Best Accounting Software for Small Business 2026
Compare six leading accounting software packages for UK small businesses, sole traders and freelancers.
Finding the best accounting software for your small business depends on what you need it to do. For most UK businesses, Xero, QuickBooks and Sage are our top choices, while FreshBooks, FreeAgent and Zoho Books are also worth considering for particular types of business.
Good accounting software can save time by importing bank transactions, sending invoices, tracking expenses and producing up-to-date financial reports. It can also help sole traders, landlords and VAT-registered businesses meet their Making Tax Digital requirements.
This guide compares six popular accounting packages based on their features, UK pricing, ease of use and MTD compatibility, with more detailed reviews of each below.
Disclosure: This content may contain affiliate links, which means if you click on them, I may get a commission (without any extra cost to you).
Our Top Accounting Software Picks in 2026:
- Xero – Best all-rounder; clean interface, unlimited users, 800+ app integrations
- QuickBooks – Best for sole traders and self-employed; lowest entry price, GPS mileage, strong MTD support
- Sage – Best for UK compliance; purpose-built for UK tax and payroll, free version for sole traders and small businesses
- Zoho Books – Best value for growing businesses; generous free version, strong automation, integrates with Zoho ecosystem
- FreeAgent – Best for freelancers, landlords, partnerships and service businesses; outstanding invoicing and expense tracking
- FreshBooks – Best for freelancers and service businesses; outstanding invoicing and expense tracking
- All six support MTD for VAT. FreshBooks does not currently support direct MTD for Income Tax submissions, so you will need compatible software to send your quarterly updates to HMRC.
- All providers offer free trials — try before you commit
BEST FOR UK COMPLIANCE
| From £18 per month |
| FREE plan for sole traders |
| UK Accounting and Tax |
| 90% Discount – 6 Months |
Best Free Software
From £12 per month |
| Free plan available |
| Works with other Zoho Apps |
| Self-Assessment filing |
How We Review Accounting Software
Our recommendations focus on the features that matter when keeping small-business accounts, including bank reconciliation, invoicing, reporting, VAT, MTD for Income Tax and ease of use. Where possible, we test the software ourselves rather than relying solely on provider feature lists.
We also consider UK pricing, available support and how easily a business owner, accountant or bookkeeper can use the software. Our reviews are updated as prices, features and MTD requirements change.
Accounting Software Comparison at a Glance
The table below compares six of the best small business accounting software packages for UK small businesses and the self-employed. It covers pricing, invoicing, automated bank feeds, MTD compatibility and other key features, so you can quickly see which options might suit your business. You can find more detailed reviews of each package below.
Prices and features checked: August 2026. Prices exclude VAT.
Xero | QuickBooks | Sage | FreshBooks | FreeAgent | Zoho Books | |
|---|---|---|---|---|---|---|
Entry Price | £7 Simple | £10 Sole-Trader | Free Sole-Trader | £16 | * Free | Free |
MTD for VAT | ✅Ignite + | ✅Simple Start + | ✅Start + | ✅All plans | ✅All plans | ✅All plans |
MTD for Income Tax | ✅ | ✅ | ✅ | No | ✅ | ✅ |
Invoice Limits | 10/mo on Simple, unlimited Grow+ | Unlimited all plans | 5/mo free, unlimited paid | 5 clients | Unlimited all plans | 1,000/yr free, unlimited paid |
Track Expenses | Grow + | ✅All plans | Standard + | ✅All plans | ✅All plans | ✅All plans |
Payroll | Add-on | Add-on | Add-on | Add-on | ✅Included | Add-on |
Inventory | Ignite + | Plus + | Plus | Not available | Not available | Professional + |
Best For | Best all-rounder | Sole traders & self-employed | UK compliance | Service businesses | Landlords | Best value |
*FreeAgent is free for life with NatWest, RBS, Ulster Bank, or Mettle business accounts. Prices are UK rates, excluding VAT, as of August 2026 — always verify on providers’ websites before purchasing.
