Once you have decided to use accounting software instead of spreadsheets, the next question is: which one? Excellent options fill the market, and knowing where to start can feel tricky as a beginner. The good news is that most modern software packages put user-friendliness first. They also share a common set of helpful features, which makes switching between them straightforward if you ever need to.
This guide is written to help you understand what to look for when choosing your first accounting software. We will focus on the core features that deliver the most value to new business owners, helping you make a confident choice for your UK business.
It’s About More Than Just Tax
Before we look at features, it is important to understand that good accounting software does much more than just prepare you for your tax return. It is a tool for running your business more efficiently every single day. It helps you understand your financial position, get paid faster, and spend less time on manual administration.
Choosing the right software is not just a compliance exercise; it is an investment in your own productivity.
Core Features to Look For
While different software packages have their own unique selling points, there are a handful of core features that you should consider essential. These are the features that will save you the most time and provide the most insight.
Bank Feeds:
This is arguably the most important feature. A bank feed securely connects your business bank account to your accounting software, automatically importing all your transactions. This eliminates the need for manual data entry and is the foundation of all automation.
Invoicing:
Good software allows you to create and send professional, customised invoices directly from the platform. You can see when a client has viewed your invoice and even send automated reminders for late payments.
Expense and Receipt Capture:
This feature allows you to take a photo of a receipt with your phone, and the software will automatically extract the key information (supplier, date, amount) and create an expense transaction for you.
Additionally you can link and connect your data extraction software with your bookkeeping software. So, when a transaction is uploaded via the data extraction software, you can step away, and we will take the reins over.
We will then log in, code the transaction to the correct corresponding account code and publish the transaction into your bookkeeping software.
This is a huge time-saver and ensures you never lose a receipt again. Gone are the days of needing to keep a mountain of receipts, as it is all now stored digitally!
(Something to be mindful of however, is just to ensure that the images uploaded via data extraction software of receipts/invoices are clear and legible and not blurry before the paper receipt is thrown away).
MTD Compliance:
As Making Tax Digital (MTD) is now a reality for VAT and is coming imminently for Income Tax, any software you choose must be MTD-compliant. All major UK software packages are.
Reporting:
Your software should be able to generate key financial reports with the click of a button. The most important one to start with is the Profit & Loss report, which shows you how profitable your business is.
How to Think About Pricing
Most accounting software is on a monthly subscription basis. The price usually depends on the features you need. For example, a basic plan might include bank feeds and invoicing, while a more advanced plan might add features for managing stock or multiple currencies.
When you are just starting out, it is usually best to choose a simple, entry-level plan. You can always upgrade to a more advanced plan as your business grows and your needs become more complex. Remember that your software subscription is an allowable business expense, so you can claim tax relief on the cost.
Don’t Be Afraid to Try Before You Buy
Nearly all software providers offer a free trial period, typically for 30 days. We highly recommend you take advantage of this. Set up a trial account, connect your bank feed, and try creating a few invoices and recording a few expenses. This is the best way to get a feel for the software and see if it is a good fit for you and your business.
When Getting Advice Can Help
While you can certainly choose and set up software on your own, getting advice can be very helpful. An accountant can recommend the best software for your specific industry, help you get it set up correctly, and provide training on how to use the key features.
If you would like calm, practical support, Penney’s Accountancy works with UK small businesses in Farnborough and the surrounding areas. We are certified experts in major software packages like Xero and QuickBooks and can help you make the right choice with confidence.
Want to Learn More in Your Own Time?
For those who want to build their confidence and understand these topics in more detail, Penney’s Finance School offers an online, self-paced business and finance course. It covers everything from company setup to cash flow and tax, allowing you to learn at your own pace.
Important information
The information provided in this article is intended as general guidance for UK businesses only and reflects UK tax legislation and HMRC guidance as of February 2026.
Tax rules and business requirements can change, and individual circumstances vary. Before acting on any of the information above, we recommend speaking to a qualified accountant who can provide advice tailored to your specific situation.