The Best Accounting Software for Small Businesses in the UK

The Best Accounting Software for Small Businesses in the UK 2025

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Specially designed accounting software suitable for sole proprietors and small business owners is inexpensive, user-friendly, and loaded with practical, time-saving features. You may optimise your cash flow and financial management, save time on routine bookkeeping, and submit tax returns more easily by subscribing to the appropriate small company accounting software.

Accounting software allows you to securely record all of your transactions, including income and costs, monitor your balance sheet, and generate accurate financial statements. Most accounting software is now available online. Cloud accounting software frees you from the constraints of your office, allowing sole traders and small business owners to enter expenses and create invoices while they are on the go.

**Note Prices/fees correct on 31/03/25 (limited time offers may be available)

Make Tax Digitial for Self Assessment

MTD IT (formerly known as MTD ITSA) will apply from April 2026 to persons who earn income from self-employment and/or property and have a total gross income of more than £50,000. Those with a combined gross income of more than £30,000 will be required to join MTD IT beginning in April 2027.

If you’re a self-employed business owner and/or landlord and you’re affected by MTD for Income Tax, you’ll have to take the following actions from 6th April 2026:

• Keep records of your business income and expenses in a digital format.
• For each type of revenue (self-employed business or property), send quarterly updates of your business income and expenses to HMRC.
• Finalise your business income by submitting a final declaration.

If you don’t already use accounting software, it’s a good idea to get ahead of the game and start maintaining digital records sooner rather than later, as MTD for ITSA is set to be rolled out to all individuals with trading income above £20,000 in April 2028. When choosing a new software supplier, search for MTD for ITSA approved software.

The best small business accounting software in the UK

We have put together a quick summary as to what you should look for in small business accounting software, we follow on with a review of each of the most polpular software in the UK, so you can investigate further and decide which is best suited to your business needs.

Best all-rounder accounting software

Quickbooks | £10.00 per month for Non VAT Reg. sole traders, from £16.00 per month for VAT Reg Small business | Packed with useful features including pay-enabled invoices, MTD for ITSA-compliant

Best accounting software for small and growing businesses

Xero | £16 – £59 per month | Good range of plans to suit your business needs, MTD for ITSA-compliant

Best accounting for small businesses and accountants

Clearbooks | £9.99 per month | Simple Online Accounting Software For UK Businesses

Best accounting software for sole traders and Landlords

Freeagent | £9.50 per month sole traders or Free with NatWest or RBS business account |Powerful accounting software with all the features you need

Best accounting software for contractors

Freshbooks | From £15 per month | Powerful proposals, invoicing and project management

Accounting software for everyday business

Free Trial | Feature Packed | Manage Business in Real Time

Find Out More

Key Benefits

• 30 Day Free Trial of the software
• Range of plans to suit your business needs
• Capture bills and receipts via email, or scan files from your mobile
• Intelligent transaction-matching helps with bank reconciliation
• Connect Xero to your bank for automatic bank feeds
• Large marketplace of apps you can connect to add extra functionality

Disadvantages

• Xero primarily relies on email, live chat, and online help resources for customer support
• basic starter plan is restricted to very limited numbers of monthly invoices and payments
• 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 plan

Reviews

Features 2025

Dashboard

Track all your business finances, all on one page. Stay up to date on the key metrics you choose – your account balances, cash flow, and the status of your invoices, bills, and expenses

Bills in One Place

Automate bill entry, streamline approvals and never miss a due date, helping save you time and giving you a clearer view of your cash flow.

• Capture bills effortlessly, smarter tools to automate bill entry for fast accurate paperless processing.
• Take control of your bills Assign roles, flag duplicates, track due dates
• Pay multiple bills at once and automate reconciliation ensuring records are always up-to-date.

Manage VAT

• VAT calculated for you
• VAT is worked out and included in returns.
• View VAT transaction details and make adjustments when you pay VAT online.
• Submit VAT returns compatible with MTD for VAT.
• Manage your CIS deductions, submit returns and simplify compliance.

Instant Quoting

Xero allows you to quickly create quotes in minutes, and send them straight to your clients. 

If the client accepts, you can instantly turn your quote into an invoice, saving lots of time duplicating information. 

Invoices

Create and send customised invoices with billing software that’s incredibly easy to use.

Create one or more invoice templates Insert your logo and set payment terms

 

Add a standard message or insert more fields

Bank Reconcilation

Xero makes it easy to reconcile your bank transactions through automated importing.

Most banks and credit cards integrate with Xero, making it effortless to automatically import all your bank transactions.

Bank feeds are safe, secure and reliable, meaning there’s no longer a need to waste time on manual imports. 

Explore More Features

Online Accounting Software thats good for your business

 

Make the best use of your time with Xero. Get paid faster and reconcile transactions in seconds with Xero’s online accounting.

90% off for the first 6 Months