Five Things Small Business Owners Need to Know Ahead of Making Tax Digital
From April 2019, every VAT registered business in the UK over the VAT threshold will have to keep their records digitally and send returns using Making Tax Digital compatible software.
There’s plenty of information out there but it’s reported that 60,000 VAT registered businesses in the East Midlands could be unprepared for this major change. If you feel your business isn’t ready or if you’re daunted by the move to digital, here are five things you should know.
Assess the impact
The first thing every business needs to do is find out if they need to make the switch. Not all businesses need to be ready for Making Tax Digital in April, but there are so many benefits to digital accounting that it’s worth converting in most other cases. In April 2019, MTD will apply to VAT registered businesses with a turnover higher than £85,000, so if that’s your business, it’s especially important to act now.
Before you make any changes, you should work out how it will impact the way you work, how much it will cost, and what additional practices you’ll need to adopt. At this stage it’s worth seeking professional advice to make sure you’re on the right track towards becoming compliant.
Is your current process working?
As with any new regulation, MTD is a great opportunity to assess your internal processes and establish a new system that really suits your business. MTD will include filing quarterly VAT returns online and maintaining accurate and up-to-date financial information throughout the trading year. This is an opportunity to update and improve the way you work, so it’s worth training your team to get the entire business up to speed on the changes and nominating an MTD champion so at least one person is heading up internal processes.
Sort your software
Switching to cloud accountancy before the changes come into force is the simplest way to get your business ready, so the best thing to work out at this stage is what cloud-based platform to use. There are plenty of options available which suit different businesses and ways of working. Think about whether you’ll be filing your new MTD-friendly tax reports yourself or outsourcing it. Going digital now will allow you time to choose the right system and become comfortable with its use before going live.
Cloud based accounting systems have a host of advantages over traditional PC based software which can streamline your accounting and save keying in information and having stacks of bills and receipts to decipher. Cloud software also enables you to access your data anywhere at any time and share these with your accountant, which can make a big difference.
Digital is the way forward
This is a digital age and the advantages of this technology are numerous, it’s worth making these changes regardless of MTD. Once up-and-running, digital bookkeeping is more efficient, easier to manage and works intuitively with most of the popular stock management, point of sale and client relationship systems that your business may already be using.
Many MTD compatible platforms can be accessed by anyone you authorise and they are easy to use, even for remote and rural businesses that may not have the best broadband connectivity.
It’s an opportunity
Business owners have many pressing tasks, however transferring their business to a new accounting system in preparation for MTD is a chance to save time, streamline accounting systems and get instant access to the information needed to make good decisions going forward. Time and budget are of the essence to small businesses, and MTD is an opportunity to manage both more effectively.
Contact our team today for a free consultation.