Top Recommended: Xero, QuickBooks and Sage
Xero, QuickBooks and Sage are our top three accounting software choices for UK small businesses. All three are well-established, support Making Tax Digital and provide the core bookkeeping features most businesses need, including invoicing, automated bank feeds, expense tracking and financial reports. Xero is our best all-rounder, QuickBooks is particularly suited to sole traders and the self-employed, while Sage is a strong choice for UK tax and compliance.
Xero — Best All-Round Accounting Software
Xero is our best all-round accounting software because it is easy to use without being too basic for a growing business. The dashboard shows bank balances, unpaid invoices and cash flow, while everyday bookkeeping tasks such as sending invoices, reconciling bank transactions and submitting VAT returns are easy to find.
One of Xero’s biggest advantages is unlimited users. You can give your accountant, bookkeeper or employees access without paying for additional user licences. Xero also connects with a large range of other business apps, making it a good option if you need to add more features as your business grows.
I have also used Xero’s customer support and received a quick response, which is worth considering if you are setting up or managing the software yourself.
Xero is also developing JAX, its built-in AI assistant. I have tested JAX myself to raise an invoice and produce a financial report, and both worked successfully. It can also help with tasks such as bank reconciliation, bills and receipts, and answering questions using your Xero data. You can review actions, which is important when using AI for bookkeeping.
Xero Pricing
For self-employed people and landlords who are not VAT registered, Xero also offers the Simple subscription, designed for basic bookkeeping and MTD for ITSA. It includes up to 10 invoices, bank reconciliation, reports and Hubdoc document capture.
Plan | Price/Month | Key Features | Best For |
|---|---|---|---|
Ignite | £16 | Up to 20 invoices, 10 bills, bank reconciliation, MTD VAT and Income Tax, unlimited users | Very small businesses with lower transaction volumes |
Grow | £37 | Unlimited invoices and bills, payroll (1 included), expenses & Mileage | Small businesses with regular invoicing |
Comprehensive | £50 | Multi-currency, expense management, analytics, payroll for up to 5 people | Businesses needing more advanced features |
Ultimate | £65 | Advanced analytics, projects, payroll for up to 10 people | Established businesses with more complex requirements |
Xero supports both MTD for VAT and MTD for ITSA. It also includes CIS features for construction businesses, while payroll and some other features depend on the plan you choose.
A free trial is available, and our affiliate link includes Xero’s current introductory offer.
Tip: Xero’s unlimited users policy means your accountant, bookkeeper, and employees can access your account on any package.
Verdict – Xero is our best all-round choice. It covers the bookkeeping features most small businesses need, allows unlimited users and has plenty of scope as a business grows. I have also found JAX useful for practical tasks such as creating invoices and producing reports, rather than simply being an AI feature added to the software.
QuickBooks Online — Best for Sole Traders and Self-Employed
QuickBooks is our top choice for sole traders and the self-employed. Its lower-cost version covers the everyday bookkeeping most self-employed businesses need, including bank feeds, invoicing, income and expense tracking, receipt capture and mileage tracking. It also supports Self Assessment and MTD for Income Tax.
The mobile accounting app is particularly useful if you work away from a desk. Mileage can be tracked automatically using GPS, receipts can be photographed and uploaded, and invoices can be created while you are out. QuickBooks also includes free customer support and an onboarding session, which can be useful when setting up accounting software for the first time.
QuickBooks also includes customer support and a free onboarding session, which is particularly useful for businesses setting up accounting software for the first time.
QuickBooks also includes Intuit Intelligence, its built-in AI assistant. I tested it by asking it to create an invoice, produce a profit and loss report and tell me the gross profit figure. It completed all three tasks successfully. The invoice was created within the AI chat, although unlike Xero’s JAX, it wasn’t displayed in the main QuickBooks screen as part of the process. In my testing, Xero’s JAX felt more integrated and easier to use for this type of task.
Important: The Sole Trader version is designed for businesses that are not VAT registered. If you are VAT registered, you will need Simple Start or a higher plan.
