What is the best online accounting software for small business?

13 min Read Published: 05 Feb 2021

What is the best online accounting software for small business?With so many accounting software platforms to choose from and so many different levels of subscription on offer, choosing the best online accounting software for your business can be a tricky process. In this article, we take a look at the best online accounting software platforms in the UK and reveal the best based on a number of factors including cost, ease of use and customer service.

How does online business accounting software work?

Online accounting software can help automate and simplify your business finances. Your business bank account and credit cards can be connected and daily transactions can be automatically reconciled. Depending on the subscription package you choose, you'll be able to create and send invoices, submit VAT returns, capture bills and receipts as well as produce detailed reports on cashflow and profit and loss. Subscription plans are flexible, meaning you can easily upgrade and downgrade your subscription and there are no contracts or cancellation fees for most accounting platforms.

What accounting and bookkeeping software should you use?

Think about how your business is set up and how you plan to grow your business over time. What are your priorities and are there any must-have features? If you have an accountant it would be worth speaking to them to see if they are familiar with any particular business accounting software as this could be a key part of the decision making process. You should take all of this into consideration when considering which accounting software is best for your business. Read on for more guidance on selecting the best accounting package for your business.

Things to consider before buying online accounting software for your business

Below we've provided a list of questions you should ask before settling on an online accounting package for your business. It is essential to ask these questions before going any further as it will help to formulate a list of priorities and ensure that you end up buying the best online accounting package for you and your business.

How competent are you with business accounting?

If this is your first time dealing with business accounting then you should pick an online accounting software package that has a good reputation for simplicity and ease of use.

How much can you afford to pay for online accounting software for your business?

If you have just started out then you'll want to keep costs low. There are a number of accounting software platforms that offer free trials and there are some that are even free to use.

How quickly is your business growing?

If your business is growing you may find that you need to upgrade the business accounting software package you have and so it is worth researching whether the software you are interested in can allow for upgrades. It is also worth investigating how easy it is to upgrade a package and how much it will cost.

How many people will need access to the software?

This is an important consideration as some accounting software platforms restrict the number of users and may charge you more depending on the number of people who need access to the software.

Do you need to pay staff or will you need to in the future?

Most online accounting platforms do not provide a payroll solution as part of the standard monthly plan and so you will likely have to purchase an add-on. It is important to consider whether the online accounting platform you choose has a payroll option and how much it is likely to cost. If you have an accountant, give them a call and ask whether they can provide payroll facilities for your business as it may work out easier and cheaper in the long run.

Online business accounting software cost & features comparison

Every online accounting software platform is different and so it is impossible to definitively say which is best, especially as every business will have a different set of priorities. Most accounting software platforms offer three levels of subscription, which can be broadly defined as basic, intermediate and premium. We have tried to make the process of shopping around a little easier by looking at four of the most popular business accounting platforms. We compare the costs, features and customer ratings for different accountancy software. Later in this article, we highlight the best software for different scenarios.

Online business accounting software cost comparison

In the table below we have compared each of the three pricing plans offered by Freshbooks, Quickbooks, Sage and Xero. All four of the online accounting platforms offer either a free trial period or a discounted offer for new customers.

Online accounting software - cost comparison

Freshbooks Quickbooks Sage Xero
Basic Package £11 £12 £12 £10
Intermediate Package £19 £20 £24 £24
Premium Package £30 £30 £30 £30

If you are self-employed, a freelancer or if you are in the very early stages of setting up your business then you may want to consider one of the free accounting software platforms such as Wave. It is worth noting that the features will be limited and you'll need to pay to access payroll and payment processing. There is nothing wrong with starting off using a free accounting platform such as Wave before migrating to an alternative platform when the time is appropriate.

Online business accounting software features comparison

To make it easier to compare the top online accounting software platforms we have created a features comparison table below. The table lists a number of features and provides a quick guide as to whether that feature is available on that platform and at what subscription level. If the feature isn't supported you will see 'N/A' displayed. If there is an additional cost for a feature then the cost is displayed.

