Being on lockdown, stuck in your house, restricted movement, social distancing, whatever you want to call it isn’t easy for a lot of people but luckily for us, in this day and age, we have a wide range of technology at our fingertips to help us stay connected.
Staying connected is important for us on a personal level to help keep away the boredom, help keep us motivated and help keep a closer eye on our loved ones that are now out of reach. Video calls are most definitely a great option for keeping in touch with people.
Staying connected for business is going to be vital for many as more and more people are migrated to home working; getting access to apps, software and resources will help us work effectively and efficiently and well; just make the day easier.
Here’s a good but not exhaustive list of software and Apps you could try to keep you connected for work and socially.
Video Calling Software
Facetime – available on your iPhone, iPad or iPod touch and even newer Macbooks
https://support.apple.com/en-gb/HT204380 Facetime is a nice simple tool to use to video call loved ones but it is also a nice easy option for one to one video meetings.
WhatsApp – is popular for group chats but also have a video feature where you can video call individual people or groups of people, WhatsApp is available for Android, iPhone on Mac & Windows PC so is very accessible for lots of users
Zoom – is designed for video conferencing and makes keeping in touch from a personal point of view but is especially handy for business use with several options & plans
Skype – Skype has video conferencing available and you can chat to more than one person at a time and share your screen, this makes it good for personal use but also. Works well for businesses use too
Microsoft Teams – This is more than just a chat or remote meeting solution, Microsoft teams allows you to set up teams, have chats, hold group video calls, share a calendar and share documents within the teams, it is designed for teamwork.
Big businesses might have fantastic IT resources, but if you are a smaller business it might be harder to manage your documents between your teams.
I wouldn’t want to suggest one over another but a few options to help you keep running more smoothly are:
Microsoft teams – as above, it is not just great for keeping in touch, it also has the power to share documents and update them live without the need to email things backwards and forwards.
Dropbox – This is more of a file-sharing option, you can give authorised people access to a Dropbox folder so you can access the documents within. If you have to work with personal data you will need the business version to help you be GDPR compliant
Google Drive – This is a file-sharing platform and they have both personal and business packages available
Huddle – a cloud-based project management solution that helps project teams in businesses
Receipt Bank – a pre-accounting tool often used by accountants and bookkeepers but can also be used by businesses to log receipts digitally.
Smart Receipt – Turns your phone into a receipt scanner and expense report generator with Smart Receipts! You can track receipts and lots more
Expensify – claims to be the world’s leading application for expense management, receipt scanning, and business travel. Take a picture of your receipts using SmartScan and go from there
There are loads of tools out there to help make things just a little easier… all at your fingertips.
It’s April, and you know what that means!
No, we’re not talking about Brexit. We’re talking about Making Tax Digital. Yes, after years of discussions and prep time, the deadline is here. If you’ve not got yourself sorted and ready, you’ve not got long to get organised and ready to submit your VAT returns digitally. If that sounds familiar, don’t worry – you’re not alone. We’ve come across plenty of business owners who aren’t ready yet, but there is still time to get your house in order. To help out, today, we’re answering some basic (and not so basic) FAQ’s around Making Tax Digital, so you can meet the deadline feeling fully prepared and in the know.
What Is Making Tax Digital?
Making Tax Digital is the name for the HMRC scheme designed to get all VAT registered businesses to submit their VAT returns online, instead of by paper. MTD has been in the making a while now, and just like Brexit, the deadline is fast approaching. The idea is simple – if you are a VAT registered business, with a turnover above the current VAT registration turnover threshold of £85,000, you now need to be using an online accounting system to track and manage your VAT. These online accounting systems can then link directly into HMRC’s digital platform, and you can upload VAT returns quickly and simply, once a quarter. You can find out more about what Making Tax Digital is by reading this blog.
Will I Be Affected?
If you run a business that is VAT registered or has a turnover above the VAT threshold of £85,000, then you will need to get on board with MTD. In essence, this means you will have to:
- Keep your records for VAT digitally
- Submit your VAT returns to HMRC via MTD approved software
Can I Opt In Even If I’m Not VAT Registered?
If your business is registered for VAT but earning below the VAT threshold, you have two options. You can continue as you are, or you can opt in to the MTD scheme straight away. If you choose to opt in, you have the security of knowing your software is compatible and you have all the systems you need in place ready for when you do have to join MTD, keeping you compliant from the outset and ready for the switch.
