Choosing the right accounting software is crucial for the smooth financial management of your small business. With the implementation of Making Tax Digital (MTD) in the UK, it has become mandatory for most businesses to use compliant software for taxes and accounting. In this article, we will compare and assess the best accounting software options available for UK small businesses, considering their pricing, features, pros, and cons. By the end, you will have a clear understanding of which software is the right fit for your business.
FreshBooks: Best for Sole Traders
FreshBooks is a popular accounting software designed specifically for small businesses. It offers a range of features, including estimates and invoices, expense tracking, billable time tracking, and self-assessment. FreshBooks is known for its user-friendly interface and intuitive user experience. However, it's important to note that the lower-level plans have client limits, and phone support is only available during US business hours.
Pricing: FreshBooks offers three pricing tiers: Lite (£3.30 per month + VAT with a 70% discount for the first three months), Plus (£5.70 per month + VAT with a 70% discount for the first three months), and Premium (£9 per month + VAT with a 70% discount for the first three months).
Crunch: Best for Ease of Use
Crunch is an easy-to-use tax and accounting software that offers a range of features to help you meet your tax obligations. It allows you to create and send invoices, track expenses, and connect your bank account. Crunch also offers additional services such as bookkeeping, payroll, insurance, and self-employed mortgages. However, it's worth noting that Crunch can be relatively expensive compared to some other providers.
Pricing: Crunch offers different pricing plans based on your business type. The Sole Trader Pro plan is priced at £12.25 per month, while the Limited Company Pro plan starts at £19.75 per month. There is also a Small Business plan priced at £98.25 per month.
Ember: Best All-in-One Solution
Ember is an all-in-one accounting software designed for sole traders and limited companies. It offers automated expense management, invoice creation, real-time financial reporting, and open banking integration. Ember also provides support for more complex queries from its in-house accountants, as well as VAT returns, tax insights, and multi-currency support. However, multi-user access is not yet supported.
Pricing: Ember offers different pricing plans based on your business type. The Starter plan is free, the Pro plan is priced at £7.50 per month, and the Unlimited plan is priced at £24 per month.
QuickBooks: Best for Fast-Growing Businesses
QuickBooks is a widely used accounting software that offers a range of features for small businesses. It provides bank account connectivity for automatic reconciliation, invoice and quote generation, purchase order and bill management, and stock tracking. QuickBooks is known for its quality reporting and customizability. However, some users find it difficult to navigate, and certain features may be hidden in settings.
Pricing: QuickBooks offers different pricing plans based on your business needs. The Self-Employed plan starts at £2 per month, the Simple Start plan starts at £3 per month, and the Essentials plan starts at £5.50 per month. There is also a Plus plan priced at £8 per month.
Sage Accounting: Best for Micro Businesses with Limited Stock
Sage Accounting is a cloud-based accounting software that offers a range of features for small businesses. It includes estimates and invoicing, payroll, corporation tax calculation, multi-currency support, bank account connectivity, and stock management. Sage Accounting is suitable for micro businesses with limited stock, but its user experience may appear dated compared to other software options.
Pricing: Sage Accounting offers different pricing plans based on your business needs. The Accounting Start plan is free for the first month and then priced at £12 per month. The Standard plan is free for the first month and then priced at £26 per month. The Plus plan is free for the first month and then priced at £33 per month.
Xero: Best for Larger SMEs with Multiple Users
Xero is a popular accounting software used by over 2.7 million subscribers worldwide. It offers a range of features, including bank account connectivity, invoice and quote generation, purchase order and bill management, stock tracking, and customizable reports. Xero also provides an ecosystem of third-party apps and integrations. However, the Starter plan has limitations, and some users find the drop-down menus and reporting functions less intuitive compared to other software options.
Pricing: Xero offers different pricing plans based on your business needs. The Starter plan starts at £6 per month, the Standard plan starts at £13 per month, and the Premium plan starts at £33 per month.
ClearBooks: Best for Wholly UK Small Businesses
ClearBooks is a cloud-based accounting and payroll software designed for UK small businesses. It offers features such as estimates and invoicing, payroll, corporation tax calculation, multi-currency support, bank account connectivity, and stock management. ClearBooks is known for its simplicity and value for money. However, some users find certain functions overly complicated, and the software may not be suitable for enterprise-level businesses.
Pricing: ClearBooks offers different pricing plans based on your business needs. The Small Business plan is priced at £12 per month, and the Large Business plan is priced at £26 per month.
In conclusion, choosing the right accounting software for your UK small business is essential for efficient financial management. Consider the specific needs of your business, such as invoicing, expense tracking, payroll, and multi-currency support, when evaluating the different software options. By selecting the software that best aligns with your requirements, you can streamline your accounting processes and ensure compliance with MTD regulations.
