Running a business in the UK, especially in its startup phase, can be a hurdle sometimes. From managing income and expenses to staying compliant with HMRC and even making good business decisions, there is usually a level of pressure. The good news is that managing your business finances in the UK is not as complicated as it sounds. This is because, with the use of accounting software as a business owner, you can stay right on top of your cash flow and even make smarter financial decisions. From organising your bills to access to multi-currency support, there is so much you can achieve with the right accounting software for your business.
In this article, we will explore the best accounting software for businesses in the UK and how to choose the best software for your business.
What is Accounting Software?
Imagine being able to manage all your business records, calculate and track the costs of goods you’ve sold, and even handle bank reconciliations without dealing with paperwork. That is accounting software in simple terms. It is a digital tool that helps you manage, analyse, and record your business financial transactions. It is best put as the central hub for information on financial transactions and taxes. This means that from tracking incoming and outgoing transactions to paying employees and suppliers, handling cross-country payments, creating detailed financial reports, and more can be run through accounting software.
How Accounting Software Works For Businesses in The UK
Accounting software serves one purpose: to be the central repository for all financial information in your business. This means that it works similarly, regardless of the location of use. However, for businesses in the UK, the accounting software required is one designed with features that are tailored to meet the legal requirements for UK businesses. This means that, as a business owner in the UK, you should use the accounting software that helps you stay tax compliant. This is because of the Making Tax Digital Initiative of the UK government, which expects businesses, especially VAT-registered businesses, to maintain digital tax records. The MTD initiative, on the other hand, requires software that is compatible with the HMRC. Aside from the MTD initiative and being tax compliant, accounting software for businesses in the UK also helps with:
- Processing payroll and submitting Real-Time Information(RTI) submission to the HMRC.
- Making international trading easy, as it has a multi-currency feature.
- Bank reconciliations, because it has a direct connection with business banks in the UK.
Best Accounting Software For Businesses in The UK
Like we stated earlier, when it comes to businesses in the UK, the accounting software you should use is compatible with HMRC, firstly. Aside from this, there are also other features that we considered to compile this list. One outstanding example is their usability, especially considering that some of their users might not be tech-savvy.
QuickBooks
QuickBooks is one of the most popular accounting software choices in the UK. It is a professional accounting software that gives you a rich range of features at a reasonable cost. The different features vary depending on the user. As a business owner in the UK, you can use QuickBooks to handle your invoicing, expenses, HMRC self-assessment, track expenses, pay employee salaries, and more. Aside from being good for business owners, it is also useful for accountants in financial reporting, cash flow insights, corporation tax, creating and managing client ledgers, among other features. For easy use, QuickBooks also gives a 45-minute free onboarding session and allows for integration with other popular applications.
Features:
- Access to Reports in Real-time: With QuickBooks, you can access a dashboard that gives you real-time updates on your financial activities. From sales to expenses, to profits and losses, you can get a clear, visual representation of data in a chart or graph format. Also, you can automate the reports to generate and send across to your email. Lastly, when you connect QuickBooks to your bank, the bank account reconciliation is instant, and you can get access to previous data, even up to 2 years.
- Advanced Payroll Solution: This feature allows you to manage employee payments, taxes, and other admin tasks like calculating taxes and pension enrolments automatically when paid for.
- Integration: QuickBooks has over 750 popular apps that can be integrated to aid the functionality of the software. From the Rewind Backups Application that helps you automate a backup process, to Qvinci, which provides access to financial data regardless of file type or location, in real-time, there are lots of options to choose from the QuickBooks app store.
- Practice Management Software: With this feature or software in QuickBooks, you can create automations that allow you to email clients, assign tasks, and track the progress of your team. You can also generate reports that let you know how well your business is doing and how it can be better.
You can learn more about QuickBooks here.
Xero
Although it is quite similar to QuickBooks, Xero is more user-friendly and easier to use. Its features are useful for both small businesses and large companies. It has a 30-day free trial and four different subscriptions available. With Xero, you can access your financial data from different global banks, track stock levels and fixed assets, deal with multiple currencies, calculate and file VAT returns, manage invoices, and so much more. You would also get access to a user dashboard where you can monitor your finances, manage your accounts, and reconcile your bank accounts.
Features:
- Multiple Payment Options: Xero allows you to accept payment through their accounting software and allows your customers to pay directly through invoices.
- Payroll: With Xero, you can calculate taxes, pensions, salaries, take-home pay, and other payroll figures automatically. Also, it allows employees to access their payroll data through Xero’s Employee Management and Self-Service Feature, also known as XeroMe. The feature allows employees to access a portal that they can use to submit time sheets, make requests, and complete tasks.
- Project Tracking: Through this feature, Xero helps you analyse expenditure, link costs, and add the necessary details to invoices before sending them out to your customers. Aside from this, you would also be able to edit and get a complete view of the projects you are managing, and also create as many projects as you want.
- Multiple Analytics Options: Xero offers two analytics options, which are Xero Analytics and Analytics Plus. The analytics features allow you to have a projection of how your cash flows based on your existing financial data, and help you track your income, expenses, and your total profit. Also, the analytics tool helps you make smarter and data-driven financial decisions for your business, as it helps you see how the different financial moves you make can affect your business.
