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5 Best Accounting Software for Sole Traders

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Last editedJan 20223 min read

There’s a lot to juggle as a sole trader in the UK. You not only need to provide services in your area of expertise, but you also need to handle marketing and manage your own financial accounts. Fortunately, UK sole trader accounting software can help you stay organised. We’ll cover what to look for in the best accounting software for sole traders in this guide.

Why should you use sole trader accounting software?

As a sole trader, you may find there simply aren’t enough hours in the day. Manually entering all your accounting details into spreadsheets takes hours each week, particularly if you deal with a high volume of transactions. Sole trader accounting software is specifically designed to save you time and money by automatically tracking expenses, creating invoices, and reconciling bank accounts.

Here are a few benefits of the best accounting software for sole traders:

  • It keeps all your details in a single location, so no receipts go missing

  • It automatically tracks expenses to cut your tax bill

  • It reduces the risk of human error

  • It helps with cash flow forecasting

  • It keeps you on top of sole trader tax obligations

Accounting considerations for sole traders

Sole traders can use any major accounting software, but it’s important to be aware of your unique tax considerations. One of the biggest advantages of registering with HMRC as a sole trader is that you don’t need to worry about filling out annual accounts or submitting corporate returns. Registration is free, and you don’t need to follow the same rules that a limited company would. This cuts down on the red tape.

However, sole traders must fulfil the following obligations:

With the best sole trader accounting software, you’ll meet both targets and stay on top of all tax compliance issues.

Best sole trader accounting software

Fortunately, the self-employed are spoiled for choice when it comes to choosing accounting software. Here are five of our top picks:

1. Xero

Xero is an all-purpose, cloud-based accounting software founded in 2006. It’s packed full of features to benefit small businesses, including sole traders. One benefit is that you can access it from anywhere, and it links with a multitude of payment processors for on-the-go flexibility. Features include inventory tracking and automatic report generation. Although there are several plans to choose from, the Starter Plan is suitable for most sole traders. It contains everything needed to keep accounts up to date and submit your tax returns.

2. Sage

Sage Business Cloud Accounting is a good fit for those without an accounting background. You can get set up easily, and if you have any questions Sage offers 24/7 online and phone support. As with Xero, the base package will suit the needs of most sole traders. It includes tools to calculate your VAT returns, if applicable. You’ll also be able to create and send invoices, reconcile bank accounts, and track payments.

3. KashFlow

KashFlow aims to make accounting as easy as possible for freelancers and sole traders. Its user-friendly dashboard provides an overview of your financial situation, and it integrates with numerous apps including major ecommerce platforms like Amazon and Shopify. It’s also ideal for scaling up as your business grows, allowing you to submit unlimited quotes from the most basic Starter Plan. If you’re not convinced, you can give it a try first for free.

4. FreeAgent

Specifically designed for the smallest of businesses, FreeAgent comes packed with all the tools you’ll need to keep your books balanced. Standard features include a choice of eight professional invoice templates, time tracking sheets for invoicing, and automatic expense tracking directly from a live bank feed. You can also use the app to fill in and file your Self-Assessment return.

5. QuickBooks

QuickBooks is one of the most well-known business accounting software packages, and it’s equally applicable to sole traders as it is for larger companies. It’s easy to use at any level, with income and expense tracking and the ability to connect multiple bank accounts for real-time updates. You can also send and track invoices while chasing late payments to improve cash flow.

How to choose the best sole trader accounting software

There’s no shortage of options, so how can you choose the best software? Think about the platform’s ease of use and your own comfort with accounting methods. If you’re a complete beginner, you might want to opt for a platform like Sage with comprehensive customer support.

Invoicing is also an essential component of running a small business. Sole traders can streamline the payments process by blending accounting software with pull-based payment methods like GoCardless. These take payments automatically from customers when they’re due. You can use GoCardless directly through the self-serve dashboard. We also integrate seamlessly with all five of the accounting platforms mentioned above, as well as other partners.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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