Good bookkeeping software saves time, shows you how your business is doing, and makes your tax returns quicker and cheaper to prepare.
It is also becoming a legal requirement. VAT-registered businesses already have to keep digital records under Making Tax Digital (MTD), unless they are exempt. From 6 April 2026, sole traders and landlords with qualifying income (before expenses) over £50,000 will have to use MTD-compatible software for Income Tax too.
This post covers what to look for and how to choose. We don't name a "best" product, because the right one depends on your business.
What to look for
MTD compatibility. Check the product is on HMRC's list of recognised software for the taxes you need, such as VAT or Income Tax. HMRC does not recommend any product.
Bank feeds. The software should link to your business bank account and pull in transactions each day, so you don't type them in.
Receipt capture. Look for an app that lets you photograph receipts and attach them to transactions.
Invoicing. If you invoice customers, check you can send invoices, see who has paid and chase late payers.
VAT returns. If you are VAT registered, check it handles the VAT scheme you use.
Payroll. If you employ staff, check whether payroll is included or needs a separate product.
Accountant access. Your accountant should be able to log in and see your records, so you aren't sending files back and forth.
Ease of use. You will use it every week. Try the free trial before you commit.
Cost as you grow. Many products charge more as you add features or transactions. Check what the price will be next year, as well as this year.
Questions to ask yourself first
How many transactions do you have each month?
Are you VAT registered, or likely to be soon?
Do you employ staff?
Do you send invoices, or are you paid at the time of sale?
Do you hold stock?
Who will do the bookkeeping: you, a member of staff or your accountant?
The answers narrow the choice quickly. A sole trader with a few dozen transactions a month needs far less than a shop with staff and stock.
Can I keep using spreadsheets?
Yes, in some cases. "Bridging software" links your spreadsheet to HMRC so you can send MTD submissions. This can work if your records are simple and you are comfortable with spreadsheets. The spreadsheet must hold all the records HMRC requires, and the link to the bridging software must be digital. Copying and pasting figures by hand doesn't count. For Income Tax, your setup must also handle the end-of-year return.
Switching software
Pick a clean start date, such as the start of your financial year or a VAT quarter.
Bring across opening balances, including money owed to and by you.
Run the old and new systems side by side for a month if you can, to check the figures agree.
Keep your old records. You must still keep them for the required period. Under MTD for Income Tax, if you switch part way through a tax year, that year's records must be brought into the new software. Earlier years don't need to be moved.
Tell your accountant before you switch. We can help set it up correctly from day one.
Summary
The right software is the one that fits how your business works and that you will use every week. Check it is recognised by HMRC for MTD, links to your bank, and lets your accountant see your records.
If you would like help choosing or setting up software, book a call or contact us.