance work through an agency
- Depends what kind of market you are hitting with your services! If you are going to be targeting small business with a low turnover then being VAT registered may well out your hourly rate well above competitors who are not VAT registered. If you are working with bigger businesses (turnover above £60k or whatever the threshold is) then being VAT registered will not be an issue.
Not sure about the agency - would have thought they would be VAT registered so whether you submit an invoice for £1,000 without being VAT registered or an invoice for £1,175 being VAT registered then it will in effect be the same amount of money for them so in theory should not be a problem for them. Worth checking before you register for VAt though I guess.