Question 1

Do I need dedicated accounting software or can I manage with spreadsheets?

Accepted Answer

Spreadsheets work until your transaction volume, invoicing frequency or tax complexity outgrows what you can manage manually without errors. For any VAT-registered business or limited company with more than a few dozen transactions per month, dedicated software pays back in time saved on reconciliation and the reduced risk of filing errors. MTD requirements also effectively mandate software for most VAT-registered businesses.

Question 2

What is Making Tax Digital and does it affect my accounting software choice?

Accepted Answer

Making Tax Digital is the UK government's requirement for businesses to keep digital records and submit tax returns using compatible software. MTD for VAT is already mandatory for most VAT-registered businesses. MTD for Income Tax is being phased in for self-employed individuals and landlords. Any accounting software you choose must be HMRC-recognised and support direct digital submission for the taxes that apply to your business.

Question 3

Should my accountant choose the software or should I?

Accepted Answer

Your accountant's familiarity with the platform is a genuine efficiency factor — a platform they work in daily means faster year-end, lower advisory hours and fewer back-and-forth data requests. Discuss the shortlist with them before committing. If you already have an accountant, their preference should carry significant weight. If you are setting up accounting before engaging an accountant, choose a platform with a large accountant partner network so you have more options later.

Question 4

What is the difference between cash and accrual accounting, and does my software need to support both?

Accepted Answer

Cash accounting records income when cash is received and expenses when they are paid. Accrual accounting records both when they are earned or incurred, regardless of cash movement. Most limited companies must use accrual accounting under UK GAAP. Sole traders and some small businesses can use cash accounting for tax purposes. Check that the platform supports the accounting basis you use, particularly if you switch between them or need to produce reports on both bases.

Question 5

How do I handle expenses submitted by employees in accounting software?

Accepted Answer

Most accounting platforms either have a native expense submission module or integrate with a dedicated expense management tool. Employees submit receipts via a mobile app; the expense is matched to the correct nominal account and appears in the bank reconciliation queue. Check whether expense submissions require an add-on subscription, whether receipt OCR is included, and how approval workflows are configured for multi-level sign-off.

Question 6

What financial reports should my accounting software produce automatically?

Accepted Answer

At minimum: a profit and loss statement, balance sheet, cash flow statement, aged debtors and creditors reports, and VAT return summaries. Management accounts packages add budget-versus-actual comparisons and departmental breakdowns. Check whether these reports are configurable (custom date ranges, department filters, comparison periods) or fixed-format — inflexible reports often drive finance teams to export to spreadsheets, defeating the purpose of having software.

Accounting marketplace

Ramp

Freshbooks

Brex

Mercury

SpendHound

Xero

Zoho Books

Dext

Zeni

Bench

Zccounting

TurboTax