Best accounting software if you’re a sole trader

Having the right accounting software helps your sole trader business immeasurably.

While you’re handling the day-to-day running of your business, accounting software saves you hours of work and mountains of receipts flooding out of shoeboxes. It’ also help you cut your tax bills and reduce the risk of making mistakes. 

And with Making Tax Digital (MTD) for Income Tax being phased in from April 2026 (when it applies depends on your gross income from self-employment), the sooner you invest in compliant software for record-keeping and filing the better.

With all that in mind, we’ll be taking a look at how to find the right accounting software for your sole trader businesses along with some of the best packages on the market.

How do I find the right accounting software for my sole trader business?

Before you dive right in, you’ve definitely got some factors to consider. What should you be looking for from your accounting software? We spoke to experts from three accountancy and finance firms to find out more.

Free trial

Having a free trial allows you to have a taster of different accounting platforms before you make a decision. This is especially useful if you’re unsure of the functionality you’ll need.

“If you can experiment and try a few out then do,” said Rick Smith, managing director at Forbes Burton. “They all perform a very similar function, but you need to select one that is going to be easy for you to use. The ultimate aim should be not to make life more difficult for yourself for the sake of perceived convenience.”

Cost

Once you’ve established what you want, cost is the next crucial factor. “Most are evenly priced, but there may be features that you need which aren’t included so make sure you check what features are included. Locking into a contract and finding some elements are limited could well be difficult and expensive down the line,” explained Smith.

Functionality

As you can see, the functionality itself is hugely important. This can mean many different things – and be careful about having too little or too much functionality.

“A primary consideration for sole traders looking to invest in new software is the software’s Making Tax Digital (MTD) compatibility, whereby sole traders with a gross income of more than £10,000 will be required to file tax returns electronically from April 6, 2024,” said Joanne Thorne, technical compliance manager at SJD Accountancy. She went on to say that under MTD, sole traders will have to submit these records on at least a quarterly basis. The Self-Assessment Tax Return (SATR) will then be replaced by a Final Declaration.

“In the meantime, it is business as usual, so it’s advisable to use software that will allow them to submit their SATRs, and software that can automatically calculate their SATR based on the digital records that are submitted on the platform can save a lot of admin time.”

>See also: 9 myths about Making Tax Digital busted

Thorne also said that it’s worth considering what you need from your software from an operational perspective, such as the option to run payroll or submit VAT and whether your chosen option supports this. Sole traders should also investigate whether they wish to link their bank accounts to the system.

Then there’s common functionality which is very useful for the everyday running of your business. “The biggest development for sole traders is OCR (optical character recognition) technology, whereby the accounting package self-populates from a photo that the user takes of their receipt. This removes the need for onerous filing of receipts and makes the process instantaneous,” said Clare Bowen, director of Monahans accountancy. “This is invaluable when users are on the road, going from job to job. When linked to a card payment platform, invoices can be sent directly to clients and the user therefore gets paid quicker.”

As we’ll note a bit later, integrations with platforms you already have an account with can streamline your business processes. “You should also look at how easy it is to get data and information out of the software,” said Smith. “For example, can you export the accounts into another package? Is it easy to interact with other platforms? These are the things that will slow you down.”

Ease of use

Of course, having sophisticated functionality isn’t any good if the software is clunky and difficult to use. “Accounting should be something you can do while you’re out and about, anywhere and at any time, instead of in front of a spreadsheet on a Sunday afternoon,” said Bowen. “The key for these platforms to be of use to sole traders is that they need to be relatively basic, without all the high-end capacity that you might otherwise need for a larger corporation.”

She warned of apps that are pared-down versions of bigger platforms which are generally used by those who are VAT-registered, i.e. those whose taxable turnover exceeds the £85,000 threshold. “These are a little pricier and therefore less suited to sole traders,” she added.

>See also: Sole traders and VAT

Evolving with your business

Try and go for software that will suit your business in the future as well as today. “Above all, you should invest in accountancy software that will evolve alongside you and your business, with the agility to grow and include new capabilities as and when required and choosing software which can be easily updated to take account of any changes in tax legislation, such as MTD, is critical,” said Thorne.

