Barrie Callender

On becoming a Software Developer and starting a UK business

Free Accounting Software for Small Business in the UK

'GnuCash is a free accounting application' We use GnuCash to run the accounts for our small business in the UK, which currently consists of me working through a contract and my wife building an automated income through an affiliate marketing site. I had used it when I was a contractor a few years ago and had no hesitation to use it for when my new contract started on 1st June 2016.

If you are starting a new business in the UK, I hope this article will help you decide if GnuCash will satisfy your requirements for an accounting application. Here I will provide our experience of GnuCash as one of the accounting tools we are using to run our small business.

I am not an Accountant so anything I write here is not advice. This is the first article I have written on this subject and I know I will write more on specific details as I gain more experience with the hope it will be useful to others.

What Do I Use To Run My Business?

I use the following applications to run my business:

What Do We Use GnuCash For?

The short answer is our accounting record. Where other businesses use Quickbooks or Sage or something else, we use GnuCash. We don’t have a complex business and don’t need to spend money on accounting systems that do about the same, though possibly with a nicer user interface.

What is GnuCash Support Like?

GnuCash has a helpful community around it which includes people who are based in the UK. Through the community, I have found out how to deal with each of the following in GnuCash:

  • Wages
  • VAT
  • Depreciation

Their help has been valuable and helped us better understand accounting. GnuCash is fairly active and is improved fairly frequently. Even if it wasn’t good enough for running your business, it might be suitable for running your personal finances instead.

The Fundamental features of GnuCash

At the heart of GnuCash is double entry bookeeping. Every transaction must debit one or more accounts to the same value as it credits one or more other accounts. This means the books always balance such that the difference between Income and Expenses will exactly equal the sum of Assets and Liabilities including Equity.

The Register is where most of the work is done and is a pleasant check book style interface. It allows multiple or split lines which you should provide decent descriptions for so it makes sense when returning to it months later or handing it to your Accountant for an audit.

'The GnuCash Reconcile Dialog'

One of the features I really like is the ability to reconcile the accounts against a Bank Statement by checking off the register entries. By providing the statement date and ending balance, GnuCash will display the Reconcile dialog with entries listed for both debit and credit. These are checked off in the dialog and Gnucash provides the updated balance to be cleared. GnuCash also allows interest to be entered as a new transaction.

Scheduled Transactions is another useful feature for us as we have a few monthly subscriptions such as Freshbooks and payments for Indemnity Insurance. There is a lot of functionality here including dealing with transactions that fall on a weekend.

'Sample GnuCash Reports'

GnuCash also comes with a number of reports, including some graphs, that are enough to run everything we need for our business. It is possible to customise the reports, but we have not needed to do that so far.

GnuCash can produce a Balance Sheet and Profit and Loss statement as well as a Trial Balance. All of these make submitting our accounts to our Accountant fairly painless. The Chart of Accounts was put together by selecting sets of templated Accounts and changing or deleting some of them as well as adding new ones. Each Account is assigned an Account Type based on what the parent is. The full list is as follows:

  • Accounts Receivable
  • Asset
  • Bank
  • Cash
  • Credit Card
  • Equity
  • Expense
  • Income
  • Liability
  • Mutual Fund
  • Stock

GnuCash also allows an Account to be marked as a Placeholder. This type of account cannot have transactions added to it and so is applied to ones that are Parents of others.

Many people on forums do not like any Open Source Accounting software and I suspect it is either because they used them many years ago when not mature or have never actually used them. The best way to find out for yourself is to go to the GnuCash website, download and install a copy and try it out for yourself.

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