Choosing Accounting Software For Small Businesses: What Do You Need?

Accounting software has become somewhat obligatory due to Making Tax Digital (MTD). 

If you’re VAT registered, you already need proper software. And from April 2026, if you’re self-employed or a landlord earning over £50,000, you’ll need it for Income Tax Self Assessment too. That’s set to catch everyone earning over £20,000 over the next few years. 

But compliance aside, accounting software is the way to take better control over your business finances.

The question is, what do you need to look for? This guide helps you choose the best accounting software for small businesses.

Your Options

There are four big names that dominate the market. You’ve probably heard of most of them.

These four are constantly recommended because they work, are well-supported, are MTD-compliant, and most accountants already know them.

There are also some solid alternatives worth knowing about:

• Zoho Books – Affordable at £12/month with decent features for the price
• FreshBooks – Popular with consultants and agencies who bill for time
• Wave – Free for core features, you pay for add-ons like payroll
• Landlord Studio – MTD-compatible option for landlords

Basic Features

This is the core functionality that handles your day-to-day bookkeeping and keeps you compliant with HMRC. The differences between platforms come down to how intuitive they make these tasks and how well the features work together.

MTD compliance is key now – and most accounting platforms offer it. But always check. 

Making Tax Digital Compliance

Your software connects directly to HMRC’s systems. When you need to submit a VAT return or a Self Assessment, the software formats everything correctly and sends it to HMRC’s systems. 

The software maintains your records in the digital format HMRC requires. For VAT-registered businesses, this is already mandatory. For self-employed people and landlords earning over £50,000, it becomes mandatory from April 2026.

Bank Feed Integration

Your bank account connects to your accounting software, and transactions are pulled in automatically. Payments in, payments out – everything appears without manual entry (if you allow it to).

The software links to your bank through Open Banking, downloads transactions regularly, and presents them for you to review and categorise.

Invoicing and Payment Tracking

You create invoices in the software and send them to clients. The software tracks which invoices are outstanding, which are overdue, and which have been paid. Most systems let you:

• Set up recurring invoices for regular clients
• Customise templates with your branding
• Track when invoices are viewed and opened
• Accept payments directly through invoice links

Expense Tracking

You record business expenses and categorise them for tax purposes. Your bank feed pulls in transactions, and you assign each one to the right category – travel, equipment, office costs, whatever applies to your business.

The software learns your patterns over time, so it starts suggesting categories for regular suppliers and transactions.

VAT Returns

The software calculates your VAT liability by tracking VAT you’ve charged customers and VAT you’ve paid on business purchases. You can see your VAT position throughout the quarter, so you know in advance whether you’ll owe money or get a refund.

At the end of the quarter (or other period), you review the figures and submit your return directly to HMRC through the software.

Financial Reports

The software generates reports that show how your business is performing. The main ones you’ll use are:

• Profit and loss – Shows your income minus expenses, tells you if you’re making money
• Balance sheet – Shows what you own versus what you owe
• Cash flow reports – Shows money moving in and out, helps predict if you’ll have enough to cover bills

You can generate these reports whenever you need them – monthly, quarterly, or when you’re making decisions and want current figures.

Useful Features

Looking for deeper functionality? These make your life easier without being strictly necessary. 

Some save time by reducing manual work, others give you flexibility to work from anywhere, and some just make collaboration smoother when you’re working with a bookkeeper or accountant. 

Receipt Capture and Scanning

You photograph receipts with your phone instead of keeping paper copies. The software stores the image and links it to the transaction. Some systems can read the receipt and extract information automatically.

This eliminates boxes of paper receipts and the risk of losing important expenses.

Multi-User Access

Multiple people can work within the software at the same time. So your bookkeeper can handle reconciliation while your accountant reviews records, and you check cash flow. 

You can usually control what each person can access – full editing rights for some users, view-only for others.

Mobile Apps

You can handle accounting tasks from your phone:

• Log expenses on the go
• Photograph receipts immediately
• Create invoices while travelling
• Check your bank balance before making a purchase

Automated Payment Reminders

The software sends reminders to clients with overdue invoices. You set when reminders go out and what they say, and the system handles it automatically.

This protects your cash flow without you having to personally chase every late payment.

Smart Bank Reconciliation

The software learns from how you categorise transactions and starts making suggestions. Regular payments are automatically matched to the right categories, turning reconciliation into a quick review rather than line-by-line data entry.

Direct HMRC Submission

Beyond VAT returns, some software lets you submit other returns directly – Self Assessment, CIS returns if you’re in construction, potentially Corporation Tax.

Each return you can handle through your accounting software is one less government portal to log into separately.

Advanced Features

Looking to handle some advanced tasks and workflows we’ve not covered? These features handle specific scenarios – managing stock, dealing with foreign currencies, tracking project profitability, or connecting your accounts to other business systems. 

