Do I need to use software for my tax records?

While keeping your records in a spreadsheet can be compliant with Making Tax Digital (if used the right way), far more businesses are now using software to deal with the bookkeeping for their business as this has several benefits compared to using a spreadsheet.

Under Making Tax Digital (MTD) for VAT you must file your VAT returns to HMRC through MTD-compatible software, like QuickBooks or Xero. Some of the records now also need to be kept digitally so using software will deal with both points.

Once the software is set up for your business and automation rules have been put in place, monthly bookkeeping can be efficiently and easily completed.

The other main benefit of using software is that, providing the bookkeeping is kept up-to-date accurately and consistently, you can easily access management reports such as a profit and loss account and a balance sheet to see how the business is doing at any time. These reports can also be helpful if you are looking to get additional funding for the business as most lenders will ask for up to date management information.

Traditionally software has been aimed at accountants and not business owners, which put many business owners off. But this has all changed and software is now built with business owners in mind. The ‘accountant’ terminology has been removed making it even more accessible, and there are no large up-front fees to pay. You really can access your financial records on the go using mobile apps, invoicing customers before you even leave their premises.

If you would like any advice or assistance in this area please contact us on 0208 616 3319 or use our simple online contact form to arrange a free initial consultation.

Date published 25 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.