Best free accounting software for small businesses in 2022 Accountancy software can make running your business quicker, simpler, and easier, and there are some great free solutions out there. Check out the options here, and find the right fit for your business. Alec Hawley December 6, 2021 20 min read Our experts We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. This article was co-authored by: Alec Hawley Bryn Glover Editor Our independent reviews and recommendations are funded in part by affiliate commissions, at no extra cost to our readers. Can your business do all of its accounting without having to spend on software? Well, up to a point, yes. There are quite a few options out there, but we’ve done the research and found that Zoho Books is the best free accounting software for UK small businesses. Zoho’s 100% free plan is a great fit for businesses just starting out, but you’ll probably want to consider upgrading to a paid tier pretty quickly.In fact, this caveat is the case with all of the free accounting options – they are free for a reason, after all. Led by Zoho, there are still some respectable free accounting software choices available – but make sure you have a careful think about whether you should spend (just a little) to find the perfect accounting software for your business. Best Free Trials to Accounting Software Before discounting paid-for software altogether, take a moment to consider the all-singing, all-dancing accounting software offerings from the dominant major players. Many will have a generous free trial, and surprisingly low ongoing costs that make for a smart investment as your business scales and grows:Freshbooks – 30 day free trial, then plans beginning from just £11 per month (Alternative deal: 50% off for the first 3 months)QuickBooks – 30 day free trial, then plans beginning from just £8 per month (Alternative deal: 50% off for the first 4 months) We've picked out three good free accounting software options, below. However, each one comes with compromises and drawbacks, which we've drawn attention to:Zoho BooksOur No. 1 pick for free accounting software, Zoho’s free plan has a solid set of basic features and is built on a powerful, intuitive and attractive interface.Drawback: Zoho’s free plan lacks important features such as bank feeds, and is also limited to 1,000 invoices per year.QuickFileThis is a simple, intuitive and feature-packed product that’s free for small businessesDrawback: a monthly fee is charged when your account goes over a certain size.FreeAgent A stylish, award-winning accounting software that can go toe-to-toe with the big boys, FreeAgent is offered free of charge to Natwest/RBS business banking customers.Drawback: To use it, you must give up some access to your financial data in exchange, so make sure this is something you’re comfortable with.In this guide, we’ve used our more than 20 years of small business experience to take a look at all the free accounting software options available and tell you which could be a good fit for early-stage businesses that need to carefully account for every penny. We based these choices on ease of use, features, design, scalability, suitability for the UK taxation system, and suitability for various kinds of businesses. To learn more about the differences between free and paid accounting software, and the top contenders in both categories, read on. Compare providers and save Do you use accounting software? Yes No Best accounting software with a free trialIn the section below, you can compare the UK's most popular accounting software for small businesses.We understand why completely free-for-life software can seem appealing; but ultimately, their heavy functional limitations mean they won't be a good long-term solution for your business. For as little as £11 a month, you can use a premium product that will help you run, grow and scale.Plus, each of the software products offers a 30-day free trials, so you can confidently try them out, and make sure they're a good fit for your business before you commit – risk free!To get a sense for how one of the UK's best full-fat, premium accounting software products could help your business, it's definitely worth signing up for a 30-day free trial.The list above shows some of the UK's most popular accounting software providers, each of which offers a free month so you can get a proper idea of how it works and what it does. Our top picks for free accounting software are: Best accounting software with a free trial Best free accounting software UK Zoho Books Quickfile FreeAgent Wave Accounting GnuCash VT Cashbook How to choose the best free accounting software for your small business The best alternatives to free accounting software Final thoughts Best free accounting software UKCheck out our pick of the best free accounting software for small businesses in the table below: 0 out of 0 backward forward Price From Best For Key BenefitsBEST OVERALL EASIEST TO USEZoho BooksQuickFileFreeAgentWave AccountingGnuCashVT CashbookFreeFreeFree (for Natwest/RBS business banking customers)FreeFreeFreeOur top overall pickSmall businesses that trade overseasRBS/Natwest customersBusinesses with advanced needsBusinesses that need a desktop solutionBusinesses looking for simplicityCreate and send invoicesMTD VAT filingExpenses & mileage trackingBank feed integrationMTD VAT filingMulti-currency supportCorporation tax forecastingProject trackingTime tracking