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Published 05 October 2023

Best Accounting Software for Small Businesses October 2023

Finding the right accounting software for your business can make keeping on top of your finances much easier. But where should you start? Compare the pros and cons of NerdWallet’s top five best accounting software providers below.

Many or all of the products and brands we review are from our partners who compensate us. This may influence which products we write about and the product we choose in our ‘promotions’. However it doesn’t influence our reviews or ratings. Our opinions are our own. Read more on our methodology, ratings and what our use of the word ‘Best’ means.

Whether you pay for an accountant or do your own taxes, accounting software can be a great way of keeping on top of your business finances, especially if used in tandem with a business bank account. It can help you monitor your cash flow, track transactions, and submit your taxes. 

There are many different providers and plans available, so it is important to pick the right accounting software for your needs. 

That’s why we’ve picked our top five accounting software providers based on our own research of the market, and what we believe matters most to businesses. This includes monthly fees, whether all plans on offer are Making Tax Digital (MTD) compliant, and the quality of a provider’s mobile app. 

Editor’s Picks

Accounting Software

Editors Pick

Free trial

No. of plans

Free plan available?

 

FreeAgent
Overall/Payroll
30 days
4
Yes

Zoho Books
Free/App
14 days
6
Yes

Xero
Multiple Users
30 days
4
No

Sage
24/7 Customer Service
30 days
3
No

FreshBooks
Time Tracking
30 days
4
No

The editor’s picks listed above are based on NerdWallet’s editorial team’s analysis of all the accounting software providers reviewed on our site. The team has assessed eight accounting software providers to evaluate which brands offer standout features that may be important for your business.

Editor’s picks are our own opinion and don’t constitute advice, recommendation or suitability for your financial circumstances. They are editorially independent of any relationship NerdWallet has with partners who may compensate us.

Top 5 Accounting Software Providers

This top five is from eight business accounting software providers that NerdWallet evaluated and reviewed. Others are available. Find out how we use ‘best’ and our guide to ratings.

4.4

FreeAgent
Promotion

FreeAgent

FreeAgent
  • Free trial
    30 days
  • No. of plans
    4
  • Free plan available?
    Yes
Pros and cons

Pros:

  • Completely free if you have a business account with NatWest, RBS, Ulster Bank or Mettle.
  • Ability to submit self-assessment and VAT tax returns directly to HM Revenue & Customs (HMRC).
  • Every FreeAgent plan is Making Tax Digital (MTD) compliant.
  • FreeAgent’s payroll function is free with every plan.

Cons:

  • After the introductory offer has ended, FreeAgent’s sole trader plan is more expensive than many other comparable products.
  • Customer service hours over the phone and via email are limited to Monday to Thursday, 9am to 5pm, and Fridays, 9am to 4pm.

4.2

Zoho Books
Promotion

Zoho Books

Zoho Books
  • Free trial
    14 days
  • No. of plans
    6
  • Free plan available?
    Yes
Pros and cons

Pros:

  • Businesses with annual revenue of less than £35,000 can get a basic account for free.
  • Every Zoho Books plan is Making Tax Digital-compliant.
  • You can submit MTD-compliant VAT returns directly to HMRC.
  • Every Zoho Books plan comes with some level of multi-user access.

Cons:

  • Payroll features aren’t included with a Zoho Books account.
  • Cash-flow forecasting is locked behind the more expensive Zoho Books plans.
  • Multi-currency handling is only accessible at the Professional tier and above.

3.9

Xero Books
Promotion

Xero

Xero
  • Free trial
    30 days
  • No. of plans
    4
  • Free plan available?
    No
Pros and cons

Pros:

  • Every Xero account is Making Tax Digital-compliant.
  • You can submit MTD-compliant VAT returns directly to HMRC.
  • Xero’s payroll features are cheaper than many of its competitors.
  • You have an unlimited number of users logged into your Xero account at no extra cost.
  • Seven- and 30-day cash-flow forecasting is available with every plan.

Cons:

  • The entry-level Xero Starter plan is more expensive than comparable plans elsewhere.
  • Xero’s customer service options are limited, despite claiming to offer 24/7 online support.
  • You can only access multiple currencies if you pay for the more expensive Premium or Ultimate plans.

3.4

FreshBooks
Promotion

FreshBooks

FreshBooks
  • Free trial
    30 days
  • No. of plans
    4
  • Free plan available?
    No
Pros and cons

Pros:

  • Ability to submit VAT tax returns directly to HMRC.
  • Every FreshBooks plan is Making Tax Digital-compliant.
  • FreshBooks allows you to send invoices and track expenses in any currency.
  • Unlimited time tracking means you can easily log your billable hours and add them to your invoices.

