I know what you’re thinking. It’s coming too fast. The systems won’t cope. HMRC will get it all wrong. And you know what? You might be right.
But these issues aside, Making Tax Digital could be the best thing to happen in years. And in this post, I’ll explain why.
What is Making Tax Digital (MTD)?
Making Tax Digital is the government’s plan to change the way all VAT-registered businesses in the UK file their VAT returns.
Instead of filing the old style VAT return by either manually entering the figures through the online portal, or by sending it from your software, they’re making it mandatory for you to use an online accounting software system. From April 2019, you’ll need to file your quarterly VAT return through a compatible software platform.
So basically, what they’re doing is ‘forcing’ small businesses to get with the times and use accounting software to run their bookkeeping. Now, you might resist the idea of someone telling you what to do, and you might be terrified of the idea of learning to use a software that sounds difficult (and expensive!), but in reality, you have very little to worry about.
4 major benefits of cloud accounting software
While I can sympathise that MTD is a tad overwhelming and perhaps unwanted, I want you to know it’s actually a really positive step change by HMRC.
At Stubbs Parkin, we actively (and sometimes quite strongly) encourage small businesses like yours to move to a software platform like Xero – and for good reasons. So, although the government might be sticking their oar in here, at least this time they’ve got it right!
Here are 4 benefits to embracing MTD and switching to the cloud:
1. It’s an app
You can use it on your laptop or your phone and it feels like using any other app; simple and intuitive, convenient and quick.
2. It does the hard work
The heavy-lifting work of bookkeeping is done for you. Set up a direct feed to your bank, teach the software how to process the transactions (once done, never forgotten and 100% consistent) and the remaining bookkeeping work will be minimal.
3. It gives you data
This is a really important one. All businesses need to know how they’re performing and have those business insights at their fingertips, from the smallest online jewellery seller, to the market-leading independent electronics company. No longer is it necessary to have an expensive in-house finance function to see your business numbers.
4. Your accountant can really work WITH you
You can both see the real-time data, so all conversations are much more relevant and actionable. With one single ledger, your accountant can assist you with any or all parts of your bookkeeping, and use the data to produce more timely and more cost-efficient management reports.
As helpful as your accountant may currently be, working online with them takes it to a whole other level. You can both access the numbers, so your accountant can be your bookkeeper, support helpline, strategic advisor and Finance Director, all rolled into one – and from anywhere in the world.
Get ready for MTD with Stubbs Parkin
Whether or not you like the government telling you how to run your business, this is one change you should make for yourself. Online accounting software truly works for small business and it’s time to get on board.
Make sure you’re ready for Making Tax Digital. Switch to the cloud today.