toolsReceipt scannningIntegration with ShopifyConnections to PayPal, Shoeboxed and EtsyCompletely freeCheckbook-style interfaceOpen-source desktop softwareFast data entry with autocompleteTrack multiple bank/cash accountsProduce basic reportsCompare accounting software and find the right deal for you Compare now Zoho BooksPowerful features (though the best ones are paid for)Cloud-based – works on web browser, mobile and tabletColourful, intuitive interfaceZoho made its name with its CRM systems (check out our review of Zoho CRM here) but it has offered accounting software since 2011. Zoho Books’ free plan is the best overall choice for free accounting software, though things improve further if you pay out for a premium tier.It combines a simple and intuitive interface with powerful features that means, even on the free tier, Zoho Books effortlessly handles all the basics.In short, it’s a great choice for businesses just starting out.What can Zoho Books do?On the free tier, Zoho Books offers all this:Create, customise and send invoices (up to 1,000 per year)MTD VAT filingAutomated payment remindersExpenses & mileage trackingCreate business reportsRun an audit trailProduce recurring invoicesIntegrate with other Zoho apps and other apps like GSuite, Office 365 and DropboxEmail supportWhy is Zoho Books free?Zoho offers a free plan, but of course, there are drawbacks. For one, it’s limited to 1,000 invoices per year, and lacks a number of features that can make a huge difference to the level of debt in which accounting software can help your small business.We’ve taken a closer look at how Zoho’s free plan matches up to its £12 per month (+VAT) Standard plan below: Zoho Books Free vs StandardWhile Zoho’s free plan is very useful for businesses just starting out, there are some big reasons you should consider signing up for the Standard plan.Most notably, the Standard plan lets you create up to 5,000 invoices per year, as opposed to just 1,000 for the Free plan. This means that Zoho Free won’t be suitable for businesses with high transaction volumes, and SMEs with serious growth plans should go for a paid plan.Another key point is that Zoho Standard comes with bank feed integration. What this means is that once you’ve linked your business bank account, any transactions you make will automatically appear in Zoho Books. With Zoho Free, you’ll have to download and import bank transactions, an annoying and time-consuming task when you’re busy running your business.On a paid tier, you’ll also be able to create recurring expenses, add up to three users, track project expenses, use a larger number of payment gateways, integrate with other services including Uber and Zendesk, and get support via voice and chat.So, while the Free plan definitely has its plus points, the extra features and higher limits of Zoho Standard make it a very persuasive option for UK small businesses.When comparing them, make sure you consider just how much time and effort you’d save with the Standard plan – letting you get on with growing your business. If your business has more complex needs or requires higher limits, Zoho also offers the Professional (£24 per month +VAT) and Premium (£30 per month +VAT) plans.You can see how all four Zoho Books plans stack up below: 0 out of 0 backward forward Plan Cost Features FreeStandardProfessionalPremiumFree£12 a month (excl. VAT)£24 per month (excl. VAT)£30 per month (excl. VAT)Manage up to 1,000 invoices per yearMTD VAT filingExpenses & mileage trackingManage up to 5,000 invoicesAutomatically import transactionsAdd recurring expensesBill managementMulti-currency handlingRetainer invoicesTrack activity across multiple branchesCustom domainCustom reportsCompare Zoho plans to see the latest deals Zoho deals What support does Zoho Books offer?On the Free plan, Zoho gives support via email, while its paid plans add assistance via voice and chat. Zoho Books VerdictWith loads of powerful features and a great interface, Zoho Books Free is the perfect free accounting software for businesses just starting out. The integrations with Zoho’s other leading business apps are the icing on the cake, but SMEs who are serious about growth should consider going for a paid Zoho plan. QuickFileGreat range of featuresResponsive support communityFee applies for larger accountsCloud-based – works on web browser, mobile, and tabletWhat is QuickFile?Founded in 2010, QuickFile is accounting software that’s specifically aimed at freelancers, small businesses, and entrepreneurs. It’s a simple and intuitive cloud-based solution that helps any small business owner with little accounting knowledge to easily keep track of their finances.It’s also got great reviews on Trustpilot, amassing an average score of 4.7 out of 5 from over 1,100 reviews, with reviewers praising its ease of use and range of features.What can QuickFile do?QuickFile boasts an enviable range of features, including:Integration with over 50 automated bank feedsEasily manage invoices through a branded portal, which your clients can use to view and pay invoices through a range of online payment providers like PayPal and StripeTrack and file VAT returns – QuickFile is fully compatible with Making Tax DigitalGenerate a range of reports that give insight into your businessFull multi-currency supportTools to create estimates, purchase orders, and delivery notesA mobile app that allows you to create invoices/estimates and snap expenses