How to set up UK accounts - not VAT registered, but expect will be one day?

[Wm]

On 03/12/2016 12:00, Dr. David Kirkby (Kirkby Microwave Ltd) wrote:
> On 3 December 2016 at 09:22, Maf. King <maf at chilwell.net> wrote:
>> On Saturday, 3 December 2016 08:49:58 GMT Dr. David Kirkby (Kirkby Microwave
>> Ltd) wrote:
>>> I run a company in the UK, but are not VAT registered. But I think
>>> that will change at some point, and the company will need to be VAT
>>> registered.
>>>
>>> Is it more sensible to set up the GnuCash account as "Business" or "UK
>>> VAT Accounts"?  There seems to be two possible issues
>>>
>>> 1) If I set it up without VAT, it may become more tricky to manage if
>>> the company becomes VAT registered.
>>>
>>> 2) If I set up with VAT, it will cause more of a headache now, when
>>> the company is not VAT registered. (I did wonder if setting it up with
>>> VAT, and setting the VAT rate to be 0% might be a sensible solution.)
>>>
>>> Any thoughts?
>>
>> Hi David,
>>
>> I have often said in the past (and others have too) that you should make GC
>> reflect real life.  You are not registered for VAT, and showing any sort of VAT
>> on your invoices is, IIRC, not legal.  You also may not ever register, or you
>> may register with a flat-rate scheme agreed with HMRC which simplifies the
>> accounting side.
> 
> OK, I'll forget the VAT.  I'm pretty sure I will not register this
> financial year, which ends in February.
> 
> Since 90% of what I sell is exported, and much of it outside the EU,
> it seems it might be sensible to register, as I believe I could then
> recover the VAT on everything I buy, but would only charge VAT on a
> small percentage of sales.
> 
> Once we leave the EU, it would be a no-brainer, as the amount sold in
> the UK is small. . Y

Please don't go there, David.  We, the UK users of gnc have no more
insight as to what Mrs May is going to do than anyone else.

>> In terms of specifically your question about VAT, it is easy to add accounts to
>> GC at any time.  IIRC, you will need to add a couple of liability accounts
>> (VAT box 1 and 2) and an asset (for VAT box 4) all under a parent liability
>> (which I  called VAT).  You'll also need to set up some tax tables for your
>> vendor bills and customer invoices, but that will only take a few minutes.
>>
>> If you have expenses which are not on vendor bills (eg credit card) you'll
>> have to manually record the VAT part as a split
>>
>> In short, I'd say that unless you are reasonably sure you'll hit the
>> registration threshold this tax year, don't set up the VAT accounts yet.  Get
>> more familiar with using GC and editing the account tree etc..  Adding VAT
>> later won't be significantly more work than adding it now, and you don't need
>> it yet.
> 
> I was concerned it would be a nightmare trying to add them later, but
> if it's not a problem, I wont worry about it.

gnc and I can help with that, it is easy to import additional account
sets if you need them.  Start with a really basic set and import others
as your needs grow, it is also easy to delete accounts that have been
imported and don't fit your model.

-- 
Wm