Free Making Tax Digital software? Honest review of Sage Sole Trader

Hello there, and welcome back to the Small Business Toolbox. I hope you're doing very, very well today, and business is good. If you've been following this channel for a little while, you will know that I have been a little bit obsessed with the whole Making Tax Digital debacle. I've been following it from the earliest days of it being talked about by HMRC, and while I'm certainly not against the digitization of keeping records and things like that, I think the way the whole kind of project has been handled is a bit of a disaster. But anyway, that's maybe a topic for another video. We'll kind of see how things are going over time. Do let us know in the comments down below, because there is a fair few of you who will now be actively having to partake in the Making Tax Digital for Income Tax system, if you can call it a system. Anyway, today I'm going to cut to the chase, and we are going to have a look at some Making Tax Digital software, and this one is a free one from Sage. It's called Sage Sole Trader Free, I think. This is basically the sort of software that you're going to potentially have to use to be compliant with Making Tax Digital. So, let's head over to the computer and see what it's all about. Right, so here we are on the Sage website, and at the top here we have got the menu, and within Making Tax Digital. And then we've got a link here, Get Free MTD software. So, let's have a look. So, the options seem to be Sole Trader Free and Sole Trader, and it looks like that is £70 per month for 12 months, cuz you get 90% off. But anyway, we're going to go for the free version, so let's do Get Started Now. Business or trading name, I'm just going to put Handy Mac. I've filled in my address details, accepted terms and conditions. No, I don't want any updates. Let's go for it. Let's set up a password, and go. Pop the verification code in and continue. Identify some stairs. I hate these. Uh, that, that. Go. Add extra security. Maybe later. Pointless cookie warning, we'll accept that. We've got a very annoying AI assistant. I definitely don't want that. Please go away. And now I've got a thing saying install and run Google Widevine. Um, I have no idea what that is. Um, I presume it's to play this video. I don't want that. Don't ask me about that. Go away. Get started. Choose how to bring your records into Sage. Well, I will do that manually, thank you very much. Can I do that? Import a file or add records manually. We'll just do import or add records. And we've got the option of add records manually or import a file. Again, I don't really have a file that I can import, so I'm just going to do add records manually. I just want to see how this is going to work, really. And we've got Add your first record manually. So, we've got a thing on the right-hand side here. Um, can I just come out of that? Right, that's better. Can I zoom in a bit? Let's see if we can zoom in. There we go, that's a bit better. You can actually see what's going on now. So, transaction wide, let's just add a transaction. What's the difference between transaction and journal? I'm not sure. Let's try transaction first. We'll add an expense. Go. When was it? Uh, well, we'll just say it's from the bank account, and we're going to pretend it was to buy some plasterboard. And it cost £30. Category is goods, materials, and other cost of sales. And we'll say the date of that actually was, we'll say it was, uh, that date there. And um, what's going on here? Uh, for some reason, that's all disappeared, and now I can't edit anything. Um, I'm not entirely sure what's happened there. I'll just quickly add it again. Oh, it's because I tried to change the size of my window while adding a transaction, and it's completely destroyed the ability to continue adding the transaction. What? That is now completely uneditable. Let's just do that again. Leave without saving. Expense. Yeah, watch this. That's crazy. So, these are all editable fields here, and all I'm going to do is pretend that I had to like resize my window for some reason, and uh Yeah, that's jumped to being like completely Okay, that's really bad. Why is it doing that? Anyway, never mind that. How do I add a payee? We've bought the plasterboard from Wickes or wherever we've bought it from. How do I tell it that? Am I losing my mind? So, we've got expense, do the date, bank account