How your accountant can help

Your accountant can give you further guidance on the right accounting software for you as a sole trader, but they may also be able to provide you with a software licence at a reduced rate, according to Smith. However, they might prefer for you to use the one that they’re familiar with, so be prepared for that.

Bowen advises having a good relationship with your accountant so you don’t lose track of the numbers. “That’s going to become more important when Making Tax Digital rules are extended to all those who have a self-employed (and property) income of more than £10,000, from April 2024. From this date, you’ll have to submit quarterly returns but with the use of software, the idea is that this process is as efficient as possible. That’s why I’d advise any sole trader who isn’t already on these systems to start using them, so that they’re seeing the benefits and aren’t caught out last minute.”

>See also: Hiring an accountant: A small business guide

Which accounting software is right for me as a sole trader?

Now, on to the accounting platforms themselves. As mentioned, they offer largely similar functionality but there may be features that stand out to you and your business’ needs. Here is an introduction to some of the top products on the market, in order of their cheapest package. More details on each product are listed below.

• Sage
• Xero
• QuickBooks
• FreshBooks
• Ember
• Coconut
• KashFlow
• ClearBooks
• FreeAgent
• Crunch

Sage

For sole traders looking to simplify finances and focus more on growing their business, Sage offers a powerful, HMRC-recognised cloud-based solution that combines essential bookkeeping tools with the cutting-edge convenience of AI automation.

Designed to take the stress out of self-employment accounting, Sage helps you manage your income, expenses, tax returns, and cash flow—all from a single, user-friendly dashboard.

Pros

• Time-saving automation through AI-powered features like Sage Copilot and receipt capture
• Fully compliant with HMRC and Making Tax Digital (MTD) for VAT returns.
• Flexible plans that can scale as your business grows

Cons

• Some valuable features like receipt capture and budgeting are only available on higher-tier plans
• May require a learning curve for users unfamiliar with accounting platforms

Pricing

Xero

Xero is a leading cloud-based accounting platform trusted by millions of small businesses worldwide. For sole traders, it offers an affordable, HMRC-recognised way to stay on top of finances, streamline daily admin, and prepare for Making Tax Digital (MTD) with ease. With real-time insights, time-saving tools, and flexible pricing, Xero helps sole traders work smarter—not harder—while keeping full control of their business finances.

Pros

• Designed to grow with your business, from basic needs to more advanced features
• Fully HMRC-recognised and ready for MTD for Income Tax and VAT
• Optional add-ons like CIS submissions and payroll allow you to tailor features to your specific needs

Cons

• Entry-level plans include limitations on invoices and bills per month
• Core features like project tracking and multiple currencies are restricted to higher-tier plans
• Add-ons like payroll and CIS submissions come with additional costs

Pricing

*All plans include 90% off for 6 months.

Intuit QuickBooks

QuickBooks is a well-established and highly trusted accounting solution, known for its flexibility and ease of use. With HMRC recognition for Making Tax Digital (MTD), robust support, and powerful AI tools, it’s an ideal choice for sole traders looking to streamline financial tasks and stay in control of their business.

QuickBooks gives you everything from Self Assessment prep to real-time cash flow insights, with features that grow alongside your business—no long-term commitment required.

Pros

• Simple, intuitive setup ideal for non-accountants
• AI tools help automate admin and provide useful insights
• Strong tax compliance features, including Self Assessment and VAT

Cons

• VAT and CIS functionality only available in higher-tier plans
• Some essential features (like multi-user access and currency tracking) require more expensive plans
• Payroll, stock tracking, and advanced analytics require additional fees or upgrades

Pricing

*All plans include free for 1 month and 90% discount for 1 year.

Freshbooks

FreshBooks is a cloud-based accounting platform that offers a simple, modern solution for freelancers and business owners. With a 30-day free trial and 50% off for the first 3 months, it’s easy to get started. Designed to simplify invoicing, expense tracking, and VAT filing, FreshBooks combines powerful tools with a user-friendly experience that scales with your business.

Whether you’re just starting out or managing a growing client base, FreshBooks gives you the ability to automate admin, collaborate with team members, and keep your business finances organised—all from one clean dashboard.

