The Best Self-Employed Accounting Software For UK Businesses

The Best Self-Employed Accounting Software For UK Businesses
Accounting has to be one of the most hated and feared parts of any business. But sadly, there’s no escaping it. It’s completely essential that your accounts are up to date, accurate and submitted on time. 

If you don’t, your business could face dire consequences. In fact, you can be fined £100 if your tax return is late. The later it is, the more you’ll pay. And of course, you’ll also be charged interest on those late payments. 

It’s a mess you don’t want to get yourself into. Which is where accounting software comes in to help out. 

In this guide, you’ll discover why you need this software, what accounts you need to keep and the top 5 programmes to use for self-employed businesses in the UK. What are you waiting for? Let’s jump in. 

What accounts do self-employed businesses need to keep? 

First up in this exciting guide to accounting software, we need to stress why this is important. So, let’s start with the records that self-employed businesses like yours need to (and should be!) keeping. 

First of all, not every report is going to be looked at. But you need to keep a hold of them to accurately calculate your profits or loss for all tax returns and paperwork you’ll be completing. 

And trust me, if there’s anything you’ll have to do as a business, it’s paperwork. 

But once you’ve calculated this, don’t get rid of your documents. You need to keep hold of them for at least 5 years after submitting your return – and could be asked to hand them over to the HMRC at any given time. 

This includes: 

  • All receipts for goods and stock
  • Bank statements, chequebook stubs
  • Sales invoices, till rolls and bank slips

As taken from the HMRC website, your tax return will also include information such as: 

  • What you’re owed but have not received yet
  • What you’ve committed to spend but have not paid out yet, for example, you’ve received an invoice but have not paid it yet
  • The value of stock and work in progress at the end of your accounting period
  • Your year-end bank balances
  • How much you’ve invested in the business in the year
  • How much money you’ve taken out for your own use

Now, that’s a lot of paperwork to keep a track of. Which brings us nicely onto the next section… 

Why do you need accounting software?

Accounting Software

Okay first things first, you don’t technically need accounting software. You’re fully capable of keeping records and your books by yourself. And if you need a hand, we’ve put together a few tips on bookkeeping for beginners that you can read here. 

But there are a number of benefits for businesses using an online bookkeeping service or accounting software. And you’ve guessed it, we’re about to list some of them for you. 

1. Better accuracy 

Let’s face it, humans are not perfect. Mistakes happen and it can only take one tiny lapse of concentration to write a 3 instead of an 8. 

But when it comes to your accounting, there can be no mistakes. You need to submit the right information, end of. This cannot be guaranteed if you’re doing this by hand – which is where accounting software can come in to help. 

2. Save time

Time is the most valuable asset that any business can have. So why waste hours of your time completing your accounting when software can complete calculations in milliseconds and do the job in a fraction of the time?

That’s hours that you could be spent getting in new customers, planning your strategy or even taking a well-deserved tea break. 

3. Reduce overall costs 

It may seem like investing in accounting software will increase your overheads, but you’ve got to think of the bigger picture. 

Greater speed will save your business valuable time that can be used to generate more income for your profit. In addition, greater accuracy will reduce the chances of any fines or time spent rechecking and recalculating your accounts. 

4. It gives you easier insights

It’s no secret that accounting isn’t the easiest subject in the world. You may understand the basics of bookkeeping and keep accurate records – but be honest here, do you do anything with this information? 

If you allow me to be frank,  I’ll assume that once these records are complete they’re stored away to forget about. Now, that’s no good. 

With accounting software, you can generate reports that give you a complete overview of how your business is performing. It can help you identify any expensive overheads that you might be able to cut, helping you boost your profits and grow your business even more. 

5. It’s so much easier 

You may have gathered this point from the others but it’s worth stressing. Using accounting software is so much easier than doing it all yourself. This is particularly true if you’re self-employed as you’ve got everything else to do already. 

So, give yourself a break and reduce the tax filling frustration with accounting software. 

What is the best accounting software for self-employed businesses?

Now we’ve covered why you need one, let’s talk about which accounting software you should be on the lookout for. 

We’ve recently reviewed our top 5 performing programmes, but dive in to discover the good, the bad and if they’re worth it for self-employed businesses like yourself. 

