Best UK small business accounting software - review guide - Small Business UK (2023)

Thanks to affordable accounting software, long gone are the days when you’d need a room full of filing cabinets to keep track of your accounts, and even the humble Excel spreadsheet has been rendered a relic.

With accounting software, even the smallest business can easily manage expenses, create and send invoices, keep on top of taxes, and more from one centralised platform.

But it’s no longer just advisable – under Making Tax Digital, it’s becoming obligatory for nearly all businesses to use compliant software for taxes and accounting.

With the extension of Making Tax Digital for VAT in April, all VAT-registered businesses now have to maintain digital records and file VAT returns to HMRC through approved software.

That’s why we’ve taken the time to compare, contrast, and assess the best small business accounting software on the market. Discover their pricing, pros, cons, and top features, and decide which is right for your business.

Best accounting software for UK small businesses

Source: SmallBusiness.co.uk

A quick comparison of the best accounting software providers

Get a quick, at a glance summary of what the top 7 providers offer or read on for deep dive reviews.

How to choose the right provider

Every small business is different. Most small businesses can make do with basic functions like invoicing, bank reconciliation, income and expense tracking and financial report generation.

Indeed, most UK small business accounting software offers the same features, it’s just that you may feel more comfortable with how one is designed over another – and then of course, there’s the cost.

First, make a list of what you need to do in terms of bookkeeping and accounting.

• Do you need to track inventory and purchase ordering?
• Do you need to invoice payment deadlines?
• Are you a sole trader and do you plan to do self-assessment?
• Do you have staff and a payroll to run?
• Do you need foreign currency transactions?
• Do foreign currency transactions convert to sterling?
• How many users will need to use the accounting software?

How much can you afford?

Although there are free options available, when it comes to UK small business accounting software – and especially something as sensitive as financial information – it’s probably wise to pay for a package. Back in the 1970s, the US television industry coined the phrase, “If you’re not paying for the product, you are the product.” These days that means that the software provider sells on your data.

The other change that has happened is the rise of monthly subscription as opposed to a one-off software licence. On the plus side, Software-as-a-Service (SaaS) means your tech is always up to date. The downside is that, as the months roll on, you eventually end up paying more than if you’d bought a one-off licence.

Accounting software deals for small businesses

Want to get started with one of our top accounting software providers? As a new customer, you can take advantage of any of these great deals:

• Freshbooks – 30-day free trial, then from £11 per month, or just £3.30 for first 3 months with 70% discount
• Crunch– 50% off paid plans and a £200 voucher for new customers
• Ember – 100% free forever plan available or from £7.50 month if you pay annually

4 questions you need to ask your UK small business accounting software supplier

• How do you back up data?
• Tell me about customer support. What are your hours and how quickly should I expect a response if I raise an issue?
• Can you tell me about a similar client who’s signed up to your software?
• Does your platform support foreign currency payments and convert them into sterling?

Best UK small business accounting software: In-depth reviews

Here’s a detailed rundown of each accounting software for small businesses provider, with information on pricing, features and pros and cons.

FreshBooks– best for sole traders

Overview: Back in January 2003 FreshBooks founder Mike McDerment, who at the time was running a design studio, lost hours of work, having saved the wrong invoice using Word and Excel. He decided there had to be a better way and over the next fortnight coded what became the beginnings of FreshBooks.

He and two colleagues then spent the next four years working out of McDerment’s parents’ basement building the company, which basically adapted double-entry bookkeeping for the internet age but more importantly was specifically designed for small business.

Today, the Toronto-based company has over 500 employees and more than 24m people in over 160 countries have used FreshBooks.

FreshBooks offers nearly all of the features every other accounting software platform offers but with one caveat: you have to pay to add clients outside of those allowed on its two lower-priced plans. The basic plan means you can only use FreshBooks with five clients.

Another issue that might be off-putting for a UK small business owner is that telephone support only works during US daytime (8am to 8pm EST/-5hrs GMT), which means that no telephone help is available before 1pm.

Pros:

• Specifically designed for small businesses
• Colourful and intuitive UX

Cons:

• Lower-level plans have client limits
• Charge for additional users
• Phone support only during US business hours (8am to 8pm EST/-5hrs GMT)
• Lacks functionality larger businesses need

FreshBooks offers the below when it comes to pricing:

Lite: £3.30 per month + VAT with first three months 70 per cent discount

Plus: £5.70 + VAT with first three months 70 per cent discount

Premium: £9 per month + VAT with first three months 70 per cent discount

Mobile: iOS, Android and Windows

Compare and fine the best FreshBooks deals

Crunch – best for ease of use

Overview:

Crunch is the easy-to-use tax and accounting software that has Chartered Certified Accountants on hand to ensure you can meet your tax obligations.

