The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

VALUE-Added Tax (VAT) has been a “blessing in disguise” for many local small businesses according to a leading small business consultant, noting that such businesses have effectively been forced into better accounting practices and financial management.

Mark Turnquest, principal in Mark A Turnquest & Associate Companies, told Tribune Business: “I would say that is has been a blessing in disguise for small businesses. Pre-Vat, 90 per cent of my customers when they started their business never paid high emphasis on accounting. Now with VAT in place they now will put that in as part of their working capital requirements so they could get a proper accounting and point of sale systems to properly record VAT transactions.

“It is forcing them to be financially responsible in everything they do. They are now in a position to separate their business transactions from their personal transactions which was a serious challenge in the past. They know that they have to operate their business in an effective and efficient manner.”

VAT was implemented on January 1 at a rate of 7.5 per cent. Mr Turnquest said that while some businesses were experiencing low sales year-to-date, the majority of his clients were unaffected. “They are now actually maturing to be compliant. VAT has not really had a negative effect on my small business clients; they now all have 100 per cent better record keeping. The most impressive thing is that new entrepreneurs who are getting into the industry will have a template on how to do things the right way.”

Mr Turnquest said that small and medium-sized businesses were preparing to file their VAT returns and payments and deciding whether to go with the flat rate accounting system or the standard rate. “They can either choose the flat rate of 4.5 per cent or go with a standard rate where they subtract the VAT they collected from the VAT they paid out. Based on their model, because all business are different we will decide is the final method for filing. They are closing out March and determining what method they would use to be better prepared for the future.”