X / (rate + 1) = subtotal & X - subtotal = tax
Ireland — Standard VAT rate = 23%Formula 100:1.23= 81.30 - 23%- 18.7
South Africa — Standard VAT rate = 15%100: 1.15= 86.95 - 15% - 13.05
United Kingdom — Standard VAT rate = 20%100: 1.20= 83.33 - 20% - 16.66
A recent amendment in the UK has required that all businesses earning over £85,000 had to be MTD (making tax digital) compliant. This requires that they keep financial records digitally and must use MTD-compliant software for their businesses. Small business owners—although not limited only to small business owners—that are now having to transition to this new mode of tracking their finances are the market FreshBooks is hoping to attract to the website through the VAT calculator.
A typical user can be a part-time or full-time business owner with no more than 20 employees working below them. These individuals wear many hats in their companies, often over-burdened with paperwork. Their goals are to grow their business—this is specifically true for full-timers—and continue to follow their passion with less headache of managing their finances and taxes. These small businesses tend to fall under the following industries: creative/marketing, contractors & construction, professional services, business Services, and Trades.