Small Business Accounting Software
Options for your business accounting software
Finding the best business accounting software is essential to managing your business finances.
Whether you are starting a small business or expanding, you must look for the best options available for your business needs.
In this article, we will look at the following:
- How to choose the best solution
- Accounting features
- The most popular paid solutions include FreshBooks, QuickBooks, Sage, Zoho Books and Xero.
- Free accounting software, including Pandle, Zoho and QuickFile
A good starting point may be to speak to your accountant or bookkeeper if you have one. They may have a product that they use and can recommend. It is also worth contacting other businesses or looking on forums for recommendations.
Accounting Software for Small Business
Most packages offer a free trial if you are looking for a paid service. It is worth trying a couple of packages to see which one suits your business.
Most of the options available are cloud-based, but there are also some options to download onto a computer.
When choosing the best solution, consider the features the business needs. We will examine the different accounting features in detail below.
We have outlined some of the small business accounting software options available, both free and paid versions. Compare each one and determine its advantages and disadvantages.
Here is a quick list of some of the best small business accounting software available in the UK:
- FreshBooks – One of the best accounting tools for small business
- Zoho Books – Great free version for turnover up to £35,000 and then plans available to upgrade
- QuickBooks Online and QuickBooks Self-employed – Fantastic all-around solution with lots of additional features.
- Xero – Recommended by lots of bookkeepers and accountants.
- Bokio – Best free option, although they are looking to introduce pricing for some features.
To help, we’ve written a QuickBooks vs. Xero comparison that looks at pricing and features.
Small Business Bookkeeping Software Features
Below are some of the main features of accounting software. If you start by listing the features that your business needs, we will then look at the features of different software products.
Making Tax Digital
Making Tax Digital is in the process of being introduced by HMRC.
The plan is to get businesses to complete their accounting online and submit tax reports via the software.
VAT returns commenced in April 2019, with all businesses with a turnover of 90,000 or more.
If you are self-employed and complete tax returns, making tax digital was delayed from April 2023 to April 2026.
Ensure that any software you look at is making tax digital-ready.
Invoicing
Issuing sales invoices to customers on time is essential. Using software that includes a mobile app can mean that you can raise an invoice as soon as you finish a job.
When signing up for an accounting solution, it is worth checking if they have unlimited invoices. Some of the cheaper pricing plans have a limited amount of invoices or clients. You can soon reach this and have to upgrade to a more expensive monthly amount.
Branding an invoice and including all the information that a customer needs to pay the invoice is essential. There are several options to set up a template; built-in ones and creating your own template.
Most accounting software also includes a feature that the invoice is paid directly. They use payment providers, including Stripe, Paypal and their own. There is usually a fee involved, so adding the bank details and getting paid by bank transfers is cheaper.
Expense Tracking and Expense Management
I’ve heard of so many bookkeepers being passed a box of expenses at the end of the year. It will cost your business the bookkeeper’s time on data entry.
If you use accounting software, you can track your expenses as you go. Some will even allow you to take a photo on a mobile phone and upload it directly to the application.
Expense management includes tracking bills and when they are due. On the whole, this is included in the most popular software, but on the cheaper plans, it is not available.
If you prefer to track expenses using Excel, we have expense templates available for download. It is ideal for tracking mileage and expenses that are paid out of your personal money.
Bank Accounts
One feature that can save lots of time is a bank feed. You may also need more than one account for cash, savings and credit cards.
By using open banking, the software connects to the bank account and downloads all the bank transactions. Once imported, you can review each one and reconcile it to a transaction or post it directly.
By setting up rules, a future transaction can be reconciled with one click.
Check that the software you are looking at offers feeds for your bank.
Most free accounting software packages do not offer this feature or charge a small monthly fee.
Inventory Management or Stock
If your small business keeps stock, it is essential to track inventory.
The best packages for tracking inventory are Xero , QuickBooks, Sage and Zoho Books has an additional app to add.
As part of inventory management, you may need to re-order levels, stock count, stock amount and work in progress. If you can’t find what you are looking for, there are special packages that track inventory.
Payroll
If you employ staff, payroll is required.
There are several options: use accounting software, usually for an additional monthly fee, use the accountants, or use an online payroll service.
A specialist payroll service is often a good choice as they have all the knowledge of running a payroll system and can keep track of dates and issue reports on time.
Time Tracking
A small business running a service may require time tracking.
A time tracking feature can record both real-time or log previous time worked.
Zoho Books and QuickBooks both offer time tracking in their mobile app.
Time tracking can be an essential part of the invoicing process by recording time against a project.
Mobile App
The most popular cloud-based accounting software offers a mobile app for both iOS and Android.
Packages including Zoho Books and QuickBooks have all the cloud-based software features built into their mobile app.
Having the same features allows you to complete the following tasks:
- Invoicing – Create and send invoices directly to your customers. You can even accept payments on the invoice.
- Tracking Time against service projects.
- Track Mileage in real-time.
- Photo Bills and upload to the software.
- Produce reports like the profit and loss and Balance Sheet.
- See a snapshot of the business.
Reports
Reports are essential for business owners to know their financial position. It allows them to look at the financial data and make business decisions or produce reports for year-end.
Most include standard reports like Profit and Loss, Balance Sheet, Accounts Payable, Accounts receivable, payroll, trial balance, cash flow forecasting, and VAT.
