Xero to Hero: How Digital Accounting Can Benefit Your Business in 2020
If you’re a business seeking to boss your accounting this year – or a VAT-registered company above the threshold of £85k – you’ll want to learn more about Xero: an HMRC-recognised Making Tax Digital (MTD) software. If you fall into the latter category at the very least, it is now mandatory to banish those spreadsheets and submit your tax returns digitally. For SMEs in general however, the move to a digital accounting platform provides a faster, smarter way of working – freeing up more time for business owners to focus on productivity, growth, and the things that really matter. So, whether you’ve yet to become HMRC-compliant for MTD, or you’re keen to embrace more efficient workflows, we explore how digital accounting can streamline your processes with software provider Xero.
The Xero effect – transform your accounting with digital
MTD aside, there are so many reasons why small businesses should consider the transition to digital accounting. Not only can traditional methods prove time-consuming and costly where additional support may be required, but the manual processing of such data also increases the risk of human error – or worse still, a security breach if found in the wrong hands (when shared via a USB drive, for example); similarly, the back-up of data can easily fall by the wayside during busy periods, and thus not always be guaranteed. By switching to a digital accounting system, not only can you iron out existing processes, but futureproof your business by allocating time more efficiently. Here’s just a few ways this can be achieved with cloud accounting software like Xero:
Improved visibility – With financial updates provided in real-time, the bigger picture is always in your hands. Whether in the office or on the move, Xero accounting software also allows multiple users to access key information from wherever they are, resulting in improved communication when collaborating across a wider team of employees and/or advisors.
Reduced costs – Up-front costs associated with accounting are significantly reduced with software like Xero, resulting in a far more reliable solution should funds not always be available. From system administration to on-going maintenance and potential server failures down the line – these are all covered by Xero without incurring additional fees.
Routine updates – Thanks to free automatic upgrades, you’ll always be using the very latest version of your Xero accounting solution – without any glitches to worry about. Plus, with the regular (and all-important) back-up of data, you can rest assured that your information remains both up to date and stored safely within the cloud.
Enhanced security – As one of the most secure ways to safeguard your data, the cloud can provide a solution that is not only watertight but also cost-effective – the perfect match for smaller businesses on a budget. This ‘offsite’ method of storing data also means productivity needn’t be affected should disaster ever strike. In other words, nothing can ever be ‘lost’.
A ‘softer landing’ with MTD
As with the majority of roll-outs affecting UK companies over the years, teething problems with MTD – including the hurdle of complex or legacy IT systems for some businesses – have prompted HMRC to extend the deadline for SMEs yet to become MTD-savvy, known as the ‘soft landing’ period. In addition, a page dedicated to service availability issues, whether with your Government Gateway login or for those businesses overseas, has been set up by HMRC to support with the transition.
For businesses and organisations with a turnover of £85k or more – this includes sole traders,
partnerships, limited companies, non-UK businesses (registered for VAT in the UK), charities and trusts – MTD is now a compulsory requirement; and that’s where cloud accounting software like Xero comes in. Those with a VAT period starting on (or after) 1 st April now have until April 2020 to set up their digital links with compatible software to share with HMRC. Whether moving from an Excel spreadsheet or converting from other software, the Xero platform provides a seamless transition for SMEs, while ensuring they fulfil their MTD obligations. To get started, businesses can sign up to MTD for VAT via HMRC, after which customers can activate the MTD solution via their Xero account. Find out how an accountancy practice like Adams Moore can support with MTD, when both VAT Returns or Year End accounts are due.
As one of the world’s leading digital accounting solutions, Xero continues to drive growth for clients wishing to cut costs, save time and improve efficiency within their business. To find out more, get in touch with Adams Moore – a recognised Xero accountancy software provider – on the benefits of going digital this new year.