Guide: best accounting software for your business

Using the best accounting software for your businessThe rules on how to keep VAT records and submit VAT returns changed on 1 April 2019 under Making Tax Digital. All sole traders, micro-business and small firms with a taxable turnover above the VAT-registration threshold now need to use compatible accounting software to submit VAT returns for periods ending on or after 1 April 2019. Here's our guide to some of the top packages

Choosing accounting software can be daunting. It's important to find a solution that's the right fit for you and your business; it must have the features you need right now and be able to support you as your business grows and as tax self-assessment rules change.

Our guide to some of the most popular accounting packages allows you to compare features, functionality and prices, all in one place.  Key features you need to consider include VAT returns, PAYE and payroll solutions. (Prices and functionality are as quoted on provider websites as at 1 March 2019.)

In time, Making Tax Digital is likely to apply to almost all freelancers and small businesses - even if you only need a simple spreadsheet, you'll eventually need a software-based accounting solution. The good news is that accounting software can save a lot of time and could even reduce the fees you have to pay to your business accountant.

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Clear Books Large

Aimed at: SMEs; accountants and bookkeepers supporting SMEs.

Key features & USPs: CIS; fixed asset accounting; dividend calculation and distribution; project accounting; bank feeds and uploads; quotations and invoicing; stock lists and pricing; multi-currency; free email and telephone support.

Free trial? Yes (30-day).

MTD VAT capabilities? Yes. Full VAT accounting, VAT return production and MTD online submission to HMRC.

Works with multiple currencies? Yes.

Links to bank accounts? Yes, via CSV import or via third party product (Yodlee) provided free with Clear Books subscription.

Handles payroll? Via separate product.

Stock management? Can manage stock lists and selling/buying prices. No stock levels.

Mobile version? Mobile app in development.

Any limit on number of users? No.

Costs: from £10.75 for the first three months, then £21.50 per month. Savings available for annual payments (one or two years).

FreeAgent

Aimed at: Freelancers, contractors and micro-businesses.

Key features & USPs: VAT filing; RTI-compliant payroll; overview screen bringing together invoices, expenses, bank accounts and cash flow tracking; Tax Timeline enabling users to see upcoming dates for self-assessment, VAT, corporation tax and payroll; powerful double-entry accounting engine; self-assessment filing for sole traders and limited company directors; free UK-based telephone and email support.

Free trial? Yes (30-day).

MTD VAT capabilities? Yes.

Works with multiple currencies? Yes.

Links to bank accounts? Yes.

Handles payroll? Yes.

Stock management? Yes.

Mobile version? Yes (iOS and Android).

Any limit on number of users? No.

Costs: Monthly at 50% discount from £9.50 for sole traders; £12.00 for partnership/LLP; £14.50 for limited companies. Full price applies after the first six months.

QuickBooks (Intuit)

Aimed at: Small businesses, the self-employed and accountants.

Key features & USPs: Tracks income and manages self-assessment for sole traders; invoicing; receipts; downloads bank transactions; payroll; manages CIS deductions; bills and payments.

Free trial? Yes (30-day).

MTD VAT capabilities? Yes.

Works with multiple currencies? Yes.

Links to bank accounts? Yes.

Handles payroll? Yes.

Stock management? Yes.

Mobile version? Yes.

Any limit on number of users? From three to five, depending on package.

Costs: Initial six month 50% discount for Essentials from £7.00 per month; Plus from £11 per month. Charges increase to £18pm/ £27pm after six months.

Sage Business Cloud Accounting

Aimed at: Entrepreneurs, start-ups and small businesses.

Key features: Free 24/7 telephone and email support 365 days a year; users can choose to take Payroll without an Accounting subscription.

Free trial? Yes (30-day, or 90 days exclusive to Donut site users).

MTD VAT capabilities? Yes

Works with multiple currencies? Yes (although currently does not support multi-currency bank accounts).

Links to bank accounts? Yes. Sage Business Cloud Accounting offers Automated Bank Feeds via a third party (Yodlee) as well as Direct Bank Feeds with RBS, Nat West, Barclays, Halifax, Santander, Nationwide, Cashplus and hundreds more.

Handles payroll? Yes, for up to 25 employees, including RTI and auto-enrolment compliance.

Stock management? Yes.

Mobile version? Yes. Sage Expenses and Invoices apps are free for IOS and Android.

Any limit on number of users? Sage Accounting Start is for single users; Sage Accounting is unlimited multi-user.

Costs: For Donut site users only - free 30 or 90 day trial then monthly from £10 for Sage Accounting Start; £22 for Sage Accounting; Sage Payroll: from £6 for up to twenty-five employees (higher prices apply for additional employees).

Xero

Aimed at: Small business owners and their accountants.

Key features & USPs: Direct bank feeds; easy invoicing, expenses, stock control and bill paying; you can submit VAT and payroll to HMRC online directly; payroll; easy to use dashboard to see how your business is doing; mobile apps for invoicing, expenses and bank transactions; updates and new features released every three to six weeks; unlimited user access.

Free trial? Yes (30-days).

MTD VAT capabilities? Yes. - across all pricing plans. Xero calculates your VAT and lets you file VAT returns online directly.

Works with multiple currencies? Premium plan only.

Links to bank accounts? Yes.

Handles payroll? Yes. Three months free and then £5 per month for up to five employees and £1 for each additional employee. Stock management? Yes.

Mobile version? Yes.

Any limit on number of users? No.

Costs: Initial 50% six month discount for the Starter plan £5 per month, Standard plan £11 per month and Premium plan £13.75 per month. Charges increase to £10pm/ £22pm/£27.50 after six months.

Zoho Books

Aimed at: SMEs and freelancers.

Key features & USPs: Double entry accounting software with financial reports including profit & loss, balance sheet and cash flow statement; business transactions including quotes, invoices, bills, expenses, credit and debit notes, recurring invoices, PO, SO and more; project billing and time tracking for service-based businesses; automation and customisation capabilities; integrates with Zoho apps including Zoho CRM, Zoho Projects, Zoho Expense, Zoho Inventory, Zoho Subscriptions and Zoho People.

Free trial? Yes (14-day).

MTD VAT capabilities? Yes. UK businesses can collect and record VAT on transactions and produce VAT reports including VAT MOSS for EU transactions and allows you to enable the flat-rate VAT option.

Works with multiple currencies? Yes.

Links to bank accounts? Yes.

Handles payroll? No.

Stock management? Yes.

Mobile version? Available on iOS, Android and Windows; native apps for Apple Watch and iPad.

Any limit on number of users? Pricing plans are based on user numbers. Basic supports two users; Standard supports three; Professional supports ten users.

Costs: Monthly from £6.00 for the Basic plan; £12.00 for the Standard plan; £18.00 for the Professional plan. Annual plans cost £60, £120 and £180 respectively.

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