Small business accounting software has changed massively in recent years. Thankfully, the advent of cloud computing has consigned the days of buying bookkeeping software in a box and installing it on your computer to history.
These days, start-ups and sole traders can choose from a whole host of online accounting software packages. These tools help ease the pain of managing your finances and come packed with time-saving features.
However, with numerous web-based solutions available, how do you select the ideal system for your specific needs?
That’s where this guide comes in. If you follow the advice below and ask the right questions, you should be able to narrow down the field and choose the best software for your business.
Xero offer: Get 90% off Xero for 6 months. Xero is fully compatible with Making Tax Digital and widely used by UK sole traders preparing for MTD from April 2026.
Scroll down for comparison tables.
Why choosing the right tool matters
If you’re starting out as a sole trader, you have a duty to keep accurate and up-to-date records from day one. Taking a bit of time now to choose the right software will save you time and hassle later on. And will keep you on the right side of HMRC.
Many of today’s cloud accounting solutions are built specifically for small business owners. Unlike the bulky traditional platforms, monthly fees for sole trader online accounting are surprisingly affordable.
Because sole traders often manage everything themselves, it helps to have a single system that lets you raise invoices, check who owes you money, record expenses, and track profits – all from your mobile, tablet or desktop.
What to look for in accounting software
- Invoicing & expenses – Custom invoices, receipt uploads, mileage tracking.
- Bank feeds & reconciliation – Link your business bank account and match transactions easily.
- VAT & MTD compliance – If you are VAT-registered, you’ll need software that files returns directly to HMRC. Soon you will also need to comply with MTD for Income Tax.
- Self Assessment support – At a minimum, it should provide profit and loss reports and exportable summaries.
- Mobile access – Look for tools with a solid app for managing finances on the go.
- Automation – Auto-matching transactions, invoice reminders, tax forecasting.
- Scalability – Can you upgrade later to add payroll, multi-currency, or stock control?
- Support & integration – UK-based help and connections to your accountant or other apps.
The cheapest option isn’t always the best. And recommendations from friends, while well-meant, might not fit your business needs.
The tables below were compiled in June 2025. Be sure to check the most up-to-date prices and features on the providers’ websites, as they change frequently!
Paid accounting software – comparison table (2025)
| Software | Cost / Month | VAT & MTD | Bank Feeds | Self Assessment | Mobile App | Notes |
|---|---|---|---|---|---|---|
| Xero Starter | £16 | ✔ | ✔ | ✔ (export only) | ✔ | 90% off for the first 6 months for ByteStart readers! |
| FreeAgent | £14–£29 | ✔ | ✔ | ✔ | ✔ | 30-day free trial, 10% off for life for ByteStart readers. |
| QuickBooks SE | £14–£34 | ✔ | ✔ | ✔ | ✔ | Great mobile interface |
| Sage Start | £15 | ✔ | ✔ | ✔ | ✔ | Includes an AI assistant |
| FreshBooks | ~£25 | ✔ | ✔ | ✔ (exports) | ✔ | Client-centric UX |
| Crunch | From £19.50 | ✔ | ✔ | ✔ (via team) | ✔ | Includes accounting help |
Xero Starter (90% off for ByteStart users for 6 months)
£16. Cloud-based system popular with small businesses (and their accountants). Includes bank feeds, VAT tools, and basic invoicing and reporting. Great scalability – can grow with your business and add payroll, inventory, and project tools later.
FreeAgent (30-day free trial for ByteStart users)
£14–£29. Full SA103 filing, MTD-compliant VAT returns, and smart tax forecasting. Built specifically for UK sole traders and freelancers. Includes time tracking, expenses, and project profitability. Often free via Mettle or NatWest business accounts.
QuickBooks SE
£14–£34. Designed for the self-employed, with real-time tax estimates, mileage tracking, invoicing, and automated categorisation of expenses. Excellent mobile app with clean UX. Connects to HMRC for VAT and Self Assessment filing.
90% off Xero Accounting Software for 6 months for ByteStart readers!
Fully compatible with Making Tax Digital (MTD) for sole traders from April 2026.
Sage Start
£15. Trusted UK brand with an intuitive dashboard, VAT and MTD filing, bank reconciliation, and expense tracking. Now includes Sage Copilot – an AI assistant for automated insights and reminders. Great for sole traders with simple needs.
