In Search of a Small Biz Accounting Program

I don’t know how other people manage their personal finances, but this problem was solved for me around the dotcom crash on buying Quicken. Most people seem to think of their personal finances in terms of a single number, the amount of money they have at any time, usually the end of the month 😉 This seems to be the principles behind consumer budgeting tools like this, often advocated on the debt boards of moneysaving expert. This gives a snapshot in time, like a single frame from a movie. It’s bizarre to me that this is useful at all – either my personal finances are furiously complicated, or other people’s are one-dimensional.

I found it a lot better to look back on the expenses and income as a function of time, and Quicken lets me look back over the year. Just like a share price graph, if the trend is up its my friend, if it’s going down there should either be a reason for it or some action needs to be taken.

I also used it for my multimedia company, and there it helped with cashflow – by entering future costs, estimated future costs and estimated future revenues it told me how I would be getting on in future. Like any budgeting tool it is only as good as you are honest with your predictions.

Unfortunately Intuit quit the UK market a few years ago, and the obvious competition, Microsoft Money, also scarpered. However, Quicken remains serviceable for the moment.

Looking for a decent small-biz accounting program

It so happens that I’m looking for a program to do this job for a small company/future enterprise. I am not trained in book-keeping, but I used Quicken happily to manage my previous accounts and VAT returns, and it did the job and my company accountant seemed happy enough with the results to be able to draft the statutory accounts and HMRC jazz.

It doesn’t feel good to be using a 10-year old software package to do this job, since future versions of Windows may no longer run older code. I’ve got away with it so far. So I looked at the field, accounting software tends to be country specific because taxation varies greatly between countries. In the UK there seems to be Sage 50 which is £700 and up, QuickBooks which is £100 and upwards or a monthly rental/online of £10 which is even more expensive and doesn’t do VAT which is probably an issue, and a motley crew of wannabees and also-rans bringing up the rear around the £100-200 mark.

From my experience with Quicken I’d tend to favour QuickBooks, but the feedback on AccountingWeb seems to be that Intuit’s support makes people snarl and grizzle so maybe not. OTOH the Ermine is of the opinion that by the time things are so hosed that it ever seems a good idea to ring the manufacturer about a software problem the fight is lost. Software is sold like a used car – as seen and without any warranty express or implied.

Then we have the new kids on the block – cloud accounting software, with KashFlow, Xero, and FreeAgent. All these rough out at about £20 a month. Now I know they say that there’s no point in trying to sell anything new to anyone who’s over 40, but really, all your financial information processed and stored online? What on earth could go wrong 😉

At least I can still use Quicken even though it’s been abandoned by the supplier in the UK. To still be using a cloud SaaS after a similar amount of time  I’d have been paying ten years’ worth of usage fees (£2400!), and of course I would be relying on the company to still be actively supporting the application. No, thank you very much.

Quicken tried software rental with QuickenXG for home users in 2003. The UK market correctly interpeted this as price gouging, and rejected the product, so Quicken retired from the UK market in a huff.

What do I want accounting software to do for me?

Accounting software does two things. One is making sure that all the figures add up. In a company of more than one person, there is room for both human error and fraud, and it’s the job of the software to minimise the former and make the latter harder to do and more traceable if it happens. Most of the statutory requirements are all about making sure the figures add up and are stated accurately, as the tagline for Companies House says, ‘for the record’

Most small business owners need accounting software so they can afford to pay their accountants. You need an accountant for statutory compliance if you are a limited company, though not as a sole trader I believe. Hit him with the shoebox full of receipts and you’ll pay for his expensive time to enter it all and reconcile, give him a data file and the bank statements and receipts and it makes the whole process work easier and cheaper.

That’s not what I want it for. I want it to set strategic direction, and to be able to see the cashflow enemy up ahead. It’s the finance director’s flight instrumentation panel, and it puzzles me why SMEs often outsource this book-keeping function. You shouldn’t be in business if you can’t achieve about a 5% return on capital employed (ROCE) or more in the long run. Just like Quicken in my personal finances, with my previous company it allowed me to see how much cost is going into something. No ifs or buts. I’ve seen entrepreneurs flog themselves in business not really making much money at all. They’ve lost sight of their ROCE, or got so emotionally hung up on the business that they haven’t observed the slow changes that rust away at the fundamentals of a once-sound business case from years ago.

