How to Set Up Capsule CRM for a UK Service Business

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Start Here: Your Plan Decides Which Steps You Can Follow

Before the first click, check which Capsule plan you are on, because three of the steps below are not available on all of them.

• Free gives 2 users, 250 contacts, 1 pipeline, 5 custom fields, and no Xero or QuickBooks integration
• Starter, £14 per user per month annually, adds the accounting integrations and 30,000 contacts
• Growth, £27, adds multiple pipelines, project boards, workflow automation and proper reporting
• Advanced, £42, raises the pipeline and board allowance to 50

Most setup guides, including the version this one is based on, assume everything is available throughout. If you are on the free plan, Step 5 will not work and Step 3 will run out of custom fields. Our Capsule pricing guide has the full breakdown.

With that established, here is the order to do this in.

Step 1: Clean Your Contact List Before You Import

The single biggest mistake is dumping a messy spreadsheet into a fresh CRM. An hour of cleaning saves days.

Remove duplicates. Use Excel’s Remove Duplicates or Data > Remove Duplicates in Google Sheets, and check on email and name — the same person appears twice under slightly different spellings more often than you would think.

Standardise company names. “Smith & Co”, “Smith and Co” and “Smith & Co Ltd” are one business. Pick a format.

Fill in the basics. First name, last name, company, email, phone. Empty records are worse than no record, because they look like data.

Add a data source column. Referral, website enquiry, existing client, networking event. You will need this for your lawful basis records in Step 4, and reconstructing it later is almost impossible.

Add a date-obtained column. Also for Step 4, and it is the field people most regret not capturing.

Archive rather than delete. A client from four years ago may come back. A separate “inactive” tab beats deletion.

Importing

Capsule takes CSV. Go to People & Organisations > Import and map each column to a Capsule field. Anything that does not map needs a custom field creating first, so read Step 3 before you import rather than after.

Two formatting points that cause most import failures: save as UTF-8 so accented characters and apostrophes survive, and use ISO dates (YYYY-MM-DD) so Capsule does not read 03/04/2026 as March. Our guide to migrating from spreadsheets to a CRM covers the rest.

After import Capsule flags likely duplicates. Review them individually — two people at the same company with similar names are a genuine pair, not a merge.

Step 2: Build a Pipeline That Matches How You Sell

Capsule’s default stages are generic. Go to Settings > Sales Pipeline and replace them.

A structure that works for most consultants, agencies, trades and freelancers:

1. Enquiry received — contact made, no real conversation yet
2. Discovery call booked — a time is agreed
3. Proposal sent — quote, proposal or statement of work issued
4. Proposal follow-up — chased once, no answer either way
5. Verbal agreement — yes in principle, nothing signed
6. Contract sent — terms with them for signature
7. Won — signed, deposit paid, work underway
8. Lost / no decision — with a reason, so patterns surface

Assign a probability to each stage, and be honest. A booked discovery call is not an 80% close for most service businesses, and optimistic percentages make the forecast useless rather than encouraging.

One Pipeline or Several?

If you want new business and renewals tracked separately, or distinct processes for different services, that needs multiple pipelines — a Growth feature at £27 per user. The free plan is limited to one, and Starter does not include multiple pipelines either.

On a single pipeline you can approximate it with tags or an opportunity custom field for project type, which is a workable compromise if you are not ready for Growth.

Make It a Habit

Opportunities only work if they get updated. Build the habit of updating Capsule at the end of each client call rather than on a Friday afternoon, when you will not remember.

Step 3: Custom Fields Worth Adding

Settings > Custom Fields, then choose whether the field applies to people, organisations or opportunities.

On contacts and organisations:

• Lawful basis — a dropdown recording contract, legitimate interests or consent
• Basis established date — when that basis arose
• Marketing permission — separate from lawful basis, and Step 7 explains why this is not the same field
• Referral source — what marketing actually works
• VAT number — if you invoice businesses
• Companies House number — for due diligence on larger clients
• County or region — easier filtering than address fields if you cover multiple areas

On opportunities:

• Project type — which services you win
• Decision maker — who signs off
• Budget confirmed — stops you polishing proposals for people without money

Mind the Free Plan Limit

That list is more fields than the free plan’s five allows. If you are on free, the five that earn their place are lawful basis, basis established date, marketing permission, referral source and project type. The rest can wait until you are paying.

