Just hearing the words “VAT” or “taxes” is enough to make any business owner cringe. And for a good reason. Taxes and VAT has a bad rap among business owners and the business community as it means liability and additional finance and admin work.
Although VAT can be a disadvantage at some points, there is a necessary advantage to it. For one, VAT is used to subsidized government projects like building infrastructures for convenience.
Learning the VAT can be advantageous for you and your business in some aspects. Here’s how:
- Learn more about product pricing accordingly
The common misconception that we know is VAT is simply something we add to the prices of our products and is turned over to the government for public use. But there is more to that than additional charges on items being sold. When you put a VAT on the products, you can review your pricing if you are covering the all the cost incurred on each item – from production to sales. With this, you can make adjustments on your pricing. Most globally-run businesses are keen on learning this as VAT rules is different and depending on the location.
- Learn how you can maximize VAT recovery
Many business owners did not know this, but you can reclaim the taxes you incurred from the VAT that you turned over to the government. A lot of experts are lamenting on how these businesses are not paying attention to this as it can also benefit their businesses. Unclaimed VAT recovery can have negative impact on one’s business as this in untapped funds.
Depending on the VAT invoices that you have, you can ask vat consultancy company Abu Dhabi experts on how you can maximize your VAT returns and reclaims. This can be an additional fund for your cash flow. Just be sure to keep all VAT invoices and ask your consultants which of these receipts can be filed to support your input tax claims.
- Learn how to account for your VAT and improve business accounting
If you are VAT-registered company, the computation and accounting might be different. There are formulas and computations that needed to be done to be able to compute the VAT and the payables and receivables accordingly. By knowing the correct computation, business owners can easily know how to benchmark their accounting against their current practice and system. Locations and countries who are new to this system might find it hard at first, but when they get the hang of it, they can make adjustments to their business finances.
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