2020 has been a significant year of change. Before the onset of COVID-19, the U.K. was already planning Making Tax Digital (MTD) this year. As businesses look to recover, adapt, and succeed in the current climate, MTD is still required and valuable in a more cloud-based work structure.
One of the ways MTD can work in favor of business during this time is by leveraging the flexibility of the Salesforce platform. In this article, we’ll understand what MTD is, exploring how and why it can support businesses.
What is MTD?
Required by April 2021, the MTD initiative, set forth by Her Majesty’s Revenue & Customs (HMRC), requires tax data to be stored and completed digitally by every business in the U.K. But the good news is that this move offers several benefits and opportunities, including streamlined workflow and more accurate financial management. In order to facilitate MTD, there are several technology requirements:
- The accounting must be digital, or cloud-based.
- The system has to be able to receive data from HMRC.
- The accounting system must-have features that ensure financial data is secure.
- The accounting system must be able to manage all of your financial data on a single solution.
- The solution must be able to store up to six years of financial records.
- Your system has to be able to generate a Value Added Tax (VAT) return and share it with HMRC.
- The accounting system must be equipped to share VAT data with HMRC on a voluntary basis.
These requirements will force many businesses to adapt their current solutions or look for new accounting technology to be MTD compliant. With financial solution Sage Financials no longer operating in the U.K., this leaves a major opportunity to sell the power of the Salesforce platform and bring true value to these businesses.
Can Salesforce Handle the Accounting and Taxes for MTD?
Yes, Salesforce can help you manage the accounting, reporting, and tax management requirements behind MTD, but not on its own. Read more about this in Can Salesforce Do Accounting?
Salesforce is a Customer Relationship Management tool (CRM), a cloud IT platform that lets you track and manage customer relations and sales. However, through native accounting solutions like Accounting Seed, users have accounting, sales, and other business operations solutions all in the same system. Everything is accessible and real-time ready with Salesforce, which is why it isn’t just a great base for MTD compliance but also making your business stronger.
With MTD, less is not more. Several accounting solutions can satisfy the base requirements, but there’s a difference between just meeting these requirements and having added value. If you can meet these standards while also having more effective, time-saving, and secure features, why wouldn’t you? These will help your company and save you money in the long run; let’s look at the core areas where Salesforce adds value to the MTD process.
More Functionality and Flexibility = Smooth MTD Compliance
Salesforce and its native solutions are inherently designed to give users a virtual toolset of options when it comes to organizing and managing all areas of business. This flexibility is the difference between a streamlined workflow and frustrating program restraints. As you adjust to the rules of MTD, the process will be a lot easier if you can customize how you want the technology to respond. As MTD requirements change and shift, you’ll need accounting solutions that will keep up.
Stronger Connections Provide More Options
Native accounting solutions like Accounting Seed share the Salesforce architecture that lets them connect with other Salesforce-based apps without traditional integration. This native architecture has other key benefits besides flexibility and adaptability. Leveraging the most robust application programming interface (API) on the market, Salesforce solutions can smoothly connect with outside tools to grant you even more options. For example, Accounting Seed leverages its MTD features along with a reliable connection to tax management specialist Avalara. Advantages like these give you unlimited possibilities in how you run your organization.
Safer Accounting and Tax Management
With digital tax management and online accounting, security must be a top priority. According to CSO Digital Magazine, “Each record lost costs around $150 on average globally; in the U.S. that figure rises to $242, while in the U.K. the cost is $155 per record.” In pounds, this is about £119 – still no small amount. This indicates that not only U.K. business data is targeted, but the costs of this data loss can be extreme, especially considering that average data breaches involve thousands of records. Currently, the average cost of a data breach worldwide is about $3.86M.
The security risks of MTD come from external threats like hackers and internal threats from within your organization like internal fraud or even mistakes. All are controllable. However, your level of safety and control is linked to the features of your accounting technology. This is an area Salesforce definitely gives MTD compliant companies an edge. The platform leverages the resilient and encryption- focused architecture, and security support, that makes it one of the most secure IT platforms on the market. Additionally, native accounting solutions built on Salesforce have this architecture and features that prevent internal and external data theft. These come right out-of-the-box. Here are a few very important security features for MTD compliant, safe accounting:
- Two-Factor Authentication
Two-factor authentication lets you enable a second level of authentication for every login. You can also implement this when a user is performing a specific function.
You can automate specific steps or sequences of events that require an official signoff on a record to ensure accuracy.
- User Role Hierarchy
Establishing a user hierarchy lets you dictate which specific user(s) can view or change specific components of accounts or records within the system, like reports.
- User Permissions
User permissions let you clearly define what tasks users can perform, approve, and have access to.
- Validation Rules
Validation rules establish standards for recording and handling data. Based on business logic, these rules prevent processes from being completed out of sequence.
For more details on financial data security and other critical features, check out this 2020 Accounting Technology Buyers Guide.
Streamline MTD Through Salesforce
MTD through Salesforce makes everything more streamlined and consolidated. Accounting solutions on this platform have the added benefits of versatility and resilience that U.K. businesses need to be both secure and competitive. Don’t waste your time or lessen your peace of mind! Go with Salesforce and you tackle MTD compliance head-on while furthering the potential of your entire workflow!