Top 7 Accounting Software for Small Businesses In The UK 2021

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Every business no matter small requires Accounting cloud accounting software rather than spreadsheets and paper-based system. Not only does it make staying on top of your company finances easier, but it also enables you to prepare and submit your tax and VAT returns faster.

But, with so many accounting packages on the market, how do you choose the best accounting software for your business?

In 2021, most people will rather choose online accounting software as this gives the flexibility to work on your bookkeeping at any time and from anywhere, making it simpler to run a business remotely.

If you have little accounting knowledge, you will probably prefer a package that is more intuitive, as you won’t want to spend lots of time setting up your system or searching for essential functions.

In this blog post, we have enumerated 7 of the best online accounting software you should consider in 2021.

1. Sage Business Cloud Accounting 

Sage Business Cloud Accounting Dashboard
Sage Business Cloud Accounting Dashboard

Previously known as Sage One. It’s best suited to start-ups, small businesses, freelancers or anyone who just needs a simple accounting system with invoice, tax assistance, and profit and loss information. It requires very little accounting knowledge and is fairly easy to use.

There is chat, telephone and email support if you need it. Additional support through the Sage Business Community is also available. As of 2020, they now offer over 100+ integrations with various apps to automate your accounting workflow. Something that was previously lacking.

It’s also important to note they are fully Making Tax Digital (VAT), RTI, auto-enrolment, GDPR compliant.

2. Quickbooks 

Quickbooks Online dashboard
Quickbooks Online dashboard

QuickBooks is one of the leaders in the cloud accounting space with over 4.5 million customers worldwide. You can do it all thanks to their innovative and intuitive platform. For example, you can download and reconcile credit card transactions quickly, organise weekly timesheets and track bank deposits with real-time transaction data.

Users can scan receipt and bills and submit them as proof of expense or share with the stakeholder concerned. It offers customisable templates that can be branded with the business logo and desired fields to generate invoices, bills and reports. Your invoices are also pay-enabled so you accept payments faster directly online and automatically send reminders to those pesky late payers.

Besides being MTD compliant QuickBooks now let’s you spot mistakes on your VAT return before submitting thanks to their SmartScan™ technology. In addition you can now connect to more than 700+ business apps to automate multiple types of workflows.

Payroll is directly integrated and you can set up in minutes. With their advanced payroll, you get complete compliances even for complex schemes, CIS, salary sacrifice or even court order deductions and you can automate your entire pay run.

3. Free Agent 

FreeAgent Accounting Dashboard

Geared towards the small business owner, freelancers or contractors without much accounting experience. Easy to use and lets you input as many clients or projects as you need. Multi-user options and time-tracking features make it simple to track remote freelancers who can log in and complete their timesheets.

Invoice creation is straightforward, with payment reminders at set dates after bills fall due. FreeAgent makes it dead simple to stay on top of your taxes. It’s very easy to know how much you own and file directly to HMRC in just a steps.

Their one-click reporting creates a self-assessment summary for income tax and you can even forecast your Corporation Tax ahead of time.

FreeAgent won numerous awards including the 2018 Accounting Excellence Awards as Small Business Accounting Software of the Year and 2017 Software Excellence Awards in the SME accounts/bookkeeping category.

Fully compliant with MTD, RTI, HMRC and GDPR

4. Kashflow 

Kashflow accounting solution dashboard
Kashflow accounting solution dashboard

Kashflow has a clear dashboard that includes a business health check score.  Billing is fast and quotes can be turned into invoices with just one click.

There are no limits to the number of invoices you send and new customers, suppliers and transactions can be added as needed. Good for submitting VAT returns and there is secure integration with payment card processors like SagePay and Barclaycard. Unfortunately like ClearBooks, it doesn’t offer any integrations to outside apps.

5. Zoho Books 

Zoho Books UK Dashboard
Zoho Books UK Dashboard

Zoho Books is a very good online bookkeeping software for solopreneurs and micro-businesses. Especially those working with international customers. They might not have the name recognition of the major players but they make up for it in functionality and compatibility.

What makes it such a great value besides their pricing is the entire ecosystem. Instead of having to connect third party apps, Zoho has over 40 companion cloud apps that cover most business functions. If you also need a CRM, project management app, collaborations tools like chat and online bookings or even a BI solution, Zoho has you covered.

Everything you need to do your accounting online is included in the basic package. Bank reconciliation, custom invoices, online payments, receipt scanning, projects, timesheets, more than 20 reports and workflow automation come standard which is rare for entry level cloud bookkeeping packages. They are also MTD compliant by the way, so you can file VAT returns automatically.

The only downside, is that there is no integrated payroll, corporation tax estimate or directors statement, which can be a deal breaker for some larger companies with employees. If you can get past that, you’ll enjoy their clean and modern interface and fantastic support.

Pricing starts at £6/month for two users. You can get two months free if you pay yearly instead.


6. Xero 

Xero accounting software dashboard presented on desktop, tablet and mobile screens.
Xero accounting software dashboard presented on desktop, tablet and mobile screens.

Xero is the first online accounting platform that became popular with small businesses and with good reason.

They offer everything you need to get your accounting done and they’re very focused on automation to save you precious admin time. After all, who doesn’t need more time nowadays?

Online invoicing, automatic payments and friendly reminders to unpaid invoices are a breeze to set up. You can connect your bank and reconcile statements in seconds thanks to Xero’s smart matching technology which imports and categorises transactions for you.

The beauty behind Xero is that no matter what type of business you operate, Xero can adapt to suit your needs and grow with you. This is in part thanks to their integration to more than 800+ third party business apps.

View your financial information from anywhere on their mobile app, available on both iOS and Android. Additionally, you can even send invoices and scan receipts to create expenses claims on the go.

If you need help there’s a wide range of support available through community, email, training events and webinars or you can simply ask us.

7. Clearbooks 

Clearbook simple accounting software dashboard
Clearbook simple accounting software dashboard

Offers simplified accounting to small businesses. In 2014, it won Best Cloud Accounting Software Suite in the UK Cloud Awards.

Very UK-centric, a major plus for many. Generally considered intuitive and simple to use, it has a nice layout and a good selection of features. It has lagged behind the leading players in terms of UI, the user interface is not as modern and it also lacks any outside integrations.

However it still offers everything necessary to do your accounts correctly and complies with HMRC and MTD. If you don’t want to be distracted by any bells and whistles this is worth looking into.