UK Freelance advice
Out of context: Reply #11
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- johnnnnyh0
You can register for VAT but you will need to charge VAT on your services. If you work B2B this is fine as they will most likely simply claim the VAT back. If you work for people who are not VAT registered like smaller companies or small start ups then the VAT becomes an additional cost for them and might not make you as competitive. You can adjust your prices accordingly but that would mean you would make less money.
Once VAT registered you can claim the VAT back on purchases for business use as long as you get a VAT receipt. More paper work with VAT since you need to do a return every three months which is a calculation of what VAT you charged less the VAT you spent out on. The balance is what you owe Alistar Darling. It rarely works that you claim more than you bring in unless you are starting up or things are going really slowly.Ltd company will most likely mean you will need to use an accountant to compile your company accounts. It's tax efficient to a degree but you probably won't be setting up offshore Cayman island accounts with the difference.
Some companies prefer to deal with a LTD company for example government contracts tend to not want to deal with a sole trader. Ltd makes you look like a company where as sole trader can pigeon hole you into freelancer which can turn you into bloke in bedroom which means people think you live on fresh air.
Keep in mind it's a business what ever you call yourself. You need to make a profit otherwise it's called a hobby.