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Best Free accounting software Micro company

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Hello Everyone,

My name is Chris and I wanted to ask you opinion/help with a new business that I am looking into setting up for myself.

As this is a company that hasn't started yet, I am still in the planning process and I am looking into finding the appropriate software for my needs.

The company will be printing stickers, initially through eBay/Amazon/Etsy and the likes and turnover will not by a long shot exceed £85k so I won't be looking to register for VAT (that's right based on what I read on HMRC. If not, give me a shout :) )

What do you think the best free software to use based on the below:

  • Turnover probably won't exceed £5k/year for the first couple of years
  • I will be doing a Limited company
  • no employees involved, I will be the only person working
  • No VAT registration necessary for the foreseeable future
  • I will be selling through the internet, my website and eBay etc plus to some local stores
  • I am an accountant during my day job but don't do all the HMRC stuff etc( I don't do Pnl Balance sheet Tax return myself but have a good understanding on how they are done)
  • MTD coming soon for all submissions I think, should I get one thats committed to MTD? If not, how easy is to change accounting software for a small company such as mine?

I have looked into some websites that offer free software such as quickfile, Wave etc but since there is no testing enviroment I could find I am not sure if they are suitable for what i need.

What are your thoughts?

Thank you in advance 

Chris

Replies (23)

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RLI
By lionofludesch
07th Sep 2019 15:53

My thoughts are what's a business with a £5k turnover doing, even considering trading through a limited company, let alone having definitely decided to do it.

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Replying to lionofludesch:
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By chriskouchris
07th Sep 2019 17:16

Thank you for your reply. I know its not a lot but its a side business. I 've always worked for limited companies doing accounting and I though its the way to go. I guess you are suggesting there's too much admin work involved for a limited company versus trading as a sole trader? I thought that for trading a few products and for simple accounting UK GAAP should be simple?

I ll look into being a sole trader as well. it might be more suitable.

in any case, do you have any software advise?

Thank you for your input.

Chris

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Replying to chriskouchris:
RLI
By lionofludesch
07th Sep 2019 17:43

I hope you'll be using UK GAAP whether you decide to trade as a sole trader or a company.

If you're happy that you have the knowledge to comply with Companies Acts legislation, by all means go for a company.

It's impossible to say whether the tax will be higher or lower at this stage. You'd need to tell us your profit extraction policy.

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By paulhammett
07th Sep 2019 16:37

Don’t expect too much from free software.

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By Moonbeam
07th Sep 2019 18:03

Consider Pandle. It's £6 a month, including VAT and could handle VAT returns/MTD if you had to register for VAT. It will give you aged drs and crs and simple reports.
However if you're going to connect with eg Stripe or other apps that help you seamlessly download sales data to your accounts from your website I'd recommend paying for Xero, which is £12+VAT a month for the first4 months, rising to £24/mth +VAT after that.
Free software isn't sensible/reliable if you're running a proper business.

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RLI
By lionofludesch
07th Sep 2019 18:19

I wouldn't want to rely on a software which didn't have a good UK base.

I'd be toey about them being compliant.

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By Matrix
07th Sep 2019 18:42

QuickFile is fine, it is probably worth paying £50 or so for the bank feed.

Or if you go down the sole trader route then use VT cashbook.

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By Ken Howard
07th Sep 2019 20:05

I thought Wave had withdrawn from the UK/EU marketplace due to them not wanting to upgrade to comply with MTD/GDPR.

I don't think it's wise to use software that isn't GDPR compliant, so you can knock off Wave from your list.

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By chriskouchris
08th Sep 2019 09:46

Hello Everyone!

Thank you for your replies! I did look at wave but as it didn't mention MTD I stopped looking. Paddle has a free version so it currently in the lead. Quickfile just looks good but I ve seen no demo or video for it to see how it works so I ll have a second look!

Thank you every one for your help again!

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Replying to chriskouchris:
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By clark.hall
10th Sep 2019 11:17

In such cases Wave used to be my go-to. Now it's Pandle. Should suit you for now with an eye on moving to Xero in future.

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By zebaa
08th Sep 2019 11:30

Try Gnucash. It is a big program so will take a little time to get to grips with. If you are looking for totally free, not cripple-ware or limited-time software I think that fits your needs. I am a big fan of limited a company wrapper for almost any business as far too often I have seen people loose money when something bad happens. Often totally left field. Think carefully before going sole trader and remember the phrase 'what could possibly go wrong?' as a warning.

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By paul.benny
09th Sep 2019 09:53

It sounds like you have a very simple business model – largely cash sales, and, although you’ve not spelt it out, your products are made to order by a third party.
On that basis, do you even need accounting software? A cashbook in Excel would probably do everything you need at this stage.

Answering a few questions that you haven’t asked…
- There’s a lot of useful stuff on gov.uk about starting a business
- It’s very easy to set up your own company (5-10mins on Companies House website).
- Once you’ve prepared the data, you can do microcompany accounts and tax return through CH webfiling. Don’t tell anyone here but if you broadly know what you are doing, you (probably) don’t need to hire an accountant.

