Tag: Top 5 Things Businesses in Shirley Should Know About Making Tax Digital (MTD).

Top 5 Things Businesses in Shirley Should Know About Making Tax Digital (MTD).

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Top 5 Things Businesses in Shirley Should Know About Making Tax Digital (MTD).

Are you a business owner in Shirley? Then, you might be aware of the term Making Tax Digital ( MTD) spoken hundreds of times by your accountant or mentioned on the HMRC websites. But, what do you mean by this and why does it matter for your business? Well, due to this new “term” is changing the way businesses manage their taxes. MTD in short is the way authorities manage their business tax and have modernised the new system to make it more transparent, efficient and accurate. But, for small and mid-sized companies, this shift towards digital media is a little chaotic and difficult to understand. That’s why a professional accountants in Shirley can help you manage their chaotic maze with confidence and stay compliant to the new rules. So, whether you are a sole trader, small business owner or a proprietorship, these are the five essential things you should be aware of about MTD. Let’s explore those five factors in this blog.

Five essentials factors you should know about MTD

1. MTD is no longer optional but now it’s mandatory
Let’s start with the basics. MTD (making tax digital) is nothing nice to have but for every business it’s mandatory or a definite rule sketched in stone. As per new guidelines issued this year, MTD for income tax self-assessment (ITSA) will also be applied to self-employed individuals and families with income of £50,000 per year. And those earning £30,000 by 2027. As we know, this rule was applied to VAT registered businesses in 2022. With the advent of this new rule, one must keep these things in mind

  • You should have all the copies of documents in digital format whether it’s expenses or income.
  • Every business should submit quarterly tax updates through the HMRC application.
  • You don’t have to make paper returns and spreadsheets as it’s not applicable.

If you are a small business in Shirley, you need to prepare for tax audits early. That’s why hiring a local accountant in Shirley will help you in choosing the right software to keep up with the digital needs and ensure you meet all the HMRC guidelines.

2 The right software makes all the difference
In this making tax digital campaign having the right accountancy software is necessary. You need to work with HMRC approved applications and softwares such as Xero, Safe, FreeAgent and QuickBooks. All these programs will assist you in keeping records of all finances, income taxes, expenses and even VAT in real time with accuracy. But not everything is designed for your business, you need to consider your business size, industry and transaction limit per day. That’s where an accountant in Shirley can help you in customising different features of software along with choosing the right one.

3. Quarterly submissions are now the normal
Now, taxes are not about yearly deadlines but under MTD, you now have to report your business four times per year. Plus, a Annual Accounts & Corporation Tax Return submission too. This might sound stressful but in reality it benefits your business. That’s where your accountant in Shirley will help you with all the quarterly updates such as:

  • Forecasting profits with accuracy
  • Finding right tax saving opportunities
  • Trying to avoid any problems in cash flow and staying compliant with the laws.

All these can be easily managed by automation softwares including data collection and reconciliation. Hence, making your quarterly submissions error free and clean.

4. Data accuracy and compliance are non negotiable
The next thing, one should understand as a business owner is that MTD new rules don’t change how you file taxes each year. But, it simply raises the accuracy of tax filing. Any mistakes that you might be facing in the past tax filings are now easily flagged due to these softwares. Hence, making any digital record clean and updated all the time. Along with that, HMRC records are now digitally linked that doesn’t allow any manual data transfers like copying. You can leverage accountants for your small business and easily maintain digital links between transactions from receipts to invoices of any kind.

5. MTD is an opportunity not a burden
Lastly, making and storing things digitally might add more responsibilities for your business but it’s also an opportunity for you to modernise your business in a better way. There are various advantages of digital records such as:-

  • You now have better financial understanding and control over your finances. You can easily check expenses, cash flow, tax filing, profit margins, etc on a single dashboard.
  • With the digital records handy anywhere, you can make informed decisions for your business.
  • Now, there is no stress of paperwork, printing and manual work kept as manual ledgers or receipts.
  • You can maintain a healthy relationship with HMRC with better resolutions.

Final Thoughts

Making Tax Digital is changing how companies handle their money, but it doesn’t have to be a difficult process if you prepare ahead of time and get professional help. Local accountants in Shirley will be your best partner in assisting you through the seamless transition of digital records. They understand the day-to-day reality of operating a small business in Shirley in addition to the intricacies of HMRC’s new regulations.  And can make MTD work for you rather than against you, from selecting the finest software to maintaining compliance each quarter. Success in the digital era depends on how well you manage your money rather than just how much you make! So, choose wisely!