accountants and business advisers
Chief Executive Officer
07 Dec 2018
A report from the Enterprise Research Centre (ERC) has criticised claims that micro businesses are a drag on productivity because they do not have the expertise to make certain tasks efficient.
The report finds that provided they made use of five key technologies, Britain’s 1.1m microbusinesses have the potential to boost output by £16.6bn. Its study of 6,000 micro companies, employing an average of four people and with a median turnover of £250,000, showed the dramatic difference that using digital tools has on their efficiency.
Using customer relationship management software to track sales leads led to an 18.4% boost, while employing web-based accounting software, computer-aided design and online sales also were linked with greater productivity. Use of cloud-based services was linked with a 13.5% rise in sales per employee.
From 1 April 2019 the Government are introducing their Making Tax Digital for VAT (MTDfV) legislation which affects all VAT registered businesses with a taxable turnover in excess of £85,000 a year.
If a business is affected by the changes, VAT returns prepared for a period commencing on or after 1 April 2019 must be submitted to HMRC directly by software and not manually through the existing Government Gateway. This means a business method of record keeping must be capable of interacting directly with HMRC by 1 April 2019.
Although MTD represents a fundamental and unprecedented change to the UK tax system, it also represents a huge opportunity for UK businesses and taxpayers to modernise their record keeping and start using real time data to plan their business strategies.
Darren Jasper, Head of Cloud Accounting at PKF Francis Clark said:
“Our recommendation, where right for the business, is a move to cloud accounting. There are a variety of products on the market that provide tangible bookkeeping efficiencies by removing the manual entry of invoices and bank transactions. Further, as referenced by the ERC report, apps or add-ons for electronic payment solutions, automated debt collection, and industry specifics such as stock tools, webshops and till systems can be linked to the cloud accounting system.”
“Cloud accounting can be about more than just software. It is a way of working together with your accountant who, with remote access possible, will be able to guide your business and spot potential issues or tax planning opportunities early on. The availability of real-time, business critical information allows you to identify patterns and trends and take advantage of them quickly and reach your business potential.”
“Although April 2019 may sound far away, we would recommend that businesses consider any potential change sooner rather than later to facilitate a smooth transition into the new legislation next year.”
Source: PKF FRANCISCLARK
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