Think back to 2008 — the Olympics were in Beijing, Barack Obama was elected president of the United States and the UK began its digital TV switchover. This switch saw the UK’s terrestrial television converted to digital while analogue channels, broadcast from thousands of transmitter sites, were turned off. First announced in 2005 and finally completed in 2012, there was ample time to prepare for the digital TV transition. Unlike the TV switchover, the digitalisation of the UKs tax system is fast approaching and many independent jewellery retail owners are rushing to be prepared.
Here, Richard Stonier, partner of online accountancy software expert, Tally Accounts, explains how jewellery retailers can be proactive and prepared for the transition to tax digitalisation.
The government announced in 2015 that by 2020 most businesses, self-employed people and landlords will be required to keep track of and update HM Revenue and Customs (HMRC) of their tax affairs digitally.
While some jewellery retail owners may rejoice in the news, after being overloaded with paperwork and often frustrating communications with HMRC over the years, for others, the transition may not be so effortless.
Keep it simple
According to research, two-thirds of small businesses don’t use accountancy software, and 16 per cent don’t use any sort of financial record keeping at all, let alone a digital one. For this group of business owners, the transition to digital will not only be a case of learning new software systems, it will be actually keeping financial records to begin with.
Keeping useful and useable financial records when starting from scratch is easy, just keep it simple. Find a system that works for you, and stick to it ─ and if you can make these records digital, then even better. Monitoring your income and outgoings using a simple spreadsheet, or using easy-to-use software, will make transitioning to the new HMRC systems much easier in the long run.
Speaking to an expert accountant sooner rather than later will help eliminate headaches further down the digital line. You might be a superstar of digital bookkeeping already, but full-time accountants are on the ball when it comes to HMRC changes and will be able to give the best advice for future-proofing your business accounts.
By using accountancy software that is prepared for the switch will likely mean a smoother conversion when the deadline rolls around. While for jewellery retail owners who don’t feel comfortable using computerised software just yet, working with experts who already use the right software and are prepared for the shift will also ease troubles.
Accountancy experts, like Tally Accounts, are already working on improvements to their accountancy software to make the transition to digital tracking and tax submission easier for business owners long before the transition deadline.
Don’t be an ostrich
Don’t bury your head in the sand and hope the digitalisation of tax will go away. Regardless of whether business experts are in favour of the transition, or not, the change is going to happen, and fast.
Be prepared. Do your own research and get to know the new system now. Then, when the system comes in and is a requirement, rather than just the optional practice that it currently is, you will be comfortable, confident and capable of working the system.
While your accountant can provide expert advice, ultimately the successful tracking and processing of your business accounts is for your benefit. Properly administered accounts mean less time sifting through month-old receipts and more time generating new business and making more sales.
By preparing yourselves and your finances for the digital switch now, your financial accounts will be crisp and clear — just like the sharp, high definition images we receive on our TV screens thanks to the digital switchover of 2008.