receipts on the goA seamless ‘click to print’ service if you need to post hard copies of your invoices, estimates, or statementsWhy is QuickFile free?QuickFile is only free for accounts of a certain size. This is slightly technical, but you’re limited to 1,000 ledger entries (this includes all invoices, purchases and bank transactions). Once you go over this limit, you pay a set fee of £45+VAT per year (approximately £54 in total at current rates). This fee also grants you access to some advanced features, such as enhanced bulk invoice entry and VAT bridging tools.The free version is also supported by ads.This pricing structure makes it perfect for startups – who can upgrade as their business grows – and means that you can easily try QuickFile for free to see if it’s the right fit for your business.What support does QuickFile offer?While there is no phone support available, QuickFile has a very active online community forum, and promises to answer most questions posted there within a few hours. You can also email their support team directly, but you’re likely to get a quicker response by posting a question in the forum. QuickFile VerdictQuickFile is the ideal free solution for very small businesses that can stay under the ledger entry limit. Its highly competitive pricing and great range of features means it should also be strongly considered by larger businesses, too. FreeAgentPowerful cloud-based accounting software with a huge range of featuresFree for Natwest/Royal Bank of Scotland (RBS) business banking customersDedicated phone and email assistance from UK-based support accountantsCloud-based – works on web browser, mobile and tabletWhat is FreeAgent?Set up in 2007, FreeAgent is now used by over 90,000 small businesses across the UK, who use it to keep track of their finances, expenses, invoices, estimates, and more. It boasts some great advanced features, like automatically generated VAT returns, corporation tax forecasts, and self-assessment tools that automatically fill in up to 90% of the self employment tax return form. It has also won awards (it was named the Small Business Accounting Software of the Year at the 2018 Accounting Excellence Awards, for example), and has an average rating of 4.7 out of 5 (from nearly 1,000 reviews) on Trustpilot.For most users, though, all this comes at a cost (see the “why is FreeAgent free” section for full details). The reason FreeAgent is being discussed here is that it was bought by RBS in March 2018 for £53m, and it is now being offered for free to RBS/Natwest business banking customers.This equates to a saving of at least £150 a year, and so is very tempting for small business owners. However, the small print makes it clear that taking up this option means your bank will be able to see exactly what’s going on with your accounts, so carefully consider whether you want to give them access to your detailed financial data in return.What can FreeAgent do?FreeAgent’s huge range of features includes:Tools to create and send professional estimates and invoicesTime tracking tools so you can easily create smart timesheetsPowerful HMRC integration that makes doing your tax return a doddleAutomatic creation of VAT returnsCorporation tax forecastingA dashboard that lets you easily monitor your cash flowAutomatic importation of bank transactionsA projects view that clearly shows the income, time, and expenses associated with each project, and whether it’s making a profit or lossA fully featured mobile app that allows you to snap receipts, create invoices, track time, manage payments, and see your accounts on the goWhy is FreeAgent free?As stated above, FreeAgent is only free for RBS/Natwest business banking customers.For everyone else, the standard pricing is as follows:Sole trader – £19+VAT per month – includes self-assessment filing toolPartnership/LLP – £24+VAT per month – includes profit share calculation toolLimited company – £29+VAT per month – includes self-assessment filing, dividend vouchers, and corporation tax forecasting toolsAll plans have a 30-day free trial.If you are an RBS/Natwest business banking customer, then you can get FreeAgent for free. However, remember that you are giving up something valuable in exchange – your financial data. Quite what your bank intends to do with this is not yet clear, but make sure you consider how this might affect you before signing up, and discuss this decision with your accountant if you have one.What support does FreeAgent offer?FreeAgent offers excellent customer service, with help available from UK-based support accountants via phone and email during business hours (9am-5pm Monday to Friday). The website also has lots of resources that explain things like expenses, invoices, and VAT filing. FreeAgent VerdictAs a product, FreeAgent is a great solution for small businesses – it’s got loads of powerful features, and responsive customer support if you get stuck. Getting all this for free as an RBS/Natwest business banking customer is very tempting, but make sure you consider the potential consequences of giving up access to your detailed financial data in return. Wave AccountingPowerful accounting software that’s completely freeHandy receipt scanning mobile appUS/Canada focus limits UK functionalityCloud-based – works on web browser, mobile, and tabletWhat is Wave Accounting?Founded in 2010 in Toronto, Canada, Wave Accounting is powerful, free, cloud-based accounting software that