Customer Support
Customer support is typically included but might be via online chat, email, telephone or accountants. Some offer support included in their monthly subscription, while offers might be an additional fee.
Ember offers a solution that includes support from an accountant for a fixed monthly fee. Although the monthly price is higher, it might give you peace of mind.
Business Accounting Software – Cloud-Based Accounting
What is cloud accounting? Cloud-based accounting is becoming a popular product for business accounting. You pay a fixed fee each month, which includes support and upgrades.
Cloud-based accounting uses a remote server to host the software and user data. You can access it from any PC, tablet or phone with internet access.
An advantage of cloud accounting is that several people can use it at the same time. You can also share the software with your accountant or bookkeeper.
Most of the suppliers offer a free trial of up to 30 days. Some choices include QuickBooks, Xero , Sage, Accounts Portal, FreshBooks and Zoho Books.
Our favourite package is QuickBooks. Although it is more expensive, it is more user-friendly than others.
Best Accounting Software for Small Business
Read our five best accounting software for small business. We have reviewed some of the top accounting software for small businesses and put a complete guide together, including the pricing, pros and cons for each.
We also offer a tool to compare accounting software.
If you are unsure of the best package for your needs, this is the best place to start.
Below are some of the top business accounting software providers.
FreshBooks Business Accounting Software
FreshBooks is very good for small business accounting and especially for freelancers.
The pricing structure is based on the number of clients, so if you deal with lots of clients, you may find it expensive compared to other solutions.
It has all the features you would expect from an accounting package including time tracking, mileage, invoicing and tracking expenses.
QuickBooks Online
QuickBooks Online has several different versions, including self-employed, simple start, essentials and plus.
Pricing starts from £8 per month for QuickBooks self-employed to £30 per month for plus. Their most popular plan is the essentials at £20 per month.
QuickBooks has all the features you would expect and includes; payroll, CIS, excellent reports, brand invoices, sending invoices from the app, income and expenses and VAT.
Sage
Sage is a popular accounting software option for both small and medium businesses.
Prices start from £12 per month for the basic package to £30 per month for their plus package.
Sage is used and recommended by lots of accountants and includes all the features you would expect.
Xero Business Accounting Software
Bookkeepers and accountants also recommend Xero. The layout is user-friendly, and everything is easy to find.
The pricing starts from £12 per month, ideal for sole traders and new businesses. Their premium package is £33 per month. Xero can get expensive if you need lots of their add-ons, including expenses, projects and CIS.
Free Small Business Accounting Software
There are several free accounting software options available. They are limited in features but might be suitable. They are great as a small business owner starting out, but it is worth checking if they will grow with the business.
Bokio Online Accounting Software
Announcement – From 30th September 2023, Bokio will remove the free version and create a single paid plan at £19.95 per month.
Bokio is an all-in-one accounting software solution for both sole traders and small businesses.
It includes lots of the features of paid software, including bank feeds, reporting, unlimited transactions, income and expenses.
It is limited to some reporting and invoice layouts, but if you need help, the support is paid for and linked to accountants.
They are looking to charge £19.95 per month from 30th September 2023.
Free Agent
Free Agent is free for business current account holders for NatWest, Royal Bank of Scotland and Ulster Bank NI or one transaction per month with Mettle.
It is an ideal software for small businesses, as it is easy to use and includes bank feeds, time tracking, MTD for VAT and Payroll.
GNU Cash
GNU Cash is open source and can be downloaded to your computer. It is ideal for personal use or for the self-employed with simple accounts.
It includes financial reports and invoicing but is very basic
Pandle
One of the choices that I have looked at is Pandle. It is a great start to using a full accounting package. As you expand the business, a paid version is available with extra features.
I have used Pandle for a couple of small businesses and a charity. On both occasions, it has worked well for the needs.
Zoho Books
Zoho Books offers free accounting software up to a turnover of £35,000 and then is cheaper per month than some of the other options. It is ideal for self-employed and small businesses.
It has all the features you would expect, lots of reports, invoices, bank accounts and accounts payable. They have a user-friendly interface.
They also have paid versions, which is cheaper than some of the other providers.
Read our complete guide on free accounting software; above are just a few.
Free Microsoft Excel Templates
We have written some of our own free Excel bookkeeping templates. We try and make them simple to use, with clear instructions. Our templates include Cashbook, bank reconciliation, business expenses, and petty cash.
Excel templates can be a good starting point, especially if you know Excel well. As the business grows, looking at business accounting software as an upgrade is the best option.
Free Excel Bookkeeping Templates
Paid Microsoft Excel Templates
Paid-for Excel templates can be a cheap solution with a one-off payment. If you are going to pay for a spreadsheet, ensure that you can do a trial first and that there are options for a refund.
Accounting Software Packages
The traditional way is to use an accounting software package such as FreshBooks, QuickBooks, Xero or Sage. Most companies have stopped offering a package, but they are available on eBay. It can be an expensive initial outlay, but it may be cheaper than paying monthly in the long term. On top of the software, you may also need to pay for support yearly.
Small Business Accounting Software – Conclusion
It is essential for business owners to manage their business finances, and using bookkeeping software is the ideal solution. Other options are Excel templates.
When choosing small business accounting software, look at the features that the business will need and don’t forget to consider whether the company will still be suitable if it grows.
The cost of the business accounting software should be taken into account, but it can save both time and money.
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