An ex-bank manager related the cautionary tale of a one-man truck driver. He expanded, taking on more staff and trucks. In the end this guy was run ragged staying on top of all this, but he as basically only making the same amount of money as when he was a one-man band.

Running a working business needs continual calls on ‘is this worth doing or not?’ Not everything gives a tangible ROCE but you ought to know why you are doing something, particularly if it isn’t making money. Of course one of the things that makes running a business hard are that there are all sorts of transactional costs, that raise the cost of changing direction. It is sometimes rational to carry on a line of business even if it isn’t profitable, if the cost of shutting it down and restarting it are high (sacking and rehiring staff, etc), but it’s a hard call to make, as it is hedged all around by known unknowns and risks.

The trouble is most accounting software seems designed to do the compliance thing once a year. The cloud services do a slightly better job that I can see of allowing you to report and graph costs and revenues by item, but all of them look like a damned expensive way of doing the sort of thing that Quicken does for my personal finances. For instance if I want to know what I spend on my car then Quicken give me this

Quicken car costs graph

Tells me pretty much everything I need to know, including that the spikes showing the parasitic costs of owning a car (tax, insurance, servicing) cost me more than the fuel. Quicken will also spit out a report itemising these lines if necessary. What’s not to like? Why can’t accounting software just do that for me, as Quicken did for my multimedia company 10 years ago?

Is there something I am missing about book-keeping/accountancy?

After you’ve been working in companies for thirty years, you get to pick up some of the general principles they used for financial management. I’ve been lucky enough to work in a small company of about ten strong, as well as in bigger organisations. You see more of the guts in a small company, though I was a cocky upstart at the time. Nevertheless, I’ve never learned anything formally about accounting. I’d assumed that a decent knowledge of the Micawber principle, and something that would give me a time display of costs and revenues would be enough.

So I got myself onto AAT skillcheck and had a bash to establish what my level of knowledge was.  I flunked double-entry bookkeeping and sucked at financial transactions:

Double entry bookkeeping FAIL

so it’s possible that there’s something I don’t understand about what accounting software is trying to do that is giving me a hard time here. I managed to up my IT skills score to green on the second go, but the right hand two remained resolutely amber and red, so there’s obviously something about this accounting malarkey that’s outside my ken. Maybe that’s why I can’t find accounting software that tells me what I want to know, because I can’t speak the lingo.

Taking an AAT course isn’t the answer, however, due to the stupendous price of even distance learning. It is interesting to observe that Level2 is in fact the entry level (there are no level 1 courses I could see). So I am at O level rank neophyte level with bookkeeping.

Somewhere something isn’t right here. There seems to be a massive focus on making the numbers add up and compliance, whereas I want a speed and heading indicator. I’ve never had trouble making the numbers add up with Quicken. It’s also hard to believe that after running my own company and working in others for three decades that I could have blissfully sailed past something fundamentally essential in small business finance, but that’s the feedback I’m getting.

So maybe I should wing it with Quicken or GnuCash, which can deliver the strategic direction part for me, and outsource the accounting as before. My accountant 6 years ago was about £150 ex VAT ech year, probably up to £250 these days. He headed me off doing things with would have been dippy from a tax viewpoint and when you look at the price of accounting software, which seems to be regularly updated at a cost then the benefits of learning how to do this job myself start to look marginal. I clearly know jack all about double-entry bookkeeping.

From this review of GnuCash that might help me learn, at least. It appears that some of the features of Quicken actied like stabiliser wheels on a kid’s bike. I didn’t come unstuck, but I never learned how to do it right, either.

