Time to sack the spreadsheet?
Digital influences almost everything that we do, on a daily basis. Technology and innovation have made life easier and more convenient,enabling tasks to be completed faster and more accurately.
For years, businesses have been slowly shifting away from paper-based transactions and records, to storing data digitally, resulting in more accessible, and accurate, company information.
But times certainly are a’changin’, and the pandemic has accelerated the adoption of digital technology, highlighting the need for many business owners to rapidly move on from outdated processes and systems.
In an ever-evolving landscape, it can be easy to stick your head in the sand and hope it will all blow over. But resisting the shift to digital won’t benefit your business now, or in the long term.
In case you still need some convincing about the move to digital, here’s five good reasons why…
1. The penalty regime for MTD for VAT starts on 1st April 2021
Penalty. Regime. HMRC. Words designed to send shivers down your spine. This new regulation, delayed from April 2020 due to the pandemic,requires over 1 million UK VAT registered businesses to record and submit their VAT returns digitally.
The new rules also include a penalty regime for businesses that fail to keep digital records or maintain a complete digital journey. This is the first time penalties have been threatened, following the end of the two year ‘soft landing’ phase of MTD.
Any UK VAT registered businesses over the VAT registration threshold of £85,000 must keep and maintain VAT records digitally, through compatible accounting software.
Having initially waived penalties for companies that could demonstrate they had made a ‘best effort’ to comply with the new filing obligations, HMRC will be implementing fines and interest charges for late VAT MTD payments from 1st April 2021. Any returns containing careless or deliberate inaccuracies may be fined up to 100% of the VAT due.
2. MTD for Income Tax begins in 2023
MTD for Income Tax is the next step in the government’s planto ensure all taxpayers are using software for accounting and reporting, andwill be mandated on 6 April 2023.
MTD for Income Tax will apply to the self-employed,partnerships and to those who receive income from property, with gross income from these sources combined above a threshold of £10,000.
For self-assessment, individuals will need to complete quarterly updates, an end of period statement (EOPS) and a Final Declaration. Although this may sound like a lot more work, software should automate most of the tasks and in theory there should be less admin work needed.
3. You can make significant productivity gains
Having a clear picture of your current financial position,in real-time, reduces the amount of time wasted time on duplicating or preparing information.
Most software automatically updates, to make your life easier, and often the ability to store important documents and receipts, which you can quickly access at any time.
Being adaptable in an uncertain environment and ensuring you have a streamlined accounting process will give you a better chance of business growth. A report by QuickBooks found that in the first six months of MTD compliance, small businesses generated over £815m in productivity gains such as simplified tax and enhanced cashflow management.
Having a clear picture of your financial position allows you to better plan for the future, with greater visibility of how your business is performing and the ability to spot any anomalies on the horizon.
With your accounts and records 100% online and backed up automatically, you should have peace of mind and more time to spend doing what you enjoy.
4. Confidence that your data is accurate
Using accounting software is not only more efficient, but also likely to result in fewer mistakes than manual processing, as it helps you to enter information in the right format at the right time.
Having ‘one source of truth’ means no confusion over which spreadsheet is most up to date and some tools can even provide you with a real time cashflow forecast.
Staying up to date with all the latest legislation isn’t easy when you’re busy running a business, and accounting software, along with the advice from your friendly accountant, will help to keep you compliant.
5. Improved customer service and client relations
Having a clear record of information and transactions in one place can help your company assist and guide client or customer concerns and queries efficiently.Happy clients and happy customers can only make your company more successful!
If you’re not sure where to start with MTD, or if you need help or advice setting up or choosing the right software for your business, our Blue Rocket Client Advisors can help. Call us for a no obligation chat on 01322 555 442 or email happytohelp@bluerocketaccounting.com
