Choosing the right accounting software saves time, reduces errors, and makes your accountant's life easier. Most contractor accountants have a preferred platform, but understanding the options helps you make an informed choice.
FreeAgent
FreeAgent is the most popular choice among UK contractors. It is specifically designed for freelancers and small businesses, with features tailored to UK tax requirements. Key features include automatic bank feed imports, invoicing, expense tracking, corporation tax estimates, dividend recording, and self-assessment preparation. FreeAgent is included free with NatWest, Royal Bank of Scotland, and Ulster Bank business accounts. Otherwise, it costs approximately £30 per month.
Xero
Xero is a more general-purpose accounting platform used by businesses of all sizes. It offers powerful features including bank reconciliation, invoicing, expense claims, payroll, and multi-currency support. Xero integrates with hundreds of third-party apps and is the platform of choice for many accounting firms. Plans start from around £15 per month, with the most popular plan at approximately £33 per month.
QuickBooks
QuickBooks Self-Employed and QuickBooks Online are widely used by contractors, particularly those whose accountants work with the Intuit ecosystem. Features include receipt scanning, mileage tracking, automatic categorisation of expenses, and tax estimates. Pricing starts from approximately £12 per month.
What your accountant prefers matters
The most important factor in choosing accounting software is compatibility with your accountant. Most contractor accountants specialise in one or two platforms and can work most efficiently when you use the same system. Ask your accountant which platform they recommend before committing. The time and cost savings from smooth collaboration with your accountant typically outweigh any differences between platforms.
Key features to look for
Regardless of which platform you choose, ensure it supports automatic bank feeds from your business bank account, corporation tax tracking, dividend recording and documentation, expense categorisation aligned with HMRC requirements, and easy data sharing with your accountant. Mobile apps for receipt scanning and on-the-go expense recording are also valuable for contractors who travel to client sites.