Making Tax Digital | MTD For Small Business
Well, if you have a small or medium business, better known as an SME, you will find the same number of benefits that big companies have found in electronic invoicing. Since the creation of electronic invoicing, big companies have seen the benefits almost immediately. For example, in the reduction of costs and spaces that involved making paper invoices, but also in the time that was invested in it. All this thanks to the ease and speed that digital solutions offer us. In this case, we are talking about companies that issue hundreds or thousands of invoices a day.
Now, what about SMEs? If you have an SME, you will be able to use the physical space that you previously used to save invoices, for the time required by law, to expand your sales floor, create more space for your employees or even to expand your office, if you need it.
Join us to review our most recent article to see the advantages of making digital tax in your small business. Let`s see!
What is digital TAX?
Electronic taxes are a magical resource that simplifies your life. The digital invoice is a digital document of a fiscal nature. This document is handled in a 100% virtual way with the same validity as the physical element. Digital taxes are governed by the laws of your country.
SMEs and MSMEs should consider electronic invoicing as an opportunity for improvement and development. Will be possible to develop organized growth if this new tool is implemented in much company in the country. The compaines must be wanna grow in the market, be it large, medium, small or micro.
Electronic invoicing has been strongly biased and interpreted as a mandatory but unnecessary expense within every organization. It is necessary to break with this paradigm. We need make known the great amount of benefits that this new tool provides for all SMEs and MSMEs. You will notice that the balance will tip in favor of your company. Also, you will see this new opportunity as a saving of time, resources and problems derived from the human factor.
Benefits of digital TAX
The reduction in costs to any company is good, Doesn’t matter if we are talking about a few cents or thousands of dollars. What is even more important: your SME will have greater control over the management of its financial resources. This is because your company will have a simplified record of its income and expenses, this will allow to you control of the documentation from business purchases and sales in a better way.
Another great advantage for SMEs is the certainty that electronic invoices provide about the company that issues them and their content. This means that you can eliminate the risk of being a victim of fraud or theft of your tax identity.
In summary, this modality is mainly a necessity for you in these times. Currently, digital information is used much more efficiently and awareness of the environment is something that you must prioritize, seeking to reduce the indiscriminate use of paper as much as possible.
The advantages:
- For the Treasury: The inspection is automated facilitating the monitoring and control of billing. This way you will be able to obtain data in real time without the need for Information Regimes. It is a key tool to counteract tax evasion!
- For the taxpayer: Savings in stationery expenses, accounting automation, quick availability of information to audit or use internally, and savings in administrative control and report preparation processes.
How implement digital billing and tax?
In order to implement this new regime, your SME company needs to modify its habits. You should consider the eventual acquisition of computer tools to improve this process.
To issue the invoice, as a taxpayer, you can use specific software or free means such as those provided by some countries.
In the UK, there is the country project MTD (Making Tax Digital). With this, as of April 1, 2021, UK taxpayers must submit the “9 BOX VAT Retunr Message” electronically.
In summary, the process consists of the following steps:
- Check if and when you should register with Making Tax Digital for VAT.
- Get the right software
- Create an agent services account
- Register your existing VAT clients to digitize your taxes.
- Enroll your clients in Making Tax Digital for VAT.
- Ask your new clients to sign up for Making Tax Digital.
- Ask new customers to authorize you
- Acquire your software and authorize it to carry out the process
For detailed information go to website from GOV/UK.
Importance of billing digital for SME companies
Although the incorporation of electronic invoicing can be seen as a challenge in the daily activity for SMEs. It can also generate a series of advantages for the performance of our businesses.
The use of electronic invoicing represents a reduction in operating costs for your company. Using an electronic means to record invoices means less use of paper for your company. You reduce expenses related to courier services and other important costs. That is, the electronic invoice in your company can be identified as a tool to reduce administrative costs to a variable degree.
Additionally, the electronic invoice allows you to strengthen the degree of formality within your company. The possibility of having the invoices in electronic means gives you greater security in the handling of the information of the entities. Your tax information will not rest in paper files, but in several virtual folders which would have a computer backup.
The use of this electronic process is a mechanism that encourages the implementation of best environmental practices by your company. This is an aspect that can be very beneficial in the implementation of electronic invoicing since not all small businesses have as a priority to take environmental support measures.
This greater formality and awareness of caring for the environment are necessary conditions for your company to follow business trends internationally. You will also have the possibility of incurring in international markets. All this will make your SME increase its export offer.
The implementation of the electronic invoice should be seen as a tool that allows you to reduce costs. It also favors your adaptation in terms of formalization and care of the environment. With all this you will see the opportunity that is offered to you for the growth of firms and the use of electronic invoicing.
Still not convinced?
Well, think that with paper invoices your company is exposed to an accountant or printer misusing your information. Your data could be sold to other people or used to generate profits of your own. Imagine that one day the tax authority comes to your door asking for the hundreds of invoices issued with your tax data … Invoices of which you have no idea of their existence. This could get you in trouble. But thanks to electronic invoicing, you guarantee that you and only you have control over the number and type of invoices that are issued under your company name.
We hope we have given you a clear idea about the benefits of digital invoicing. Keep checking our blog updates for more information.