The Making Tax Digital (MTD) initiative has just come into effect. It is designed to be a cost and time-saving exercise both for the Exchequer and the independent hardware retailer that must comply.
Almost three million businesses, spanning different sectors, are affected by MTD; and the initiative offers a real opportunity for retailers to find a cloud-based accounting system that will help ease the stress of financial reporting as well as improve productivity when used properly.
It’s for the latter reason that home improvement retailers should shop around to find the software that best works for their whole business, rather than purchase a platform purely to enable digital tax submissions.
For all the hype around digital transformation, there is now compelling evidence that online business management can help a retailer to become more competitive, allowing them to save time, create a loyal customer base, and ultimately make more money. For example, the right software can help to analyse consumer trends and inform more intelligent stock decisions, helping you to choose the hardware that your customers are most in need of.
It’s evident that the UK government is doing all it can to encourage businesses to think ‘digital-first’. Tax is a key area of this, not least because the Exchequer has said inaccuracies in submissions cost the economy almost £9billion per year. It’s hoped automation may solve many of the issues currently experienced.
DIY and furniture retailers have to get on board, and VAT-registered businesses with a turnover of more than £85,000 will have to submit quarterly reports with more detail than that included in a VAT Return from April 1, 2019. MTD will render filing receipts in drawers, or storing records in a shoe box under the till meaningless, as the government will no longer accept paper records when it comes to tax and VAT submissions.
Against this backdrop, MTD-compliant software will allow small and medium-sized retailers to keep a digital record of all transactions and will store sale prices, costs and taxes.
The purchase decision
As ever, when the government asks businesses to change the way they operate, it can mean additional work and research to ensure everything, including the benefits, have been understood. For independent retailers adapting their processes for Making Tax Digital, there are three key things to bear in mind:
1. Talk to your accountant. Getting professional advice is crucial, as it’s their job to help with any questions and to lay the best options for you on the table. Get in touch with your accountant or bookkeeper for more information on MTD and what it means for your business.
2. Look for a certified accounting system. Make sure that the existing accounting system used, or any new one purchased, will be certified under MTD. If it’s not, start researching other options. If you find one that is able to integrate seamlessly with your EPOS then your business will be able to benefit from other productivity benefits of going digital, such as seamless inventory management and the ability to quickly reorder popular products and collect customer data.
3. Research cloud EPOS systems. Start looking immediately if your business is not currently using one. Take trials to make sure the software is a good fit for the business and if you do already have an ePOS then look into integrating it with your accounting system as soon as possible.
Why look for a digital partnership?
Now is the time to go digital. With MTD here to stay, retailers should consider how EPOS and accounting systems could integrate and power more productive, more profitable digital-first businesses. DIY retailers manage a lot of stock, and records of what is in store and what is flying off of the shelves will be much more useful to management when they can be viewed online.