Small business accounting software: how to choose

What accounting software does

Accounting software records every money movement in your business and turns it into useful reports. Core features include invoicing customers, recording bills and expenses, importing bank transactions, reconciling accounts, and producing profit and loss and balance sheet reports. Many packages also handle sales tax or VAT returns, payroll, inventory and project tracking.

The main options

• QuickBooks Online (Intuit) — widely used in the US, UK, Canada and Australia, with a large app ecosystem. Check current price
• Xero — founded in New Zealand, popular with accountants in the UK, Australia and NZ. Check current price
• FreshBooks — founded in Canada, strong for invoicing and time tracking for service businesses. Check current price
• Wave — Canadian, aimed at very small businesses in the US and Canada with free core features. Check current price
• FreeAgent — UK-based, designed for sole traders, freelancers and small limited companies. Check current price
• Sage Accounting — from Sage, a long-established UK software company. Check current price

See the full comparison table and picks by country.

Choosing by country

• UK: VAT-registered businesses must use software compatible with Making Tax Digital (MTD) for VAT. HMRC lists compatible software on GOV.UK. FreeAgent, Xero, QuickBooks and Sage are common choices.
• US: look at sales tax support across states and integration with your payroll provider. QuickBooks, FreshBooks, Wave and Xero are common.
• Canada: check GST/HST (and PST/QST where relevant) handling. QuickBooks, Wave, FreshBooks and Xero are common.
• Australia/NZ: check GST and BAS (Australia) or GST returns (NZ) support. Xero and QuickBooks are widely used.

Features that matter most

• Bank feeds for automatic transaction import.
• Invoicing with online payments and reminders.
• Tax returns filed or prepared from within the software.
• Receipt capture via mobile app.
• Accountant access and multi-user permissions.
• Integrations with e-commerce, payments, CRM and payroll.
• Reporting including cash flow and profit by project or customer.

Understanding costs

Most accounting software is sold as a monthly subscription, with tiers that unlock more users, features or transactions. Promotions are common for new customers, and payroll or extra users may cost more. Because prices change frequently and vary by country, we do not quote them — use our cost calculator to compare the real yearly cost with prices you find today.

Mistakes to avoid when choosing software

• Choosing on promotional price alone — check the ongoing price after any introductory period.
• Paying for features you will not use in the next year.
• Ignoring what your accountant uses and supports.
• Skipping the trial and committing on a demo video.
• Forgetting add-on costs such as payroll, extra users or premium integrations.
• Not checking that your bank and payment providers integrate properly.

Questions to ask on a free trial

• Can I connect my business bank account, and how reliable is the feed?
• How quickly can I create and send a branded invoice?
• Does it handle my sales tax, VAT or GST correctly for my country?
• Can my accountant log in, and do they like it?
• Is the mobile app good enough for receipts on the go?
• How easy is it to export all my data if I leave?
• What does support look like — chat, email, phone, community?

Industry-specific needs

Some businesses need more than core accounting. Retailers and e-commerce sellers need inventory tracking and integrations with their shop or point of sale. Trades and agencies often need job or project costing to see profit per job. Businesses trading abroad need multi-currency invoicing and bank accounts. Check that the tier you are considering includes these features — they are often reserved for higher plans or delivered through add-ons.

Thinking about the next three years

Choose for where your business is heading, not just where it is today. If you plan to employ staff, sell online or take on investment, a package that scales with payroll, inventory and multi-user permissions may save a painful migration later.

Our recommendation

Shortlist two products that support your country and suit your business type, ask your accountant for their view, and run free trials with real transactions. Choose the one you find easiest to use every week — consistency matters more than features you will never touch. Take the chooser quiz for a quick suggestion.

Frequently asked questions