Free Accounting Software for Small Businesses in the UK

This ideal for a fairly small and simple business. maybe perhaps a small side hustle where you are testing out a product or service or an idea and want to know exactly how much you have spent and how much you made then this is ideal.

When you have just started a business and are still getting to grips with running it then it might be easier to not jump straight into using an accounting software that will cost money and also some time to set up and learn to use. Hopefully your business will soon become well established and you will be making some income, when that has happens, then it will be time to invest in an accounting software like QuickBooks, Clear books or Xero. These dedicated accounting software for small businesses will make your bookkeeping and accounting even easier and will handle all the taxes such as VAT for you easily. They will also meet the requirement by HMRC to file all taxes digitally using recognised and approved softwares.

But for now, the one free way of doing your bookkeeping Is to use excel. This comes as part of the Office 365. So if you use Word, PowerPoint etc then you will have Excel.

So you need to create the a way of capturing all your expenses and income so you can know how much you have spent, how much is coming in and what your profit is.

On a blank Excel sheet create you need 5 tabs as named and shown below:

• Business Details

• Bank Transactions

• Chart of accounts

• Transactions

• Income statement

On the Business details tab you put your business name, the month you started the business or if this is not your first year in business put the accounting period start date. Also include your end date which will usually be 12 months. But it does not have to be. If this is a test project and you are only testing for 3 or 6 months then that will be your accounting period. Example below.

Then you need to create a Bank Transactions Tab. This will be useful if you have a dedicated bank account for your business. Downloading all the bank transactions into this tab will mean that you can link this tab to the transactions tab saving you having to manually enter data reducing errors.

The 3rd tab will be your chart of accounts and will detail your sources of revenue and what your expenses. For example, if you sell on Shopify then that can be a revenue and you can set it up like below.

Or you can list this by specific products

The 4th tab is the transactions tab that pull all the transactions from your business into one place and help you categorise them. All the category name will pull from the data you entered in the on the chart of accounts tab like below.

Then you have the 5th and final tab where it all comes together and all see all your income and expense s and your profit at the bottom of the page.

The imgae below shows the bottom of the income statement where you will be able to see your profit or loss for the period you are looking at

So all the above steps show you how you can set up a simple excel template in less than a day that you can use as a new business without the monthly costs of an accounting software. Or you could even save yourself more time by downloading for a free a ready set up template that you can start to use right away.