We've set up more logical nominal codes and created different accounts for additions, disposals, and depreciation during the year and on disposals.

If you look at the list of FreeAgent codes under Journal Entries or in Accounting > Trial Balance > Chart of Accounts CSV, you’ll see the following codes:

• 601 - Capital Asset Brought Forward
• 601-1 - Computer Equipment Brought Forward
• 601-2 - Fixtures and Fittings Brought Forward
• 601-3 - Motor Vehicles Brought Forward
• 601-4 - Other Capital Asset Brought Forward
• 602 - Capital Asset Purchase
• 602-1 - Computer Equipment Purchase
• 602-2 - Fixtures and Fittings Purchase
• 602-3 - Motor Vehicles Purchase
• 602-4 - Other Capital Asset Purchase
• 604 - Capital Asset Disposal
• 604-1 - Computer Equipment Disposal
• 604-2 - Fixtures and Fittings Disposal
• 604-3 - Motor Vehicles Disposal
• 604-4 - Other Capital Asset Disposal
• 605 - Capital Asset Depreciation
• 605-1 - Computer Equipment Depreciation Brought Forward
• 605-2 - Fixtures and Fittings Depreciation Brought Forward
• 605-3 - Motor Vehicles Depreciation Brought Forward
• 605-4 - Other Capital Asset Depreciation Brought Forward
• 606 - Capital Asset Depreciation
• 606-1 - Computer Equipment Depreciation In Year
• 606-2 - Fixtures and Fittings Depreciation In Year
• 606-3 - Motor Vehicles Depreciation In Year
• 606-4 - Other Capital Asset Depreciation In Year
• 607 - Depreciation on Disposal of Capital Asset
• 607-1 - Depreciation on Disposal of Computer Equipment
• 607-2 - Depreciation on Disposal of Fixtures and Fittings
• 607-3 - Depreciation on Disposal of Motor Vehicles
• 607-4 - Depreciation on Disposal of Other Capital Asset

So what does that mean for you?

If you don’t have any capital assets on your books, then you can stop reading this now.

If you do have capital assets, then you’ll see things working slightly differently.

We’ve changed the numbers of some codes as follows:

• 611 (Computer Equipment Additions) will become 602-1 (Computer Equipment Purchase)
• 613 (Fixtures & Fittings) will become 602-2 (Fixtures & Fittings Purchase)
• 615 (Motor Vehicles) will become 602-3 (Motor Vehicles Purchase)
• 612 (Computer Equipment Acc. Depreciation) will become 606-1 (Computer Equipment Depreciation In Year)
• 614 (Fixtures & Fittings Acc. Depreciation) will become 606-2 (Fixtures & Fittings Depreciation In Year)
• 616 (Motor Vehicles Acc. Depreciation) will become 606-3 (Motor Vehicles Depreciation In Year)

These codes will be discontinued, so If you have any figures in codes 611-616 you’ll see them in slightly different places when you next look at your Trial Balance. Other than this, the Balance Sheet will look exactly the same.

We’ve also worked some accounting magic so that anything you post to a code starting with 602 or 604 will be rolled up into its counterpart starting with 601 at the end of the financial year, so that at the start of the new financial year you’ll see last year’s cost brought forward, plus any additions, less any disposals, all in the one code. This is something you’d otherwise need to do yourself, or ask your accountant to do, when your final accounts are prepared.

Similarly, anything you post to the 606 or 607 codes will go automatically into its 605 counterpart at the end of the year. This is to do the same thing with the depreciation.

FreeAgent’s automatic depreciation entries will be posted into the codes that end in “Depreciation in Year”.

New assets

When you enter a purchase of a capital asset, you'll be asked how you'd like to categorise it - Computer Equipment, Fixtures and Fittings, Motor Vehicles, or Other.  Make sure you choose the correct category so that your asset goes into the right line on the balance sheet.

For the estimated 42 million freelancers and self-employed workers currently in the States, tax filing is just as fraught for our US cousins as it is in the UK - so we’ll be in place and ready to help ease the burden for them over the year ahead.

As usual we don’t do things by halves: to kick-start our US plans we’ve acquired a great software company called 60mo, and we’ve raised a further round of growth investment from Lightbank, a high-profile Chicago-based tech fund.

The guys from 60mo have a wealth of knowledge of US accounting and taxes, and have been visiting FreeAgent HQ in Edinburgh for an intensive Rocky-style training montage to prepare them for the task ahead. We’ve force-fed them deep-fried pizzas and Irn Bru, plugged them into the FreeAgent matrix and sent them back to the US unobtrusively tattooed with Saltires.

