Business Accounting Software

Free accounting software This tax year I’ve transferred my accounts to Kashflow, which is an online accounting service available for individuals, businesses and companies in the UK. Before this I had used my own software written in PHP and dealt with everything fine enough but due to a lack of time, it had not been updated for quite a while and there was a lot that could still be done.

Khalid then introduced me to Kashflow, and although it’s not free, it’s so worth the price! I took full advantage of the 60 day free trial and my Mum (who does my accounts and invoicing) and I really had a good go through it all to make sure we were both happy with it. The bonus of it all being online of course is that we can both access it, which is handy seeing as we live about 3 hours apart!

So what features does Kashflow contain? Well we have the obvious features of course. You can add customers, add invoices, add expenses and purchases. You can also generate a number of reports to see your earnings for the year. Standard stuff really. However, you can also generate invoices online and set them to email direct to the client – you fill out a few boxes, select the client and the invoice is generated into a PDF, a great time saver. You put in the due dates for your invoices and when you haven’t updated the invoice as being paid, you’ll get an email through telling you the invoice is overdue – saves me having to write a list of when payments are due now!

The reports are great as I can see who’s paid me the most, where I’m spending most of my money. The best report, for me, is the Profit and Loss report as I’ve got it set up to show me my turnover, then my gross profit (so turnover less unavoidable costs such as cost of sales, employee costs etc) and my net profit. However, there are various reports designed for companies, VAT registered businesses etc. and if there’s something that you’d really need and can’t get, the developers are pretty happy to take suggestions.

If you manage your own accounts, or do most of the entries and then pass your accounts on to an accountant to sort out then it’s a really handy system as both you and your accountant can access it. Of course it’s all secured and backed up on a regular basis too, so no worries about losing your accounting history and information. It also integrates with PayPal, can import all of your sales history from PayPal, saving you time if you do a lot of business via PayPal. It’s certainly worth the free trial to have a look around anyhow!

Kashflow currently costs £15.99 + VAT per month after the 60 day free trial, so that’s just over £18 a month. However, if you do fancy trying it out then sign up through my affiliate link, and you’ll save yourself £1 + VAT a month. nothing major but that’s £12 + VAT a year, almost one month free 😉 The 60 day trial has no commitment attached, you don’t even enter your card details. So if you’ve gone as far as you can with Excel, or thinking of looking into a more professional accounting system, then I highly recommend at least taking a look. I’ve been using it for over 6 months now and am more than impressed.

16 Responses

  1. Hello Sarah!

    Ive signed up for this, via your affliate link – and I reckon Im going to keep it. (Im working on a couple of monthly support contracts and when/if they come through Ill have the funds)

    I need some help/advice with registering that kind of stuff as being a busines, do you know a decent accountant or anyone, that maybe works with kashflow?

    I obviously dont want to spend a lot, but it would be good to get it all checked out – or can I do it myself?

  2. Sarah says:

    Matt, sorry had to dig your comment out of Akismet!

    In answer to your questions, you honestly don’t need an Accountant, especially as a sole trader with just a couple of contracts/jobs.

    All you need to do is within 3 months of starting as self employed ie. invoicing customers or making expenses tied to your work, you need to register with the inland revenue. Fact is you may as well register from now as it won’t affect you either way, as you’re going to be registering before the end of the tax year anyway. When you register tell them that you want to apply for the low earnings exemption from national insurance Class 2’s because, unless you earn over £4,825 you won’t need to pay these.

    Then, get yourself a business account. HSBC does a free business account when you do most of your business banking online ie. bank transfers, direct debits etc. You can pay up to 10 cheques a month into the account for free, after that they charge you per cheque. They’ll charge you for cash deposits and withdrawals too, but you can just transfer cash to your personal account and get it out that way. You may think why bother with another account but it’ll help you keep your finances separate. You can just get a debit card, get a little cash in the account and use that for your expenses, petrol if you drive to a client’s, cost of computer equipment, broadband, mobile etc. Also HSBC give you a business savings account where you can then stash 20% of your earnings for your tax. You’ll get a little interest on it then and have somewhere to put your tax for your self employed earnings.

    Keep a track of all your accounts on Kashflow. You can generate your invoices directly on there and get them emailed to clients. I think you can set up a monthly invoice too (maybe, not sure though, you’ll need to look through the help on that!). It’ll keep an account of everything for you and I then recommend using the Profit & Loss report to see your turnover and your net profit. You will of course pay 20% tax on your net profit at the end of the year.

    When you come to complete your tax return (apply to do it online it’s easier), you can then just get the figures from the profit and loss report as you won’t need to give them much info until you earn over £15k in self employed earnings.

