These days, cloud accounting software isn’t just commonplace – it’s the norm. With changes to Making Tax Digital (MTD) around the corner, it’s becoming increasingly important for businesses to move paper records onto online systems earlier rather than later.
Get MTD-ready
One of the most important things to consider when choosing cloud accounting software is whether it’s MTD-compatible.
Making Tax Digital is part of the Government’s plans to make it easier for people to get their taxes right. It essentially requires taxpayers to maintain digital records and file their returns online using HMRC-recognised software.
VAT-registered businesses are already required to sign up for MTD for VAT, and many people are signing up for the MTD for income tax self assessment (ITSA) pilot before it becomes compulsory in April 2024. Corporation tax will also eventually move to MTD, which could happen as early as 2026. If you want to know more about how the new system will affect you, HMRC’s comprehensive overview of Making Tax Digital is a valuable resource for businesses.
What we recommend
QuickBooks
We’ve partnered with QuickBooks for years, and it’s an industry leader for good reason. Affordable and easy to use, it’s an attractive option for many business-owners who want access to top-notch cloud accounting software without breaking the bank. The simplest QuickBooks packages start at £8 a month, but the most popular plan is QuickBooks Essentials, which is loaded with great features designed to make your business run smoothly.
For £22 a month, you’ll be able to manage income and expenses, send invoices and produce cashflow forecasts at the click of a button. This plan also allows up to three users to access the data, making collaboration with your accountant easier. The most comprehensive plan comes in at £70 a month, and is suitable for larger businesses that require more in-depth reporting.
Furthermore, QuickBooks’ optional free trials and a no-fee cancellation policy make it easy to switch if you change your mind.
Xero
Xero’s simple, intuitive interface makes it a great option for small businesses and newcomers to cloud accounting software. Like QuickBooks, Xero is MTD-compatible, and enables you to manage your finances in real time, whenever you need. The pricing ranges from £14 to £49 a month, and each package allows customers to add an unlimited number of users. However, what makes Xero stand out from the crowd is the sheer amount of customisation tools available.
Many businesses add functionality by paying for optional add-ons such as automated payroll, project tracking and simplified batch payments. You can also browse the Xero app store to find and integrate third-party apps designed to enhance your experience. However, one downside to the more basic Xero plans is that there are limitations to the functionality. For example, users on the starter plan can only send up to 20 invoices per month.
Other software providers
While QuickBooks and Xero are our usual recommendations, it’s worth looking at what other providers have on offer. For example, Sage markets itself as having more core features than its competitors, and includes advanced views for accountants and bookkeepers, as well as unlimited transactions and a chart of accounts.
Unlike with Xero, you won’t have to pay for add-ons, but you will need to pay for a more expensive plan if you want unlimited users.
Meanwhile, Freshbooks originally started out as invoicing software, but has evolved to handle other accounting and bookkeeping tasks as well. There are a range of plans on offer, but custom pricing is available for businesses with more complex needs.
Making your decision
The truth is, it all depends on what suits your business best. Blind loyalty to one package over another does nobody any favours, and it’s important to consider all of your options carefully.
Talk to our experts to discuss which cloud accounting software package is right for your business.