Top 8 Best Accounting Software for a Small Business in the UK for 2025
- Published: 12 February 2025
- 10 min read
- Running a Business
Heather Cameron
Business Writer
Heather believes in the power of great storytelling and is here to craft compelling copy that informs and inspires readers. With an extensive background in digital marketing, she has experience writing for various industries, from finance to travel. As Osome’s copywriter, Heather creates content that empowers entrepreneurs and small business owners to boost their business with expert guidance, helpful accounting tips and insights into the latest fintech trends.
Mosan Ali
Reviewer
Mosan Ali is our Accounting Manager based in the UK and has a wealth of knowledge of UK GAAP, VAT, and PAYE. With 12 years of experience crunching numbers and ensuring compliance, he keeps our financial reporting ship-shape. Think of Mosan as our blog's accounting guru. He carefully reviews our UK-focused content, ensuring it's accurate, up-to-date, and packed with helpful tips for UK businesses. Get your taxes right from day one with our informative blog posts.
Selecting the best accounting software for small businesses is vital for efficient financial management. This article reviews the top 8 options in 2025, detailing features like invoicing, expense tracking, and tax compliance to help you choose the right tool for your business.
Key Takeaways
- Choosing the right accounting tool is crucial for small businesses, enhancing productivity, compliance, and profitability by automating tasks and offering insights.
- The top small business options in 2025 include QuickBooks Online, Xero, Osome, FreshBooks, Zoho Books, Sage Business Cloud Accounting, FreeAgent, and Wave, each offering comprehensive plans catering to different types and sizes of businesses.
- Take into account key features such as invoicing, expense tracking, payroll processing, and integration capabilities, with a focus on automation to enhance efficiency and accuracy.
Why Choosing the Right Accounting Software Matters?
Selecting accounting and tax digital software is crucial for any small business, significantly affecting productivity, compliance, and profitability. Effective solutions simplify management, save time, minimise errors, and offer valuable financial insights for informed decision-making. Automating tasks like invoicing and expenses allows small business owners to concentrate on growth rather than bookkeeping.
But managing your finances goes beyond just software. Osome’s accounting services for small businesses provide comprehensive support, including bookkeeping, tax preparation, and financial reporting. Our team of experienced accountants can help you streamline your financial processes and ensure your business stays on track for success.
Involving an accountant in the selection process offers tailored insights aligned with your business’s unique financial needs and compliance requirements to the software provider can address both immediate tasks and ongoing financial challenges, keeping your business agile and competitive.
Top 8 Accounting Software for Small Businesses in 2025
The abundance of business accounting software providers makes choosing accounting software challenging. That's why we’ve curated a list of the top 8 small business accounting software for small businesses in 2025 to make it easier for you.
These cloud-based software are based on their features, user-friendliness, and overall value to small business owners. QuickBooks, Xero, Osome, and FreeAgent each offer unique benefits tailored to the diverse needs of small businesses. While the actual features vary between different accounting software plans, most of these tools allow you to access key financial information in one centralised space, connect with your business bank accounts, monitor your overall financial performance, and have the ability to send out professional invoices.
Accounting Software | Key Benefits | Monthly Subscription from | Free Tria |
|---|---|---|---|
| QuickBooks | User-friendly interface; | £5/month | ✅ |
| Multi-user functionality;Extensive app integrations; | |||
| Affordable pricing. | |||
| Osome | Real-time cash flow dashboard, specialised for ecommerce; | Can vary based on the specific plan | ✅ |
| Seamless integration with popular platforms like Amazon and Shopify. | |||
| Xero | Intuitive interface; | £20/month | ✅ |
| Seamless integration with POS systems; | |||
| Easy-to-use budget creator. | |||
| FreshBooks | Ideal for service-based businesses; | €15/month | ✅ |
| Simplifies invoicing and expenses; | |||
| Includes project management and mileage tracking. | |||
| Zoho Books | Streamlines financial tasks through automation;Integrates well with other Zoho apps; | £10/month | ✅ |
| Affordable pricing; | |||
| Compatible with Making Tax Digital. | |||
| Sage Business Cloud Accounting | Detailed reporting; | £10/month | ✅ |
| Inventory management; | |||
| Budgeting. | |||
| FreeAgent | Designed for UK freelancers; | £25/month | ✅ |
| Ensures VAT compliance; | |||
| Simplifies invoicing and time tracking. | |||
| Wave | Free for basic features; | Free | ✅ |
| Ideal for very small businesses or sole traders; | |||
| Includes invoicing, receipt scanning, and bank reconciliation. |
1 QuickBooks Online
QuickBooks is one of the most robust options for those looking to manage their business finances in one place. The accounting software provider offers multi-user functionality, inventory management tools, integration and monitoring for business accounts, multi-currency support, and an optional payroll add-on, depending on your subscription tier.
The software also provides invaluable insights into a business's financial transactions for effective cash flow forecasting. QuickBooks also integrates with over 700 third-party applications, making it a versatile tool for various business needs, including filing tax returns digitally.
The user-friendly mobile app and cloud-based interface for QuickBooks Online allows you to perform essential tasks on the go. In the meantime, the desktop version of Quickbooks is more robust for limited companies with more complicated financial information and taxation requirements.