    However, from your point of view, all you need to do is register with the Inland Revenue and tell them that you won’t be earning over £4,800 this year so need to apply to be exempt from paying Class 2 NICs. Keep receipts of everything and get a separate account sorted ASAP if you haven’t already 🙂

    Give me a shout if you want any more info 🙂

  3. Sarah says:

    Just to add, this is the HSBC account I was talking about. Highly recommended as I have one 😉

    http://www.hsbc.co.uk/1/2/business/accounts/business-direct

  4. Thanks Sarah thats really useful.

    Does it matter, with the class 2s, that in my full time job Im obviously earning a lot more then that? or can I still get an exemption certificate?

    Thanks again 🙂 Your never on MSN these days 🙁

  5. Also with that HSBC account, it says people who dont use cash, so can I pay it into my current account and just transfer it over?

    Im not sure about claiming petrol and stuff, does that make it all overley complicated? As I guess I could claim for internet, mobile etc – but does that make anything cheaper for me? Infact my car is on HP, so maybe I could claim a bit of that?! I dont know! The car has been sign written any everything…

  6. Sarah says:

    Class 2s and Class 4s only depend on self employed income regardless of how much you earn in an employed position.

    Class 2s are £2.10 (or £2.15) a week and payable if you earn (or expect to earn) over £4,825 for the 08-09 tax year. Class 4s are then payable if you earn over £5435 or something like that (it may have gone up to £6035, it’s usually the same as the lower tax limit). Then you pay 8% on everything you earn self employed.

    During this time you can earn £10k or £20k or even £30k from your job. The only point at which your full time earnings come into it is how much tax you pay as if full time work plus self employed hits the next tax bracket then you will pay 20% on some self employed earnings and 40% on the rest, however I’m guess that’s not a problem, so you’ll simply pay 20% earnings on all self employed work.

    >> Your never on MSN these days

    Sorry, too much work! Plus I’ve spent the week out at meetings nearly every day.

  7. Thanks Sarah, made it all a lot clearer, Im off all next week so think Ill make a phone call…

    Thanks mate 🙂

  8. Sarah says:

    Hey Matt, for some reason your second post the other day got spam blocked yet your first didn’t. Probably let the first through then thought you were spamming with the second so soon after!

    Anyway, in answer to your questions

    1. Yeah the HSBC account can work out fee free if you don’t deal in cash ie. you don’t accept cash as payment (which you ideally don’t want to anyway) and you don’t intend to withdraw cash over the counter or via a cash machine. I pay myself via bank transfer then I withdraw cash from my personal account which is free anyway. If you expect to accept a lot of cash in payment then you could either, as you say, pay it into your own account and transfer it, just keep a record of it, although that defeats the purpose of having a business account as all the income is coming from you. Ideally try and get people to pay by cheque or bank transfer.

    2. Claiming petrol etc. won’t be so complicated for you until you earn over £15k self employed earnings. For the time being, keep all petrol receipts for when traveling to and from a client. You could either work out how much your mobile is being used for your self employed work and put that down as an expense (you’d keep the whole bill in your paperwork, just highlight all the calls then maybe work out a percentage of time used for the monthly contract fee) too, anything else that been paid for due to your self employment or anything else that is used in part, again work out the percentage of it. Once you’ve done it for one month you’ll most likely have the same percentages each month eg. 25% of your mobile phone monthly fee, 50% of your broadband etc.

    Fact is, if you put your expenses down then it deducts from your turnover and you’ll pay less tax. Every expense that goes down saves you 20% of the value of that expense, so yes, it can be worth doing it right!

    As for your Car on HP, I couldn’t say. You’re moving into the territory of a car being used for business purposes and your insurance could escalate. You’d be better off keeping your insurance and HP as personal expenses and just submitting petrol receipts that are from business use.

  9. Thanks again for that Sarah

    The problem about cahs payments, is that as Im mainly going to homes, it will be cash payments and not be able to get paid in other ways, as I need payment before I give them the laptop or pc back…

  10. I’m going through all the hassle of registering as a business and sorting out proper accounting at the minute (Left it a little late in the year, I know! xD ), but I just wanted to say that your comments on this post Sarah are by far the most helpful thing I have found in days of searching online. Thanks!

  11. Just to say Im now a fully paid up user of Kashflow, and its all looking groovy 🙂

  12. Sarah says:

    Michael – cheers for the comment, glad what I’ve written has been of help 🙂

    Matt – good to hear it and good to hear business is going well.

  13. Curt says:

    Sarah,

    This looks pretty interesting. I ve been looking for an alternative to quick books to see if there was anything better. I am in the US, and noticed that the application you review here is from the UK. Does it support US dollars? Or is it based on the Euro? Thanks Curt

    • Sarah says:

      Hi Curt, I don’t know if Kashflow can work outside the UK, however you can change your primary currency charged to US dollars (or most world currencies). I can’t see why you couldn’t use it, providing you can get the date changed to US format as ours is dd/mm/yyyy. However easiest option is to either drop Kashflow a message or just set up a trial and see. You’re under no obligation and don’t even enter payment details until you decide you want to continue with it, so it literally is a free trial 🙂

  14. Thanks for recommending us (KashFlow), Sarah – much appreciated.

    Curt, yes, it works in the US. IT can also work with US date formats.

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