I had an interesting conversation with a potential recruitment client the other day about Making Tax Digital (MTD) and specifically MTD compliant software. They currently use an old system called DOSH, which I haven’t seen for years. I had a flashback to when we used it in our practice, mainly because Lloyds Bank gave it away free to encourage businesses to use a computer. We thought it was great as it added everything up automatically, how things have changed!
Forget DOSH – Choose MTD Compliant Software
HMRC has released a list of 150 software providers for Making Tax Digital. The main culprits are on there: Sage Online, QuickBooks, KashFlow and Xero.
All the 150 suppliers have said they’ll have software ready in time for April 2019.
Xero – Our MTD Compliant Software of Choice
The software we advocate is Xero and this is the one I introduced my potential client to. Xero will not only make you compliant with MTD but comes with the following benefits:
- Automatic bank feeds
- Software integrations, such as Receipt Bank to input purchase invoices and receipts
- Up-to-date management reports
- VAT returns at the press of a button
Xero helps businesses so much that we are often now faced with the following question… “why do I need an accountant as the machine [Xero] is doing everything for you!”.
You have a point.
Your Making Tax Digital Accountant
Your accountant is so much more than a number cruncher. They should be delivering you with valuable advice, not only to keep you compliant, but to ensure you are running the most efficient business possible. If you are an ambitious recruitment agency, or want peace of mind that you are getting the most out of your business; if your accountant is not delivering you with regular proactive advice, you need to assess if they’re the right fit for you.
Take this meeting for example, the potential client had not heard of Making Tax Digital until she read my blog and was using a system that was 20 years old. No wonder she feels that she does not need an accountant, if her existing accountant is not already advising her correctly.
Just an example of some of the services your accountant should now deliver:
- Meetings in person or via Skype at least four times a year to review your personal and business goals. This is essential to make sure the business is on track to meet the company’s objectives.
- A thorough tax planning exercise a few months before the company’s year end. This ensures you are not paying more tax than you need to.
- Five-year forecasts to see where the business is going. This is essential to see whether any improvements can be made to increase income or ways to reduce expenditure.
- System reviews to improve your current working methods. Xero has a whole ecosystem of add-ons that can save you and your team time, for example TSheets and ReceiptBank. TSheets is a time sheet system and ReceiptBank aids with document management.
- Retirement planning. Is your business doing everything it can to set you up for the future?
Making Tax Digital is not only changing the software you use but should also change the way in which you interact with your accountant. Your accountant should be making a positive difference on your business. If you need further help on Making Tax Digital or want to discuss how I can help you achieve your business’ objectives, contact me at firstname.lastname@example.org.
To keep up-to-date with all of the latest news regarding Making Tax Digtial, sign up to our newsletter.
By Lee Manning
Partner and Cloud Accounting Expert