Top 6 Accounting Software for UK Companies in 2024

Ryan Patrick

• 8 min read
Top 6 Accounting Software for UK Companies in 2024

After creating a company in the UK or any part of the world, you need an accounting software solution that functions properly, keeps records, and files taxes efficiently. However, the market has numerous solutions, and picking the right one from the shelf could be challenging.

Fortunately, if you're looking for an ideal accounting solution, we'll provide insight to help you make an informed choice. This guide analyses the best accounting software for UK businesses in 2024, comparing their pros and cons. Let's get started.

What's an Accounting Software for a UK Business?

Accounting is the backbone of any business, big and small. Every company is liable to keep accounting records, file tax returns, manage purchase orders, etc. Fortunately, with accounting software, they can help do these tasks and help minimise human error.

What Are the Purpose of Accounting Software

Here are the main purpose of accounting software:

  1. Help you automate the repetitive accounting process
  2. Help you reduce errors and save you time in tasks like bank reconciliation and data entry
  3. Simplify relationships with external parties, such as the government, customers, and suppliers.

What Are the Most Useful Features of Accounting Software?

Here are accounting software's most useful features:

  • Make bookkeeping easy and reliable by identifying errors: this software eases double entry and accounting and integrates with your bank accounts to expedite data entry. This minimises errors, enhancing efficiency.
  • Sending invoices and paying out becomes convenient: they can create templates and send them via email. Some solutions allow you to accept payments through popular platforms like Wise or PayPal to minimise delays.
  • Create real-time interactive dashboards and financial reports: some software has payroll services or billing depending on work hours with time tracking features for freelancers and consultants.

However, the tax automation feature is what you should give utmost importance to. But why? This is because HMRC made it compulsory for every UK company to file taxes online, such as sales tax and VAT returns, through Making Tax Digital (MTD) in April 2022. However, certain businesses' income tax and corporation tax decisions are still pending. This means a shift to accounting software will be a norm for all businesses to comply with government standards.

Top Accounting Software for your UK Business

After our research and comparison, we developed the six best accounting solutions for your business.

FreeAgent

This is a UK-based cloud-based accounting software ideal for small businesses. It provides a simple and candid approach to accounting. The solution is also 100% free for Ulster Bank, NatWest and RoyalBank account holders.

Thanks to its intuitive interface, the software has extensive features catering to your small business needs.

  • It is compatible with a wide range of third-party applications and financial institutions, making it easy to integrate with your business workflow and saving time with automation.
  • You can access open banking standards to most banks, making it easy to keep track of your expenses and import the bank deed in real time. This also applies to newcomers such as Monzo and Revolut.
  • This accounting software integrates with Zapier to automate workflow. It also connects with Paypal Stripe or Shopify to streamline the payment process.
  • The interactive dashboard helps you track invoices, cash flow, etc., in one place. You can highlight overdue payments or receive alerts about legislative changes using Radar.
  • The software will remind you of impending self-assessment and VAT filing deadlines. FreeAgent is HMRC-approved software that generates MTD-compliant reports ready for your submission.

Benefits of FreeAgent

This solution has the following benefits:

  • With its powerful mobile application, you can manage your business. You can record expenses, scan receipts, send invoices, and track time.
  • The solution has an email invoicing system where you can use templates or advanced customisation features. With this, your customers can make payments with a single click. The software also automates reminders for clients with late payments.
  • The co-pilot feature helps you share your finances with your accountant, enhancing convenient collaboration.
  • Every plan has project management features, such as storing receipts, task lists and invoices in a centralised place. With this, you can track work hours and project profitability easily.
  • FreeAgent has an inbuilt payroll management system that allows you to generate P60s and payslips at no extra cost.

Although this solution is best for small businesses, here are its downside

  • If you skip FreeAgent's free offer and pay an annual plan, it saves you money, but it's a huge commitment.
  • You must change banks or open an account with a software-affiliated financial institution to get favourable terms.

FreshBooks

FreshBooks is also a cloud-based software designed for self-employed freelancers and small businesses dealing with customers and contractors. With FreshBooks, you can:

  • Create professional invoices: the software has an advanced invoice generator to help you get paid faster and observe your cash flow. It allows you to deposit and track time, and customers can pay via Apple Pay or credit cards.
  • Import expenses from your bank automatically and sort them based on their categories. You can also mark expenses as billable, enabling you to create an invoice.
  • Create MTD-compliant reports and gain valuable insights into your accounts using advanced filtering features and interactive dashboards.
  • Invite your accountant with a single click and save time on data entry because of its versatile open accounting system.

Benefits of FreshBooks

Here are the advantages of this accounting software

  • Easily create personalised estimates and project proposals, collect feedback, and seamlessly convert them into invoices.
  • An integrated project management system enhances efficiency, allowing seamless file storage, messaging, collaboration, and billing work hours from any location.
  • Connect seamlessly with your preferred solutions, such as HubSpot, GSuite or Squarespace, using a diverse array of options available in the marketplace.
  • The solution is HMRC-approved.

Although the app is easy to use and efficient, we found a few features that could be upgraded.

  • The Lite plan restricts billable client additions to a maximum of 5.
  • It's expensive to remove FreshBooks branding from your communications; it requires a pricier custom plan.
  • While there isn't a dedicated FreshBooks payroll management add-on, integration options with Gusto Payroll are available for an additional fee.

