The Best Self-Employed Accounting Software for 2024

In today’s fast-paced world, self-employed individuals and small businesses need efficient financial management. Accounting software saves time, ensures accuracy, and provides valuable financial insights to help grow your business. But with so many options available, how do you choose the right one?

In this blog post, we’ll explore the best self-employed accounting software, discuss factors to consider when deciding, and even offer alternatives for those who prefer using Microsoft Excel. Choosing the right option is crucial as discovering a better fit later could lead to significant time lost in transferring data.

Key Takeaways

• Investing in quality accounting software can improve financial reporting and record accuracy.
• This article overviews the top 6 accounting solutions, each with unique features to meet individual needs.
• The future of Making Tax Digital
• Consider usability, functionality, cost and customer service when selecting a solution to maximise its benefits.

The Importance of Accounting Software for Self-Employed

Managing finances can be tough for self-employed people, as it involves keeping track of income, expenses, taxes, etc. However, these tasks can be streamlined with the right software, saving precious time and ensuring greater accuracy.

Benefits of using small business accounting software include:

• Simplified tracking of income and expenses
• Streamlined tax return preparation
• Enhanced accuracy in financial records
• Time savings of up to 8 hours per month
• Submission of Self-Assessment tax return

By utilising software, individuals can effectively manage their finances and focus on growing their business.

For self-employed, accounting software is a vital tool that aids in handling several financial aspects, such as:

• Bookkeeping
• Invoicing
• Purchase orders
• Account statements
• Inventory
• Self-Assessment reports

It provides features such as user access controls, data encryption, and regular backups to ensure the security of sensitive financial data, including bank accounts and bank transactions. Using accounting software, you can gain invaluable financial insights, such as sales fluctuations and assistance with self-assessment tax returns, to make informed decisions for your business’s success.

Investing in top-notch accounting software for your self-employed venture can enhance financial management, increase record accuracy, and free up time for business growth.

Making Tax Digital

The UK government has introduced some changes to accounting and taxation for small business owners and the self-employed. The Making Tax Digital (MTD) initiative requires businesses to comply with digital record-keeping standards for tax returns.

This means that instead of paper records, all transactions must be recorded electronically using software approved by HMRC. This digital tax system helps the government streamline income and expenditure records and keep track of taxes due.

HMRC have delayed it until 6th April 2026 for income over £50,000 and 6th April 2024 for income over £30,000. For income below £30,000, there is no planned date. You can sign up earlier to help HMRC test and develop the system. Most accounting software is MTD-ready, but it is worth checking before signing up.

6 Best Self-Employed Accounting Software Solutions

Here is a list of the 6 best accounting software solutions that might fit your business perfectly. It features:

• QuickBooks Self-Employed
• Xero
• FreeAgent
• FreshBooks
• Zoho Books
• Sage Business Cloud Accounting

Each solution offers unique features and capabilities to cater to the diverse needs of self-employed and small businesses. They are all cloud-based solutions offering up-to-date software and secure data.

Of course, all of them have different benefits and disadvantages. The top accounting software in the UK is Xero and QuickBooks. We have compared them side by side, making it easier for you to make a decision. So; let’s take a deeper look at what they are.

QuickBooks Online – Great for Sole Traders

QuickBooks Online is an accounting software specifically tailored to the needs of sole traders and self-employed people, providing all the tools needed at a low price.

QuickBooks Online offers:

• Invoicing
• Expense Tracking
• Track mileage
• CIS
• Separate personal and business transactions
• Invoicing on the go
• Snap receipts and bills to upload
• Tax estimates

These features make it suitable for sole traders and self-employed individuals.

QuickBooks Online Pricing

The base self-employed plan of QuickBooks is priced at £10 per month (excluding VAT), making it one of the cheapest options. If you are VAT registered, the price is £14 per month.

QuickBooks Self-Employed is a powerful and feature-rich accounting software tailored for the self-employed, focusing on tax management support. While there may be a learning curve for some users, the benefits of using this software for tax planning and organisation make it a strong contender in the market.

Visit QuickBooks

Xero

Xero is a powerful cloud-based accounting software that provides:

• Invoicing
• Online payments
• Expense tracking (2.50 per month per user)
• Project management (£5 per month after trial)
• Automated bookkeeping
• CIS Returns

It offers a clean interface and unlimited users, making it suitable for growing businesses.