plasterboard, £30, goods and materials. Where do I put the payee? That is the most fundamental piece of record keeping for an expense is who you've paid the expense to. Um, okay, well, whatever. And then what have we got in here? We've got save as draft or save as completed. We'll do save as completed. Go for it. Transaction added successfully. We've got a let's go button. Let's do that. Obviously, it's trying to connect my bank account, and that's not an easy thing for me to test, but whatever. What's in transactions? Nothing that's So, where's our completed transactions? Here we go. So, yeah, okay, we've got the transaction there. There it is there. Let's add a couple more transactions, actually. I think this will make a bit more sense if we get a bit more information into this. I don't know what this Co-pilot categorized transactions is. I don't like the way that takes up like half the screen, because I don't want Co-pilot categorized transactions. I just want to manually put my transactions in. Okay, I want to add another transaction. How do I do that? Okay, so you've got to go to draft and then add. We'll do another expense, and this one we'll say was on, uh, that date there. Bank account again, this one was screws, and we spent £20 on screws, and again, this is kind of customer materials, I suppose. Save as completed. And I think you can add attachments into here. Presumably, I could add a receipt. Check which file formats are Yeah, okay, that's fine. I'm not going to do that at the moment. I'm going to add a couple more transactions in. — Okay, so we are sitting here with a number of transactions there. Let's just see what the difference is with this journal option. Accountants use journals to correct errors, make adjustments, or for accounting-based tasks, record depreciation, write off bad debt, and move values between ledger accounts. Journals can affect your HMRC tax calculation. Um, I don't think this is what I would consider as a journal entry, to be honest. So, on the basis that I have no idea what this is for, I'm just not going to do that. Okay, so, invoicing. How do we actually kind of bring money in, if you like? So, you have five invoices left this month. Okay, so, let's for argument's sake, uh, we can add a customer. Customer, we'll say Joe Bloggs. Put an email address and stuff in. We'll save the customer. We'll invoice them last week sometime. We're on 14 days. Presumably, you can change that somewhere. We've got custom dates. Okay, that's fine. We'll keep this 14 days. Customer reference, we can do an invoice summary, and then we've got invoice items. Okay, so, we're just going to say, put up a shelf. Quantity hours, we'll say, I don't know, it took 2 hours, and is that a unit price? We'll pretend it's £40 an hour, and then obviously, you could add extra line items, that's all fine. Obviously, we've not added any bank details or anything yet, so I can't really do that. We can add some default information. Let's just do save. A random QR code has just popped up. Um, can I have a look at this invoice? Where How do I look at it? Um, so the invoice is obviously there, and it's marked as unpaid. How would I mark that as paid? Get paid faster with a simple invoice. Um, add your customer, enter the description, blah blah. Create your first invoice. I've already done I've created an invoice. Where's the invoice that I created? How do I do anything with it? I can't Nothing's clickable here. Um, I think I'm going to have to go through this. Let's do this. I've already done this. Am I missing something? How do I print the invoice out? How do I issue the invoice? Um, Oh, okay, my bad. There's a scroll line at the bottom there. It's because I'm zoomed in so much. Wow, how much do you have to be zoomed out to fit that in? Let me just zoom out a bit. Yeah, okay, yeah, it fits when you're at 100%, I guess. But then you can't see it. So, let me just zoom back in, and uh we'll deal with it. My bad. Sorry, Sage. Not your fault. Um

let's see. Actions. Copy invoice link. We've got an email invoice, add a payment, export as PDF preview. Let's have a look preview. Yep, there it is there. I mean, obviously, it could be tidied up a bit, but uh that would kind of do the job, wouldn't it? Let's just close that. And we've got a view button here. Is that going to do the same thing? Um okay, that's a slightly different version. Fine. And presumably from here, we can mark it as paid if we just do add a payment. Payment amount, £80. Create a money in transaction. Ah, okay. Well, this is an important thing that I want to get my head round with Sage because what if you don't invoice people? Not everyone sends out invoices. So, um yeah, let's see how that works. We'll save this and mark this invoice as paid. And presumably, is this going to show in completed transactions now? I'm not sure. Um No. Okay, fine. It just seems to be in Presumably, it'll be in the paid bit. Okay, how do I add a transaction for just like money in which I haven't necessarily invoiced for? So, uh why have I got a number one in draft at the minute? Maybe I should have a look into that. Um ah, it's this payment thing. Maybe I need to give it a category. Um turnover? Still categorizing one by one. Yeah, okay, whatever. Um Turnover? Save. Guess that's done that. Completed. Let's have a look. So, we've got this money coming in and then we've got all these transactions out. That looks fine. Okay, that vaguely makes sense. Yeah, let's try and add some um random income transactions. So, we'll do transaction and we'll do money in, income. Next, we'll say that came in on uh that date and the source uh shouldn't that say destination? Um okay, whatever. We'll put source and I think that's not entirely correct, but fine. Description um we will say that uh well, someone just sent us some money. It was for a random job. And it was £100. S- and what else have we got? Category, turnover. And save as completed. Now, the only problem here is there would appear to be no way of assigning that to a customer. So, yeah, that's a bit of a limitation that like. Um let's just have a look. So, basically, by the looks of it, if it's income that you want assigned to a customer, you're going to have to do it via an invoice. And you can only do five of those in a month. Well, um okay. Yes, you might not need to create five invoices in a month, but I do want a way of assigning income to a customer. Five invoices in a month is useless if you can't do it through some sort of manual method. Let me just have another look at this. So, we'll go back to transactions, draft, add transaction, income, next, source, which makes no sense. Is there anything else in here? Nope. Bank account. Yeah, there's no way of assigning a customer to this. So, yeah, that's not great. Let's just do test, another £100. Category, what else have we got? Um so, it would have to be turnover, but yeah, um that is very limiting. So, what's in this customer thing? Yeah, so customer is purely going to be for invoicing, isn't it? Let's just add another test customer. Save. View details. Yeah, this is purely for invoices. So, because of this invoicing limitation, I've only been able to do five invoices a month, that makes it almost a non-starter. If I can't assign a customer to income, man, that is like really, really limiting. Okay, right. Well, whatever. What else have we got in here? We've got reports. So, we've got a trial balance. That will mean absolutely nothing to anyone who doesn't know about accounts. And we've got an income tax summary. Okay, fine, whatever. And then all of this stuff you've got to unlock. Presumably, you have to pay for that, which is fine because I would never want to do a profit and loss account as sole trader anyway, but would basically have to upgrade to the £7 a month thing by the looks of it. Anyway, let's forget about that. Let's go home, maybe. Well

