Which accounting software is best for a start up on a budget?

Choosing accounting software is one of the earliest financial decisions a start up must make, but it is also one of the most misunderstood. Many founders assume that the cheapest option is automatically the best when they are watching every penny, yet in my opinion the right choice depends on more than cost alone. You need something simple, reliable, easy to learn, and flexible enough to grow with you without forcing an expensive upgrade too soon.

In this guide I explain the most budget friendly accounting software options for UK start ups. I cover what each one offers, who it suits, what to expect from free or low cost plans, and how to choose the most sensible option even if you have never used bookkeeping software before. My aim is to give you a clear understanding of how each tool works so you can choose confidently.

What a start up on a budget should look for in accounting software

Before I dive into specific options it helps to understand what really matters for a new business. I have worked with thousands of founders and the ones who choose the right tools early save themselves a huge amount of stress later.

Ease of use

You need something you can learn quickly. If the software feels overwhelming you will avoid using it which creates messy records, missed deadlines, and higher accountant fees.

Clear bank feeds

The software should connect directly to your business bank so transactions upload automatically. This saves hours of manual entry.

Simple invoicing

Good software will send invoices, track payments, and allow customers to pay online.

VAT ready

Even if you are not VAT registered now you might be later. In my opinion choosing a system that can handle VAT from day one avoids switching later.

Affordable pricing

Start ups need predictable, low cost monthly fees without charging extra for every small feature.

Scalable features

The best software grows with your business rather than forcing a complete switch during your busiest months.

The best accounting software options for a start up on a budget

Below is an honest breakdown of the most suitable low cost options in the UK. I explain each one in plain language with my own view on who it suits and what to expect.

1. FreeAgent

FreeAgent is very popular with freelancers, consultants, and small limited companies. It has a clean, beginner friendly design and focuses on making day to day bookkeeping as simple as possible.

Why I think FreeAgent suits start ups

In my opinion FreeAgent works extremely well for service based start ups that want something easy to learn. The dashboard is simple, the invoicing is clean, and the tax timeline helps you keep track of deadlines. If you are on a budget but want professional level features, FreeAgent is usually a safe choice.

Key strengths

• Very easy to learn

• Clear tax timeline for Self Assessment and VAT

• Strong invoicing features

• Good mobile app

• Ideal for consultants and sole directors

Limitations

• Less suited to product based businesses

• Can feel limited if you scale quickly into more complex operations

• Some add ons increase the cost

2. Zoho Books

Zoho Books is one of the best value options on the market. It is feature rich, well designed, and significantly cheaper than many competitors.

Why Zoho Books is ideal for budget conscious founders

If I were launching a new business with tight cash flow I would seriously consider Zoho Books. The entry level plans are affordable and still include core features such as bank feeds, invoicing, expense tracking, and VAT support. The interface is clean and the software can scale nicely as you grow.

Key strengths

• Extremely affordable

• Great value for the features provided

• Strong reporting

• Suitable for both sole traders and limited companies

• Works well for product and service based businesses

Limitations

• Some advanced features require higher tier plans

• Fewer accountants use it compared with the biggest brands

3. QuickBooks Online

QuickBooks is a well known name and is used widely across UK small businesses. It tends to be slightly more expensive than other budget options yet still affordable for most start ups.

Why I recommend QuickBooks for slightly growing start ups

If you want a recognisable brand with strong support and plenty of tutorials, QuickBooks is a good choice. In my opinion it is not the cheapest but it is reliable and has enough features to last you several years as your business grows.

Key strengths

• Very powerful for the price

• Lots of training videos and guides

• Widely used by UK accountants

• Easy VAT submissions

• Integrates with dozens of apps

Limitations

• Costs can creep up if you add payroll or advanced features

• More complex than FreeAgent or Zoho Books

4. Sage Business Cloud Accounting

Sage is one of the oldest UK accounting brands and offers a budget friendly cloud version designed for start ups and small businesses.

Why Sage is a good option for traditional businesses

If you prefer a British brand with a long history, Sage is worth considering. It is reliable, MTD compliant, and offers simple features for start ups who do not want anything flashy.

