New software distribution channels create opportunities for accountants
Paul Loberman, Chief Product Officer at untied, offers his views on the importance of technology partnerships
he accounting software industry has been around for a long time, but the software, tools and the way in which they are used have changed dramatically over the years.
A new software paradigm is evolving. No longer is it only about what these tools do and how your clients use them, but how they find them, and how they choose them too.
These new tools are quickly getting into the hands of consumers through strategic partnerships, large scale distribution and integration with digital platforms sold directly to sole traders. They’re cash-book-based rather than double entry, mingling personal and business transactions through one account with ease.
And all accelerated by the mandate of Making Tax Digital for Income Tax (MTD ITSA) in 2024.
How do these new tools work, who will be offering them and how can accounting practices capitalise on this change?
Chief Product Officer
What's app with tax?
Since the arrival of the App Store in 2008, our lives have become enveloped in digital experiences.
Apps are built from the ground up, on digital foundations, using the latest technology, and with the end-user experience front and centre. Experiences have become more magical and our expectations have increased.
Everything can be done from our phone, even our tax returns.
untied’s one of a new generation of products finding ways to simplify taxes using open banking technology. Users can get started quickly and easily, tagging their transactions as income and expenses, and follow a guided journey through to filing direct to HMRC. It’s been built with MTD for Income Tax in mind.
While this can happen directly, it’s also a significant opportunity for accountants, offering streamlined ways to support your existing clients and to find new ones. Real-time consistent data and automation let you focus on the stuff that’s valuable. Self-assessment clients that were hard to service profitably become a viable client group.
Four million people needing software for MTD for Income Tax from April 2024 is a tempting opportunity for banks to tap into. Virgin Money’s recent announcement demonstrates the direction of travel in this space, helping to remove some of the administrative burden on their customers – sole traders, freelancers, creators, small business owners, landlords – offering MTD ITSA software that seamlessly connects to their bank.
Many will want additional help which you’ll be well placed to provide.
How can accounting practices capitalise on these tools?
How do you capitalise on this opportunity? Here are six tips:
- Be proactive: If you're waiting for your existing cloud accounting provider to deliver an MTD ITSA solution, explore vendors that are already recognised by HMRC for MTD ITSA. Check which banks are starting to offer tax solutions through these software vendors. As they begin marketing to your sole trader clients, you'll want to understand the software.
- Think strategically: Look at how software vendors are partnering with banks, their go-to market strategies and determine if there are opportunities to partner with them to provide more value for your clients. Not everything can be solved by software, so some vendors may be looking for accounting practices to partner with to refer more complex cases and questions.
- Be open to change: Cloud accounting and double entry bookkeeping may be great for you, but there are simpler tools out there now for your clients. What’s the right tool for them?
- Be prepared for change: Develop processes and procedures internally to handle the upcoming changes. Work with software vendors that are already learning from the MTD ITSA pilot and get ahead of the rest of the market.
- Consider different levels of service: Having access to technology that allows clients to self-serve – uploading receipts, tagging income and expenses, logging journeys – can free up more of your time. Enabling your client to simply and easily provide more of the data you need in advance will enable your practice to operate more effectively with MTD ITSA. We’ve built our accountant portal to make it as simple as checking and submitting what your client has entered already.
- Support your clients: Find software that works for your client and how they live their lives. Help them understand their options and make the best choice for their business's needs.
Significant opportunity exists for accountants to help their clients
Don't be afraid of change – embrace it! The growing use of technology means that innovation is becoming increasingly important as a way of staying competitive. Many modern businesses thrive by being able to adapt quickly; if accounting practices were completely frozen in time, then how could accountants stay relevant?
With new technologies such as open banking and digital payments becoming more widely adopted, and a variety of new software tools including those being provided by banks, now is an ideal time for accountants who want to remain at the forefront of developments within their sector, to explore new software and understand the opportunities that they bring.