Step 4: UK GDPR — Basis, Records, and Two Duties You May Not Know About

Not optional, and the position changed this year.

The Three Bases That Apply to a CRM

Contract. You hold the data because you have a contract with that person or are taking steps to enter one. Covers existing clients cleanly.

Legitimate interests. A genuine business reason, not overridden by the individual’s rights. Covers prospects you have had meaningful contact with. It does not cover a purchased list.

Consent. They actively opted in. The most burdensome to maintain, because it must be freely given, specific, informed and withdrawable.

The ICO’s position is that you should not default to consent because it feels safest. If legitimate interests genuinely applies, use it — and document a Legitimate Interests Assessment.

What to Record Against Each Contact

Which basis applies, the date it was established, and for consent specifically how it was given (“website enquiry form, 14 March 2026”) plus any withdrawal.

Subject Access Requests: You Have One Month

The draft advice to “keep a note of the process somewhere” understates this. A subject access request must be answered within one month, extendable by a further two months for complex or multiple requests, and you must tell the person you are extending within that first month.

Capsule’s export pulls everything held against a contact, which makes the mechanics easy. Know the deadline before one arrives.

One helpful change: the Data (Use and Access) Act 2025 codified that your search need only be reasonable and proportionate, which settles a long-running argument about how exhaustively you have to look.

The Complaints Procedure You Now Need

This is the duty most small businesses have not heard about. Under the Data (Use and Access) Act 2025, a data protection complaints requirement took effect on 19 June 2026, and individuals are now expected to complain to you first before going to the ICO.

What you need in place:

• An accessible way to complain — an electronic form plus email or post, open to anyone and not only clients
• Acknowledgement within 30 days of receipt
• Prompt, appropriate steps and reasonable enquiries, keeping the person updated
• A decision explained in plain language, telling them they can escalate to the ICO
• The route prominently linked from your privacy notice and website

No small business exemption has been stated. ICO draft guidance proposes resolving complaints within three months, though the Act sets no hard outcome deadline.

Practically: add a line and a link to your privacy policy, and set up a Capsule task template so a complaint gets acknowledged inside 30 days.

Your Processor Agreement

Capsule processes personal data on your behalf, which makes it a processor and you the controller. UK GDPR Article 28 requires a written agreement. Capsule publishes a data processing addendum; find it, read it, and keep a copy with your records. Same for Transpond if you use it.

Retention

Do not keep data indefinitely. Set a Capsule task to review inactive contacts annually. The ICO prescribes no fixed period for most business data — the standard is “as long as necessary”, and the obligation is to be able to justify it.

Step 5: Connect Xero or QuickBooks

Available from Starter upwards. Not on the free plan, which is the first thing to know if the accounting connection is why you chose Capsule.

Which Way the Data Flows

This is the part guides routinely get backwards, so it is worth being exact.

Capsule is the source for your contact data. The sync pushes customer records — and optionally suppliers — from Capsule into Xero. It does not pull your Xero contacts into Capsule, and changes made in Xero are not described as flowing back.

The working rule for you and your bookkeeper: edit contacts in Capsule, never in Xero. Fix an address in Xero and you have created a discrepancy the integration will not resolve.

What You Will See in Capsule

Against each contact record: a summary of invoices, payment due dates, whether invoices are paid, overdue amounts, and any estimates issued.

You may read that you can raise Xero invoices from within Capsule. Capsule’s own integration page does not document that, so treat it as unconfirmed and test it in your own account before building a workflow around it. The detail is in our Capsule Xero integration guide.

Setting It Up, and Duplicates

Settings > Integrations > Xero, then the OAuth flow. QuickBooks works the same way.

If you have just imported contacts that also exist in your accounting software, check for duplicates afterwards. Matching is on email address and it does not always get it right.

Step 6: Set Up Tasks So Follow-Ups Actually Happen

The commonest CRM failure is contacts sitting untouched because nobody set a reminder.

• Follow up on proposal — set it whenever an opportunity moves to Proposal sent, due five working days out
• Check in with client — every four to six weeks on active clients
• Re-engage cold prospect — 30 days after a discovery call goes quiet, one more try before archiving
• Annual data review — on inactive contacts, per Step 4
• Acknowledge data complaint — a template task, well inside the 30-day limit

The Tasks view shows everything due and overdue. Checking it first thing takes under a minute. Tasks can be assigned to team members, which keeps accountability clear without a separate project tool.