You can learn more about Xero here.
FreshBooks
FreshBooks is regarded as one of the best accounting software programs, especially for small and medium businesses. It is best for small businesses because it makes the process of accounting simple and easy to grow into, especially because of its user-friendliness and easy-to-use features. As a business owner, it allows you to create a professional invoice, a well-detailed financial report, and much more, and also allows you to try the features with a 30-day free trial, before you pay for the software. Other features include: tracking expenses, team management, mileage tracking, and mobile accounting apps. It also has three subscriptions available, and you can create a custom plan that suits what your business requires.
Features:
- Business Name Generator: Imagine starting up your business, and you have no idea what to name your business. Well, you don’t have to imagine because one of FreshBooks’ main features is the Business Name Generator. All that is required of you is to select the industry your business is in, and enter a keyword (this can be any word you like that is closely related to your business or defines what you do). Once you do this, you will be presented with some name options to choose from. You can always repeat the process if you do not like any of the options presented to you.
- Profitability Tools: This feature helps you to know how profitable your projects and clients are. It does this by analyzing financial data to give you a summary of all your figures.
- Invoice Generator: With this feature, you can create personalised professional invoices and even automate most of your invoicing tasks.
- Expense Tracking: With FreshBooks, you can track all your business expenses with a variety of resources. Firstly, FreshBooks can be accessed on a mobile device as a mobile app. And with this, you can scan your paper receipts with your phone for FreshBooks to extract the necessary details and add to your records. This makes your expense tracking easy.
You can learn more about FreshBooks here.
Sage Accounting
Sage accounting software is regarded as a solid solution for small businesses because it has all the features that business owners need to thrive and also stay MTD compliant. It has features that allow you to automate billings, oversee expenses, manage cash flow, stay tax compliant, track job costs with detailed records, automate stock tracking, and generate invoices automatically. It is also used in accounting to manage tasks like bookkeeping, invoicing, expenses, cash flow, bank reconciliation, inventory, and managing multiple currencies.
Features:
- Access to Support: Think about masterclasses, articles, teachings from business experts, and courses that can get you ahead in the business industry. This is the kind of support you can access as a business owner using the Sage Accounting software. There is also the Sage Community Forums valuable and sensitive topics are discussed, and industry leaders participate to share their valuable insights with other business owners.
- Automated Data Entry: Just like FreshBooks, Sage Accounting also helps you save time with compiling and managing data from invoices, receipts, bank statements, and any other financial document. It also helps you classify and store the data accordingly. And because it is a cloud-based software, you don’t need to worry about retrieving your data when you need it.
- Multi-Currency Support: Sage accounting allows you to accept payments in different currencies. If you are using the Sage accounting software as a business owner, your business does not need to be restricted to the UK alone. You can work with clients overseas.
Zoho Books
The most outstanding thing about Zoho Books is that it is the best option for you if you are looking for free accounting software. Imagine being able to manage most of your accounting tasks and organize your transactions from one platform for free. So if you are on a budget and earning less than £35K per annum, then Zoho Books is most preferable for you. However, if you generate more than £35K, you would have to go for a paid plan.
Features
- Mobile App: With a stable internet connection, you can access the different accounting features available on Zoho Books via the mobile app. Features like expense tracking, invoicing, managing cash flow, and overseeing financial activities can be accessed on the go.
- Bank Account Reconciliation: You don’t have to go through a hassle to reconcile your multiple accounts to connect all your financial data and transactions. You can automatically put all your transactions into different categories based on the settings you make with this feature on Zoho Books. You can also check your cash flow forecast in real time via the banking dashboard.
- Invoicing: With Zoho Books, you can automate recurring invoices and send up to 1000 invoices with the free plan. This feature also allows you to personalise your invoices with the different branding elements available on Zoho Books.
- Comprehensive Reporting: Zoho Books gives you access to a wide range of report types to aid comprehensive reporting. You can also automate the software to generate weekly, monthly, or quarterly reports, and can quickly share reports with others easily.
You can learn more about Zoho Books here
Choosing The Right Accounting Software For UK Businesses
When choosing accounting software, there are tons of things to consider before you choose one for your business in the UK. This is because you do not want to start with one software and start looking for how to transition to another in the long run. You should think long-term about scalability and your business type and structure, in general. Secondly, you don’t want to use an accounting software programme that is not recognised by the HMRC. Before you choose an accounting software programme for your business, you should consider the following:
- Features: Compare the different features of each accounting software programme and check if they align with your brand objectives. You could do this by outlining what is necessary for your business, what is manageable, and what is not necessary at all. This would give you a sense of priority of what to look out for in the features, and guide you in making the right choice. If you are a small brand, consider what you would need as you are scaling, so that you would not need to change the accounting software programme after you’ve grown.
- Budget: If you are not opting for a free accounting software programme, then you definitely need to plan for a paid software program. So you could start by checking the plans that fit your budget and ensure that the plan you choose still offers you features that would help your business thrive.
- Integrations: You might have to connect your accounting software with other applications in order to make your business’s financial management seamless. So you have to consider the wide range of applications that can be integrated with the accounting software you choose.
