The Unexpected Benefits from Making Tax Digital

This year Pyramis Solutions are committing to posting more regularly online and to start us off, let’s talk about Making Tax Digital!

Most of us are aware of HMRC introducing ‘Making Tax Digital’ (MTD) and many small businesses are now going to need to file their accounts quarterly.  This may seem painful, but there are also some genuine business benefits to going digital that might just outweigh the pain of updating your current accounting systems.

Firstly, if you have been on the fence about using an accounting package like QuickBooks or Xero (among many), this might well be the time to embrace this technology.  Most providers are looking to provide the functionality that makes filing pretty much a click of a button, and they would be at a huge disadvantage if they didn’t provide this as part of the kit.

So back to why is it a good idea, other than HMRC’s reasoning for it that is!

Regular Accounts Preparation:

For most businesses, doing the accounts is not the most riveting thing in our business, and if you are fortunate to have a bookkeeper or accounts assistant to take that pain away, that’s great but if you do need a bit of a ‘deadline’ to make sure the accounts are updated, MTD has now created this for you.

There is a huge benefit for preparing your accounts more frequently, by having up to date accounts, you have up to date information about how well your business is performing and what position you are in.  So, for each quarter, can you see if sales are up?  Are costs too high? Do you have enough cash moving forward?  Are things going to plan?

Up to date & powerful Reporting:

By having up to date information, you can access up to date reporting.  By using a digital platform, this should be easy to access, and easy to obtain.  This might be a little more difficult if you are using spreadsheets, however, if you have (or opt) for one of the software packages, you have a vast array of reports that are extremely useful for when you are looking at your business financials.

Best of all, these can be adjusted for time periods, certain activities, certain codes and are on demand with no formula errors.  Useful reports include Profit & Loss, Balance Sheet, Aged Debtors/Receivables and Aged Creditors/Payables, to name a few.

Maximising the Software:

Not only do you have more up to date data within the accounts itself, and more powerful reporting, there are a number of benefits to moving to a software-based accounting package too, whether it be cloud based or standalone software.

Many systems or plugins can handle electronic recording of paperwork, so it can make it easier to run a paperless system while still maintaining all the necessary evidence for accounting purposes, also reducing the need for paper filing, storage and destruction.

Double-entry is done for you, reducing the amount time entering accounts and also ensuring the necessary transactions are recording in the right place.  Along with improved security with user permission control and an often a clear transaction history for accounting transparency, which is great practice when it comes to your books.

Finally, some systems have functionality beyond the book-keeping such as budgets, project costing and forecasting.  These can help you get more from your numbers.

Here at Pyramis Solutions, we aim to help develop Control, Clarity & Confidence so you can make informed business decisions, by embracing MTD and upgrading your systems, you can be given the tools to achieve this, of course we are here to help facilitate that process if you want, please get in touch if you would like your free consultation call.

If you would like to read more about the Making Tax Digital, you can read the overview from HMRC here.