Making Tax Digital (MTD) is coming! If your small business submits VAT returns then most likely by 1 April 2019, you/your bookkeeper/your accountant will need to keep records digitally and use software to submit your VAT return.
You can find a full timeline for when it is mandatory for your business to start using MTD software on the government’s website
Why use Online Accounting Packages?
Online accounting packages are a brilliant option for freelancers and small businesses over spreadsheets; being able to store all your bookkeeping data online in a secure place is only going to save you time and money in the long run. There is no need to install any software onto your computer or any danger of files becoming corrupted.
Having your financial information stored in an online accounting system means you can access the information from anywhere and from different devices. With many of them you have the option to invite other users to your information so you, your accountant and bookkeeper have access to the same up-to-date information.
There are good professional looking invoice templates that you can add your logo to, allowing you to email your invoices directly to your clients, also giving clients the option to pay online. All this information is stored and you also have the option to add your bank statements into the system, simplifying the reconciliation process.
Which accounting software should I use?
Xero – Xero says they are Britain’s leading online accounting software. They have lots of resources for small businesses and also bookeepers/accountants for preparing for Making Tax Digital. You can download the Xero app onto your smart phone allowing you to check your accounts or even create invoices while on the go.
Quickbooks – they have a huge resource centre which includes webinars and videos about MTD software, and there is MTD for VAT software and bridging solutions. Talk to their MTD team on 0808 168 4238.
Clearbooks – you can book a demo to see if this the software for you. You can even try it for free. The process for submitting VAT returns via Clearbooks is simple and can be done in three easy steps.
How to prepare for MTD as a small business?
Although MTD will be brought in in stages, the best way to compliance is to make sure everything is up-to-date now so no last minute panics. Before you know it, MTD will apply to all tax systems.
Check with your software supplier that they will be HMRC-compliant by 1st April 2019 (we’ve already given you three suggestions but there are plenty more providers out there). Also sign up to MTD:
Head over tohttps://www.gov.uk/guidance/use-software-to-submit-your-vat-returns
Click on the sign up button and follow HMRC’s instructions
For more information on Making Tax Digital, take a look at this guide put together by Thomson Reuters.