Marie
Hi there,
I went through the voluntary VAT registration process for my consulting business a couple of years ago, and I can share a bit about my experience.
Pros:
Input Tax Reclaim: The main advantage was definitely the ability to reclaim VAT on my business expenses. This was particularly useful because, like you, I was making significant investments in equipment and software. It felt great to recover some of that money and reduce my overall costs.
Professional Image: Registering for VAT did give my business a more established appearance. Clients seemed to perceive my company as more credible, which was a nice bonus. It also aligned with the idea that my business was growing and doing well.
Cons:
Administrative Effort: The increased paperwork was definitely a downside. I had to keep track of VAT on all invoices, file quarterly VAT returns, and deal with the complexities of VAT compliance. It’s a lot of additional work, and if you don’t have an accountant, it can be quite overwhelming.
Price Increase: There was also the issue of raising my prices to include VAT. Some clients were not thrilled about this, especially since they couldn’t reclaim the VAT themselves. This meant I had to carefully manage client relationships and sometimes justify the price increase.
Overall, it was a mixed experience. The input tax savings were beneficial, especially during my startup phase, but the extra administrative work and potential client concerns were definitely factors to consider. If you’re handling a lot of VAT-able expenses and can manage the extra paperwork, it might be worth it. However, if your client base is sensitive to price increases and you’re not prepared for the administrative load, you might want to think it over carefully.
Hope this helps and best of luck with your decision!
