That's because HMRC is launching its new 'Making Tax Digital' programme, which will phase out the annual tax refund in favour of requiring businesses to submit tax information online every three months.
Don't be alarmed if that sounds like four times the work. Businesses will be given a digital tax account that is linked to their bank data, automatically pulling in real-time financial data to save you time.
All you'll have to do is double-check the data every quarter and give any additional information requested by HMRC. It means, among other things, that you won't have to wait until the end of the year to find out how much tax you owe. So far, everything is going swimmingly. However, in order to maximise efficiency, you must host your accounts on software that allows you to file taxes online.
That implies that if you're currently using desktop software like Quickbooks or Sage, running your business with an Excel spreadsheet, or not keeping digital records at all, you should consider switching to a cloud-based platform.
And the time has come to act.
The clock is ticking...
HMRC first announced its 'Making Tax Digital' programme a few years ago, but after a false start and multiple revisions to the timeline, the pilot scheme is now slated to debut in April 2018.
Then, beginning in April 2019, the first enterprises (those with a turnover above the VAT level) will be required to file quarterly VAT returns online.
Other businesses (including freelancers and sole traders) are projected to join the digital revolution a year later, in 2020.
If you already use online accounting software such as Xero, the shift to quarterly digital reporting should be simple. Platform suppliers are already hard at work behind the scenes, collaborating with HMRC to ensure all necessary functionality is in place for go-live. However, if you aren't keeping digital documents, don't wait until the last minute to make the changeover. You'll need plenty of time to select a platform and then come up to speed with your new software before the deadline.
Furthermore, the advantages of cloud accounting are numerous, and the sooner you make the switch, the sooner you may benefit from improved company insight.
Why becoming digital is a benefit rather than a burden...
Long before Making Tax Digital, astute business owners were transferring their accounts online for two primary reasons. To begin, cloud accounting allows you to access your accounts from any location. You can access, modify, and rate your books on the move, whether you're at home, on the train, or on vacation, as long as you have an internet connection and a computer (laptop or mobile).
Second, internet accounts allow you to share data with your accountant in real time. Your accountant can see whatever you can see.
That means you can get quick advice from your accountant based on precise, up-to-date financial data, resulting in improved cashflow management and tax planning, as well as assisting you in making smarter business decisions.
As the deadlines for Making Tax Digital approach, transitioning to a cloud-based accounting systems should not be viewed as a burden. It's an opportunity to get more control over your company and superior help from your financial advisor.
Where should I begin with the switch?
After you've become acquainted with the Making Tax Digital timeline, you'll need to select a platform for your online accounting.
In time, it's conceivable that HMRC will supply some free basic software to help firms stay compliant without having to explore the commercial sector - however, for the reasons stated above, doing so would be a major opportunity lost.
Sage and Quickbooks, the two most well-known commercial platforms, are mostly desktop applications with minimal internet features, leaving Xero as the clear leader. Xero was designed and developed primarily as a cloud platform, and it is purpose-built and incredibly intuitive, with possibly the shortest learning curve of them all.
If you already use Sage or Quickbooks, you may be tempted to continue with what you know and avoid the added online functionality. However, owing to third-party applications like MoveMyBooks, it's actually quite simple to migrate to Xero.
Seek for a Certified Xero accountant, and they will assist you in making the transition as smoothly as possible, while also giving any training you may require to get the most out of the new platform.
However, don't wait too long to seek assistance, since tech-savvy Xero accountants are likely to be in high demand as the deadline approaches.
To summarise: Act now...
There are only around 14 months until 'Making Tax Digital' becomes essential for firms with a turnover above the VAT level, so now is the time to act. Speak with your accountant about their plans for the new initiative, or contact us to see how Xero can help you meet your duties while also transforming your business.
Comentarios