Businesses of all shapes and sizes need to manage finances, but they often lack the accounting skills to optimize their books. That’s why people turn to accounting software. Small business accounting software with invoicing is designed for sole traders, freelancers, and other non-employer businesses. The following guide works through several trends in this space and what you can do to get ahead of them.
There are several business accounting software options available for small businesses. Depending on which features you need, your preferences can be crucial in helping you make decision. We’ve reviewed the best small business accounting software with invoicing options for your consideration.
VT Cashbook
VT Cashbook is great for small businesses looking for a simple, no-fuss way to manage the accounts. It’s desktop software, meaning you’ll need to install it – on the plus side, you won’t even require an internet connection to use it. The free version offers basic functionality, allowing you to record day-to-day cash transactions and prepare profit and loss statements and balance sheets. However, you’ll need to upgrade to the paid version if you want to create and file Making Tax Digital VAT returns.
FreeAgent
- Powerful cloud-based accounting software with a huge range of features
- Free for Natwest/Royal Bank of Scotland (RBS) business banking customers
- Dedicated phone and email assistance from UK-based support accountants
- Cloud-based – works on web browser, mobile and tablet
What is FreeAgent?
Set up in 2007, FreeAgent is now used by over 90,000 small businesses across the UK, who use it to keep track of their finances, expenses, invoices, estimates, and more. It boasts some great advanced features, like automatically generated VAT returns, corporation tax forecasts, and self-assessment tools that automatically fill in up to 90% of the self employment tax return form. It has also won awards (it was named the Small Business Accounting Software of the Year at the 2018 Accounting Excellence Awards, for example), and has an average rating of 4.7 out of 5 (from nearly 1,000 reviews) on Trustpilot.
For most users, though, all this comes at a cost (see the “why is FreeAgent free” section for full details). The reason FreeAgent is being discussed here is that it was bought by RBS in March 2018 for £53m, and it is now being offered for free to RBS/Natwest business banking customers.
This equates to a saving of at least £150 a year, and so is very tempting for small business owners. However, the small print makes it clear that taking up this option means your bank will be able to see exactly what’s going on with your accounts, so carefully consider whether you want to give them access to your detailed financial data in return.
What can FreeAgent do?
FreeAgent’s huge range of features includes:
- Tools to create and send professional estimates and invoices
- Time tracking tools so you can easily create smart timesheets
- Powerful HMRC integration that makes doing your tax return a doddle
- Automatic creation of VAT returns
- Corporation tax forecasting
- A dashboard that lets you easily monitor your cash flow
- Automatic importation of bank transactions
- A projects view that clearly shows the income, time, and expenses associated with each project, and whether it’s making a profit or loss
- A fully featured mobile app that allows you to snap receipts, create invoices, track time, manage payments, and see your accounts on the go
Why is FreeAgent free?
As stated above, FreeAgent is only free for RBS/Natwest business banking customers.
For everyone else, the standard pricing is as follows:
- Sole trader – £19+VAT per month – includes self-assessment filing tool
- Partnership/LLP – £24+VAT per month – includes profit share calculation tool
- Limited company – £29+VAT per month – includes self-assessment filing, dividend vouchers, and corporation tax forecasting tools
All plans have a 30-day free trial.
If you are an RBS/Natwest business banking customer, then you can get FreeAgent for free. However, remember that you are giving up something valuable in exchange – your financial data. Quite what your bank intends to do with this is not yet clear, but make sure you consider how this might affect you before signing up, and discuss this decision with your accountant if you have one.
What support does FreeAgent offer?
FreeAgent offers excellent customer service, with help available from UK-based support accountants via phone and email during business hours (9am-5pm Monday to Friday). The website also has lots of resources that explain things like expenses, invoices, and VAT filing.
FreeAgent Verdict
As a product, FreeAgent is a great solution for small businesses – it’s got loads of powerful features, and responsive customer support if you get stuck. Getting all this for free as an RBS/Natwest business banking customer is very tempting, but make sure you consider the potential consequences of giving up access to your detailed financial data in return.
GNUCash
GNUCash is a free open source accounting software for small businesses that you download to your PC.
GNUCash is not a cloud-based software, so it will only allow a single user.
GNUCash is not as pretty as some of the other accounting software we have looked at, but it is usable and has all the features for sole traders to manage their accounts.
GNUCash Advantages
- Downloaded to your PC no internet connection needed
- Open Source software
- Enter sales invoices
- Ideal for personal or freelancers
- Financial Reports available
- Alternative to Excel Templates
GNUCash Disadvantages
- Not as user friendly as others
- Very basic invoicing
- Will calculate VAT but not making tax digital compliant
Conclusion
Small business accounting software gets more and more popular for small businesses owners all around the globe. It is no wonder that every business owner wants to know how to choose right software solutions that will help them track their expenses, sales, payments and everything else they need for running of their companies.
For a business owner the most important thing they have going for them is their bookkeeping. Smart bookkeeping is going to help your business become more profitable down the road, and it’s going to allow you to run a tighter ship so you can be confident that all of your finances are being handled appropriately. A lot of people don’t realize this though because they feel intimidated by keeping their books up to date, but there are small business accounting software’s available now which makes everything much simpler.