With MTD ITSA (Making Tax Digital for Income Tax Self Assessment) in place now, a lot of UK taxpayers are looking to move away from spreadsheets and onto the accounting software. (If you’re still in a muddle about the changes, this is a great guide)
Moving from Excel to a cloud platform like Xero, QuickBooks, or FreeAgent is a clean slate moment. To avoid bringing old errors into your new system, follow this step-by-step migration checklist:
1. Pick Your Go-Live Date
Don’t try to move mid-month. The best times to switch are:
- The start of a new Financial Year (e.g., 6th April for UK sole traders).
- The start of a new VAT quarter.
- The first day of a new month (if you’re okay with mid-year manual adjustments).
2. Scrub Your Spreadsheet Data
Before importing, clean your Excel or Google Sheets data:
- Check for Duplicates: Remove any double-entered invoices or expenses.
- Standardise Names: Ensure “Apple” and “Apple.com” are merged into one contact.
- Verify Balances: Make sure your final spreadsheet balance matches your actual bank statement on the closing date.
3. Export Your Core Lists
You don’t need to move every single historical transaction (accountants can handle the Opening Balances). Just export these three lists as CSV files:
- Customer List: Name, email, and address.
- Supplier List: Regular vendors you pay.
- Product/Service List: What you sell and at what price.
4. Set Up the Chart of Accounts
This is just a fancy term for your Categories (e.g., Rent, Travel, Stationery).
- The Default Path: Most accounting software provides a standard UK small business chart (list). Use this rather than trying to recreate your spreadsheet categories – you can always modify it and add a few new categories to match your requirements.
5. Connect Your Bank Feed FIRST
This is the magic step. Once you connect your UK business bank account to the accounting software via Open Banking:
- The software will pull in the last 90 days (or more) of data automatically.
- You now need to exclude any transactions that occurred pre-conversion, since they are included in your Opening Balances (see step 6)
- You can then match these transactions to any outstanding invoices you’ve imported and categorise all the others.
6. Enter Your Opening Balances
This is where people often get stuck. You need to tell the software exactly where you stood on Day 1:
- Bank Balance: What was in the account?
- Accounts Receivable: Who still owed you money from the spreadsheet era?
- Accounts Payable: Who did you still owe money to?
- Any other balances from the Balance Sheet need to be reflected as well such as fixed and current assets as well as liabilities and equity.
- If your chosen conversion date is mid-year, you will also need to enter Year To Date figures from Profit and Loss accounts.
- Tip: Your accountant can usually do this bit for you.
7. The Parallel Run (Optional but Recommended)
For the first 30 days, keep your spreadsheet updated alongside the new accounting software.
- Compare the two at the end of the month.
- If the balances match, you can officially retire the spreadsheet.
8. Set Up Receipt Capture
Download the mobile app (Xero, QuickBooks, or FreeAgent) and practice snapping a photo of a petrol or lunch receipt. Seeing it appear in the software instantly is usually the moment most people realise they’ll never go back to Excel.
A last few words:
We think it is a great opportunity to streamline and optimise your processes and admin. We would be more than happy to handle the move for you ensuring smooth transition and error-free, clean starting point in your new accounting software. You can contact us here to arrange a free discovery call.
Also, here’s our honest take on the three most popular accounting software solutions. We have been using them for years and know all the small details that make them a hit or a miss when choosing the right one.
Want to know more about who we are? You can find more here – we’re AAT licenced accountants based in Southampton who work with businesses all across the UK!