Making Tax Digital with Xero

Making Tax Digital with Xero
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Are you a notepad and pen kind of person or are you someone that favours technology over the traditional? I must admit I fall somewhere in between the two. When it comes to planning or working through ideas I’m definitely a note pad or big piece of paper kind of girl. I love making notes, drawing up ideas, crossing things out and making arrows to connect thoughts. I think there’s something so creative in the physical act of writing and drawing things on paper, I find it more fluid than typing on my laptop or phone. I’m sure there are fancy apps and programmes that let you express this but I’m sticking with pencils and paper for now. I have embraced a digital calendar and diary however, as I found that I just couldn’t keep up with having a paper and a digital calendar. Our family is organised by a joint calendar on our phones and we have ones for our businesses on there too. I definitely would be lost if we didn’t do this, our whole lives run through it!

Paper or digital, or a mix of the two?

Business wise when it comes to working out my expenses I find it so hard to keep track of receipts and printed out invoices and general paperwork. At one point I had box files full of them with the promise that I’d deal with them later – this made doing my accounts such a stressful experience. This is where technology comes in for me. I’ve previously talked about the cloud based accounting platform, Xero on here and my experience of using Xero as a small creative business owner. Any necessary paper receipts are scanned and organised and synced, everything else is digitally recording through my banking and Paypal streams. If going digital can make my life and business more streamlined and efficient leaving me time to concentrate on the side of business that I love then I’m all for it.

From April 2019, as part of the government’s Digital Transformation agenda, UK businesses that are VAT registered and above the threshold will be required to keep their records digitally and submit VAT returns to HMRC using Making Tax Digital compatible software, like Xero. Neither myself or my husband’s businesses are VAT registered (his is exempt and I’m not earning at that level yet, so I’m a sole trader). With this in mind I had a chat with a few of friends that do have VAT registered businesses on what MTD would mean for them. The general consensus was that they weren’t aware of this change- here’s hoping their accountants are though! Alisa, head of interior design company, Inside Studio, hopes that the change will save her time requiring less back and forth with paperwork between her company and the accountants.

Making Tax Digital with Xero

Xero is included on HMRC’s list of software suppliers supporting Making Tax Digital for VAT, following successful VAT returns using the beta version of Xero’s Making Tax Digital for VAT functionality. Our accountant is a registered partner of Xero so I had a chat with him about the up coming changes.

“As an early adopter of Xero, we have minimised the impact of MTD to ourselves and to our clients because most of our clients already use Xero and therefore it should ‘just work’ in the background without too much fuss.  For those clients who are VAT registered, but still do their bookkeeping using spreadsheets or even the back of an envelope, we see MTD as a win:win situation whereby the client can massively benefit from all that Xero has to offer and we get to help them out along the way.  Ultimately, it will lead to happy clients… which of course leads to happy Accountants!”

Jonathan, Whitehead & Aldrich, Chartered Accountants in Preston

 

All in all, it’s not something to feel daunted about, if this change impacts your business all you (or your accountant) need to do is record your taxable records and submit your VAT returns through MTD-compatible software – like Xero. As both Alisa and I have said, anything that streamlines your business activities and saves time is a positive change for sure.

For more advice and useful information on tax digitalisation visit Xero’s Making Tax Digital Hub 

 

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6 Comments

  1. October 19, 2018 / 12:13 pm

    I’d say I’m somewhere in the middle too. To be honest, I need to be better and more organised with this kind of thing and I think technology is definitely the way forward to sorting me out.

  2. October 19, 2018 / 2:50 pm

    I need to be better organised but definitely a balance of the two is better.

  3. October 20, 2018 / 7:42 am

    I’m not VAT registered either (nowhere near earning that much!) but it’s interesting to know that everything will have to be recorded digitally for those who are. In theory I suppose it’s to make everything easier (and traceable) – the switch might be a bit tricky I the first instance (as changes to any established system tend to be) but it sounds like it’ll make it easier in the long run.

  4. October 22, 2018 / 9:22 am

    I’m a disorganised mess when it comes to accounts. Thankfully, my lovely boy sorts it all for me and sends it to the accountant to be signed off. I definitely need to get more organised now and the thought of scanning receipts rather than having a big bag of them definitely sounds like something I need. Great post, thanks for sharing.

  5. October 23, 2018 / 9:04 pm

    OMG I am rubbish about the admin side, I avoid it when I know I have to do it, I want to concentrate on pretty and creative which I know is so wrong. I so need organising on the admin front x

  6. November 4, 2018 / 4:23 pm

    Such a great post, so helpful Morgana. I’m not afraid to admit that everything is left to Mr H. I can manage admin in the office but not at home

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