has a great UI and a slick marine design scheme. It makes its money by selling payroll and payments services (alongside display ads), which means its free accounting software is pretty much unlimited in terms of account size etc. All this means Wave Accounting is beloved by US startups, but its US/Canada focus means it’s not an ideal fit for UK small businesses – and some may find it a non-starter for this reason.What can Wave Accounting do?Wave Accounting’s great range of features includes:Tools to create and send professional invoices, even on the goUnlimited income and expense trackingReceipt scanning via an iPhone/Android mobile appCreate and export a range of accounting reportsMulti-currency support with automatic exchange rate calculationsIntegration with ShopifyConnections to PayPal, Shoeboxed, and EtsyA smart dashboard that organises income, expenses, payments, and invoicesAs well as receipt scanning and invoice creation, the mobile app allows you to easily keep track of your accounts on the moveWhy is Wave Accounting free?As mentioned above, Wave Accounting makes its money by displaying ads, and most importantly, by selling payments and payroll services. These services are targeted at US/Canadian customers, with the payroll service being exclusive to those customers. This focus means that, for UK small businesses, Wave Accounting has some significant deficiencies.Most notably, Wave Accounting does not support the new Making Tax Digital (MTD) protocol for VAT, and so it will be of only limited use to businesses that need to register for VAT and file VAT tax returns digitally. Unlike some of the other providers discussed here, it also does not support the automatic importation of bank transactions via open banking, making keeping track of your financial activity a more time consuming process.What support does Wave Accounting offer?Wave offers expert help via its community forum, and you can also ask for technical support via a help function built into the platform. There is no phone support available, however. Wave Accounting VerdictWave Accounting boasts a great range of features, has a stylish look, and there are virtually no usage limits. However, the US/Canadian focus means it won’t suit the needs of all UK small businesses. GnuCashOpen-source desktop accounting softwareCompletely freeBasic featuresDesktop – works on Windows, Mac, and Linux PCsWhat is GnuCash?GnuCash began life in 2001, and is a desktop open-source accounting software. If you’re confused by any of that; desktop means you need to actually download and install it, while open-source means that anyone can download and edit the actual code that makes up the program, in order to add extra functionality and fix errors.This means it’s completely free forever, but it won’t win any awards for its UI, and it’s not particularly tailored to the needs of small businesses (there’s no open banking integration or mobile app, for example). There’s also a bit of a learning curve, and doing your accounts is a more manual and fiddly process than with some of the other software discussed in this piece.What can GnuCash do?GnuCash offers a basic range of accounting features. This includes:A checkbook-style interface that allows you to record transactions via double entry accountingSupport for recurring transactionsGenerated reports that show balance sheets, profit and loss etc.Customer and vendor tracking toolsMultiple currency supportCompatible with QIF files used by some other accounting softwareWhy is GnuCash free?Essentially, GnuCash is made on an entirely voluntary basis, so no one who makes it gets paid at all. The product is then provided free of charge to anyone who wants to use it, and keeps being updated by a dedicated army of volunteer developers. In other words, GnuCash is free because it’s not trying to make money at all – it just wants to help people who can’t afford professional accounting software. If you want to help them out, then you can donate via the GnuCash website, or even volunteer to test new updates.What support does GnuCash offer?GnuCash supports its users through its forums (called Mailing Lists), and an extensive manual and FAQ. There’s also a part of the GnuCash wiki called Using GnuCash, which gives solutions to common issues encountered by real-world GnuCash users. This probably goes without saying, but there’s no phone or email support for GnuCash. GnuCash VerdictComparing GnuCash to some of the other providers on this list feels like weighing up the relative benefits of apples and oranges. They have different objectives, business models, and hugely different functionality. However, if you don’t mind the dated visuals and sometimes fiddly interface, then GnuCash is a great option for no-frills accounting software. It’s also not reliant on an internet connection, so ideal if you often work in remote areas with patchy internet coverage. VT CashbookBasic desktop accounting softwareEasy to usePaid upgrade required for Making Tax Digital VAT returnsDesktop – works on Windows PCsWhat is VT Cashbook?VT Cashbook was released in 2019, but it’s from a company with a strong track record in accounting software. VT Software was founded in 1997, and its professional products (VT Accounts and VT Transaction+) are beloved by accountants, especially small firms that work with small businesses. Cashbook is the starter product – a straightforward, easy to use desktop accounting software that’s perfect