Do I need to use software for my bookkeeping?

Under Making Tax Digital rules for VAT you are required to use compatible software such as QuickBooks or Xero to file your VAT returns. Certain records are also required to be kept in digital format if your taxable turnover is over £85,000. This requirement will be extended to all VAT-registered businesses unless they are exempt from April 2022. Bridging software can be used to submit VAT returns if you don’t use compatible software but records should still be kept in a digital format.

At present, you can continue using your cashbook if you wish, but investigating the available software options now will prove beneficial ahead of the introduction of Making Tax Digital for Income Tax in April 2023. This will require some businesses having to submit quarterly returns to HMRC, followed by an end of year statement and a final declaration.

The use of bookkeeping software can help your business in so many ways:

• Raising your sales invoices for you and automatically entering them into the software
• Keeping track of what your customers owe you
• Keeping track of what you owe your suppliers
• Up-to-date management information which may be needed for lenders or suppliers who are offering credit, or for better business planning
• More efficient use of your time

Once the system is set up and you are fully trained, the use of software can make the bookkeeping process so much more efficient.  Alternatively, your accountant could do the bookkeeping for you, and you could use software such as Dext to capture and submit your invoices and receipts, making the bookkeeping process even smoother.

If you would like any advice or assistance in this area please contact us on 0208 441 6890 or use our simple online contact form to arrange a free initial consultation.

Date published 26 Aug 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.