Accounting software designed for small business owners and sole traders is low-cost, easy to use and packed with useful, time-saving features. Subscribing to the right small business accounting software will save you time on routine bookkeeping, improve control of your finances and cash flow and make it easier to file tax returns.
Accounting software allow you to record all your transactions securely including income and expenses, keep an eye on your balance sheet and create accurate financial statements. Most accounting software is now accessed online. Cloud accounting software means you are no longer tied to your desk and busy sole traders and business owners can log expenses and create invoices on the go.
If you are looking for an accountant to help you, use this free tool to get matched with accountants that meet your requirements and compare quotes.
**Note Prices/fees correct on 08/04/25 (limited time offers may be available)
Making Tax Digital (MTD) and accounting software
The government is continuing its efforts to make tax digital. MTD for Income Tax begins its roll out from April 2026. Those with a gross trading or gross rental income of more than £50,000 will need to comply with the MTD for Income Tax requirements from 6 April 2026. They will need to keep accurate digital accounting records using MTD-compatible accounting software and submit quarterly figures to HMRC.
If you're not already use accounting software, it makes sense to get ahead of the game and start keeping digital records sooner rather than later as MTD for Income Tax is expected to be rolled out to all those with trading income above £20,000 by April 2028. If you are considering moving to a new software provider, you should look for MTD for Income Tax approved software.
The best small business accounting software
Here’s our quick guide to what to look for in small business accounting software, and our review of the UK’s most popular small business accounting software packages to help you choose what’s best for your business.
Accounting software: what useful features do you need?
The first step to choosing the right accounting software is to understand what features you need, so that you can assess what different solutions offer.
- Any of the leading packages will make it easier to log your transactions, manage your finances and automate routine bookkeeping tasks and prepare for your accounts. Accounting software providers are continually developing new, clever features like automated bank reconciliation and the ability to scan expense receipts.
- Make sure you know what sort of tax functionality you require - for income or corporation tax returns, VAT and payroll (PAYE). Making Tax Digital (MTD) makes the ability to file VAT returns online essential and this will be extended to income tax too over the next couple of years.
- The larger your business, the more likely it is that you will want sophisticated management reporting features and software that allows multiple users. On the flip side, a sole trader is likely to find sophisticated bolt-ons such as payroll surplus to requirements.
Other practical considerations include how easy the software is to set up and use, whether the provider offers cloud accounting software, integration with your other systems and cost. It's worth asking your accountants which software they recommend so that it is easy to share financial information with them.
Find out more about these popular accounting software packages:
Xero
Xero’s popular online accounting software covers all the basics for managing your finances and offers some great time-saving tools.
Key benefits:
- range of plans to suit your business needs
- take photos or scan bills and receipts to automatically extract data
- intelligent transaction-matching helps with bank reconciliation
- large marketplace of apps you can connect to add extra functionality
Disadvantages:
- basic starter plan is restricted to very limited numbers of monthly invoices and purchases
- cash flow forecasting beyond one month ahead is an optional extra
Pricing:
- monthly plans £16 - £59 (plus VAT) per month
- some services, like payroll, are automatically included in some of the paid plans but may be payable as an add-on in the cheaper plans
Find out more about Xero online accounting software for small businesses.
FreshBooks
With a focus on easy invoicing, FreshBooks is a good choice for freelancers and small businesses who want to get paid quickly.
Key benefits:
- produce estimates and proposals from within FreshBooks using built-in tools
- invoice generator for creating customised, professional-looking invoices – with option to build in direct debit or credit card payments
- time-tracking and project management features
Disadvantages:
- entry-level plan limited to five clients and excludes automated bank reconciliation and accountant access
- lacks features for businesses selling physical products (eg manufacturers and retailers) or contractors/subcontractors using the Construction Industry Scheme (CIS)
Pricing:
- £15 - £35 per month
- higher cost, customised ‘Select’ package available with advanced payments and other useful features
Get more information on FreshBooks invoice and accounting software for small businesses.
Sage
Sage has a long-established track record and reputation and a solid offering for small businesses.
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
- MTD for Income Tax-compliant
Disadvantages:
- receipts auto-entry is an optional (paid) extra
- quotes and estimates not included in entry-level package
Pricing:
- free trials available (length of trial depends on package taken)
- £15 - £99 per month
Read more about Sage online accounting software for small businesses.
Crunch
Unlike other providers, Crunch offers both software and accounting services. That can be an ideal solution, particularly for businesses that don’t have an accountant or aren’t happy with the service they currently get. Use promo code MAY123 to get Crunch for as little as £1 a month.
Key benefits:
- accountancy and tax support as well as accounting software
- range of packages to suit start-ups, sole traders and limited companies
- competitive pricing compared to standalone accountancy services
Disadvantages:
- software not as fully-featured as more advanced competitors
- won’t suit businesses that want face-to-face service from a local accountant
Pricing:
- free, easy-to-use version designed for self employed individuals and small businesses
- sole trader package costs £26.50 per month
- £86.50 - £159.50 per month packages for limited companies
- extra (paid-for) options include bookkeeping, payroll and pensions auto-enrolment
Read more about Crunch online accounting for small businesses.
QuickBooks
Probably the most widely-used accounting software for sole traders and very small businesses, QuickBooks is a strong all-rounder.
Key benefits:
- send ‘pay-enabled’ invoices, making it easier for customers to pay
- links with almost all leading UK banks, plus PayPal, Payoneer and Wise
- business mileage tracking feature
Disadvantages:
- low-cost starter plan lacks features – but can be a good option for sole traders who aren’t registered for VAT
- limited range of optional features, but a wide range of add-on apps are available in the QuickBooks app store
Pricing:
- self employed package £10 per month
- business packages from £16 per month
Find out more about QuickBooks small business accounting software.
