Review guide for the top UK small company accounting software

Accounting software is now so cheap that you don’t need a room full of file cabinets to keep track of your finances. Even the simple Excel spreadsheet is no longer useful.

Accounting software makes it easy for even the smallest business to keep track of spending, make and send invoices, stay on top of taxes, and more, all from one central platform.

But under Making Tax Digital, it is now a requirement for almost all firms to use compliant software for taxes and accounting. Before, this was just a suggestion.

With the April expansion of Making Tax Digital for VAT, all businesses that pay VAT must now keep digital records and send VAT returns to HMRC using approved software.

Because of this, we’ve taken the time to look at, compare, and evaluate the best accounting software for small businesses. Find out how much they cost, what their pros and cons are, and what their best features are. Then choose the one that will work best 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, glance summary of what the top 7 providers offer or read on for deep-dive reviews.

How to choose a reputable service

Every small business is different. Most small businesses can get by with simple tasks like sending out invoices, balancing their bank accounts, keeping track of their income and expenses, and making financial reports.

Most accounting programmes for small businesses in the UK do the same things, but you might like one style better than another for personal reasons. Cost is another important thing to think about.

Make a list of all the bookkeeping and accounting tasks you must do first.

• Do you need inventory tracking and buy orders?
• Do you need payment due dates for invoices?
• Are you a sole proprietor, and do you intend to self-evaluate?
• Do you need to manage payroll and staff?
• Do you need currency exchanges?
• Do transactions in foreign currencies translate to sterling?
• How many users will the accounting software require?

What kind of budget do you have?

Even though there are free options, it’s a good idea to pay for a bundle of UK small company accounting software, especially when it comes to something as sensitive as money. In the 1970s, the US television business was the first to use the phrase “If you’re not paying for the product, you are the product.” Today, it means that the company that makes the software sells your data.

Another change is the rise of monthly software subscriptions instead of one-time software licenses. Software-as-a-Service (SaaS) is a good way to make sure that your technology is always up-to-date. The downside is that you end up spending more over time than if you had just bought a one-time license.

Accounting software deals with 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 the first 3 months with a 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:

Mike McDerment, the founder of FreshBooks and the owner of a design business, wasted hours of work in January 2003 by saving the wrong invoice with Word and Excel. After deciding that there had to be a better way, he spent the next two weeks programming what would become the core of FreshBooks.

Then, for the next four years, he and two coworkers worked out of McDerment’s parents’ basement to build the company. It was basically an updated version of double-entry accounting for the internet age that was also made for small businesses.

The Toronto-based startup, which now has more than 500 employees, says that FreshBooks has been used by more than 24 million people in 160 countries.

Except for one thing: you have to pay to add customers who aren’t covered by its two cheaper plans. FreshBooks has almost all of the features that accounting software platforms in general have. Under the basic plan, FreshBooks can only be used with five clients.

Another thing that could bother a UK small business owner is that phone support is only available from 8 am to 8 pm (EST/-5 hours GMT) in the US. This means that there is no phone support before 1 pm.

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 (8 am to 8 pm 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 percent discount

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

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

Mobile: iOS, Android and Windows

Crunch – best for ease of use

Overview:

Crunch is tax and accounting software that is easy to use and has Chartered Certified Accountants on hand to help you make sure you meet your tax obligations.

Whether you choose the “free forever” version, a package for a sole trader, a package for a limited company, or a package for a small business, Crunch’s software is ready for MTD and is recognised by HMRC. You can make and send invoices, keep track of your expenses, and link your bank account in all versions.

With a premium plan, you can also sign up with HMRC and file VAT and Self-Assessment returns. Crunch also offers a number of other important services for small businesses, such as bookkeeping, payroll, insurance, and mortgages for self-employed people.

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

Ember is accounting software that is ready for MTD and was made for both sole traders and limited companies. It automates the most boring tax and accounting tasks to save you time and money.

All plans include automated expenses, the ability to make and send invoices, real-time financial reporting, integrations with a lot of apps, and open banking. Ember can do both your tax return and your annual accounts for £99 and £200, respectively.

On premium plans, it also offers help from its in-house accountants for more complicated questions, as well as VAT returns, tax insights, and support for multiple currencies.

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 £10,000

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

Mobile: iOS, Android

QuickBooks – best for fast-growing businesses

Overview:

Intuit, the parent company, was started in 1983. The QuickBooks brand came out in 2002, and QuickBooks Online came out two years after that. Today, 2.2 million people in 225 countries use QuickBooks.

Customers can view, print, and pay invoices through a client portal, and a customer relationship management (CRM) system helps you keep track of your customer database.

QuickBooks stands out because its reports are so good. They give you a quick look at how your business is doing financially. Its reporting feature is more customizable than those of competitors like Xero.

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:

Sage is another payment processing platform based in the UK. It was started in 1981 when the company’s founder reached out to students at Newcastle University and asked them to help him make an automatic accounting program. Fast forward almost 40 years, and Sage now has 13,000 employees in 23 countries. Its software is used by more than 3 million businesses. Sage says that it helps UK businesses make more than 500,000 invoices, handle 700,000 transactions, and sell 1.5 million products every month.

Sage, like all of the other accounting software for small businesses on this list, is based in the cloud and connects easily 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 look 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 micro businesses: 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
• Customizable reports
• Range of apps in the 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 that 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, and 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 started ClearBooks in July 2008 from his spare room. At the time, he was an accountant at KPMG. He made a simple web-based double-entry accounting system so he could keep track of the money for the small web-development company he ran on the side. Then he realised that a lot of small businesses in the UK would be looking for the same kind of software. Fouracre built ClearBooks for nine years before he stepped down as CEO in 2017.

Today, Clear Books helps thousands of small businesses in the UK with cloud accounting and payroll software that is clear and easy to use.

Pros:

• Simple to use
• Designed for British businesses
• UK-based
• The 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: £ 12 pm + VAT with 50 percent discount for three months if you sign up during the one-month free trial

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

Mobile: iOS, Android and Windows