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Shoebox versus spreadsheet versus accounting software

21st May 2024
Brought to you by
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Coconut’s simple bookkeeping and tax app is specifically designed for sole traders, helping them...
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Have you found this content useful? Use the button above to save it to your profile.

It can be a familiar story every year when the time comes to complete your clients’ Self Assessment tax returns. You request information about their allowable expenses for the year and whether new or an existing client, some turn up with a shoebox crammed with sales receipts. Great.

Well, at least your client has (hopefully) managed to keep receipts for all smaller purchases they wish to claim as an allowable expense and they’re in one place. HMRC can, of course, ask for proof of purchases to support allowable expense claims.

If you’re really lucky, your client will have enveloped-off their expense sales receipts into categories (eg travel, stationery, raw materials, etc). If not, and they’re in one huge messy pile, you’re just going to have to roll up your sleeves and wade through them all. It’s a tough job and someone (ie you) will just have to do it. Being able to charge a higher fee for bringing order to chaos softens the blow. Slightly. But it’s boring work, it isn't the best use of your time and you’d rather be doing, well, anything else, really.

Using spreadsheets to record tax expenses

Other clients (the ones you love more) are far more organised and more up to date in their thinking. Why? Well, they record all of their expenses in a spreadsheet. They’re all conveniently categorised and summarised (hopefully), all of their income is detailed, too, which makes your life far easier when completing their Self Assessment tax return.

Because it’s less of a time-consuming faff for you, it’s cheaper for them. A classic win-win. And because they’ve accurately input all of their costs as they’ve arisen, you can confidently claim their allowable expenses. Job done.

If they’ve created their own spreadsheet for free, that’s a cost-saving bonus for them. But not everyone is a spreadsheet whizz, which means some clients won’t be able to create their own accounting solution. And there could be errors in their formulas, while sharing DIY spreadsheets can also be more problematic. There can be security concerns, too, and if the numbers don’t quite add up, it can be difficult to find out why.  

As part of their onboarding process, some accountants provide ready-made spreadsheet templates for new clients, which can prevent problems and ensure that the information required for Self Assessment is properly summarised. It’s a low-cost solution, but the simple fact is this – good accounting software trumps spreadsheets every time.

Why get your clients to use accounting software?

Using reliable accounting software involves cost, but if it’s a tenner or so a month, that’s hardly a big business expense for your clients, certainly not when they realise the benefits. And you may be able to get a discount for signing up five or more clients to an annual subscription, while you don’t have to pay anything for access to their data.

Almost effortlessly getting the key figures you need to fill in your clients’ Self Assessment tax returns will save you lots of time and effort. Providing your clients have been updating their accounting records regularly with accurate income and expense figures, there shouldn’t be any issues. And accounting software can be used with tax return-filing software, which streamlines everything and can provide significant time-and cost-savings, enabling you to process far more tax returns.

Using accounting software also enables you and your clients to better understand how their business is performing and where they need to cut costs or boost their sales. Good accounting software can reduce the time your clients spend managing tax and finance, for which they’ll no doubt be thankful.

Better expense management for your clients  

Accounting software can be connected to bank accounts and credit cards, which means income and costs are automatically accounted for. No longer will your clients forget to claim for a business expense because they’ve lost a receipt. Their accounting software may even enable them to take a smartphone snapshot of their receipts and store them safely online, so they’re there should HMRC ask for proof.  

And with Making Tax Digital for Income Tax Self Assessment back on the horizon, due for its first phase of introduction from 6 April 2026, getting your sole trader and landlord clients to get into the habit of using accounting software makes more sense than ever.

Coconut is the easy-to-use accounting app for sole traders, freelancers, landlords and their accountants. It can be linked to 30+ bank accounts and credit cards for better expense record management. Purchase receipts can be snapped and stored in the cloud. Coconut makes it easier to track income and monitor business performance. Users can use it to create and send their own customised invoices and receive notifications when overdue. Coconut also gives accountants instant free access to their signed-up clients’ real-time accounting data.    

Book a demo with a member of our team and see for yourself just how easy Coconut really is.