Desktop accounting software has been around almost as long as desktop computers, but small businesses are increasingly looking to cloud-based accounting solutions to manage their bookkeeping, payroll, statutory accounts and annual tax returns.
Many online accounting platforms also offer apps for smartphones and tablets, making it even easier for small business owners to manage payroll or analyse their balance sheet while on the move. There is a growing range of accounting platforms to choose from. Here at MMP2018 we have the experience to assist clients in making the best software choices for their businesses. We currently recommend packages from Xero, KashFlow and QuickBooks.
Launched in New Zealand in 2006, Xero was an early pioneer of cloud-based accounting software, and has become a hugely popular solution for small businesses in the UK. Xero gives customers a range of service plans to choose from, with each plan costing incrementally more and offering slightly more functionality as the price increases.
Available on any computer or mobile device with an internet connection, each of Xero’s three plans offer small businesses the ability to generate quotes, invoices, purchase orders and bills, handle automatic bank reconciliation, import data from Excel, Google Sheets and CSV files, and process payroll for at least five employees. Data is accessible through a single ledger, allowing accountants and clients to collaborate on finances.
KashFlow, in existence since 2006, was acquired by IRIS in 2013. Like Xero, KashFlow includes three service plans to choose from, depending on the needs of the business.
The starter plan offers small businesses the ability to create quotes, invoices, purchase orders and bills, perform automatic bank reconciliation, import data from QuickBooks, Sage and CSV files. However, KashFlow’s starter plan doesn’t include any payroll functionality, and this plan limits customers to 10 invoices and 25 bank transactions per month.
KashFlow’s intermediate plan includes all the functionality that comes with the starter plan, but allows users to raise an unlimited number of invoices, purchase orders and estimates, and record an unlimited number of bank transactions. Unlike Xero users, KashFlow customers are unable to run payroll unless they sign up for the company’s premium plan, which currently costs £15 plus VAT. This gives customers access to the same functionality included in the intermediate plan, while also offering a complete payroll management solution.
QuickBooks is developed by Intuit, one of the very earliest providers of accounting software.
Freelancers can sign up for the basic package that helps track self-employed income, while small businesses can use it for things like VAT and payroll. There are lots of reporting and monitoring
The free online version allows business owners to receive up to 20 reports for their business, and the other paid options will allow up to 65 reports. Information is automatically backed up with online versions of Quickbooks and email support is included with some packages. If you employ five people or less the free online version should be fine, however if you employ more than 10 people then the paid versions are the best option because they offer much more for a growing business. The nice thing about Quickbooks online is that the service can be accessed from any computer because the information is saved directly on the Internet.
Both the pro and premier Quickbooks editions have more facilities. For instance the pro edition allows users to create estimates and invoices. You can also track more than just sales with this edition. Quickbooks pro will keep track of payments, inventory and even taxes. With Quickbooks pro you can manage payroll and export data to other software programs such as Excel. The premier edition goes one step further by offering reporting that is tailored to specific industries. It also includes tools that help with business planning.
While it’s important to find software that suits the way you like to work, if you need to submit a Self Assessment tax return you also need software that’s compatible with HMRC’s systems.
A number of these software providers are quite cagey about whether or not their software will be compatible. Quickbooks, for example, says you can use it to ‘complete HMRC Self Assessment’, but on closer inspection it simply provides the information and expects you to copy and paste it into the online form HMRC currently use.
While Making Tax Digital is still in its early days, having been put on hold and then brought back onto the agenda recently. It’s likely that many, if not all software providers will make changes to ensure their software works with the new HMRC system. At MMP2018 we are well placed to guide you through the coming changes and requirements.