Have you ever wondered if there is a way to save some time for more important tasks in your business?
I bet the answer is YES. It is for us too. Probably the same for everybody and every company.
If you are not familiar with MTD (Making Tax Digital), it is an HMRC project which started in April 2019, when they changed how the UK tax system works. Businesses and landlords with turnover above the VAT threshold (£85,000) must use an online software to update and maintain their records quarterly.
There are almost a million enterprises with a turnover above £85,000 per year, who had to move over to the new Making Tax Digital system.
VAT-registered businesses with a taxable turnover below £85,000 will be required to follow the Making Tax digital rules for their first return starting on or after April 2022.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.
The government will provide businesses with an opportunity to take part in a pilot for Making Tax Digital for Corporation Tax and will not mandate its usage before 2026. (source)
How does Making Tax Digital help you and your business?
1. More efficient tax administration – reduced workload
MTD will reduce the amount of paper you used to work around. The MTD accounting software has new client-friendly features and processes that are easy to operate and analyze.
2. Easier for taxpayers to get their tax right – fewer mistakes
With needing to submit the data every quarter, it will allow you to correct any mistakes made in the previous submission, while you don’t need to face a big fine because of missed deadlines, incorrect data or missing information.
3. All data is together at the same place – smarter system
MTD means that HMRC has all your previously provided information with them already, and you don’t need to provide that over and over again.
4. Hassle-free tax filing – reduces stress
You will be able to know the amount you have to pay months earlier than with the old system. Also, you will submit your data on a quarterly basis, which will allow you to have everything in place and not trying to find all paperwork at the last minute.
5. Live data on tax affairs – tax planning
With the constant reporting towards HMRC, you have the opportunity to see your finances better, much earlier than previously. That allows you to know how much you will have to pay and gives you the opportunity to save more tax with efficient planning.
Whether you are already on the scheme, you are just reaching the threshold, you have a new company or you just would like to join to avoid any mistakes, you should read the following, to make sure that you have everything you need from your accountant.
How can accountants help your transmission to MTD?
1. Digital switchovers
Convert you from Spreadsheets or Sage to digital accounting:
We know that sometimes it feels like you have no idea how you will do something in your business. Your accountant should take this burden off your shoulders, as that is their expertise.
They work with these systems every day – if they don’t, you probably wonder at this point, how innovative they are if they are not even compliant with the current requirements from HMRC – so it should be a much faster process, as they know what they are doing. This would save you a lot of time and headache as well.
2. Advice on apps
Help you select Xero or QuickBooks etc – and offer training:
The buyer’s mechanism changed in the last decade or so. Anytime we buy something new, we research it for days and nights to make sure that we choose the best product in the best quality with the cheapest price possible. But when it comes to a software regarding your accounting, how would you know what is recommended and what is old-fashioned? Which one would save the most money and time?
Your accountant should help you choose the best, although sometimes you need to move accountants just to go with a certain software if your current one is not working with that particular partner.
(Read about our recommended software, Xero)
3. Simplify accounts
Collate all your tax information together in one place online:
Whenever you would like to buy a new vehicle, a new property or just need a mortgage the banks are requesting you to provide a lot of paperwork to be able to process your application.
You need to contact your accountant for all that information, but if they do not have those at the same place, it takes a much longer time to collect all the relevant data for you. You might miss some important deadlines or an excellent offer because of not having all the info gathered together.
4. Automation set-ups
Make invoicing, reconciliations and other processes automated:
Time is money. You can get more money, but you cannot buy more time. However, the new software automation can save you time, which then you can use to make more money, when you focus on more important parts of your business, like sales.
If your accountant has never ever mentioned to you to automate some of your processes regarding invoices and receipts, then you may be surprised how many different options are available now to save time.
(Read more about our recommended software for receipts and invoices, Dext – Receipt Bank, here)
5. Implement cloud credit control
Get your invoices paid faster without spending time on creating and chasing them:
One of the biggest problems companies face every day is the unpaid invoices from their customers. According to The Business Disputes Register, 30% of invoices are not paid within the agreed terms. Do you have enough income to hire someone to create and chase your invoices? I probably would say that the answer is ‘Ohh, God No!’. Exactly our thoughts.
With the expeditiously growing IT world, we now have the opportunity to choose between multiple fascinating products to do the job that one person would do for much quicker, cheaper and more efficient. Ask your accountant if they are able to help you set something up to get paid faster, easier and in less time.
(Read more about Chaser, what we use for our clients and ourselves too, here)
6. Recommend faster payment systems
Offer multiple solutions for your clients’ conveniences to pay their invoices so you get paid faster:
If you’ve attended a craft fair recently, you’ve likely noticed that most small business owners now offer card payments via portable terminals.
Have you also noticed, that if you book a holiday and you need to make a bank transfer, it is just too much of a hassle to log into your bank, not finding the terminal for your code or your bank mobile app not allowing you to switch between screens of the invoice and the app without keep logging back in?
You’d prefer to click a link and pay with a card already saved on your phone or browser. Isn’t it just so much easier, faster and more convenient?
That is what clients want from you too.
(Read more about our opinion on which product to choose, here)
7. Minimise financial risks
Assess clients and minimise ‘bad debt’:
If you are trying to invest in something, you always hear it everywhere: “To win big, you sometimes have to take big risks” – Bill Gates. However, when it comes to your business and finances, you’d likely prefer to avoid risking too much cash whenever possible.
This is why it is recommended that you use a cash management software. Satago allows you to get paid faster and understand your customers’ behaviours too. It empowers your business decisions with real-time credit insights, alerts on risk changes, and safeguards against bad debt.
8. Expertise and advice
Give you proven long-term business growth strategies:
Who knows more about your business than the person/company handling the finances. Your accountant’s best intention is to help to grow your business, not just because that they will have a job continually, but because as your accountant, there is nothing else better than seeing your business is thriving.
Continuous support through reports and forecasting software enables better decisions and drives unexpected business growth.
These 8, let’s call them extra services – which really should not be extra, but natural to have for every client, would change and transform your business for good.
It is important that you have a good understanding of your financial situation and are willing to make changes and improvements to become more successful.
We believe that as an accountant, we should be helping you as much as possible with most of the things we can.
These services help clients save time, energy, and money, allowing them to focus on business or personal priorities.
If you want to learn how these can benefit your company, explore our case studies for detailed reviews of these products and professional services.