QuickBooks Pricing
Plan | Price/Month | Key Features | Best for |
|---|---|---|---|
Sole Trader | £10 | Bank feeds, income and expense tracking, send invoices with online payments, Self Assessment, GPS mileage, CIS, MTD ITSA. No VAT. 1 user. | Non-VAT-registered self-employed |
Simple Start | £16 | Sole trader features plus MTD VAT returns, 1 user. | VAT-registered small business owners |
Essentials | £38 | Bill management, multi-currency, recurring invoices, time tracking. Up to 3 users. | Businesses with suppliers and staff |
Plus | £56 | Stock management, purchase orders, sales orders, project management, and budgeting. Up to 5 users. | Product-based and growing businesses |
Advanced | £123 | Advanced custom reporting, workflow automation, forecasting, auto-track fixed assets, up to 25 users. | Larger SMEs |
QuickBooks supports MTD for ITSA, while Simple Start and the higher version also support MTD for VAT. Payroll is available as a paid add-on. QuickBooks includes phone and online support, and our affiliate link includes the current introductory offer.
Verdict: Best for sole traders and the self-employed. Lowest entry price on the market, GPS mileage tracking on every subscription, and phone support included. Watch out for tight user limits on lower plans and prices that have risen sharply in recent years.
Sage: Best for UK Compliance, Sole Traders and Small Business Accounting
Sage is a strong choice for UK small businesses, particularly if tax compliance and payroll are important. Unlike Xero and QuickBooks, Sage started in the UK and its accounting software has been developed around UK bookkeeping, VAT, payroll and HMRC requirements.
Sage covers the everyday accounting tasks you would expect, including invoicing, bank feeds, bank reconciliation, financial reports and VAT returns. Its Accounting versions also include Sage Copilot, an AI assistant that can help with tasks such as transaction categorisation, identifying possible errors and chasing unpaid invoices.
A major advantage for the self-employed is Sage Sole Trader Free version. It is designed for non-VAT-registered sole traders and includes digital record-keeping, bank feeds, up to five invoices a month, tax estimates and MTD for Income Tax submissions. The paid plan removes some of the limits and adds more features and support.
Important: Sage offers a genuinely free accounting plan for non-VAT-registered sole traders. It includes digital record-keeping, bank feeds, Self Assessment support, and MTD quarterly submissions — making Sage one of only two major providers with a free.
Sage Pricing
Plan | Price/Month | Key Features | Best For |
|---|---|---|---|
Sole Trader | Free | Digital records, bank feeds, Self Assessment, MTD ITSA updates. Up to 5 invoices/month. Non-VAT only. | Self-employed starting with digital record-keeping |
Sole Trader | £7 | Free plan features plus unlimited invoices, automated Self Assessment, expert webchat. | Self-employed wanting more features and support |
Accounting Start | £20 | Send invoices, bank reconciliation, MTD VAT return, Sage copilot and payroll (1 person). 1 user. | VAT-registered micro-businesses |
Accounting Standard | £43 | Start plus expense management, multi-currency, cash flow forecasting, purchase invoices, CIS, quotes and up to 3 users. | Small businesses needing full bookkeeping |
Accounting Plus | £59 | Standard plus stock management, budgeting, multi-currency, unlimited users. | Growing businesses managing stock or projects |
Sage supports MTD for VAT and MTD for Income Tax, although the features available depend on the product you choose. Sage Sole Trader supports MTD for Income Tax but not VAT, while Sage Accounting is designed for businesses that need VAT and wider accounting features.
Verdict: Sage is our top choice for UK compliance and is particularly attractive for sole traders who can use the free plan. Its UK focus, MTD support and accounting and payroll products make it a good option for businesses that want software designed around UK requirements.
Also Worth Considering: Zoho Books, FreeAgent and FreshBooks
Xero, QuickBooks and Sage are our top three choices, but they won’t be the best fit for every business. Zoho Books stands out for the amount it includes for free; FreeAgent has useful features specifically for landlords, while FreshBooks is particularly strong for invoicing and service businesses.
Zoho Books — Best Value Accounting Software
Zoho Books offers an unusually wide range of accounting and tax features for its price. The free version includes invoicing, expenses, bank reconciliation, VAT returns, MTD for VAT, financial reports and up to 1,000 invoices a year. It also includes one user plus accountant access.
For UK sole traders and landlords, Zoho Books has become particularly interesting in 2026. It supports MTD for Income Tax on all plans, including the free version, allowing quarterly updates to be submitted directly to HMRC. Zoho has also introduced direct Self Assessment filing, so eligible users can prepare their SA100 and supported supplementary pages, calculate their tax and submit the return to HMRC from Zoho Books.
