Images Digital Edition DEC 2018

BUSINESS DEVELOPMENT www.images-magazine.com 22 images DECEMBER 2018 ■ In the Autumn Budget at the end of October the Chancellor announced that business rates for retail properties with a rateable value of £51,000 or less will be reduced by a third from April 2019 for the next two years. ■ Also announced was an increase in the National Living Wage for over 25s from £7.83 to £8.21 an hour from April 2019. The rate for 21-24 year olds will increase from £7.38 to £7.70, the rate for 16-17 year olds increase from £4.20 to £4.35 and the rate for apprentices will increase from £3.70 to £3.90. What is the government‘s initiative called ‘Making Tax Digital‘, and what do I need to do? T here is a significant deadline looming that many businesses are in danger of overlooking. From 1 April 2019, the first wave of the Making Tax Digital (MTD) for VAT transition will come into force from HMRC. By April next year, VAT-registered businesses will have to keep digital VAT records and submit returns to HMRC through MTD-for-VAT- compatible software. This means you and your accountant will not be permitted to copy and paste figures from Excel to submit to HMRC, and the existing HMRC online portal will be closed. Manual accounting Confused? I don’t blame you. According to research by my company, Intuit QuickBooks, (a provider of accounting software), nearly half (41%) of small businesses owners were still unaware of the MTD for VAT transition as of June this year. I’m not convinced this number has decreased significantly since. Furthermore, at least 25% of SMEs still use primarily manual systems, without the assistance of accounting software, particularly at the smaller and self-employed end of the business spectrum. Small businesses make up 99% of all businesses in the UK, and most garment decorators fall into this category, so there are potentially a huge number of companies not ready for the deadline in April next year. But it’s not all doom and gloom. These changes offer a number of advantages to businesses. For instance, digitisation removes human error in making calculations, speeding up the process and minimising the risk of fines. Accounting software also offers features that specifically help garment decorators run their business more efficiently, such as managing invoices on the go and snapping and storing receipts for easy expense management. The transition to digital accounting may feel daunting, but you may be surprised by how easy it is and the benefits of online accounting can ultimately bring to your business. HMRC, in a proactive step, issued a guide to help VAT-registered businesses prepare for the legislation. The HMRC communication pack gives a good overview of all you need to know. The bottom line is: if you have an accountant, speak to them about steps you can take to prepare right away. If you already use software, ensure it is MTD-ready. Importantly, if you use spreadsheets, you must be able to submit the required data to HMRC digitally, for example, by using MTD-for-VAT- compatible bridging software. Bridging software Bridging software helps address the needs of a wider range of businesses – from the smallest VAT-registered businesses to those with complex VAT arrangements. This is done by digitally linking a spreadsheet into the software through to HMRC. What’s especially useful about bridging software is that the process remains familiar for small businesses already using spreadsheets, while adhering to HMRC’s new compliance rules. Plus, when bridging software is a feature within end- to-end accounting software, like QuickBooks, when you’re ready to fully move your accounts online, the migration is made much easier. The road to digital tax might be another source of uncertainty for some, but solutions are available to help you along that path and free you up to focus on the most important things – running and growing a healthy business for the long term. Prepare for your business’s future by transitioning to a digital tax system sooner rather than later. Expert advice on the business of running a garment decoration company Q&A Shaun Shirazian is the head of UK Product Management for QuickBooks. www.quickbooks.intuit.com