Following last week's article on taxes, I decided to help you take the next step towards becoming more tax-savvy!
The key to staying on top of bookkeeping and being able to have up-to-date records ready for your accounting system.
You can do it all on a spreadsheet, but you'll still have to enter all the data manually, then when the day comes, do the Math yourself.
When you have the budget, the best thing to do is to leave it to the professionals. In that case, you need to make sure you have all the paperwork and hand it over to your accountant or bookkeeper, and they'll do the rest.
A third option is a semi-automated solution. You can register with a software or app to do the heavy lifting for you, aka the Math and the repetitive tasks. All you need to do is to make sure you set up your account correctly and keep adding your expenses, invoices and receipts.
Check out the following five options and choose the one that fits your business model, needs and goals the best. From a practical point, all UK sole traders and small businesses may be required to join the Making Tax Digital scheme very soon, according to HMRC. VAT-registered companies already have to do it, so we will showcase free apps that are great for personal trainers who are just starting, but also a few paid solutions that comply with the MTD scheme.
GnuCash is an open-source software that has been around for decades. It's free to use! The platform's design is not the prettiest, but the fact it's available offline makes it an excellent solution for those that are not keen on sharing their data to the cloud.
The three most useful features, among others, are: - Chequebook-style register - A range of customisable reports; Profit & Loss, Balance Sheet, etc - Invoicing and Payroll options
It may take time getting used to the surface, but there are plenty of online tutorials and documentation available to help you out.
Wave is probably the most popular free accounting app used by entrepreneurs. The platform is super user-friendly, which explains why it became the leading free software in its category.
It provides a solution for Accounting, Payments, Invoicing and Receipts all in one. The dashboard gives an overview of the most crucial data of your accounts, including upcoming deadlines, due invoices, insights into your balance plus extra recommendations for action like reminders to email clients.
Wave is ideal for sole traders and smaller fitness ventures, it has its limitations when it comes to medium and bigger size businesses. The basic features are included in the free subscription, but if you want to use it for payroll, take payments online or have web-chat support, you'll need to pay for them.
The first paid app we'll review here is FreeAgent. If you need a cloud-based accounting app that was designed with freelancers in mind, you found it. You can use it for tasks like expense management, invoicing and even time tracking.
Their lowest tier fee is £19/month for sole traders, but you only pay half of that for the first six months. They claimed to provide award-winning support by UK-based accountants when you need directions. You don't need to enter into a contract in case you change your mind, and you can have as many clients, invoices and projects as you want with no extra fee. You can try the software for free for 30 days too.
Another HMRC Make Tax Digital-ready accounting solution is QuickBooks. If you need a solution for your VAT-registered fitness business, QuickBooks is encouraged by authorities and accountants as well. Not to mention that the pricing is very budget-friendly.
If you only need it for self-assessment, the monthly fee is £4 per month for the first six months; then you'll pay £8/month. You can also try it for free for a month before signing up. Those that need VAT services can start from as little as £6 for the first six months and then pay £12/month.
They have an app and expense management is made super easy: snap a picture of the receipt, add it to your profile and QuickBooks will sort it out.
Another big player in UK accounting software is Xero. Their solution is also ready, so you can submit VAT to HMRC for Making Tax Digital.
Their Starter package costs £5 for the first six months; then you pay £10/month from thereon. However, if you need to handle over five invoices and bills or record over 20 bank transactions, you'll need to upgrade. You are though able to submit your VAT even in the smallest tier.
You can add optional extras to each package: payroll, expenses, projects and CIS Contractor.
I recommend you assess precisely what you need when it comes to accounting and bookkeeping, then check out the above online solutions and decide which is best, based on that assessment.
For instance, you may not need to think of VAT just yet, but if your business goals include going beyond the VAT threshold, you may want to consider a software that will be ready for it when the time comes.