Why invest in technology and automation?

April 20, 2021 in Accounting, App Stack, Technology

Why invest in technology and automation?

With technology, the largest accounting firms have traditionally had a distinct advantage. Their large budgets allow them to build sophisticated resources, which allows them to reap enormous benefits from economies of scale.

Firms that invested the most in technology last year increased sales by more than 10%, compared to a UK accounting industry average of 3%. Further, accounting firms that spent the most on technology expanded at a pace that was 330% faster than the UK average.

Is there a digital divide in the accounting profession?

The response is emphatically yes, with big-budget companies reaping the benefits of automated systems that push reporting and boost client engagement.

Technology spending in the private sector is at an all-time high. According to Accountancy Age, the top 100 UK companies spent more than £73 million on new technology, just in 2020. That’s over £730,000 spent on new systems per firm!

Can all accountants afford to invest in technology and automation?

The question should be: Can they afford not to? There is significant investment in software and related services that help out  the more technologically sophisticated accountants in the UK. However, those that don’t take the plunge will be left behind with dwindling clients and an eventual uphill battle to keep pace with the requirements of the simplest of filings needing to be online.

Is it possible to eliminate this disparity?

Yes, absolutely! In the United Kingdom, Xero is now the most used accounting software. This, along with investing in many other cloud and technology solutions, has been our focus since 2014 when we first started to appreciate the benefits of software as a service.  Dext also provides a significant helping hand when it comes to automating bookkeeping and tracking errors in the accounts. Old and new clients have also been reaping the benefits of this approach throughout the pandemic crisis.

Progress and efficiencies are all possible thanks to cloud computing. We’re happy to demonstrate if you are unsure about taking the plunge. We can show you the light (and improved information about your business too)

Getting ready for the extension of Making Tax Digital

April 12, 2021 in Accounting, SEO, Small Business, Tax

Keeping the UK’s tax system running effectively and up to date with advances in technology is no easy task. The introduction of the Government’s ‘Making Tax Digital (MTD)’ initiative is intended to solve this problem by moving most taxation over to a digital model.

Making Tax Digital for VAT began in April 2019, making it compulsory for VAT-registered companies that met the £85k turnover registration threshold to comply with the MTD rules. Soon, the MTD initiative will be extended to cover ALL VAT-registered businesses, followed by all sole traders and property owners who submit a self-assessment income tax return.

So, what will this extension of MTD mean for you and your taxes? We’ve summarised the key impacts and what you need to do to stay compliant with the MTD guidelines.

What does the extension of Making Tax Digital mean for you?

The Making Tax Digital system is already up and running for many VAT-registered businesses, however, the extension of the initiative over the next two years is likely to bring a lot more UK businesses and individuals within the scope of MTD – This means you need to be ready…

We’ve aimed to answer some of the key questions for you here:

  • How does Making Tax Digital (MTD) work? In essence, MTD moves the recording of tax records and submission of tax returns away from paper and online returns over to a digital model. Businesses and individual taxpayers will need to keep digital records of their finances and will then submit quarterly returns in a digital format, direct to HMRC.
  • Who will be affected by the extension of MTD? The extension of the MTD initiative means that more businesses and individuals will now have to comply with the mandatory need for digital returns. According to the latest government briefing, this will mean:
  • From April 2022: MTD will become compulsory for ALL VAT-registered business, including those below the £85k turnover threshold.
  • From April 2023: MTD will become compulsory for all taxpayers who file income tax self-assessments returns for business or who have property income of more than £10,000 a year.
  • What do you need to do? If you fall into either (or both) of the two affected categories, it’s prudent to start planning for the MTD extension as soon as possible. This means that businesses and individuals must:
  • Keep digital records of their finances, along with all the relevant tax records
  • Use a relevant accounting software that can connect to HMRC’s digital portal
  • Submit a digital tax return on a quarterly basis, directly to the HMRC portal.

Setting up a digital accounting system for your finances

Getting your accounting system ready for MTD will help to iron out many of the potential pitfalls. For businesses that are operating in the digital domain, the whole process of submitting your VAT and self-assessment income tax returns becomes far easier to action.

