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Which cloud based accounts system shall I choose?

As we start down the very long road of making tax digital where the goal in my opinion is for HMRC to have nearly real time insight into any business. This is going to be made a reality by digital accountancy systems that are linked to programs like receipt bank or auto entry. Receipt bank will allow your digital system to have pictures of all your purchase invoices and expenses linked  to your accounts. This data will then be submitted quarterly or monthly to HMRC. We can get into the big brother argument another time, but I will sum it but by saying if you are law abiding diligent business you have nothing to hide. Although I say this because I believe HMRC are going to be so busy investigating all the returns submitted by what I call DIY bookkeepers.

The question for now is which package do I choose Quickbooks, Freeagent or Xero? The time saving benefits of all three compared to excel or sage line 50 based accounts systems are obvious.

I am aware there are two other larger packages In Kashflow and Sage One but in my opinion, they are too far behind in terms of functionality that they are not worth considering. Freeagent is also behind but there is a reason to consider it.

I am going to consider each package on functionality, price, support.


There is no doubt about it that Xero and Quickbooks are in the lead here. All three support bank feeds however Freeagent doesn’t yet support automation using rules. If you are a firm that has substantial transactions a month then Freeagent is not yet ready for you. This automation feature is not to be sniffed at it can save hours a month of bookkeeping time used correctly.

Quickbooks has a more traditional reconciliation feature which I personally love because you can see what transactions have been entered easily into past months potentially putting the bank out. Freeagent and Xero have more modern reconciliation features and if you are a competent bookkeeper that’s no issue. But we are now in the age of the DIY bookkeeper who loves to make a mess of a bank rec.

Quickbooks and Xero can handle the CIS scheme however Xero handles in a more complete fashion (free for now then there’s a cost). If you deduct CIS don’t even consider Freeagent. Xero’s advantage is that you can verify contractors and submit the actual CIS return through Xero. Quickbooks only records CIS suffered and deducted, and you have to track the totals to submit manually. We always recommend Xero if you are in the building or construction industry for this reason.

I do have it on authority that QuickBooks will not be far behind in introducing this functionality as you would expect from the company with the biggest budget.

All three packages can run payroll but the difference is that Freeagent s payroll is Free two others charge extra for this feature.  We don’t use this option at Chippendale and Clark, we have 3rd party software. We would always recommend having your accountant run your payroll it’s a specialised job. So the payroll charge doesn’t really matter.

Now no matter what industry you are in there will be an app that links to your accounts system that can save you time. Quickbooks and Xero connect to most 3rd party apps but we have found that xero connects to a few more. Freeagent is again behind the times here but will improve. If you want integration Xero and Quickbooks are again the right choice.

Anything complicated tracking costs by customers, projects or tracking foreign tax i.e TVA in France both QuickBooks and Xero can handle.

I want to mention that Freeagent I believe is the best accounts system for DIY bookkeeping clients. However, I should stop there and anyone that knows me will know I’m passionate about people not doing bookkeeping themselves if they haven’t got accountancy qualifications. The messes take longer to correct that just doing it right the first time.

Xero does currently deal with employee expenses in a separate area and even QuickBooks doesn’t currently do this.

In summary if you are currently submitting CIS returns you should pick Xero otherwise QuickBooks and Xero are very similar. If you want an efficient system for employee expense Xero is also your go to. My personal preference for my clients is Quickbooks as we can find the client mistakes easier. However, we offer our clients both options.

If you have a small micro-business or consultancy Freeagent is worth considering especially if you are a Natwest customer. See below.


I would like to stress that price should not be the main focus for which system to use. Get the right one for you and it will save you hours per month of time. If you use your accountant (which you should) to help you keep your accounts up to date, then it will save you ££££ because of the time savings.

First big item to note if you have a Natwest bank account for business you can get Freeagent free for life. This is because Freeagent was brought by Natwest last year.

Xero is currently the most expensive at £24 for the standard edition. My problem here though is you have to pay extra for Xero Projects, Payroll, Expenses and CIS come March 2020. There is also charges for some bank feeds. I will forgive Xero for the payroll as most company’s charge extra for this. 

Personally, I have never liked this type of billing structure something that starts of reasonable ends up costing £500 per year. Small business should take some note of the price difference.

QuickBooks is £18 per month and at this moment in time only charges extra for payroll.

In summary QuickBooks currently offers the best value for money. But if we consider potential timesaving’s from some of xero features the others don’t have then the price difference is irrelevant as long as you can utilise them.


Both QuickBooks and Freeagent offer support helplines where you can talk to someone. Xero doesn’t offer this, and the support is ticket only through Xero. This can be frustrating waiting for a response when you want to sort your problem there and then.

Xero and Quickbooks offer a wealth of online training videos. Xero is particularly good at these. However, I still maintain you must have some accountancy knowledge to operate these programs with a high degree of accuracy.

All support is currently free of charge but at this moment Quickbooks is superior.


Chippendale and Clark support all 3 options and we believe Xero is best for building and construction. The expenses module can help with employee expenses management which QuickBooks doesn’t offer.

If there is no real advantage to Xero we recommend QuickBooks. The support in our opinion is better.

If the client is small and has a Natwest bank account then freeagent is currently a good option.

However best overall advice use these programs jointly with your accountant for maximum accuracy support and efficiency.

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