Automating task creation on a stage change requires workflow automation, a Growth feature. Below that, set them by hand.

Step 7: Email Campaigns, and the Rule That Overrides Your Lawful Basis

Capsule has no email marketing. Campaigns run through Transpond by Capsule, which integrates natively but is a separate paid subscription — Capsule advertises the marketing add-on from a paid monthly figure, so do not plan around a free tier without confirming one exists. Our Transpond versus Brevo comparison covers the alternatives.

You can segment in Capsule by tag or custom field — “active clients in the South East”, “prospects who received a proposal in the last six months” — and push the segment across.

Your GDPR Lawful Basis Is Not Marketing Permission

Here is the trap, and it is the most important correction in this guide.

Guides commonly tell you to filter on the lawful basis field from Step 3 so you only email people you have a basis to hold. That is the wrong test. Marketing email is governed by PECR, a separate regime from UK GDPR, and legitimate interests is not a route to sending it.

To email an individual subscriber you need either consent, or the soft opt-in: you obtained their details in the course of selling or negotiating to sell to them, the marketing is for similar products or services, and they were given a simple way to refuse both at collection and in every message since.

Two things that catch UK service businesses out:

• Sole traders and unincorporated partnerships count as individual subscribers, so the corporate exemption does not cover them. Limited companies, LLPs and public bodies are corporate subscribers and can be emailed without consent, subject to the right to object.
• A contact you hold perfectly lawfully under legitimate interests may still be someone you cannot lawfully email.

Which is why Step 3 lists marketing permission as its own field, separate from lawful basis. Segment on that one. Our guide to GDPR rules for email marketing sets out the soft opt-in conditions in full.

Worth knowing what is at stake: the Data (Use and Access) Act raised the maximum PECR penalty from £500,000 to the UK GDPR ceiling of £17.5 million or 4% of global turnover.

FAQ

Which Capsule plan do most UK service businesses need?

Starter at £14 covers contacts, one pipeline and the accounting integrations. Most service businesses end up on Growth at £27, because that is where multiple pipelines, project boards, workflow automation and real reporting sit. Our fit assessment for consultants and agencies goes through the decision.

How many contacts can I import on the free plan?

250, with 2 users, 1 pipeline and 5 custom fields. Workable to evaluate the software, and most active businesses clear it within months.

Can I use Capsule for Making Tax Digital?

No. Capsule is not accounting software. MTD for Income Tax has applied since 6 April 2026 to sole traders and landlords with qualifying income above £50,000, dropping to £30,000 in April 2027 and £20,000 in April 2028, and it is handled in Xero, QuickBooks or equivalent. Connecting Capsule keeps income attributed to the right client, which makes quarterly updates less painful but does not make you compliant.

Do I need to tell contacts they are in my CRM?

You need a lawful basis and an accurate, accessible privacy notice describing how you use personal data. Individual notification of every contact is not normally required. Since 19 June 2026 your privacy notice should also prominently link to your data protection complaints route.

Does the Xero integration import my Xero contacts?

No, and this is the common misconception. Capsule is the source for contact data and pushes to Xero. Invoice and payment information from Xero displays in Capsule, but contacts flow one way.

Can I email everyone I have a lawful basis to hold?

No. Holding data and marketing to it are different tests. Marketing email needs PECR consent or the soft opt-in, and sole traders and unincorporated partnerships count as individuals rather than businesses.

Setting Up Capsule CRM: The Bottom Line

Do it in this order: clean the spreadsheet, import as UTF-8 with ISO dates, build a pipeline that matches how you actually sell, add the custom fields, record your lawful basis and marketing permission as separate fields, connect your accounting software, and set the follow-up tasks.

Three things to get right that most guides miss. The Xero sync runs Capsule to Xero, so contacts get edited in Capsule and nowhere else. Multiple pipelines, workflow automation and project boards are Growth at £27, not Starter. And your GDPR lawful basis is not permission to send marketing — that is PECR, and it has its own test.

An hour on the groundwork is worth weeks later, mostly because it is the difference between data you trust and data you second-guess. If Capsule turns out not to fit, our Capsule CRM alternatives comparison covers seven options with UK pricing.

Pricing and features correct at time of writing. Plans and capabilities are subject to change — always confirm current details on the provider’s website before purchasing. This article is general information, not legal advice; check the ICO’s current guidance or speak to a data protection professional about your own obligations.