Updated 26 July 2022
Even if you use an accountant, you can reduce your overall costs by tackling some of the workload yourself. If you handle the simpler tasks such as bookkeeping and cashflow management, you can save your accountant’s time for the heavier lifting such as handling your corporation tax returns. But if you’re going to do this, it really helps to use software that’s compatible with whatever your accountant uses, so you can simply share files and transfer your data over to them.
With accounting software, as with most things in life, you get what you pay for. Accounting is quite literally ‘serious business’, and errors can prove damaging as well as very costly, so if your business is above a certain size it’s worth shelling out for a mainstream accounting package such as Sage, QuickBooks or FreshBooks. However, if your turnover is small or your finances are relatively simple, then you may get all the performance you need from a freeware accounting app.
For example, if you’re just setting up in business and getting the lie of the land, free accounting software may help you get started without too much initial expenditure. You can then get a better idea of what kinds of additional accounting features you’d be willing to pay for. It may also help you decide which accounting services you might eventually want to source from an accountant.
Bearing in mind that no software is a substitute for a trained human accountant, and that free packages are inevitably more limited than paid ones, here is a list of the accounting freeware that has impressed us most recently. N.B. This isn’t a ranking but a simple list – some packages will be superior in some areas, and inferior in others, depending on your specific needs.
QuickFile is well liked by many freelancers, entrepreneurs and small businesses, scoring 4.7 out of 5 from over 1,200 reviews on Trustpilot. It’s cloud-based accounting software, which allows you to automatically import transactions by connecting to 50 UK banks and over 300 other web services.
Some of its other helpful features include an app that lets you image and upload receipts on the go, a branded online portal clients can use to pay their invoices, multi-currency support and the ability to file VAT returns directly with HMRC.
QuickFile offers a free and paid-for service. To be eligible for the free service, you’ll need to keep your ledger entries under 1,000 a year and be prepared to encounter ads.
GnuCash is open-source desktop accounting software. This means that, unlike a cloud-based system, you’ll need to download and install it on to your device. The code is also available to anyone, allowing volunteer developers to add extra functionalities or fix errors. This makes the platform very flexible and completely free forever. You won’t have to put up with adverts, but on the downside it’s not the prettiest or most intuitive platform to work with.
GnuCash is often described as a ‘no-frills’ version of accounting software. It handles invoicing and credit notes, accounts payable and receivable and some payroll features, but doesn’t offer the more advanced features such as open banking integration or a mobile app.
Wave has over two million users, making it a popular free service among sole traders, freelancers and small firms. It promises unlimited accounting, invoicing and receipt tracking services, meaning you can use as much as you want for as long as you want. It’s also known for having a beautiful, easy to use interface.
However, payroll isn’t included in the free service, which is predominantly targeted at US customers. There’s also a pay-per-use policy for online payments, where you’ll pay per transaction. For this reason, it’s often not recommended for businesses with high sales volumes, and is often considered too basic for medium-size businesses.
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 is only free to business banking customers of Natwest/Royal Bank of Scotland, but it’s a powerful piece of cloud-based software that’s used by over 90,000 small businesses in the UK. It allows you to automatically generate VAT returns and completes the majority of the self-assessment tax return form for you. It also gives you a clear view of the income, time and expenses associated with each project, so you can see whether you’re making a profit or loss in real time.
These features have won FreeAgent awards including the Small Business Accounting Software of the Year Award in 2018. However, the biggest drawback is that your bank will have full access to your financial data, so they’ll be able to see exactly what’s happening with your accounts.
In the free version of ZipBooks, you’re able to produce an unlimited number of invoices to an unlimited number of customers. You can also use it for unlimited bookkeeping. As a cloud-based piece of software, it’s known for being really easy to use, with a modern looking design.
However, you’ll only have access to basic reporting features and can only connect one bank account. If you want to take advantage of the more advanced and intelligent features, you’ll need to upgrade to one of their paid packages.
Similar to GnuCash, this is another open source tool, recognised for being well designed and with features to rival even premium software. It’s easy to understand and simple to use, making it a good option for sole traders. It’s great for budgeting and forecasting cashflow but getting set up initially is known to be fiddly and time consuming. It also operates entirely offline, meaning you won’t be able to link to online banking. Still, the entire program can run from a USB drive, making it portable.
Adminsoft Accounts was developed in the UK by a small business owner for other small business owners. The concept behind it is that it’s designed to work the same way entrepreneurs do, and doesn’t require an accounting background to understand. It’s been downloaded over 300,000 times and provides a full double entry accounting system, stock control, purchase order processing, payroll software and even some HR functions. The platform, however, is powered by ads and designed for Windows only.
Another open source option, this tool has been evolving since the Dark Ages (well, 1985) and is especially popular in Europe, the US, Canada and Australia, with over two million downloads. It’s able to handle VAT, purchase orders, multiple companies and multiple users. However, if you want to run it from the cloud and use it to manage payroll, you’ll need the paid version. Most reviews also say it’s better suited to small and mid-sized companies than sole traders.
NCH Express Invoice offers invoicing software specifically for small businesses. In fact, to qualify for the free version you need to have fewer than five employees. With this tool, you can create invoices and quotes, automate recurring invoices, and produce a useful range of reports on business activity. It’s useful for everyday activity but isn’t powered by the cloud so misses out on the more advanced features.
Any of the above packages may prove a useful tool for your business, and reduce the amount of work you need to give to an external accountant. However, none of them can replace the services of a qualified accountant, who can bring a level of expertise, proactivity and professional experience to your business that no software package can emulate.