A guide to switching to FreeAgent

This article explains how to bring your accounting data to FreeAgent from another accounting software or from manual record-keeping such as spreadsheets.

Read on to find out how to bring your accounting data to FreeAgent. Alternatively, watch our Switching to FreeAgent webinar.

Whether you’re switching to FreeAgent from spreadsheets or another software package, following these four steps will help you get fully set up and ready to start using FreeAgent.

1. Gather the relevant data from your previous system
2. Set up your FreeAgent account
3. Enter your accounting data into FreeAgent
4. Check your numbers match your old system

1. Gather the relevant data from your previous system

To make the transition as seamless as possible, we’d recommend that you have the following information to hand which you can export or gather from your previous system:

• Company registration number (if your business is a limited company)
• Key accounting dates such as your business start date and accounting year-end date
• If you’re registered for VAT, key VAT details such as your VAT registration number, date of VAT registration and first VAT return period end date
• Online business banking credentials to set up a bank feed and automatically import bank transactions into FreeAgent (optional but highly recommended)
• Trial balance or a report of all your business’s accounts dated the day before you wish to start your bookkeeping in FreeAgent (most important)
• Exported list of contacts (names and email addresses of customers and suppliers)
• Details of individual debtors and creditors (how much money is owed to the business and owed to suppliers)
• Bank statements from your online banking if you’re planning on adding bank transactions from more than two years ago in FreeAgent (optional)
• Business logo if you’d like to personalise your invoices (optional)

For advice on extracting data from other software packages or spreadsheets, please refer to your previous software provider.

2. Set up your FreeAgent account to get a head start

Once you have the relevant information to hand from your previous system, you can sign up for FreeAgent and follow the steps below to set up your account. If you’ve already set up your account, read how to view and edit your business details, accounting dates and VAT registration details.

If you have a business banking account with either NatWest, Royal Bank of Scotland, Ulster Bank or Mettle, you have the option to use FreeAgent for free for as long as you retain your account (optional add-ons may be chargeable). Find out how to set up a Mettle-funded FreeAgent account or transfer to a funded account.

It's important to select the appropriate business type when creating your account as this cannot be changed later. Read about choosing the appropriate business type and category. If you’re setting up a limited company account in FreeAgent, you’ll need to enter your company registration number.

Setting up your account involves entering your accounting dates, VAT details and banking details.

Entering your accounting dates

You’ll need to enter your business’s key accounting dates. These are:

• your business start date, which is the date you registered as self-employed with HMRC or, if you have a limited company, the date of incorporation
• your first accounting year-end date, which is the date that you want FreeAgent to prepare your first accounting year to. For a sole trader, partnership or unincorporated landlord, the year-end date in most cases will be 5th April to coincide with the tax year
• your FreeAgent start date, which is the date you want to start your bookkeeping in FreeAgent from 

If you’re setting up a sole trader, partnership or unincorporated landlord account, you’ll be asked to confirm whether you’d like to prepare your accounts using the ‘Traditional (accruals) basis’ or ‘Cash basis’. This is different from using the cash basis to prepare your VAT returns, so please check with your accountant if you’re unsure which basis you should be using for your accounts.

Entering VAT details

Next, you have the option to enter the business’s VAT details.

• If your business isn’t registered for VAT, or you don't have the details to hand and want to enter these later, choose 'Not Registered' from the ‘Are you VAT Registered?’ drop-down menu.
• If you’ve applied for VAT registration but haven’t yet received your VAT certificate from HMRC, choose 'Registration Applied For' from the ‘Are you VAT Registered?’ drop-down menu and enter the date you expect the certificate to take effect from. Read more about waiting for your VAT registration number.
• If your business is registered for VAT, choose 'Registered' from the ‘Are you VAT Registered?’ drop-down menu and enter the relevant details. Please note that if you are VAT registered and want to enter your details at a later date, you’ll need to enter these VAT details before issuing your first invoice.

Entering banking details

Banking is one of the most important features in FreeAgent. Connecting your bank account allows your business bank transactions to be automatically imported into FreeAgent. Rest assured your data is safe and secure. 

The software prepares your business’s accounts based on the explanations you give for the money paid into and out of your business bank accounts. FreeAgent’s Guess feature is powered by AI to help you nail the daily admin by automatically categorising new bank transactions based on existing information in your FreeAgent account. 

You can choose your bank name from the list in the drop-down menu and be taken to your bank's online banking to connect your bank account to FreeAgent.

However, if you'd rather skip this step for now, you can select 'Connect later' and enable a bank feed at a later date.

Read more about how to set up your FreeAgent account.

3. Enter your accounting data into FreeAgent

Once you’ve set up your FreeAgent account, the next step is to enter your accounting data into FreeAgent as at your chosen FreeAgent start date.

This includes your contacts, opening balances, which are the amounts that your business has in each of its accounts at the start of your FreeAgent start date, and your relevant business bank transactions. You can also enter additional data such as projects and historical data if you wish.

