freelance and VAT
Out of context: Reply #10
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- thebottlerocket0
Not really an issue, VAT is paid by most orgnaisations so they are all aware of how they operate. I felt a bit funny at first, seeing as my business is just me, but after a few invoices, you get used to it and cleints are never bothered by it.
.....but there is one thing about VAT thats really important.
You pay VAT at different rates depending on your profession/industry. As a creative, not sure what the classification is but you only pay VAT at 10% to the government. However, if you are VAT registered (which is the only way you can charge VAT) you charge clients at 17.5%.
Think ofit this way, for 100k of invoices, you charge £17500 in VAT but pay only £10,000 to Inland Revenue: you keep the £7500.
For a single person business this 2.5% VAT difference more than covers the cost of accountancy.
VAT registration is compulsory for earnings over £50k
- Ah..someone already mentioned this...perhaps I should read the thread first. my Flat rate VAT is 10% though....thebottlerocket