Small business owners have a lot on their plates. In addition to hiring and retaining the right talent, finding new customers and coming up with new marketing ideas, a good chunk of small business owners also have to deal with finances.
According to research from the Association of Accounting Technicians, roughly 60% of them are solely responsible for their organization’s finances. And in certain countries, this includes submitting overly-complicated VAT (Value Added Tax) returns in accordance to government rules.
But here, most business owners find themselves puzzled, because these VAT rules can sometimes appear nonsensical, to say the least… In fact, they are so confusing that countries like United Arab Emirates are offering workshops, in order to educate business owners and raise awareness about VAT.
The Complicated World of VAT
Even small business that have a financial leader aren’t fully prepared for VAT. That’s because, according to Concur research, around 75% of them say that they wish they knew more about VAT expenses and VAT recovery.
Simply put Value added tax is a very broad topic – so in order to explain how the whole things works, we’ll try to simplify it as much as possible… Ready? Here we go…
In most countries, VAT ranges from 0% to 27% and it can be recovered by local businesses in a country. Furthermore, international businesses can recover this tax through refund claims in certain countries. In most cases, international companies claim expenses from local transportation, hotels and restaurants…
So what do you need to claim your refund?
Well, for example, if you’re located in the United Kingdom, VAT recovery mainly occurs when a company charges a certain customer with lesser VAT amount than the company’s purchases. If you want to know more about it, you should contact HM Revenue and Customs for more insight…
VAT Refund is Not a Short Process
So if you decide to handle your VAT refunds by yourself, how long will you have to wait for the money? Let’s stay in the UK for now… There, it usually takes 10 business days – or roughly two weeks – to process your refund after HMRC gets your return.
But the process can even last a little longer, so naturally, the government has a special program in case this happens. So if you end up waiting more than 30 days for HMRC to authorize your payment, they’ll provide a repayment supplement – which is around 5% – to make up for your waiting…
But in some cases, a company can’t reclaim VAT. For example, if your company provides services like health services, insurance or even stamps, which aren’t chargeable with VAT. Moreover, purchases from other European Union countries aren’t included as well, because they are classified under the electronic cross-border refund system…
Here’s Where Technology Comes into Play…
All of these specifics still seem complicated… And that’s just because they are. However, we know what prevents most companies from claiming back the VAT they’re owned. More often than not, guesstimating monthly travel expenses and lost receipts are the ones to blame…
Your employees can do things properly, only if it’s made easy for them… So you need to leverage technology to keep things in check. So here are a couple of apps that will help you keep track of all of your expenses and receipts and subsequently, work on VAT recovery.
For starters, we have this Evernote’s app that you can use in place of the build-in cam-app. The biggest advantage Scannable provides is border-detection that will definitely speed things up if you have a ton of receipts to scan. As soon as you start the cam, the blue detection field goes into action and starts looking for the edges of your receipt. Once it recognizes the edges of the document, the app immediately snaps a pic and offers you to review it, just to make sure everything’s in order…
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Receipts
This app not only enables you to scan various receipts, but also to place them in different categories and keep them in complete order. Furthermore, it will keep a running total of how much you’ve spent in which category. So if you have an accountant, he’ll definitely be thankful for this. The only downside is, you can use the app for free until you’ve added 10 receipts, and after that, you’ll have to pay 10 dollars to upgrade the app…
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Office Lens
If you’re working with OneNote, most people online will agree that you cannot go wrong with Office Lens. The app is designed by Microsoft, and naturally it integrates with a number of company’s products like Office and OneNote. Once you scan the receipt, you can easily convert it to PDF, send the image via email or save it in your phone. It’s quite easy to use actually, you just take the pic, choose the service you want to send it to and the app will do the rest…
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Genius Scan
This scanner right here, which comes to us from Grizzly Labs, is specially integrated with a number of different cloud services. After you scan your receipt, you can easily crop it and then the app will enhance the picture until it looks crisp… The free version includes integration with Dropbox exclusively, but the premium version works with everything from Google Drive to Box.
Final Thoughts
While most of the information we provided in this article concerns European companies, US companies should also take note, because people are already wondering should the United States adopt a Value Added Tax to encourage economic growth…
Nonetheless, you at least don’t have to worry about it for now…
The bottom line is – understanding Value Added Tax is all about good practice – you have to always run checks and keep tabs on all of your receipts to make sure that your company remains compliant –keeping everything neatly in once place will allow you know when and where to find all the info you need…
