Why it's important to choose the right MTD software for your business
Making Tax Digital can seem like a big change for small businesses. But, choosing the right MTD software can make all the difference! Here’s a quick guide to why you need the right software.
What is Making Tax Digital?
Making Tax Digital (MTD) is new regulations that came into force in April 2019. VAT-registered businesses with a turnover of over £85,000 need to keep their records digitally, and use an MTD compatible software to submit their VAT Return.
If your turnover is under £85,000 but you are VAT registered, you can still sign up for Making Tax Digital.
Why it’s important to choose the right MTD software
Choosing the right MTD accounting software can have a great impact on your business. But, it’s also important to understand HMRC rules around Making Tax Digital. Here’s what you need to know:
Your provider needs to be MTD compliant
Your software provider needs to be MTD compliant, so find this out before you commit to moving to accounting software. This means the software will allow you to keep the right kinds of digital records, and to submit your VAT Return through Making Tax Digital. The HMRC website lists MTD compliant software, so you can be sure of your choice.
Avoid HMRC penalties
HMRC could charge a penalty if you don’t keep the right VAT Records. The penalty could be up to £500! But, there’s currently a ‘soft landing’ period for businesses to make efforts to comply with Making Tax Digital.
Soft landing deadline
The soft landing has been extended to end next year. So, all businesses required to follow MTD will have to digitally submit for their first VAT Return period starting on or after 1 April 2021. This is a welcome extension for small businesses, given the current climate surrounding COVID-19.
Making Tax Digital bridging software
Although some businesses are currently using bridging software to comply with MTD, this isn’t the best long term solution. Bridging software may not be appropriate after the soft landing finishes. Doing your accounting in spreadsheets isn’t reliable or secure, so choosing a cloud accounting software instead has lots of benefits for your business.
Get to know your finances
Choosing an MTD cloud accounting software can help your business beyond simply being MTD compliant. Automation, extra features like invoicing and expenses, and increased security are just some of the things that can help you get to know your finances and run your business more efficiently.
How Bokio can help you be MTD compliant
Bokio is a free MTD compliant software that lets you submit your VAT Return in minutes. When you do your accounting with Bokio, your VAT Return is automatically generated. So, all you need to do is check it and submit it to HMRC.
Bokio has lots of other features too! Bookkeeping, invoicing and expenses are all in one place to make doing your accounts simple. Plus, it’s really easy to use, so you don’t have to worry about struggling with new software.