Looking to start the new tax year off right? While there are many ways to manage the finances of your small business, using an accounting software can help make the process easier.
And with Making Tax Digital for income tax set to be introduced from April 2026, now is the perfect time to find a self-employed accounting software that works for your business.
Accounting software comparison: what is the…
- best accounting software for small business? QuickBooks or Xero
- best free accounting software for small business? Crunch Free, Sage Accounting Individual Free, or QuickFile
- best accounting software for self-employed? Zoho Books
- best free HMRC tax return software? FreeAgent
- best Making Tax Digital software? Xero
Making Tax Digital software: what you need to know
Making Tax Digital (MTD) means that from April 2026, depending on how much you earn, you’ll be required to keep electronic records and submit and pay your tax return online.
From this date, you’ll need to keep digital records in order to submit quarterly expense reports to HMRC. You’ll also need to report your income to HMRC through MTD-recognised software every three months.
Switching to a digital accounting software can be a good first step to prepare for this change.
Best self-employed accounting software compared
QuickBooks
Price: from £10 a month (often reduced for the first six months to a year)
Who is it for? Sole traders, small businesses, large businesses
Trustpilot score: 4.4
MTD-recognised? Yes (Simple Start plan and above)
QuickBooks is a cloud-based software and was one of the earliest providers of accounting software. If you’re a sole trader or just starting out, the cheapest plan lets you prepare for Self Assessment and send invoices.
If your business grows, you can gain more features with the more expensive plans – such as VAT deadline reminders and the option to submit your VAT to HMRC.
The platform is easily customisable and comes with an introductory guide to get you started.
FreeAgent
Price: free if you have certain bank accounts, from £19 a month for sole traders, from £10 a month for landlords (often reduced for the first six months)
Who is it for? Sole traders, small businesses, large businesses, landlords, professional accountants
Trustpilot score: 4.7
MTD-recognised? Yes
FreeAgent, a cloud accounting software, is targeted at freelancers and small businesses – so it focuses on daily admin tasks like invoicing, time tracking, and expense management.
Its mobile phone app means you can do your bookkeeping on the go – including uploading pictures of your receipts, so you never miss an expense.
There are also optional add-ons you can buy, such as linking to your Amazon account if you sell on the platform.
You can get FreeAgent for free if you bank with NatWest, Mettle, Royal Bank of Scotland, or Ulster Bank. Learn more about switching business bank accounts in our guide.
Xero
Price: from £16 a month (often discounted up to 90%)
Who is it for? Sole traders, small businesses, large businesses
Trustpilot score: 3.8
MTD-recognised? Yes
Xero is another big player in cloud accounting software. Xero can help with invoicing, inventory, payroll, and expense claims.
As well as that, it can import your banking, credit card, and PayPal data – and there’s an app that works on both iPhone and Android. Certain packages give you the ability to submit VAT to HMRC for Making Tax Digital.
You can also choose to add more users to your plan as your business grows.
Zoho Books
Price: Free and paid versions (from £12 a month)
Who is it for? Sole traders, small businesses
Trustpilot score: 4.1
MTD-recognised? In development
You can integrate Zoho Books with lots of apps from Zoho’s own suite, as well as third-party apps. It can help you issue invoices, sort expenses, and track inventory. Zoho Books is part of an overall suite of cloud-based software – other apps include Zoho Invoice and Zoho Expense, although there isn’t a payroll feature yet for the UK.
Zoho Books can also connect to your bank account for real-time updates on cash flow.
According to the government website, it’s currently in development to become MTD-compatible.
FreshBooks
Price: from £7.50 a month (often discounted)
Who is it for? Sole traders, small businesses
Trustpilot score: 3.8
MTD-recognised? Yes
Benefits of cloud-based FreshBooks include the user-friendly interface and lack of jargon. It’s designed for freelancers and small businesses with basic accounting needs, so it focuses on things like invoicing and expense tracking. It integrates with apps like PayPal and Zendesk.
There’s a free trial available so you can try before you buy. FreshBooks says its packages have everything you need to stay compliant with Making Tax Digital, so you can connect it directly to your MTD profile and submit your tax return straight to HMRC.
Sage
Price: Free, with paid versions available from £15
Who is it for? Sole traders, small businesses, large businesses
Trustpilot score: 4.3
MTD-recognised? Yes, for the paid version
Sage is a big enterprise software provider, but Sage Business Cloud Accounting is its cloud accounting software offering for small businesses. There’s also a free trial available to try to see if it’s the right software for you.
Sage can help you with everything you’d expect – like invoicing, cash flow, and payroll. And if your business grows, you can even purchase other Sage software such as Sage HR or Payroll.
If you’re a sole trader or are just starting out on your business journey, you can also use the free version of their platform, Sage Accounting Individual Free.
This lets you manage your income and expenses, manually record receipts, and get an income tax summary. It even has its own free mobile app. But please note that the free version isn’t compatible with MTD.
Crunch
Price: Free, with a paid version from £26.50 a month
Who is it for? Sole traders, small businesses, large businesses
Trustpilot score: 4.4
MTD-recognised? Yes
Crunch is a big name in the online accounting software industry. While it’s mostly known for its paid version, there’s a free version available which includes:
- invoicing
- bookkeeping and expenses
- bank account integration
If you want to use the platform for your Self Assessment, including Making Tax Digital, you’ll need to upgrade to the paid version.
QuickFile
Price: Free
Who is it for? Sole traders, small businesses
Trustpilot score: 4.8
MTD-recognised? In development
If you’re looking for a free and simple accounting software for your small business, QuickFile could be the answer. You can file your tax returns directly with HMRC and gain insights into your business through reporting.
You can even connect it to other apps such as PayPal and Square to help manage your online payments.
A mobile app lets you track your receipts on the go and you can even create invoices to send to customers.
Accounting software – FAQs
Does a sole trader need accounting software?
A sole trader doesn’t currently legally need to use accounting software to track their finances. Bookkeeping and basic accounting can be done in an Excel spreadsheet or even in a notebook. However, Making Tax Digital (which will be phased in from April 2026) means you’ll eventually need to keep electronic records of your accounting.
Do self-employed people have to use accounting software?
Self-employed people, whether a sole trader or limited company owner, currently don’t need to track their finances through accounting software. However, they will need to keep electronic financial records from April 2026, when Making Tax Digital becomes mandatory.
What software do accountants use most?
Professional accountants use a variety of different software to track their clients’ finances. They could use specialised software created just for them or even track manually in Excel. Many even use accounting software such as QuickBooks.
What is the best software for self-employed people?
If you’re newly self-employed and using accounting software for the first time, you could start with a free accounting software such as Crunch, Sage, or QuickFile to learn what best works for you and your business.
What is accounting software?
Accounting software, sometimes known as bookkeeping software, is designed to help small business owners with things like:
- bookkeeping
- invoicing
- purchase orders
- statements of account
- inventory
- payroll
It can also be invaluable to businesses when it’s time to submit a tax return. And having your financial information all in one place can make it easy to see where your business is doing well and where it may need improvement.
What is Making Tax Digital software?
Making Tax Digital software is HMRC-approved software that lets you keep digital records and submit VAT returns. HMRC has a tool on its website that you can use to find compatible software.
More useful guides for small business owners
- How to do a Self Assessment tax return online
- Small business tax changes: new thresholds, rates, and allowances
- How to write an invoice and free template
- Is professional indemnity insurance tax deductible?