Choosing Making Tax Digital Accounting Software for your Business
Making Tax Digital is a government scheme to digitise business taxation in the UK. It is being rolled out in phases, starting with businesses that pay VAT.
Businesses with a revenue above the VAT threshold must now file VAT returns digitally. And the only way to do this is by using compatible accounting software.
With plans to further digitise the tax system announced last month, choosing the right accounting software for your business has never been more important.
Getting the right software
Most accounting software will let you take care of the essentials such as managing tax returns, creating invoices, tracking expenses and categorising incoming and outgoing transactions.
This may be enough for some small and medium sized businesses, but if you truly want to find the best software it is important to think about business problems you are trying to solve.
How much time do you have to manage accounting?
One of the things we hear most often from new customers is that they want to save time when it comes to accounting.
Running a business can keep you very busy and it isn’t always easy to find time for things like the accounts.
This can cause business owners to lose sight of their cashflow, meaning they don’t get a true picture of how their business is performing. It can also cause a headache during tax season when they have to spend a long time sorting through transactions just to get up to speed.
The best way to stay on top of your accounts is to link your business bank account to your accounting software so that you can import any business transactions into your account on a daily basis.
Cloud accounting software packages including FreeAgent and Xero have this functionality. They can even learn to categorise transactions automatically, so you don’t have to.
This software can save you time in other ways by tracking expenses, creating and sending invoices and chasing late payments, leaving you to concentrate on what’s important.
Staying on top of business finances
You probably didn’t start your business because you love accounting. You might not even be that good with money.
That’s why it’s important you can get a clear picture of your business finances and make sure you stay on top of tax deadlines.
Software packages like FreeAgent and Xero can give you an at-a-glance overview of your incomings and outgoings and they can even remind you about upcoming tax deadlines to help you monitor day to day finances.
Which is right for me?
Business accounting software packages such as FreeAgent and Xero are generally geared towards different kinds of businesses.
Contractors, freelancers and other micro businesses tend to prefer the functionality of FreeAgent while larger businesses and online sellers appreciate the full range of add-ons that is available on Xero.
If you aren’t sure which package is right for your business speak to a member fo the Cloud Accountant team today. Call: 0808 281 0303.