The subscription price is also appealing, starting at £5 per month for new users and £12+VAT per month for small businesses. This makes it an excellent choice for budget-minded businesses and startups, though it might lack specific features for certain industries.
2 Osome
Osome offers a real-time dashboard for instant access to your business’s cash flow information. These insights are crucial for informed financial decisions. Osome’s services cover financial record maintenance, tax management, transaction matching, and billing, keeping your digital records up-to-date.
What sets Osome apart is its specialised expertise in ecommerce. The software integrates seamlessly with platforms like Amazon, Shopify, and eBay, making it an ideal choice for online businesses. UK-based experts at Osome assist new founders in navigating the UK taxation system from the start, ensuring peace of mind and compliance. You can chat with your accountant directly through the app and seamlessly share your accounting records with your specialist.
Choose an accounting package that matches your business needs to avoid hidden costs later. A well-structured plan ensures compliance, saves time, and helps you focus on growth.
3 Xero
Xero’s intuitive interface and user-friendly design significantly enhance the accounting experience. Seamless integration with POS systems like Square, EPOS Now, and Lightspeed enables efficient data management and streamlined operations.
Xero’s easy-to-use budget creator is vital for businesses with tight margins. This tool helps businesses track their financial health and make informed budgeting decisions.
4 FreshBooks
FreshBooks is ideal for service-based businesses and freelancers. This accounting software offers tailored solutions to simplify your invoicing, expense tracking, and other accounting processes. It allows users to create invoices, track payments, and send automated reminders.
FreshBooks also includes project management and mileage tracking, enhancing management efficiency. A free trial allows potential users to explore features before committing, making it accessible for sole traders.
5 Zoho Books
Zoho Books excels at streamlining financial tasks through automation. Its features include invoicing, expense sorting, inventory tracking, and real-time cash flow updates. Zoho Books also integrates well with other Zoho apps, making it ideal for professional service teams.
Starting at £10 a month, Zoho Books has pricing plans suitable for different business sizes and needs. Compatible with Making Tax Digital, it ensures UK tax compliance and offers flexible payment options through integration with payment processors.
6 Sage Business Cloud Accounting
Sage Business Cloud Accounting is perfect for growing businesses, providing detailed reports, inventory management, budgeting, business account reconciliation, and pay-enabled invoices. These features help businesses make informed decisions and manage finances effectively.
Sage also includes invoicing, cash flow management, and payroll functionalities. Detailed insights from the software help businesses monitor performance and make strategic decisions.
7 FreeAgent
Designed for self-employed UK freelancers and sole traders, FreeAgent ensures is a free accounting software with VAT compliance in mind, making it easier to manage your finances while staying compliant with Making Tax Digital requirements. Features like invoicing and time tracking streamline financial management for freelancers and micro-businesses, ensuring compliance with local regulations.
8 Wave
Wave offers essential accounting features for free, making it ideal for very small businesses managing finances without extra costs. Features like invoicing, receipt scanning, and bank reconciliation help small businesses maintain accurate data and streamline accounting processes.
Key Features To Consider in Accounting Software
Core features to consider in accounting software are:
- Invoicing
- Expense monitoring
- Payroll processing
- Integration capabilities
Integrated payroll management automates payroll calculations and creates mandatory tax forms, streamlining financial operations.
Advanced functionalities like automated invoicing and expenses improve financial oversight and efficiency. Integration capabilities synchronise data across business applications, enhancing accuracy and streamlining workflows.
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Costs and Tips for Accounting Software
Accounting software pricing varies widely. Factors influencing accounting software cost include the number of users, required functionalities, integration needs, and ongoing support. Considering different pricing structures, subscription plans, and potential hidden fees is also crucial. Plans can range from £5(+VAT) to £199(+VAT) per month. Comparing various accounting software can help you select a solution that balances cost and features, supporting your financial management effectively. Understanding these costs helps you find the best option that aligns with your business’s financial capacity and needs.
When budgeting for accounting software, aim for the most cost-effective solutions that meet your needs. Choosing a plan that matches your requirements the closest and rule out any unnecessary features to keep your subscription at the minimum. Pay attention to specific functions such as Making Tax Digital tools, automation capabilities, and AI assistants.
How To Set Up Your Accounting Software?
Proper setup of accounting software is key to effective financial management. The correct setup ensures accurate and efficient financial data management, vital for informed decisions and compliance.
Step | Actions |
|---|---|
| 1. Choosing the right accounting software | Research and select the software that best suits your needs and budget. |
| 2. Testing the software | Utilise the free trial period (if available) to thoroughly test the software's features and ensure it meets your requirements. |
| 3. Training and support | Provide training to your team on how to use the software effectively. |
| 4. Regularly review and update | Review and update your software settings and configurations to ensure they remain accurate and aligned with your needs. |
Establishing a clear project plan and communication strategy is key for successful software implementation. Proactive planning for potential challenges helps small businesses navigate issues during setup, like technical difficulties and data transfer.
