The SMB’s guide to upgrading your accounting software

Chapter 1

Why update your accounting software?

Most small businesses spend more time on accounting than they should. According to the Federation of Small Businesses, UK SMBs spend 12 days a year on tax compliance alone. Another study found that small businesses in the UK are wasting 120 days a year on mundane back office tasks because they don’t have the right systems in place to improve efficiency. Those tasks include invoicing, tax and payroll. 

Modern accounting software for small businesses can give you a significant chunk of that time back. It can automate mundane tasks and free up your employees for more productive work (up to three hours a day, according to one piece of research). It can ensure accuracy and compliance to keep the taxman at bay. All the while making your life easier and letting you focus on what matters: running your business. 

In this paper we’ll go into more detail about why you should upgrade your small business accounting software, and how to go about it.

How to use financial reports to make better business decisions

Accounting software? What accounting software?

OK. We realise that many small businesses aren’t at the upgrading stage, because they’ve never used accounting software at all. If you still rely on spreadsheets and paper receipts, the really good news is that a world of automated delights is just a small monthly outlay away. 

Manual accounting processes are slow, frustrating and prone to error. They’re also about to become obsolete, because the taxman won’t allow them any more.

HMRC wants digital finance: Making Tax Digital

The reason for this is Making Tax Digital (MTD), part of the Government’s aim to make HMRC “one of the most digitally advanced tax administrations in the world.”

MTD aims to make it easier for individuals and businesses to get their tax right, while eliminating the mistakes that cost the exchequer over £9 billion a year. So what does MTD mean for you?

That might sound like a massive inconvenience, but SMBs that are still reliant on manual accounting processes are likely to find that, after a few bumps in the road, the digitisation of tax makes life a lot easier.

Outdated accounting software

The same is true to some extent if you use outdated accounting software. You may have moved on from spreadsheets and paper receipts, but legacy software comes with its own issues. For example…  

So why don’t you upgrade?

We know, upgrading your finance automation tools is easier said than done. With 80% of small business leaders struggling to find time for anything but day-to-day survival, it’s no surprise that fixing something that doesn’t seem broken is low on the list of priorities. 

In those circumstances, choosing, installing and learning new accountancy software can seem like a headache nobody wants to have. But not only is modern accountancy software designed to be user friendly and easy to grasp, it can also cure more headaches than it creates. We’ll explore what it solves, and how, in the next chapter.

Chapter 2

Accountancy packages today

A modern accountancy package can make business better in several ways:

It will make accounting more than just a chore

Good accountancy packages automate lots of things that nobody likes doing. But they are far more than replacements for office drudgery. They should give you real insight to help improve your business:

Project and time management. Is a project coming in on time and on budget? Full-featured packages go beyond accounting and into the realms of project management and time tracking.

It will make customers happier

When customers get a readable document, with goods or services received and payment terms clearly laid out, they’re more likely to pay on time. Modern accounting software makes professional invoicing easy. 

Good software will also offer multiple payment gateways, so your customers can pay in the ways they prefer. That includes card payments, bank transfers and Direct Debit, but could also include payments from the likes of Paypal, Go Cardless and Stripe through third-party integrations. 

All of these mean less time chasing payments and other thankless admin, and should benefit your cashflow too.

It will make employees happier

So yes, good small business accounting software is far more than a replacement for office drudgery. But it is a replacement for office drudgery, and your finance-facing employees will thank you for it (while potential employees will be attracted to your business because of it). Good small business accounting software will…

(But do talk to your accountant)

If you’re about to change your accounting software, your accountant really needs to know. (S)he also knows what your business needs, and can be an ongoing source of expertise, especially if (s)he uses the same software. Ask for their advice before committing.

Should you go for a free package?

A lot of accounting packages offer free trials of up to 30 days. A few stay free forever, at least in limited form. These can be excellent options, if you have simple requirements. 

Wave Accounting is a good example. It lets you create invoices, schedule reminders, record payments, upload expense receipts and more.

But it doesn’t give you detailed reporting, inventory tracking, time and project management and tax estimates. It has very few integrations. Many free packages are aimed at cash-strapped freelancers, microbusinesses and Etsy or Ebay traders. Larger SMBs will need the more advanced tools which only paid-for options provide.

A head for the cloud

Free or paid, most modern accounting software is housed in the cloud. This means you don’t own the software outright, but rent it online on a monthly basis. There are several advantages to this:

Accounting software is therefore following a well-worn path. Gartner predicts that SaaS – already the largest segment of the cloud computing market – will grow revenues by 17.8% in 2019, reaching $85.1 billion globally.  So don’t be scared of the cloud (if you have Office 365, Slack, Gmail or Trello, you’re already using plenty of cloud services already…)

Chapter 3

What accounting software for SMBs is out there?

When it comes to accounting software for small business, you are spoilt for choice. There are dozens of options at varying pricepoints – and some of them are ideal for specialist requirements. 

Here are five of the big players and what they offer.

Quickbooks Online

QuickBooks started out as a desktop package, and has now migrated to the cloud. It is hugely popular.

What it offers?

All the basics – invoicing, expenses, bank reconciliation, tax – and pretty much everything else you’ll ever need. QuickBooks can run over 80 reports, so you always have a full picture of the state of your business finances, and integrates with hundreds of third party apps, from receipt management tool Receipt Bank to budgeting solution LivePlan.

