Accounting: How do I create a VAT report?
We all know about it. It can be the bane of small businesses - should you register? What will it mean for your business? How will it impact your income and expenses? And perhaps most crucially: will it mean more forms to submit when it comes time to file your tax return?
We’re talking, of course, about VAT. The decision of whether to register for VAT depends primarily on your annual turnover. If it falls above the current VAT registration threshold, you no longer have a choice. Below, and it’s completely up to you.
There are a few arguments for and against voluntarily registering for VAT if your turnover is in fact below the threshold. So it’s important to do the necessary research and make the decision based on your business and what works best for you.
HMRC has made the move towards making tax completely digital. And with the digitisation of tax, comes a more frequent but simple filing process. The change to quarterly reporting in the UK might be unwelcome, but from what we’ve heard, the aim is to make it as pain-free as possible.
But there are other ways to ensure this is the case.
VAT with online accounting software
Is there anyone who enjoys dealing with tax forms? Do we convince ourselves that our accountants like it? It’s safe to say that it would come as a surprise if someone suddenly announced a passion for handling tax documents and filing.
But thanks to current technology, much of this process can be automated. It starts with accounting software. Using accounting software that allows you to work with VAT on both invoices and your business expenses is the best way to stay on top of VAT.
When your accounting software automatically applies the appropriate VAT to your invoice template and calculates it accordingly. It also allows you to add multiple VAT rates to the same invoice, meaning that if some of your products are services are VAT exempt, they do not need to appear on a separate invoice.
VAT is also automatically applied to your expenses when you select a category each time you upload an expense. Fast, simple, and no additional manual calculations.
Your VAT report in accounting software
Because VAT in accounting software is automatically tracked across your business finances, it is even easier to view a report for a given period of time for your business.
With these reports, you can select your time period and click through to view your VAT report. The report takes the information entered across your account (invoicing and expenses) and automatically does the calculations.
Each line corresponds to the lines in your online VAT return with HMRC, making it fast and simple to manage your VAT. Online accounting software takes the work off your shoulders so that you don’t need to worry about the tedious side of things. The numbers are ready, all you need to do is fill in your return.
Managing your VAT with accounting software also greatly reduces the chance of error. Good news if you want to prevent HMRC to come knocking.
Manage VAT with Debitoor accounting software
With Debitoor, it’s easy to quickly activate or deactivate VAT in your account, depending on whether your business is registered. When you turn on VAT, you have the option of saving your products or services with specific VAT amounts. This means that these rates are automatically applied when you select them from the dropdown menu when creating a new invoice.
You can also save the VAT number of your customers within their profile on your account, meaning that it is applied automatically to each invoice you issue them, ensuring a full, legal, VAT invoice. Similarly, your VAT number will also be included in the footer of your invoices with your business contact details.
Debitoor accounting & invoicing software features VAT reports in our two largest plans. These reports can be generated at any time. You can select your report to be monthly, quarterly, or bi-annually, depending on your business needs.
With Debitoor, managing VAT and preparing your VAT returns can be fast, simple and pain-free.