Cloud Accounting for Businesses
Making Tax Digital for VAT
It is required that VAT registered businesses with a turnover over the VAT threshold (£85,000) submit their VAT returns digitally through approved software. From 1 April 2022 this requirement will affect all VAT registered businesses.
Making Tax Digital for Income Tax
It is proposed that from 6 April 2024, all self-employed businesses and landlords with annual turnover above £10,000 will need to meet the requirements of Making Tax Digital for Income Tax. Under this scheme, businesses and landlords will need to submit quarterly reports outlining the turnover and expenditure for the period. A final report will then be due at the end of the year to confirm the annual figures. These reports will be submitted digitally, through HMRC approved software.
Making Tax Digital for VAT came into force in April 2019 for businesses with turnover in excess of £85,000 and will fully come into effect for all VAT registered businesses from 1 April 2022.
In order to comply with Making Tax Digital for VAT, all VAT information must be submitted via approved software. A list of compatible software can be found here.
Making Tax Digital for Income Tax, set to come into effect April 2024, poses a huge challenge for many individuals and business owners alike, and may require largescale changes to the way business records are kept through the use of HMRC approved software.
At Richard Sexton & Co, we have experience with many approved software providers and will be happy to guide you through any changes that may need to be made to your current system to ensure you meet the requirements.
Why cloud accounting?
We feel that it is beneficial for many businesses to keep their records through digital (cloud) accounting software as there are several benefits. The chosen digital system can be tailored to each individual business, accurate forecasting and management reports can be created and effective real-time tax planning is now possible.
Routine processing should also become more efficient and accurate, with most cloud systems having a direct feed from your online bank account which reduces inputting errors and time consuming data entry.
Business would also have a real-time view of how the business is operating and thus assisting in business decisions. Reports are available that show monthly sales/expenses, aged debtors or creditors lists (to enable the business to keep a track of outstanding amounts owed to the business and by the business) and monthly VAT reports to help the business budget and plan for future VAT liabilities. More complex reports such as cash flow forecasts and budgeting are available depending on the software package you choose.
How we can help
We would be happy to discuss which system will work best for your business and help to set up your cloud accounting package to fit your needs. We currently subscribe to QuickBooks, Sage One and Xero (and can therefore obtain favourable rates) but also have a number of clients using Freeagent and Farmplan so feel that we are well placed to consider the merits of each system. We are Quickbooks ProAdvisors, Sage One Certified and we are committed to constantly improving our knowledge to provide the best support to your growing businesses.
We are happy to provide assistance at the level you need it: from entering every transaction; reviewing your entries by regularly logging in, or simply providing guidance for the more complicated transactions. The cloud systems mean that we will have the ability to log in to access your records easily at any time (which would be beneficial when going through particular transactions with you remotely, simultaneously being able to view the same screen from our respective computers) in order to provide the support you require. The software providers also provide support so can help with processing issues if required.