Cons:

  • Payroll features aren’t included with your FreshBooks account, instead requiring app integration.
  • It costs an extra £8 per person, per month for multi-user access.
  • Cash-flow forecasting requires a separate app integration.
  • Customer support options are limited.

3.4

Sage
Promotion

Sage

Sage
  • Free trial
    30 days
  • No. of plans
    3
  • Free plan available?
    No
Pros and cons

Pros:

  • Every Sage account is Making Tax Digital-compliant.
  • You can submit MTD-compliant VAT returns directly to HMRC.
  • Sage offers 24/7 online customer support as part of all its accounting software plans.
  • The Standard and Plus Sage plans allow for unlimited users.

Cons:

  • Sage provides limited free customer service, with telephone assistance potentially requiring an extra subscription to Sage Cover.
  • Cash-flow forecasting is only available for Standard and Plus plan members.
  • Multi-currency accounting is only available for Plus plan members.
  • The Sage accounting app on Google Play has below average reviews.

This top five only contains business accounting software providers reviewed by NerdWallet UK.

The pros and cons featured here are chosen by us based on our expert, research-based opinions. They are unlikely to be the only product features and restrictions that you should consider. Pros and cons are subjective, and you should align them to your own personal and business circumstances. Information was correct at the time of publication but may have changed since.

Top 5 Accounting Software Providers: Summary

This top five is from eight business accounting software providers that NerdWallet evaluated and reviewed. Others are available. Find out how we use ‘best’ and our guide to ratings.

ProviderStar ratingFree trialNo. of plansFree plan available?
FreeAgent30 days4Yes
Zoho Books14 days6Yes
Xero30 days4No
FreshBooks30 days4No
Sage30 days3No

What is business accounting software?

Accounting software is a type of digital platform that allows you to monitor and track your business transactions. 

Typically, you will be able to access your accounting software through your web browser or via a mobile app, using a cloud-based system, or as downloadable software on your computer. This means you can keep track of your business’s finances wherever you are.

The features offered with accounting software vary from provider to provider, and plan to plan, and may include the ability to:

What is Making Tax Digital?

The Making Tax Digital (MTD) scheme is part of the government’s plans to digitise the tax system.

At present, it means that all VAT- registered businesses must keep digital records, and submit their VAT tax returns through MTD-compliant software. So you must choose an accounting software provider that is MTD compatible if your business is registered for VAT.

From April 2026 and 2027 (depending on their income), self-employed business owners and landlords will also be required to submit their income tax returns via MTD-compliant software. It might be a good idea, therefore, to select an MTD-compliant plan ahead of these changes.

» MORE: Business tax in the UK

How to pick an accounting software provider

To work out what you need from your accounting software, and therefore which provider to go with, you can start by asking yourself the following questions:

Accounting Software Methodology

NerdWallet evaluated and reviewed eight business accounting software providers. Collectively, these accounts represent the largest providers by internet search traffic, along with notable or emerging players in the industry.

We considered more than 10 data points for each provider, scoring them on fees, Making Tax Digital-compliance, and app reviews, among other factors. This information was gathered from each provider’s website and company representatives. In addition, data is collected regularly and reviewed by our editorial team for consistency and accuracy.

Using the same data across all products and features we were able to create star ratings presented on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’.

Frequently asked questions

Is there free accounting software?

Yes, it is possible to access free accounting software. However, these free plans may have a restricted number of features when compared to paid-for plans. So it is always worth researching what features a free plan contains, and whether it is suitable for the full range of your business needs.

What does ‘cloud-based’ software mean?

If an accounting software plan or provider is ‘cloud-based’, this means that you access it online through your web browser or mobile app, rather than through a piece of software you download on to your computer.

This means that you will be able to access your accounting software from anywhere, and on any device, as long as you have wi-fi and your login details.

Review methodology

At NerdWallet Ltd UK we base our reviews & ‘Best Of’ pages’ on the results of surveys we undertook about what was important to people who use these products. This allows us to look at products impartially of any commercial arrangements we have, and fairly rate the products on the same set of criteria.

Best means ‘our best’, and is based only on what products we have aligned to our surveys and which form the basis of our reviews and ratings. This means that there will be other products on the market that we have not included in our ‘best of’ pages. Best does not mean it’s best for you, nor does it mean the ‘cheapest’. 

Our reviews may include provider rates. This additional information that has not been included in our star rating or evaluations but is still very important when choosing a product. Rates offered can depend on circumstances, amount and term. Always check details before proceeding with any financial product.

Product details reflect the information that was available at that time but may have changed since. We strive to give you a review on as many products as possible but it is likely there are others available that we have not reviewed. The review is our opinion, but it does not constitute advice, recommendation or suitability of your financial circumstances.

You can view our full review methodology here.

    About the Author

    Connor Campbell

    Connor is a lead writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and…

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