A Complete Guide to VAT Registered Business for Dropshippers

If you're looking to set up a new business or to expand your former business online and you need the easiest way to begin, try dropshipping. Dropshipping is a low-risk, low capital, and easy online business for all and sundry. However, registering your brand as VAT taxable provides added advantages for your dropshipping business. You want to find out how? Keep reading below.

VAT & "VAT Registered": Definition

Value Added Tax (VAT) is a consumption tax paid on goods and services. It is an indirect tax paid by consumers upon the purchase of goods and services. Although it is a general tax paid by all commercial service providers, there is an annual turnover limit to attain before a business can become taxable. The VAT charged for each service rendered and goods sold are specific to them. In UK, the standard VAT rate on most goods and services is 20%.

Being VAT Registered means registering your business to pay tax. As a start-up or expanding business owner running dropshipping, you can enlist your business under the government to be taxable. A VAT registered business collects VAT on goods and services sold and declares VAT returns to the government quarterly. You are legally allowed to charge VAT on goods and services sold to customers. Your dropshipping business can be VAT registered even before you attain the annual turnover limit, as it helps in enhancing your brand's profile and credibility. Are you wondering why you should enlist to pay tax even before you reach the turnover limit?

Benefits of Being VAT Registered

There are lot of advantages to being a VAT registered business. The benefits of being VAT registered include:

• As a VAT registered business, you can reclaim VAT on goods and services you have purchased for your business upon submission of VAT returns. VAT reclaims available for goods purchased for your venture up to four years and on services 6months before becoming a VAT registered operation.

• Being VAT registered helps to boost your business' reputation. VAT registration aids you to compete better with already established brands in the marketplace. Your VAT registration number can be attached to your brand's details, making your brand more reputable and trustworthy.

• VAT registration helps you keep an up-to-date record of your purchase sales. It is mandatory to keep records of all purchases and sales in a VAT-registered business to provide adequate information to calculate the tax returns. This, in turn, helps you have an updated record of your business transactions and can be used to evaluate your brand's growth.

• Your VAT registered customers also enjoy the benefit of VAT reclaims on VAT inclusive goods and services they purchase from you.

Do I Need to Be VAT Registered? (for Dropshippers)

As a drop shipper, there are advantages to becoming a VAT registered brand. VAT registered drop shippers have an advantage over non-registered drop shippers because they get to claim VAT refunds on goods and services purchased for their business. Non-registered drop shippers get charged for VAT on both goods purchased and goods sold, and cannot claim VAT returns. Thus, you cannot enjoy the benefits of being VAT registered.

Also, as a VAT registered dropshipping business, your customers can easily pick up their goods without having to pay separately for VAT since you have added VAT charges to the price of goods ordered.

How to Become VAT Registered in UK?

You may wonder how to be VAT registered. There are different ways to go about VAT registration in the UK. The following ways are how to get VAT registered:

You can register your brand for VAT using the online platforms provided by HM Revenue and Customs (HMRC). To register and get a VAT number, all you need to do is create an account on the platform and provide all the necessary details. The account created becomes the platform by which you pay your VAT returns.

You can follow the steps in the video below to get your business registered easily.

2. Via an agent

You can hire an agent to help you sort through the registration processes and get you a VAT number.

Although most businesses can register online, there are few exceptions to those who get VAT registered online. Pick up and fill the corresponding VAT1 form to register via post. Business mandated to register via post are:

EU brands 'distance selling' to the UK are to register with a VAT1A form. Goods importation businesses importing over £85,000 goods from an EU country are to register with a VAT1B form. Businesses disposing of assets on which 8th or 13th Directive refunds have been claimed register with a VAT1C form.

You need to provide details of your business' annual turnover, bank, and business transactions on the account created before you can become VAT registered. Once approved, your VAT registration certificate is obtained after 30days and is sent online or via post.

How to Check Whether a Company Is VAT Registered or Not?

You can easily check if a company is VAT registered or verify your brand's VAT registration. The following ways are how to check if a company is VAT registered or not VAT registered. First, check on the company's page or details if there is a VAT registration number available because VAT registered businesses have a VAT number. You may also enquire from the customer service of the brand. Also, there are websites available where you can run a check to validate business' VAT numbers. Companies that are not VAT registered will result in an invalid check result.

Conclusion

We have discussed the various benefits of being VAT registered and how to go about VAT registration processes. You can also confirm the VAT registration of brands via the VAT checkers app online. So, what are you waiting for?

As a drop shipper, you are the middleman between the supplier and the consumer, and it allows you to access a wide array of product options and saves the cost of stocking inventory. Go register your dropshipping business and improve your brands reputation, and enjoy VAT returns.


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