What Does Making Tax Digital for Self-employed Means?
Making Tax Digital (MTD) is a UK government initiative taken by the HMRC. It aims for transforming the way in which tax is reported. It makes the tax system easier, effective, and more efficient.
For individuals who are self-employed, MTD means changing the way you keep the records of your business and submit taxes.
In other words, Making Tax Digital for self-employed refers to;
- Keeping Digital Records
- Paper records are no longer sufficient for businesses. You have to maintain your records digitally using compatible software. These records may include your income, expenses, and other important details.
- Quarterly Updated to HMRC
- You need to submit updates to HMRC quarterly which means every three months, instead of submitting one self-assessment tax return per year.
- Final Submission
- At the end of each tax year, you will send a final declaration in order to verify your income and calculate your final tax bill.
Which Softwares Do You Need for MTD?
You will need Making Tax Digital (MTD) compatible softwares. Some of the most common ones are;
- Xero
- QuickBooks
- Sage
- FreeAgent
- Other bridging softwares that work with spreadsheets
Benefits of Making Tax Digital for Self-employed
Below mentioned is how self-employed individuals can benefit from MTD
- Increased Efficiency
- By using digital tools, data entry has become much easier than ever. It saves your time and reduces stress so that you can focus more on running your business.
- Accuracy
- Digital softwares provides real-time updates and automatic calculations, which minimises the chances of errors.
- Better Management of Cash Flow
- MTD involves quarterly submissions which means you can get a clear picture of your earnings as well as expenses throughout the year. This allows you to budget properly and improve control over your cash flow.
- Improved Financial Visibility
- With digital and cloud-based tools, you can view your financial data anywhere, anytime, helping you make informed choices.
Step-by-step Guide for Preparing Self-employed Accounts
Preparing your self-employed accounts isn’t challenging when we’re here. By simple organisation and right steps, you can manage your business finances all year round.
Following are some simple steps;
- Gather all your income records and invoices.
- Organise receipts and business expenses.
- Separate personal and business finances.
- Use spreadsheets or accounting software.
- Keep track of VAT if registered.
- Reconcile bank statements regularly.
- Maintain accurate and updated records.
- Consult an Accountant for review and advice.
How CannyTax Helps in Making Tax Digital
We simplify your transition to MTD and help you at every step.
1. Digital Records Made Easier
Your digital records are made easier as we help you choose and set up accounting software that is recognised by HMRC, tailored to your needs.
2. Filing Support Quarterly
At our accounting firm, we ensure that we manage your expenses completely and submit quarterly updates and reports.
3. Training and Support
Our team provides ongoing support and guidance so that you can feel confident while using digital tools.
4. Advisory and Tax Planning
We offer tax planning and expert advice to run your business and minimise your liabilities.
Why Choose Us
- Expertise with MTD
- To run our client’s business smoothly, we stay up to date with HMRC requirements, guidance and software specifications to keep you compliant and prepared.
- Tailored Services
- From a sole trader, landlord, or small business owner, every client has their own individual needs. We adjust our services to fit yours.
- Affordable & Transparent Pricing
- No hidden fees. We offer transparent plans which are tailored to your needs and budget.
- One-on-One Support
- We believe in fostering long-standing relationships with clients, providing direct access to experienced Accountants and expert advisors when you need them most.
- Trusted by Self-Employed Professionals
- We are trusted by many businesses and sole traders, helping you stay financially organised and meet your digital tax deadlines easily.
Get in Touch
If you’re self-employed and looking for a trusted partner to help you out, get in touch with us today. Our team can ensure that you are making the most of MTD.
