Tag Archives: limited company

FreeAgent Online Accounting Software Review

FreeAgent LogoFreeAgent (www.freeagent.com) is an online accounting solution for limited companies, partnerships, or sole traders, which is used by over 35,000 freelancers and small businesses. The software lets you keep on top of expenses, payroll, time tracking, estimates and invoices. You can also keep track of your businesses cashflow and project profitability, and check to see who owes you money. You can also see what your current tax situation is, and file VAT, RTI (Real Time Information) and Self Assessment returns directly to HMRC.

 

Features

Estimates (Quotes, Proposals)
The software lets you create estimates for potential work. The estimates can be combined to form a single invoice if necessary, they can be printed or emailed directly to clients. Multiple currencies and languages are supported.

Time Tracking
FreeAgent enables you to log timeslips for work done on active projects, and to switch between weeks and months so that you can see where your time is going. On project completion, you can generate an invoice for unbilled time and send this to the client. The software also lets you generate timesheets that can be printed or emailed to clients.

Invoices
Create professional invoices and emailed them to clients. You can also create recurring invoices. The software enables you to keep track of outstanding invoices and to send late payment reminders where necessary.

Part of the FreeAgent Add New Invoice page

Part of the FreeAgent Add New Invoice page

Expenses
The overview screen lets you view a list of your recent expenses, and to add a new one instantly. Where you have expenses that are repeated on a monthly basis, for example, you can set these up to automatically recur.

Banking
You can automatically import bank transactions or complete bank statements into the software, and reconcile invoices and bills with transactions made in FreeAgent. You can even import transaction data from PayPal.

Accounting
FreeAgent gives you access to monthly and quarterly accounting reports, providing you with a clear picture of your profit and loss at any time and helping you to track revenue and spending. To help you work more effectively with your accountant, you can give them access to your FreeAgent account. This will allow your accountant to provide you with advice throughout the financial year and not just at year end when they are producing your company accounts. The software is also able to produce a complete balance sheet for your business. For limited companies, FreeAgent keeps track of company profit from both the current year and previous years, ensuring that any dividends you take are legal.

Taxes
FreeAgent can work out your tax situation from both a personal and business perspective. The tax timeline tells you how much tax you have to pay and when you have to pay it. You can export the dates from the timeline to calendar software such as Google Calendar. The software can also work out all the figures for your quarterly VAT Returns, and is able to handle both invoice accounting and cash accounting, as well as the VAT Flat Rate Scheme. If you are a limited company, FreeAgent can also calculate how much corporation tax your business owes.

Secure, Web-Based Accounting
FreeAgent is a cloud (web-based) accounting solution that uses secure 256-bit SSL technology to encrypt all transactions between you and the FreeAgent servers. You can access your account from any web-enabled device that supports a web browser, for example, a PC, laptop, tablet, or mobile phone.

 

Free Trial

A 30 day free trial of the software is available. Although the initial setup is straightforward (I selected the limited company option), it does prompt you to enter a lot of details that you probably don’t want to at this early stage (bank account details, VAT registration number, etc). After all, you’re just trying out the software. Of course, you can just enter dummy data to get yourself up and running – which is what I did. You can update these settings later if you want to using the Settings menu bar option.

As with all software applications, it takes a bit of time to find your way around the software, but I have to say that the navigation in FreeAgent is easy to follow. It also has a Quick Links drop down list at the right of the screen that contains the most common tasks, such as, creating an invoice and adding a new expense.

Pricing

Three pricing models are available:

  • Sole Trader (£15+VAT per month)
  • Partnerships/LLP (£20+VAT per month)
  • Limited Company (£25+VAT per month)

If you pay for 12 months up front though, you can get two months for free, meaning that for the limited company option the price would work out at just under £21+VAT per month. Although slightly more expensive, this is similar to KashFlow and Clear Books.

Conclusion

I particularly like the fact that you can choose the accounting software that suits your particular company structure, for example, if you’re an IT contractor working through your own limited company, you choose the limited company solution, whereas if you’re a sole trader, you choose the sole trader solution. This makes everything tidier, when it comes to the functionality that is provided. You can also choose an account based on US company structures … nice!

FreeAgent is aimed at very small businesses that have just a few people. It offers plenty of functionality – probably as much as most one- or two-person enterprises would require. It doesn’t seem to handle stock control though, so it assumes that your business is a service-based one.

Other Accounting Software Reviews

You might also be interested in reading the following review(s):

Clear Books

KashFlow

Xero

All Accounting / Bookkeeping Software Reviews

Will IR35 Ever Be Abolished?

IR35Ever since its announcement in the 1999 budget by the then Chancellor of the Exchequer, Gordon Brown, IR35 has been a thorn in the side of anyone choosing to work through their own limited (Ltd) company. But now, in 2013, its abolition seems further away than ever – so will it ever be abolished?

