The Best Accounting Software for UK Small Businesses in 2025

With Making Tax Digital now firmly in place, cloud accounting software is becoming almost essential for even the smallest of businesses.

Choosing the right accounting software for your business can seem like a daunting task so each year we like to highlight what in our opinion are the best options depending on your business size and stage.

Making Tax Digital needs to be considered even if your business is a side hustle and you have no intention of exceeding the £50k threshold in the next twelve months but the question at this size is,

Do you even need accounting software?

Short answer is No, in theory you can use simple spreadsheets and then a basic bridging software solution such as 123 Sheets to submit MTD returns if and when required to do so in the future. Depending on your spreadsheet skills this is probably the cheapest solution available to you. 

For simple businesses that do not require complex accounting such as a B2B service based businesses QuickBooks remains the best option, especially for founders who don’t have an in-house bookkeeper or finance background.

Why we rate it No.1:

• ✅ Clear bank reconciliation process – this is a key feature that Xero oddly still lacks, and it’s essential for accuracy and peace of mind
• ✅ User-friendly interface – ideal for business owners trying to get hands-on without needing an accounting degree
• ✅ Affordable pricing – scalable packages that make sense for companies in the £100k–£500k turnover range
• ✅ MTD-ready and HMRC-recognised
• ✅ Excellent support and integrations – particularly strong with payment providers and expense tools

If you're new to cloud accounting, QuickBooks is typically easier to learn and we offer full setup and training as part of our start-up incubator service.

Xero dominates this market but for all its strengths, and despite our requests, it still lacks a defined bank reconciliation feature a surprising omission in 2025.

It’s more expensive and harder to pick-up without some understanding of accounting.  It’s generally aimed therefore at larger businesses who might have an internal or external bookkeeper. 

Good for:

• Larger businesses
• Companies with a finance team or dedicated bookkeeper
• Integration with apps like Dext, Hubdoc, or project tracking tools

We continue to support Xero users via our Virtual Finance Office service, especially where it's already embedded in the business. 

What About Sage, FreeAgent or Zoho?

SageOne’s rocky launch years ago unfortunately knocked confidence among small businesses and while they’ve improved, we rarely see Sage used successfully in this sector.

FreeAgent is often bundled with bank accounts, but it’s limited in features. Zoho Books is solid but lacks the UK-specific support and market presence.

Put simply: QuickBooks and Xero have won the race, the others are either niche, legacy, or lagging behind.

One of the most common mistakes we see is untrained business owners trying to run their accounts solo.  Often this leads to nothing but frustration as the software is used incorrectly and fails to deliver any actionable insight for the business owner. 

Even the best software can’t spot a mis-coded transaction. But combined with the right training or support, tools like QuickBooks can transform how you run your business and manage your tax.

That’s where we come in. We help UK-based professional service businesses choose, set up, and manage the right software for their needs.

• ✅ QuickBooks setup, training and support
• ✅ Ongoing bookkeeping and compliance
• ✅ Virtual Finance Office for growing businesses
• ✅ Support for Xero users who prefer to stick with it

If you're not sure which platform is right for you or you're struggling to get the most out of your current setup we’re happy to help.