Introduced in 2019, Making Tax Digital aims to bring the tax industry online and in line with modern day technology. The HMRC aims to move all businesses into the 21st Century and create a digital environment where you can see real-time tax information.
Our blog at SCS Financial Management looks into Making Tax Digital and what impact this will have on bookkeeping.
Simple and Smooth Process
One of the best advantages of moving tax online is an increase in efficiency. For many bookkeepers, it will become much easier to access any documentation or statistics that you require. For a lot of small businesses, it has become commonplace to work in excel spreadsheets or even without written books, making it incredibly difficult for information to be recorded and monitored.
Cloud based accountancy software is dominating the market and has been for years, offering users an alternative way to manage finances. As tax moves online, it’s important to be using software such as Xero, Quickbooks and Freeagent as these can help you to monitor your financial situation as a small business.
As well as creating clearer records, working online will also save you valuable time and money in the long run. This enables businesses to put more money and time elsewhere, increasing efficiency and turnover.
Clearer Bookkeeping of Records
It may seem like the most obvious advantage, but keeping everything digital creates much clearer records for you to assess. Having everything in person or on a spreadsheet may work well for you sometimes, but it isn’t the best way of recording your tax and financial information.
Making the move onto cloud accounting makes sure everything is easy to reach in one place. There’ll be no more routing through documents trying to find an invoice. Instead, you’ll be able to find live information and work from this.
On top of this, a lot of software out there allows you to measure performance from month to month and compare this to your own KPIs. This way you can clearly see how your company is doing and whether you need to make any adjustments.
Find it hard to know which files are where and how you can access them? Using digital tax software it is much easier to manage workloads and has more control over the process of finances. As tax is to be calculated quarterly rather than monthly, there is less chance of unexpected worries becoming an issue. As you know what to prepare for, you can stay in control of what to expect in the coming months. You will know clearly what your tax liability is each month and avoid waiting for an annual figure and calculating it then.
Find Out More
Here at SCS Financial Management we work with clients around the Reigate and Surrey areas. For more details about bookkeeping, VAT or PAYE, please give us a call today on 01737 373707 or fill in our contact form to make an enquiry.
You can find out more about what Making Tax Digital is on the Government website.