The Latest Big Noise from Scotland. (And It’s Not Nicola Sturgeon On The Bagpipes.)

In the spirit of taking a positive outlook upon Brexit, and considering all that makes Britain great, we start our review with the wise words of one of Britain’s finest:

Of all the small nations of this earth, perhaps only the ancient Greeks surpass the Scots in their contribution to mankind.

Winston Churchill, British Prime Minister.

To be fair to Winston, though, we think he would have awarded the Greeks the number two spot if he’d known anything about FreeAgent, which is an Edinburgh born-and-bred cloud accounting platform fighting a spirited defensive action against the foreign invaders.

And as King Edward VII said (as he put the bagpipes to his mouth for the first time and blew), the grass won’t flatten itself – so let’s walk you through the details of what FreeAgent offers.

Who’s It For?

FreeAgent is designed for freelancers, micro businesses and their accountants. Micro businesses are defined by EU bureaucrats (remember them?) as those with fewer than 10 employees and a turnover of less than €2m per annum. FreeAgent specifically targets the micro end of the micro business market (still with us?) with a focus on freelancers, owner managed companies and sole traders. Some of FreeAgent’s functionality is based around recording and charging out time for projects and we’ve found it is therefore a great solution for contractors.

Give Me The Headlines

A UK-based cloud accounting platform built around owner-managed and time-based business requirements.

What Does It Cost?

Pricing is dependent upon the legal form of your business. The Limited Company package is £29 per month, the Partnership/LLP package £24 per month and the Sole Trader package £19 per month (all prices excluding VAT). At the time of writing (July 2016) all the packages are offered at half price for 6 months.

A summary of current pricing and features is available <HERE>.

We feel the pricing is broadly in the right ballpark. It may work out slightly more expensive than some rivals such as QuickBooks Online and Xero (depending on your chosen subscription), but when looking at accounting software we believe it’s much more important to get the right software for you and your business – and to check what you get for your money – than simply to save a couple of pounds a month. And as with all accounting packages, you probably won’t be surprised to hear that we strongly recommend you subscribe to FreeAgent (or indeed any other package) through your accountant. This will ensure you receive the appropriate support, accountancy advice, tax filing and associated subscriptions to automated book-keeping.

If you don’t yet have an accountant, details of our service for career professionals can be found <HERE>. If you want to discuss any of these options further, please do book a no-obligation exploratory video call <HERE>, or just give us a call on the old-fashioned telephone to discuss your requirements.

OK, Give Me More Detail

Before we proceed, relevant disclosures. We are certified cloud accounting platform partners of Xero, QuickBooks Online and FreeAgent. However, at the heart of our service is the commitment always to provide impartial and tailored advice on all the relevant products in the market. We only recommend products we believe are suitable for our customers’ requirements, and if that’s not one of our platform partners, so be it.

So let’s take a look at those features…

Core Accounting


There is a standard chart of accounts which should cover most circumstances for most users but this can modified based on your specific requirements (we recommend you take advice from your accountant before modifying).

Journal entries are available but again this is an area where it is important that you know what you are doing. If in doubt, consult your accountant!

Sales & Purchases

Quotes can be raised and then, once approved by the customer, converted into invoices at the click of a mouse.

You can personalise your invoices from FreeAgent’s set templates, which ensures that all the statutory information is included but still lets you stand out from the crowd.  It’s easy to produce recurring invoices to the same customer charging the same amount each month.  However, as far as we can see you cannot create multiple invoices of the same product to different customers, and these would need to be created one by one.

FreeAgent enables you to accept online payments from your customers (via third parties) and has a basic level of auto-chasing invoices.

As FreeAgent is designed for the (very) micro end of the business spectrum it doesn’t have an inbuilt workflow where, for example, invoices are sent for approval to another user before being sent out to customers.

A key feature of FreeAgent, reflecting the target market, is to allow the easy invoicing of recorded time spent on a client project. This core feature is a big plus if you need it, as is sometimes it is only available in other packages as an add-on at additional cost (such as with Xero) or as a premium feature within the package (such as Reckon One – which is nevertheless very keenly priced).

As far as multi-currency goes FreeAgent allows the production of foreign currency sales invoices (in foreign language too!) and can deal with foreign currency bank accounts. Both types of transactions are translated into GBP at the prevailing exchange rate within the system. Foreign currency purchase invoices must be input in GBP.

FreeAgent makes it easy to deals with expenses, general purchases, payment reminders, credit notes and repeat purchases (eg utilities).  It can even be set up to give payment reminders so that you’re always up to date.  Again, reflecting the target market, it does not support purchase orders.

One area which requires a workaround is the CIS scheme, and to be honest we have not seen this fully dealt with by any of the cloud accounting software platforms. If you have, please let us know!


FreeAgent has a fixed asset register to allow you to capitalise assets and process associated depreciation.  It also deals with accruals and prepayment where required.


FreeAgent has developed strong links with Barclays Bank and can accept bank feeds directly from Barclays accounts.  Once a transaction occurs through the bank account the data is transferred and is shown in the bank account on FreeAgent ready for you to allocate.

