- Connects to other bank accounts
- Two paid types of accounts
- Business insights tool
- Sorts out taxes
- Send invoices
- Claim expenses
Coconut is an up and coming accounting and tax tool that comes with a current business account that’s not available to new customers at the moment.
As this bookkeeping app is consolidating its business, we decided to take a look if their bookkeeping and tax app can lure customers away from other popular digital banks like Starling that offer an all-in-one business account package.
But first, here’s our short verdict:
Coconut is a small bookkeeping and tax app that still has a long way to go. Without its current account, you’re better off getting a proper digital business account that offers more capabilities for less money and integration with accounting tools like Xero or Quickbooks.
Coconut is a digital banking app that offers smart bookkeeping and tax management for sole traders, freelancers, the self-employed, and small business owners. It was founded in 2016 by Adam Goodall and Sam O’Connor and is based in the UK and registered with the Financial Conduct Authority (FCA).
When customers register with Coconut, their funds are held in a segregated Barclays account to conform to the FCA rules of e-money management.
Why is Coconut so special?
Coconut is a digital financial service, meaning the entire service runs via an app on your phone, and there are no physical branches. You can connect as many bank accounts with the app to get a consolidated view of your business.
The app lets you track all your business transactions kissing spreadsheets goodbye. By collecting data on your self-employed income, loans, rental and PAYE income, you can get an overview of the taxes boxed to the government.
Pros and cons
- 7-day free trial
- Sends branded invoices
- Tracks payments and sends reminders
- Share your business records in real-time
- 25+ UK current accounts and credit cards
- No desktop capabilities
- Not accepting current account applications
- No accounting software integration
- No international payments in or out
- No IBAN
- £3.60 or £12 monthly fee
- £1 per ATM withdrawal
- £1 per £500 cash deposit
- 20p per bank transfer (after reaching limit)
- 3% fee on foreign card purchases
Who is Coconut for?
Coconut is only available in the UK to UK registered businesses or sole traders. It was tailor-made for sole traders and freelancers to spend more time involved in their business and less time doing expenses and taxes.
The app was designed to give you a detailed overview of your business, help you calculate taxes, track expenses and income. You can connect as many business or personal bank accounts and cards.
How to open a Coconut account?
To sign up, you have to download the app, fill in personal details, validate your identity, and your new Coconut account will be opened, and you’ll get your debit card in the post.
The sign-up process is far more comfortable than the paperwork-laden processes at traditional banks, and usually, accounts are up and running within minutes.
You have to be aware that the company isn’t accepting new customers for the checking account at the moment.
How to add funds?
Coconut accounts come with an account number and sort code just like any fully functioning bank account in the UK, meaning you can add funds to your account via direct debit or quick transfer from another bank account.
There’s no capability to fund your account via an international money transfer.
Coconut also makes it possible for customers to deposit cash into their accounts at their local Post Office; however, customers should be aware that the Post office charges a small fee for this service.
Side Hustle (£3.60/m)
- 30 categorised transactions for tax per month
- 3 invoices per month
- 1-3 connected institutions
- Unlimited categorised transactions per month
- Unlimited invoices per month
- 4+ connected institutions
- Share access with your accountant
Coconut recently moved from one free and one paid account to two paid accounts. They start at £3.60 per month which isn’t much. If you’re just starting out and don’t have too many expenses and transactions in general, the inexpensive ‘Side Hustle’ account might be for you.
You won’t be able to share your business insight with your accountant and only connect a couple of accounts.
The ‘Professional’ account offers unlimited categorizations and invoices and offers four or more accounts that you can connect. You can also share your insights with your accountant.
By connecting your bank accounts to Coconut, you’ll get a complete overview of your business expenses, taxes, and income in the Business tab of the app.
You are in complete control of how much you want to put aside for pensions, income tax, insurance, and other savings or funds.
The app gives you a breakdown and makes it easy to see your take-home pay or your bottom line. All of your transactions from last two years are readily available in the Coconut app for all your connected banks and cards.
If you still don’t have a good invoicing tool, you’ll be happy to know that Coconut lets you create and send personalized invoices with the ability to duplicate them or make recurring.
Of course, you can check the payment status of any invoice at any time and send reminders to customers with one tap. The app will notify you when you get paid and automatically match the payment to your invoice. All in all, a good invoicing capability by Coconut here.