Whether you opt for the ‘free forever’ version, or a sole trader, limited company, or small business package, Crunch’s software is MTD-ready and HMRC recognised. All versions allow you to create and send invoices, manage expenses, and connect your bank account.

On premium plans, you also get access to HMRC registration and VAT and Self-Assessment returns. What’s more, Crunch offers a variety of other essential small business services, including bookkeeping, payroll, insurance, and self-employed mortgages

Features include:

• Easily create and send invoices
• Record and track expenses
• Connect your bank account
• HMRC registration
• VAT filing

Pros:

• Access to advice from certified chartered accountants
• Easy to switch from another accounting software
• No minimum term for Pro and Premium plans

Cons:

• Quite expensive compared to some other providers
• Tied into a 12-month contract on the Small Business plan

Price:

Crunch Free: Free forever

Sole Trader Pro: £12.25 per month*

Limited Company Pro: £19.75 per month*

Limited Company Premium: £57.75 per month*

Small Business: £98.25 per month*

*50% off for first 3 months

Mobile: iOS, Android and Windows

Compare and find the best Crunch deals

Ember – best for an all-in-one solution

Built for sole traders and limited companies, Ember is an MTD-ready accounting software that automates all the most mundane tax and accounting tasks to help you save you time and money.

All plans include automated expenses, the ability to create and send invoices, real time financial reporting, integrations with plenty of apps, and open banking. Ember can file your tax return for £99 and your annual accounts for £200.

On premium plans, it also offers support for more complex queries from its in-house accountants, as well as VAT returns, tax insights and multi-currency support.

Features include:

• Automated expense management
• Invoice creation
• Review and submit VAT returns directly to HMRC
• Open banking
• Tax insights

Pros:

• You’re not forced into a long-term contract and can cancel any time
• Supports multi-currency accounting, including live foreign exchange in USD and Euros
• Suitable for everyone from sole traders to businesses
• Has in-house accountants to advise you and file your returns

Cons:

• Multi-user access isn’t yet supported

Price:

Sole trader

Starter: Free – for avg. monthly revenue of up to £1,000

Pro: £7.50 per month – for for avg. monthly revenue of up to £5,000

Unlimited: £24 per month – for for avg. monthly revenue of over £5,000

Limited company

Starter: Free – for avg. monthly revenue of up to £1,000

Pro: £33 per month – for for avg. monthly revenue of up to £10,000Unlimited: £66 per month – for avg. monthly revenue of up to £1,000

Mobile: iOS, Android

QuickBooks – best for fast-growing businesses

Overview:

Parent company Intuit was founded in 1983 and the QuickBooks brand was introduced in 2002, with QuickBooks Online following two years later. Today, QuickBooks has 2.2 million users across 225 countries.

Nifty features include a client portal, where customers can view, print and pay invoices and a customer relationship management (CRM) system, which helps you keep on top of your customer database.

Where QuickBooks stands out is the quality of its reporting, with punchy snapshots of how your business is performing financially. Its reporting facility is ahead of rivals such as Xero when it comes to customisation.

Pros:

• QuickBooks’s user experience (UX) is easy to understand and pleasing to the eye
• QuickBooks is mindful of scaling businesses and its software can have anything up to 25 users
• Professional accountants rate the professionalism of QuickBook’s reports and its bank reconciliation features

Cons:

• QuickBooks can be difficult to navigate with some features hidden in settings
• It’s a steep learning carver for anybody who’s not technically literate
• There have been complaints that QuickBooks online is still buggy with long waiting times for telephone customer support

Price:

QuickBooks is offering a 75 per cent discount for the first four months.

Self-employed is £2 per month rising to £8.

Simple Start is £3 per month, rising to £12.

Essentials is £5.50 per month, rising to £22.

Plus is £8 per month, rising to £32.

Sage Accounting – best for micro businesses with limited stock

Overview:

Another UK-based payment-processing platform, Sage began life in 1981 when its founder got in touch with Newcastle University students asking them to help him develop an automatic accounting processes program. Jump forward nearly 40 years and Sage now has 13,000 employees across 23 countries serving over three million businesses using its software. Sage says that every month it helps UK firms create over 500,000 invoices, process 700,000 transaction and sell 1.5 million products.

