What to Look for in Bookkeeping Software

The bookkeeping software market is crowded and confusing. Every product claims to be the simplest, cheapest, and most powerful option. The reality is that most of them are adequate for basic needs, but the differences that matter are often not the ones highlighted in marketing materials. Here is what to actually evaluate when choosing bookkeeping software for a small business.

MTD compatibility is now non-negotiable. If you are a sole trader or landlord with income above the relevant threshold, your software must be able to submit quarterly updates to HMRC. This is not a nice-to-have feature — it is a legal requirement. Check that the software is on HMRC's list of recognised products and that it supports the specific MTD obligations relevant to your business.

Bank feeds are the single most important time-saving feature. Software that connects to your bank account and imports transactions automatically eliminates the most tedious part of bookkeeping — manual data entry. Look for software that supports your specific bank and that imports transactions reliably. Some cheaper tools only support manual CSV imports, which saves less time than real-time bank feeds.

Receipt capture matters more than most people realise. The ability to photograph a receipt with your phone and have it attached to the relevant transaction is transformative for record-keeping. Under MTD, you need to keep records of all business expenses. A phone-based receipt capture feature means you can record expenses as they happen rather than accumulating a pile of paper that you sort through once a month — or once a year.

Categorisation intelligence saves time and improves accuracy. Good software learns from your previous categorisations and suggests categories for new transactions. Over time, this means most transactions are automatically categorised correctly, reducing your bookkeeping to reviewing and confirming rather than entering from scratch.

Reporting should give you a clear view of your profit and loss, your tax position, and your cash flow at any point. You should not need to wait until year end to know whether you are making money. Monthly or quarterly profit and loss reports, a running estimate of your tax liability, and a cash flow summary are the minimum useful reports.

Multi-currency support is essential if you invoice or pay in currencies other than GBP. Not all small business bookkeeping tools handle this well. If you are a freelancer working with international clients, check that the software handles exchange rates correctly and records currency gains and losses.

Accountant access is important even if you do not currently use an accountant. Your software should allow you to grant read-only or full access to a third party. This means that if you do engage an accountant — or when HMRC queries a submission — the relevant person can see exactly what you see without you needing to export data or share login credentials.

What matters less than you might think: the visual design of the dashboard, the number of integrations listed, mobile app ratings, and the celebrity endorsements in the marketing. These are vanity features. What matters is whether the software accurately records your transactions, submits correctly to HMRC, and does not lose your data.

Pricing models vary significantly. Some charge per month regardless of usage. Others charge based on the number of transactions. Some have free tiers with limited features and upsell constantly. The cheapest option is not always the best value — a free tool that requires hours of manual work costs more in your time than a paid tool that automates the process. Tools like Accounted are designed to give genuine value at every price point without artificial limitations.

Data export and portability should not be overlooked. If you decide to switch software in the future, you need to be able to export your full transaction history. Check that the software allows CSV or standard format exports. Lock-in through data inaccessibility is a common tactic that you should actively avoid.

Finally, try before you commit. Any decent bookkeeping software offers a trial period. Use it with real transactions — not just test data — for at least two weeks before making a decision. The true test is whether you are still using it after the initial enthusiasm wears off.