The Cast of Characters – List of UK Personal Finance and Accounting programs

Since I had to suffer the pain of doing this research it might do somebody else some good 🙂 Here’s a list of the obvious contenders, marshalled into rough categories. There is a vendor lock-in and data longevity strategic issue with using proprietary solutions with proprietary formats, so Open Source versions are marked with a *

Small Business Accounting – desktop/installed standalone software

  • Sage seems to be the 900 pound gorilla in this space. Lots of people really hate Sage, though I guess lots of people really hate Microsoft, so it’s one of those scale things…
  • QuickBooks – sort of 600-pound gorilla…

those two are the big ones in the UK by the looks of it. All the rest bring up the rear

Web-Based – Cloud (All Your Data Are Belong to Us)

If you’re going to build your business on this you better hope that cloud biz accounting software providers are more stable that personal finance coud providers in the UK, see rant below. If a finance director of my firm advocated this solution and the provider went down I’d fire them for culpable incompetence.

Managing money is deeply embedded into any company structure, and part of why I am mulling this over so much is once you’ve set direction, changing it over is not going to be any fun at all. You can replace the foundations of a structure without dismantling it, but it ain’t easy to do compared to getting it right from the off!

Personal Finance Management


  • MS Money – deceased. This is living proof why you should never trust commercial software for strategic long-term requirements.
  • Quicken UK – deceased. More living proof why you should never trust commercial software for strategic long-term requirements, though note at least Quicken remains serviceable in 2012 🙂
  • *GnuCash
  • Accountz
  • Moneydance (see comments for user experience)
  • BankTree

Web-Based – Cloud (All Your Data Are Belong To Us)

I don’t understand how anybody would even entertain this. Maybe it’s just a generational thing, but you put an awful lot of effort into the data entry of things like this. The software vendor owns your balls. Wanna see your data – you pay them what it takes. This is a classic setup for vendor lock-in.

Clearly many other people are a lot more relaxed than I am about this. So good luck to y’all, but don’t blame me if you get price ramped later on! Something that should scare you is to read MS Money is Dead – Five Alternative Programs to keep Track of your Cash from CNet UK from June 2009 (only three years ago), and then observe that the first online service, Wesabe, has gone to a dis, the second online service, Yodlee, looks as American as apple pie and may not handle UK punters any more, the third online recommendation, Expensr, is no more and is now MoneyStrands. So that’s a 100% fail or metamorphosis into something else in three years. Do you feel lucky, punk?

Money Strands

I didn’t find anybody else that would deal with Brits, if you’re American than the obvious choice seems to be Mint, which is owned by Intuit, makers of Quicken and QuickBooks.

If I get to hear about other programs SaaS  providers I’ll edit this.

17 thoughts on “In Search of a Small Biz Accounting Program”

  1. Do the cloud-based SaaS options do not enable you to export your data? I’d be surprised if not. Suppose you then need to pick through it, though.

    I looked a few of them when I left my co-founded start-up and went it alone again a few years ago. I thought they looked great. But as you allude, as someone who is still under 40, I pretty much live in the cloud these days! In contrast, I’d hate to have all my data on some lumpen PC in my living room.

    As it turned out, I ended up doing all my books in Excel, however, just as I had as a sole trader many years before. It’s quick simple once you set it up properly.

    Surely an inveterate tinkerer like you could create your own bespoke spreadsheet system? There are probably templates online…


  2. Depending on what you want, building an Excel sheet might be the answer if you want it for personal finance rather than accounting per say. That said accounting for tax might be a right old nightmare, which is presumably why such software is so hard to find. The analysis for my population sustainability post was all done from Excel so you can take it pretty far if you know what you want to achieve with it. Just depends how much you require of it and how complicated its going to be. From a budgeting perspective, analysing things like car costs, however, it would be a piece of cake.


  3. I am a (grudgingly) GNUCash user. More precisely, DW is a GNUCash user. I mostly watch in the background and provide irritating comments :-|.
    While there are many things that I would like GNUcash to do/look and provide better, it is the (only) thing in the market — and it is free. Beggars, etc.

    The gripes you have are the gripes I have about GNUCash/accounting packages too. Trying to tinker with Excel for a while now to provide me with aah.., “speed and direction” as you puts it.