Key strengths

• Trusted UK brand

• Clear VAT functionality

• Good for straightforward bookkeeping

• Suitable for both sole traders and small limited companies

Limitations

• User interface feels less modern

• Some features feel basic compared with newer competitors

5. Wave Accounting (for very early stage businesses)

Wave is free accounting software that is popular with freelancers and small sole traders. While it is not UK specific it offers basic invoicing, expense tracking, and simple reporting.

Why Wave works only for very simple businesses

In my opinion Wave is fine if your business is extremely small and not VAT registered. However it is not MTD compliant and therefore cannot submit VAT returns, so you will need to switch once you grow.

Key strengths

• Free to use

• Simple and easy

• Good for micro businesses

Limitations

• Not MTD compliant

• No VAT support

• Not ideal for UK limited companies

Choosing based on your business type

In my opinion the right software depends heavily on the kind of start up you are running. Below is a simple breakdown to help you choose.

Best for freelancers and consultants

FreeAgent or Zoho Books

These two are the easiest to learn and ideal if your income is mainly from invoicing clients.

Best for limited companies that will grow

QuickBooks or Zoho Books

They offer strong reporting, VAT support, and scalable features once you hire staff or increase transactions.

Best for product based businesses

Zoho Books or QuickBooks

Both handle inventory and product tracking better than FreeAgent.

Best for very small, very early stage businesses

Wave or Zoho Books

Wave is free but limited. Zoho Books offers far more capability while still being very affordable.

Additional factors to consider

Cost over the first 12 months

If you expect your business to stay small during year one you can choose a cheaper system now and upgrade later. If you expect quick growth, it may be cheaper long term to pick software with more features from day one.

Accountant compatibility

Some accountants strongly prefer certain systems. If you already have an accountant, I would ask which platforms they support. Using something they are familiar with usually reduces your fees.

VAT registration

If you expect to hit the VAT threshold soon it is worth choosing software that handles VAT comfortably. In my opinion Zoho Books, Sage, and QuickBooks handle this best at budget friendly levels.

Payroll

If you are planning to employ staff you may want software that integrates payroll. QuickBooks and Sage offer this more naturally than some others.

Mobile usability

If you want to send invoices from your phone or upload receipts on the move I would lean towards FreeAgent or Zoho Books.

Real world examples

Example 1: A self employed photographer

They issue invoices, track fuel expenses, and want something simple that works on a mobile. In my opinion FreeAgent would be the easiest and most enjoyable.

Example 2: A new online shop selling products

They need bank feeds, inventory tracking, discount codes, VAT support, and integration with payment providers. Zoho Books or QuickBooks would be the better choice.

Example 3: A consultant who is turning into a limited company

They want clean invoicing and a system that scales once they hire a bookkeeper. Zoho Books or QuickBooks make strong long term options.

Example 4: A home based craft business with very low turnover

They have only a handful of sales and want to keep overheads minimal. Wave might work initially, but they will likely need to move to Zoho Books or FreeAgent later.

In my opinion: what I would choose

If I were launching a start up on a tight budget I would choose one of these two:

1. Zoho Books

Because it is the best value for money, provides strong features, works for both product and service businesses, and keeps costs low.

2. FreeAgent

Because it is the easiest to use, ideal for simple UK service based businesses, and helps beginners stay organised.

I believe these two offer the best balance of affordability and capability for most new business owners.

If I needed something more advanced or expected rapid growth, I would choose QuickBooks instead because it scales more naturally once the business becomes more complex.

Final thoughts

The best accounting software for a start up on a budget is the one that fits your current needs while giving you room to grow. You do not need the most expensive system when you start, but you do need something that helps you keep clean records, stay compliant, and understand your finances clearly.

In my opinion Zoho Books offers the strongest combination of price and features. FreeAgent is perfect for freelancers and consultants who want a simple life. QuickBooks is the obvious choice if you plan to expand into a more complex operation.

Whatever you choose, you should make keeping your accounts up to date a weekly habit. Software helps but only if you use it consistently.