Before leaving sunny Scotland, the new FreeAgent Inc team solemnly promised to “take the ball and run with it”. Personally, we think that if they’re using a football metaphor they should be kicking the ball, not carrying it - and they can take those ridiculous pads and helmets off while they’re at it as well.

Now that they’re back home, the team is helping us build US versions of the unique, automatic accounting, tax-forecasting and filing features that our UK users enjoy. Unlike software packages such as Quickbooks which are currently widely-used in the US, we’ll be offering an accounting tool that is designed specifically for freelancers and independent workers and makes them feel smart, not stupid, about their finances.

This is great news too for our other users in both the UK and elsewhere in the world. We'll have more resources to improve FreeAgent in ways that will benefit everyone. And building from our recently announced direct feeds with Barclays, we'll continue to press forward with even more revolutionary capabilities for the UK version of FreeAgent.

Onwards and upwards!

It feels like we barely have time to reflect on where we’ve come in the last five years before we shift up yet another gear. This time it took us all of nine months to double our customer count, a real testament to the strength of our product and the dedication and hard work of the team here.

Does that mean we’re resting on our laurels now? Now’s the time to kick back a little? After all we’ve got this thing sorted, right?

Certainly not. We’ll continue to invest heavily in maintaining the exceptional quality of our customer service across the growing customer base. We’ll continue to improve the already best-in-class design, usability, responsiveness and capability of our product. We’ll continue to build strong relationships with market-leading partners and relentlessly progress towards our goal of ‘democratising accounting’ - making business owners everywhere be awesome at managing their finances.

And if it’s not mixing the space opera metaphors too much, we’ll continue to boldly go where no accounting software has gone before!

PS If you want to be a part of the FreeAgent story, check out our open jobs. We’re especially keen to find the world’s best ruby engineers and superhero support accountants & bookkeepers!

The API is the way third party apps and services access FreeAgent, so if you've used a mobile phone app or web service which integrates with FreeAgent, you've used the API.

As a FreeAgent user, the main change is that you will no longer have to share your FreeAgent username and password with an app. When you use an app which has been developed against API v2 and which you want to link to your account, the app will send you to FreeAgent where you can grant access. There's a new Authorised Apps settings section in FreeAgent where you see which apps are connected to FreeAgent, and disable apps you no longer use.

For those of a geekier persuasion, the highlights are:

• OAuth 2.0, which is the same authentication system Facebook and Google use for their APIs
• More resources, including Bank Transaction Explanations, Recurring Invoices, Estimates with more to come.
• JSON responses as well as XML
• Sandbox accounts where developers can test their apps

We have a brand new Developer Dashboard at dev.freeagent.com where developers can sign up to integrate their app with FreeAgent. While you're over there, have a look at the documentation: dev.freeagent.com/docs.

We will be saying goodbye to API 1 in the not-too-distant future, so if you're a developer with an existing app you'll need to modify it over the next few months. Of course, we'll give plenty of warning before we turn off API 1.

Over on the engineering blog look out for some posts on some of the more technical aspects of API 2.

Our hope is the new API will enable a new generation of apps and services that integrate with us, enhancing the ecosystem and offering customers more choice in extending the capabilities of FreeAgent.

So here are a few useful tips on how you can get your accounts looking fresher and tidier than ever for the year ahead.

1) Get your records up to date

You need to build your business on firm foundations, so start by making sure your books are up to date. This way, you’ll have useful information to work with, such as whether you’re charging your customers enough to make a profit.

Sort out and file your paperwork as well, whether you do this using hard or soft copies. If you store any information on a computer, make sure that you sort these files thoroughly and make back-up copies of the data - as this will give you extra security in case you lose any papers and have to justify your figures to HMRC.

And, for the new tax year, try and keep your books up to date as you go along. It will make your life much easier. Honest.

2) Chase up slow-paying customers

Once your books are done, you’ll be able to see which customers pay you quickly and who pays you slowly - or, in same cases, who doesn’t pay you at all.

Ask yourself whether you could be paid any quicker? Is it time to tighten your payment terms, or perhaps take payment up front or by credit card? Do you need to take steps to implement tighter credit controls for your business, or use a system that automatically chases payments for you?

If there are certain customers who always pay you slowly, is it time to stop working for them - or should you be firmer with them when it comes to agreeing a payment date?