The Self Assessment feature currently supports the main SA100 return, along with employment, short self-employment, and UK property supplementary pages. It won’t cover every possible Self Assessment situation, so businesses with more complicated tax affairs should check that their income sources are supported.
Zoho Books Pricing
Plan | Price/Month | Key Features |
|---|---|---|
Free | £0 | Invoicing, expenses, bank reconciliation, MTD VAT, MTD for ITSA, Self Assessment and 50+ reports |
Standard | £12 | Free features plus bank feeds, recurring expenses, custom reports and 3 users |
Professional | £24 | Bills, purchase orders, multi-currency, projects, inventory and 5 users |
Premium | £30 | Fixed assets, budgets, cash-flow forecasting and additional automation |
Higher-level Elite and Ultimate subscriptions are also available for businesses needing advanced inventory or analytics.
Zoho Books also connects with other Zoho products, including CRM, Payroll and Projects, which may be useful if you already use the Zoho ecosystem.
Verdict: Zoho Books offers particularly good value for small UK businesses. The free version now goes well beyond basic bookkeeping, with MTD and Self Assessment features that would normally be associated with paid plans. The main consideration is whether you need features that are only available on the higher plans.
FreeAgent — Best for Partnerships and Free with Some Business Bank Accounts
FreeAgent is UK accounting software for sole traders, limited companies, partnerships and landlords. It includes invoicing, expenses, bank feeds and financial reports, alongside UK tax features including VAT, Self Assessment and MTD for Income Tax.
One of FreeAgent’s biggest advantages is that it is available free with qualifying NatWest, Royal Bank of Scotland and Ulster Bank business accounts, and with qualifying Mettle accounts. This can make it a good alternative to paying for accounting software separately.
FreeAgent also has a dedicated account for unincorporated landlords, allowing you to track rental income and expenses by property and supporting Self Assessment and MTD for Income Tax.
FreeAgent Pricing
| Business Type | Price/Month |
|---|---|
| Landlord | £10 |
| Self-employed | £19 |
| Partnership | £27 |
| Limited company | £33 |
Verdict: FreeAgent is an outstanding option for contractors, landlords, partnerships and self-employed people who bank with NatWest, RBS, Ulster Bank, or use Mettle — the free access makes it hard to beat. For businesses without these bank accounts, the flat monthly fee is reasonable, and the all-in pricing, including payroll, compares well with competitors’.
FreshBooks — Best for Invoicing and Service Businesses
FreshBooks is aimed mainly at freelancers, consultants and service businesses. Invoicing is one of its main strengths, with recurring invoices, automatic payment reminders, online payments, estimates and time tracking built into the software.
The Lite subscription lets you invoice up to five clients, while Plus increases this to 50 and adds bank reconciliation, accountant access and additional financial reports. Premium removes the client limit and adds features for businesses dealing with a larger number of customers.
FreshBooks Pricing
Plan | Price/Month | Key Features |
|---|---|---|
Lite | £16 | Send invoices (up to 5 active clients), track expenses, time tracking, MTD VAT returns, and a single user. |
Plus | £30 | Up to 50 clients, double-entry reports, bank reconciliation, accountant access, retainers, proposals. |
Premium | £42 | Unlimited clients, accounts payable, project profitability, and customisable email templates. |
Select | Custom | Dedicated support, lower transaction fees, and 2 users included. |
FreshBooks supports MTD for VAT, but it does not currently support direct MTD for Income Tax submissions. This is an important limitation for UK sole traders and landlords who must use MTD.
Additional users cost extra, and payroll requires another service or integration, so the overall cost can increase if several people need access.
Verdict: FreshBooks is worth considering for freelancers and service businesses where invoicing, time tracking and getting paid are the main priorities. However, the lack of direct MTD support puts it behind the other accounting packages on this page for many UK sole traders.
Making Tax Digital — What Software Do You Need?
Making Tax Digital (MTD) requires businesses within its scope to keep digital records and use compatible software to send information to HMRC. The requirements differ for VAT and Income Tax, so check that the software you choose supports the type of MTD you need.
