So, April 2019 is the deadline for Making Tax Digital for VAT registered businesses earning above the £85,000 VAT threshold.
The clock is ticking and before we know it April will be on our doorstep! We are making sure that our clients are ready and prepared. However, there may well be plenty of other local Chessington Businesses that are not on top of this yet and need assistance. And the next question is “how do you prepare for MTD (Making Tax Digital)?”. Do you need an accountant or a bookkeeper to do this or can we handle this on our own as a small business?
Well as a small business, there are already many accounting software pieces in place to help you with Making Tax Digital. But if accountancy is not your strong point, you will more than likely need assistance from an accountant – and that’s where we can help. We are already plugged in to many of the top notch accounting software like Xero, Quickbooks and Sage, to name a few.
Xero is considered to be one of the very best online Bookkeepers ranking as the “Gold Standard” among many small business owners for its ease of use and technical abilities. Plus it also has the benefit of third party access (allowing your accountant to also plug in to process your data).
Direct links to HMRC is very beneficial for VAT returns
We are still receiving enquiries from local businesses who are not entirely sure what Making Tax Digital is and how it impacts their business. Basically, Making Tax Digital means that you need to submit your return through use of digital software. Software suppliers have provided a cloud based facility for businesses to upload their documentation and supporting evidence with their return.
Here is a brief overview of the main popular software suppliers for Making Tax Digital:
A stalwart of the industry, Xero is preferred by SMEs due to its accessibility and user-friendly interface. The software can be delivered through internet browsers, with financial information secured by cloud-based back-up systems. Xero’s basic software is also capable of connecting directly to bank accounts. That makes receipts, current, and savings account reconciliations easier.
- Pros: For many small businesses, Xero represents the standard accounting function, and can be managed by accountants and employees.
- Cons: The platform is maximised over a computer rather than mobile devices.
QuickBooks also offers direct links to HMRC for VAT returns. QuickBooks can calculate and file VAT and can be used by sole traders and SMEs. The technology uses the cloud to deploy its application. For the self-employed, QuickBooks can easily generate invoices, track spending, and also complete Self-Assessments. Users can also incorporate existing Excel spreadsheets into the platform. For professionals who are on-the-go, the app poses a convenient solution for on-demand business profit-and-loss monitoring.
- Pros: Direct link to MTD VAT returns, MTD strategy assistance, flexible pricing, and focus on sole traders and small businesses are the key advantages of the software.
- Cons: For more sophisticated businesses, the system may not offer all the linkages for cross-entity accounting, or templates for regulatory reporting.
Small businesses may find Sage’s online bookkeeping software Sage Business Cloud Accounting useful for tracking expenses and monitoring sales. Direct bank feeds also enhance the functionality of the software – the cash position can be taken across a range of banking counterparts, making reconciliations easier.
- Pros: Comparable in sophistication with Xero, Sage offers direct links to MTD VAT returns, and feeds from current accounts. The application can be downloaded to phone, tablet or computer.
- Cons: The bookkeeping software is mainly used for invoice and accounting management. So, it may not be as suitable for those with large numbers of receipts to process.