In a recent survey by the Institute of Chartered Accountants in England and Wales, a nationally representative sample of 500 UK businesses was asked how they keep their financial accounting records.
The results
showed that just 25% currently maintain their accounts electronically using accounting software, and the percentage was even lower among small businesses
The rest will therefore need to consider what changes they may need
to make, almost certainly incurring considerable costs to comply with the new rules which come in in 2018.
From April 2018, small, non-VAT registered businesses will be the first UK businesses to have to comply with the Government’s new proposals for Making Tax Digital, first announced in the Budget 2015.
As we explained in a recent blog, the rules will make digital record keeping compulsory, in addition to a new requirement to make four returns of information to HMRC each year. By 2020, all businesses will be required to keep records digitally and to make four returns each year.
But this is only a small part of the problem; without automating their accounting and
using software designed to provide regular financial information, small business owners are spending too much time and have too little information to run their businesses properly. Bonkers.
Further analysis revealed that a greater burden falls on sole trader businesses, with 82% of these one-person businesses needing to make the move to digital record keeping. Most of the burden will
fall on the manufacturing and construction industries, where 41% still rely on paper-based records.
Encouragingly, 55% of those surveyed support the general move by HMRC to encourage businesses to send in their information online, however, only 18% of businesses felt that it should be made compulsory.
if you would like a complimentary, no obligation, chat about how to move your books to accounting software by using new free software most people haven't even heard about then book a call with me now.
Noel
Guilford
Noel Guilford is the principal of Guilford Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 01244
660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting http://guilfordaccounting.co.uk/figureit out.
Notes on business research:
ICAEW commissioned IFF Research to conduct 500 telephone interviews. These were conducted with businesses across the UK and the interviews took place between 15 and 26 February
2016.
All data weighted to be reflective of the make-up of the UK business population.
ICAEW & IFF Research both adhere to the Market Research Society (MRS) code of conduct.