Vat is the silent killer!

[Pap_sak]

About 10 months back I opened another store. Because of added turnover of this shop I had to register for vat, and this eats into my net profits hugely, at the least, around R450 per R10000.

Just working on last years figures, I would have done marginally better NOT having opened the new shop, and staying under the vat threshold, even though the new shop makes a small profit every month!

I do not regret it, it’s better to have two for quite a few reasons, and will not be closing it, but maybe I should have put the other one in my wife’s name….

If you are going to just break the 1mill mark, think long and hard before registering for vat, it might not be worth it.

[wynn]

Perhaps you can register the new store under a different cc/ptyltd ??? and keep seperate books.

The only reason you would need to register for vat (besides the turnover thing) is if you have customers who are going to claim vat input.

If you sell icecreams to the general public don't bother!!

[Pap_sak]

Perhaps you can register the new store under a different cc/ptyltd ??? and keep seperate books.

The only reason you would need to register for vat (besides the turnover thing) is if you have customers who are going to claim vat input.

If you sell icecreams to the general public don't bother!!

Well, I think whats done is done - I just should have thought about it more before registering. At the end of the day, I just need to make more sales.

[Dave A]

The R1 million mark is also the line where the small business turnover tax option disappears. Maybe not significant in retail, but I certainly expect this would impact service industry operations.

[BusFact]

Sometimes the input VAT you can claim back from other expenses such as rent, insurance, electricity, bank charges, etc may make it worth your while to register for VAT even before the R1mil mark. It depends on your overhead structure.

As you said ... do your sums.