Some are industry-specific, like CIS support for construction businesses. You’ll know if you need them based on how your business operates.

You’re right, let me flesh these out properly:

Inventory Management

Stock control within your accounting software tracks what you have, what it’s worth, and when you need to order more. Every time you make a sale, the software automatically reduces the stock count. When new stock arrives, you log it, and the quantities update.

The software shows you stock levels in real-time, so you’re not overselling or running out unexpectedly. You can set reorder points – when your stock of a particular item drops below a certain level, the software alerts you. Some systems can even automatically generate purchase orders.

For retailers or wholesalers, this connects your sales directly to your stock value, which affects your balance sheet and profit calculations. If you manufacture products, the software can track components and raw materials separately, then calculate the cost of each finished product based on what went into making it.

Multi-Currency Support

If you’re invoicing foreign clients or buying from overseas suppliers, multi-currency support handles the complexity. You invoice a client in euros or dollars, and the software records both the foreign amount and the GBP equivalent at the exchange rate on that date.

When payment arrives – potentially at a different exchange rate – the software automatically calculates any foreign exchange gain or loss. Your reports can show figures in the original currency or converted to GBP, depending on what you need to see.

It also gives you accurate profit figures that account for exchange rate movements, which matter more than you’d think if you’re doing regular international business.

Payroll Integration

When payroll connects to your accounting software, running payroll creates accounting entries automatically. Staff wages, employer National Insurance, pension contributions, tax deductions – all of it gets recorded in your accounts without you having to enter it twice.

This keeps your accounts accurate and saves time. You’re not manually journaling payroll costs at month-end or trying to reconcile payroll reports with your accounting records.

Most accounting software charges extra for payroll – it’s rarely included in the base price. But even if you’re paying for two separate modules, the integration between them eliminates double handling and reduces errors.

Custom Reporting

Standard reports – profit and loss, balance sheet, cash flow – work fine for most purposes. But sometimes you need something specific. Which clients are most profitable? What’s your margin by product line? How do costs break down by department?

Custom reporting lets you build reports that answer advanced questions. You choose which data to include, how to group it, and how to display it. Some software offers drag-and-drop report builders, while others require more technical knowledge.

This becomes valuable when you’re trying to make decisions, and the standard reports don’t quite show what you need. Instead of exporting to Excel and building your own analysis, you create the report once in your accounting software and run it whenever you need updated figures.

CIS Scheme Support

Construction businesses working with subcontractors need CIS functionality. The software verifies subcontractors with HMRC, calculates the correct deduction rate (20% for registered subcontractors, 30% for unregistered), and tracks everything for your monthly CIS return.

When you pay a subcontractor, the software:

• Calculates the gross amount and the CIS deduction
• Creates a payment record showing both figures
• Updates your CIS return with the payment details
• Generates CIS statements you can give to subcontractors

At month-end, you review the figures and submit your CIS return directly to HMRC through the software. 

API Integrations

APIs let your accounting software talk to other systems you use. When you make a sale on your e-commerce platform, it is automatically reflected in your accounts. When you log time in your project management tool, it’s ready to invoice. When a payment comes through your payment processor, it matches the invoice.

This eliminates double entry – recording the same transaction in multiple systems. It reduces errors from manual data transfer. And it means your accounting records stay up to date without you having to remember to update them.

The value depends entirely on what other systems you use. If you’re already running everything through your accounting software, integrations don’t matter. But if you’re using Shopify for sales, Stripe for payments, and a separate CRM, having them all talk to each other saves considerable time.

Making Your Choice

Here’s what to consider when you’re narrowing down your options:

• Think two years ahead – Switching accounting software later is painful. You lose historical data, spend time on migration, and everyone needs retraining. Choose something that can grow with you.
• Match your business type – Freelancers need different features than limited companies. Service businesses work differently than retailers. Construction firms need CIS support that other businesses don’t.
• Use the free trials – Most platforms offer 30 days, which is enough to import your bank feed, create some invoices, and see if the interface makes sense to you.
• Budget for value, not just price – Software that costs £30/month but saves you hours of work is better value than free software that wastes your time or creates errors.

There are few right or wrong answers, but we can help you choose if you’re between options or feel lost in any way.

How Double Point Can Help

We work with all the major accounting software platforms and can give you honest advice on which one fits your situation. 

Beyond helping you choose, we can handle setup and training so you don’t have to figure everything out alone. We’ll configure the system properly from day one, set up your chart of accounts correctly, and show you the features that matter for your business.

Getting your accounting software right the first time means you can focus on running your business instead of wrestling with your bookkeeping.

Book a consultation with Double Point today, and let’s find the system that works for you.