There was a time when the only real software option for small business and sole trader finances and accounts was Excel. This was fine up to a certain number of employees, but much beyond that and Excel’s limitations began to show. Most notably this could be seen in the inability to collaborate or share.
Times have changed and in the last few years the market has been flooded with off-the-peg cloud accounting packages that allow multiple users and a host of functionality from invoicing and bank recs to expenses and payroll features. Whilst most of these packages are aimed at the general user, they often include advanced functionality that can be remotely accessed by your accountant. Mobile app integration also means you can keep a track on your company’s finances wherever you are in the world.
With so much choice out there, we’ve taken a look at four of the biggest players in the market for you.
Xero is a very powerful cloud accounting package that offers a ton of features and integration, including stock control. Unlike many other cloud accounting packages, Xero is targeted as much at accountants and bookkeepers as it is the general user. This allows accountants to offer the software to their clients and administer their finances through the cloud.
That’s not to say Xero is only for the experts. The easy to use interface makes it a versatile tool and there is a host of functionality that comes with it. This includes a highly advanced and automated bank reconciliation feature that allows you to import bank statements directly into Xero. Some banks will even do this for you for a small monthly fee.
Another amazing feature is the ability to upload pretty much any file to the Xero cloud and associate it with an invoice, purchase order or other part of the system. The app even includes a tool for taking pictures and then uploading them straight to Xero (perfect for paper purchase orders and bills).
One of Xero’s other advantages over the competition is the amount of integration with other ecommerce apps such as Shopify and iZettle, making it particularly useful for online stores. In June this year, Xero also added a new ‘business performance’ reporting function, allowing users to produce useful graphs.
Price plans: Starter package is £4.50 per month and allows you to create and send 5 invoices, with limited bank reconciliation functionality. Standard and premium packages, at £10 and £12.50 per month respectively, allow unlimited invoicing and bank recs, with the premium package allowing multi-currency accounting.
Quickbooks is one of the most popular cloud accounting apps on the market and can be scaled up or down very easily, depending on your business needs. Setup and navigation is easy with all the functionality you’d expect.
Quickbooks’ customer service is second to none, with the option of phone and instant messenger support though the website. The website also features a versatile knowledge base and resource centre for troubleshooting problems yourself. One of the drawbacks of Quickbooks is the lack of functionality on its mobile app, with very few features compared to the competition.
Price plans: Quickbooks pricing plans vary from £4.80 per month to £17.40. The basic sole trader option only really deals with tax and expenses, whereas the other plans all include invoicing and payroll functionality. The Plus account also handles foreign currencies.
Freshbooks started life as a simple online invoicing tool and has evolved into a fully fledged cloud accounting package. Freshbooks’ basic package used to be available for free, allowing you to add up to 3 clients. This has now been withdrawn and replaced with a 30 day trial.
Setup is simple and the dashboard is clean and easy to use. Freshbooks also allows you to set up credit card payments from within your online invoice, as well as Paypal integration.
Freshbooks really shines when it comes to its mobile app. With a comprehensive suite of options, you can send invoices, estimates, track and record expenses, record hours, manage projects and so much more from your mobile, wherever you are. For some this might not be a big deal but for people who are on the move a lot it can be pretty useful.
The mobile app isn’t perfect though, with reports needing a web browser to view. The mobile app is only available on iOS and Android as well, leaving Windows and Blackberry phone users out in the cold.
Price plans: There are four price plans which are mainly based on how many clients / staff members you can add. Converted from prices in USD given on the website they are £8.55, £16.48, £26.39 and £52.81 respectively (using 1 GBP to 1.51 USD exchange rate). The top two packages also allow you team timesheets and to track expenses and revenue by staff member.
Sage One is a cloud based version of the hugely popular desktop accounting software package. The premium accounting package is pretty versatile and allows multiple users to enter data from different sites at the same time.
The software will naturally appeal to people who have used Sage before, but be warned, Sage One is a very different beast and is aimed more at freelancers and startups instead of bigger companies like its Windows based cousin. It is easy to use and comes with 5GB of cloud storage but customisation and functionality is limited beyond a certain level. This could inevitably mean abandoning the software if your company starts to grow much beyond this.
Price plans: Sage One comes with two plans for accounting (£5 and £10) and three plans for payroll based on the number of employees (£5 - £15).
When it comes to cloud accounting it really is a buyer’s market. There are loads of packages available and generally prices are pretty competitive. At the very basic level all cloud accounting software should allow you to invoice and input payments, as well as calculate your taxes. Nowadays though, most packages will offer you proper double entry accounting functionality, perfectly tailored for larger organisations.
When choosing the package that works for your new business it’s worth bearing in mind that the features you don’t need today, may be of huge importance to you (or your accountant) in the near future.
Andy Hyland has been a qualified accountant for fifteen years and is the owner and director of AK Tax