By staying on top of your accounts, you’ll have access to information that could have a huge impact on the way you manage your business - and your customers - in the future.

3) Check your costs

Go through your bills and see how much you’re paying to your suppliers.

Have any of them put their prices up? If so, should you put yours up to compensate for this?

Could you save on costs by, for example, working at home instead of renting an office?

It’s important to also spend enough on areas such as your website and marketing. You can be smart and avoid paying over-the-top prices, but if you cut corners here it’ll be obvious to your customers - and could send the wrong message about your business and your brand. For example, what does a business card printed on flimsy cardboard and cut by hand on a guillotine say to you? How well do you think that business looks after its customers?

Make sure you’re spending wisely on your business but don’t bust your budget!

4) Check your tax

One important cost that no business can escape altogether, unless it never makes a profit, is tax!

However, by getting your books up to date now, you’ll be ready to have a conversation with your accountant about how you might be able to save tax - and about what actions you can start implementing in order to do so.

Make sure you’re up to speed with your tax and it could have a very positive effect on your business.

5) Tidy up errors in your books

We’ve all got them – those lingering little errors in the records. Maybe it’s that credit note your supplier sent you which you recorded as £100 rather than £150, or that £20 train ticket which you paid for yourself rather than from your business account.

Clear them up now rather than paying your accountant extra to do it for you. If you’re already a FreeAgent customer, you can also contact our fantastic support team for help.

By giving your accounts a thorough spring clean, you can ensure that your business is set fair to make the very best of the new tax year.

It caused quite a stir among our team of support accountants, who ended up answering the question with a few inspired canine-related puns. And once I’d finished laughing at how it had given them all “serious paws for thought”, it got me thinking… When, and how, is the cost of buying and caring for an animal tax-deductible in a business?

Well, it all depends on what the animal actually does for that business.

Farm animals

Farm animals, such as cattle, sheep or laying hens, would be treated as either stock of the business, or, if the animals form a production herd, as a capital asset.

A production herd is one that is kept for what the animals yield while they are still alive, such as wool, eggs, milk, honey, or live young - and each production herd is made up of animals of the same species used for the same purpose. So for example, a flock of sheep kept for wool is the same herd whether it’s a mixture of breeds or not, but a flock of one breed kept for wool and another breed for cheese would be two separate herds.

(HMRC calls them herds whatever the actual collective noun for the animals is – for example, a hive of bees kept for its honey is still referred to as a production herd.)

So farm animals are definitely tax-deductible in one of two ways, either as stock or as assets.

Working animals

There may also be animals on a farm that are kept to do a job of work but which are not part of what the farm produces, such as a sheepdog, or a horse used for carting or ploughing. I’ve visited a hill farm where ponies were used to pull carts, as the pastures were too steep for tractors.

These working animals are treated in the business books as capital assets that qualify for capital allowances, and feeding and caring for them would be tax-deductible expenses. So you could put food for these animals, veterinary fees and so forth into your business’s profit and loss account as business costs, and save tax.

Other working dogs, such as a gamekeeper’s spaniel, police dog, or army bomb disposal dog, would be treated the same way as a farm working dog.

There is very little guidance from HM Revenue about how to treat different working animals for tax purposes. My opinion would be that you could argue that, for example, a cat kept to control the number of mice in a grain store would also be a working animal and would be treated for tax like a working dog.

HMRC does say that this treatment would also apply to animals kept for show, racing or other competition purposes – such as a flock of racing pigeons.

Guard dogs

HM Revenue have been known to claim that guard dogs, especially those who guard a business run from home, are actually pet animals and therefore the cost of buying and feeding the dog is either not allowable for tax or only partly allowable.

This doesn’t always work though:

We had a visiting inspector (many years ago) suggest that the two Alsatians in the pub were "primarily pets" and not allowable as guard dogs. Having known these 2 dogs since they were pups and knowing my uncle (an RAF dog handler instructor) had trained them, I simply opened the door and told them to "watch him". I suspect he needed a change of underwear after that encounter :) Needless to say the 100% claim as guard dogs was never questioned again.

[Source: AccountingWeb]

My own opinion would be that a guard dog that isn’t also a pet animal should be treated just like any other working dog. You could claim capital allowances on the cost of buying the dog, and “maintenance” costs for the dog - such as feeding and vets’ bills - are tax-deductible expenses.

If you have a pet dog that also carries out some guard duties, for example guarding a home office at night, then my opinion would be that you could claim a proportion of the dog’s food, vet fees, insurance, etc. as business costs.

