6 Accounting Software for Small Business UK

Hannah Conway
12.12.19
6 minute read

In 2018, almost 750,000 self-employed people in the UK filed their tax returns late. That’s more people than the entire population of Luxembourg potentially facing a £100 fine.¹

Ensuring that you are completing your VAT-tax returns correctly, on-time and compliant with the HMRC’s rules is vital. Finding the right small business accounting software package can help with this. There’s no one-size fits all solution, so we’ve picked out some software options, to help in your research. This is not intended as a comparison.

Making Tax Digital

It’s important that the software you choose, allows you to be compliant with HMRC for your VAT-tax returns.

Making Tax Digital (MTD) aims at helping make it easier for individuals and businesses to get their tax right. Part of this is Making Tax Digital for VAT, that means many VAT-registered businesses with taxable turnover above the VAT threshold are required to use the MTD service to keep their records digitally, and use software to submit their VAT-returns. This means that you’ll need a software, that is compliant with MTD. All of those included below are compatible with Making Tax Digital, at the time of writing, but always check directly with HMRC if you’re unsure.

*HMRC does not endorse or recommend any one product or software provider

Xero

Xero is an ​online​ ​accounting​ ​software offering a comprehensive range of features specifically tailored for small businesses. It’s​ ​small​ ​business​ ​accounting software​ ​that’s​ ​simple,​ ​smart​ ​and​ ​occasionally​ ​magical.

  • Unlimited Users.
  • Free for 3 months, for up-to 5 employees - then £5 /mo. Add additional employees for just £1 each.
  • Get paid faster with online invoicing - sent direct to your customers.
  • App available for iOS and Android.
  • Xero’s a HMRC-recognised software³, so you can use it to complete your VAT returns.⁴

Use their mobile app to reconcile, send invoices, or create expense claims - from anywhere in seconds. Xero imports and categorises your latest bank transactions, to get a real-time view of your cashflow.

Cost: Plans range from £10 - £30 per month, but look out for discounts. You can try the software for a reduced cost for the first 4 months, with plans ranging from £5 - £15.

Free Trial: There is even an option to give the free trial a go for 30-days, before committing.


Connect Xero with TransferWise for Business

Automatically combine a multi-currency account with your accounting workflow.

  • Automatically sync your activity for over 40 currencies to Xero. It's like connecting Xero with your bank – but better.
  • Control what currency accounts you sync.
  • Handle your accounting instantly.
Connect now and handle your accounting instantly

Don't have a TransferWise for Business account? Sign up


Quickbooks (Intuit)

Another of the bigger players, Quickbooks offers accounting software, providing a platform for small businesses to easily track their VAT and submit their returns.

  • 3 user profiles.
  • App available for iOS and Android.
  • Aimed at payroll for 30 employees (£1 per paid employee /mo).
  • Easily import your VAT data - this is then digitally recorded by the platform. Software is recognised by HMRC.³

Quickbooks lets you work with your accountant, with free accountant access. They also provide online tutorials to help get you started.

Cost: Freelancer (VAT function) package starts at £4 per month (increasing to £12 after 6 months). 30-day free trial available.⁶

Sage Business Cloud

Sage is Britain’s biggest tech company, and has been around for more than thirty years.⁷ Their cloud-based software has sizes to fit all: accounts for small to medium businesses - and even for accountants and bookkeepers.

  • Aimed at small businesses of 0-20 employees.
  • Unlimited users.
  • App available for iOS and Android.
  • Sage software is recognised by HMRC, so you get use it to get ‘Making Tax Digital’ compliant.⁸
  • Sage offer a free 45-minute webinar to help you get started with the software.⁹ They can help you get paid with online invoices, and integration with real-time invoices and expenses.

    Cost: You can customise your plan depending on how many users you want to add. And although feature-rich configurations can get pricey, the basic plan starts at £6+VAT per month and rises to £10+VAT per month⁶ after 3 months.¹º 30-day free trial available.

    FreeAgent

    This is a great tool for general financial admin as well as being handy for tax. FreeAgent has tools for time-tracking, job estimates and depending on the package you go for, it covers tax. As they say themselves - “it's the whole enchilada.”

