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.
22-28 Willow Street, Accrington, Lancashire, BB5 1LP
T 01254 300050
F 01254 396620
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