Making Tax Digital means changes to your bookkeeping.
We made it through GDPR and another deadline is now looming for small (and large) businesses. From 1st April 2019 VAT reporting must be recorded digitally and businesses must be using bookkeeping and accounting software to submit their quarterly VAT returns.
Who does it affect?
• all VAT registered businesses
• with a turnover above the current VAT threshold
How do you keep your financial records? Are they in a spreadsheet? Or perhaps you keep your receipts in a shoebox or a carrier bag to be processed later? Maybe you use a notebook or a written ledger? If any of these are the case then Making Tax Digital requires you to make some changes.
And even if you’re not a VAT registered business, while you can continue with manual records for now, Making Tax Digital may still apply to you at a later date.
What do I need to do?
You’ll need to choose suitable bookkeeping software for your business, get it set up with your accounting codes so it’s ready for data input and have all your records for the quarter entered into the new software ready for your first VAT reporting date.
It sounds like a lot of work – what do I get out of it?
You may have guessed that Making Tax Digital is partly about making HMRCs tax return process more efficient.
Moving over to digital also benefits business owners – and we’re not just saying that. Bookkeepers and accountants have been saying for years that many small businesses owners suffer and make poor decisions because they don’t have a clear view of their finances.
1/ Reduce time (and fees) on bookkeeping by automating your admin – your software can link to your bank account and customer contacts to automatically record expenses and send invoices.
2/ Once your new software is set up you can check your business finances (invoices, supplier payments, payroll, director’s drawings) from your phone whenever you want.
3/ See for yourself how much tax you owe based on your real time records, rather than face a huge bill every 12 months.
How do I choose the right software?
There are many different software options out there and the choice can be confusing. Start by talking to your accountant or your bookkeeper as they are best placed to advise you.
The earlier you get started the more time you’ll have and the set up process will be less stressful. Bear in mind that if you put it off and need help in a hurry you may end up paying a premium.
It only takes 5 minutes to ask the first question and get started: please don’t put it off until March!
Contact Claire at Team4Bookkeeping on 01825 763378 who will be pleased to help…