Do small businesses need to rethink their financial management?
Do small businesses need to rethink their financial management?
Small businesses and sole traders are shunning technology and are overly reliant on paper methods for managing their finances, new research has revealed.
Simply Business found that 24% of the small businesses they polled didn’t use any technology to help with their financial management.
It comes despite government efforts on Making Tax Digital, whereby small firms are expected to manage their tax affairs online.
Less than a third of the businesses questioned said that they use specialised accounting software, despite a number of free and subscription-based services being in circulation.
Nearly half of firms do use spreadsheets to manage their finances, but errors can still occur, meaning all figures constantly need to be checked.
Currently, provided that a business is registered for Self-Assessment and files its tax return annually, they can choose how best to manage their finances.
But, Making Tax Digital made a return appearance in the Queen’s Speech in mid-June, having previously been put on hold.
As a result, small businesses will need to keep digital records – the move will get underway in 2018 and must be completed by the end of 2021.
While a degree of leeway will exist relating to which accountancy software firms can use, it must be capable of being linked to HMRC so that quarterly tax returns can be submitted.
HMRC time to pay services can provide assistance to businesses experiencing issues with VAT, PAYE arrears and unpaid tax.
Speaking to an advisor at the earliest opportunity can help with the arranging of time to pay agreements with HMRC to ensure that businesses are meeting their responsibilities.
Businesses that are able to prove that they cannot use the digital reporting systems – due to poor broadband in certain geographic locations for example – and those with an annual income below £10,000 will be exempt from the new rulings.
By Phil Smith