Accounting software is a type of computer tool that helps you with some of your paperwork and accounting. It’s usually used to store, automate, and analyse data, but this can change based on the service provider you choose.
Accounting software can help you send bills, keep track of your revenue and expenses, and send both Self Assessment and VAT tax reports to HMRC if you are a sole trader. Also, it can give more accurate reports with less room for mistake.
Who Needs Accounting Software? #
For most people, all they need is a simple worksheet with their income and spending on it. Still, a lot of people use services like Quickbooks or Xero just to make the process easier.
To stay in line with MTD (“Making Tax Digital”), sole traders who are registered for VAT will need to switch to using online tools for their accounts. As of April 2022, sole traders who are registered for VAT will need to use software to report VAT charges. Before that, only businesses that make at least £85,000 a year will be able to join. But this date has been pushed back more than once, so you can still get ready for this change if you haven’t already!
Does MTD Replace Traditional Accountants? #
Accounting software does not replace the need for an accountant. To figure out how much tax you owe, it only tells you how much money you made and spent. An accountant, on the other hand, will help you file a claim and give you advice on what costs you can claim and which tax-free amounts you should use.
