The benefits of Making Tax Digital for businesses

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Making Tax Digital begins in April 2019 and many businesses will have to fundamentally change the way they maintain their financial records. The days of keeping manual records - or a vast array of spreadsheets - are disappearing. Similarly, leaving everything to the last minute and retrospectively “writing up your books”, or collating all your invoices and bank statements for your accountant in time for your tax return deadline, are gone!

I understand the pressure this will put on businesses from the clients I work with. I also understand the challenges that many businesses are facing as they adapt to a new way of working, learning to use new software and overhauling their financial record keeping. However, there will be benefits for all businesses when they come out the other side of this transition:

Real time information

A cornerstone of Making Tax Digital is the recording of transactions digitally on a real-time basis. Although this may at first appear to be an admin burden for smaller businesses, it also provides business owners with valuable up to date financial information, allowing you to manage your profitability and cash flow closely, avoiding nasty surprises and ultimately make more money.

For those businesses that opt to work closely with their accountant, a real time, cloud based accounting system, such as Xero, allows your accountant to have instant access to the same information as you. This results in seamless collaboration and better financial advice for your business when needed.

Save time and reduce errors

Using all the great features of cloud based accounting packageslike Xero, business owners  can save precious time, allowing you to focus on what matters to your business. Some of the time saving features available within these cloud based systems are:

• Bank feeds – automatically download transactions from your bank account overnight ready for the next morning – providing you with an up to date position
• Bank rules – allocate transactions and claim VAT automatically based on bank statement descriptions
• VAT return submissions directly from your accounting software – without having to key information into the HMRC website
• Raise sales invoices “on the go” using a mobile phone app
• Invoice scanning – take pictures or scan invoices which will be automatically entered onto your system – identifying the supplier and all the amounts without you typing anything
• Integrate your accounting package with many different systems and apps, so they can “talk” to each other without re-keying information or totals from one place to another. This saves time entering the same information twice and also prevent errors. For example, you can integrate your till system so that the daily totals are automatically transferred into your accounting package overnight

Access your financial information anywhere from any device

Using a cloud based system to comply with Making Tax Digital is unlike traditional desktop software that is installed locally on one computer. With a cloud based system, this can be accessed via any web browser.  This allows you the opportunity to access your online account from any location – providing there is an internet connection – and equally important, offers you access to your information from a laptop, tablet or smartphone via browser or app. Having this facility at your fingertips provides the opportunity to make quick business decisions and react quickly to issues arising.

The unappreciated benefits of Making Tax Digital can be harnessed to grow your business and make more money. We have a dedicated Onboarding Team who can get your business ready for Making Tax Digital and make the change to your systems as easy as possible.