This article first appeared in Scottish Farming Leader, NFU Scotland’s members’ magazine.

The introduction of Making Tax Digital (MTD) in 2019 forced a change to many businesses and their methods of record keeping, with many choosing to move to the cloud accounting software, Xero. From the first VAT period starting on or after 1 April 2022, all remaining VAT registered businesses (mainly those below the £85,000 threshold) not already operating MTD for VAT also had to sign up – so by now, most of you will be very familiar with the monthly or quarterly routine of posting your invoices. But are you making the most out of Xero?

We’ve identified some useful additional features which could help you manage your business more easily and efficiently. 

 Profit and loss tracking 

 Xero allows you to create ‘tracking categories’, so you can allocate each income and expense to a particular category you would like to keep track of. You can then run a profit and loss account for each category, to track the profit you are making in each area throughout the year and compare this with previous years.

Tax planning 

Xero being ‘cloud based’ means that your accountant can, with your instruction, log into your Xero account towards the end of your financial year to estimate the profit for the year. They can then advise on different ways to minimise your tax liability, before the year end has been reached. 

Budgeting 

You can create budgets quickly and easily with Xero’s budgeting tool. It allows you to calculate what your profit and loss would look like in different scenarios, to enable you to plan as much as possible in these uncertain times.

Mobile app 

You can use Xero’s mobile app to create and send sales invoices at any point in time. This can help you issue your invoices in a timely manner as well as ensuring none are forgotten about. You can also upload photos of purchase invoices, receipts, and hire purchase and loan agreements.

Get in touch

To find out more about maximising your Xero subscription or if you have not yet made the transition to becoming compliant with Making Tax Digital, get in touch with a member of our Rural team.