Accounting software is a must-have for small business owners. Not only does it simplify the process of invoicing clients, it provides an at-a-glance overview of your cash flow, and makes it easier to complete your tax returns. But which software is right for you?

In this short guide, we share our top five accounting programmes that are perfect for startup businesses. Each has pros and cons that we’ve collated from a series of reviews online to help you make the right choice for your business.

Choosing the right accounting software for your small business

There are many great easy-to-use accounting software options available for new or small businesses, so be sure to conduct some thorough research before choosing one.

Do you just need a free app with minimal features or are you willing to pay for something with more functionality? Are you always on the move and need a brilliant mobile app, or will you mostly be working from your laptop?

Whether you’re seasoned in accounting or it’s all new to you, ensure that the features outlined will certainly meet the needs of your specific business, and that it will also provide the assistance you need to keep your books in good shape!

Free accounting software for small businesses

Startups are often cost-conscious and paying for an accounting app might not seem worth the expense. As startup experts, we've got two things to say about that:

  1. The right accounting software will more than pay for itself in the time it saves you (no more struggling with spreadsheets!)
  2. Some banks offer free accounting software! NatWest, for example, include FreeAgent in their package

Our top five accounting softwares for startup businesses

1)  Xero

Xero is a quality, cloud-based piece of accounting software that assists with invoicing, payroll, inventory, expense claims, and even submitting VAT to HMRC. It’s super easy to use and you can access your business finances anytime, anywhere, so long as you have an internet-connected device to do so. You can check your cash flow while on the go, share with  key stakeholders and it integrates with more than 500 apps to help you streamline your business processes.

Pros:

  • Low cost
  • Making Tax Digital ready
  • Connect your bank for live cash flow
  • Create online invoices & secure payments quickly
  • Pay bills and manage your own business spend
  • Pay staff & pension contributions quickly and easily
  • Run your business from anywhere
  • Free 30 day trial
  • 50% off for start-up businesses with an annual turnover of up to £50,000

Cons:

  • Requirement to pay extra for further functionalities
  • No time billing function available
  • Not all reports update frequently to latest formats
  • Basic setup guidance

2) Sage One 

Sage One small business accounting software offers help with quotes, estimates, invoices and statements, has an easy system to track what you’re owed and provides reports and insights so you can fully monitor the financial state of your business, from anywhere if you have an internet-connected device. You can connect your bank, and data flows in automatically giving you an up-to-date view of your accounts. It helps with forecasting too, enabling you to plan ahead for how much money your business will need in the future.

Pros:

  • Invoicing and expenses apps
  • Making Tax Digital ready
  • Good setup tools to help you get started
  • Automated sales tax rates
  • Multiple currency support
  • Multiple packages to suit the specific needs of your business
  • Free 30 day trial

Cons:

  • Accounting & payroll are separate features
  • Dated user interface / navigation
  • Basic reports with little scope to customise
  • No time billing function available as of yet
  • No add ons / app integration

3) Kashflow 

Kashflow is a great tool that helps with all aspects of accounting, from bookkeeping to payroll, and it even has an HR tool that could be useful if your new business will be hiring employees, enabling you to keep processes streamlined in one tool. It helps with quoting, invoicing, payment reminders and provides a full view of your finances, on the go, 24/7. It offers reports that are easy to understand and you can link your bank accounts to keep track of all your business finances in one platform.

Pros:

  • Clear user interface
  • Making Tax Digital ready
  • Setup takes just minutes
  • Mobile device friendly
  • Automated invoicing
  • Functionality to integrate with other apps
  • Easy for new, small businesses to use

Cons:

  • 12 month contract with 3 month notice period
  • Not as low cost as alternatives
  • Email-only support
  • Limited forecasting features
  • Clunky reporting function

4) FreeAgent

FreeAgent is a great tool for both entrepreneurs just starting out, and those who are perhaps a little more established. This is because this software allow you to invite an accountant to collaborate on your accounts with you, and even has a database of recommended accountants should you ever need to find one. The tool assists with invoicing, time tracking, payroll, banking, expenses, estimates and projects, helping you to combine all aspects of your business in one easy to use platform.

Pros:

  • Making Tax Digital ready
  • Free 30 day trial
  • Use by yourself as a business owner or invite an accountant
  • UK-based support accountants available via live chat, phone and email
  • Dashboard that gives you a clear overview of your whole business
  • Automatic tax forecasts and reminders
  • Currently 50% off for the first 6 months

Cons:

  • Limited connectivity with external payment account providers
  • Limited connectivity with ecommerce sites
  • User interface could be improved
  • Limited add-ons and integrations
  • Limited reporting function
  • Additional cost for the mobile app alongside monthly subscription

5) QuickBooks

Quickbooks is a great tool that enables you to seamlessly transition to their software with easy importing of spreadsheets. It has multiple plans for you to choose from to best suit your business and each of these are very affordable. Even the most ‘basic’ plan is very comprehensive and the tool enables you to track income and expenses, send unlimited invoices, automatically chase late payments, store receipts easily, connect multiple bank accounts for a full overview of your business finances and you can run multiple reports too.

Quickbooks also integrates with several apps that you likely utilise frequently, like PayPal and GoCardless, for example.

Pros:

  • Free mobile app
  • Free UK phone support
  • Comprehensive, easy to understand reports
  • Reports can be customised
  • Flexible contact records
  • Comprehensive payroll support
  • Lots of integrations
  • Free 30 day trial
  • Making Tax Digital ready
  • Very low cost self-employed plan

Cons:

  • Limitation on the amount of users
  • Payroll functionality charged as an extra
  • Limited inventory tracking
  • Upgrade fees to access the latest software updates, although updates are usually just once a year
  • Although multiple plans are available, some features are better suited to larger businesses

As startup experts, Transmit Startups have partnered with a number of businesses to provide special offers on products we think will benefit small business owners. For deals on accounting software and more, take a look at our Marketplace.