The Fizz! Blog

Sage and Intuit may be a bit worried right now

Microsoft has launched a new accounting package which looks likely to shake up the UK accounting software market:

http://www.msofficeaccounting.co.uk/product.aspx

It's called Microsoft Office Accounting Professional.  There's two versions of it.

The full blown version, which is £149.95, has similar capabilities to the mainstream Sage and QuickBooks products which retail for somewhat more (maybe £250 to £400 or so) - although no doubt both Sage and Intuit, who publish QuickBooks, will be assuring us that their offerings have significant advantages!

More significantly, the Express version, which is pitched at the level of Sage Instant Accounts or QuickBooks SimpleStart, is free.  That's right, free.  Instant accounts is around £100 and SimpleStart about £50.  In my experience, while that's not much money for bigger businesses, for whom getting the right package is more important than getting the cheapest package, the type of business looking for an entry-level package will be happy to save even £50, and rightly so.  I would think that Microsoft have just wiped out the market for those products, particularly for those businesses buying the software themselves, rather than being pushed in a particular direction by their accountants.

Now, a fair chunk of the sales of the "grown up" versions of Sage and QuickBooks are businesses upgrading from Instant or SimpleStart as their business grows and their needs become more complicated.  So it won't just be the sales of the basic products that are affected, in time it could be the full blown versions too.

But the recommendation of accountants counts for a lot with new businesses, and accountants are reactionaries who will carry on recommening the Sage and QuickBooks that they're comfortable with, right?  Maybe, maybe not.  Microsoft have got a plan.  I've got a copy of the full version of the new MS package - firstly because I need to know if it's good enough to recommend to clients, and secondly because MS are bribing accountants by giving it to us for free - along with a copy of Office 2007 as well.  So, I'll have a play, and will report back in due course.

http://www.fizzhq.com

"Husband and wife companies" - government consultation

Link: Income shifting: a consultation on draft legislation.

The government has today announced a consultation period on their draft legislation attempting to stop the shifting of income from one person to another to save tax.  It remains to be seen whether this is a genuine consultation, of course.  The government's record on this is not exactly perfect - too often the consultation appears to be a lip service exercise that just enables the Chancellor to claim that we were consulted but results in no changes to the rules.

In any case, at the moment, splitting income between (say) husband and wife via a company or partnership remains legitimate and best practice.

Are you a sole trader or a partnership?

Or do you know anyone who trades as a sole trader or partnership?

If so, transferring an unincorporated business to a limited company can provide fantastic tax savings.  Not only are you likely to pay less tax on an annual basis in future, but, depending on the particular business, there's often an amazing one-off opportunity to save tax on the transfer of the business into the company.  I've personally used this system a number of times, saving one client over £200,000 in tax in the process.

But, from 6 April, thanks to the changes to CGT proposed by the government, although the option will still be there, the tax savings are going to slashed.  So, if you - or anyone you know - might be able to benefit from moving to a limited company, tell them to talk to Fizz straight away!

http://www.fizzhq.com