As the owner of a business, you might have come across the term ‘VAT return’. However, if you are not sure what this term exactly means, then you have nothing to worry about, as this guide will not only tell you about VAT returns and VAT return services, but also why it is considered important. You can use the article to learn everything you need to know about VAT returns.
Understanding the meaning of VAT Return
Before you start looking for VAT accounting services, it is essential for you to understand the meaning of a VAT return. A VAT return is an important form that businesses need to fill out in certain countries across the world for businesses that are registered for Value Added Tax, also known as VAT.
The form includes essential details about the business, such as its sales and purchases for a specific period of time, and also mentions the amount of VAT that is charged and paid.
What are the details included in a VAT return?
A VAT return must report the exact details that are mandatory by the tax laws of the country where it has been filed. The following are some of the usual particulars that are to be incorporated in a VAT return made by VAT returns services.
- The VAT registration number of the business
- The period of VAT covered by the return
- The sales and output tax of the business
- The purchases and input tax that the business is claiming
- The complete amount of VAT that is either payable or refundable
- Any changes or rectifications to the previous VAT returns
Understanding the Importance of a VAT Return
A VAT return has several functions, both for the entity that files it and the tax authority that receives it. Below are some of the main reasons that make VAT returns indispensable:
- Legal Compliance: It is mandatory for businesses that are registered for VAT in countries where VAT is in force to periodically file VAT returns. Not complying with this requirement can lead to the application of fines and penalties.
- Accurate Record-Keeping: With the help of VAT returns, businesses can easily document their sales and purchases with high accuracy, thus contributing to tax and accounting purposes in an easier way.
- Managing Cash Flow: A VAT return can act as a tool to manage the business’s cash flow, as VAT paid on purchases can be claimed back against VAT charged on sales.
- Claiming VAT Refunds: A business that has paid more VAT than it has charged may be a candidate for a VAT refund, which it can get back by submitting a VAT return.
VAT return is an inevitable component of business in the countries where VAT is applicable; it serves legal, financial, and accounting purposes.
If you are not sure about how to fill out the VAT form, then you do not need to worry, as there are different VAT filing services in the market that assist businesses with the same. You can take the assistance of these services to make sure that you have correctly filled out your VAT returns.
