Going Digital with Accounting Tax and VAT

You may have heard about Making Tax Digital, a UK government initiative to transform the tax system and make administration more efficient, effective, and easier for the taxpayer.

Self-employed businesses with annual income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.

To a business owner, the thought of going digital may seem terrifying. What happens to your shoebox of till receipts and dog eared invoices?

Spending hours (or days) sifting through paper documents is outdated and time consuming. In today’s climate, you need to free up as much valuable time as you can to spend working on your business rather than in it.

Today’s bookkeepers work smarter, but how did it all begin? 

If you look back through history, you’ll find bookkeepers emerging whenever people bartered over goods. If Mr Smith gave Mr Brown a sheep and two chickens in exchange for a barrel of ale you can guarantee a bookkeeper was present to document the deal!

If Mr Brown later implied that he had only received one sheep and one chicken, the bookkeeper had the proof to dispel any grievances.

As the world evolved, and the exchange of currency became popular, bookkeepers were employed to keep more meticulous records. They began to record all transactions in a book with information about money paid and owed – single-entry bookkeeping.

It was the Italian monk Luca Pacioli who set the groundwork for modern accounting in the 15th century when he published a book in 1494 showing the benefits of a double-entry bookkeeping system. This led to the creation of a balance sheet of debits and credits, which meant bookkeeping became more efficient and offered a business owner a much clearer picture of their wealth.

As the world evolved, business owners recognised the importance of attracting investors and started to share the information the bookkeepers collated using balance sheets, cash flow and income statements. They provided the necessary proof that a business was making a profit.

Today’s bookkeepers use automated systems rather than single or double-entry cash books. They have progressed from the adding machine to life-changing software such as Xero, saving them time and effort.


How can you ditch the shoebox of receipts and go digital?

As the bookkeepers throughout history have advanced, believe me when I say that you can too! Making the switch from paper to digital is easier than you think.

Before you worry that your beloved shoebox will become redundant, allow me to assure you that it’s pretty impossible to eradicate every piece of paper in your office. Think of that as your comfort blanket – you’re welcome! However, reducing the sheer volume of paper will improve the efficiency and productivity of your business.

With the Xero accounting software, it’s easy to scan your digital documents and file away for when you need them. Of course, switching everything over to Xero can take time, which is why we support you and your team throughout the entire process of set-up and remain on hand to offer guidance until you’re confident with the transition.


Embrace Xero software

Are you ready to ditch the shoebox?

Let me help you leave the dog eared world of paper based accountancy behind and show you how to be more cost-effective, organised, and inspired. Switching to Xero software gives you the freedom and flexibility you deserve – don’t delay, switch today!

The Making Tax Digital initiative is a brilliant way of improving accounting for ourselves and future generations, so why not become part of the history lesson and go digital.


To find out more about Xero and how I can help support you and your business take advantage of my FREE consultation call (add LINK).






Top 10 Things You Should Demand From Your Accountant to Help Your Business Be More Successful.

Like most entrepreneurs, you deserve proactive advice and business growth support from your accountant.

The vast majority of UK businesses feel their current accountant is ‘just a bookkeeper’ and are unable to give you, the client, the support you need. Statistics show that 70% of UK business owners would not recommend their advisor to others.

I’m delighted to share this guest post from Grant McKnight, as they share their Top 10 Things your accountant should do to help you grow sales and profits.

Uncover the hidden financial data and host of sales growth, cost savings, and profit enhancing opportunities your accountant should be helping you with.

Do you get the support you deserve?

67% of businesses want to grow, and they need reliable financial performance. Here’s how GMK believes your accountant can help you be more successful.


1. Focus on your future, not on the past.


Imagine driving your car and only using your rearview mirror to see where you have been, but never looking forwards. What do you think would happen?

You need to know what is happening in your business and the status of your financial position right now. Even more importantly, you need to be aware of what’s going to happen next so you can prepare and be ready.


2. Understand your key drivers for success


You can’t change the past, but producing meaningful reports with up-to-date details of what happened in the previous month can help you plan for what may occur in the month ahead.

Having this information is vital for your cash flow forecast. You can track the key performance indicators that matter to your business. You can’t manage what you can’t measure.


3. Understand what discounting does to your profits


It’s crucial to track your key revenue drivers (clients, transactions, and transaction value) to be able to understand and control your margin rate.

A discount of 10% is easy to calculate and far too easy to ‘give away’. It would be best if you resisted the temptation to discount as the negative impact it has on your bottom line is considerable. Make gross margin rate your key performance indicator (KPI).


4. Manage your risks, cash flow, and working capital requirements


To manage your cash effectively, you need help with credit control, cash flow management, forecasting, and planning.

It is better practice to raise your invoices immediately, don’t provide extended credit, and collect your cash as quickly as possible. You can also negotiate longer payment terms with your suppliers, and don’t hold too much in stock.


5. Manage costs and identify areas for savings


By helping you monitor and manage supplier costs, your accountant can help you find better suppliers where necessary. They should also help you analyse your overheads, letting you know when you can renegotiate and introduce you to suppliers who can be trusted to provide the very best terms.


6. Customer value and where there is customer risk


You need to know your current client trends, the rate at which you acquire new clients, and the rate at which you lose them.

Knowing this rate of client gain and loss is critical to accurately forecasting what your future sales will be so you can focus attention on the most appropriate strategies to grow your business.


7. Forecasting: seeing into your future


Use your current data to produce a plan of where your business will be in terms of sales, profit, and the future value of your business.

You need a financial forecast. This should be reviewed and updated regularly so you know what’s happening and the impact it has on your projected figures for next year and beyond.


8. Track your key business drivers to make improvements continually


Six key areas drive the performance of every business, and your accountant should help you understand, monitor, and improve on each of these:

  • Customer acquisition rate
  • Customer retention
  • Average transaction per customer
  • Average transaction value
  • Gross margin
  • Overheads


9. The easiest customer to sell to and the ones you already have


Your accountant should help you identify the customers who could buy more from you by tracking cross-sales targets.

Recording purchases via your accounting system is simple, and it allows you to highlight opportunities to sell more to your existing customers, which is eight times less expensive than selling to new customers.


10. Sales is vanity, profit is sanity, cash is reality


Does your accountant help you manage your cash? Too many profitable companies fail because they don’t have a handle on their cash flow – don’t become another statistic.

Your accountant is in the best position to help you understand, manage, and plan your cash requirements to make sure your business has access to sufficient working capital at all times.


How can Grant McKnight help you?


We monitor profitability analysis by quickly identifying profit drivers, allowing you to maximise opportunities and mitigate risks. Our automated forecasting evaluates your current trading performance and creates a forecast for the next twelve months.

Business intelligence modules allow us to help you create a bespoke analysis for each client. Our simple user interface means no training is required, and we can analyse your business performance at the click of a button. We effortlessly distribute insightful monthly performance analysis to your clients, and via our unique algorithms, combine financial and sector expertise to identify opportunities automatically.

Your data is automatically refreshed and kept entirely up to date for a true one-time setup. We can benchmark against your other clients and externally benchmark against similar profile businesses.


If you would like to find out more about Grant McKnight and how they can help you boost your business book a FREE Consultation Call or email the team at info@grantmcknight.com