Now that Making Tax Digital is here, you should be moving your accounting software to an online or cloud platform if you haven’t done so already.
Going from the consultation documentation available, HMRC has no plans to provide their own free software. This forces the majority of businesses to obtain a software which will be suitable for business use.
So, which accounting software should you go for?
It largely depends on the type of business you run. Each business has to decide based on their personal circumstances. For SMEs specifically there are a number of different cloud software systems currently out there which are capable of recording transactions online. Here are some to consider:
Xero has several plans which businesses can choose from depending on their needs. The prices below are only available for a limited time and will increase after three months.
Starter: £5 + VAT per month. This package is suitable for small businesses or contractors as it only allows you to send up to five invoices and reconcile up to 20 bank transactions per month. This price will increase to £10 after the first three months.
Standard: £12 + VAT per month. It doesn’t restrict you on the number of transactions you can input, but you don’t get the option to handle multiple currencies with this package. The price will increase to £24 after the introductory period.
Premium: £15 + VAT per month. This package is similar to Standard but you do get multi-currency with the premium package. The premium price will double to £30.
With Xero, you can add the payroll package to any of the above pricing plans for an extra £5 per month. The first three months are free for up to five payroll employees.
Each package has a 30-day free trial.
QuickBooks’ three packages (all currently 50pc off) include:
Simple Start: £6 + VAT per month. The Simple Start package includes MTD bridging software, unlimited invoices and snap & store receipts. It reverts to £12 after the first six months.
Essentials: £9 + VAT per month. This one’s more suited to SMEs. It includes all of the capabilities of Simple Start with the ability to manage bills and payments as well as multi-currency support. The cost jumps to £18 after the introductory period.
Plus: £14 + VAT per month. Plus provides all the features QuickBooks online software has to offer, including capabilities to manage stock, create budgets and purchase orders and track employee time. The cost will increase to £27 per month.
One thing you will need to bear in mind with QuickBooks is that you are restricted on the number of users you can have. With the Simple Start package only one user is allowed; the Essentials package allows three; the Plus allows up to five.
Again, each package is available on a 30-day free trial.
FreeAgent offers three different accounting software packages to suit different business structures. The price of each package is reduced by 50pc for the first six months:
Sole trader: £9.50 + VAT per month. Sole Trader gives you access to all the features of the software including expense tracking, automatic bank feeds and corporate tax forecasting, plus self assessment filing. The price will jump to £19 after half a year.
Partnership/LLP: £12 + VAT per month. It give you access to all of the features plus profit-sharing calculations. The price will increase to £24.
Limited company: £14.50 + VAT per month. This package has everything else plus dividend vouchers. The price jumps to £29 a month after six months.
Each package has a 30-day free trial offering.
KashFlow also comes with three packages which are as follows:
Starter: £8 + VAT per month. Starter is suitable for contractors, sole traders and small businesses. Its features include unlimited quotes, up to ten invoices, access to other 50 reports and bank feeds.
Business: £15 + VAT per month. This package is ideal for many limited companies and those that are fast-growing. Invoices, bank transactions and quotes are unlimited, with multi-currency available.
Business and Payroll: £21 + VAT per month. Business and Payroll provides a similar package to Business with a payroll package of up to five employees added to it.
Sage Business Cloud Accounting
Sage is well-known in accountancy and has two packages, both with 40pc off and the option to try free for 30 days:
Accounting Start: £6 + VAT per month. This one’s ideal for sole traders and micro businesses. Features-wise, you can create sales invoices, submit VAT returns and track what you’re owed. After the first three months, the price will revert to £10 a month.
Accounting: £13.20 + VAT per month. The Accounting package has the same as Accounting Start, with the ability to generate quotes and estimates, record purchase invoices and view cash flow statements. The price will change to £22.
You have the option to add on a Payroll package for five (£14), ten (£16.50) and 15 (£19) and 25 employees (£24).
Zoho Books has three pricing structures, charged per organisation per month. You get the equivalent of two months off if you pay yearly:
Basic: £6 per month + VAT. The Basic is suited for businesses with up to 50 customers. It has five automated workflows and can be accessed by up to two users. It includes bank reconciliation, expense tracking, recurring transactions and sales approval.
Standard: £12 per month + VAT. For slightly bigger businesses, Standard works for up to 500 contacts with ten automated workflows and up to three users. It has everything on the Basic, plus vendor credits, reporting tags, purchase approval and budgeting.
Professional: £18 per month + VAT. This package suits businesses with over 500 contacts, can create up to ten automated workflows allows access for up to ten users. It has everything on the Standard plan plus purchase orders, sales orders, inventory and custom domain.
All of the packages integrate with G Suite, Stripe, Office 365, Go Cardless, PayPal and more.
Each one has a 14-day free trial. Add a user for £2 a month (or £20 a year) or add 50 auto-scans a month for £4 a month (or £40 a year).
What about free accounting software packages?
For small businesses that don’t want to incur any costs, there are a number of free software systems that are worth checking out:
I find Wave software very reliable and useful especially for small businesses and contractors. It provides a lot of free functionality including an app where you can take photos of your receipts and upload them to the software, ready for you to update which accounts the expenses relates to.
It does charge for credit card processing (1.4pc + 20p per transaction for European issued cards and 2.9pc +20p for non-European issued cards).
The only downsides to Wave are that it does not provide a payroll service for UK-based businesses and you will need bridging software to file your returns.
QuickFile‘s small and medium-sized accounts are free. They provide professional invoicing, purchase/receipt management, banking automation and full multi-currency support.
Business owners can download adminsoft for free. It’s a full double accounts entry system with accounts receivable, accounts payable, general ledger, stock control/inventory, purchase order processing, invoice software, human resources and payroll software. It’s also has multi-user, multi-company and multi-currency capabilities.
Special modules are available free of charge for retail, cafés and restaurants as well as point of sale and workshop operations in the autotrade.
Mariah Tompkins is founder of WKM Accountancy.
Further reading on accounts
Which digital accounts software is right for your small business?