5 reasons you should embrace Making Tax Digital
There is no doubt by now, that if you're a VAT registered business with a taxable turnover above the VAT threshold, you'll be fully aware of Making Tax Digital. MTD became mandatory on 1 April 2019.
MTD doesn’t come without its challenges and not every business is ready. After all, more reporting, having to keep records digitally – doesn’t that just mean more work? Well, the good news is, no.
Making Tax Digital is the government’s new, fully digital tax system which will make it easier for all taxpayers, whether individuals or businesses, to get their tax right and stay on top of their affairs. So, in essence the whole purpose of Making Tax Digital is for the reporting system to become more effective and efficient, saving everyone valuable time and money.
Still not convinced? Read on to learn why you and your business can make the MakingTax Digital scheme a blessing, not a curse.
1.Using digital records will save you time and money
Bank accounts, expenses, mileage claims, sales invoices – imagine all of that information being fed into one system automatically, so you just don't have to worry about it. That’s the whole joy of Making Tax Digital. By using compatible software, HMRC will have your digital records and data at their fingertips, so even though ultimately your tax returns will be more frequent, the amount of information to input will be substantially smaller, freeing you up to concentrate on doing the things you love. That sounds like a win-win to us.
2. Fewer costly tax mistakes
Spreadsheets, manual accounting ledgers – goods ways of recording your company’s financial data, but prone to one thing – errors! It’s so easy to enter information into incorrect accounts or transpose the wrong number, and manual accounting systems don’t come with internal checks and balances. You might be cynical about MTD, but you will see the accuracy of your financial data improve. And as HMRC will pick up any discrepancies in real time, mistakes won’t get overlooked. And that's got to be a good thing, since we all know tax mistakes can be very, very costly.
3. Increased visibility of your tax affairs
There is nothing worse than finding out you have a massive tax bill, just before you need to pay it, especially if you don’t have the money put aside. Making Tax Digital means all your tax affairs will be visible in real time throughout the year, so at any given moment you can check your tax liability and make sure you've got the money to cover it.
4. Budget and plan more effectively
In previous blogs, we talked before about how real-time bookkeeping can provide a business with valuable information about your business’s health. There is no point finding out at the end of the year that your prices were too low, your stock levels were all over the shop (excuse the pun) or your plans for expansion just weren't feasible.
Up-to-date financial information means you will know at any given point how your business is doing, enabling you to make informed business decisions, when they are most needed. After all, spotting threats and opportunities at the right time can only help your business thrive.
5. Make Tax Digital and getting more from your accountant
The great thing about MTD is it should make your accountant work more effectively for you. How? Well, if we have more reliable business data, we can spend more time on understanding the trends of your business, identifying areas for improvement and recommending investment opportunities. And the thing is, MTD means you can share that information with us without even thinking about it! The result - enabling your business realise its full potential and helping you achieve the work/life balance you desire. Want to find out more about how we can help take your business to the next level? Take a look at our business growth planning service.
Make sure you're Making Tax Digital compliant
So, how do you feel about Making Tax Digital for business now? Realised MTD is a positive step and not just about making your life more complicated? Still got questions? Then why not think about a Making Tax Digital consultation?
Over the last few months, we have worked with numerous companies helping them fully understand the new reporting rules and ensuring they have the right MTD compatible tools in place. In fact, as part of our accountancy services package, we also offer free cloud-based accounting software, which is fully compliant with Making Tax Digital.
So, if you are looking for accountants in Aylesbury and want to be 100% sure you're Making Tax Digital ready and MTD compliant, get in touch today.