If you are switching software, or if this is your first time integrating a smart accounting solution, make sure to plan for data migration in advance. This avoids disruptions during the transition and helps you identify technical difficulties ahead of time. Before fully deploying your new tool, be sure to test it with a few users first. If you are filing taxes yourself, make sure your tool is compliant with Making Tax Digital requirements.
Maximising the Use of Accounting Software
Leveraging real-time reporting and analytics features in accounting software provides insights into financial health and trends. Budgeting and forecasting features use historical data to project future performance, aiding strategic planning and decision-making.
Project accounting capabilities monitor project-specific expenses and revenue, while asset tracking manages the value and details of assets.
Tax management functions to ensure compliance with tax requirements, further streamlining your accounting process.
Integrating with other business tools
Integrating accounting software with business applications reduces manual data entry and boosts operational efficiency.
Centralising accounting processes through integration streamlines workflows and enhances team collaboration. Connecting accounting software with tools like inventory management, CRM, and project management systems creates a cohesive operational environment.
Utilising advanced features for growth
Advanced features in accounting software significantly support business growth and success. Utilising these features improves financial management, supports business expansion, assists in cash flow forecasting, and ensures Making Tax Digital compliance.
On the other hand, Automation and AI can enhance operational efficiency. For example, AI uses predictive analytics for financial forecasting, whereas automating data entry and other basic tasks can help streamline your accounting process. By investing in accounting software with advanced features, businesses can maximise tax deductions, improve cash flow management, and drive overall growth.
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Future Trends in Accounting Software
The accounting landscape continues to evolve with technological innovations and changing business requirements. Small businesses that embrace upcoming trends in accounting software can enhance their operational efficiency and remain competitive in the market. Regular updates based on user feedback and performance issues ensure that these software solutions continue to meet the needs of businesses.
Impact of AI and automation
AI is revolutionising accounting software, significantly improving accuracy by automating calculations and reducing human errors. AI enables data-driven decisions by analysing large datasets and providing valuable insights and informs strategic planning.
AI and automation integrations help streamline financial processes, allowing professionals to focus on more strategic tasks and decision-making. As AI continues to evolve, its impact on accounting software will only grow, offering even more sophisticated tools for managing business finances.
Security and cloud-based solutions
Cloud-based accounting software is considered secure for small businesses. It is widely recognised for its safety features. Security measures implemented by cloud-based accounting software providers include encryption, manual accounts, regular backups, and access controls, ensuring that your financial data is protected and customized.
When choosing a cloud-based accounting software provider, it’s essential to select a reputable provider and ensure that proper security protocols are in place. This ensures that your business’s financial data remains secure while benefiting from the accessibility and convenience of cloud-based solutions.
Osome offers comprehensive accounting services for UK small businesses, including bookkeeping, tax preparation, and financial reporting. We can help you navigate the complexities of Making Tax Digital requirements and ensure your business stays on track for success. Contact us today to learn more!
Summary
In conclusion, choosing the right accounting software is crucial for small businesses to manage their finances effectively and efficiently. Most accounting software providers offer a range of features and benefits tailored to meet diverse business needs. The top desktop and online accounting software options, such as QuickBooks, Osome, Xero, FreshBooks, Zoho Books, Sage Business Cloud Accounting, FreeAgent, and Wave, on the other hand, offer more robust functionalities that allow anyone without extensive accounting knowledge to manage their business's finances at ease.
By understanding the key features to look for, the costs involved, and configuration methods, companies and self-employed sole traders can make informed decisions that enhance their accounting performances. Embracing future trends like AI workflow, cash flow forecasting, and cloud-based solutions will further ensure that businesses remain competitive and efficient.
Heather believes in the power of great storytelling and is here to craft compelling copy that informs and inspires readers. With an extensive background in digital marketing, she has experience writing for various industries, from finance to travel. As Osome’s copywriter, Heather creates content that empowers entrepreneurs and small business owners to boost their business with expert guidance, helpful accounting tips and insights into the latest fintech trends.
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FAQ
What is the best accounting software for small businesses in 2025?
QuickBooks stands out as the best accounting software in 2025 thanks to its comprehensive features and intuitive design. This makes it an ideal choice for efficient management and safe navigation through the Making Tax Digital requirements.
How much does accounting software typically cost?
UK accounting software typically costs between £5(+VAT) and £199(+VAT) per month, depending on the required features and functionalities. Choose options that align with your specific needs for the best value, especially if you need assistance with Making Tax Digital.
What are the key features to look for in accounting software?
Key features to look for in accounting software include invoicing, expense monitoring, cash flow insights, payrolls, direct connection with bank accounts and robust integration capabilities. Prioritising these elements ensures you are choosing the right solution for your business's accounting needs.
How can I set up my accounting software effectively?
To set up your accounting software effectively, ensure your data is clean and organised before migration, align the software configuration with your business processes, and conduct thorough user acceptance testing. This approach will facilitate a smoother implementation, enhance usability, and ensure accurate reporting on your business performance.
What future trends should small businesses look for in accounting software?
Small businesses, especially self employed sole traders, should prioritise advancements in AI and automation, along with enhanced security features in cloud-based accounting solutions. These trends will significantly improve efficiency and protect sensitive financial data.
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