Making Tax Digital is the Government’s imminent legislative initiative that comes into effect for VAT-registered businesses earning above the VAT threshold (£85,000) on 1 April 2019. This will require qualifying businesses to migrate their current financial recording systems to a dedicated digital, cloud accounting platform, and will become ubiquitous for all businesses by April 2020. This means that sole traders, partnerships, landlords and commercial property owners and trading companies and corporations will all be subject to these changes in little over a year.
It’s a big change. Under Making Tax Digital, finances are required to be reported quarterly rather than annually, though the annual tax return is still included under this. Essentially, Making Tax Digital represents a more effective way for the Government to stay updated on companies’ financial reporting – providing less room for error, miscalculation and fraud when it comes to processing tax.
Transitioning your business’s finances to the cloud sounds like a complex and calculated process and indeed it can be unless you have the right help. The scale and scope of the operation depend on the size of your business and the quality of your existing bookkeeping, but some cloud accounting platforms exist that can facilitate a quick and painless migration such as Xero.
In this post, we take a look at the various ways in which Xero can improve your business’s financial accounting and streamline the bookkeeping and accounting process.
Why choose Xero?
There are a number of reasons for choosing Xero as your dedicated cloud-accounting platform, all of which stand to benefit your company and its financial position and stability. Aside from the obvious benefit of being listed by HMRC as a compatible Making Tax Digital platform, using Xero’s accounting software can assist with:
Simplifying and streamlining your accounts
With an intuitive and intelligent interface, Xero is the perfect solution for businesses looking to refine their approach to bookkeeping through clear, concise accounting. The Xero system is simple and straightforward to use, and as it’s built specifically for small business owners and operators, it means you’re not required to have an in-depth knowledge of accounting in order to use it, understand it and in turn, better understand your business’s finances.
Understanding your business’s financial position
By engaging with Xero’s illuminating dashboard overview, you’re provided with a clear, comprehensive and unobstructed view of your business’s financial stability. From automated daily bank feeds to outstanding invoices owed, Xero is compatible with a number of third-party technologies and platforms, and its dashboard offers a holistic insight into your finances – giving you the tools to better understand your business’s positioning and health.
With a strictly digital hosting network, Xero’s client data is stored entirely on the cloud. This means that you can access the platform from anywhere in the world; the only requirement is an Internet connection and a compatible device. Further to this, you don’t need to back up your files when using Xero. The secure servers are in place with all necessary redundancy measures, so accessing everything is a remarkably painless affair.
Improving your business’s operations
As a cloud-based platform, Xero provides freedoms that many small businesses once thought out of reach or unattainable. With no need for IT maintenance, no over complicated setup process or the tediousness associated with having to serve a client with a physical invoice the week after completing a job, Xero can make your business a smoother, simpler operation.
Better security of your financial data
Incorporating complex encryption technology into the storage and transference of your business’s financial data, Xero’s cloud accounting technology is a reliable and secure means of keeping your accounts in order. With your data encrypted in both storage and sending phases, any records that you submit online are efficiently and effectively safeguarded – which means your business and its interests are also better protected.
Aligning yourself with future Making Tax Digital Requirements
Despite coming into effect for VAT-registered businesses above the threshold on 1 April 2019, future instalments of the MTD legislation are imminent and will incorporate other forms of business. The ramifications of this are yet to be seen, but depending on how the introduction of MTD for VAT-registered business pans out, there may be changes to the existing and planned tax lodgement processes – so embracing the cloud and familiarising yourself with a platform such as Xero is imperative.
How can Tax Agility help?
As a gold partner of Xero, Tax Agility is privy to a handful of benefits that other tax agents and accountants aren’t. As London’s local accountants for small businesses, we’ve been working with Xero since 2011 and as such, have cultivated a reputation for being experts when it comes to using their digital cloud accounting software – becoming certified Xero advisors in the process.
This certification means that we’re able to provide our clients with special benefits when it comes to subscribing to Xero and using their technology, as well as being able to offer discounts of up to 25% for new small businesses looking to make the switch. Not only can we make it more affordable for your business to migrate its finances to the cloud, but Tax Agility is also able to provide bespoke assistance for businesses whose transition might be more complex or complicated – we’re specialists in start-up and small business accountancy and have a proven track record of delivering reliable accounting advice.
If you have any queries as to the processes by which you can migrate your business’s finances and accounts to the cloud, or would like to get in touch regarding setting up with Xero, Tax Agility can advise and assist regardless of your business type or structure. Moreover, if you’re a small- or medium-sized venture that is interested in securing the services of a qualified, specialist accountancy firm familiar with your needs and your area, London’s local small business accountants, Tax Agility, can help.
Feel free to get in touch on 020 8108 0090 and find out how you can better manage your business and improve your business’s financial positioning.
If you found this helpful, you might also like:
- Xero accounting: Update your business
- How Xero can help contractors in the UK
- Making Tax Digital for landlords: What you need to know as a landlord
This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.