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Small businesses who keep track of their financial records through Excel or on paper will need to digitalise certain records, such as VAT returns. For the 2020/21 financial year, small businesses will be required to invest in digital bookkeeping.
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HMRC’s Making Tax Digital business initiative is brining fundamental changes to the way businesses across the UK manage their tax and accounts in the future. Cloud accounting software’s role with Making Tax Digital Note: Many online accounting platforms also offer apps for smartphones and tablets, making it even easier for small business owners to manage payroll or analyse their balance sheet while on the move. This means the records can be accessed at any time and from any device (provided it has an internet connection and the correct security credentials are supplied). With these kinds of accounting software, company’s financial records are securely stored and managed ‘in the cloud’. Desktop accounting software has been around almost as long as desktop computers, but small businesses are increasingly looking to cloud-based accounting solutions to manage their bookkeeping, payroll, statutory accounts and annual tax returns.Ĭloud-based services offer a Software-as-a-Service (SaaS) business model, where the small business pays a small monthly fee on a recurring basis instead of forking out hundreds or thousands of pounds up front.