Xero Pricing

However, with a starting price of £15 per month for 20 invoices, you may soon be on a higher plan at £30. Xero has a slightly higher base cost than some of its competitors but is worth considering if you want to expand.

Xero’s basic plan is suitable for small-scale sole traders but may not be the best choice. The software is primarily designed for medium and large businesses, so its complexity may be overwhelming with limited accounting experience.

In summary, Xero is a powerful accounting software with various advanced features and apps suitable for growing businesses. In comparison, it may not be ideal for self-employed people seeking a more tailored solution. Its clean interface and unlimited users make it a strong option for those needing a scalable solution.

FreeAgent – Free Software for some

FreeAgent is a user-friendly accounting software that offers great features for self-employed individuals and small businesses. It provides:

• Create invoices
• Online payments
• Cash flow forecasts
• Transaction approval
• Recurring expenses
• Vendor credits
• Landed cost
• Inventory management
• The ability to manage multiple projects with ease

FreeAgent Pricing

A free version is available if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or use Mettle for one transaction per month.

FreeAgent is more expensive than other options, with pricing starting at £19 a month for sole traders and £29 for limited companies.

Despite its higher price, FreeAgent remains popular for self-employed and small businesses seeking a user-friendly and feature-rich accounting software solution.

FreshBooks

FreshBooks is a solution designed to meet the needs of self-employed accounting. It offers a user-friendly interface with minimal jargon, making it ideal for those with basic accounting requirements. Some of the key features offered by FreshBooks include:

• Invoice and estimate creation tools
• Time tracking – ideal for invoicing by the hour
• Mileage tracking – mobile app
• Making tax digital – VAT support

FreshBooks plans offer these features to help you manage your finances effectively.

FreshBooks integrates with popular applications such as PayPal and Zendesk, making it easy to streamline your workflows. However, one drawback of FreshBooks is that it offers a range of additional features, such as time tracking, which may not be necessary for some users.

FreshBooks Pricing

The cost of FreshBooks starts at £12 a month for the ‘Lite’ package, with a limit of five billable clients; for 50 clients, it is £22 per month. FreshBooks might not be the package for you if you are a business that invoices many clients.

FreshBooks is a great option for individuals looking for user-friendly accounting software with essential features and integrations. However, it may not be the best choice for those seeking a free or more budget-friendly option.

Zoho Books

Zoho Books is a comprehensive accounting software offering essential features for small businesses and freelancers. It provides a free plan for businesses with revenue below £35k, making it an attractive option for those just starting out or with limited budgets. Some of the key features of Zoho Books include:

• Customisable invoice templates
• Online payments
• Transaction approval
• Recurring expenses
• Vendor credits
• Inventory tracking
• Cash flow management
• Timesheet management

The user interface of Zoho Books is straightforward and visually appealing, without unnecessary embellishments. One of the main advantages of Zoho Books is for a business that plans to expand as they have over 50 apps that integrate with it.

Zoho Books Pricing

Zoho Books starts with a free plan of up to £35,000 per year; the standard package is £10 per month, which is cheaper than most paid plans.

In conclusion, Zoho Books is an excellent option for small businesses and freelancers looking for comprehensive accounting software with a free plan. While there may be a learning curve due to its many features, the benefits of using this software to manage your finances outweigh any initial challenges.

Visit Zoho Books

Sage Business Cloud Accounting

Sage Business Cloud Accounting is a cloud accounting software solution specifically designed for small businesses. It provides a comprehensive range of features to accommodate all companies, such as:

• Batch transactions for efficient data entry
• Invoicing and payment tracking
• Bank reconciliation
• Expense tracking
• Financial reporting

Sage Pricing

The Accounting Start package has a starting price of £14 per month and offers the following:

• Unlimited invoicing
• Bank reconciliation
• Track outstanding payments
• VAT
• Cash Accounting
• Telephone support

Although Sage Business Cloud Accounting is more intricate than other accounting software systems, it provides an extensive range of functionality once the interface is mastered. To get the full functions, including managing purchase invoices, you will need to pay £28 per month.

In summary, Sage Business Cloud Accounting is powerful for small businesses planning to expand but can have a learning curve.

Free Accounting Software

As a sole trader, you may seek free accounting software and tools to get started and keep costs down. Most have now removed free plans due to the increase in keeping current with legislation and overheads.

A few options are still available:

FreeAgent if you have a bank account with Natwest, Royal Bank of Scotland, Ulster Bank, or one monthly transaction with Mettle.

