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Making Tax Digital for business with Xero: Your questions answered

The Making Tax Digital (MTD) for VAT deadline is drawing closer. It’s less than a year until UK businesses that are VAT registered and above the threshold will be required to keep their records digitally, and submit VAT returns to HMRC using MTD-compatible software. Even so, there’s still plenty of confusion in the market around which online accounting software will be compliant with MTD for business (MTDfb). And what it’ll mean for businesses and their accountants. So we’re here to answer some of those frequently asked questions and make sure you’re kept fully up to speed with what we’re up to at Xero. OK, so MTD won’t be delayed any further? A number of areas of MTD have been delayed until earliest April 2020. However, HMRC has confirmed that Making Tax Digital for business (MTDfb) will come into effect in April 2019 starting with MTD for VAT.  From 1 April 2019, VAT registered businesses that are above the VAT threshold (currently £85k) will be required to keep their records digitally and submit VAT returns to HMRC using MTD-compatible software. Other areas of MTD such as Income tax and Corporation tax have been put on hold until April 2020 at the earliest. Alright then, tell me: Will I be able to submit MTD VAT returns using Xero? Absolutely! Xero customers are already able to submit VAT returns using Xero now, and we’re building a whole new VAT return experience and workflow to support the changes that MTD introduces. The great news is, we’ve already built this new connection and we’re currently testing it with HMRC to ensure it works as expected. We’ll be participating in the closed beta that HMRC are running this summer, where our first customers will submit VAT returns for MTD. Xero’s new MTD VAT will be available to customers with no upgrade fees and with as minimal impact as possible. So is Xero approved to support VAT submissions to HMRC? Yes. Xero is on the current VAT commercial software suppliers list. As it stands, there’s not actually a list of MTD VAT approved software suppliers. Later this…

Making payroll a breeze with Xero + Paychex

Payroll can be fraught with pain points – but it doesn’t have to be. At Xero, we’re teaming up with Paychex to help you avoid all the headaches that can come with processing payroll. Thanks to our new integration with Paychex General Ledger Service (GLS) you can quickly and easily connect to your Xero account, post payroll entries to your general ledger in just seconds and save time and reduce errors. Marie Phillips, CPA, head of the accounting team at Gursey|Schneider LLP took the new integration for a spin. Here is what she had to say about it. What method did you use previously to input payroll entries? We had to do it manually. It was a time-consuming process: downloading payroll reports (sometimes hard to find on the website), drafting journal entries in excel for manager review, and manually recording journal entries in the software. In addition, part of our month-end close involved tying out year-to-date payroll amounts to supporting payroll reports. With Paychex GLS, we are able to cut down data entry and review time. What was your biggest payroll painpoint before using the Paychex and Xero integration? It was inefficient. The process required back-and-forth communication between staff and manager. And, although our process required supervisor review, there was still a chance of human error. Another issue was cash flow management. Payroll was not always recorded timely (i.e. the day it was processed) so clients could not rely on their cash balances as displayed in Xero. This resulted in cash flow issues. Where have you noticed improvements in efficiency with the Paychex and Xero integration? This is a far more efficient way of recording payroll, which in turn produces a faster month-end close, less review time, and better reliance on financial statements and data. Instead of recording payroll, we can focus on providing value-added services to our clients (cash forecasting, performance analysis, scenario modeling, automation, etc.). How do you think the integration has benefited you and your clients? First, our automation platform is growing. It’s exciting to be able to link payroll to Xero for all of our Paychex…

The New Zealand Budget broken down

It’s safe to say that in today’s Budget there were very few surprises. The Government had done a good job indicating what the priorities would be and the winners on the day appear to be the health and education sectors. If you listened closely though, you may have picked up Finance Minister, Grant Robertson’s, nod to increased investment into e-invoicing. Taking a deeper dive on this, we were excited to find that the funding will aim to deliver “an e-Invoicing framework which allows businesses in New Zealand to digitally transact across the entire procure-to-pay lifecycle using their New Zealand Business Number.” As the Government revealed in its Summary of Initiatives, “e-Invoicing alone results in an estimated 80% productivity gain.” It also highlights that by using the framework used by our Australian counterparts across the Tasman, we should see boosted interoperability with both trans-Tasman and global businesses. Now, if you’re a small business, no doubt you understand that getting paid on time can present a major challenge. According to Xero Small Business Insights, in the last 13 months 30 day invoices were paid on average 4.7 days late (at 34.7 days) with the worst months seeing invoices paid 8.5 days (March 2017) and 6.4 days (May 2017) late. The resulting issues with cash flow from these delays can stifle growth and even put entrepreneurs out of business. The increased investment over the next year from $1.265m to $3.651m is good news for small businesses as e-invoicing will vastly reduce the cost of administration resulting in increased accuracy and increased pace of payment. Other announcements we thought worth highlighting include: Increased R&D funding Another key announcement we believe has the potential to support small businesses is the increased spend in R&D. The Government has set a target of increasing R&D expenditure to two percent of GDP by 2027 and today’s announcement, that one billion has been earmarked for innovation is a positive one. The key here though will be making sure that it is accessible for small businesses – from what we have seen, the proposed $100,000 annual spend requirements will be…

Small business company tax unchanged; individuals get a cut

The Australian budget for fiscal 2018-19 was unveiled tonight. There were tax cuts for individuals, which include sole traders and family partnerships, but little new in the way of tax relief for corporations.  Corporate entities will have to wait for the government’s existing 10-year tax plan to win parliamentary approval before they see any cuts. Follow our live coverage of budget night on Twitter. The new personal tax rates are below. The corporate rates, which are unchanged, can be found here. For more analysis of the federal budget, head to our Small Business Insights page, where you can also find our special reports on wage growth and how tax cuts affect employer behaviour. The post Small business company tax unchanged; individuals get a cut appeared first on Xero Blog.