Odoo Accounting

This open-source, cloud-based solution is ideal for all businesses since it helps manage daily accounting. If you're looking for flexible integration with various business tools like CRM, ecommerce, and other applications, this software is for you. Here is what this solution will offer you:

  • HRMC compatibility: this software is MTD compliant through a module you can install to comply with UK tax regulations.
  • Integrating with various business applications allows your business to other areas beyond finance like sales marketing, human resources, inventory management, etc.
  • Manage bills and other bills easily: This feature allows Odoo users to manage their business expenses easily, thanks to expense forecasts, supplier invoice management, and digitalisation of bill and employee expenses.
  • Support major banks and payment gateways: this feature allows the synch of bank statements of UK major banks and payment gateways like Authorize PayPal, etc.
  • Ai invoice and follow-up automation: This helps improve payment time.

Benefits of Using Odoo

You can never go wrong with Odoo. This software is great and offers the following benefits:

  • Odoo offers multi-support options such as
  • Multi-user access rights
  • Multi-currency support
  • Multi-company integration
  • it has Extensive customisation options for dashboards and KPIs that provide greater precision in decision-making and business insights.
  • You can access a comprehensive array of legal statements, including tax reports, profit and loss country-specific statements, general ledgers, cash flow statements, etc.

Although Odoo has its wins, it can be pricey when adding its other modules. Remember, you may need extra support during data migration, which makes it unideal for beginners.

Sage 50cloud

Sage50cloud is a renowned accounting solution from Sage. This cloud-based solution is tailored for small and medium-sized businesses in the UK. This software offers:

  • A complete visibility of your business cash flow: you can synch your bank accounts and see who you owe and which payments are due.
  • Create invoices and quotes: you will have a professional image using the user-friendly templates, which will help you get immediately through Sage Pay, PayPal, and Stripe.
  • MTD compliance: the solutions allow you to calculate and file VAT returns to HMRC, ensuring you stay current with the latest regulations.
  • Custom reports: access valuable insights that help you analyse your finances effectively.
  • Inventory management: with this solution, you can have a close look into your stocks and make orders with automated purchase orders

Benefits of Sage 50cloud

Here are the benefits that made us pick Sage 50cloud as our top six accounting software.

  • This solution collaborates with Microsoft Office 365, enabling you to analyse and organise your data using familiar applications.
  • Offers support for CIS for construction workers and presents a mobile app on iOS and Android.
  • The software offers cloud and desktop versions to cater to specific needs

Despite Sage 50cloud having lots of advantages, it has a few downsides, including:

  • There are limited integration possibilities available in the marketplace.
  • Sage offers a varied selection of professional accounting software, making navigating through all the available options challenging.

Zoho Books

Zoho Books software presents an affordable option for small business owners seeking to streamline the company accounting process at an affordable price. This platform has flexible prices and offers a free version to provide you with basic accounting needs. Here are features that make this platform a great choice:

  • Send appealing invoices: the software allows you to tailor your invoices to align with your brand. Additionally, you can accept payments from various payment methods such as Stripe and PayPal and traditional options such as cheques and cash.
  • Track your expenses easily: use the recurring expense support to track your expenses and store crucial documents, such as receipts, within the transaction.
  • Generate bills: you can create bills out of purchase orders and, to avoid mistakes, add an approval step. This solution also allows you to cater for returns and refunds seamlessly.
  • Inventory management: since it stores your stock information and product details in one place, managing your inventory becomes easy. You will also get reminders when you're low on certain products and incoming purchase orders, thus updating your inventory.

Benefits of Zoho Books

This is what makes Zoho Books an excellent choice:

  • Zoho allows bank reconciliation and works with PayPal accounts. You can import and sort all your transactions.
  • You can use the client-vendor portals to communicate with your customers and suppliers. This feature allows them to access any updates and effectively take action.
  • The project management system allows you to track time and easily collaborate on multiple tasks.
  • Storing documents: This software lets you capture, receive, scan, and convert them into bills or invoices. Also, you can attach them to specific transactions.

However, if you're using the Zoho Books free version, the management of bills, purchases, and sales orders is unavailable, and there is a restriction of up to 1000 invoices per year.

Xero

Xero is also a trending accounting software that allows you to manage accounting with one approach. Here is what Xero can help you achieve:

  • Generate quotes and purchase orders effortlessly using a wide selection of appealing templates.
  • Send invoices, enjoy direct payment options like credit cards, stripe, and debit cards, and get notifications of late payments.
  • You can track bills, accept or cancel expenses, and connect to your bank automatically for a transparent cash flow view.
  • Store documents on an online filing system. You can also capture data by taking pictures or scanning receipts.
  • This solution is also HMRC MTD enabled, meaning you can submit VAT tax returns effortlessly.

Benefits of Using Xero

  • Project management feature: you can track cost and time, quote management, and its dashboards help you track your profit margin
  • Useful module features: this flexible module offers support for CIS returns payment through wise and payroll management
  • Reconciling offline transactions is easy, and the availability of mobile apps makes it easy to capture and attach receipts, emails, or bills.

Although Xero seems like an affordable option, the starter plan has loads of restrictions, such as:

  • 20 invoices
  • Five bills
  • No bulk reconciliation transactions support

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Conclusion

Although we've provided various solutions, choosing the right accounting software for your UK business is based on your needs, limitations, constraints, and budget. Also, consider your business's future before picking the best solution. So choose a flexible software you can update without incurring extra IT costs.