Last editedNov 20222 min read
Bookkeeping can be a daunting task for creative entrepreneurs. However, as your craft business grows, you’ll need a good accounting system in place to manage your inventory, cash flows, and tax compliance. Using automated accounting software is much easier than creating multiple spreadsheets, leaving you more time to focus on what you do best: creating. Here’s what to look for in the best accounting software for craft businesses.
Why do craft businesses need accounting software?
Many of the most successful craft businesses start out as hobbies or side hustles. At the hobbyist level, you don’t need to think about how to manage your accounts. Yet once you’ve started to attract more customers and earn income, finances become increasingly complicated. Accounting software is user-friendly even for beginners, with cloud-based systems to keep everything in one place. The best programs keep track of your income and expenses to make filing Self Assessment returns easier, ensuring you’re up to date with all HMRC regulations. You’ll need to pay tax on any craft income after standard PAYE income, as well as National Insurance.
The best accounting software for craft businesses
Here’s a closer look at a few of the best programs on the market today for craft businesses.
Intuit QuickBooks is officially endorsed by Etsy, making its Self-Employed and QuickBooks Online Simple Start both great options for any creative businesses. It comes with phone apps for one-the-go management, integrating with several payment providers. You can set up automated payment reminders, track expenses, and share details with your accountant through a central platform. This makes it easy to pull tax returns together at the end of each year.
Do you work with one or more partners to create your products? Xero’s cloud-based software allows unlimited users to access each account. It also integrates with thousands of third-party apps to blend smoothly into your existing systems. Through the central dashboard, you’ll be able to see an overview of your bank balances, accounts, and costs. Xero offers automated bank reconciliation and works with multiple currencies, which is useful for craft businesses that want to go global.
Sage 50cloud offers cloud-based accounting services starting at just £12 per month. It’s perfect for sole traders, allowing you to manage cash flow, expenses, income, and incoming payments. Sage’s cloud services are compliant with the Making Tax Digital regulations, making it easy to calculate VAT. You can also set up recurring invoices with automatic bank reconciliation as well as a selection of custom quotes and templates.
Another great choice for small craft businesses isCrunch Accounting, which offers a selection of four pricing plans. For sole traders, Crunch Free is sufficient when you’re just getting started. It lets you scan receipts using an accompanying app and integrates with most major UK banks like HSBC and NatWest. However, you will have to purchase an add-on if you want to use Crunch to submit your VAT returns.
How to choose the best accounting software for craft businesses
The best accounting software firstly depends on the size and scope of your craft business. If you’ve only just set up an Etsy profile, free software like Crunch is probably best. Those needing a wider range of features might choose more comprehensive software like Xero and QuickBooks. It’s also a good idea to think about third-party integrations, as most craft businesses use additional software to manage their business.
GoCardless integrates with all accounting software mentioned above as well as over 300 additional partners. We use both open banking technology and direct debit to give your business the choice of recurring and one-off payments. This makes it easy to take payment from customers for craft orders of all sizes.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.