What Software Is Compatible?
Because businesses need to log their VAT returns digitally, they need to be using an accounting platform that is compatible with HMRC’s systems. In the beginning the list of HMRC approved software vendors was pretty small, but now as the deadline gets closer more and more platforms are getting accredited. The odds are if you’re using one of the major platforms (like Quickbooks, Xero, Sage, Freeagent, Kashflow or Clearbooks, you’re already using an accredited piece of software, so you don’t need to do anything. You can find a full list of approved accounting software here.
What Information Will I Need To Keep?
If this is your first time for VAT, then there are a few things you need to know. Essentially, you will need to keep a record of the sales and purchases your business makes so that any VAT outputs and inputs can be calculated for each return period (normally every quarter). These records need to include the transaction date and the rate of VAT that applies to the invoice in total. That means that your accounting software must be able to:
- Keep the required records in digital format
- Maintain and store the digital records for up to 6 years
- Produce a VAT return from the digital records
- Provide HMRC with the VAT return informational digitally
- Be able to receive information about the business compliance records digitally
If you’ve invested in an accounting platform that is MTD approved, then you will have all of these covered.
It might be the eleventh hour, but it’s not too late yet. You can still do everything you need to get ready for the MTD deadline – but you do need to act now. At Rosemary Bookkeeping, we can support you in choosing the right accounting system, train you on how to use it and even help you import all of your data, so you are ready to go when the deadline comes. From there, we can also support you with information, advice and ongoing support packages to help keep your business digital and running smoothly. To find out more, just contact your local Rosemary Bookkeeper today.
Written by Rosemary Bookkeeping Reading
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
If you run a business of any size, you’ve probably used accounting and bookkeeping software at some point. Accounting software makes it easy for you to track your business’s financial health and monitor the way money moves in and out of your business. You can use it to create invoices, track expenses and generate a variety of reports that can help you asses your business performance and inform key decisions. But with so many options out there, how do you know which is the best one for you? We have a few tips to help you make the right decision for your business.
Since this is usually the first thing people think about (particularly if you’re starting out), we thought we’d address this first. Accounting software’s all vary in cost and billing model, so it’s important to find something that fits in with your budget and needs. Some will demand a high upfront cost to buy desktop software (though this is rare now), while most will work on a Software as a Service model and sell you a license on a monthly subscription. You can usually choose from multiple billing plans, ranging from £10 to £40 a month and even higher, and there may be an annual payment option that offers a discount for bulk payments. Ultimately the cost will be determined by what level of functionality you need. So look at what’s included in each package, and compare the prices of those, not just the cheapest or most expensive options from each supplier.
Depending on the needs of your business, you might need some extra functionality, so it’s important to remember to check what’s included and what isn’t. Accounting software can help you see a bigger picture of your business and make day to day tasks much easier – but you should only pay for that if it’s going to be useful to you. Here are a few features you should look for in your bookkeeping and accounting software:
Basic Accounting: Most small businesses can make do with accounting software that offers basic functions like invoicing, income and expense tracking, financial report generation, and customer management. However, if your business sells more than just a few products, you may also want software that tracks your inventory, manages vendors and assists you with purchase ordering. Or, if your business provides services, you could want functionality that makes it easy to track time and invoice billable hours.
Time Saving Automation: If you’re raising a lot of invoices every month, or your expenses tend to be in the same place for the same amounts all the time, automation features could save you a lot of time. Automate recurring invoices, reconcile your accounts with the click of a button or automatically create purchase orders for new stock when your levels dip.
VAT Preparation: Do you want to make you (and your accountant’s) life easier, and have your bookkeeping software help with compiling your VAT data ready for the HMRC returns? If so, check that your chosen programme can do the correct VAT calculations and VAT reporting. It will also need to be compliant with the upcoming ‘Making Tax Digital’ requirements due to be introduced for most VAT registered businesses in April 2019.
Add-On Services: Do you need any extras, like payroll services or payment processing? These usually come as an added subscription charge, but might save you money compared to buying them elsewhere.
Third Party Integration: Can your bookkeeping software integrate with the programmes and services you already use? Can you set it to bring in data from your bank account, CRM, POS, inventory software and e-commerce platforms? Or will you have to do all of that manually?
