Accounting software is debatably one of the most important pillars of business success – it can be argued that no business can ever hope to grow without access to its financial position in real time.

Choosing the right small business accounting software can be challenging. With numerous options available, it can feel like a minefield when deciding on the best solution for your needs. In April 2019, the UK government rolled out its Making Tax Digital (MTD) initiative, and any VAT-registered business must, as of April 2022, maintain digital records and submit their VAT returns online. Any business with an annual income of £50,000 or more must comply, and this will change to a £30,000 threshold in April 2027.

As such, when completing year-end accounts and submitting VAT returns, as well as ensuring your cash flow is in a good position, complying with your tax obligations, tracking expenses, and more, the right accounting software solution can be a valuable asset in your growth journey.

In this article, we’ll explore some of the top accounting software options for small businesses in the UK.

Xero: The Gold Standard for Small Business Accounting

When it comes to comprehensive, user-friendly accounting software, Xero stands out as the premier choice for small businesses.

Here’s why:

1. Xero’s clean, modern design makes it easy for business owners and accountants alike to navigate and use effectively.
2. You can create and send professional invoices quickly, with options for customisation and automation to save time.
3. Xero’s smart reconciliation features make matching transactions straightforward, reducing manual data entry and errors.
4. You have the option to generate detailed financial reports with just a few clicks, giving you valuable insights into your business’s performance.
5. Access your financial data anytime, anywhere, from any device with an internet connection.
6. Xero integrates with over 1,000 third-party apps, allowing you to create a tailored ecosystem for your business needs.

Other Notable Options

While Xero undoubtedly – in our experience – leads the pack, other accounting software solutions worth considering include:

QuickBooks

QuickBooks offers a range of features similar to Xero, including invoicing, expense tracking, and financial reporting. It’s a solid choice for businesses already familiar with sophisticated accounting products.

Sage

Sage provides reliable accounting features with a focus on GDPR compliance and security. It’s particularly well-suited for small businesses trying to navigate MTD obligations.

Zoho

This free piece of accounting software is suitable for businesses with relatively low incomes but the paid upgrades offer valuable flexible invoicing and reporting choices for business owners.

Key Features to Look For

When evaluating accounting software for your small business, consider these essential functionalities:

• Invoicing: Look for customisable templates and automated reminders.
• Expense tracking: Ensure easy receipt capture and categorisation.
• Bank reconciliation: Automated matching saves time and reduces errors.
• Financial reporting: Comprehensive reports help you make informed decisions.
• Payroll integration: Streamline your payroll process with built-in or add-on features.
• Tax compliance: Choose software that helps you stay compliant with UK tax regulations.

It’s important to remember that your in-house accountant and bookkeeper may need access to more in-depth features than some of these choices may offer. Larger limited companies relying on outsourced accounting and bookkeeping services may also benefit from all the additional features in premium accounting software plans. Conversely, sole traders and self-employed professionals may benefit from all the features on a free plan.

When deciding, it’s important to align your choice with your business objectives. Some features like cash flow forecasting and self-assessment tax return preparation will be beneficial to most users, while multiple currencies, payroll processing, and eCommerce integration may be unsuitable for others.

Making the Right Choice for Your Business

Selecting the right accounting software is a crucial decision that can significantly impact your business’s financial management. Xero offers an excellent all-around solution for most small businesses, and as a Xero Certified Partner, Hamlyns would recommend it to anybody. We are also QuickBooks Pro Advisors and accredited Sage accountants, meaning that if you already have an incumbent solution in place, we can tailor our accounting services to suit your situation and chosen tool.

We understand that every business is unique. Our team of experienced chartered accountants can help you navigate the selection process and implement the ideal accounting system for your business.

We offer personalised consultations, implementation support, training and ongoing support as your business grows. We are always committed to helping you scale your accounting processes as you move further along your growth journey.

By partnering with Hamlyns, you’ll not only get the right accounting software but also gain a trusted advisor to support your business’s financial success. Whether you choose Xero or another solution, our team will ensure you have the tools and knowledge to manage your finances effectively.

Contact Hamlyns today to discover how we can help you choose and implement the perfect accounting software solution for your needs.