Entering opening balances

When switching to FreeAgent from another software package or spreadsheets, you'll have some opening balances to enter when you start using FreeAgent. These need to be entered so that FreeAgent can include them in your accounting reports and keep your records accurate. This may include some or all of the following:

• Money your customers owe you (your accountant might call this ‘trade debtors’)
• Money you owe to your suppliers (your accountant might call this ‘trade creditors’)
• The balance(s) on your bank account(s)
• Money you owe to HMRC for PAYE and NIC, or VAT
• Opening share capital
• Reserves of retained profits or losses your business has built up over the years
• The balance(s) on outstanding loans

As brought forward balances don’t impact the tax return for the current year of a sole trader, partnership or unincorporated landlord, a full set of opening balances may not be required for these business types.

Your accountant should be able to advise which entries you need to record in your FreeAgent account. Please note that our support team can’t help you with this as we’re not authorised by HMRC to provide accounting advice.

Customers and suppliers are both called contacts in FreeAgent and need to be added in order to create invoices, estimates, bills and projects. Therefore, you may wish to import your contacts before entering opening balances so that you can then assign individual monies owed to the relevant contact.

You can import your opening balances into FreeAgent as of your FreeAgent start date using our downloadable template or from your own .CSV file. Alternatively, you can enter them manually.

Entering business bank transactions

The quickest and easiest way to import your bank transactions into FreeAgent is by connecting your bank account to FreeAgent. You can either do this when setting up your FreeAgent account or by enabling a bank feed at a later date. This enables your bank transactions from the last two years to be imported into FreeAgent automatically overnight each night.

If your bank account is with a challenger bank such as Monzo, Starling Bank, Revolut or Capital on Tap, you can set up an integration which will function in a similar way to a bank feed.

If a bank feed isn't available for your bank, or you need to import transactions from more than two years ago (for an HMRC audit for example), you’ll need to either upload bank statements or enter transactions manually. Please note that you would only bring bank transactions into FreeAgent that occurred on or after your FreeAgent start date.

After your bank transactions have been imported or uploaded, you'll be able to view them in the Banking area of FreeAgent and explain them, which tells FreeAgent what each transaction relates to. Once you’ve started explaining transactions, FreeAgent’s popular Guess feature will attempt to explain your transactions automatically to save you time going forwards and reduce the risk of data entry errors.

If you're below the VAT threshold and not VAT-registered, you can leave the VAT rate as 'Auto' when explaining bank transactions or change it to 'Out of Scope'. If you leave the VAT rate as 'Auto' and then register for VAT in the future, FreeAgent will automatically reclaim the VAT on these purchases on your first VAT return if required.

Additional data that can be entered

Whilst not essential, you can also enter the following data into FreeAgent if you need to:

• Historical sales invoices or bills (supplier invoices) using a third-party integration such as AutoEntry, Dext, Fabio or Zapier.
• Historical expenses or mileage claims in bulk by using a template.
• Projects from .CSV file or Basecamp.

Please note that you would only bring data into FreeAgent that occurred on or after your FreeAgent start date.

4. Check your numbers match your old system

Nearly there! Before you dive in and start using FreeAgent, it’s worth checking that the figures in FreeAgent match the figures from your previous system. We’d recommend checking that:

• your opening balances are correct
• your bank transactions have been imported automatically via a bank feed or uploaded from a bank statement. Read about matching your FreeAgent bank balance to your bank account balance.

If you’re unsure whether your figures in FreeAgent are correct, please speak to your accountant so they can verify the figures for you. If your accountant doesn’t currently use FreeAgent, you can add them as a user or if your accountant is a FreeAgent partner, they can transfer your account to their Practice Dashboard. Read more on using FreeAgent with your accountant.

If you’re not currently working with an accountant, you may wish to find one through FreeAgent CoPilot.

Next steps

Great job! You’ve completed the switch and you’re ready to manage your finances and make every move count with FreeAgent’s award-winning accounting software.

To see the time-saving benefits of FreeAgent in action, try:

• adding users such as admins, finance clerks, bookkeepers or employees, and set permission levels
• adding a logo, connecting a payment solution and creating a custom invoice theme, before sending your first invoice
• using Smart Capture to automatically extract the date and amount from your receipts.
• approving and explaining bank transactions in bulk
• setting up and running your first payroll

Useful resources

Now that you’re set up with FreeAgent, you might find the following articles useful:

• An introduction to FreeAgent terminology
• What can you file using FreeAgent?
• About FreeAgent’s Radar feature
• An introduction to the Tax Timeline
• Manage your business on the go using the FreeAgent mobile app
• FreeAgent efficiency hacks for busy businesses
• FreeAgent automations to get you paid faster
• Business planning in FreeAgent

You’ll also find a link to sign up for one of our live ‘Getting Started’ webinars on our Getting Started page.