Accounting SoftwareCheapest PackageEase Of UseOur RatingReviewOfficial Site
Quickbooks Reviews£12/moExcellent
9.4
Read ReviewVisit Website
FreeAgent Reviews£19/moExcellent
9.3
Read ReviewVisit Website
Sage 50Cloud Reviews£20/moAverage
9.1
Read ReviewVisit Website
Xero Reviews£10/moGood
9.1
Read ReviewVisit Website
Kashflow Reviews£8/moGood
8.6
Read ReviewVisit Website
Clearbooks Reviews£10/moPoor
8.5
Read ReviewVisit Website

#1 Quickbooks (Our Rating = 94%)

Quickbooks

Quickbooks reached the top of our ratings by being one of the best all-round accounting software systems out there. 

And luckily for you, Quickbooks was designed with small businesses in mind. So if you’re self-employed or a sole trader, this platform has all the features you need to do your accounting.  

It allows you to generate and track invoices, organise and keep a record of all your cash flow and expenses. If you connect your bank account, it will automatically pull your transactions from there too, limiting the amount of manual labour you actually have to do. 

Even better, Quickbooks is able able to automatically generate your tax returns. Now, that’s a load of your mind if you’re self-employed. 

It’s also very cost-effective, with packages starting from just £12 a month. But you can try it for free with their 30-day trial. For more information, see our detailed Quickbooks review. 

#2 FreeAgent (Our Rating = 93%)

FreeAgent Review

Full disclosure, FreeAgent is the software that we use here at Business4Beginners. But there is a reason for that. It’s simple to use and one of the easiest software out there to get to grips with – particularly for anyone that’s self-employed with no previous experience. 

It’s got some great features that help with: 

  • Estimates and invoices
  • Expenses, with the ability for you to store photos of your receipts 
  • Time tracking, allowing you more accurate ways to invoice for your work 
  • Self-assessment tax returns 
  • VAT or any corporation tax

However, it’s worth pointing out that it’s not the most advanced software out there. But It’s got more than enough features for most self-employed businesses. You can find out more in our full FreeAgent review.

FreeAgent aren’t the cheapest option on the market with prices starting from £19 a month. But if you use our FreeAgent referral code, you can save 10% on you subscription for life. Now, that price is much better. 

#3 Xero (Our Rating = 91%)

Xero Review

When it comes to accounting software, Xero is a powerhouse. 

As we mentioned in our full Xero review, Xero one of the few companies that offer a version of their app on the apple watch. No matter where you are or what device, if you’ve got an internet connection you can access it. Now, that’s accounting on the go. 

However, this software was developed to mostly cater to medium and large businesses – not the self-employed. As a result, some of the features and interface is a little complicated and just won’t be needed. 

With prices starting from just £10 a month, they are relatively cost-effective software to use even if you don’t use these features. 

#4 KashFlow (Our Rating = 86%)

KashFlow Review

As previously covered in our KashFlow review, KashFlow is aimed at small and growing businesses. This means it’s easy to use and comes with a range of intuitive features that are suited to self-employed businesses. 

This includes invoicing, expenses, a full view of your finances, VAT returns and a handy mobile app to take a look at all of this on the go. In addition, they also have a whole host of free business guides on their website that you can access at any time. 

Here’s another bonus. KashFlow is one of the cheapest on the market, with prices starting from just £8 a month. But you don’t need to make up your mind straight away. If you register on their website, you’ll also be offered a massive 4-month free trial. 

#5 Clear Books (Our Rating = 85%)

Clear Books Review

Clear Books is an HMRC reconsigned software that’s also designed for small businesses. 

It’s got similar features to the other platforms, with one clear twist. As we mentioned in our Clear Books review, Clear Books also claims that you will be Making Tax Digital (MTD) compliant automatically by using their service. This is useful for any self-employed business who plan on growing larger over the coming years. 

Like Xero, Clear Books will also cost you £10 a month. This is the good part. 

The bad part? Clear Books is not easy to use. If this is your first piece of software, we’d recommend staying away. It’s just too much effort for you to get your head around and a steep learning curve to tackle. 

Find your perfect accounting software

Using the above reviews, you should have a great starting point to find the best self-employed accounting software for UK businesses. 

But take these accounting software reviews with a pinch of salt. This is a guide and the ratings are based on the overall performance of the software, not just how easy they are for self-employed businesses to use. 

Most of these platforms will offer a free trial. So get the software, use it and see what is easy to use for your business. Test the features for yourself and see if it makes your accounts and bookkeeping a whole lot easier. 

There’s nothing stopping you. 

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