for anyone looking for a simple way to keep track of their accounts.What can VT Cashbook do?VT Cashbook offers the following:Fast data entry with autocompleteKeep track of multiple bank/cash accountsBank reconciliations (check your accounts against your bank statements)Produce VAT returns (with paid upgrade)Easily correct mistakesProduce profit and loss accounts, balance sheets, and ledger reportsWhy is VT Cashbook free?As with some of the other software on this list, VT Cashbook is free software with basic functionality that is designed to encourage business owners to upgrade to a more advanced paid version.In this case, VT Software offers two paid options.The cheaper option is VT Transaction+, which costs £75+VAT a year for a single user. This allows users to create and file Making Tax Digital VAT returns, as well as maintain customer and supplier ledgers.The full VT Accounts suite costs £150+VAT per year, and allows users to easily create professional reports for their companies, as well as quickly calculate corporation tax. It also works as a Microsoft Excel plugin, making it attractive for any Excel users that don’t want to learn the nuances of a new program.All VT products come with a 60-day free trial.What support does VT Cashbook offer?VT Software doesn’t offer any dedicated support for its free Cashbook program, with the only assistance given being a detailed user guide available on its website. For the Transaction+ and Accounts programs, support is available by both phone and email (currently email only due to COVID-19 restrictions), with the requirement that the user is either a current subscriber or purchased the software in the last 12 months. VT Cashbook VerdictThere’s a reason professional accountants love VT Software products – they’re simple, they’re easy to use, and you’re not reliant on an internet connection. VT Cashbook is a great way to get started with maintaining company accounts, especially if you don’t want or need the bells, whistles and added complexity associated with some of the cloud-based accounting software services on this list. It also has no usage limits, so you won’t need to pay anything until you need to file VAT returns. How to choose the best free accounting software for your small businessChoosing the right free accounting software for your business is an important decision, and one you should approach carefully. Below are some key things you should consider when comparing providers.Cloud-based vs desktopCloud-based accounting software is all the rage right now, and it’s easy to see why – these services let you work on your accounts from anywhere with an internet connection, on any device you have to hand. This means you can snap a pic of an expenses receipt as soon as it’s handed to you, or digest your profit and loss report during breakfast. However, it’s not the ideal solution for everyone, and anyone who runs a business in an area with limited internet connectivity may find a desktop solution is better suited to their needs.Check with your accountant (if you have one)This should not be the crucial factor in your decision (you’re paying them, after all), but if you do already work with an accountant, then it may be useful to get their input on what software is likely to work best for your business, and which works best with their systems.Choose your compromiseEvery piece of free accounting software discussed in this article has benefits and drawbacks. To work out which one is right for you, you need to decide which of the bad points you can live with. Do you want a basic solution that has no usage limits? A slick cloud-based service that you’ll have to pay for once your business reaches a certain size? Or are you prepared to give your bank access to your accounts in return for a powerful free accounting solution? Regardless of which you choose, chances are you will have to compromise on something – there's a reason this software is free, after all.Take them for a spinThere’s no better way of working out which free accounting software is right for your business than trying them out for yourself. Remember, they’re free, so you can simply sign up/download, put your data in, and see how each feels when you use them day to day. Give each software you're considering a little trial period, and see which one works best in practice. Many of the top paid accounting software providers (see below) also offer free trials, so you can see exactly what the extra outlay will give you in return. The best alternatives to free accounting softwareAs you’ve probably realised by now, the line between free and paid accounting software is blurry to say the least. To help you work out if free accounting software is the best fit for your business, we’re going to take a quick look at four of the most popular paid accountancy software programs on the market:Sage,QuickBooks,FreshBooks, andXeroAll the software discussed below is cloud-based, meaning it works in your web browser, and on your mobile or tablet.For a more comprehensive overview of the different paid accounting packages available, check out our page on the best small business accounting software.QuickBooks OnlineQuickBooks Online comes from another company with a long history in accounting software – Intuit software was founded in 1983, and has grown from its US origins to satisfy users all over the world. The UK is a key market for the company, and QuickBooks Online is cloud-based accounting