Why digital records can work for you.
19th February 2019
The clock is ticking - Making Tax Digital (MTD) starts from April 2019. Initially, VAT-registered businesses will have to submit digital VAT returns using MTD-compliant software. Other businesses and landlords are expected to follow suit from 2020, so it’s time to move away from your spreadsheets and turn your receipts into digital records.
MTD is HMRC’s programme to introduce a digital tax system which will ultimately require most businesses, self-employed people and landlords to use digital software to keep tax records and update HMRC on a quarterly basis.
But MTD doesn’t have to be a burden on your business. There are various ways that your business can comply with MTD. HMRC has released a list of approved, compatible software which includes bridging software, a digital tool that connects spreadsheets and/or non MTD-compliant accounting software to HMRC systems, so you can digitally report VAT information to HMRC and HMRC can send information electronically.
While bridging software may look like the easiest option, we strongly advise clients to consider moving to a cloud accounting system, as the benefits go beyond simply compliance with MTD. Cloud accounting can revolutionise how you look at, and look after your businesses finances.
We’ve highlighted some of the main benefits of making the switch.
Designed for the business user, not the accountant
Cloud based software, for example Xero, generally has a very simple user interface and steers clear of accounting jargon making them a solid choice for business owners. Having an easy-to-use system gives you greater control in managing cash flow and offers a clearer overview of your business’ current financial position in real time. In addition, these systems are always being improved behind the scenes and many offer free updates so you have access to the most up to date software.
Access to data anywhere, anytime
Using a cloud based system means that the data can be accessed, often with two-step authentication for added security, from any device connected to the internet. This means you can keep on top of finance tasks on the move. Quotes can be sent instantly to prospective clients immediately after a meeting, invoices can be chased on the go and financials can be available instantly. You can also record your expenses using your phone so you never have to worry about misplaced receipts.
Saves hardware and IT costs
As the name suggests, cloud accounting systems store data securely online. Data storage costs are therefore reduced as there’s no need for installation, no requirement to purchase hardware to store data, or to spend money on ensuring this hardware is secure.
Increased privacy and security
Done properly, cloud accounting is extremely secure and often safer than keeping your financial information in your office, on a laptop, desktop or in-house server. Data security has been at the forefront of the minds of many businesses owner’s following the rise in cybercrime and the introduction of GDPR in April 2018, but by using a reputable cloud accounting software package such as Xero, Sage or Quickbooks, you can be assured that data privacy and security is airtight, with stringent policies in place to ensure your data is encrypted and backed-up.
For further help and support , book onto one of our free Cloud Accounting Workshops or contact your usual Harrison Beale and Owen contact on 01926 422292.