Trading through a company can give some peripheral benefits because it’s easier to show that you ‘in business’ if you are a company.
For banking, I can recommend Starling. App-only but quick and easy to set up. Free for most transactions that don’t involve anything physical like cash or cheques.

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Caroline
By accountantccole
09th Sep 2019 12:37

Have a couple of initial consultations with local accountants, they probably won't charge for this and you might pick up some tips. I'm with Lion, I would rarely recommend a Ltd co at that level of income, not worth the hassle or complications. If you make a loss as a sole trader in year one you can do a loss carry back too.

If you talk to NatWest for banking, I think you still get FreeAgent for free from them. It's a reasonable bit of software, has limitations like not being able to add balance sheet codes but there are workarounds for most of the issues.

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Replying to accountantccole:
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By nicklongden
12th Sep 2019 10:09

Upfront disclaimer that I work for FreeAgent - but have some great news for you @accountantccole that FreeAgent does now have the ability to create custom balance sheet codes. Our support team will be able to guide you through how to do this if you need some assistance.

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By johnt27
12th Sep 2019 09:56

Generally I'd avoid free software because, well, it's free for a reason.

If you're going to be trading on ebay/Amazon etc your admin for dealing with this in terms of recording sales, stock etc is going to be a pain and you ideally want to be looking at an app that will automate some of this for you and then integrate with an accounting platform, particularly if this is going to be a sideshow. That severely limits your choices down to a handful of apps, which are all paid for, and that's before you come to realise that not all integrations are built equally.

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Replying to johnt27:
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By C.Y.Nical
12th Sep 2019 10:44

'Generally I'd avoid free software because, well, it's free for a reason.'
I take the opposite view. I started exploring free (aka open) software many years ago with Irfanview, an image processing system, which has been a wonderful choice. I now look at the open software options when sourcing any new system. I even use it for safety-critical jobs: our motor yacht has OpenCPN as its navigation system and we trust our lives to it. The current version is absolutely as good and solid as Raymarine, Garmin, Furuno, any of the big names. Support if needed (rarely) is readily available via the forum.
I still pay for some software. Every choice is made on its own merits. I would never choose open on principle, but sometimes it's the best choice.

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Replying to C.Y.Nical:
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By johnt27
12th Sep 2019 11:10

Can't disagree with you on this but freeware is very different from opensource software and as far as I'm aware there aren't any opensource accounting software providers in the space.

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By nicklongden
12th Sep 2019 10:15

I work for FreeAgent @chriskouchris but can confirm the comment above that if you have a Natwest or RBS bank account you can get the monthly subscription free of charge. The functionality is exactly the same as if you were paying for it and we haven't stripped anything out so it could be worth you taking a look.

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Replying to nicklongden:
By Charlie Carne
12th Sep 2019 15:29

But you do still pay a monthly fee for the bank account! Also, Free Agent is aimed at freelancers and is not advisable for a limited company. I'd look at Xero or (my preference) QuickBooks Online (QBO) for a company's books.

As Paul Benny suggests above, I'd take a look at Starling for free banking, as they now offer this service as a business account to sole traders and companies (previously it was only available for personal accounts). It offers totally free banking and an application can be made online in about 10 minutes. The high street banks will probably make you wait weeks for an appointment, take further time to process it and then charge you each month.

I'd also echo the comments above about not using a limited company if your turnover is as low as you suggest unless you really need the protection of limited liability. If you are not going to use an accountant, do you really understand all of the methods of profit extraction and the tax implications of each? Do you know how the NI Employment Allowance is impacted by a sole director/employee and how to protect that allowance? Do you understand the consequences of overdrawing your loan account? There are huge pitfalls that await you if you are not experienced in running a small limited company, whereas these all fall away if you are a sole trader, for whom only an income tax return (with a simple 3-line P&L for the level of turnover you mention) is required.

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By nicklongden
12th Sep 2019 10:15

I work for FreeAgent @chriskouchris but can confirm the comment above that if you have a Natwest or RBS bank account you can get the monthly subscription free of charge. The functionality is exactly the same as if you were paying for it and we haven't stripped anything out so it could be worth you taking a look.

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By [email protected]
12th Sep 2019 10:20

I find FreeAgeng a free software for RBS and NatWest Bussiness Account holder is the best software. Can do VAT, PAYE, Accounts, Corporation Tax return and Self-Assessment as well. Switch banking to RBS or Natwest and get free software. My words are independent of any potential benefit or biased opinion.

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By itp33asso
12th Sep 2019 16:30

stick to the day job.

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By Vallery Lee
13th Sep 2019 07:31

I would suggest sole trader status and, like Moonbeam, I like Pandle. They add new features all the time and the help is almost immediate - usually within 10 minutes. As well as the paid version (about £5 plus VAT) they offer a free version so that is good whilst you are getting sorted.
Good luck to you.

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