The Best Accounting Software for Small UK Businesses 2020

November 25, 2019

The Best Accounting Software for Small UK Businesses 2020

Best small business Accounting software 2020

The world is moving fast, and so should you. Small businesses are emerging by the day, and the competition is getting tighter. You don’t want to be left behind. The worst problem new small businesses face is related to accounts as most entrepreneurs are not professionals in this area. However, to solve this problem, people have come up with online cloud accounting software. This software eases up the task by a significant margin. Let’s have a look at the top accounting software for Small Businesses in the UK one by one, so it is easier for you to decide which one is most suitable for your business.


Xero was founded in 2006 and had been growing ever since. Initially based in New Zealand, this online cloud accounting software has gained popularity over the years among small businesses. There no doubt that currently, it is among the best software for accounting that is.  

Advantages of Xero

The fantastic thing about Xero is that it enables users to access it from a range of smart devices. Since it is cloud-based, all you need is a good internet connection and an intelligent tool that has support for a browser. Pretty simple right? The whole framework of the software is based on the double-entry method.

It comes with a variety of great features that have been improved over the years. You can manage your transactions, account details and cash flow anywhere, anytime. Moreover, the cloud-based software automatically updates all of your bank transactions. That helps you stay on top of the financials of your small business.

You can keep a record of all your spending through online bill payments. You will also be notified about all fees that are due and stay up to date about the bills. Consequently, your relationship with the clients and suppliers will be strengthened. You can also manage personal business expenses with a mobile review and approval of all receipts. It also brings unlimited support for users.

Additionally, Xero integration is another feature that makes it stand out from others. It has support for 600 other software and systems that can make your life easier. Xero also brings in regular updates considering user feedback.

Some disadvantages of Xero

As much as good the Xero accounting software is, it is still not perfect. There are certain areas where it lacks behind. For instance, it is based on two tracking categories only. Another drawback of using Xero is the subscription fee users have to pay even to access the basic features.

Moreover, if you want to access features such as inventory tracking or expanded time tracking, you would have to buy add-ons apart from the subscription. Xero allows you to import data without any cost. However, if you have to make or receive any payments, it will cost you the right amount.


Xero offers its users a 30 days free trial. In this free trial, users can test the product and figure out whether it is suitable for the type of business they are doing. Once the free trial ends, Xero offers its user three different packages. These include:

Xero Starter

Xero Starter starts at £4 per month and moves to £10 per month post the three initial months of joining. However, it is limited to only five quotes and invoices in a month, reconciliation of twenty transactions and only five bills. Moreover, you get to submit automated reports and CIS calculations and VAT to HMRC. 

Xero Standard

Xero Standard starts at £9.60 per month after 1st August 2019. Post first three months of usage, it rises to £24 per month. Which includes unlimited invoices, billing, transaction reconciliations, quotes and automated CIS calculations and reports and submitting VAT to HMRC.

Xero Premium

Xero Premium starts at £12 per month after 1st August 2019 and rises to £30 per month after you have used it for three months. That is the maxed-out package which offers all the features that you get under the standard package as well as multiple currency support.


Another renowned competitor in the online-based accounting software world is QuickBooks. It offers a noteworthy dashboard which has all the essential details and categories at your disposal. These necessary details include your expenses, profits, income right in at your disposal as you sign in.

Like Xero, it is also based on the double-entry method of accounting. Moreover, it has a wide variety of reports and robust account charts. Users can customize invoices and also get multiple currency support, payroll support, and more than 400 integrations with other software.

Advantages of QuickBooks

The standout advantage of QuickBooks is that the team is always keeping the software up to date. Recently, QuickBooks was updated with the project management feature that makes up another advantage for choosing this software. In comparison to desktop software, this online accounting cloud-based software offers modern features. These include:

  • split transactions
  • location and class categories
  • automatic sales receipts
  • scheduled invoices

Disadvantages of QuickBooks

And again, like every other cloud accounting software, QuickBooks comes with its drawbacks too. Users have increasingly found the software hard to navigate. They feel like it is not as smooth as to what it offers for the desktop. So, all the fantastic features that it provides, they fall to nothing when it comes to the difficulty of using the software. You would probably need the professional help of an accountant to make full use of the software.


