Q&A: "I've transformed my business by getting my finances online"
Business Industry Anne-Marie Simpson, Owner and Director of Simpsons Gin Bar in Sutton Coldfield, thought that Making Tax Digital would be expensive to implement. In fact, it saved her business money.
Can you describe your business?
We're an independent, family-owned bar with a focus on quality and creating a fantastic, relaxing experience for our guests, based in Sutton Coldfield. We've been open for two years and trying to serve a need that wasn't previously being catered for by the town's leisure industry. It's one of a number of businesses we run.
What did you know about Making Tax Digital (MTD)?
We were getting emails from our former accountant saying: 'This is coming in April 2019. You need to prepare yourself for it.' But other than that, not a lot. My thought was that it probably meant we'd need to ensure that our invoices and receipts were scanned — and I had some concern about how much extra work that would entail.
What has MTD meant for your business?
We changed accountants and now have one that is geared up for digital and a big believer in using IT in business accountancy. We use book-keeping automation software, so our receipts are scanned in from phones very easily. We're also using a cloud-based accounting software platform that aligns with our bank feed and makes us more effective and efficient. For example, it means I can immediately look at stock costs and salaries, across months or weeks. Everything works more smoothly.
Has new software meant extra costs for you as a business?
We've found that it's cheaper to rent the software we need and employ a digital accountant. Put it like this: previously, we were paying just short of £15,000 a year on accountancy fees across four business heads. We're now paying around £5,000 a year.
What did your previous filing process entail?
We were giving our former accountant lots of paperwork. He was having to scan everything in, manually check each receipt and categorise them in terms of business expenditure. Then he would calculate the VAT element and submit a claim.
We were getting a huge bill from him because of all that, so I started doing some of the leg work to save money. But that was very labour intensive and because it took me away from concentrating on progressive areas of the business such as promotion and growth, I grew to resent doing it. So, going digital has been transformational because it's given us more control over our business.
Was technology already a significant part of your business?
Well, I've always liked to use technology to minimise processes where I can. But was our business set up with a big tech element to it? No, I wouldn't say it was. So, if Making Tax Digital is doable for me, it should be doable for most people.
What advice would you offer to anyone only just thinking about MTD?
It's going to come in and you can't avoid it, but it's not as scary as it sounds. Embrace it and use it to make yourself more efficient and effective. Get a good software package and start early so that you're fully prepared.
Visit Xero’s Making Tax Digital hub for more information on how to prepare for the new legislation.