With Making Tax Digital finally coming into implementation at the start of April, some business owners have had their long-time bookkeeping methods thrown into disorder as they have had to make the move from Excel spreadsheets and, in some cases, physical account books, to the digital world. In the world of accounting, using spreadsheets is pretty much obsolete nowadays, and the introduction of MTD was long overdue. 

 

For most business owners, this move over to MTD wasn’t too traumatic, as more and more of us are moving our business practices to online – or cloud based – methods anyway. Old-fashioned methods of storing information are no longer commonplace (who remembers floppy disks?!) and we, as a nation, are becoming more digital savvy. 

If the business is VAT registered, the bookkeeper may also be responsible for calculating and reporting VAT dues either monthly or quarterly, as relevant. 

We are proud Xero Silver Partners, and we champion the software. It is versatile across industries, sectors and business structures, and has great functionality with a constantly improving user experience. Its open API connects seamlessly to a mass of other online tools – for time tracking, for example, it can connect with TSheets, and this results in a flawlessly user-friendly experience. 

 

Ultimately, Xero works with your other software and apps to give you a really streamlined and integrated work system. 

As with all data stored online – think banking, emails and even social media – nothing is risk-free, though. Always ensure you’re using strong passwords (a randomly generated password of numbers and upper- and lower-case letters is always your best bet), and don’t share any login information with anybody. If you do need to share logins with another person, for example an assistant, colleague or associate, we recommend using LastPass, which is a password manager that stores encrypted passwords online. You can share login information without actually revealing the specifics, which is brilliant for security purposes. 

With security worries aside, what about the accuracy of doing your own bookkeeping – or hiring a basic bookkeeper – and using accounting software? For this, we need to take into account the differences between an accountant and a bookkeeper. 

 

Accountants have specialist knowledge of the ever-changing rules surrounding tax and accounting – they are essentially lawyers who are experts in tax law. When your business develops and expands, it’s no longer enough just to get the books done and leave it there. Filing your returns, doing the payroll and paying your taxes is fine as a basic financial function – after all, you are bound by law to do so! – but you need to consider more than just the basic ins and outs of your finances, which is all a bookkeeper can do. Investing in an accountant is an important business decision which will almost always be of financial benefit to you in the long run – when you choose the right one to work with. 

 

If you are doing your own bookkeeping, or have somebody else doing it for you, you need to be completely certain that you are not making costly errors – or illegal ones. Accountants and bookkeepers have years of experience and knowledge regarding the types of expenses that can be claimed, what can't, and can essentially help you stay on the right side of the law alongside helping you be as tax efficient as possible. 

 

If you fall behind with invoice chasing or fail to claim back valid expenses, these mistakes can all add up and cost you a lot in the long run. What if you are missing out on claiming valuable expenses? And just imagine the penalties you could face if it turns out you've been claiming something you shouldn't have been. But there are more serious problems that you could be facing if you are late returning paperwork to the government (which can result in a fine), or, worse, underestimating your tax bill and ending up with even bigger fines, or an investigation being carried out against you and your business. 

Online software is essentially just a bot. If you make an error with your data input, you’ll receive bad information off the back of that - so your input has to be perfect and error-free. An accountant will pick up on such errors and will carry out regular data sense checks to ensure that everything is in order. An accountant can also help with things such as lost documentation, out of date books or missed tax breaks – all of which are notoriously difficult to pick up on and amend when managing your own accounts. Accountants also recognise specialist needs which are individual to each person and business, and so they can provide more refined services whilst using the latest software, whereas using software alone doesn’t allow this. 

 

You will also need to learn how to use the software if you’re doing your own accounts, which can be incredibly time-consuming and often takes extra training because some are quite complex. Did you know that many accounting firms require their qualified accountants and bookkeepers to have training to use some software? If accountants and bookkeepers who do this type of work on a daily basis need training to use the software, this just goes to show how complicated it can be to learn – and how easy it is to make mistakes. 

Every business is unique, and software doesn’t always pick up on this, whereas an accountant can. Accountants are number-crunchers by trade, and spend every day doing the tasks that non-accounting business owners put off until late at night or the weekend (when mistakes are more likely to happen!). 

 

While it might seem like an expensive investment at first, hiring an accountant to help you with the finances of your business can be an invaluable decision in the long term. You wouldn't sell your house without legal advice, or form a will without an expert opinion, so why risk the power of tax law? Why not book a call with us to discuss your options, or send us an email?