Guide dogs

There is no guidance from HM Revenue about whether the cost of looking after a guide dog or hearing dog might ever be a business cost.

My opinion would be that, in general, you almost certainly couldn’t claim any costs for these animals, as their main function is to help you with your daily life rather than in your business.

If you would be unable to run your business without the help of your dog, for example you wouldn’t be able to travel to visit your customers without your guide dog, then my suggestion would be to claim part of the cost of looking after the dog as a business cost – and be prepared to argue this with HM Revenue if challenged.

A business that cares for animals

If your business is the care of animals, for example a boarding kennels and cattery, then the cost of feeding the animals in your care, their veterinary fees, and all the costs of looking after them, would be allowable expenses for tax.

What about Uggie?

If you’ve seen The Artist you’ll know who Uggie is – and the cost to the film company of looking after him would definitely be allowable for tax!

But first, a story. Once upon a time (last November to be exact) the benevolent and all powerful HMRC laid down a challenge to the software kingdom. They felt that good record keeping was still way too difficult for many self-employed people. 

Under HMRC guidelines, some of these people (who operate under the VAT threshold if you want to get technical) only have to file 3 line accounts: recording income, expenditure and profit for the year. They also often need to be able to record these when they're on the move or out of the office on a job.

You know we love a good challenge so we set about developing a new iPhone app with just these people in mind. The result is Earnest, available for free in the iTunes App Store now. 

Who is that guy?

Essentially, Earnest is a totally free iPhone app for the self-employed, who want to track income and expenses, and know how much tax they owe.

With Earnest you can:

• Record income and expenses
• See your bottom line profit or loss
• Get estimates on how much tax you owe
• See upcoming tax deadlines and dates with a "Tax To-do" list
• Capture and store image receipts using your iPhone camera
• Get Alerted for important tax dates, and as you near the VAT Threshold
• Categorise transactions by payment method
• Record cash and non-cash transactions
• Add notes to entries
• Record CIS deductions made on income
• Back up your data by email

In many ways, we've come to think of Earnest as FreeAgent's scrappy little brother, and it's been a huge amount of fun bringing the little guy to life. Since it started, the project has taken a life of its own and we're really excited about the new member of the FreeAgent family and what he might do next.

Is it a FreeAgent app?

The honest answer here is no. While Earnest will work great for self-employed people with simple record keeping needs, it doesn’t have any of the workflow or accounting features of its big sister FreeAgent. We do anticipate however that some people will “grow up” into FreeAgent as their business matures, and they require something a bit more fully featured.

That’s not not to say that we don’t think mobile is important for FreeAgent users, and we’re actively working towards a mobile solution for all FreeAgent users in 2012. Earnest might give you some inkling into the thinking behind that.

You can find out more about Earnest at www.earnestapp.com or download it from the iTunes App Store for free!

But when it comes to being ridiculous, there are times when HMRC beats even the best April 1st efforts. We’ve already seen the fallout from the latest VAT changes in the Budget about when tax is applicable to hot or cold food - and the debate about whether this is unfair to pasty-makers - but there are plenty of other occasions when UK tax rules are downright silly.

So here’s the challenge for you. We’ve come up with five tax statements in the list below, but only one of them is incorrect. Believe it or not, the other four are completely accurate.

All you have to do is tell us which is the odd one out. So if you think you know which one's a load of rubbish, post a comment below and tell us which it is - and, if you’re feeling really clever, you can also tell us what's wrong with it.

Our only rule is that accountants aren’t allowed to enter! If you’re an accountant you know where to find the answer if you don’t know it already - so we’ll be keeping an eye out and moderating the comments for any suspiciously accounting-esque responses! :)

OK, so here’s your list.

Remember, only one of these is not 100% true!

1) Mobility aids for the elderly are subject to the reduced rate of 5% VAT, whereas equipment for blind and disabled people is zero-rated. (Don’t ask me what happens if someone is both elderly and blind.)

2) Chocolate spread is zero-rated for VAT but chocolate bars are standard-rated.

3) Milk shakes are zero-rated for VAT but the flavouring for them is standard-rated - unless that flavouring is an extract of coffee or cocoa, in which case it would be zero-rated.

4) When an employee arranges private travel for him/herself and you pay the travel supplier direct, that cost is not subject to PAYE, only to NIC. But if the employee pays for the travel and you reimburse your employee, the cost is subject to both PAYE and NIC.