Like all the other small business accounting software packages listed here, Sage is cloud based and links seamlessly to your bank account for real-time reporting.

Features it offers include:

• Estimates and invoicing
• Payroll
• Corporation Tax calculator,
• Multi-currency support
• Bank account connectivity
• Stock management
• Linked to Stripe payments processing system.

Pros:

• Sage Business Cloud Accounting’s bottom Accounting Start tier is well priced, simple and easy to navigate.

Cons:

• Sage Business Cloud Accounting’s user experiences looks dated compared with other small business accounting software and some of the terms it uses are clunky, better suited to accountants than small business owners
• Its inventory app is not the best choice if you have a business dealing with hundreds of product lines

Price:

Start for sole traders and microbusinesses: free for 1 month then £12 per month + VAT

Standard (includes invoicing and cash flow management): free for 1 month then £26 per month + VAT

Plus (adds multicurrency invoicing and inventory management): free for 1 month then £33 per month + VAT

Mobile: iOS, Android

Xero – best for larger SMEs with multiple users

Overview:

Xero describes itself as “beautiful accounting software” offering unlimited users with free upgrades. It offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners.

Established in 2006, New Zealand-based Xero has over 2.7m subscribers in 180 countries and is used by over 16,000 accountants.

Like QuickBooks, Xero offers the following as standard:

• Connects straight to your bank account enabling automatic reconciliation
• Generates quotes and invoices that customers can pay online
• Manages purchase orders, bills and supplier payments digitally
• Helps track stock
• Keeps your account up to date as you buy and sell
• Customisable reports
• Range of apps in marketplace including Shopify, Stripe, PayPal and Square

However, you have to pay extra as bolt-ons if you want to do your payroll on Xero or enable staff to submit expenses, track expense claims.

Pros:

• Xero is popular with small businesses and especially sales-oriented businesses that need basic stock management built in.
• Its usability, features, extendibility, and network of “Xero certified” accountants make it one of the best small business accounting websites available.

Cons:

• The Starter plan is extremely limited, offering an improbably low allowance of monthly invoices and quotes.
• The drop-down menus on Xero can be a bit clunkier than, say, QuickBooks.
• And its reporting functions can be more difficult to navigate. For example, unlike QuickBooks, Xero lacks any facility to bunch together creditors and debtors by name in its reports, an omission which mystifies some accountants.
• Xero has improved its functionality dramatically but these improvements have come at the cost of dropping built-in payroll with its monthly subscription plans. And you must subscribe to its most expensive tier if you want multicurrency transactions.
• There is no telephone customer support and users complain that the online-only support has deteriorated, despite the monthly subscription hike.

Price:

Starter: £6 per month (usually £12 per month) allows you to send 20 invoices and quotes, enter 5 bills, reconcile 20 bank transactions, submit VAT to HMRC for Making Tax Digital and offers automatic calculations and reports; there are optional bolt-one for payroll, expenses, projects and submitting CIS returns from Xero.

Standard: offers all of the above for £13 per month (usually £26 per month) with unlimited invoicing, bills, bank reconciliation. As with Starter, there are bolt-ons for payroll, expenses, projects and adding a CIS contractor.

Premium: only the top tier Premium option handles multiple currencies for £33 per month but payroll, expenses, projects and adding a CIS contractor are all paid-for bolt-ons.

Mobile: iOS, Android

ClearBooks – best for wholly UK small businesses

Overview: Tim Fouracre, then an accountant at KPMG, founded ClearBooks in July 2008 working out of his spare room. He had developed a simple web-based double-entry accounting system to look after the accounts of the small web-development company he was running in his spare time. He then realised there would be thousands of small UK businesses looking for that same kind of software. Fouracre spent nine years building up ClearBooks before stepping down as CEO in 2017.

Today, Clear Books provides clear and simple cloud accounting and payroll software to thousands of small businesses in the UK.

Pros:

• Simple to use
• Designed for British businesses
• UK-based
• Support team sits alongside developers
• Value for money

Cons:

• Some functions can be overly complicated
• Not suitable for enterprise level businesses
• Continual UI updates do frustrate some customers

Pricing:

Small business: £12pm + VAT with 50 per cent discount for three months if you sign up during one-month free trial

Large business: £26 per month + VAT with 50 per cent discount for three months if you sign up during one-month free trial

Mobile: iOS, Android and Windows