With so many different products available, how do you know which bookkeeping software is best for your contracting business? Our quick guide provides a few key pointers that should make it easier to decide.
Work out what features you need
Most contractors will be comfortable with a system that makes it easy to raise invoices, provides a clear overview of the company’s profits and losses, and identifies debtors and creditors at a glance. Some additional features you may need include:
- Calculating VAT: If you are registered for VAT, you want a package that will facilitate cash and invoice accounting for VAT and the flat-rate scheme, and produce a VAT return. Another feature to look for is software that allows you to send VAT returns directly to HMRC.
- Payroll accounting: Do you want a system that will allow you to calculate staff wages and create payslips with tax and NI deductions? If so, check that the software facilitates this (most do). Some software will also do real-time submissions to HMRC, making payroll even more efficient.
- Budget and forecasts: Some software can interpret one year’s financial performance and forecast how the business will perform over the next financial year. A useful feature that can inform target-setting and help you identify areas where you need to improve.
- Manage fixed assets: Another feature to look out for is software that provides you with an audit history and cost records, and also calculates depreciation on fixed assets.
- What else? You may want a resource planning system that allows you to combine all your business systems on a single platform, especially if you operate various enterprises. Software that facilitates project accounting can be useful for contractors who work on projects that differ in terms of costs; you can also get software that links directly to your business bank account.
When comparing software accounting packages, features are only part of the story. Price, and what you get for your money, is, of course, a key factor. There are providers who offer free accountancy software services, such as Wave and GnuCash that are definitely worth checking out.
Meanwhile, most paid-for service providers offer a free trial (typically up to 30 days) so you can try before you buy. Expect to pay a monthly or yearly fee for subscription accounting software and the price will vary depending on the number of features or additional support you require.
Other aspects to consider is how the system will integrate with your existing infrastructure, whether or not the package is mobile-friendly and includes an app to complement the desktop version, and what level of support you can expect from your provider in terms of advice or help if anything goes wrong.
Most modern bookkeeping software is cloud-based and will work on Mac or PC, but make sure you know what security measures are in place that not only backs up your data but keeps it safe.
Importantly, most contractor accountants provide software as part of their monthly fee – so you may not have a choice of provider, so find out what software an accountant supports before signing up, if this is important to you.
Here is a list of the leading providers on the market.
Some accountancy software providers
- QuickBooks: One of the pioneers of bookkeeping software, offers a range of packages for contractors and small businesses including payroll, VAT plus monitoring and reporting tools. Prices range between £2 – 10 a month for the first six months.
- FreeAgent: A popular choice with freelancers looking for an easy to use system with good support. Monthly fees are £9.50 for sole traders, £14.50 for a limited company, and £12 for LLPs.
- Xero: Another well-known provider, Xero offers payroll, invoicing, inventory and expenses services and also imports your data from your bank account, credits cards and PayPal. Prices range from £10 for the starter pack to £27.50 for the premium package.
- Zoho: Designed for use by small businesses, Zoho offers basic, standard and professional packages, ranging from £6 to £18 a month.
- Sage One: Comprehensive accounting packages with all the features a small business could want such as payroll, invoicing and cashflow. Prices start from £5 a month and includes a 30 day free trial.
All of the above prices are exclusive of VAT and may vary from time to time. There are many accountancy software products and providers to choose from and it’s a very competitive market so be sure to shop around for special deals and introductory offers.