Of course, that’s an impossible question to answer – if I could answer it with absolute certainty then that would require me being able to see into the future, which I can’t. However, we can look at what has happened with regard to IR35 over the past 13 years or so, and where the legislation is today, to at least make an informed opinion of how things might develop with regard to IR35 over the coming years.

As an IT contractor I have been interested in IR35 ever since I first heard about it in 2000. I was working in France at the time and was thinking about coming back to the UK. One of my fellow contractors at the time said to me that I should reconsider because the UK government had just introduced something that meant that contractors suddenly had to start paying a lot more tax than they used to. I brushed off her comments though, thinking that surely ‘this thing’ couldn’t be all that bad … how wrong I was!

I returned to the UK in December 2000, and started a new contract in January 2001. My accountant at the time advised me to start paying IR35 taxes because, in his opinion, I was ‘caught’ by the legislation. This of course, has always been one of the main problems with IR35 – it is down to someone’s opinion as to whether one is caught or not. So, anyway, I started paying the additional tax and National Insurance (NI) that working within IR35 demanded … and oh boy … how painful was that!

Have effectively ignored the advice I was given by a fellow contractor whilst still in France, I was now paying the price for that ignorance … in cold, hard cash. IR35 had got my attention!

One of the arguments in favour of IR35 when it was announced and subsequently introduced was that a contractor (working through his/her own limited company) earning, say, £100,000 per year should pay the same amount of tax and NI as a ‘normal’ employee of a company earning the same amount. However, this turned out to be not quite true, primarily because of the Employers NI that you have to pay if you are paying yourself through your own company, as well as the accountancy and insurance fees that you have to pay as a contractor, which mean that you end up paying more than you do as an employee of someone else’s company. OK, there is the 5% allowance that you get as a contractor, which is supposed to make things ‘fair’, but it doesn’t go anywhere near far enough (in my opinion).

In the previous sentence I mentioned the word ‘fair’, which is a word that has real significance when discussing IR35. Is the additional financial burden that IR35 puts on those that are caught by it, fair? If you are a tax inspector or the Chancellor of the Exchequer you would probably say ‘yes’, but if you are a contractor paying additional taxes you would probably say ‘no’ … it’s all a matter of opinion.

So Where Are We Now?

So, in November 2013, what is the current state of play? IR35 has had a long time to mature now, so are things any better or clearer than they were, say, ten years ago? From a contractor’s perspective I would have to say ‘no’. The threat of an IR35-related investigation from HMRC is something that contractors have had to learn to live with. There have, over the years, been various glimmers of hope that IR35 would be abolished, but ultimately it’s still there on the statute books.

So have there been any winners? Yes, loads of them. A whole industry has grown up on the back of IR35 – from tax advisers to companies selling text insurance – a lot of people have made a lot of money out of IR35. How much actual tax revenue has been raised by HMRC is debatable, but it certainly doesn’t look as though IR35 will be going away anytime soon.

For many years, the Liberal Democrats and the Conservatives expressed their disapproval of IR35 and at times have stated that the legislation would be abolished if they (either of them) ever came to power. Well, as we all know, in 2010, the new UK government was formed by a coalition of the Conservatives and the Lib Dems. For many contractors, this was what we had been waiting for for years – surely this would signal the end of IR35? … but alas, that was not to be.

Pay More TaxThe coalition did carry out a review of IR35, but the outcome was the disappointing decision (again, from a contractor’s point of view) that the legislation should stay in place. George Osborne – the Chancellor of the Exchequer – stated that to abolish IR35 would effectively open the floodgates to incorporation, with loads of new limited companies being set up simply to reduce tax bills. IR35 would, therefore, stay in place as a deterrent and thus maintain tax revenues at least at their current levels. I imagine that for the industry that has grown up around IR35, this was a good outcome, although no-one from that industry would ever admit that.

So What Does the Future Hold?

This, of course, is a tricky one and is down to pure speculation – my opinion is no better or worse than anyone else’s. Personally, I think that IR35 is here to stay – all of the three major political parties in the UK have had a chance to get rid of the legislation, or at least influence its survival, and it is still well and truly with us. I can’t see any advantage to any political party in abolishing IR35 anymore.

Here comes the tax manSo where will we be in, say, 20 years’ time? I think the industry that surrounds IR35 will still be around, making huge sums of money from it. I think that some contractors will play it safe and pay IR35 taxes, and some will endeavour to avoid paying the taxes and potentially build up a large tax liability – as is the case today. At the end of the day, it’s all down to probability as to whether you will be investigated or not, and whether or not you will end up paying out a big lump of tax as a result. As a contractor you have to weigh up the odds and make a decision as to whether or not you will bow down and accept the legislation that was introduced by Gordon Brown all those years ago.