Accounting TechnologyHuge developments in accounting technology are shaping the future of digital taxation. In today’s society, access to information is more readily available than ever before. Data is accessible anytime, anywhere, and by anyone with the necessary knowhow or legal power.
As a modern business, it’s important to think about your own accounting technology. As well as how it relates to your products, your services and your intellectual property. Other companies are able to pick up on these things and replicate to their advantage. You need to make sure you differentiate yourself from your competition. You need people and systems that can adapt and improve – quickly.
As writer, Jason Jennings, puts it, ‘it’s not the big that eat the small anymore, it’s the fast businesses that eat the slow.’ We can apply this sentiment to quite a lot in business. Particularly when it comes to the role played by technology and how you can succeed in a world of digital tax advancements.
Digital taxation around the worldDigital taxation is a global goal. It’s something that companies around the world are working on and incorporating into their practices. In October, the OECD Secretariat published a proposal to advance tax-related, international negotiations. Negotiations which aim to ensure that large and highly-profitable enterprises, including digital companies, pay the proper tax wherever they have significant consumer-facing activities and generate their profits.
Unfortunately, as taxation is not equal from country to country, there remains a temptation to pay tax in the cheapest places possible. I’m sure you can think of some high profile examples. Well, these proposals are looking to halt that practice and level the playing field.
The European Union have been working on their own measures too. Up until March this year, they were ploughing ahead in seeking agreement across all EU countries – which, as we know, is easier said than done – for a common goal in relation to digital taxation. Surprisingly, they couldn’t quite manage to gain consensus, with some states showing staunch opposition to it.
So, what they’ve decided to do is scrap that plan altogether. They’re instead going to focus on attaining a global overhaul of digital taxation by the end of next year.
On the whole though, Europe is leading the way in digital tax services. France, for instance, have already implemented a digital services tax. And, with Making Tax Digital, the UK are well on their way.
What’s the UK’s response to digital taxation?So, how is the UK responding to all this? Well, it all surrounds ‘Making Tax Digital’. MTD is a key component of the Government’s long-term plan. They’re trying to help people and businesses keep on top of their tax affairs. The aim is to reduce mistakes, combat non-compliance, and help people streamline their tax affairs by introducing digital record-keeping. First announced in 2015, HMRC’s ambition is to become a global leader in ‘digitally advanced tax administration’.
According to the lawmakers, MTD has made ‘fundamental changes to the way the tax system works’. In their words it’s ‘transforming tax administration’ to become:
1. More efficient
2. More effective
3. More simple for people to get their tax right first timeSince April, all businesses with a taxable turnover above £85,000 (the threshold for VAT) have needed to keep digital VAT records. Small to medium-sized businesses that fall below this threshold are not obliged to do this until next year at the earliest.
HMRC insist that they’ve consulted with stakeholders throughout the developmental process. And, Making Tax Digital won’t get mandated for taxes – other than VAT – until at least 2020.
MTD embraces accounting technology. It’s a big step forward for our industry. You can use it to store digital business records and send Income Tax updates to HMRC. And live updates replace the filing of longwinded Self-Assessment tax returns.
What are the advantages of going digital?To analyse the future, it’s important to reflect on the past. Over the last couple of decades, the accounting industry has changed… a lot. Twenty years ago, an accountant was someone you might have spoken to few times a year. You’d checked-in with them before or after your year-end, and they’d often charge you a fortune.
Nowadays though, things have changed.
Accountants are more inclined to charge fixed fees. By and large, they’re more available to help answer the questions that matter most to you. Today, accountants are more like business advisors. They’ve almost replaced the role that a high street bank manager plays in a business.
The opportunities that accounting technology can offer are infinite. If applied correctly, technology can significantly enhance your business’s potential, taking away the legwork and allowing you more time to do what you do best.
The fundamental plus point that accountancy tech offers to consumers like you is key information, accessible at the touch of a button. Used efficiently, you can harness this information to make decisive business decisions in real-time.
When it comes to business accountancy, in today’s market, you need a technology-led service with a personal approach.
What to look for when selecting accounting software?So, what should you think about when looking for accounting software? Well, for those considering which products and services to use, here are a few things to think about:
- If you’re going it alone, think about ease of use and the complexities or intricacies associated with your business.
- Ask yourself whether you want your software to be cloud-based or on-premise?
- Think about your trade and what it is that your business actually does. This will impact the tools, services or products you need to succeed.
- Consider your transaction volume and the number of users you’ll need.
- With payroll, you need to be looking at factors such as real-time information and auto-enrolment. Whereas with tax, payments on accounts and attaining good planning & advice is important. After all, the human element of both business and accounting remains as crucial as ever, particularly when it comes to industry expertise and technological support.
How can Danbro help you?Danbro are award-winning accountants, specialising in providing comprehensive guidance, support, and personal accountancy services to businesses nationwide.
We always try to stay ahead of the curve when it comes to tech. In fact, we began using cloud-based software back in 2011 and have not looked back since. It’s our firm belief that technology is an enabler to a first-class accounting service. That’s why cloud-accounting is now a staple part of our service offering. The software we use provides a user-friendly way to manage:
- Project Management
- Time Tracking
- Tax Forecasting
Making Tax Digital is easy when you’re with Danbro. We see the positives from the initiative. Using advanced accounting technology can bring much more efficiency to a business. Plus, it gives business leaders like you timely information to help make those difficult decisions. Making Tax Digital is a real opportunity to get your systems ready for the digital future.
Danbro are passionate about embracing new technology to help small businesses and start-ups achieve their absolute potential. Our ambition is to create a future full of opportunity for our family.