Note: Specific to UK.
I can't recommend anything higher than Crunch - they act as your accountant and have their own cloud accounting software, so it's more expensive than just using cloud accounting software, but if you use an accountant to do your year-end anyway, then they cost about the same as using cloud accounting software plus using an accountant to do your year-end.
The thing I like (as a software development contractor) is that I don't have to know or worry about different ledger accounts, or journal entries, or any of the other weird accounting things, etc.
- If I pay something personally I just mark it as "paid by director personally"
- If I pay it with a bank transfer or on debit card from the company account I just mark it as "paid from bank account"
- If I take out £100 to buy some things I just log a "director withdrawal" of £100 which automatically updates the director loan account, then if the things only ended up costing £87.46 and I just chucked the change in my wallet, no problem, I just log the £87.46 as paid personally and the directors loan account updates.
- When I pay myself it just adds to the director loan account and I don't have to transfer the money - I just withdraw it later when I actually need it.
- I can always see my current tax liabilities so I know how much I can pay myself, which helps me to know if I have enough buffer to spend some time on my own projects or if I should be looking for more paid work.
Most cloud accounting software claim to simplify accounting "so that you can concentrate on running your business" whereas the reality is that you still have to spend ages learning how to be an accountant just to fill it in correctly. With Crunch that's actually true, it does actually make it simple. I've used Crunch, Sage, and Xero, so my sample-set isn't very big - just thought I'd share my experiences. If you value your time and get annoyed by having to create multiple internal transfers between different ledgers just to do something simple, it's for you.
This probably sounds like a sales pitch, but I have nothing to do with them and nothing to gain by recommending them. The only reason I'm so passionate is I started a new business to do an online shop and tried to use Crunch, but they don't do retail businesses. Only contractors/freelancers or simple service-based businesses (their software is geared up specifically for that which I guess is why it's more simple than the others). Anyway, so now I'm annoyed at having to use the more complicated ones.