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It's time to digitise your sole traders... regardless of MTD ITSA

7th Jun 2022
Brought to you by
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Coconut’s simple bookkeeping and tax app is specifically designed for sole traders, helping them...
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It’s no secret that the rollout of Making Tax Digital has been complicated. But let's not forget the huge array of benefits that the accounting industry could enjoy through digitising sole trader clients—MTD or no MTD.

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Across Making Tax Digital for VAT and soon Income Tax and Self Assessment, HMRC’s programme of digital transformation has been consulted on, tweaked, delayed, and occasionally opaque. The result is that some practitioners across the accounting industry are getting fairly tired of that three-letter abbreviation—with the uncertainty and hassle surrounding it overshadowing the potential upsides it offers. 

Which is a shame, since digital technology has the potential to drastically improve both the experience and the results of accounting and bookkeeping services for practitioners and clients alike.

Nowhere is this more evident than with sole traders. Sole traders are a huge potential market for accountants and bookkeepers—but a lower willingness to pay and a lack of robust systems in one-man-band businesses has given them a reputation as more trouble than they’re worth.

Now that MTD ITSA will require all sole traders earning over £10,000/pa to be digitised by 2024, the question is how and when to do it. At Coconut, we strongly believe that the answer is ‘as soon as possible’—not just because of MTD ITSA, but because digital solutions have the potential to solve some of the most pervasive issues that sole trader clients present. 

For practices who can leverage the right tools, MTD ITSA presents enormous opportunities for growth… but that’s not the only reason to digitise your sole traders. In this article, we explore some of the wider benefits of sole trader digitisation.

How digitising your sole traders could revolutionise the way you work

Solve the paper problem

For sole traders with relatively small turnovers, using an accounting package or expense cloud software can seem like overkill—they normally come with a bunch of features that the sole traders don’t need, and the prices are too high. 

However, this means that accountants end up picking up the slack and doing work that should be done by software. Chasing clients for paperwork and manually entering data into spreadsheets or HMRC software can be time-consuming and dull, eating into margins. And when the paperwork comes all at once—usually right before the deadline—it can be a real stress.

The answer is to use a digital sole trader tax solution that enables you to access your sole traders’ accounting information in real-time, that you can deliver at the right price-point, with minimal onboarding, providing only the features they need. 

Not only does this save time on data entry, but you can also spread the work out that you used to cram into January throughout the year, reducing the workload for you and your customers. 

Simplify their transactions

With 79% sole traders relying on their personal account for some or all of their business transactions, financial visibility can get muddy very quickly. This leaves both clients and accountants sorting through transactions and receipts manually to understand the business’s financials. 

Sole-trader optimised tools like Coconut can unmuddle business transactions from personal accounts for self-employed and landlord clients with one tap, providing clear data for productive conversations.

Build value-led relationships

Lack of time and insufficient data prevent most accountants from offering their sole trader clients anything beyond basic compliance and once-a-year retrospectives into their books. Understanding how they were doing a year ago provides little value, and the relationship can be fraught with chasing and haggling over prices.

By automating the majority of the manual work and moving to a real-time accounting solution where you can see their data day-to-day, accountants have the chance to transform their client relationships. By using a digital solution, you can check in at any time and provide your sole traders with proactive, real-time advice and insights throughout the year, helping them grow their business.

Update their business processes

Digitising your sole trader clients isn’t just about moving their books into the cloud—these tools can also help streamline a range of business processes to make your clients more successful (whilst also saving your time and sanity, too!)

Coconut helps sole traders manage their most important financial processes from a single, simple app, so they can:

  • Invoice from anywhere, any time—meaning they get paid quicker, and you don’t have to chase unpaid invoices
  • Keep track of how much tax they need to save—so there are no nasty surprises (for anyone) when it comes to paying their tax bill
  • Scan and save their receipts in the cloud—meaning you can both say goodbye to bags full of faded receipts, and know exactly where to find the records you need, when you need them.

Next steps

The reason many accountants haven’t moved their sole trader clients into the cloud is that the majority of solutions are just too complex and expensive for sole traders’ needs. This means that instead of saving time, you’re more likely to lose hours and money by putting your clients on a package they can’t (or don’t want to) use

Any solution designed for a sole trader has to be simple and easy to use, at the right price point, and tailored to their unique needs.

That’s why we built Coconut: accounting and tax software that’s built to meet the needs of sole traders and their accountants. There are no unnecessary features, no extra costs, and no confusing interfaces. The software is simple yet powerful, meaning you can digitise your sole trader clients with no fuss, no long training, and no awkward conversations about pricing.

As an accountant, you can sign up for a Coconut Partner Account for free, explore the Coconut Portal at your leisure,  and see for yourself just how easy Coconut will make working with your sole trader clients. Give it a go today!

Create a Partner Account - It's Free!