The best accounting software for small businesses

With HMRC’s Making Tax Digital initiative mandating UK sole traders and landlords to keep records and file submissions digitally, using cloud-based accounting software is now essential to stay compliant and help streamline the reporting process.

Our guide below compares the best accounting software for small business to help you find an option to suit your business.

How to select the right accounting software

Your choice can depend on many factors such as your business structure, transaction volumes and financial requirements. Simpler tools may suit freelancers and sole traders, while growing businesses may benefit from platforms that provide payroll, inventory, and advanced reporting.

Some of the features to consider include:

• Compliance with tax requirements, including Making Tax Digital (MTD)
• Invoicing, expense tracking, and reporting depth
• Integrations with banking, freelancer and ecommerce platforms
• Scalability as the business grows
• Pricing including add-ons and value for money

Cloud-based platforms can also make it easier for you to work with accountants or bookkeepers by giving them access to your accounts.

Best accounting software for small businesses

The platforms below cover a range of use cases, from experienced freelancers to growing small businesses.

QuickBooks

All-in-one accounting with strong automation

Key features:

• Tiered subscription options to suit different business needs
• Built-in payroll, VAT, and tax tools
• 800+ third-party integrations

QuickBooks balances usability with advanced functionality, making it a popular choice for self-employed professionals and small businesses.

The software includes time-saving automation features such as receipt capture, as well as bank reconciliation, payroll, and tax management tools, helping small businesses to reduce manual admin.

The platform also features an extensive list of integrations with third-party software to synchronise data and provide a detailed overview of business performance. The QuickBooks website and mobile app balance ease of use with functionality, making it suitable for new and established businesses that want a simple platform to manage finances end to end.

QuickBooks offers two subscription plans for sole traders: Sole Trader Plus for non-VAT registered professionals at £10 per month and Simple Start at £16 per month for those who are registered. It also offers four plans for small businesses ranging from £16 per month to £123 per month excluding VAT, helping you choose the set of features most suitable for your business.

Xero

Scalability to support growing small businesses

Key features

• Detailed dashboard, reports, and analytics
• Integration with a wide range of third-party apps
• Employee expense tracking and inventory management

Xero is a flexible accounting platform ideal for growing businesses. The software combines a comprehensive range of tools, including invoicing, expense management, payroll, and financial reporting, with a strong ecosystem of third-party integrations.

Similar to other platforms, Xero supports automated bank feeds and transaction reconciliation to reduce manual data entry, and also provides an extensive app marketplace that allows you to connect tools for payments, ecommerce, and inventory management. These range of features could be suited to businesses planning to scale without having to switch to another software platform in the future.

Xero offers four main subscription plans: Ignite, Grow, Comprehensive and Ultimate, ranging in price from £16 per month to £65 per month. It also added a new plan in 2025, called Simple, aimed at sole traders and landlords looking for an MTD-ready solution.

FreeAgent

Helps freelancers and contractors stay on top of tax management

Key features:

• Designed for sole traders and limited company contractors
• Built-in tax timeline, calculations, direct filing, and reminders
• User-friendly interface and reporting tools

FreeAgent is a straightforward platform that aims to give freelancers and contractors everything they require to manage their business finances. The platform makes it easy to switch from using spreadsheets or other software by importing transactions and setting opening dates and balances.

In addition to invoicing and expense tracking, the software includes tools for simple tax management, outlining clear timelines, and calculations for upcoming tax deadlines, as well as direct filing of accounts to HMRC for convenience.

FreeAgent’s simple interface makes it accessible for users without accounting experience, providing insights such as personalised cash flow projections. Features such as time tracking and project management can also add value for service-based businesses.

The software is free to use if you have a business current account with NatWest, Royal Bank of Scotland, or Ulster Bank, for as long as you keep the account open. Mettle account holders need to make at least one transaction a month to retain free access. For account holders using other banks, subscription prices range from £19 per month for a sole trader to £27 per month for a Partnership or LLP and £33 per month for a limited company.

FreshBooks

Tools tailored to service-based small businesses

Key features:

• Time tracking and project-based billing
• Client communication tools
• Intuitive interface for new users

FreshBooks provides invoicing, expensing, and client relationship management tools for service-based contractors and small businesses in sectors such as IT, legal, marketing and construction.

The platform’s time tracking and project-based billing features are designed for consultants, designers, and other professionals who bill clients on a recurring basis by the hour or project. Estimates, proposals, and client account statements and automated reminders are designed to track everything client related so you remain on top of each relationship and payment.

During tax season, you can invite your accountant and up to 10 team members to your FreshBooks account. They can update entries, run reports, file taxes, and help you make informed decisions to support growth.

FreshBooks offers a Lite subscription plan aimed at freelancers for £16 per month, a Plus plan for self-employed professionals for £30 per month and a £42 per month premium plan for businesses that work with contractors. Businesses with employees must contact the company for tailored pricing.

Quickfile

Free software for budget-conscious small businesses

Key features:

• No charge for businesses with small annual ledger counts
• Branded online invoicing and payment portal for clients
• Simplified user interface

Quickfile offers simple cloud-based bookkeeping and accounts software that is free to use for freelancers and small businesses in the UK. Large accounts with more than 1,000 ledger entries in a 12-month period pay £60 + VAT per year.

The software’s simple and intuitive interface allows businesses to design customisable invoices and create a branded online portal where clients can download and pay businesses through integrated platforms, including PayPal, Stripe, GoCardless, Square and SumUp. Quickfile also delivers direct integrations with Companies House, HMRC, Dropbox, and more through its Zapier link, and offers an API to integrate with your own back-office system.

Quickfile’s automated feeds connect to all major UK banks and more than 300 other web services for reconciliation, meaning account transactions are likely to be compatible.

Crunch Accounting

Combines software and ongoing accounting support

Key features:

• Free basic ad-driven service
• AI digital assistant for live chat and transaction matching
• Faster client payments using CrunchPay

Crunch Accounting offers small businesses unlimited professional support and advice through its client management team and chartered certified accountants.

The software is designed to be simple to use for sole traders and limited companies who are limited on time and resources, for example, you can send unlimited invoices and encourage clients to settle faster using a CrunchPay payment link. Crunch also offers a personal tax estimator and live chat with its digital assistant, Luca, which helps with bank transactions and suggests matches for you to approve.

Similar to Quickfile, Crunch Software is free for sole traders and limited companies. The free version, which displays ads, covers basic needs, while Crunch Lite removes the ads from the account and invoices for a fee of £4 per month. For more advanced features, such as Making Tax Digital submissions, you need to pay £10 + VAT per month for Crunch Plus.

In addition to choosing an accounting platform to stay on top of finances and regulations, small businesses may consider insurance to protect against operational risks such as financial errors, cyber incidents, or client disputes.

Please note: This article provides guidance for information purposes only and is accurate at the time of production. It should not be relied upon wholly when making or taking important business decisions – always seek the services of an appropriately qualified professional. The views expressed by websites referred to are limited to those of the websites, and do not necessarily reflect the views of Markel Direct. Markel Direct is not affiliated with any of the brands, companies or websites mentioned in this article.