Cloud accounting - it's the future

Cloud accounting - it's the future

With the launch of HMRC’s Making Tax Digital initiative, which will transform the current tax system by 2020, now is a great time for businesses to assess their accounting software (or lack thereof), and to be proactive to ensure you are ready when the change is implemented.

In essence, the initiative will require all businesses, whether incorporated or not, to be using some sort of digital package. 

In order to be more up-to-date, HMRC plans for all businesses to change from filing one annual tax return to filing four quarterly returns. These quarterly returns will need to be submitted directly from your accounting software to HMRC, which means records need to be kept continually up to date and accurate.

The idea of digital accounting does not only mean replacing any paper filing with an excel spreadsheet, however, as, in the future, HMRC will only accept records that are kept on accounting packages compatible with their online system. Whilst it is your responsibility to submit this information to HMRC, it would make sense for your accountant to be able to access your chosen accounting system, in order for them to be able to provide reassurance that all of your figures are correct. By opting to use cloud software this is made possible, without the need for back-ups or any delay in passing the required information back and forward.

To enable you to keep up to date, you should be looking to adopt a straight forward package, which is compatible with HMRC and can accurately report on the period required. As a business, Scott-Moncrieff recommends the use of Xero. With the use of online bank feeds, Xero is a very user-friendly system aimed at the non-accountant. This means you don’t need to understand the principles of accounting and only need to be aware of what goes on inside your own business. What’s more, Xero learns as you enter data and will provide a prompt if there are recurring transactions. It can also be accessed anywhere, as long as you have an internet connection, so there is no need for you to be stuck in the office until all hours completing your books. Essentially, it’s really easy to keep on top of, simply by doing a little and doing it often.

What’s more, Xero already has links with HMRC, so when the change to digital filing is introduced, the system will be fully integrated with their online portal, allowing for easy submission and confirmation that the information has been transferred accurately.

If you would like more information on your options for digital accounting, or if you would like to see a demo of Xero, please get in touch with Lucy Wright from Scott-Moncrieff on 0131 473 3500 or lucy.wright@scott-moncrieff.com.

 

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