The Making Tax Digital countdown has started! If you’re a VAT registered business with a with a turnover of over £85,000, you will no longer be able to submit VAT returns through the HMRC website. By April 1st 2019, all VAT registered businesses need to be ready to make tax digital.
How do I do that? What do I need to do? Is it too late?
We’ve put together a useful checklist to help you prepare for Making Tax Digital. Follow these steps and look forward to a paperwork and stress-free VAT return in the very near future.
1. Figure out the impact
If you’re already VAT registered, or are fast approaching the threshold, then MTD is for you. Not only will you submit your VAT returns digitally, but you’ll be required to do some digital record keeping too. If you’re already using an accounting software (or your accountant is), then this shouldn’t be much of a change. If it’s all new to you, consider what and who you might need to help you get started.
2. Check you’re not exempt
Before going through the process of getting your accounts online, just check that you’re definitely required to. Eventually, all businesses will use MTD – however, some are exempt until October 2019 or later. These include:
- Annual accounting scheme users
- VAT divisions and VAT groups
- Traders based overseas
- Local authorities/councils
- Public corporations
- Some public sector entities
3. Work out how you can integrate MTD
This is when it might be useful to engage an accountant. Many MTD software providers offer much more than simple VAT returns. In fact, you can automate a huge amount of your accounting, once your set up. This means that once the initial set-up is complete, keeping your business and your accountant up-to-date is easier than ever!
- Invoices – software such as Xero, QuickBooks, Sage and FreshBooks allows you to invoice directly out of the software. Whilst it’s still good to have paper or email copies of invoices, invoicing from the software allows it to log and reconcile payments intuitively.
- Expenses – if you’ve bought something through your business account, it’s simple to ‘code’ it as an expense before you’ve forgotten what it was. Apps such as the QuickBooks app allow you reconcile expenses as you go about your day. Topped up with fuel? Tap the notification on your smart phone and assign it as an expense before you’ve left the forecourt.
- What you owe – these intuitive programs can calculate your tax and VAT contribution as you go along. See a daily running total of your tax and VAT liabilities at the click of a button – no more nasty surprise bills!
4. Look into software options and speak to an accountant
Different accountants use different types of software. Have a look at what’s available and check that your accountant or potential accountant is using and MTD software that suits you. There are hundreds to choose from, but some of the popular ones include:
- Xero: Many accountants choose Xero for making the complex, simple. Code your own accounts with terms that make sense to you and easily integrate as many bank accounts and PayPal accounts as you need.
- QuickBooks Online: Favoured by small businesses and those on-the-go. QuickBooks offers a swipe right-swipe left system to reconciling payments and deposits, wherever you are.
To ensure that you’re fully Making Tax Digital ready, it’s best to ask an expert. Get in touch with us today to find out how we’re making tax digital with Xero and QuickBooks.
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