5 Best Accounting Software for Small Businesses in 2025 (US & UK Review)

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For small business owners in the United States and the United Kingdom, tax compliance is getting harder. With the IRS tightening reporting in the US and “Making Tax Digital” (MTD) becoming the standard for HMRC in the UK, using Excel spreadsheets is no longer an option.

In 2025, you need cloud accounting software. These tools automate your invoicing, track your expenses, and—most importantly—keep you out of trouble with the tax authorities.

We have tested the leading platforms to find the best solutions for freelancers, LLCs, and limited companies. Here are the top 5 accounting tools that will save you time and money this year.

1. QuickBooks Online

Best Overall for US Small Businesses

QuickBooks is the undisputed king of accounting software in North America. It is the industry standard—if you hire an accountant in the US, they will almost certainly ask if you use QuickBooks.

  • The Power: It connects to almost every US bank account and credit card, automatically downloading transactions.
  • Tax Ready: It organizes your income and expenses into tax categories, making it easy to export data to TurboTax or send it to your CPA.
  • Features: Includes inventory tracking, payroll (extra cost), and bill management.

Get QuickBooks: [Link to Official QuickBooks Site]

2. Xero

Best Overall for UK & Growing Businesses

While QuickBooks dominates the US, Xero is a massive favorite in the UK, Australia, and New Zealand. It is famous for its beautiful, clean interface that makes accounting feel less “scary” for non-accountants.

  • UK Compliance: Xero is fully recognized by HMRC for “Making Tax Digital” (MTD) for VAT returns.
  • Hubdoc Included: A fantastic feature where you can snap a photo of a receipt, and Xero scans the data and enters it for you automatically.
  • Unlimited Users: Unlike QuickBooks, which charges per user, Xero allows unlimited users on most plans, making it great for growing teams.

Get Xero: [Link to Official Xero Site]

3. FreshBooks

Best for Freelancers & Contractors

If you are a solo freelancer, a consultant, or a creative agency, FreshBooks is designed for you. It started as an invoicing tool and evolved into a full accounting suite.

  • Invoicing: It creates the most professional-looking invoices in the industry. You can see exactly when a client has opened your invoice email.
  • Time Tracking: Built-in time tracking allows you to log hours on a project and instantly convert them into an invoice.
  • Ease of Use: It is much simpler than Xero or QuickBooks, stripping away complex features that solo workers don’t need.

Get FreshBooks: [Link to Official FreshBooks Site]

4. Wave Financial

Best Free Software (Forever)

Wave is unique because its core accounting and invoicing software is 100% free. There is no trial period and no hidden subscription fees. They make money when you use their payment processing (like PayPal) or payroll services.

  • The Deal: You get unlimited income and expense tracking and the ability to run multiple businesses from one account for free.
  • Ideal For: Hobbyists, Etsy sellers, and very small startups in the US/UK who need to separate personal and business finances but have zero budget.
  • Limitations: Customer support is limited for free users, and it lacks some advanced inventory features.

Get Wave: [Link to Official Wave Site]

5. Sage Business Cloud

Best for Established UK Enterprises

Sage is a legacy name in the UK. While it was once seen as “old school,” their new Business Cloud Accounting is modern and powerful. It is the preferred choice for slightly larger businesses or those with complex inventory needs.

  • Reliability: Extremely robust audit trails and reporting capabilities.
  • Inventory: superior stock management features compared to its rivals.
  • Support: Excellent 24/7 support for UK customers.

Get Sage: [Link to Official Sage Site]

Conclusion: Which Software Should You Choose?

The “best” software depends on your location and business size:

  1. For US Business Owners: QuickBooks Online is the safest bet because nearly every US accountant supports it.
  2. For UK Business Owners: Xero is generally preferred for its user interface and smooth HMRC integration.
  3. For Freelancers (US/UK): FreshBooks will save you the most time on invoicing.
  4. For $0 Budget: Wave is the only credible option.

Switching accounting software is difficult once you have started, so choose the one that fits your long-term goals. Most offer a 30-day free trial—sign up today and see which interface makes sense to you.

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