If you’re a small business or are self-employed, you’ve probably been made aware of the government’s making tax digital (MTD) initiative. But even if you’ve read countless articles explaining exactly what it is, you might still not know how it will benefit you. Get more info about making tax digital or read on to discover the many benefits it can offer you.
Digital tax means paperless tax, which helps all of us to keep our workspaces free from documents. It can be tough to organise forms and receipts when tax time rolls around. This makes it harder to file your return on time and may even result in errors or late fines. With MTD, you can track all of your spending and income online. Everything you need will be in one place, making it simple to check up on throughout the year.
Not only will you be more organised, but filing your tax return will be a much quicker process. You won’t be scrambling for all your records anymore as they’ll all be in one place, increasing your business’ efficiency. You’ll be able to focus more on actually securing clients, selling products and improving your business when you don’t have the thought of a lengthy tax process looming over you. This is particularly good news for entrepreneurs who struggle with numbers and experience a lot of anxiety when it’s time to send them over to HMRC.
Using tax software can make you less likely to make mistakes when calculating the amount you have to pay. Many MTD-compliant systems will make calculations for you, meaning all you need to do is link the programme with your invoice system for automated tax calculations. Human error can cost you a lot of time and money, as even just one misplaced decimal point can throw off the whole year. Both underpaying and overpaying your tax can have disastrous consequences in the long run, which is what MTD hopes to combat.
The advantage of always having your tax information on hand is that you’ll be able to keep track of your cashflow. Sometimes businesses can struggle with money after having to pay out more tax than they thought they owed. Digital software will allow you to see how much tax is going to be deducted from each transaction, which can also help you to alter your pricing structure if needed. You’ll be able to have complete control over your financial situation, improving the stability of your business.
While some may have concerns over the security of digital tax, it’s actually much safer than having paper copies of invoices and accounts lying around. All your data will be stored securely and always available to access. It doesn’t matter if your computer fails or there’s a fire, as your books will be online rather than stored on your hard drive.
Hopefully, this blog makes MTD seem a lot less worrying and helps you to realise how it could change your business for the better.