As of 2019, all VAT registered businesses will need to be using an accredited piece of accounting software to complete their accounting records under the Making Tax Digital rules due to come into force from April. For smaller, non-VAT businesses, you remain unaffected for now, but businesses that are registered for Value Added Tax will need to use compatible accounting software to control and maintain their finances in order to submit their VAT return digitally to HMRC. For many, this means completely switching their records to a different piece of software.
Figure Out If You’re VAT Registered
Before we get into the tips to make your switch easier, let’s take a quick look at what a VAT registered business is. This will help you figure out whether or not you and your business is affected by the new laws. A VAT registered business is obliged to charge VAT on any relevant goods or services they sell/provide. They can reclaim the VAT that they pay on the stock they have, but if the VAT they charge exceeds the VAT they pay, then they have to pay the difference to HMRC. You must register for VAT if you expect your turnover to be more than £85,000 in the next 30-day period, or if your business had a turnover of more than £85,000 in the last 12 months.
Get Software That Is Certified
Looking at that figure, it’s safe to say that any VAT registered business is likely to have a lot of accounting work to do and would need a suitable platform to work from. A list of such software is available on the GOV.UK website. Some of the more popular accounting software includes Xero, Quickbooks, Freeagent, Kashflow & Sage. Though the full list is much more extensive.
Ask For Help
If you’re not particularly tech-savvy, it might be time to think about looking for a Bookkeeper to keep your books for you. If you’re VAT registered, you should probably already have another party keep track of things for you, and they will find the switch (if it’s necessary) much easier than you will. In the case of you or a member of your team still needing to switch software programs, have a chat to the company who provides the program, and see if they can answer any of your queries.
Know When It’s Time To Move
If you run a company with a taxable turnover above the VAT registration threshold of £85,000, you will need to switch to MTD (Making Tax Digital) compatible software in order to be able to file your VAT returns under the new MTD rules from your first VAT quarter after 1st of April 2019. The MTD pilot has been running since April 2018 and is already open to many VAT registered businesses and their third-party agents. Joining MTD sooner, rather than later, will help you prepare for any changes that you need to make.
Additional Help And Support
In the event that you still feel underprepared for the move, even after contacting an agent who may deal with tax for you, you can find more help and support for MTD on the GOV.UK website; which includes webinars and a video which explains MTD in more depth. Or, you could see your bookkeeper for some help and support.
At Rosemary Bookkeeping, we work with small and medium sized businesses to take the pain out their bookkeeping. From helping you choose the right software to use, software supply, training and data migration, to a complete outsourced bookkeeping service – we can help. If you’re just starting out, or you’re looking to hire a bookkeeper to support you as you grow, we’d love to help. Just get in touch with us today for your free consultation.
Written by Rosemary Bookkeeping Reading
