What is the Best Accounting Software for my Small Business

if you run a small business or consultancy, chances are you're really busy. having accounting software in your will simplify routine tasks and free up some of time. before we go ahead review the main players uk market, it's worth pointing out what any package must be.

• Cloud-based

• Allows you to prepare and send Invoices

• Connects to your bank account

• Making Tax Digital (MTD) enabled

These are table-stakes. All four of the packages under review offer these as standard.

If you have an accountant (and you really should), it's a good idea to get their advice on the best accounting software for your business. They will likely have knowledge of both your business needs and the various packages available and will be able to match you to the most suitable accounting package appropriate to your business.

They may also have partnerships with one or more software package providers. You might be able to get a discounted rate, or even have the package bundled into your monthly accounting fee.

FreeAgent

Full Disclosure: Acumenica are FreeAgent platinum partners and work very closely with both the application and the team. We have tried not to let this affect our review.

FreeAgent is designed specifically for freelancers, contractors, and small business owners. It offers features such as invoicing, expense tracking, self-assessment tax calculations, and more. It's known for its simplicity and user-friendly interface.

Best for

Contractors, Freelancers, Consultancies, Service businesses

Key benefits

• High quality, user friendly design

• No add-ons for payroll, expenses management, or CIS

• Free for NatWest, RBS, Ulster Bank and Mettle customers

• Truly exceptional customer support

Disadvantages

• Limited reporting options

• Not great for retail businesses

• Payroll restricted to monthly processing

Pricing

• Sole trader £19 per month

• Limited company £29 per month

Xero

Xero is a cloud-based accounting software known for its user-friendly interface and comprehensive features. It offers tools for invoicing, expense tracking, payroll, bank reconciliation, and more. It's particularly popular among small businesses and accountants in the UK.

Best for

Small businesses with ambition to scale.

Key benefits

• User friendly interface

• Lots and lots of integrations available

• Transaction matching speeds up bank reconciliation

Disadvantages

• Customer support has been reported as not good enough

• Starter plans are restricted to very low transaction numbers

• Some of the advanced features can be difficult to understand

Pricing

• Starter £14 per month

• Standard £28 per month

• Premium £36 per month

Add-ons

• Payroll £5 per month for 5 employees then £1 per month per employee.
• Expenses £2.50 per user per month.

Quickbooks

QuickBooks Online (QBO) is another widely used cloud-based accounting solution. It offers various features for financial management, including invoicing, expense tracking, tax calculations, and more. QuickBooks has a strong presence in the UK market and offers localised versions to meet UK accounting standards.

Best for

Best for small to medium-sized businesses (SMBs) with up to 25 users

Key benefits

• User friendly

• Customisable

• Lots of automation

Disadvantages

• Can be overwhelming for small business owners

• Customer support has had negative reviews

• Can be expensive

• Annoying TV Ad!!

Pricing

• There are so many options to choose from, pricing can be difficult to navigate. Entry level is £10 per month all the way up to £70 per month.

Sage Business Cloud Accounting

Sage is a well-known name in the accounting software industry. Their cloud-based accounting software offers features like invoicing, expense tracking, and tax calculations. It's designed to be easy to use and is suitable for small businesses.

Best for

Sage is good all-rounder but might be best suited for those business owners with experience of using accounting packages as it can be quite complex.

Key benefits

• above average reporting tools and dashboards

• good range of bank connections with efficient transaction matching

• clear upgrade path to more sophisticated packages for larger businesses

Disadvantages

• receipts auto-entry is an optional (paid) extra

• quotes and estimates only included in more expensive ‘Plus' package

Pricing

• Start £14 per month 

• Standard £28 per month

• Plus £36 per month

• Payroll £8 per month per user

Other options

Do bear in mind that, in addition to these top four accounting software packages, there are myriad other options, ranging in quality and price. Some are good, some are poor. Some are cheap, some are expensive, some are free. Unfortunately, we haven't got the manpower to review them all for you.

Your bank might also offer free book-keeping tools as part of your account package. Remember though that these can be very basic and might lack certain features that you need.

Some of the other options you might want to look at (in no particular order):

• Kashflow
• Freshbooks
• Clear Books
• Wave Financial
• Zoho Books
• Crunch
• Pandle
• Nomisma

But there are many more.

And the winner is…

The winner will of course depend on your needs, your budget and your accountant.

Our take is this:

If you have a consultancy, contractor or freelancer business and you tend not to have complicated reporting requirements, then FreeAgent is the one for you.

For all other businesses, on balance, we would pick Xero.

Conclusion

There have been enormous strides taken in the small business accounting packages market in recent years. Each of the mentioned accounting packages offers a unique blend of features and benefits, tailored to address the distinct needs of UK small businesses. When choosing the best accounting software for your business, consider factors such as user interface, expense management, integration with other tools you rely on, and what your accountant suggests. If you do this, you can streamline your business admin and focus more on growth and innovation.

This article was written in 2023 and is here by the kind permission of Alan Broome, of Acumenica, a Scotland based  business providing accounting and tax services. 

Acumenica can be found here