What it doesn’t?

Some features are only available at higher price points.


What it offers?

As well as a full raft of bookkeeping and accounting tools, Xero features a couple of more unusual features, like a fixed asset manager and inventory management. It also boasts hundreds of integrations. 

What it doesn’t?

As with QuickBooks, some features are only available at higher price points.

Zoho Books

Zoho Books is part of the extensive Zoho family of small business automation software packages, integrating well with its siblings.

What it offers?

Zoho Books offers all standard features, with standout invoicing and contact management tools. It also includes project management and time tracking. It’s quite cheap, too.

What it doesn’t?

Zoho Books isn’t as well connected with third party services as some others.

Sage One

Sage is better known for its enterprise accounting solutions, but Sage One is a capable small business accounting software package.

What it offers?

All standard features plus inventory tracking, detailed reporting and good links to, among others, Google Drive. 

What it doesn’t?

Like many others, it lacks a native payroll feature.

Wave Accounting

Wave is a free accounting package for freelancers and very small businesses, though it also offers some pay-as-you-go features.

What it offers?

Wave is more of a sophisticated bookkeeping tool for very small businesses than a full accounting solution. It covers the basics well, like invoices, recurring invoices, estimates and a bank feed.

What it doesn’t?

Wave lacks time and project-tracking tools, and offers very few third-party integrations.

QuickBooksXeroZoho BooksSage OneWave 
Best for…SMBsSMBsSMBsGrowing SMBsFreelancers
Mobile accessYesYesYesYesYes (Only invoicing)
MTD supportYesYesYesYesNo (Wave customers can use “approved bridging software”
Price/month (after special offers)Simple Start: £12Essentials: £18Plus: £27Starter: £10Standard: £24Premium: £30Basic: £6 Standard: £12 Professional: £18Accounting Start: £12Accounting: £24Free (though some extra features are pay as you go)

Chapter 4

Evaluating accounting software functionality

You’re upgrading, but what do you really need? It depends to a large extent on what you do, so here are some of the factors and criteria that should influence your decision.

Mobile app

Nearly all modern cloud-based accounting packages (and all the ones mentioned above) come with a mobile app, but these differ in functionality. Some are just basic invoicing tools, letting you chase invoices on the go, while others offer deeper functionality.


If you have international customers you will need multi-currency support. That’s available in all the packages listed above, but only Zoho Books offers it in the cheapest base-level package. Wave offers a limited currency tool.

Time saving finance automations

Automating mundane and time consuming tasks is a large part of the appeal of small business accounting software. Most packages automate:


Most packages will calculate and submit VAT returns.


Detailed and accurate accounting reports give you a clear overview of money coming into and going out of your business. The best software packages let you run dozens of different reports in seconds, giving you insight not only into Profit and Loss but also – for example – your best customers and worst debtors.

Invoice templates

Does the software feature multiple invoice templates, and are they customisable (so you can add your company logo, payment terms and so on)?


A good selection of integrations (via secure APIs) will let your accounting software become the centre of a financial services universe, by connecting third party services for everything from project management to payment processing. As an example, a powerful expense management tool like Soldo integrates seamlessly with Xero, saving you hours of brain-numbing data entry. Make sure your chosen software integrates with the services you need. Ideally, you should never waste time re-typing numbers ever again!

Users and transactions

Does the price point offer everything your business needs? For example, QuickBooks’ cheapest price point allows only one user profile, while its most expensive offers five. You may also want a package offering various ‘permissions’, so that different employees have different levels of access to company data.

Similarly, Xero’s cheapest price point limits you to five invoices a month, compared to unlimited invoicing with its pricier plans.

Contact management

Packages differ on how they handle contact management. The leaders in this area let you not only create contacts and enter basic details, but let you add tax and payment details, reporting tags, remarks and custom fields. You can even group contacts for collective invoicing.

Do small businesses need accountants?

Chapter 5

Starting out with new accounting software

After all that, you might be looking forward to cutting admin hours, delighting hard-pressed staff, and increasing business insight. But first you need to get to grips with the thing…
Here’s how to get started.

Prepare for the change

Use the free trial as training

Use your free period as training. Ensure key staff go through the in-built training modules. Fall back on the provider to fill in any gaps (cloud software helpdesks are much more useful and responsive than software providers were ten years ago…). Stick to mastering the simple, most-used features first.

Make the switch

If you get stuck

Providers tend to offer a mix of phone, email or live chat support, plus in-depth FAQ sections, information hubs and a community forum. You’re highly unlikely to come across an issue that somebody else hasn’t come across before. If all else fails, ask an accountant with knowledge of the software package to help set it up for you. 

You’re all set! There might be the odd hiccup along the way, but one thing we can say with certainty is that, if you currently use outdated software or manual accounting processes, you won’t regret the decision to upgrade. Good luck!

Soldo integrates with small business accounting software

Soldo is a sophisticated business expenses solution that empowers staff with controlled access to company money, while making expense tracking and management easier than ever. Soldo integrates seamlessly with accounting software for small business, and especially Xero. Learn more about Soldo and their prepaid cards for business here.