How to Keep Your Finger on Your Business Pulse
If you want to check whether someone is alive, check their pulse. To find out what's going wrong, examine their blood for imbalances. It's the same for your business. How do you monitor the vital signs that enable you to act quickly in response to changing conditions?
As we take a deep breath and consider our business planning options for 2022, the relevance of accurate, readily accessible accounting data has never been more apparent.
Without up-to-date, real-time data we cannot make the judgements that may mean the difference between survival and failure this coming year. The economic outlook remains challenging as COVID-19 continues to disrupt our personal and business lives, and all business owners need to be consistently monitoring the health of their enterprise so that they can respond to events.
What is changing?
As well as the everyday challenges that all businesses face, there are some further changes being forced on companies over the period to come. One of these is the extension of the Government's Making Tax Digital (MTD) initiative, which will require you to upload quarterly data to HMRC. At present most businesses are geared around the current system of annual reporting and accounts production, so this new requirement will require extra work and changes to systems. To comply, your bookkeeping needs to be up-to-date and accurate.
But as with all changes, the need for up-to-date data brings with it an opportunity to improve your business monitoring systems and ensure that your business heart is fit and healthy. Gathering real-time data will be a great help in planning and running your business efficiently, and it's an area in which we can help.
Aren’t the 'Making Tax Digital' changes some time away?
MTD for VAT is already required and will be extended to all VAT registered businesses from April 2022. Returns can only be made if the underlying data is in a format that can link with HMRC’s servers.
MTD for income tax purposes will require sole traders to upload quarterly business data and is due to commence in April 2024. This will be followed by similar demands for partnerships and companies in the following two years.
Business owners should ensure their records will be compliant as soon as possible as the conversion process, from manual or incompatible computerised systems, to effective and approved online bookkeeping systems, will take some time.
And don’t forget, there is a real need to for access to real-time data to keep an eye on current financial challenges as COVID-19 continues to disrupt business activity.
How we can help
Our experienced Accountancy Team can provide a range of services to deal with these challenges:
If you are still using manual bookkeeping records or spreadsheets, we can recommend inexpensive, cloud-based accounting software that you can use and will be MTD compliant.
If you already use computerised accounts software, we can check to see if it will be suitable for MTD purposes.
Once your software is in place, we can provide initial training to show you how to process bank reconciliations, sales, and other transactions.
With your agreement, we can access your accounts data quarterly and make sure that the numbers produced make sense. This could include a discussion of quarterly results, analysis of your business 'vital signs', and help to meet any upcoming financial challenges sooner rather than later.
The key to success in 2022 will depend to a large extent on your ability to gather, record and interpret your business results in real-time. The days of relying on instinct and historical data that may be months out of date are long-gone. Modern businesses have their finger on their business pulse at all times, ready to act on what the data is telling them.
Here at Chesterton House, our clients have trusted us for over three decades to help them grow, manage, and protect their wealth. We find out what is important to you in order to help you achieve your goals. If you would like to discuss your bookkeeping needs and accounting needs, please get in touch with us here for a free initial chat here.
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