The Future Is Here!
In July 2017, the Government announced that making tax digital (MTD) will commence in April 2019 for VAT registered businesses with an annual turnover above the VAT threshold - it will be delayed until (at least) 2020 for all other businesses.
To reiterate - only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and initially only for VAT purposes from 2019. This means that businesses and landlords with a turnover below the VAT threshold will be given more time to move to the new digital system.
As VAT usually requires quarterly returns, most businesses will not need to provide information to HMRC on a more regular basis than they do now.
Advantages of Cloud Bookkeeping Software
Ease of access - because its online you can access your businesses records from anywhere in the world, at any time without having to download and install anything on your computer.
Real time financial information – you and your business with have access to up-to-date, real time financial information. This means that you won’t have to wait until your accountant files your tax return to have a good idea of the profit you’ve made.
Backup and data security - you don’t need to pay extra for online backups because they are done for you.
No physical records - you can issue sales through the software and you can upload your expense receipts meaning that all of your records can be found online.
Multi user access - its easy to collaborate online with your accountant. You don’t have to physically drop your records off to your accountant as they can be given access to your records online.
Automatic updates - because the software is online you’ll always be using the newest version of the software - there are no updates required. Updates are free and instantly available.
MTD Compliant Software
In order to provide information in a digital format to HMRC we suggest that you switch over your business records to an online software package - we have reviewed the UK's biggest online software packages below:
Xero is the Rolls-Royce of online bookkeeping packages. It is easy to use, integrates with many other supplementary/specialised software packages specific to your industry and (as they state in their slogan) it really is beautiful. It does come at a price though!
"Perfect for our larger and/or more complex clients"
FreeAgent is perfect for simple businesses and is arguably the easiest to use. Natwest & RBS are currently offering it for free with their business bank accounts which is an unbelievable offer!
"Ideal for our contractors/freelancers and simple business customers"
Quickbooks is relatively inexpensive but it is not as user friendly in comparison to its competitors. It does everything that you need in an online bookkeeping package.
"Not as expensive as the other software packages but it is quite easy to make mistakes - good if you know what you're doing"
Undoubtedly the UK's largest bookkeeping software provider before the digital era - it may have come too late to the party though! Sage are currently behind in developing their online offering in our opinion and we are yet to be convinced whether it can compete with its up and coming younger siblings.
"Recommended to current Sage desktop users that would prefer not to learn a totally different software package"