software that has been specifically designed for UK small businesses.It ticks all the standard boxes – track income and expenses, produce and submit Making Tax Digital VAT returns, create and send invoices, and connect multiple bank accounts – but also has great features like a cash flow planner, and built in integration for Construction Industry Scheme (CIS) deductions. All plans also come with reporting capabilities and 24/7 customer support.Quickbooks Online has three small business plans: 0 out of 0 backward forward Plan Cost FeaturesSimple StartEssentialsPlus£12 per month (excl. VAT)£20 per month£30 per monthSmartScan VAT checkerMileage trackingEstimate creationUp to three usersManage bills and paymentsMulti-currency supportUp to five usersTrack employee time/project profitabilitySpecialised budget/stock management toolsSimple Start costs £12+VAT per month and offers all the features discussed above, as well as mileage tracking, a SmartScan VAT checker that looks for errors on your VAT return, a tool for creating and sending estimates, and a mobile app that allows you to snap receipts on the go and have the important info automatically uploaded into your accounts.Upgrade to an Essentials plan for £20+VAT per month, and you’ll be able to have up to three users, get access to a useful tool for managing bills and payments, and be able to handle multiple currencies.Plus, the top plan, costs £30+VAT a month and adds support for up to five users, tools for tracking employee time and project profitability, as well as specialised budgeting and stock management tools. The last of these comes with low stock alerts, leaving you with one less thing to worry about.Payroll can be added to any of these plans, with the cost depending on whether you need standard or advanced payroll, and how many employees are being paid. This service starts at £4+VAT per month, plus £1 per paid employee per month.At the time of writing, QuickBooks Online is offering 60% off these plans for the first six months. All plans have a 30-day free trial, so you can try it for yourself with no obligation.FreshBooksFreshBooks started way back in 2004, and has been cloud-based since the beginning. From its Toronto home, it has gradually spread worldwide, and has a tailored offering for the UK. All FreshBooks plans include unlimited customised invoices, unlimited expense entries, a tool that helps you create and send Making Tax Digital VAT returns, the ability to accept credit card payments online, open banking integration, unlimited time tracking, unlimited estimates, and specialised tax time reports.There are two FreshBooks plans designed for small businesses: 0 out of 0 backward forward Plan Cost Features LitePlusPremium£11 per month (excl. VAT)£19 per month (excl. VAT)£30 per month (excl. VAT)Send unlimited invoices to up to 5 clientsMTD VAT return filingUnlimited expensesSend unlimited invoices to up to 50 clientsInvite your accountantBank reconciliationSend unlimited invoices to up to 500 clientsTrack project profitabilityAccounts payableCompare Freshbooks plans and find the latest offers Deals & Discounts The Plus plan costs £19+VAT per month and offers all the features discussed above, plus automated recurring invoices, scheduled late fees, automated late payment reminders, and the ability to create client retainers.There’s also a handy feature called ‘Proposals', which helps creative professionals to produce company documents that explain their services or clearly explain their creative plans and associated fees.This plan is limited to 50 billable clients, but FreshBooks makes clear that this limit applies to active and archived clients, and that old clients can be deleted to make space. You will also still see the info for deleted clients, and deleted clients can also be undeleted later.If you have more than 50 clients, then you’ll need the Premium plan. This costs £38+VAT per month, and supports up to 500 billable clients.If you have more than 500 billable clients, then you’ll need to contact FreshBooks directly for a custom solution, with a personal account manager and customised training.On both the plans discussed in detail above, extra users can be added for £7+VAT per person per month, while advanced payments (so you can process cards in person or over the phone) can be added for £15+VAT per month.At the time of writing, FreshBooks is offering 60% off these plans for the first six months, and all plans have a 30-day free trial so you can try FreshBooks for yourself.XeroXero began in 2006 in Wellington, New Zealand, and has now expanded all over the world, including three UK offices (in London, Manchester, and Milton Keynes). As this presence indicates, the UK is a key market for Xero, and its cloud-based accounting services are used by over half a million UK businesses.The features offered by Xero are comprehensive, including open banking integration, tools to create and send invoices, inventory management, a customisable dashboard that shows you at a glance how your business is doing, Making Tax Digital VAT returns submission, automatic Construction Industry Scheme (CIS) calculations/reports, and a mobile app that lets you tackle your accounts on the go.24/7 online support is also included, with Xero noting that whenever you’re working, their global presence means someone will always be available to help.While it costs extra (see below), Xero also has a sophisticated payroll service that, for example, has already added functionality that makes it easy to correctly process furloughed and self-isolating employees.Xero offers three plans for UK small businesses. 