Beyond digital “shoe box accounting”: The business case for tax automation
Writing for Business Advice, Neil Robertson, CEO of?Compleat Software, considers how automation could change the way company owners and sole traders approach tax and accounting.
it’s time to stop talking about automation in the future tense. The technology is here, it’s driving efficiency, and it’s a must-have for businesses of all shapes and sizes: those embracing it are becoming more efficient and more profitable; those which arent are beginning to struggle against their competitors.
But in the pursuit of automation at all costs, it’s easy to prioritise certain areas of the business namely, those which actively affect revenue and neglect others such as accounting and finance. After all, if they don’t generate profit, why should they take precedence from a technological perspective?
Nonetheless, investing in automation for the accounting side of your small business offers considerable opportunity to improve cash flow and growth potential: cutting down on the hidden costs of old processes and inefficiencies and ensuring you stay competitive in volatile markets.
Tax doesnt have to be taxing
It will also ensure you keep up with compliance requirements: HMRC is moving away from annual tax filing, now expecting all businesses to file every three months via their digital tax account.This change will be implemented by April 2019, and by 2020, businesses will be asked to keep digital records and update HMRC quarterly for other taxes. For the sake of maintaining the accuracy of records and balance sheets, your invoices will need to be processed correctly.
If you work with an accountant or accountancy practice, you probably already know all this, of course. What you might not know is the degree to which “shoebox accounting” where the practice, or accountant, handles everything once a year is no longer fit for purpose. With invoice processing technology, youll be able to handle much of this process in-house and with minimal effort.
Find out more about Making Tax Digital:
For small businesses, this presents a clear opportunity. Your accountants will be able to serve less of an administrative function and take a more active and strategic role in your business? finances helping you plan more effectively for the future.
Upgrading systems and software has other rewards. More frequent tax calculations mean fewer surprises for you and your accountant and less paperwork at the end of the year. If you run a micro business with small revenue and turnover, automation technology allows you to develop internal invoice processes, and by doing so, futureproof.
This is more important than you might think. A growing business (even a very small one) is nearly always time and resource-poor and can struggle under the weight of more customers buying more products. As clients and suppliers increase, the need for internal invoice approval processes grows with them, whether processed by the business or by its accountants. A lack of coordination can lead to incorrect or late filing and lost money for the business. The right accounting software can help you avoid these problems and relieve the time and cost burden associated with submitting tax returns.
Of course, the changes imposed by regulation and the changes associated with implementing new technology can both seem intimidating to a small business. But they don’t have to be: there is accounting software available that can handle the needs of growing companies and their finance partners.