MTD for VAT
All VAT-registered businesses must follow MTD for VAT unless they are exempt. This means keeping digital VAT records and submitting VAT returns using compatible software.
All six accounting packages reviewed on this page support MTD for VAT.
MTD for Income Tax
MTD for ITSA started on 6 April 2026 and initially applies to sole traders and landlords with qualifying income over £50,000. Those within MTD must keep digital records and send quarterly updates to HMRC using compatible software.
The rollout is:
- From 6 April 2026: qualifying income over £50,000
- From 6 April 2027: qualifying income over £30,000
- From 6 April 2028: qualifying income over £20,000
Qualifying income is your gross income before expenses from self-employment and property. If you have both, the income is combined when deciding whether you need to use MTD.
Xero, QuickBooks, Sage, Zoho Books and FreeAgent support MTD for Income Tax. FreshBooks currently supports MTD for VAT but not direct MTD submissions.
Partnerships are not currently required to use MTD for Income Tax.
MTD for Corporation Tax
There is currently no requirement to use Making Tax Digital for Corporation Tax. HMRC previously considered extending MTD to Corporation Tax but has not introduced a start date. Limited companies must still keep suitable accounting records and file their Company Tax Return with HMRC, normally using compatible commercial software.
Check GOV.UK for the latest MTD rules, thresholds and exemptions.
How to Choose Small Business Accounting Software
The best accounting software depends on how your business operates and which features you actually need. Consider whether you are VAT registered, need MTD for Income Tax, employ staff, hold stock, work with an accountant or need more than one person to access the accounts.
Your Situation | Best starting point |
|---|---|
Non-VAT-registered self-employed wanting free software | Sage Sole Trader Free or Zoho Books free version |
Need MTD for Income Tax | Xero, QuickBooks, Sage, Zoho Books or FreeAgent |
Bank with NatWest, RBS, Ulster Bank or Mettle | FreeAgent — free for life with these bank accounts, full MTD support included |
Small business owner needing VAT returns | QuickBooks Simple Start or Xero Ignite |
Businesses with an accounting team | Xero – unlimited users on all plans |
Landlord | Zoho Books or FreeAgent — both have dedicated property features |
Partnerships | FreeAgent — dedicated Partnership plan |
Business needing inventory management | Compare the higher Xero, QuickBooks, Sage and Zoho plans |
Already using other Zoho products | Zoho Books — seamless integration with Zoho CRM, Payroll, and Projects |
Want bookkeeping and Self Assessment in one system | Zoho Books, FreeAgent or other packages that support your particular tax situation |
Before subscribing, check the provider’s current package features and limits. The cheapest plan isn’t always the best value if you later need to upgrade for VAT, additional users, stock, payroll or other features.
Accounting Software Best Deals
XERO – 80% Discount for 6 Months – Cloud accounting, unlimited users, bank feeds, MTD compatible
QuickBooks – 90% off for 7 Months – Sole-Traders, easy to use, MTD-compatible
Tide – Free with Tide Bank Account – All your banking and accounts in one place, MTD compatible
FAQ
Conclusion
Xero, QuickBooks and Sage remain our top three accounting software choices for UK small businesses. Xero is the best all-rounder, with unlimited users, a wide range of integrations and an AI assistant that worked well in our testing. QuickBooks is our top choice for sole traders and the self-employed, while Sage stands out for its UK focus and free Sole Trader version.
The other three packages have their own advantages. Zoho Books offers the best value, with an impressive free package that now includes MTD, Self Assessment and property accounting features. FreeAgent is particularly attractive if you can get it free through a qualifying business bank account, and it also offers dedicated plans for partnerships and landlords. FreshBooks remains a good choice for service businesses where invoicing is the priority, although it does not currently support direct MTD for Income Tax submissions.
No single accounting package suits every business. Consider the features you actually need, including VAT, MTD for Income Tax, payroll, stock, additional users and whether your accountant or bookkeeper needs access. Where a free trial is available, it is worth testing the software before committing to a subscription.
MTD requirements and software features can change, so check the provider’s current plan details and GOV.UK before making your final choice.UK before making your final choice.
Related Pages:
Best Accounting software for self-employed
