Digitization from the first step itself – invoicing to clients from vendors – ensures the right and timely records are maintained. Thus, all transactions, financial records, calculations, payments, current and fixed assets, liabilities can be stored in a spreadsheet which can be digitally utilized to link many calculations and create accounting systems around it.
Such a setup overrides any possibility of errors and omissions that might cause critical issues in the accounting flow. A software company IRIS found in a survey that convincing businesses to move to an accounting software is the biggest challenge in the roadmap for digital bookkeeping.
Complying with new laws such as GDPR and similar accounting laws is an essential aim of Making Tax Digital (MTD) which is an HMRC initiative proposed to ensure the UK tax system is effective, timely and easy for the taxpayers. With a deadline of 1st April 2019, for MTD to start filing VAT, companies and small businesses are scrambling with “interim” software to bridge the digitization.
While this has been working so far, a full-fledged automation through accounting software is not far away to achieve full scale of economies. Once the VAT filing is implemented and smoothened, the income tax and corporation tax which have been put on hold till 2020 will come in play.