to Why am I getting this? I Okay, whatever. So, anyway, what else have we got in here? This section we might as well just kind of ignore. Income tax. Here's some Making Tax Digital section. And again, without actually connecting to HMRC, it's difficult to see how this is actually going to work, but presumably, once it's all connected, which you would do connect to HMRC here. And by the way, this still says it's a public beta in an early version of Making Tax Digital for income tax. Bearing in mind I'm recording this on the 25th of March. So, yeah, by the looks of it, this is a beta. Okay, what else have we got? Settings, auto categorization. Does your business need to be set up as a UK property business? Coming soon, register your interest. So, it doesn't really handle anything on the landlord side yet by the looks of it. Payment providers and we've got CIS for subcontractors. Hmm. Okay, this seems like a bit of a half-baked product, I'm afraid. I mean, I'll be honest, I like the look and feel of it. It's pretty easy to use and it looks like it's got a mobile app as well, which I'm not going to really even attempt. If I can't get the desktop app working, then — I don't put a lot of faith in the mobile app. Not at this stage anyway, but for me, this limit of five invoices, it's not doable. And obviously, I get why they've done this because it is just a free product. I 100% get why they've done this, but I think it'll be a very limited number of businesses that could realistically make use of this in any practical way. You would have to upgrade to get this to do anything kind of vaguely practical. So, uh yeah, where do I start? Now, I don't want to be too harsh on Sage because A, it's free and B, they didn't really have to make free software or maybe they did, I'm not sure. It's not entirely clear. There were some things in the original government briefing that suggested that vendors should be putting together a free offering, but in reality, is this a practical piece of software you could use to run your business and to run your tax affairs and make it compliant with Making Tax Digital? And the answer is for most businesses, I would say, unfortunately, no. It certainly doesn't do what you could do in a spreadsheet. The limitation of not even being able to assign a payee with an expense is just a fundamental lack of understanding of how small businesses operate because in the most basic of small businesses, whether you're a plumber or a handyman or a joiner or perhaps you're running like a dog walking business, you know, we're talking about kind of micro-sized entities here. You are going to be logging basic information already, probably in a spreadsheet or maybe your accountant's doing it. That includes the payee for each transaction. It's just a fundamental thing that you would keep track of. Now, obviously, a certain amount of that information is going to come across to a degree when you link it to your bank account, but there still seems to be fundamental things that you can't do in the free version of this software. But, having said that, if all you're trying to do is tick the box for Making Tax Digital, it could be an option because all you would need to do is link it to your bank account and go through it and basically submit your quarterly reports. And if that's all you're wanting the software to do, it could be a reasonable option. And then you could always explore going down the paid route. And by the way, this definitely is not a sponsored video. Sage do not know I'm making this video. I'm trying to keep everything on this channel as unbiased as possible as per usual. So, I'm not personally a sole trader at the minute. I do everything through limited companies now, but if I was a sole trader, yes, I would definitely consider the software just to get the updates submitted, but then I would probably also still have to log everything separately in spreadsheets. So, it kind of defeats the object of going down the kind of digitization of accounting records route because now I'm going to have to log everything twice due to the limitations of what you can actually do in the free software. But, do bear in mind, it is obviously free, so I guess good on Sage for actually bothering to put something free together. And I have gone through the list of alternatives on HMRC's kind of software finder thing. And yeah, the free options aren't great. Let me know what you think. I am going to try and make some more videos like this about other software products as and when I get a chance to have a play around with them. Unfortunately, I don't get very much time to make videos like this and obviously this channel isn't a big channel. I don't do sponsorships or anything like that and really the only way this channel makes any money is from

people joining as a member over on my membership platform. And if you want to help support the channel, you can join that. There's a link to it down in the description below. Oh, and one other thing, I do have a Discord server now. So, if you want to take the discussion a little bit further, there's a link to my Discord down in the description below as well. It's actually a Discord for my Gosforth Handyman side of things, but there are subcategories for all sorts of things including gaming and kind of nerdy stuff and there's small business stuff on there as well. It's a really good place just for basically chatting about stuff and kind of coming up with a few ideas of how things could potentially work. — Anyway, do keep us posted down in the comments with how things are going in the world of making Tax Digital. For now, folks, good luck on your small business journey and we shall see you next time. Toodly bye.