Best free accounting software for small businesses in 2020

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FreeAgent screengrab (best free accounting software)

  • Powerful cloud-based accounting software with a huge range of features
  • Free for Natwest/Royal Bank of Scotland (RBS) business banking customers
  • Dedicated phone and email assistance from UK-based support accountants
  • Cloud-based – works on web browser, mobile and tablet

What is FreeAgent?

Set up in 2007, FreeAgent is now used by over 90,000 small businesses across the UK, who use it to keep track of their finances, expenses, invoices, estimates, and more. It boasts some great advanced features, like automatically generated VAT returns, corporation tax forecasts, and self-assessment tools that automatically fill in up to 90% of the self employment tax return form. It has also won awards (it was named the Small Business Accounting Software of the Year at the 2018 Accounting Excellence Awards, for example), and has an average rating of 4.7 out of 5 (from nearly 1,000 reviews) on Trustpilot.

For most users, though, all this comes at a cost (see the “why is FreeAgent free” section for full details). The reason FreeAgent is being discussed here is that it was bought by RBS in March 2018 for £53m, and it is now being offered for free to RBS/Natwest business banking customers.

This equates to a saving of at least £150 a year, and so is very tempting for small business owners. However, the small print makes it clear that taking up this option means your bank will be able to see exactly what’s going on with your accounts, so carefully consider whether you want to give them access to your detailed financial data in return.

What can FreeAgent do?

FreeAgent’s huge range of features includes:

  • Tools to create and send professional estimates and invoices
  • Time tracking tools so you can easily create smart timesheets
  • Powerful HMRC integration that makes doing your tax return a doddle
  • Automatic creation of VAT returns
  • Corporation tax forecasting
  • A dashboard that lets you easily monitor your cash flow
  • Automatic importation of bank transactions
  • A projects view that clearly shows the income, time, and expenses associated with each project, and whether it’s making a profit or loss
  • A fully featured mobile app that allows you to snap receipts, create invoices, track time, manage payments, and see your accounts on the go

Why is FreeAgent free?

As stated above, FreeAgent is only free for RBS/Natwest business banking customers.

For everyone else, the standard pricing is as follows:

  • Sole trader – £19+VAT per month – includes self-assessment filing tool
  • Partnership/LLP – £24+VAT per month – includes profit share calculation tool
  • Limited company – £29+VAT per month – includes self-assessment filing, dividend vouchers, and corporation tax forecasting tools

All plans have a 30-day free trial.

If you are an RBS/Natwest business banking customer, then you can get FreeAgent for free. However, remember that you are giving up something valuable in exchange – your financial data. Quite what your bank intends to do with this is not yet clear, but make sure you consider how this might affect you before signing up, and discuss this decision with your accountant if you have one.

What support does FreeAgent offer?

FreeAgent offers excellent customer service, with help available from UK-based support accountants via phone and email during business hours (9am-5pm Monday to Friday). The website also has lots of resources that explain things like expenses, invoices, and VAT filing.

FreeAgent Verdict

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