When you’re comparing bookkeeping and accounting software, it’s important to ask yourself how you plan to use it – since this will affect your choice. Will it just be you using it, or will you need multiple users to have access? For example, many people will give their accountant and bookkeeper access to their software to help stay on top of things. Or if you have a finance department, you may want full access for them, but limited access for sales team who only need to raise invoices. If you own more than one business, you may also want to choose accounting software that supports multiple small businesses under one account with no additional costs – or else the subscriptions will add up quickly. And finally, where and when will you be using it? Some business owners are happy to simply stick to a desktop software version, however, more commonly now, they want to be able to check their books on the go. A lot of providers will offer mobile apps as well as cloud storage of your data, so you can monitor key information and get core tasks done no matter where you are. This will influence whether you opt for a cloud-based provider, or a desktop one.
Our Top Picks
Of course, as bookkeepers ourselves, we have our preferences when it comes to software. We work with all sorts of platforms and packages, but there are a few we see time and time again:
Xero: Xero is widely acknowledged as one of the top pieces of cloud based accounting and bookkeeping software – especially if you’re working on a Mac. Xero is great if you’re just starting out, or if you need your accounting to be simple and straightforward every month, but is designed to grow as your business does. We like that it’s affordable, easy to use, offers a ton of add-on features and integrates with hundreds of third-party business solutions, many of which you probably already use. There is also a 24-hour email and live chat support function, so there’s always someone there to help you.
FreeAgent: Unlike a lot of bookkeeping and accounting software products that limit your transactions unless you purchase a more expensive package, FreeAgent supports unlimited users, clients, invoices and transactions for one monthly price. It’s also a cloud-based piece of software, and comes with a built-in project management feature that makes it perfect for keeping track of billable hours and expenses. As a FreeAgent partner, we recommend it for freelancers, consultants and other project-based businesses.
QuickBooks: One of the most popular accounting software packages out there (and for good reason), QuickBooks works for all types of small businesses. With three different small business plans to choose from, plus a separate plan for the self-employed, freelancers and contractors, it’s got something for everyone. Both new start-up businesses and bigger, established businesses have benefitted from its range of features, which cover basic bookkeeping to advanced accounting and business analytics.
Sage: Sage is one of the bigger brands, and it’s been around a lot longer than most. Sage Business Cloud Accounting has two plans for small business owners, starting with invoicing, expense management and reporting, and building up to the creation of quotes, estimates, tracking and inventory management. It’s most popular with retail based businesses due to its ability to integrate with POS systems, or businesses with large finance departments thanks to its support for multiple users and payroll systems.
At Rosemary Bookkeeping, we work with small and medium sized businesses across the Reading area 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.
As a business owner, you’re probably a master of doing what it is your business does. Most small business owners and startups are. But being able to deliver an amazing service and run a team aren’t the only elements to running a business. In fact, you could be a fantastic business owner, but still flunk basic bookkeeping. But if you, the business owner, don’t understand the different types of ‘accounts’ used to organise your finances, then measuring the success or failure of your business is almost impossible. Even if you outsource your bookkeeping to someone else, you still need to understand a few basics to stay on top of things. After all, as a director it’s your legal duty to understand the state of your business, and to provide oversight to ensure things are being done correctly. So without further ado, here are the basics of the 10 most common types of bookkeeping accounts for a small business that you should know.
It doesn’t get more basic than this. All of your business transactions will pass through your bank accounts – sometimes shown in the accounts as ‘Cash at bank and in Hand’. This account is very important. We ensure that each bank is kept as a separate account in the bookkeeping software, including one for Petty Cash and if necessary one for Till Receipts. all are reconciled to ensure the accounts are always in line with the bank statements or till reports.
If your company sells products or services that aren’t paid for immediately, you have ‘receivables’ that you need to track. Accounts receivable is basically all the money you are owed by customers, which makes keeping it up to date crucial for chasing overdue payments and sending accurate invoices.
Products you have in stock to sell are like money sitting on a shelf and must be carefully accounted for and tracked. The numbers you have in your books should be periodically updated by doing physical counts & valuation of inventory on hand. This will help you notice right away if something isn’t right and keep everything balanced.
No one likes to send money out of the business, but it’s much worse if you have no idea where it’s going and what you have left. But it’s less painful if you have a clear view of everything, which is what your accounts payable is for. Good bookkeeping helps ensure that you make timely payments, and more importantly that you don’t end up paying early. Having a good grasp on this could also mean you qualify for discounts with your suppliers for paying early, so it’s worth knowing about!