Listen, we all hate doing our business expenses. They’re usually a jumble of emails and physical receipts that we do on the last day available to us.
Coconut will save you time, energy, and money with real-time bookkeeping and automatic receipt categorizing. Take a photo of each receipt as you spend and attach them to each transaction. Easy.
Sort your taxes
Nothing’s certain but death and taxes. By doing your taxes as you go along, you’ll avoid nasty surprises when the tax season arrives. The Coconut app gives you a flowing estimate of how much tax you owe using the cash accounting basis. That way, you’ll never get to the end of the year with an unforeseen tax bill.
By collecting all the info on your income and expenses, the app will give you an understanding of what you can claim and prepare the numbers for your tax return.
The Coconut Accountant Portal lets you share business records in real-time with your accountant. You can invite them through the Coconut app to see your activity and data whenever they need to.
The Coconut app is designed to make business banking as straightforward as possible, and each feature is clear and easy to use. Earnings are the focus of this app, appearing on the homepage as soon as you launch it.
From there, users can click on different features to see a tax estimation based on their earnings, see an easy-to-understand record of their spending, and automated alerts where tax returns are due.
The Coconut app also makes it easy to see a record of paid and unpaid invoices and their value. Handy security features such as instant activation and deactivation of your card also provide customers with peace of mind about their money.
How is Coconut regulated?
Coconut isn’t a bank but a fintech company with an electronic money license with the Financial Conduct Authority (FCA).
Is my money safe with Coconut?
Coconut has to obey FCA’s rules and keep deposits safe under e-money legislation rules and keep them ringfenced in a separate account in a reputable bank, in this case, Barclays.
Although your deposits aren’t insured with the FSCS scheme, your money would be returned to you directly from Barclays if something were to happen to Coconut.
Because they’re not a bank, they also don’t use your money for investments or any other activity that isn’t connected to the primary purpose of your account and deposit.
If you lose or misplace your card, you can block it from the app to prevent someone from using it. Coconut also won’t store your card’s full number or anything of your security code and PIN on their servers.
Who owns Coconut?
Coconut is based in London and was founded in 2016 by Adam Goodall and Sam O’Connor, now the company’s CEO.
The company raised more than $5 million from five rounds of funding. The last round, in July 2020, brought in £2.5 million.
It has 11 investors, including Crowdcube, Kuvi Capital, Sajid Sabir, QVentures, Techstars, Chris Adelsbach, and others.
Coconut has a 4.5-star rating out of 5 on Trustpilot, with 83% of 620 reviewers giving it an excellent mark and only 5% a bad one. With a score of 4.5 stars, Coconut is the same as Monzo (4.5) and better than Starling (4.3) and Revolut (4.4), for example.
Coconut’s customer service is available Monday to Friday from 9 am to 5 pm, Saturdays and BH from 10 am to 4 pm. You can use live chat from the app to contact them directly, email them at email@example.com or call them on +44 (0) 808 169 9928 for emergencies.
Also, if you’ve lost your phone or don’t recognize a transaction, you can contact them at firstname.lastname@example.org.
UK’s digital banking space is very competitive, with more than capable banks catering to freelancers and small business owners. Here are just a few of Coconut’s competitors and alternatives.
Tide is a digital financial services provider for small to medium-sized businesses. It has more than 300,000 customers in the UK. You can get up to 35 Tide Expense Cards for your team and keep track of spending. Free Mastercards allow you to spend without fees in the UK and abroad.
mettle is NatWest’s business account for sole traders and small limited companies. It lets you create and send invoices from the app, categorize business transactions to reduce admin, and much more.
Voted the best bank for the last four years, Starling also acquired more than 370,000 UK businesses. Their free account offers access to multiple directors, integration with major accounting tools, automated spending categorization, receipt capture, and much more.
The bottom line
At the time of writing this Coconut review, the company wasn’t accepting new current account customers in order to focus on existing features and users. The only option was to connect to your other bank accounts or cards.
There are also no international payments, which means no IBAN. Although there’s a 7-day free trial, there are no free accounts, something that other digital banks readily provide.
With its limited capability, it’s hard to recommend Coconut at the moment as you can find more features with accounting software or app. The company has still a long way to go.
Adrian Volenik is a fintech enthusiast who loves testing and reviewing digital banking apps and financial products in general. How many digital banking accounts can one man have? Not enough, if you ask Adrian. As his wallet will soon explode if he doesn’t cut back on the number of cards.