As we fast approach the deadline Making Tax Digital on 1 April 2019, it’s time to turn your attention to getting your small business compliant.
Whether you are a small business owner or an accountant, making the transition will be a lot easier with these three tips.
1. Figure out the Date of Your First MTD VAT Return
Even though the official Making Tax Digital start date is 1 April 2019 your first VAT return under the new system will depend on when your VAT quarter ends.
The first step to getting your small business making tax digital ready is to figure out which is your first MTD VAT return. That way you’ll be able to pinpoint the exact date you’ll be affected.
All your transactions from the first date of your MTD VAT return must be recorded digitally and in accordance with the new rules.
Here’s the official HMRC dates you’ll need to work out when you need to start:
- Quarters ending January: first MTD Return is due 07/19
- Quarters ending February: first MTD Return is due 08/19
- Quarters ending March: first MTD Return is due 06/19
- For monthly VAT Returns: first MTD Return is 04/19
2. Decide How You Will Maintain Your Books Digitally
If you don’t already use an HMRC MTD approved bookkeeping software then it is essential that you decide how you will maintain your digital books ready for your first MTD VAT Return.
You can check my list of Making Tax Digital Approved Softwares HERE if you are searching for a new bookkeeping system or want to check the one you use is MTD compliant.
If you are using a bookkeeping spreadsheet then there are workarounds available for Making Tax Digital. These are known as “Bridging Softwares”.
3. Plan Your Transition to Digital Record Keeping
The above puts you in the know. But you need to start planning HOW you’ll actually make the transition to digital record keeping.
If you are using a bookkeeping spreadsheet or a non compliant bookkeeping software then you’ll need to work out a plan to migrate to your new approved software.
If you don’t set aside sufficient time, transitioning bookkeeping softwares can be disruptive and involve a steep learning curve. So get your migration plan together to avoid the risk getting penalties for a late VAT return, mistakes or a lot of stressful evenings!
Whether you choose to do it yourself or use a professional to help you, you’ll need to:
- Learn how to use your new software;
- Set up your new bookkeeping system;
- If you are part way through your financial year, decide if you should migrate your historic figures as well;
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