Small business accounting software has changed a lot in recent years. Most sole traders now use online software rather than installing bookkeeping programs on a computer.
There are plenty of options, ranging from free record-keeping tools to full accounting packages that can handle VAT, Making Tax Digital and Self Assessment.
At ByteStart, we’d say the main things to compare are ease of use (don’t use complicated tools if you don’t need them), how bank feeds are handled, whether you can create invoices, and, importantly, whether your accountant can easily access and share your data.
Why choosing the right tool matters
If you’re starting out as a sole trader, you need to keep accurate business records from day one.
Suitable accounting software can make that much easier. It can bring your invoices, expenses, bank transactions and profit figures together in one place, rather than leaving you to piece everything together at the end of the tax year.
Many sole traders simply need something reasonably priced and easy to use, without features you’ll never need.
What to look for in accounting software
- Invoicing and expenses – Create invoices, record expenses, upload receipts and, where useful, track mileage.
- Bank feeds and reconciliation – Connect your business bank account and match transactions against your records.
- VAT – If you are VAT registered, check that the software can keep the required digital records and submit VAT returns to HMRC.
- Making Tax Digital for Income Tax – From April 2026, MTD for Income Tax applies to qualifying sole traders and landlords whose combined gross self-employment and property income was over £50,000 on their 2024/25 tax return. The threshold falls to over £30,000 from April 2027 and over £20,000 from April 2028.
- Self Assessment – Some packages only produce reports, while others calculate tax, prepare returns or submit information directly to HMRC. Check exactly what is included.
- Mobile access – Useful if you want to photograph receipts, send invoices or check transactions while you are away from your desk.
- Automation – Features such as transaction matching, recurring invoices and payment reminders can save a lot of admin.
- Growth – If your business may become VAT registered, employ staff or need more detailed reporting later, check whether you can upgrade without moving everything to another platform.
- Accountant access – If you use an accountant, check whether they already use or recommend a particular package.
The cheapest package isn’t automatically the best. Equally, a sole trader with straightforward accounts may have little reason to pay for a large accounting system.
We last reviewed the prices and features below in September 2026. Software providers change their plans and introductory offers regularly, so always check the provider’s own website before signing up.
Paid accounting software for sole traders – 2026 comparison
| Software | Typical price | VAT | MTD for Income Tax | Self Assessment | Notes |
|---|---|---|---|---|---|
| Xero | Ignite £18/month | Yes | Supported | Accounting records and tax information rather than a conventional personal tax-return service | Well established, with strong bank feeds, reporting and accountant access. |
| FreeAgent | From £27/month before discounts | Yes | Supported | Strong UK Self Assessment support | Free for eligible NatWest, Royal Bank of Scotland, Ulster Bank and Mettle business banking customers. |
| QuickBooks | Simple Start £16/month | Yes | Supported | Prepares Self Assessment information | Sole Trader and Simple Start plans are aimed specifically at smaller businesses. |
| Sage | From £0 for Sage Sole Trader | Depends on plan | Supported | Sole Trader plans support Self Assessment | Sage now offers a free plan specifically for non-VAT-registered sole traders. |
| FreshBooks | From £16/month before current discounts | Yes – direct MTD VAT filing | Check current Income Tax functionality | Tax reports rather than full UK personal tax filing | Strong invoicing, expenses and client-management features. |
| Crunch | From £27 + VAT/month | Supported | Supported | Included with its sole trader accounting service | Different from the others because the paid service combines software with accountant support. |
Xero
Xero is widely used by small businesses and accountants. Its Ignite plan is currently £18 per month plus VAT, with higher tiers available if you need more invoicing, reporting or other features.
It has strong bank feeds, reconciliation, invoicing and VAT tools, and is designed to scale if your business becomes more complicated.
FreeAgent
FreeAgent is aimed squarely at UK sole traders, freelancers and small businesses. It covers invoicing, expenses, bank feeds, VAT, tax estimates and Self Assessment.
The normal sole trader price is currently £27 per month plus VAT before promotional discounts. However, eligible customers with business accounts from NatWest, Royal Bank of Scotland, Ulster Bank or Mettle can get FreeAgent free.
