Start with how your business is set up

A sole trader and a limited company have genuinely different bookkeeping needs, and that difference should shape your shortlist before you look at a single price tag. As a sole trader, your accounts feed into Self Assessment. You need clean records of income and allowable expenses, and if you're VAT registered, digital records that satisfy Making Tax Digital. A limited company adds statutory accounts, Corporation Tax, payroll for directors, and filings at Companies House. Some software handles all of that comfortably; some is really only designed for one side of the fence.

If you're VAT registered, that single fact narrows the field more than anything else. HMRC requires VAT-registered businesses to keep digital records and file returns using compatible software. A spreadsheet on its own no longer cuts it.

The features that genuinely earn their keep

Every product will claim to do everything. In practice, most small businesses lean on a handful of features daily.

• Invoicing. Look for customisable templates, automatic numbering, payment reminders, and a clear view of who owes you money and how overdue they are.
• Bank feeds. Transactions flow in automatically and you match them to invoices and expenses. The single biggest time-saver, and the single biggest source of frustration when it's done badly.
• VAT returns. The software should calculate your VAT from your records, let you review the figures, and submit directly to HMRC. Check it supports your scheme — standard, flat rate, cash accounting, or margin schemes for certain trades.
• Expense capture. A phone app that photographs receipts and attaches them to transactions saves a shoebox-sized headache at year end.
• Reporting. At minimum, a profit and loss, a balance sheet, and an aged debtors report you can actually read.

Bank feeds: the feature people underestimate

Bank feeds work through Open Banking, and most UK banks now support them. The practical questions are: how far back does the feed go, how often does it refresh, and what happens when it breaks? Connections do drop, usually at the worst possible moment, so a manual CSV import option matters as a backup.

Think about how many accounts you have, too. A separate business bank account is worth having, and if you also take payments through a card reader or an online gateway, those need to feed in as well. Check whether each connection is included or charged per account — it adds up quickly.

VAT, Making Tax Digital, and staying compliant

Making Tax Digital for VAT is now the default for VAT-registered businesses, and HMRC publishes a list of compatible software. The important distinction is between software that submits returns and software that merely calculates them. You want the former.

If you're not VAT registered, don't pay for features you'll never use — but check what happens if you cross the threshold later. Growth is a good problem, just not one you want to solve by migrating mid-year. If you're a limited company, confirm the software produces the figures your accountant needs for Corporation Tax and statutory accounts without a rebuild in a spreadsheet.

Budget and technical confidence

Pricing generally runs from free for very small sole traders up to £30–£50 a month for a limited company with payroll and multiple users. Watch for what pushes you up a tier: extra users, additional companies, payroll, and the number of bank connections.

Be honest about your technical confidence. If you enjoy spreadsheets, a simpler product with a good export function will suit you. If you'd rather have guided workflows, automatic reconciliation suggestions, and a decent mobile app, pay for it — the time saved is real money. A product that feels overwhelming goes unused, and unused software is the most expensive kind.

Support matters, too. Check whether help is available by phone, and whether it's familiar with HMRC quirks. Free trials of around 30 days are common; use one to enter a real month of transactions rather than clicking around a demo.

Accountant access and the handover

If you use an accountant, ask what they'd prefer before you buy. Many work with a handful of platforms and can import data far more cheaply than they can work from PDFs. Look for software that lets you invite your accountant with the right permissions — often read-only, or full access to a separate client area — so they can review figures monthly rather than scrambling in January.

Before committing, check how easy it is to leave. Can you export your full data, including attachments, in a usable format? A good product makes this painless; a poor one makes it feel like a hostage situation. Confirm where your data is stored and that the provider meets UK data protection expectations, since you're responsible for your customers' and suppliers' information.

Choose the software that fits the business you have now, with a little room to grow, and you'll spend your evenings on the business rather than on the bookkeeping.