How adopting digital accounting for your business can reduce costs and save time
In April this year we hit the deadline for Making Tax Digital (for VAT). In introducing MTD, the UK Government is encouraging businesses to move away from paper-based bookkeeping and make all tax records and tax returns digital. Seen as a necessary evil by many, MTD signals a big shift for both businesses and their accountants. Yet, even for those outside of its remit (non-VAT registered businesses), this is fundamentally part of a long-term shift to digital accounting that none of us can avoid and yet has the potential to add huge value to businesses.
The benefits of making the change
Digital accounting offers many benefits to businesses of all sizes; but perhaps its greatest rewards are on offer to the smallest firms. At the heart of this revolution is cloud-based accounting software. The likes of Xero and QuickBooks have developed to such an extent over recent years that their intuitive interfaces are specifically designed for non-accountants. Small business owners are finding that they can master these tools quickly with little training. And there are many benefits in making the change.
In a small business one person might do everything – the work in the firm as well as all the accounting and management activities. Cloud-based software automates processes at the gathering and inputting stages. It removes the need to print and file invoices. In addition, you can keep an eye on outstanding invoices to make sure you get paid on time, often remotely whilst you’re out and about.
Save time and cut costs
The many receipts that are accrued can be scanned on a mobile phone and taken straight into the system, when you’re on the go. So, there’s no risk of losing them and paying too much tax. Estimates and invoices can be easily raised, wherever you are, thereby freeing up evening and weekend time. Many processes – such as duplicate invoices – can be automated through the auto-entry options available. Sales expense receipts can be forwarded straight into the system and processed automatically to appear in your records. All this helps to drive efficiencies through your business.
The software gives businesses more control and better capability to plan and manage their financial picture. It helps to reduce avoidable errors and miscalculations that can crop up in manual calculations or when information is transposed by hand. And the software has built-in nudges and prompts to help reduce further errors. In addition, the way the software can be set up to interact directly with your bank, means that transactions can be pushed across from your bank. You review them and set up rules to automate the process. Then you can see instantly what is going on with your bank without even logging on. You can easily see who’s paid and who hasn’t – and send out immediate reminders there and then when you think about it.
The nature of cloud-based accounting software means that your tax results are visible in real time. No more waiting to the end of the year to find out what you owe. This helps firms make better decisions that will help their businesses grow.
How to prepare your business for digital accounting
Digital accounting is here to stay and will transform how we do business. MTD for VAT is just the start and will soon be followed by income tax and corporation tax. You can start by assessing your current set up and then plan how digital you want your firm to be in one, three and five years’ time. It will be important to think about how you will manage and communicate those changes to both customers and suppliers. And you may need to identify key gaps in your skills, technology or processes and decide how you will deal with them.
At Howards we have a team of experts at hand who can help you make the move. Call us on 01785 243276 for a free, no obligation consultation.
Watch our Quick Tips videos below:
Digital Accounting #1 – Clive Boult talks about the benefits of MTD
Clive Boult talks about the benefits of getting up to date with the latest digital accounting technology that helps even the smallest of businesses to save time and money
Digital Accounting #2 – Clive Boult talks about digital accounting software
Clive Boult talks about how digital accounting software is designed for non-accountants. And how a small business owner can benefit by saving time and reducing their workload by moving to cloud-based digital accounting software
Digital Accounting #3 – Clive Boult talks about how the software interacts with your bank
Clive Boult talks about how cloud-based digital accounting software interacts directly with your bank. And how it enables you to automate processes and reduce your workload.