As rewarding as it might be, running a start-up comes with many responsibilities that CEOs need to manage, otherwise the very existence of their business could be threatened. There are, of course, many things that you should keep in mind if you’ve just launched a small start-up, but the ones related to finance and accounting are by far the most important, simply because you’re legally required to take care of them. Unfortunately, very few, if any, new CEOs have any kind of background in these fields, so essentials such as the VAT or EU VAT formats are a complete mystery to them. Understanding the particularities of the value-added tax is very important, not only for legal reasons, but also because you could be paying more than necessary.
Choosing the adequate VAT scheme – the first and most important thing
Not all businesses have to pay the same amount for VAT. On the contrary, it can greatly vary depending on the country in which the business is registered and on its field of activity. Many CEOs aren’t aware of these fluctuating values, so they end up picking the standard scheme, which leads to unnecessary payments. To avoid this, hire a VAT expert who can recommend the best course of action.
Calculating your own taxes – a rookie mistake
The image of a modern CEO is often idealised, but in reality, owning a start-up is much more stressful than it looks, especially financially. There are so many costs involved that a common practice among executive officers is to do their own taxes to avoid paying an accountant or VAT expert. This a risky decision, because unless you’ve worked in finance before, you’re likely to calculate your taxes wrong and pay either too much or too little. Even though you might feel like you’re saving money on a short term basis, you could be losing it in the long run. Needless to say, hiring an expert can save you a lot of time and stress.
Investing in software – a great way to eliminate human error
All businesses should invest in high-quality accounting software, first of all because it saves time and streamlines operations and secondly because it eliminates human error. Even the best accountant can make mistakes sometimes, but, with specialised software, the risk of these mistakes is minimised. There are many options that you can choose from, or, you can ask your accountant what they usually use.
VAT exemptions you should know of
In some cases, you might be exempt from paying VAT, which can help you save quite a lot of money. However, many businesses still pay this tax, because they aren’t well informed. Keeping up with all the changes in this field can be tricky, which is why you should work with a professional accountant who knows all about this. Most of the time, you’ll have to submit quite a few documents before you can benefit from the exception, which is why it is all the more important to rely on a professional.