It has long been the case that doing accounts means buying and becoming familiar with either Sage or QuickBooks. These companies have been the dominant suppliers of accounting software packages for so long that familiarity with one or both of them has become a prerequisite for anyone who needs to file accounts, even owners of very small businesses and the self-employed. But times have changed, and recent years have seen an increase in the number of online accounting systems, some of which look set to rival Sage and QuickBook’s hegemony. Offering simpler interfaces and easier access, the best of the new online accounting packages are becoming increasingly attractive to small business owners.
Online accounting vs conventional software
The distinct advantage that online accounting systems have over conventional software is access: anywhere that has an internet connection, and any device that has a web browser can be used to access accounts and update information. For many, one potential downside of an online accounting package is the perceived lack of security. However, the online accounting providers claim their security is every bit as watertight as online banking.
Here are three of the top web-based accounting solutions.
This is a great online accounting software package for stock-based businesses in particular, as it allows users to enter the number of items in stock, which then automatically
decreases each time an invoice is issued. The other key selling point is that it allows users to submit VAT returns directly to HMRC without having to leave KashFlow.
Other impressive features include one that produces the figures needed to complete a self-assessment form, as well as full integration with SagePay and Barclaycard. There is only limited support for multiple users, however, as it doesn’t allocate different passwords or permission levels. KashFlow starts from £7 per month (plus VAT).
The target market for this package is the sole-trader or small business owner. It does its best to make accounting as simple and straightforward as possible, preferring everyday titles like ‘Work’ and ‘Expenses’ over accounting terminology like ‘Accounts Receivable/Payable’ etc. FreeAgent allows separate log-ins for different users with an option for different permission levels. Although it doesn’t offer as many functions and reports as Xero and KashFlow, it does feature the most important ones: trial balance, VAT, journal entries,and profit and loss. Overall, FreeAgent is easy to use, and is particularly suitable for freelancers and contractors; a Sole Trader package starts from £9.50 a month + VAT.
Of the three online accounting packages we have looked at, Xero is the one which is most ideally suited for larger companies. This is because it allows multiple users with varying permission levels, and it also features an integrated module for payroll, which has a batch payment function. Xero also provides a bank reconciliation feature that matches invoices with bank statement entries. It doesn’t currently have a stock control feature, although as with KashFlow and FreeAgent, the security levels are high and data and accounts can be exported to CSV format. A Standard Xero package costs £22 per month excluding VAT but you can tree it out for free first!