Non-Barclays users can integrate FreeAgent with Yodlee, a service used by most other accounting platforms which pulls bank feeds from the bank in much the same manner (nearly all UK banks are supported).  Alternatively bank statements can be manually downloaded in CSV format from your bank and then manually uploaded manually into FreeAgent.

Once the bank transactions are in FreeAgent they need to be reconciled and allocated.  FreeAgent makes this as easy as possible by suggesting allocations based on what it has automatically learned from how past transactions were allocated.  This works really well but is perhaps not as smooth as some other competitors such as Xero, for example, which allows specific bank rules to be set up in advance to allocate transactions.


We think FreeAgent really has the edge on its rivals when it comes to tax.  We love the tax timeline which reminds when tax payments are due and returns are to be submitted.

Using FreeAgent you can calculate and submit VAT returns directly to HMRC.

For sole traders and partnerships FreeAgent claims to be able to complete 90% of your self-assessment tax return, with the rest requiring completion by you or – as we recommend – by your accountant.  It can then be submitted to HMRC through FreeAgent.

For limited companies, FreeAgent creates an ongoing estimate of the corporation tax liability and the tax timeline includes reminders to complete the corporation tax return and make the payments on time.  Further input and review is required from your accountant and corporation tax returns cannot be submitted to HMRC through FreeAgent – in line with most other platforms.


FreeAgent is broadly comparable to its cloud accounting rivals for its payroll.  It calculates everyday pay and tax on a monthly payroll.  It can now manage auto-enrolment for workplace pensions and of course, it seamlessly records the payroll transactions in the company’s books.

However, it is fair to say that, along with its rivals, it is significantly behind in functionality compared to specialist payroll software.  It has no facility for employees to submit timesheets and be paid on an hourly rate.  It does not monitor employee holiday requests.  Any specialist adjustments, such as redundancy, sick pay or maternity pay, require manual calculations and inputs.

In keeping with its target market we feel that running payroll on FreeAgent is only really suitable for limited companies with one or two employees with straightforward requirements.


FreeAgent enables the simple creation of all the major accounts reports that a micro business is likely to need on a day to day basis. These reports can be exported to CSV if required.  However, the selection is rather limited compared to rivals such as Xero and Quickbooks Online.


FreeAgent has gone to significant lengths to make sure that if you can get any assistance you may need.  There is a searchable knowledge base with help articles and videos, this is less comprehensive than rival Xero’s but we have always found what we needed quickly.  In addition there are users’ message boards to share information, as well as a dedicated customer phone line and live chat support.


Free Agent has a basic inventory management where the value and quantity of inventory can be tracked (accounting geeks might like to know, it’s on a FIFO basis).  Consistent with the offerings at this level, it doesn’t deal with manufactured goods or provide full inventory management (eg where stock is, low inventory warnings, optimal buying indicators, track individual items, etc), which would require specialist inventory software.


We are super impressed with the ability on the limited company package to prepare, issue and minute dividends.  This is missing on most of FreeAgent’s main rivals and really sets it apart from the rest.

FreeAgent’s mobile app allows you to do key tasks on the go.  Unfortunately we’ve not yet had the chance to really get to grips with it.  We understand that it is a little bit more limited compared to the main software but is developing all the time.

There is an emerging add-in ecosystem of apps, with some core and popular apps that you would expect (eg Receipt Bank, PayPal, GoCardless) and availability is growing.  We’d encourage developers of apps to look to integrate to FreeAgent.

What it doesn’t do

Platform providers have to make choices in respect of their target customer market and thus decide which system functionality is (and isn’t) going to be developed. With FreeAgent, some of elements have been de-prioritised. Very briefly some areas for possible further development are as follows.

Cost centre reporting: Priority has been given to developing the project allocations and charging, so there is no cost centre reporting functionality, but given the target customer base we think this is probably the right call at this stage.

Other Accounting Features: As discussed above the multi-currency functionality is limited. There is also no budgeting capability, to allow planning and control, and we’d like to see some development in this area as this would be really useful.

What’s coming next

We understand the FreeAgent team is continuing to develop the mobile app and the reporting options on offer.

On the security front, FreeAgent tweeted in May to say two factor authentication is coming soon (we’re waiting to see when it arrives). We’d also like to see the payroll elements improved.

There have been rumours that FreeAgent are going to update multi-currency to include purchase invoices, this has long been anticipated but when will it happen? We’ll keep our ears to the ground for this too.

We’ll update this blog post periodically to reflect the latest position (latest version: July 2016).


In A Nutshell

FreeAgent is one of the best options for its target market, being freelancers and the micro end of SMEs. Given the improvements to be done in some areas, the price tag could be a little more competitive, but the focus on project accounting and the ability to invoice recorded time are great core features.

The tax timeline and ability to prepare, issue and minute dividends really sets FreeAgent apart from its competitors.

About Aiteo Consulting Aiteo Consulting is a Tech and FinTech accounting and advisory practice which offers a premium service to motivated professionals and small business owners. We allow you to focus on your career and growing business while we focus on your numbers.