Online accounting software - features and subscription package comparison

Freshbooks Quickbooks Sage Xero
Cloud-based accounting Basic Basic Basic Basic
Connect multiple banks and credit cards Basic Basic Basic Basic
Capture bills and receipts Basic Basic Intermediate Basic
Unlimited invoices to 100+ clients Premium Basic Basic Intermediate
Calculate and submit VAT returns Basic Basic Basic Basic
Unlimited users Basic N/A Intermediate Basic
Telephone support Premium Basic Basic N/A
Self-assessment preparation N/A Basic N/A N/A
Multiple currencies Basic Intermediate Premium Premium
Mileage tracking Basic Basic Basic N/A
Submit CIS returns N/A Basic Intermediate £5 per month
Payroll N/A £4 or £8 per month £7 per month £5 per month

Online business accounting software reviews comparison

Below is a summary of the review scores received on independent review site Trustpilot for Freshbooks, Quickbooks, Sage and Xero. The figures were correct at the time of writing.

Online accounting software - review comparison

Freshbooks Quickbooks Sage Xero
Number of reviews 314 6,514 12,781 2,858
Rating Poor Excellent Excellent Great
Score 2.1 out of 5.0 4.6 out of 5.0 4.7 out of 5.0 4.2 out of 5.0

Best online accounting software for small business

Below we list the best accounting software, in our view, for different scenarios:

Best online accounting software for overall value

Winner: Quickbooks

The basic subscription package offered by Quickbooks represents great value as it includes a number of features that rival platforms charge extra for.

Runner Up: Xero

The basic subscription package offered by Xero is the cheapest of the four accounting software platforms that we have reviewed. It is good value for small businesses that require a simple accounting solution.

Best online accounting software for ease of use

Winner: Freshbooks

Freshbooks is designed for simplicity with easy to navigate menus and well thought out design. Freshbooks is good for those looking for an accounting software platform that can be set up quickly and easily, without the need to spend hours completing tutorials.

Runner Up: Xero

Xero has a clear dashboard that is easy to set up and navigate.

Best online accounting software for invoicing

Winner: Quickbooks

Quickbooks allows users to send unlimited invoices on its basic accounting package. Invoicing is simple to set up and each invoice can be 'pay-enabled' meaning they can be settled directly from the invoice.

Runner Up: Freshbooks

Freshbooks offers the best experience in terms of invoice customisation. The one thing that lets it down is that it only allows you to send invoices to up to 5 customers on its basic accounting package

Best online accounting software for payroll

Winner: Xero

Xero provides an all-in-one payroll solution for £5 per month, plus £1 per employee per month. The software is easy to set up and simple to use.

Runner Up: Quickbooks

Quickbooks offers two payroll options priced at £4 or £8 per month. There is also an additional charge of £1 per employee per month. The £8 per month option provides users with access to advanced payroll features such as multiple pay schedules and detailed reporting.

Best online accounting software for telephone support and customer service

Winner: Sage

Sage has been providing business accounting software since 1981 and has over 13,000 employees in 23 countries across the world. It is well known for providing excellent levels of customer support. Telephone lines are open from 8.30am to 6.00pm, Monday to Friday.

Runner Up: Quickbooks

Quickbooks has a strong reputation when it comes to customer support and it is included with all subscription levels. Telephone lines are open from 8.00am to 7.00pm, Monday to Friday.

Summary

Finding the right business accounting software platform for your business is important and so it is worth taking the time to explore the features on offer and any additional costs that could be incurred. Work out a list of priorities and make sure that the accounting platform you choose has a good reputation for completing those tasks competently. Ask around and see what other people are using and read the reviews on independent review sites such as Trustpilot to get an understanding of the pros and cons of each platform. Feel free to read our in-depth reviews of Xero and Quickbooks, just click on the links to read more about the features on offer. Finally, speak to your accountant as they may have some knowledge and experience of using various online accounting platforms and so may be able to help guide you.