The Best Accounting Software for Small UK Businesses 2020

The Best Accounting Software for Small UK Businesses 2020

Best small business Accounting software 2020

In this post, we look at four of the best-known options that we think every business should have on their shortlist.

Some have more features than others, some are cheaper, but across all of these is a basic level of quality and usability that we believe business owners will love.

The Contenders

Accounting Software contenders

To be included in our list the accounting software needs to be aimed squarely at new start-up and small businesses.

This is why you won’t find the likes of Access, Oracle and SAP in this article!

Sage is probably the best known of our quartet and for many years the desktop version was the name that every accountant would instantly recommend to their clients.

Time has moved on and with the advent of cloud-based SaaS (Software as a Service) offerings Sage’s dominance has waned somewhat. That having been said they are still a very strong player.

Like Sage, Quickbooks has been around for donkey’s years and had an excellent reputation in the desktop market.

They have also made the transition to a cloud service and have spent heavily ensuring that they have a wide-ranging support network.

Arguably, the push for traditional software houses to move to SaaS came from Xero.

Xero started life as a fully cloud-based, subscription service and very rapidly gained a wide and loyal following and is recommended by many accountants as a standard even though the system has only been available in the UK for just over a decade.

Our final contender is possibly the least known of the four and yet has been around for slightly longer than Xero.

Launched purely as a SaaS service FreeAgent is based in Edinburgh and was acquired by the Royal Bank of Scotland in 2018.

Round 1:  Usability – Winner FreeAgent

Sage LogoXero LogoQuickbooks LogoFreeagent Logo
Usability3 stars1 star gold4 stars gold

4 stars gold = best

1 star gold= worst.

There’s no point in paying for accounting software if it is too difficult to use and so this is our first assessment category.

FreeAgent 4 stars gold

Top of the list has to be FreeAgent with its clear and uncluttered interface. It is pretty obvious that this has been designed with the average user in mind and it achieves what it needs to do in a simple to understand way.  Designed initially for Sole Traders and Contractor Accounting, the simplicity is also its downfall as it lacks functionality to handle more complicated businesses.

FreeAgent

Xero 3 stars

Next, we’d say that Xero is a good option due to its user-friendly design and excellent usability.  It’s not as user friendly as FreeAgent, but it more than makes up for this by providing plenty of functionality and huge range of third-party apps available in its market place.    

Quickbooks

One of the things that has bugged the conversion from desktop to SaaS for Quickbooks is the poor user experience of the interface. Whilst all the features are there it is not always obvious how to access them.  Quickbooks have made quite an effort in the last few years to improve their user experience, however we feel it still has quite a way to go when compared to its main rivals.

SAGE 1 star gold

Finally Sage lags the pack as the system seems to have been designed to carry directly on from Sage line50 (the desktop version) which was aimed squarely at the trained and experienced accountant, either in-company or in practice.

Round 2: Features – Winner Quickbooks/Xero (tie)

Sage LogoQuickbooks Logo
Features3 stars4 stars gold4 stars gold

When you look at a software you need to understand what features are built-in and what you will have to pay more for or even buy in another app.

Quickbooks/Xero 4 stars gold

Quickbooks accounting has an excellent range of features and even the cheapest version allows their receipt scanner, PayPal enabled invoicing and mileage tracking. Upgrade to £30pm and get the full suite including stock management, multi-currency and budgeting.

Xero fails a little when it comes to features as many of the things that you may wish to do require additional (paid for) apps or optional extras.  Whereas Sage and Quickbooks have unlimited category tracking Xero limits users to just two and things like expense tracking (£ 3 pm) and Projects (£ 5 pm) are add-ons.  However what Xero fails in free functionality, it more than makes up for it huge range of third party apps availability on its market place.

SAGE 3 stars

The basic version allows you to track stock, manage departments, deal with cashflow and has excellent reporting. If you want to manage projects and use sales and purchase orders then you’ll have to pay for the professional licence.

FreeAgent

FreeAgent is arguably the least featureful of the lot however this probably reflects the fact that it is designed with freelancer accounting in mind.

Few freelancers will need more advanced features such as multi-currency support or departmental tracking and so the lack of different methods is not necessarily a disadvantage.

When you are looking at the features list of your future software, remember to check what is included, only buy things that you need and make sure none of them is volume-limited as you could end up paying more than you bargained for.

Round 3 – Support – Winner FreeAgent

Sage LogoXero LogoQuickbooks LogoFreeagent Logo
Support3 stars4 stars gold

So if you can’t work out how to do something then what do you do? You call support.

Although accountants should know everything about accounts, they don’t always know everything about software so even we have to access support from time to time and so this is an important aspect for us.

FreeAgent 3 stars

FreeAgent accounting has a good level of support with training webinars, knowledge base articles and the option to book a call with a support agent.  You can also call directly and the knowledge of support is pretty good. 

SAGE 3 stars

Sage has been in the software business for years but it has suffered a fair amount through having a poor reputation for support. Customers can call in but the line is a standard rate number and it takes a while for them to answer.

Quickbooks & Xero (we have a tie)

Quickbooks delivers support through training videos, chat boxes, email, phone and community support forums.  Having said this, from our experience of dealing with QBs support team, we found that the knowledge level of the support team hasn’t always been their strong point and fixing a problem can sometimes take days if not weeks.

Xero also has a well-developed support network and their training videos are superb.  It doesn’t however have a helpline which is extremely disappointing.  Instead you need to raise a query through a ticketing system, which can be annoying as sometimes you just want to be able to speak to someone and a ticket system where you are going back and forth can be frustrating. 

The one thing that trumps all of the support options is that if a system is so good and so user friendly that you don’t need any help, then support is irrelevant.  Thus I must give credit to Xero and FreeAgent, where in comparison we have had very little issues with the actual system performance with these over the years.  