Pros

• Clean, modern interface with excellent mobile access
• MTD-compliant VAT filing included in all plans
• Good scalability for growing businesses
• Easy to set up recurring invoices and client retainers

Cons

• Limited clients in lower-tier plans
• Some automation features only available in Premium or higher
• Team members and advanced payments cost extra (except in Select plan)

Pricing

Team Members: £8 per person per month
Advanced Payments: £15 per month (included in Select)
All plans 50% off for 3 months + 30-day money-back guarantee

Ember

If you’re a freelancer or sole trader in the UK, Ember offers everything you need to manage your finances with less stress—and no spreadsheets. Its dedicated sole trader plans combine powerful automation with real human support, making it easy to stay compliant, save time, and focus on running your business.

Whether you’re just getting started or managing a steady income, Ember connects directly with your bank, categorises your transactions using AI, and gives you real-time insights into your tax position. And if you need expert help, qualified accountants are on hand to assist with filings and questions.

Pros

• Plans tailored for sole traders at every income level
• Free option available for new or low-revenue businesses
• Saves time with automation and categorisation rules

Cons

• Pricing is no longer publicly available
• Limited features on the free plan
• No phone support

Pricing

Coconut

If you’re a sole trader, freelancer, or landlord tired of wrestling with spreadsheets and shoeboxes full of receipts, Coconut is designed specifically for you. It’s not just accounting software – it’s a stress-reducing tool that brings all your business finances together in one simple app.

Built for the self-employed, Coconut lets you manage expenses, send professional invoices, track income, and prepare for tax time with zero hassle. You don’t need to be an accounting expert – it does the hard work in the background, so you can focus on getting paid and doing what you love.

Pros

• Specifically designed for sole traders and small businesses
• Clear, simple interface ideal for non-accountants
• No guesswork: see how much tax to set aside throughout the year

Cons

• No built-in payroll or VAT-only option (focused on Self Assessment)
• No pay monthly option on some plans

Pricing

IRIS KashFlow

KashFlow offers a straightforward way for sole traders, freelancers, and small business owners to stay on top of their finances without needing an accounting background. With an intuitive interface, strong automation features, and cloud access, KashFlow helps you save time on admin and stay compliant with ease. Whether you’re sending invoices, tracking expenses, or handling VAT returns, KashFlow’s bookkeeping software is built to simplify the process and give you more time to focus on running your business.

Pros

• Great for new sole traders – Starter plan covers the essentials at a low cost
• Accessible on desktop and mobile – Do your books from anywhere
• Automatic reminders and easy reporting – Stay compliant and in control

Cons

• Limited invoicing on Starter plan – Only 10 invoices per month unless you upgrade
• Interface feels slightly dated compared to modern competitors
• Payroll features locked behind more expensive plans – Not ideal if you plan to hire

Pricing

ClearBooks

ClearBooks is a UK-based accounting platform designed to help sole traders and landlords stay organised, submit tax updates to HMRC, and keep their business finances in check. Whether you just need the basics or want more advanced reporting tools, Clear Books offers scalable plans tailored to your needs.

Pros

• Free MTD-compatible plan ideal for new sole traders
• Scales well with your business as it grows
• Good support for both VAT and construction industry needs

Cons

• More advanced features locked behind higher-tier plans
• Interface is less modern compared to newer platforms
• Pricing increases sharply as features are added

Pricing

FreeAgent

FreeAgent is an HMRC-recognised accounting tool tailored for UK sole traders. With automation, insightful dashboards, and mobile functionality, it’s built to make daily admin easier while keeping you in control of your finances and taxes.

Pros

• Excellent tax tools including Self Assessment and real-time tax timeline
• Free plan available for certain bank customers
• Comprehensive mobile app and automation features

Cons

• Receipt capture limited to 10 per month without £5 add-on
• No tiered feature set—price the same regardless of business size
• Amazon integration requires extra monthly fee

Pricing

Crunch

Crunch offers an all-in-one accounting package designed specifically for sole traders, combining easy-to-use software with unlimited expert accountant support. It helps you save time on admin, stay compliant with HMRC, and reduce your tax bill with built-in tax optimisation.

Pros

• Unlimited accountant advice included at no extra cost
• Transparent pricing with no hidden fees
• Built-in tax optimisation to potentially save you money

Cons

• Pricing starts low only with promo; regular price is higher
• Limited to sole traders; no multi-user business plans detailed
• No detailed breakdown of software features compared to some competitors

Pricing

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