    Still tinkering with the Excel ideas, FWIW.

    Like you, I would rather poke my eye out than put my data into the cloud, and I am in my mid-30s, BTW. May not be a generational thing after all.


  4. > Unfortunately Intuit quit the UK market a few years ago

    And they are in the Indian market now, aggressively peddling a “cloud” version of their money manager. Their tagline. They have offices in India, so they are into “long term”. Naahhh.. not buying it.


  5. @Monevator You cloud-living Digital Native 😉 It is theoretically possible to hook the data out of KashFlow using the API, and yes, as a ex-programmer I could do that. But it’s nasty, and due to the double-entry facilities I would be surprised if the database were normalised. It’ll have the same information in both the creditit and debit accounts, and stitching that sort of data together isn’t going to be fun.

    Excel works/worked for me for a lot of what-if and all the retirement calculations. Where it falls down horrendously is an Excel spreadsheet can only serve one master. It’s possible other people will need to enter information, and indeed I can’t make head or tail of DW’s current spreadsheet. In a previous life running a small enterprise with a xGF I wrote an application running on Access which did that job, enabling me to extract information from the back-end without buggering up the order & customer management front end.

    However, all these were stressful to maintain – a lot of work in changing from Access 97 to 2000 when MS deprecated the Jet database engine.

    The aim of retirement is that I want to be able to take a couple of weeks or a month out and go to Central European forests and record birdsong. Or look into the middle distance and drink beer in Munich 🙂 So anything that depends on me to maintain is a service liability I’m keen to avoid.

    I can’t help feeling there’s either something I’m missing or something everyone else is. Using basic PF tools I could get the information of line profitability and loss, and budgeting/forecasting estimates. This kind of thing seems the devil’s own job to win from accounting software.

    @Rob Excel gets out of hand when trying to track VAT, particularly in anything food-related, because your input costs are VAT-able but your outputs are often VAT-free. However, some outputs (training courses etc) wouldn’t be.

    Excel is also great for a sole trader, but very hazardous in the hands of other people. Your spreadsheet design often embodies part of your world-view. Even in my Quicken model Loans are a credit line to my net worth, because this is a loan from me to others and therefore an asset. Most people come from the viewpoint that loans are a liability, I had to fight the system to get this how I wanted 😉

    So if I set up a model as the proprietor I could cause untold grief and head-scratching. At least a model designed independently would be consistent.

    You’re right that for a PF angle Excel would be fine, most people have one or two income streams and everything else is some form of cost centre. However, in a business you have a lot more crossing streams of money flow to juggle. I wouldn’t like to run a business on Excel unless it had only a small number of money flows. You get that in firms selling intellectual property like my multimedia firm, but not with something selling real stuff. Even running a newsagent would be challenging with Excel IMO.


  6. @Surio – that’s interesting – I’ve never met anyone who’s actually used GnuCash.

    Some of the gripes about GC seem to be that is uses a double-entry accounting method under the hood. Perhaps there is an inherent problem there, in that double-entry book-keeping is inherently contrary to speed of reporting, and using classes/sub-classes to get a feel of where thigns are going.

    For instance, with Car category in Quicken, I have sub-classes for fuel, insurance, road tax, servicing. It is possible that the double-entry model would force all of these to be accounts in their own right, and there would nto be a way to collectively summarise these as car costs.

    I may try and run GC and see if this is the case, your observation that it doesn’t provide the instrumentation I want may save me banging my head agaist a brick wall any further 😉


  7. Whilst I think that Excel (or better, OpenOffice Calc) is fine for personal finances, I can see why a small business would need something more. I think you could waste a lot of time fiddling around with macros and linked spreadsheets trying to get the information in the form that you want.

    I am sorry I have no recommendations to make except to counsel avoidance of cloud services unless you have a reliable, simple and local readable export format.

    The business case for the cloud revolves around minimising awkward things like capex and worse, employees; neither of which, I imagine, applies to you.