Tide
Simple bookkeeping and accounting, linked with your business bank account.
Key benefits:
- simplifies all-round bookkeeping, financial management and tax return preparation
- personalised invoices with payment links
- Connect your existing business bank account or open a Tide business account
Disadvantages:
- lacks the sophisticated features of more advanced packages
Pricing:
- £5.99 - £22.99 per month depending on the package taken
Find out more about Tide.
FreeAgent
Award-winning software now owned by the NatWest Group.
Key benefits:
- high quality, user-friendly design and quick access to a financial overview of the business with the FreeAgent dashboard
- payroll included at no extra cost
- MTD for Income Tax-compliant offering direct self assessment filing with HMRC
- free for customers with a business account with NatWest, Royal Bank of Scotland or Ulster Bank
Disadvantages:
- ease of use comes at the cost of slightly restricted functionality
- entry-level package relatively expensive
Pricing:
- 30-day free trial
- £19 per month (sole trader) or £33 per month (limited company)
- free for NatWest, RBS, Ulster Bank and Mettle business account customers
Find out more about FreeAgent simple accounting software for UK small businesses.
Clear Books
Designed for ease of use, and with plenty of support on offer, Clear Books can be an excellent choice for business owners who want accounting to be as easy as possible.
Key benefits:
- good all-round features, even on entry level package
- strong support through online guides and videos, plus free email/phone helplines
Disadvantages:
- optional payroll software can become expensive with more employees
Pricing:
- 30-day free trial
- from £13.50 - £36 per month
- discounts for yearly subscriptions
- £5.40 per employee for optional payroll (minimum two employees)
Find out more about Clear Books small business online accounting software.
Ember
Managing your accounts is made easier with this combined software and expert support from qualified accountants - all in one app.
Key benefits:
- expert, round-the-clock support from qualified accounts via video call or in-app chat
- HMRC-recognised and MTD-compliant software
- automated expense management
- rated 'excellent' on Trustpilot
Disadvantages:
- access limited to a single user
- no cash flow forecasting capability
- full payroll only available to limited companies subscribing to to the unlimited plan
Pricing:
- free trial available
- essentials package for limited companies costs £59 per month (non-VAT registered) or £89 per month (VAT-registered)
- full service package for limited companies with a dedicated accountant costs £159 per month (non-VAT registered) or £189 per month (VAT-registered)
- free for life package for sole traders with monthly revenue up to £1,000 per month
- pricing for sole traders with higher turnover is based on your revenue starting from £7.50 per month
Find out more about Ember.
Accounting software providers may introduce new features or change their prices at any time, so it’s worth checking the latest information before making a decision. The pricing details in this guide do not include VAT or any introductory discounts or free trials.
Common accounting software questions
- Do I need business accounting software?
- What are the benefits of using business accounting software?
- How much will accounting software cost?
- Is online accounting software secure?
- How can I check my accounting software HMRC-compliant?
1. Do I need business accounting software?
All businesses are legally required to keep accurate financial records. While you can currently keep manual accounts, you will almost certainly need to switch to digital accounts soon (unless you have very limited turnover) as Making Tax Digital for Income Tax is being rolled out from April 2026. probably benefit from using accounting software. In any case, accounting software eliminates repetitive data entry, can be accessed anytime, anywhere and can be more secure.
2. What are the benefits of using business accounting software?
Accounting software offers several benefits over manual accounts:
- it eliminates repetitive data entry
- it automatically does all the calculations, eliminating the risk of errors
- it is more flexible - the information can be accessed securely wherever and whenever you (or your staff) need access
- you get real-time access to up-to-date financial information
- you can share access with your accountant, improving communication and saving time
Read our guide to using accounting software.
3. How much will accounting software cost?
Accounting software can cost as little as £10 per month but can cost a great deal more - depending on the functionality you require.
You should factor in any additional costs and compare initial lower monthly costs with annual fees.
Ask yourself these questions before you buy:
- Will expensive training be required to use the software?
- Do you have to pay for additional licences for extra users?
- Does the software have the capacity to grow with your business?
- Can you upgrade the accounting software if required?
- Is it easy to transfer your data to a new system should you need to switch?
- Is the software compatible with your accountant's software?
- Can you easily cancel a long-term contract if your circumstances change?
Online accounting software helps limit upfront costs. Most online services do not tie you to a minimum contract either, so you can always cancel if it's not right for you. It is also easier to scale up as your business grows. You simply pay for the additional licences as you need them.
What's more, the monthly fee usually includes all updates and upgrades - unlike traditional software where you may be forced to pay again when a newer version is released.
However, that doesn't mean online accounting software always cheaper in the long run.
Read our guide to choosing accounting software.
4. Is online accounting software secure?
When choosing an online accounting software provider, you should do your homework. Take the same security precautions you would for any cloud computing service.
Make sure your chosen online accounting software has a good track record of keeping data safe. Check online reviews as this will quickly reveal any potential issues.
Reputable suppliers should ensure that data is securely protected, and offer a very high level of online availability. If you have any doubts, check where and how your data will be stored and what arrangements are in place to protect it. You may also want to find out what options you have for exporting or backing up copies of your data.
It's worth comparing the risks of online accounting software with those of running software in-house. For instance, a fire, flood or server crash could cause serious disruption and employees can compromise your data deliberately or inadvertently. Generally speaking, using online accounting software will actually reduce the risks.
5. How can I check my accounting software HMRC-compliant?
Any accounting system you use must meet your legal obligations to hold records correctly. If you are registered for VAT, make sure that HMRC will accept forms and returns from your preferred business accounting software by finding software that is compatible with Making Tax Digital for VAT and Making Tax Digital for Income Tax on the HMRC website.
Read more frequently asked questions on accounting software.