5) If an employer reimburses an employee for the cost of clothing (that’s not a uniform or protective clothing) to wear at work, then that cost is subject to PAYE - but it will only be subject to NIC if the clothing is not durable. That means paying an employee for the cost of a pair of tights would be subject to NIC, but reimbursing them for a pair of shoes wouldn’t be.

Which of those five is not completely true?

You tell us!

Before that though, a bit of background.

The problems

From a design perspective, I've never been particularly happy with our current Overview screen. The multiple panels are great for quickly seeing what needs attention in your business, but there are some fundamental design and usability issues:

• There's simply far too much information on display at any one time. For first time users, and even seasoned veterans, it's simply overwhelming.
• There's no organisation of the different blocks of data, so the information on display lacks hierarchy.
• The charts are currently drawn in Flash, which don't work on many mobile devices, including the iPhone and iPad.
• The page doesn't work well at small screen sizes.

Beyond the design problems there are serious issues with the performance of the Overview page, and it’s one of the slowest pages in the app. As we scale this not only affects individual users with lots of data but everyone using the app. Which is bad.

As a result keeping the Overview page as is, simply isn’t an option for us. Which leaves us with 2 options:

• Permanently remove content from the Overview, trimming it down
• Keeping the existing content but coming up with an elegant way to handle the current information that works from a design and performance perspective.

As you might have guessed, we’ve gone down the latter route.

The solution

With the current problems in mind, we knew what we wanted to achieve with the new Overview screen:

• The same rich, at-a-glance view of your current financial position
• Significantly better page performance, achieved through "lazy loading" of the content.
• Introduce a logical grouping of the different content blocks to create natural content hierarchy.
• Migrate our charts from Flash to a JS-based charting library for better accessibility and device support
• Better layout at smaller screen sizes and across a range of devices.

The new Overview

The new layout now contains 4 grouped "tab panels" roughly split up into the following areas:

• Money in - Invoicing, projects, timeslips
• Money out - expenses and bills
• Banking
• Accounting and tax

Grouping the information together like this significantly reduces the amount of information on display at any one time, which means the Overview is much cleaner and faster to load.

The grouped panels have fixed heights and equal weighting, resulting in better balance and easier scanning. If there’s lots of data within a particular panel (say you have lots of outstanding Invoices) you can scroll through all the entries using the arrow buttons at the bottom of each panel.

Cashflow reporting

In addition to reworking the existing data panels, we’re also adding in some great new functionality in the form of a historic cashflow panel.

The cashflow panel sums your money in/out across all bank accounts and displays a monthly breakdown, alongside totals for different date ranges. Really useful to see how the bottom line of your business has been performing.

Looking good

All of this comes together in a new design that works great on smaller screens and devices like the iPad, where the new Javascript powered charts display perfectly.

There are a few other extras on the Overview page, but we don’t want to completely spoil all the surprises just yet.

As you already know, FreeAgent has a pretty intuitive system in place for uploading bank statements into your account. However, we’ve often been asked whether there’s any way of circumventing the whole “download and then re-upload into FreeAgent” step for bank statements. A lot of our customers have requested the option to have their bank transactions imported directly into FreeAgent - so we’ve been working away at making this a reality.

And today we’re delighted to announce that our first automated bank feeds feature in FreeAgent is now up and running.

Available to all FreeAgent users who are Barclays Business account holders, the new feature allows you to set up automatic daily feeds of transactions from your Barclays Business account directly into FreeAgent, without the need to mess around with electronic statements.

Getting started is simple. You just hit the Enable Daily Feeds button when viewing your Barclays Business account in FreeAgent and once it’s all set up your transactions will be automatically loaded every day into FreeAgent.

Essentially, by using the daily feeds feature, you’ll get faster and more efficient access to your bank data - allowing you an even better way of staying on top of your bookkeeping. It’s an intuitive upgrade that gives direct, reliable and secure access to your business accounts and we reckon it’s going to be a very popular addition to FreeAgent.

We are the first, and currently only, app to be able to provide this direct link with Barclays Business and we're very excited about the benefit it will bring to our users.

We’ll be rolling this out gradually to users over the next few weeks, so if you can’t see the option yet don’t panic - it’s coming!

Of course, we’ll also be working hard on our wider bank feed strategy to ensure all FreeAgent users have the option of automatically importing bank statements into their accounts. It's taken us much longer than we'd hoped but we're getting close now and we'll be sharing more concrete details about this soon.