If you’re using a cloud accounting platform, such as Xero, then you’re already primed and ready for MTD. If not, now’s the perfect time to switch from a paper-based system, or a desktop accounting set-up, over to the multiple benefits of cloud accounting.

‘New school’ accountants have replaced ‘old school’ bank managers for small businesses

March 1, 2021 in Accounting, SEO, Small Business

‘New school’ accountants have replaced ‘old school’ bank managers for small businesses

We have an increasingly complex financial ecosystem, yet UK businesses feel that they have no one to turn to.  It’s not surprising, since we’ve seen a reduction in bank branches and bank managers over the past 20 years but what business owners don’t know is that they do have someone. To help SMEs in a way that banks never could, accountants are stepping up to fill this gap. They are bringing back the relationship driven, trusted advisor role to the businesses who miss it. 

Here is how accountants are taking the place of old school bank managers.

The bank manager is dead…

Around 20-30 years ago, life seemed a lot simpler. If you were in business and you wanted a loan or to open an account, you would just head to a high street bank.  This was most likely the same one where you had your personal account, mortgage, savings accounts and even investments. Your efforts usually resulted in an overdraft and the add on of a relationship manager.  

This was a win-win relationship. Business owners had a bank manager who they could come to about anything from finances to providing services to grow their business. In return, bank managers had clients who didn’t just come to them for a one off shop (e.g. a loan). They were loyal customers and did their full weekly shop with them every week (e.g. accounts, mortgage etc). 

Fast forward to today and there has been a massive reduction in bank branches (almost 3,000 branches across the UK closed between 2015-2018 alone). For the banks that are still operating, they have moved up the ‘food chain.’ Not all banks but the majority, have digitised and have reserved their face-to-face services for the bigger businesses who are bringing in more money.  

The result of this is that thousands of SMEs have been left without a trusted advisor. They have been left to make crucial financial decisions based on limited or poor information and don’t know where to turn. In essence, to smaller business owners, the bank manager is dead. 

Long live the accountant!

According to a survey by Capitalise, 98% of business owners said that they had no idea who their bank manager was and that, at best, they have a call centre. This shows that banks are falling short of providing a long term solution to replace the role traditionally filled by the Bank/Relationship Manager. 

Business owners may have lost this relationship element from their banking service but what many don’t know is that their accountants can offer this and more. SMEs need guidance across the entire financial landscape, including personal decisions as well as business decisions and this is where accountants thrive. 

Accountants are uniquely positioned to be the new gatekeeper for smaller business owners. They know their small business clients best so can easily step into this role of ‘Trusted Financial Advisor.’ A seemingly ‘old school’ and obvious solution, we know, but accountants have evolved over the years while the banks seemed to have devolved. 

Where do business owners go for help?

Long story short, if you are one of the many business owners who miss a relationship-driven service rather than a transactional one…if you need a professional advisor who you can talk to openly and honestly about anything…if you want guidance to come up with the best financial solutions to satisfy your specific business needs…you can turn to your accountant.

They should be your first port of call for any question or query that you have. Do you need a personal mortgage renewal? Call your accountant and they will manage this for you and make the best introduction. 

Your accountant can help you with everything that an old school bank manager would and more:

  • Very first point of contact – as your trusted advisor and someone you can call or sit with
  • Funding solutions – debt, loans and data-driven finance applications.
  • Cash flow management – accounts, reviews, and forecasting.
  • Business advisory discussions.
  • Quality referrals – accountants connect with people daily and grow their network/client base.
  • Business introductions – insurance, pension advisors, bank accounts, business succession/exit.
  • Personal wealth and finance introductions – mortgages/investments/pension.
  • Business growth – implementing and training for cloud accounting programmes that increase efficiency and facilitate growth. 

Next time you need business or personal advice, talk to your accountant first. They can give you invaluable support in the four key areas of business (people, sales, service, and risk). Plus, unlike the old-school bank managers, they still put the relationship first. This means that they are in a position to give you the best guidance and support as they know you, your business, and your needs as well as their own.