QuickBooks
QuickBooks now offers dedicated Sole Trader products as well as its Simple Start plan.
Simple Start is currently £16 per month plus VAT. It includes invoicing, expenses, bank connections, VAT submission and support for Making Tax Digital for Income Tax.
Sage
Sage has broadened its sole trader offering considerably. Its Sage Sole Trader Free plan costs nothing and is aimed at non-VAT-registered sole traders who need digital records and Self Assessment support.
There is also a £7-per-month Sole Trader plan and Sage Accounting Start, currently £20 per month before promotional discounts, for businesses needing VAT and broader accounting features.
FreshBooks
FreshBooks is particularly strong on invoicing, expenses, time tracking and client management.
Its UK plans can submit MTD-compliant VAT returns directly to HMRC. If Income Tax MTD or full Self Assessment filing is important to you, check the current UK functionality before choosing it.
Crunch
Crunch differs from conventional accounting software because its paid sole trader package combines the software with support from accountants.
Its Sole Trader Pro service currently starts at £27 plus VAT per month and includes Self Assessment filing and MTD for Income Tax support.
Free accounting software for sole traders
You may not need to pay for accounting software, especially if your business is small and your bookkeeping is straightforward.
Some free products are now surprisingly capable.
| Software | What you get | What to check |
|---|---|---|
| Sage Sole Trader Free | Income and expense records, mobile app and MTD for Income Tax support. | Aimed at non-VAT-registered sole traders. |
| Zoho Books Free | Invoices, expenses, VAT records, reports and MTD VAT filing. | The free plan has usage limits, including annual invoice and expense limits. |
| Crunch Free | Basic online bookkeeping tools for sole traders and small businesses. | Accountant support and tax filing sit in paid packages. |
| Wave | Basic invoicing and accounting. | Primarily aimed at North America and not suitable if you need UK MTD filing. |
| GnuCash | Free desktop double-entry bookkeeping software. | No direct UK MTD filing or automatic bank feeds. |
Sage Sole Trader Free
This is now one of the more interesting free options for UK sole traders. It is aimed specifically at non-VAT-registered businesses and includes digital record keeping and support for Making Tax Digital for Income Tax.
Zoho Books Free
Zoho’s free plan includes invoicing, expenses, reports and MTD VAT filing. It is more capable than many free bookkeeping products, although there are limits on how many invoices and expenses you can process each year.
Crunch Free
Crunch offers free bookkeeping software and paid accountancy packages. It may suit someone who wants to start with basic software and potentially add professional support later.
Wave
Wave provides straightforward invoicing and accounting tools, but it is primarily designed for the North American market. It is not a good choice if you need direct UK Making Tax Digital submissions.
GnuCash
GnuCash is free desktop bookkeeping software, not a cloud accounting service. It provides proper double-entry bookkeeping but requires more manual work and does not handle UK MTD submissions itself.
What about spreadsheets?
Plenty of small sole traders still use spreadsheets successfully.
If your business has relatively few transactions and you aren’t caught by a digital filing requirement, you may not have a pressing reason to move to a paid package.
The calculation changes once you need automated bank feeds, VAT submissions or software for Making Tax Digital for Income Tax.
We look at the pros and cons in more detail in our guide to accounting software vs spreadsheets.
How to decide
- Start with the features you actually need rather than the longest feature list.
- If MTD applies to you, make sure the exact plan you choose supports the relevant HMRC submission.
- Check whether your accountant prefers a particular platform.
- Try the software before committing if a free trial is available.
- Don’t overpay for features you don’t yet need.
- Think about whether you are likely to become VAT registered or need more advanced features later.
A few final tips before you choose
There is no single accounting package that is right for every sole trader.
Someone with a handful of monthly transactions may be perfectly happy with a free product. A VAT-registered business with hundreds of transactions may save enough time with bank feeds, reconciliation and automation to justify a more expensive package.
And if you already have a business account with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle, check whether you qualify for FreeAgent at no extra cost before paying for another package.
Whichever system you choose, make sure you understand what it actually files with HMRC. “MTD compatible”, VAT filing, Income Tax updates and Self Assessment filing are not all the same thing.