Round 4 – Pricing  No real Winner here

Sage LogoXero LogoQuickbooks LogoFreeagent Logo
Pricing3 stars3 stars3 stars3 stars
Standard
(pm)
£24£24£20£29
Premium
(pm)
£30£30£30N/A
Payroll£7 (up to 5 employees then add bundles of 5 employees for £5£5 (up 5 employees then £1 for each additional employee)£4 (+ £1 per paid employee)N/A

Note 1: Prices correct at time of publishing – Aug 2020

Note 2:  Most of the above providers offer significant discounts for the first 6 months, we have not taken these into consideration and only looked at what we would need to pay in the long run.

Note 3:  All prices above exclude VAT and are based on monthly subscription

As you can see there is not much difference when it comes to pricing.  And the overall cost may differ depending on each user’s needs.  Hence, we have decided not to declare a clear winner here. 

It is worth noting that these software providers also advertise more pricing options for Sole Traders, but for our review we are only looking to compare prices for Small Businesses operating as Limited Companies

For the smaller business Quickbooks leads the way and if you want something simple that will handle your VAT submissions, invoicing and receipt tracking then you’ll only pay £12 per month.

This increases to £30 per month for multi-currency, stock management and time tracking.

FreeAgent prices its offer based on the type of company that is using the service. For self-employed people, the charge is £19 per month, for partnerships £24 pm and Ltd companies £29.

Xero accounting has a starter plan that only costs £10 per month (not shown in the table above) but you do need to be aware that this only allows the production of 5 invoices, 5 bills and 20 bank transaction reconciliations. In our view, this would only be of use for companies that have a very low amount of transactions.

For their standard option, you’ll pay £ 24 pm and the premium which allows multi-currency £30.

Price is important but thoroughly investigate what you get for your money first and don’t be swayed by initial special offers.

Expect to pay more also if you want to have more users logging on to the system.

Round 5 – Reporting – Winner (No real winner here too )

Sage LogoXero LogoQuickbooks LogoFreeagent Logo
Reporting3 stars3 stars3 stars3 stars

It’s all very well having your information in a shiny new system but how do you go about getting the information out, or in other words how good is the reporting?

This is where we have a bit of a problem with QuickBooks. It has a superb dashboard that is fully customisable, it has excellent methods of tracking unlimited departments and projects but some of its reports can let it down and in common with the desktop version the export feature doesn’t always work well.

Xero has the ability (like QuickBooks) to have customised report templates and the company has developed a new reporting dashboard.

The system does have the basics like cash flow, P&L and Balance sheet but the standard built-in reports aren’t as extensive as Sage and QuickBooks and the limited analysis codes make it less useful.

FreeAgent has an excellent front end dashboard which, for most users will prove adequate for their needs. It doesn’t have the depth of reporting or the massive amount of customisation options of a Quickbooks but it gets by.

Sage has an exceptional array of complex accounting features but its reporting could use some improvement.
The system does include standardised reports and you can customise them using the report designer but the user interface is clunky and has a fair old learning curve.

As you can see it is difficult to select a clear winner here.

Round 6 – Connectivity – Winner Xero

Sage LogoXero LogoQuickbooks LogoFreeagent Logo
Features1 star gold4 stars gold3 stars

One of the best aspects of a SaaS system should be connectivity with other services.

We take it as read that all of our systems can connect seamlessly with banks but what about other services like PayPal, Receipt bank etc?

Xero 4 stars gold

Xero has a wide array of different apps that you can connect, either by getting them from the Apple Store or Google Play or by using the Intuit App collections.

Quickbooks 3 stars

Quickbooks also does well in terms of apps and connectivity with a wide array available on their marketplace. These range from time trackers to inventory.

FreeAgent

FreeAgent has fairly limited options here. It still, however, does have some keys apps that will integrate well including things like Zapier, Stripe and Basecamp.

SAGE 1 star gold

Sage feels like it lives in a different age and this has been widespread criticism of the company for many years.
Its connectivity offering is pretty limited and whilst it will integrate with other Sage products like Sage Pay and Payroll, if you are looking to get this seamlessly patched into your CRM system then you may be disappointed.

If you are running a highly integrated business such as an eCommerce company then you need to make sure that your financial software will work with your other systems.

Conclusion – what software should you buy?

For ease of use, we’ve produced the following table and we’ve rated each aspect on a star basis:

4 stars gold = best

1 star gold= worst.

Sage LogoXero LogoQuickbooks LogoFreeagent Logo
Pricing*3 stars3 stars3 stars3 stars
Features3 stars4 stars gold4 stars gold
Support3 stars3 stars3 stars4 stars gold
Usability1 star gold3 stars4 stars gold
Reporting3 stars3 stars3 stars3 stars
Connectivity1 star gold4 stars gold4 stars gold3 stars

There really is no single answer to this question but we hope that by teasing out the issues involved we have given you some food for thought.

If you are a very small business or a freelancer then have a look at FreeAgent because its user interface is exceptional and although it has a limited feature set it is probably all you need and the learning curve for a more complex system probably isn’t justified.

If you are in a slightly bigger business and need a wide array of features despite the cost then Xero or QuickBooks are probably the best online accounting software.

They are both reasonably priced, have excellent flexibility and can connect with a wide array of other services so could be a good choice whatever your needs but especially if you are in eCommerce or use a CRM extensively.

SAGE has been a little disappointing overall and given its late entry into the cloud accounting we feel it has quite a way to catchup.

Our final piece of advice is to say that the right software is the right software for you. People tend to have very strong opinions but in the final analysis, if your software does what you want it to do then that’s all you need.

If you would like to talk over the options, or if you need help with implementing a new system for your business then why not get in touch? – We’d love to help.

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