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Managing finances is a critical aspect of running a small business. Fortunately, the top accounting software for small businesses makes it easier to stay on top of invoices, taxes, and cash flow. For small businesses, it’s essential to choose a tool that meets local regulations, including Making Tax Digital (MTD) compliance. Here are five of the best accounting software options for small businesses in 2025.
1. Xero
Xero is one of the most popular accounting software options globally, and it’s well-suited to small businesses. This cloud-based platform offers robust features for managing invoices, reconciling bank accounts, tracking expenses, and handling payroll.
Key Features:
- MTD-compliant VAT submissions.
- Integration with over 1,000 third-party apps.
- Real-time bank feeds for effortless reconciliation.
- Inventory management and project tracking tools.
Xero’s mobile app allows business owners to stay in control while on the go. Additionally, its user-friendly interface and excellent customer support make it a go-to choice for small businesses.
Recent updates include enhanced cash flow forecasting tools and the ability to manage multiple currencies, which is perfect for businesses with international transactions.
2. Sage Business Cloud Accounting
Sage Business Cloud Accounting is a trusted name in the accounting software market. It offers a seamless solution for small and medium-sized businesses to manage their financial operations.
Key Features:
- Automated bank feeds and reconciliation.
- Tools for creating and sending professional invoices.
- Payroll processing and VAT submission.
- Customisable reporting options.
Sage is ideal for businesses seeking a comprehensive solution with strong compliance tools. Its AI-powered features, including financial forecasting, streamline operations, saving business owners valuable time.
3. QuickBooks Online
QuickBooks Online is another leading choice for small businesses. Developed by Intuit, it provides an all-in-one accounting solution with a focus on ease of use and scalability.
Key Features:
- Customisable invoices and expense tracking.
- MTD-compliant VAT submission capabilities.
- Integration with popular tools like PayPal and Shopify.
- Employee time tracking and payroll management.
QuickBooks is ideal for growing businesses, as it offers a range of pricing tiers to suit different needs. Its intuitive dashboard provides a clear view of cash flow, profit, and expenses, helping business owners make informed decisions.
4. ANNA Money
ANNA Money is a newcomer in the accounting software space, but it’s quickly gained traction among freelancers and small businesses.
Key Features:
- AI-powered bookkeeping for managing invoices and expenses.
- Integrated business banking account.
- MTD-compliant tax management.
- Real-time notifications for business transactions.
ANNA Money is designed to simplify admin tasks, making it an excellent choice for sole traders and small business owners who need to save time on day-to-day accounting.
5. Free Agent
FreeAgent is tailored for freelancers, contractors, and small businesses. It’s designed to simplify the complexities of accounting with an easy-to-use platform.
Key Features:
- Automatic expense categorisation.
- Invoice tracking and reminders for late payments.
- MTD-compliant VAT submissions and tax filing.
- Built-in time tracking for projects.
FreeAgent integrates with popular banks and offers a dedicated app, making it an excellent choice for mobile business owners. Its focus on simplicity is ideal for those without prior accounting experience.
An Overview of the 5 Top Accounting Software for Small Business
When it comes to accounting software for small businesses, there is no one-size-fits-all solution. Each of the options above offers unique features that cater to specific business needs.
- Xero is the best all-rounder for its scalability and rich integrations.
- Sage Business Cloud Accounting provides excellent compliance and automation tools.
- QuickBooks Online is perfect for businesses seeking flexibility and growth.
- ANNA Money excels in AI-driven bookkeeping for small operations.
- FreeAgent stands out for freelancers and contractors.
Consider your business’s size, goals, and budget when choosing the right software. Investing in the right accounting tool will streamline your operations and save time, allowing you to focus on what matters most: growing your business.