Over the past decade, traditional accounting software has increasingly been replaced by cloud-based solutions, with major players in accounting like Sage and Quickbooks having to adapt and develop their own cloud-based versions in order to compete.
This rapidly emerging market, which works on a subscription based payment model, has allowed smaller organisations and businesses to take advantage of powerful functionality without the heavy financial and technical burden of purchasing and installing software upfront. Additionally, software/version updates are managed automatically, meaning that organisations do not need to worry about updating to comply with any new tax/accounting rules.
Currently, there are a number of cloud based accounting software solutions targeted at both small and medium sized businesses. The following is a brief guide to several of the most popular packages currently available in the UK.
Sage 50cloud Accounts
Probably the biggest name in accountancy software and with a proud history, Sage now offers a cloud-based solution. Sage 50c is suitable for businesses of any size and has been designed primarily for desktop use. Businesses are able to share financial data with their accountants and other users by storing it on their own individual Sage Drive.
The software fully integrates with Office 365, manages VAT & submit online returns to HMRC and connects to your bank account. Premium package allows you to track and manage stock, whilst the professional package also allows create sales and purchase orders and trade in multiple currencies.
This solution is appropriate for businesses looking for customisable and feature-heavy solutions and has a particularly strong inventory management element. It has thorough documentation, online and telephone support and offers automated offsite backups. Financial reports can be viewed from laptops, tablet, or smartphones.
- Sage 50c Essential licence – from £20 per month (1 or 2 users, 1 company)
- Sage 50c Premium – from £60 per month (1 or 2 users, up to 2 companies)
- Sage 50c Professional – from £125 per month (1 or 20 users, up to unlimited companies)
Xero is a cloud-based accounting software solution aimed at small and growing businesses, with over 250,000 users in the UK. It can be accessed from any number of devices provided that there is an active internet connection. Xero uses a double entry accounting framework and cash flow and can handle all budgeting, accounting and payroll functions. Transactions and account details can be viewed from any location and bank transactions are automatically imported and coded. It also allows online bill payments, personal expense management, unlimited user support and integration with over 500 systems (via its add-on marketplace).
Xero’s pricing comes in a lot cheaper than the other packages in our list, with their starter package just £10 per month. This does limit you to 5 invoices and 20 bank reconciliations per month, which is perfect for freelancers and contractors but probably not suitable for small businesses who may require the standard or premium packages (the latter of which can handle multiple currencies).
One of Xero’s selling points is its flexibility when it comes to additional users, which can be added to expenses, payroll or projects for around £2.50 to £5 per month per user.
- Xero Starter – £10 per month but has monthly limits and no payroll.
- Xero Standard – £22 per month and provides unlimited billing/invoice functionality, transaction reconciliations, free payroll for five employees and bills.
- Xero Premium – £27.50 per month and is essentially the same as Standard but offers multiple currency support on top.
QuickBooks is another well-known accounting software provider that has been around for a very long time like Sage. As such it has both desktop and online versions. As with a number of other accounting tools, Quickbooks offers an attractive dashboard showing key data such as income, expenses and P&L across all their packages.
Quickbooks offers ample reports as well as customisable invoicing, inventory management, payroll support and over 400 integrations. The software is automatically updated on a regular basis and recently introduced a project management feature that has proved very popular.
As with Xero, QuickBooks has a ton of bolt-on apps that bring more functionality. These include inventory management, Shopify integration, job scheduling, CRM amongst many others. The downside is that these can quickly become expensive (some bolt-ons cost more than QuickBooks itself).
Essentials and business plus packages allow you to calculate and file VAT returns,with the latter also allowing you to create budgets & purchase orders and manage stock. None of QuickBooks’ packages include payroll, which has to be bolted on separately.
- Self-Employed– £3 first six months and then £6 per month thereafter
- Essentials – £7.50 first six months and then £15 per month thereafter
- Business Plus – £15 first six months and then £25 per month thereafter
Founded in 2005, KashFlow has won several awards including Best SME Accounting and Finance and Best Small Business Accounting Software. Currently, there are over 50,000 businesses in the UK using KashFlow.
KashFlow’s mobile app is targeted at traders and small business owners and is available on Android and iOS. It gives a financial overview and allows the creation and sending of quotes and invoices. The software directly links to HMRC and integrates with leading online payment processors including GoCardless and Worldpay.
The basic package is limited to one user and 10 invoices and 25 bank transactions but comes with the ability to create unlimited quotes. An auto enrollment module can also be added to the Business and Payroll package.
- Basic package- £7 per month
- Business – £14 per month
- Business and Payroll – £19 per month