If you’re running a business, it is important to keep up to date with compliance requirements around the various facets of day-to-day operations, including admin, HR, marketing, finance and more. Your financial compliance is incredibly important, as this is the lifeblood of any business. If your company is earning at the VAT thresholds for your local government, and you are VAT registered or in the process of getting registered, you may need to update your invoicing process. This is part of a move towards the business heading into a new earning capacity and can be considered a growth step for any startup. Let’s delve into VAT invoices, why they are important, and also consider the importance of efficient reporting in keeping your business compliant in the long run.
A VAT invoice is a document issued by a company detailing payments due for goods or services, as defined by the nature of the business. It gives an account of the costs associated with a service, and once the company is VAT registered, it includes additional charges related to VAT law in the applicable country or countries. A VAT invoice must be issued within a specific timeframe of the end of the month and also includes important registration information, which the business can use for compliance procedures at the end of the current financial year.
Correct invoicing is an important part of the accounting of any business, but also in terms of VAT compliance. Correct VAT percentages, for example, assist with compliance when the business books are being balanced after a financial year, and also allows for goods or services to be offered in line with local laws and regulations. It is vitally important that the person, or software responsible for issuing VAT invoices is functioning at a high capacity at all times, and especially so when discrepancies pop up, or unexpected errors creep in. The business remains compliant as a collective effort and it’s important for two or more people to be looped into the process at all times.
Once VAT registered, there are specific compliance requirements and reporting that needs to be done in order for the business to remain in good faith with its originating country, and well as with those in which it is selling it goods and services. It is important for directors to be aware of the returns that need to be filed, and how any transactions should be conducted and declared.
Filing VAT returns and charging and recovering VAT requires an expert to handle to process, and is not something you should leave as a last resort. To find out about the declarations, returns and mechanisms you have to put in place annually, you should speak to an expert like VATGlobal, who has serviced over 12 000 clients in nearly 120 countries around the world since incorporation. You can’t go wrong when trusting experts with the welfare of your compliance status.
While this article aims to provide an overview of the technicalities around VAT, it should not be considered a legal authority on the matter. You are encouraged to talk to a specialist if you need more information, or if you have specific questions about the processes mentioned.