    • Self-assessment filing for small business.
    • Dividend vouchers and corporate tax forecasting.
    • App available for iOS and Android.
    • ‘Making Tax Digital’ compliant and software is recognised by HMRC.

    You can manage invoices and expenses, all in one place, and use automatic tax forecasts and reminders. Also, FreeAgent’s directory of trusted partners to find an accountant, or invite your accountant to the platform.¹¹

    Cost: The Sole Trader package is £9.50+VAT⁹ per month for 6 months, rising to £19+VAT and covers Self Assessment filing. The most expensive package has everything the Sole Trader package has, but also covers dividend vouchers and corporation tax.¹²

    Zohobooks

    Zohobooks is highly customisable, allowing you to add on features as and when you need them. It’s more of a financial admin tool than a fully-fledged accounting solution and focuses on invoicing and purchase orders rather than corporation tax and Self Assessment.

    • 3 users (2 users + 1 accountant).
    • App available for iOS, Android and Windows.
    • Create transactions for up-to 500 customers.
    • Zoho books can help you be ‘Making Tax Digital’ compliant, with HMRC.¹²

    Zoho offers end-to-end accounting - helping you to manage your business from sales orders to invoices. Features like time-tracking, to keep track of time spent on projects.

    Costs: But for £6 a month¹⁰ for the basic package, it’s good value for those essentials. It’s also one of the few accounting software providers that doesn’t hike its prices up after a few months.¹³

    FreshBooks Cloud Accounting

    FreshBooks is a cloud-based accounting software for small businesses¹⁴, and those who are self-employed.

    • Team members can be added at $10 per person /mo.
    • App available for iOS and Android.
    • Add 50 billable clients.
    • HMRC recognised software, so you can be compliant with MTD.

    Seamlessly links online payments with FreshBooks, so no need to chase clients. They aim to make billing simple with features such as online invoices, and double-entry accounting tools to help with business data and insights.¹⁵

    Cost: There are 4 account options available from FreshBooks, aimed at varying sizes of businesses. The Lite option is aimed at self-employed individuals, with prices starting at $6 /mo. The Plus option is geared toward small businesses, with prices starting at $10 /mo. You can try it free for 30-days.

    Best accounting software UK

    Finding the right accounting software for a UK business depends a lot on the size of your company and the complexity of your business banking transactions. Many of the packages we’ve looked at vary their pricing based on the number of users you can have. Choosing business accounting software is as much about understanding what you don’t need as it is identifying the must-haves.

    One area where the top tier software providers are really innovating is third party integration. And that can be a game-changer for small businesses.

    Third party integrations

    Third party integration lets you connect your software to your bank or payment platform, streamlining the accounting process. This is often ideal for small businesses as they can integrate accounting functions like invoicing and month-end reconciliation, automate tasks, and in many cases, say goodbye to manually entering transactions altogether.

    A nice example of accounting software integration is Xero and TransferWise for Business. Automatically sync your activity for over 40 currencies to Xero. It's like connecting Xero with your bank – but better.


    Ensuring you have an accounting software that works for your needs, is vital. There are many providers out-there offering online, intuitive solutions - but with all that choice, it can be difficult to choose. We can’t tell you which one will be right for you, but this introduction should help you start your own research.

    Try Xero out for free, or if you already have it, connect now to TransferWise.

    Sources used:

    1. HMRC: 2018 Self-Assessment Review
    2. Xero: About Us (UK)
    3. HMRC: Find software for Making Tax Digital for VAT
    4. Xero: Making Tax Digital (MTD)
    5. Xero: Pricing (UK)
    6. QuickBooks: MTD Software
    7. UK’s Biggest Tech Companies: Telegraph
    8. Sage: MTD Software
    9. Sage: Free Webinar
    10. Sage: Accounting Software
    11. Free Agent: Accounting Software
    12. Free Agent: Pricing
    13. Zoho: Pricing
    14. FreshBooks: Cloud-based accounting
    15. FreshBooks: Self-Employed
    16. FreshBooks: Pricing

    Sources checked on 01-October 2019.


    This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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