0 out of 0 backward forward Plan Cost FeaturesStarterStandardPremium£10 per month£24 per month£30 per monthMaking Tax Digital VAT returnsOpen banking integrationStrict usage limitsSame features as StarterNo usage limitesSame features as Starter & StandardMulti-currency supportThe Starter plan costs £10+VAT per month, and comes with all the features discussed above. There are, however, some pretty strict usage limits – businesses on the Starter plan are only able to send 20 invoices/quotes per month, and enter 5 bills per month.The Standard plan costs £24+VAT per month, and removes all of these limits. This makes it a great fit for growing businesses.Finally, the Premium plan costs £30+VAT per month, and adds support for multiple currencies.As well as payroll, a number of optional extra services can be added to any of the plans above. These are discussed below:Xero payroll – £5+VAT per month (up to 5 employees), £1+VAT per month for each additional employeeXero expenses – £2.50+VAT per month, plus £2.50+VAT per month for each additional active userXero projects – £5+VAT per month, plus £5+VAT per month for each additional active userXero Construction Industry Scheme (CIS) contractor – £5+VAT per month (allows users to submit CIS returns from Xero)All Xero plans come with a 30-day free trial.Sage Business Cloud AccountingSage is a UK company that has been producing accounting software for the best part of four decades. Founded in 1981, its latest offering – Sage Business Cloud Accounting – is a cloud-based accounting solution that’s perfect for businesses large, small, and anywhere in between.Alongside everything you’d expect from cloud-based accounting software in 2020 – including open banking integration, invoice creation, and Making Tax Digital VAT returns – Sage Business Cloud Accounting includes award-winning customer service. This is available 24/7 via phone and live chat, and vital for all those small business owners whose working hours frequently stretch beyond the standard 9 to 5 (and that’s most of you, in our experience).The price depends on which Sage Business Cloud Accounting package you select.The cheapest package, Accounting Start, costs £12+VAT per month and is designed for sole traders. It offers entry-level accounting software that lets you (amongst other things) create sales invoices, track what you’re owed, connect your bank account, and submit VAT returns. You’ll also get the mobile app for working on the go, plus 24/7 support.Accounting Standard is aimed at small businesses, and costs £24+VAT per month. For this extra outlay, you get advanced reporting capabilities, support for unlimited users, cash flow statements, and the ability to record purchase invoices.Billed as advanced accounting software for small businesses, Accounting Plus is the top package. For £30+VAT a month, you get everything in the two packages discussed above, plus support for multiple currencies and inventory management (which can make a real difference to anyone running a retail business).Payroll services can be added to any of these packages for an extra fee (from £7+VAT per month, depending on the number of employees).At the time of writing, Sage is offering 3 months free on all its Business Cloud Accounting packages, as well as a 30-day free trial so you can see if it’s right for your business. Final thoughtsChoosing the right accounting software for your business is an important decision, and one you should consider carefully. Finding a solution that fits you and your business could save you countless hours of stressful and time-consuming admin, freeing you up to do what you do best – run your business.Free accounting software is hugely attractive to UK small businesses, especially those that are just starting out. However, as this piece has explained, all free accounting software comes with compromises, so you have to think about which of these you can live with.Moreover, you don’t want your small business to stay small forever, and chances are you’ll have to move to paid accounting software at some point. If you can afford it, finding a paid solution that will grow with your business could make this whole process much easier.Finally, all the options discussed on this page are either free or offer a 30-day free trial, so be sure to make use of these options. It’s only by actually using the software that you’ll be able to work out which is right for you, which compromises are tolerable, and which extra features are really worth paying for.Good luck! Startups.co.uk is reader-supported. If you make a purchase through the links on our site, we may earn a commission from the retailers of the products we have reviewed. This helps Startups.co.uk to provide free advice and reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews. Share this post facebook twitter linkedin Tags Topic spotlight Alec Hawley Alec is Startups’ resident expert on politics and finance. He’s provided live updates on the budget, written guides on investing and property development, and demystified topics like corporation tax, accounting software, and invoice discounting. Before joining, he worked in the media for over a decade, conducting media analysis at Kantar Media and YouGov, and writing a wide variety of freelance pieces.