Pandle is another free option with limited capabilities, but for a small business, it might be suitable.

Zoho Books also offers a free version with a turnover of up to £35,000.

QuickFile offers a free version for basic bookkeeping for up to 1000 general ledger transactions per year. This might sound like a lot, but with double entry bookkeeping, you can soon reach the 1000 transactions.

Factors to Consider When Choosing Self-Employed Accounting Software

Choosing the right software requires careful consideration of several factors. Usability is crucial, as you want easy-to-navigate and understand software, especially if you have limited accounting experience.

Functionality is another important factor, as you want to ensure the software offers essential features such as:

• Invoicing
• Recurring invoices
• Quotations
• Tracking payments
• Logging expenses
• Time tracking
• Cash flow forecasting
• Mileage

Cost, safety, expansibility, and customer service should also be considered when choosing an option. By carefully evaluating these factors, you can make an informed decision and select the best software for your business.

Integration Possibilities with Popular Apps

Many accounting packages offer integration with Apps to simplify processes and reduce the amount of data entry. Popular apps that can be integrated include:

Mailchimp integration with Quickbooks online lets you see trends and send marketing emails. It also allows you to segment your customer base and tailor your communication to their specific needs. This integration is a powerful tool for boosting customer engagement and retention. It helps you to track customer behaviour, analyse their purchasing patterns, and then use this information to send targeted marketing emails.

PayPal or Stripe integration with QuickBooks or Xero speeds up the payment process and eliminates manual data entry. It allows you to process payments faster with less stress, making it easier for customers to pay their invoices online. Plus, PayPal supports over 100 currencies, so you can accept payments from all around the globe.

Dext Prepare is a powerful tool that works with your accounting software. This application collects and extracts data from your paperwork with an impressive 99% accuracy rate, then processes the information automatically to your software. This seamless integration minimises manual data entry, reduces errors, and saves valuable time.

By exploring and utilising these integration possibilities, you can streamline your workflows and improve efficiency, ultimately making the most of your solution.

Tips for Maximising the Benefits of Self-Employed Accounting Software

You can employ several strategies to fully exploit your software’s capabilities and achieve the best self-employed accounting. First, use free trials to ensure the software meets your needs. Research the features, test the software, and look for any discounts or promotions that may be available.

Customising your software can also help you maximise its benefits. Key features for customisation include:

• Invoice creation, adding logos and colours for branding
• Invoice tracking and automatic payment reminders
• Open Banking – downloading transactions from a business bank account
• Automatic bank account reconciliation
• Custom reports for monitoring business performance
• Customised quotes and invoices
• Expense Management – recording bills and recording payments
• The ability to customise credit terms and payment reminders

Lastly, keeping your software up-to-date with transactions and implementing financial processes is essential for maintaining accurate records and ensuring you have access to accurate reports. Following these tips can maximise the benefits and enhance your financial management.

Alternatives to Self-Employed Bookkeeping Software

Using Excel bookkeeping templates or paper records can be viable for those who prefer a hands-on approach or seek alternatives to self-employed bookkeeping software.

Bookkeeping templates can simplify the process of setting up a basic bookkeeping system. However, it’s crucial to ensure that the template you choose fits your business type and includes all the necessary information for reporting.

For your convenience, we’ve designed a free template, the Cash Book, which includes recording Supplier Payments and Customer Receipts. You can download it from this link: Free Excel Cash Book Template.

This user-friendly and straightforward template makes it an excellent choice for small businesses looking to kick-start their bookkeeping without the complexities of sophisticated software.

Best Accounting Software for Self-Employed – Summary

In this blog post, we have explored the best accounting software, discussed factors to consider when choosing the right software, including Making Tax Digital, and offered tips for maximising its benefits. We have also provided alternatives for those who prefer a more hands-on approach.

By carefully evaluating your needs and preferences, you can select the best financial management solution for your self-employed business, ensuring accurate records, streamlined workflows, and valuable financial insights to help grow your business.

Frequently Asked Questions

Which is the best self-employed accounting software?

There is no one correct answer, as each business can have different needs. QuickBooks, Xero, FreshBooks, and FreeAgent are among the top recommended packages for the self-employed. Each offers features and benefits that make it well-suited to the unique needs of a freelancer or small business owner.

Can QuickBooks be used for self-employed?

Yes, self-employed, including sole traders, can use QuickBooks to manage their business finances. It features mileage tracking, invoicing, tax, and automated income calculations to help sole trader manage their finances effectively.