How to Beat the Odds As a Small Business

Guest Article It’s lonely at the top. Especially if you are a small business. There are nearly 30 million small businesses in the United States, but only about 5 million of them look like miniature large businesses. The vast majorities are businesses with 1-5 people. Getting large is not the prime directive, surviving and prospering are. There used to be a hard distinction between “opportunity entrepreneurs”, those who raise capital to pursue a vision and change the world, and “necessity entrepreneurs”, those who can’t otherwise find employment who create lifestyle businesses to support their families. Today there is a dynamic third category, the “aspirational entrepreneurs”, those people who want to own, not rent their future, and who are willing to sacrifice in order to control their own destinies. Never mind that most small businesses fail, aspirational entrepreneurs are motivated to beat the odds. And while rocket ship tech ventures steal the headlines, its small businesses that create jobs. The Silicon Valley style ventures use technology to provide leverage for their businesses, often destroying more jobs than they create. But true small businesses hire locally, support their community and contribute where it matters most, at home. So how do you beat the odds? You buy every book that can give you a leg up. You attend seminars. You listen to podcasts and read blogs. You join local industry groups. You work long days and weekends, without vacations, sacrificing precious time with friends and family. But there is more you can do. You can accelerate your learning by hiring a coach. The terms “advisor”, “coach” and “mentor” are bandied around a lot these days. But it is important to understand the difference. An advisor is someone with specific experience and expertise that can help with your business. They may have run a bakery and can help with yours, or managed a day care center and can share their hard earned lessons with you. Advisors educate you and make you a smarter businessperson. A coach is someone who has the ability to help you address particular business challenges you face in running your…

Single Touch Payroll is coming, and Xero will be ready

Australia’s 1 July deadline to adopt Single Touch Payroll (STP) is fast approaching. Xero will roll out STP progressively to users starting 1 July rather than switch everyone over at once. This will minimise any chance of disruption to your business. Thanks to the ATO, Xero subscribers have a deferral of as much as six months to ensure a smooth rollout of STP. When it’s time for a payroll administrator to opt-in to STP, a banner will appear on the Xero pay-run screen. This is a similar to how Xero rolled out its Superannuation feature. All you’ll need to do is click on the banner and follow a few more steps. Until then, you can process payroll as normal and remain in full compliance with the ATO. It’s that simple. We expect to have all Xero users switched to STP well before the end of December. We’re excited about the addition of STP to Xero Payroll, and we think you will be too. Here’s a sneak peek at what’s coming:   We’ll have details on our STP implementation, educational webinars, and more in the coming weeks. In the meantime, rest easy and be assured that the move to STP will be a simple one on Xero. Here are some FAQs for further information. And see our Xero STP page too.   Q: How can employers document the ATO deferral, if needed? A: Xero customers can use the ATO reference number 49410109. Q: Who has to make the switch to STP? A: All businesses with 20 or more employees, as of 1 April 2018, must use STP by 1 July 2018. But as noted, many Xero users will implement STP in the months that follow, with no penalty. We’ll enable all Xero Payroll subscribers for STP well before 31 December 2018. Q: If I begin using STP after 1 July, do I have to play catch-up in reporting to the ATO? A: No. Each STP filing includes all year-to-date payroll information. This feature, along with the ATO deferral, means there won’t be any complications when you begin using STP. Q: I have…

The beauty of business: You create your own career

Sophie Andrews is the award-winning director and owner of the Accounts Studio, a bookkeeping firm that works to build profit for creative thinkers. We spoke to Sophie about the highs and lows of her business journey as part of our beautiful business campaign. Growing up in the United Kingdom, I used my languages and business degree to build a career in the jewellery and gift industry. But when I moved to Australia 25 years ago, I found my European languages weren’t required in Australia. I’d always been good at maths, so I came up with a new way to stay in the same industry – and moved into finance.   When the jewellery industry took a dive in the mid 90s, I transitioned to finance for fashion brands. Then my daughter was born 10 weeks premature and I needed to reduce my hours, which meant another job change. I worked with some surfwear brands but one by one they moved their operations to other states and I didn’t want to uproot my family to follow. Through all this upheaval, I realised that you can work hard to make yourself invaluable, but as long as you’re working for someone else, there’s always an element of your career that’s out of your hands. I wanted more control over my working environment and I wanted to create stability for myself. So I set up my own business doing something I knew: bookkeeping. Taking control into my own hands The Accounts Studio was a means to an end at first, but it took off quickly and I brought someone on to help me part-time. Some years later, with demand still strong, I realised I was getting burned out. So I made the conscious decision to go niche and position the business to work largely with designers and creatives doing their bookkeeping. The change revitalised me and took me back to the creative space where I’d started my career. I relished those creative client relationships, and my clients found someone in the finance world who understood them. It’s incredible to think the Accounts Studio has…

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