If you've been following our blog series over the last few weeks you will have seen that we've explored Making Tax Digital (MTD), "Cloud" accounting and how the 2 interact.
What I wanted to look at in this blog is how using a cloud accounting package can help you to run your business more efficiently, whether or not you fall under the initial MTD legislation (because ultimately all businesses will eventually fall within it).
Why the need for cloud accounting?
Since the turn of the century or, even more so, the last decade the technologies around us have evolved and we are now more data rich than at any other time in human history. In turn this has meant that the community in which businesses operate has inevitably had to change and adapt and unless those businesses change with it then they risk falling into obscurity or worst still failing because they haven't adapted.
What are the benefits of cloud accounting?
As the world has become so much more fast paced so to has the need to get things done quickly. These days there are a myriad of things that demand your attention at any one time, be that dealing with customers, suppliers or spending time with the family. Everything is demanding more and more of our time and as an entrepreneur the very last thing you got into business for (unless you are an accountant) was to deal with your accounts, and that's why it always gets left until last.
This is where cloud accounting can help.
Cloud accounting can help you to efficiently capture data, quickly categorise data and see just how the business is performing at the click of a button.
This will save you both time and money through increased efficiency.
Let's look at the ways that cloud accounting helps:
Why should you implement cloud accounting?
For those out there that will fall into MTD (VAT registered over the VAT threshold) then there is a need to make the move and to make it quickly, there is only 6 months until the legislation comes in and you can be subject to penalties from HMRC if you don't file your returns using their recommended software solutions.
For the rest of you, there is real benefit in joining the cloud accounting revolution, access to real time information, less data entry and better collaboration amongst your team are all things that will make your business run more efficiently.
Either way you can look forward to an increased knowledge of your business and more time to do what you love.
For more information on how we can help you with the move to the cloud give us a call on 01254 300 050 to speak to a member of our team.
Over the last 2 blogs we have looked at " What is Making Tax Digital" and also "What is Cloud Accounting".
Now let's look at the interaction of both, is MTD's introduction really a good thing for your business?And how should we be embracing the change?
How will MTD benefit me?
HMRC's MTD compatible solutions are mainly cloud based accounting solutions, such as Xero and QuickBooks Online, which are capable of importing bank feeds and linking to 3rd party software capable of capturing your expense receipts without you needing to input them, this will make your bookkeeping process much more efficient if used correctly.
Secondary to the efficiency gains mentioned above is the ability for us, as your accountants, to access your data, in real time, at the same time as you without the need to send backups between each other.
This will lead to a smoother process when we both need to access the information at the same time, such as with Year End Accounts.
Ordinarily when using standard, desktop based, software the process for accountants to prepare anything on your behalf was either:
1. We come to your offices and "take over" your system to prepare the information that we need, or
2. You send us a backup which we then install on our system, make the changes that we need and then send the data back to you.
In some instances this can lead to your system being unavailable to use whilst we work on it, data being upgraded to an incompatible version or, worse still, data becoming corrupted and unable to be restored.
All of these can be time consuming and costly to, you, the business owner.
Any other benefits?
As well as those identified above, the actual filing of the returns to HMRC will be easier, from the current system of having to manually calculate the figures, log in to HMRC's portal, find the correct VAT period and re-key the details in to the boxes.
Using MTD compatible software should make this process as simple as pressing a single button in the software which will automatically send all the required information to HMRC, in the format that they require, without any need for further human interaction.
This is another efficient saving and will also eliminate the risk of errors from mistyped numbers, which could potentially open you up to penalty charges being imposed by HMRC.
MTD should be embraced by business owners as we move towards the future of tax reporting with HMRC. Rather than being more onerous, your entire bookkeeping process can become more streamlined and easier.
Get in touch on 01254 300 050 to see how our cloud accounting experts can help you with the transition to cloud accounting and identify efficiency gains that can help you.
Of the, currently, nearly 50 providers identified by HMRC of Making Tax Digital (MTD) software most offer "cloud" accounting packages.
Moving to "cloud" accounting can help you run your business more effectively, and efficiently, but first let's explore what "cloud" accounting is.
So what is Cloud Accounting?
In today's day and age we all use the cloud on a daily basis, from storage solutions such as iCloud and Google Drive to streaming services such as Netflix, the cloud is all around us and there is no getting away from it. We use it for the majority of things we do every day.
Cloud accounting is nothing new, in fact it's been around for a few years now. First and foremost it is a bookkeeping software just like you have always been used to as a business owner however it now utilises the cloud to save your data and allow you access from anywhere in the world.
Desktop solutions which have been the norm for so long are quickly being overtaken by the cloud accounting solutions as progressive, forward thinking, businesses have been quick to embrace this method of working.
Companies such as Xero and QuickBooks Online offer solutions that enable you to give access, restricted to the areas that they need, to both your team and your accountant. This enables real time collaboration across multiple members from anywhere in the world.
Usually accessed by a web browser cloud accounting packages can be accessed on different operating systems (MacOS or Windows etc.) across a multitude of devices (Mac, PC, tablet and smartphone) bringing a greater flexibility across how you are able to access your data.
And because everything is stored in the cloud there is no need to create backups of your data and send it to your accountant to do their work, and there is also no need to stop working on the data as has sometimes been the case too. Everyone can keep working, and doing what they need to do, with the system all the time.
How does cloud accounting affect me?
If you fall under the MTD legislation (initially VAT registered businesses above the VAT threshold) then from 1 April you will need to move to one of HMRC's recommended solutions or risk penalties being imposed from HMRC.
The next 6 months, before the introduction of MTD, would be a great time to assess the software and implement the preferred solution in your business. Which would also give you time to receive training, and get familiar with, the cloud solution that you have chosen.
Give us a call on 01254 300 050 for more information.
It is just over 6 months until HMRC shake up the tax reporting landscape with the introduction of the Making Tax Digital (MTD) legislation.
From 1 April 2019, and initially aimed at VAT registered businesses, MTD will require that businesses registered for VAT, maintain and file their VAT returns digitally using one of HMRC's approved solutions.
What does this mean?
HMRC have identified a list of software which is MTD compliant and all VAT returns, with a return period beginning after 1 April 2019, will need to be filed using 1 of these pieces of software.
Anybody that should fall within MTD but fails to do so will leave themselves open to penalties from HMRC.
As yet, there is no recommended HMRC solution for filing returns via spreadsheet.
I'm still keeping paper books and records, what are my options?
Don't worry if you are still keeping paper books and resources, there are still options available to you, although they will involve moving to one of HMRC's solutions.
There are ways to do this that may include continuing to maintain your books and records on paper and paying an accountant to convert these on to one of HMRC's solutions before filing.
We would not recommend this though as it will be costly and time consuming to you.
Our recommendation would be that you speak to a member of our team here, identify which solution would be best for you from HMRC's list and then implement it in to your business well in time for your required date for MTD purposes.
We can even offer guidance and training in our recommended solutions.
If you'd like to explore how we could help you with the switch to MTD then please give us a call on 01254 300 050 to speak to a member of our team.
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