How To Stop Worrying About How Making Tax Digital Will Affect You
Put simply Making Tax Digital (MTD) is a Government initiative to digitalise the UK tax system. This will ultimately result in all businesses needing to keep all financial information digitally and file corporation tax quarterly, as well as VAT to the HMRC, through comparable software. Luckily this is being phased in, but is likely to impact most businesses within the next 12 months.
From April 2019, VAT registered businesses (including the self-employed and landlords) with turnover above the VAT registration threshold (currently £85,000) will have to:
keep their records digitally (for VAT purposes only)
provide their VAT return information to HMRC through MTD-compatible software
By April 2020, Phase 2 will be in force with all the remaining VAT registered companies being MTD compliant. Once these phases have been successfully rolled out the final phase will be scheduled. So it’s only a matter of time until it is compulsory for every business, regardless of size, to keep digital records of ALL financial transactions and submit quarterly updates to the HMRC for both income and corporation tax purposes using MTD-compliant software.
So how do you go digital and get your business MTD ready?
If you are already keeping all your records using a HMRC complaint software, such as Quickbooks Online, then the change for you will be minimal and straight forward. However, if you are currently using offline, desktop-based spreadsheets to manage your accounts or paper records that you hand to your accountant every year - then you will have no choice but to change.
Luckily going digital and moving toQuickbooks online isn't just about being MTD compliant it offers many other advantages too. Such as a clear overview of your financial position - 24 hours a day from anywhere; easy access for your bookkeeper and accountant; reduced paperwork; and software that is not only always up to date but customisable to your business.
That being said, as a small business owner, you might be concerned about a cloud service provider storing your data. But the cloud is one of the most secure ways to store information. For example, using cloud software, if your laptop is stolen, no one can access your data unless they have a login to the online account. Rest assured Cloud-based software companies ensure that the security and privacy of data about you and your organisation is always airtight.
So what are you waiting for?
Despite the initial delay of HMRC’s ‘Making Tax Digital’ initiative, businesses should use this time to get ready rather than wait and risk falling behind. Small businesses that have already adopting digital solutions are already benefiting from greater efficiency and having a clear overview of their financial position.
The good news is that the process of going digital can be made simple and pain free. Regardless of how big or small you company is, whether you have an up to date spreadsheet with your accounts on or are simply used to handing a box of receipts and paper records to your accountant once a year - we can help.
At Blue Bean Bookkeeping we can set you up with a Quickbooks Online account, and set up all your transactions and company information. After this we will take care of all your bookkeeping needs whilst you get on with running your business.
Just get in touch and I can explain exactly how easy it could be for you to have your business information up to date, accurate and at your fingertips every single day.