QuickBooks has been catering to small businesses with three packages of the software. However, recently it has added another package for independent contractors and freelancers, the Self-Employed plan. All of these plans come with a 30 days trial for free so that users can test the software. Medium to small business owners can use the three packages. The three plans include:

Simple Start

Simple Start starts at £5 monthly for the first six months. It allows you to send unlimited invoices, snap and store payments, run reports, connecting multiple bank accounts, track income and expenses, run payroll and one user profile. For running payroll, you would have to pay an extra pound for each employee every month.


This package starts at £7 monthly for the first six months. It comes with all the features that you get with the basic plan. However, it offers more features such as managing payments and bills, two additional user profiles, tracking employee time and multiple currency support.


This package starts at a whopping £11 monthly for the first six months. That comes with everything that is offered to you in the essentials package. Also, users get to manage stock, purchase orders and create budgets as well as track the profitability of the project.


Self-Employed is the recently introduced plan for freelancers and independent contractors. That comes with the most basic features as it starts at £3 monthly for the first six months. It only offers the functionality to track deductible mileage, snap and store receipts, track expenses and income, sending unlimited invoices and connection to more than one bank accounts.  

Sage 50c Premium Accounting

Sage 50c is another cloud-based online accounting software. This one has been designed keeping in mind the desktop users. Since it is cloud-based, you can easily share files, data and reports with your accountant online. That is made possible by the web-based Sage drive, which can be accessed by anyone you allow.

Which is the best accounting software for all small businesses which are looking for robust features with increased customizability? It is highly customizable when it comes to inventory management. It is famously known due to its detailed and thorough documentation. Moreover, it has support for smartphones and smart devices with web support.

Advantages of Sage

There are several features of Sage that make it stand out from other accounting software. It allows its users to access all of their financial reports with the convenience of their smart devices including laptops, tablets and smartphones. Since it is cloud-based, it is automatically backing up all of your data. Thereby, you have the option to undo any entry and go back to the previous set of data if you have made any mistakes.

Disadvantages of Sage

The most obvious downside of Sage is that even though it is cloud-based, it still lacks integrated browser-based remote access for data retrieval and transaction entry. Moreover, it has not released an app for Android users and only caters to iOS users with its app.


Sage 50c offers three different packages which are either monthly or annually. Let us have a look at each of them separately:


This package has the most basic features. It is perfect for a smallsized business looking for accounting solutions in their initial stages. It is priced at £20 monthly, or if you wish to go annual, it costs £240 annually. Users can manage income expenses and payments, cashflow all with safe and secure cloud backup and access. This package does not come with a free trial.


The standard package comes with a 30-day free trial which allows users to test the software before they decide to subscribe to it. This package has a price tag of £60 per month, and if you wish to go annual, it costs £720 annually. Apart from all the essential package features, it comes with department analysis and stock management features.


Professional is the costliest plan out of the lot. With a whopping price of £125 per month, and if you wish to go annual, it costs £720 annually, the same as the standard plan. This plan allows over twenty users to have access. You will be allowed to receive in-depth stock reporting as well as manage an unlimited number of companies.


FreeAgent is another well-known cloud-based accounting software. It offers a built-in stopwatch with which users can keep records of the time. You can also monitor all your cash flows from the dashboard. You can connect your bank account with FreeAgent and make payments with ease. You can file for all your taxes and self-assessment forms. Moreover, you can keep track of your income, expenses, fees and whatnot. It has integration support for the popular payment gateways making your life easier.

Advantages of FreeAgent

It has an extremely easy to use incredibly intuitive platform. Users find it pretty easy to navigate. All your critical business activities are just a click away. You can view them directly from the dashboard in the form of graphs and charts. This software is highly suitable for small businesses as it has been designed specifically for them. All the features that you need to stay on top of your business’s finances are on offer.

Moreover, you can import your bank feeds and bank statements directly into the software and easily monitor them. You can also manually add expenses if you want. You can categorize expenses based on the currency. FreeAgent also enables its users to customize bills and set recurring bills saving you a good chunk of time. Other significant advantages include invoicing and contact management. It provides eight invoice templates making invoicing the most natural part of handling finances. It can directly process all your payments. Moreover, its links to international payments gateways allow you to use any payment method and still take advantage of all the features it has to offer.

In Conclusion

All of the accounting software mentioned above are best at what they do. However, it is up to you to decide the right fit for you. You need to do your research and figure out the financial requirements of your small businesses. Once you know them, you will be able to make an informed decision as to which software goes best with your business structure and needs.

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