FreshBooks
~£25. Ideal for creatives and service-based sole traders. Slick interface with time tracking, invoicing, expense logging, and client management. MTD-ready with exportable data for SA. Lacks native UK tax return filing, but has a great user experience.
Crunch
From £19.50. A hybrid platform offering both software and accountancy support. Includes invoicing, expenses, bank feeds, and VAT filing, with real accountants handling your returns. Flexible plans tailored to sole traders and contractors.
Free & freemium options for sole traders – 2025
| Software | Free features | Limitations for sole traders |
|---|---|---|
| ANNA Money | Free business account, debit card, invoicing, expenses, and free quarterly MTD submissions. | Not complex accounting software, but perfect for sole traders with simple accounts. |
| Zoho Books (Free) | Invoicing, expenses, bank feeds, MTD VAT | Only for revenue under £35k |
| Bokio | MTD VAT, invoicing, expenses | Lacks phone support, basic P&L |
| Wave | Invoicing and accounting | No UK MTD support, US-centric |
| GnuCash / Adminsoft | Full desktop bookkeeping | Manual setup, no MTD or bank feeds |
| Ember (Starter) | Simple invoicing under £1k/month turnover | Very limited reporting |
| Coconut (free tier) | Designed for freelancers and sole traders | Best for very simple tax setups |
ANNA Money
ANNA combines a free business account with built-in tools for sole traders, including invoicing, expense tracking, and Making Tax Digital (MTD) features. You get a debit card, instant account details, and the option to handle MTD without paying for separate accounting software.
It’s an e-money account rather than a traditional bank account, and some advanced features are paid, but for many sole traders, it works well as a free business account with free MTD tools included for life.
Quarterly MTD filings are free forever – no strings attached. ANNA customers will also get their full MTD Self Assessment, including the final return and ANNA’s Auto Accountant, free in the first year (quarterly filings are automatically prepared and ready to file to HMRC with just a few clicks).
Zoho Books (Free)
Free plan includes invoicing, expense tracking, bank feeds, and MTD VAT filing. A solid entry-level option for sole traders who want accounting software without a monthly fee.
Only available if your turnover is under £35k. Some advanced features are locked behind paid plans.
Bokio
UK-focused tool offering invoicing, expense tracking, and MTD VAT support. Clean interface and relatively easy to use for new sole traders.
No live phone support. Reporting is basic on the free tier.
Wave
Popular free tool for freelancers and very small businesses. Includes invoicing, accounting, and expense tracking with a strong, simple interface.
No UK MTD support and no direct HMRC integration. Primarily built for the US market.
GnuCash / Adminsoft
Desktop-based accounting software offering double-entry bookkeeping, invoicing, and asset tracking. Best suited to experienced users who prefer offline tools.
Requires manual setup and backups. No bank feeds or MTD support.
Ember (Starter)
Simple, modern tool aimed at micro businesses. The free tier supports invoicing and expenses up to £1,000 per month in turnover.
Reporting is limited, and key features are restricted to paid plans.
Coconut (free tier)
Built specifically for UK sole traders. Focuses on simplicity, with income and expense tracking and a mobile-first approach.
Best suited to very simple setups. The free tier has limits and does not support MTD.
How to decide
- Start with a free trial or entry-level plan.
- Make sure it meets UK compliance requirements, especially MTD and Self Assessment.
- Don’t overpay for features you don’t yet need.
- Think about how your business might grow – and whether the tool can scale with you.
Quick recommendations for sole traders
- Best all-rounder: Xero Starter – 90% off for ByteStart readers for the first 6 months.
- Best for freelancers/contractors: FreeAgent (excellent software – we’ve used it for years)
- Free but limited: Anna Money (free MTD submissions) + free business account, great for simple accounts.
- Best value for basics: Sage Start
- Best tax automation: QuickBooks Self-Employed
- Freelancer favourite: FreshBooks
A few final tips before you choose
There are more options than ever before for sole traders looking to ditch spreadsheets and get on top of their finances.
Whether you go for a powerful paid tool like Xero or FreeAgent or test the waters with a free, simple MTD tool like ANNA Money, the key is to pick something that fits your business, not just what’s cheapest or most popular.
Take your time, try before you buy, and keep it simple. You can always upgrade later as your business grows.
From £37.50/m
From £49/m