To learn more about the Making Tax Digital (MTD) initiative and who must comply- click here.
What impact will MTD have on a small business that is not VAT registered?
If you are not VAT registered and do not expect your profits to meet or exceed the VAT threshold of £85,000 by 1 April 2019, the initiative will have no impact on you for the time being.
Even if you are not affected by the 2019 MTD deadline it is a good opportunity for you to review and start digitising your business.
For example, the usual process businesses use to collect payment is; complete the job, invoice the customer and wait up to 30 days to receive payment. This method of collecting payment is lengthy and can have a negative impact on cash flow, especially if you are a sole trader or small business. Collecting payment electronically would mean you have the ability to obtain payment immediately, you could do this by buying a chip and pin device or allowing your customers to make payment on your website.
What impact will MTD have on a small business that is VAT registered?
If you are a VAT registered business you will have to digitalise your accounting records before the 1 April 2019 deadline. This means financial processes, in particular, will have to be reviewed. Give your accountant a call and ask how they are going to support you in your transition from paper-based financial records to digital.