If you borrowed money to buy equipment, vehicles or pay bills, then this account tracks that loan, including interest payments and due dates. This is usually more important for startups to follow, though established businesses looking to grow may also need to take out and monitor loans.
The Sales account is where you track all incoming revenue from what you sell. Recording sales in a timely and accurate manner is critical to knowing where your business stands.
Your purchases accounts are where you track anything you buy for the business, such as raw materials or finished goods for sale. This is also where you would include any costs of outsourcing that was essential for a sale, or is part of your service offering. This account is used to calculate the ‘cost of sale’, which in turn impacts your bottom, line, so it’s important that it’s accurate and up to date.
Overheads & Expenses
This is the catch all term for the other costs of running a business that are directly related to the sale so don’t fit into the ‘cost of sales’ category. This includes things like your rent, bills, and any fees for professional services fees you might use. If you aren’t sure if an expense falls into the cost of sales category, it probably belongs in here.
This is the biggest cost of all for many businesses. No matter how much you beg, few people want to work for nothing. Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements. Shirking those responsibilities will put you in serious hot water.
The Retained Earnings account tracks any of your company’s profits that are kept in the business and are not paid out to the owners as Dividends. Retained earnings are cumulative, which means they appear as a running total of money that has been retained since the company started. Managing this account doesn’t take a lot of time, but it is important to investors and lenders who want to track how well the company has done over time.
Many business owners think of bookkeeping as an unwelcome chore. But if you understand and make effective use of the data your bookkeeper collects, bookkeeping can be your best friend, helping you run your business more effectively. At Rosemary Bookkeeping, we specialise in providing outsourced support for small business owners, tailored to whatever they need. Whether that’s some training and one-off help on using the right software, ongoing support or even a fully outsourced service. If you would like to find out more about how we can help you, please just get in touch today.
The life of a small business owner is never boring. There is always something new to do, somewhere new to be, and anything that can be done on the move, will be. So it makes sense that business owners would want to manage their accounts on the go. Mobile phones, tablets and laptops have made working on the go much easier, from checking emails to managing your diary, updating your business social media and even creating and editing documents. These are things many business owners do every day. But did you also know that you can manage your business accounts on the go too? Most accounting software providers have now created mobile apps to match their desktop versions, so you have all the access you need to your accounts. Not convinced? Here are 4 things you can do using a mobile accounting app.
No More Hoarding Receipts
This might be one of the single best things for most business owners when they first switch to cloud accounting software. When you download the app that goes with your accounting package, whether that’s Xero, QuickBooks, FreeAgent or anything else, you will be able to input your receipts at any time. That means no more gathering receipts in your wallet or losing them between the train and the office. And no more spending hours at the end of the year sorting through the box of paperwork you’ve amassed. Instead, you can just take a photo of the receipt, mark it as an expense and that’s it. You can throw the receipt away. HMRC recognises digital receipts as acceptable proof of expenses, so there’s no need to keep piles and piles of receipts.
Invoice And Log Payments On The Go
If you work in the trades, sales, or other professions that require a lot of time on the road, it can be difficult to manage generating invoices in a timely manner. Particularly if you’re on the road for long periods, with little time to sit down at your desk. But with a mobile accounting app, you can generate and send invoices directly from your mobile phone. This means you can generate invoices as soon as your finish a piece of work, or as soon as the deal has been agreed to. Far less time spent on billing, and you’ll be far less likely to forget about sending an invoice.
Reconciling the bank accounts with the accounting software is one of the tasks a lot of business owners dread at the end of every month. And hey, we don’t blame them. But it’s one of those tasks that is best tackled in little doses, which is what a mobile accounting app does. Because you have access to all the information in the palm of your hand, you can avoid painful backlogs and reconcile your accounts every day with just a few taps. Because the software is linked with to your bank business account, the recent bank transactions will show up on the app your phone, allowing you to run through and create or confirm matches with your accounts over morning coffee. You’ll never fall behind again.
Keep An Eye On Cashflow
Keeping tabs on the money coming in and out of your business is vital. Good cash flow is the key to good business, but sometimes that can be hard to see. Mobile accounting apps help you check your business cash flow whenever you want, with simple dashboards to show you thinks like revenue, expenditure, overdue invoices and payments that are due. No more generating complex reports or having to dig for the information – it’s all right there on your mobile phone screen.
