There are a number of implications for Stockport small businesses that came out of last week’s budget. We will be picking over them in future blogs. But one thing that has not changed, and will remain on track (for the time being at least), is Making Tax Digital (MTD).
We look at the benefits and implications of Making Tax Digital, and thefor businesses that must come with it.
Implementation Timeline of MTD
Earlier this year HMRC chose to heed the concerns of businesses and accountants and delay the original MTD intake timetable. However, we are now on track for MTD to come into place, with the first intake to be in April 2019 for businesses with taxable supplies above the VAT threshold of £85,000. HMRC plans to extend the intake in April 2020 at the earliest, it is also likely that income tax will follow VAT.
MTD Reporting Requirements
For VAT businesses, MTD will require quarterly reporting, which is no more than already required. However, if the VAT threshold is reduced, as was mooted in the budget, more and more businesses will be required to comply with MTD.
Don’t Put Off The Switch to Digital
The crucial message for all businesses is therefore not to put off the switch to digital cloud accounting, despite any delays that have occurred with MTD. The direction of travel is clear, and the shift to digital is inevitable. So it is best to begin preparations as soon as possible.
The Benefits of Cloud Accounting
The positives include being able to keep track of the business records at any time and cloud accounting gives clients a variety of accountancy practices to choose from.
According to a BlueHub report, businesses using cloud technology grow 26% faster and see 21% higher profits than businesses that don’t. Furthermore, more than 80% of businesses have saved money by implementing cloud software.
The benefits of switching to the cloud are abundant. With Quickbooks, for example, businesses get:
- Ability to check accounts and do payroll using any device with an internet connection
- Access up to date information
- Improve efficiency and accuracy by automating labour-intensive tasks
- Reliable storage systems with no danger of missing or lost files
- Easier collaboration between colleagues, as well as your accountant
HMRC’s making tax digital plans which will make accounting even more of an online necessity, but the speed and reliability of Quickbooks cloud accounting has immediate benefits for business. Processes, such as monthlythat used to take 3 or 4 days can be done in a matter of hours.
Many experts predeic that within the next two years, every business will have to use accounting software. However, at present it appears just less than 20% of businesses today are using cloud tools with professional quality control.
Many Businesses are Falling Behind
A study carried out by CIMA last year found that firms were reluctant to adopt cloud computing with 70% of businesses citing data security as a main worry. Only one in four firms had adopted cloud technology for business systems with 19% making use of the cloud for financial accounting, 34% used cloud technologies for management reporting.
There are several reasons for this. Many individuals may feel a certain trepidation over the daunting task of learning how to use new software and entrusting unfamiliar technology with such crucial operational tasks. There are also data security concerns. According to CIF, 70% of businesses cited concerns about data security concerns and fears of online piracy. While cybersecurity is a legitimate concern in the digital age, CIF also reports that 99% of respondents have never experienced a data breach, making these concerns unfounded.
Cloud Accounting is a Must for your Business
Embracing cloud technology such as Quickbooks can revolutionise the way your business works. You can facilitate remote working and improve accuracy as well as boosting efficiency.
With so many benefits, and with MTD literally just around the corner, we recommend that all clients adopt cloud accounting as soon possible, and embrace the digital revolution.
Learn more about how we can help you move into the cloud and be ready for Making Tax Digital.