21 Jul What is Making Tax Digital and why should your small business be aware of it?
Although there are many important parts to any successful business, keeping on top of your accounts is perhaps the most crucial.
If you do not keep tabs on your cash flow, track expenses or run the payroll on time, for example, things could soon get a bit tricky.
A major part of good small business accounting is looking after your tax affairs properly. One big change in this field lately has been the emergence of Making Tax Digital. But what is it and why should your small business know all about it?
What is Making Tax Digital?
In simple terms, Making Tax Digital (or MTD as it is commonly referred to) is a new way of dealing with tax which uses the latest digital technology. The UK Government hope that its implementation will enable businesses to keep on top of their tax reporting in an easier, more organised way.
Compliance with MTD regulations will see companies needing to not only store their tax records digitally but also submit their tax/VAT returns in a digital format also. MTD-compliant accounting software will be crucial for this and using an accountant who is fully conversant with MTD rules will also be vital moving ahead.
When does my small business need to start complying with MTD?
The UK Government’s phased approach to Making Tax Digital means different types of businesses will need to start getting on board at different times. If your small business is VAT registered, then you should be complying with MTD currently.
MTD rules for non-VAT registered small businesses or sole traders are set to come into force as from April 2024. This will see you having to comply with MTD if your income per reporting year is above £10,000. For general partnerships, the same threshold is in place but MTD is not needed until April 2025.
Why is it key to know about MTD?
The main reason is so you can ensure your small business is doing what it should be when it should be in terms of tax reporting. It is not a good idea for example to be dealing with tax reporting in the old way if your business should actually be using new MTD rules. As MTD should make handling tax for business more efficient, easier to do and less hassle, knowing about it means you can access all these benefits.
MTD for small business with SQK Accountancy
If you are a Manchester-based small business or sole trader but still feel unsure about MTD, get in touch. We are based in the city and can provide expert guidance in this important area. Give us a call on 0161 706 0444 or contact us here to see how we can help.