At Rosemary Bookkeeping, we love mobile accounting apps. We encourage our clients to use the apps that match their chosen accounting software, link in to take care of their books and even offer training to help them learn all the tricks they need to get going. If you’re using accounting software but don’t know where to start with the app version, or if you’re thinking of switching to a new software provider, we’d love to help. For your free consultation, just get in touch with us today.
GDPR is only two months away, which means that a lot of business owners are suddenly scrambling around to make sure they’re compliant before May 25th. At first, it was only the finance and IT industries who were worrying, but now GDPR is at the forefront of every business owner’s minds.
In case you hadn’t heard, GDPR aims to unify and standardise data protection policies, shoring up weak spots and creating a strong base for personal data protection. The regulation provides a single set of rules for all member states to follow (including mandatory security notifications, new rules around user consent, a clearer definition of what could be personal data and greater rights for people to access and request deletion of the information companies hold on them). Essentially, every business in the EU needs to be compliant with these new, stricter rules around data, and we’re here to help you understand what that means.
The Brexit Question
A lot of business owners are still a bit confused about the whole thing – after all, aren’t we meant to be leaving the EU? If that’s the case, why bother updating everything? Thankfully the answer to that is quite simple. Even if we do leave the EU, GDPR will still apply. This is because not only will many UK businesses still be handling EU citizen data (and therefore be subject to GDPR anyway), but the UK Government has also confirmed that it will be passing GDPR into UK law. So no matter what happens with Brexit – the rules still apply. Sorry!
Asses Your Whole Business
The main mistake a lot of businesses are making is assuming that GDPR only really impacts their IT infrastructure. And while this is one of the bigger areas that GDPR focuses on, the fact is that nearly every area of every business will be impacted by GDPR in some way. There are six main areas that will see the biggest impact, so you need to assess your own and see if you are GDPR complaint. The six areas are:
Legal – One of the most overlooked areas to be impacted by GDPR is your legal department. GDPR requires changes to your contracts, terms and conditions, policy documents and more, not only to reflect the new laws, but to ensure that consent rules are being met at every level. This also means that your legal team (or outsourced legal support) may need to review contracts, and potentially even renegotiate some to include explicit consent and meet GDPR.
Finance – GDPR will hugely influence the way accounting and finance in done in your business. Huge amounts of highly sensitive data pass through external accountants and bookkeepers as well as within your business, so you need to make sure your systems are compliant, as well as the software and businesses you are using for support. Due to the nature of the risk, GDPR threatens to deal out heavy fines to businesses that don’t protect their financial data correctly.
Sales & Marketing – Sales and marketing is another area that will be hit really hard, because it relies on personal information in order to function. Sales people are at the front line when collecting personal data, and marketing departments struggle to function without it. But now, you need explicit consent to gather and use personal data – no more ‘opt-out’ allows, it’s a fully ‘opt-in’ model, and you will need to be able to prove that consent was given too.
HR – GDPR doesn’t just affect the way the business works in an operational sense. It also significantly improves the rights of all employees and customers when it comes to their data. Your employees can now request proof that their data is secure, and can request that you ‘forget’ them by deleting all of their data. This means your HR function needs to be updating contracts to include the use of personal data, ensuring that everyone knows their new rights and implementing the changes.
Paperwork – While we might all be striving towards the idea of a paperless office, the fact is that we’re still a long way off. This means that you need to consider how your office handles the security of data kept in physical form. Where is it stored, and who has access to it? How can you track who has accessed it, and how easy is it to find and destroy if needed. Do you employee a shredding company, or shred things yourself?
IT – And of course, there’s IT. Your It systems are your first line of defence for all of this data, so they need to be bulletproof. Good, secure IT systems are the foundation to a lot of GDPR’s requirements, so you need to make sure you’re are up to the job. If you’re not sure, just ask a cyber security expert to give you a health check.
But don’t worry, you don’t have to do it all on your own. The ICO (Information Commissioner’s Office) has provided a wide range of guides and information, including this data protection self assessment toolkit, to help businesses prepare for GDPR. At Rosemary Bookkeeping, we’re working with a lot of client’s who need to review their financial processes and data to make sure they’re prepared for implementation day. If you need help or support in understanding your accounting software’s policies, or want some advice on getting the financial side of your business GDPR ready, we’d love to help. Just get in touch with us today for your free consultation.