  8. Rather than lurking I thought I might actually comment for a change.

    I use GNUCash for tracking my stock portfolio only. I did try to use it for tracking all personal finance but it became just too much hard work to maintain/update the various accounts (personal current act, joint account, credit card etc.). There really is a gap in the market for personal finance software that 1> Can actually do a good job of it. 2> Is easy to use. 3> Provides robust integration with providers.

    As for managing company accounts, dare I say I’ve ventured into the Cloud and am currently using the solution. It gets the job done for me and means I need spend only 30 mins a month on accounting. Invoicing is easy, it syncs with company bank accounts nicely and the balance sheet/Profit and Loss report make the filing of company accounts straightforward.


  9. You might want to add “Ledger” to your list of accounting programs:

    To quote from the manual: “Ledger is an accounting tool with the moxie to exist. It provides no bells or whistles, and returns the user to the days before user interfaces were even a twinkling in their father’s CRT. What it does offer is a double-entry accounting journal with all the flexibility and muscle of its modern day cousins, without any of the fat. Think of it as the Bran Muffin of accounting tools.”

    It’s a free open source project so no need to worry about the company going bust. I use it to track my personal finances and am very happy with it.

    The docs are also very good and may help you improve those double entry accounting skills 🙂


  10. I use GnuCash for all my personal/household finances.

    It will do what you want with sub-accounts: yes, I have a ‘Car’ account which is a sub-account of ‘Expenses’, and further sub-accounts of ‘Car’ for Insurance, Petrol, etc. The graphing interface is not the most intuitive, but as flexible as you want; doing a chart of payments out of Car + all sub-accounts, over time, is easy.

    I found GnuCash – or at least double-entry accounting – to have a steep learning curve.
    But most of my spending is regular and now I’ve automated all that, it does most of the hard work for me.


  11. Another accounting application, for Mac, Windows and Linux is Moneydance: I’ve been using it for years so can’t really view it objectively any more, or compare it to any alternatives. But it seems to do most things for me and the folks behind it seem alright. Some of it is slightly too US-centric though, and it’s more of a personal finance tool rather than for companies.

    For what it’s worth, people I know who use Xero really love it, which isn’t a sentiment you hear often about finance software in my experience.


  12. @All – wow, thanks for all the help with this one! Looks like GnuCash could address the issues of using a legacy program, which loos good so I’ll experiment with that. Current users are always a relief with something like that.

    The company will have to be a limited company anyway so I’ll leave the DE bookkeeping to the end of year accounts, since there seems something in that which knackers the reporting and estimating function I actually need. And I still fear the Cloud 😉


  13. I used FreeAgent last year to keep the accounts for a small limited company. It is very good at what it does, its organisation is intutive and seems quite robust–and its VAT handling is very slick indeed. But £20 a month still feels steep.


  14. Hi

    I am currently looking into accounting softwares. I am uncertain in which country I will be setting up thus I would like to find out whether accounting software is country specific. For example I read that Sage does VAT reutnrs etc for HMRC which is UK specific. Can you offer any insights?



  15. @Miklos if you will be using the software for business accounting involving sales to consumers then it needs to handle multi-tiered VAT taxes in the UK.

    If you’re just looking to set up as a professional services contractor like a software developer then VAT doesn’t have to apply or if it does (because you will be buying in a lot of equipment and your customer can reclaim VAT) it will be at one rate even in the UK. So if you want to use a French or Greek accounting system to do that you’ll be fine, just change the VAT rate to 20% if in the UK.

    You can set the VAT tax rates in Quicken and GnuCash which may handle most European countries but the UK has zero rated (basic foodstuffs and books) low rated 5% for domestic fuel and the rest at 20%. Sage, Quicken 98,2002 and 2004 and GnuCash can cope with that.

    I don’t know details but I think other European countries have just zero or full VAT. So I’d expect Sage to handle the UK and any other EU country but do ask before relying on that 😉 The other way round may not work.

    In the US you’d need to track sales tax both within state and out of state it sounds like a hellacious nightmare that I’m glad I don’t have to deal with.


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