Since the Inland Revenue Service first formed (and then turned into HMRC in 2005), businesses across the UK have been subjected to filing annual returns through a long, complicated, paper-based process. The flurry of printing off forms, filling in complicated boxes, sending things off and then worrying that you’ve filled something in wrong – every year it’s confusion and panic. No matter how organised you are, you are bound to fall in a pitfall or two.
But over the last few years, HMRC have been working on a series of processes to make tax digital. This has happened very slowly, and typically means that key forms and processes have been digitised one at a time, to test how it all works together. After a series of beta tests, the government have pledged to take tax fully into the digital world. ‘Making tax digital’ is a key part of the government’s plans to make it simpler and easier for businesses (and individuals) to keep track of their taxes, pay the right amount and ensure they are on top of their paperwork. But, you know, without the physical paper. But what exactly does this mean?
Better Use Of Information
One of the things HMRC is most famous for in business circles is asking you for information that their systems already have, sometimes multiple times, rather than cross-referencing internally. This is partly because the sheer volume of data HMRC processes is staggering, and most of it is paper based. But with the digital system, information will be stored in a central database, meaning HMRC will no longer need to request information they already have, or can get from elsewhere (for example, by asking your employers, banks or other government departments). Every user will be given their own digital tax account, and through this they will be able to see all of the information HMRC holds on them and correct it if something is wrong. That in itself is cause to break out the champagne (for some people anyway), but it gets better. Using all of this consolidated, easy to digest data, HMRC will now be able to tailor the service it provides to individuals and businesses to suit their circumstances, instead of using the current ‘one size fits all’ approach.
Tax In Real Time
Another negative of the hidden, paper based system HMRC have been using is that it leaves business owners struggling to plan for things like tax bills effectively, simply because they don’t have any clue what they’ll be liable to pay. Sure, they might be able to work out a rough estimate but until the annual return comes around they can never be sure. But with the new digital tax system, business owners won’t have to wait until the end of the year any more. Instead, HMRC intends to collect and process as much information that relates to tax as possible and use it as close to real time as they can. The theory behind this is that it will cut down on errors and stop owed tax from building up into one huge chunk, allowing business owners to plan effectively using real time information.
A Single Financial View
So as of right now, individuals and business owners aren’t able to see a full, accurate account of their tax affairs in one place. Instead, it’s spread over multiple forms and platforms, so if you want the full picture you need to be willing to put in some elbow grease. But HMRC have pledged that by 2020, customers will be able to see a ‘full, comprehensive financial picture in their digital account, just like they can with online banking’. So when this does roll out, you should be able to just log into HMRC with your unique account and see everything you owe or are owed, your current and past returns, and basically everything you could need for tax purposes.
Finally, what might be the best bit for some people – HMRC communications are going digital! So many business owners get that feeling of dread when the brown envelope hits the doormat – but no more. While some letters might still be sent, HMRC will be allowing customers to communicate with them digitally, and communicate back digitally as well. This will mostly be done through your HMRC account using a webchat and secure messaging function to talk directly to HMRC, instead of sitting on hold for hours waiting for someone to pick up the phone. Sure, you might wait a while for someone to be available on chat – but at least you can do something else while you’re waiting! Business customers will also be able to exchange information with HMRC directly from your business software in future iterations, so communication and submission of accounts becomes much simpler.
Of course, most of this isn’t all that new. The guidelines for the digital tax incentive were first published in December of 2015, and the scheme has been under constant work since. In fact, it’s still being worked on now. Parts of the system are online as we speak, and more are being trialled all the time. But for now, it’s time to start preparing for your business to go digital, so you’re ready for the big switch. That means moving all of your record keeping, bookkeeping and accounts into an online system, and then keeping them updated! Not a small task. But don’t worry – we’re here to help.
At Rosemary Bookkeeping, we can support you in not only choosing the right online accounting system for your business, but by providing training on your chosen platform too. We have years of experience and knowledge in all of the major online systems, helping us give you the information you need to make the right decision. We can even help you transfer everything in, and train you in how to use it all properly. From there, our experts are on hand to give you information, advice and ongoing support in keeping your business accounts digital, if you need it. To find out more about making your business accounts and tax digital, just get in touch with us today.
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