Xero, QuickBooks, Sage or FreeAgent? How to choose accounting software for a UK small business

1. Compliance first

In the UK the non-negotiable is Making Tax Digital. HMRC publishes searchable lists of compatible software for VAT ^[1] and explains what software must do for MTD for Income Tax ^[2]. All four of the best-known products are widely used for MTD, but always confirm the specific plan you are buying covers the returns you need to file.

2. Fit the software to how you work

• Invoicing: can you send invoices from a phone on site, add your payment details and set payment terms per customer?
• Bank feeds: does it connect to your bank so payments are matched without retyping?
• Construction: does it handle CIS deductions and the VAT domestic reverse charge if you work in building?
• Projects: can you tag income and costs to a job to see margin per site?
• Your accountant: which system do they use for clients? Shared access saves hours at year end.

3. The four common choices at a glance

• Xero — cloud accounting with a large marketplace of connected apps and a public API ^[3].
• QuickBooks Online — Intuit's cloud product, also with a public API used by many add-ons ^[4].
• Sage — a long-established UK name with cloud accounting for small businesses and a developer platform ^[5].
• FreeAgent — built for freelancers and micro-businesses, with an open API ^[6].

We deliberately do not rank them: the right answer depends on your trade, your accountant and the apps you want to connect.

4. Check what it connects to

Modern accounting software is a hub. Payroll, job management, receipt capture and credit control tools connect through OAuth, which lets you grant access without sharing your password and revoke it at any time ^[3][4].

An open API also protects you: your data can leave with you if you change systems.

5. Don't forget getting paid

Accounting software records who owes you money; it does not usually chase it with the legal detail a UK business can rely on. Nemexio connects to Xero, QuickBooks, Sage and FreeAgent, reads overdue invoices and sends factual reminders that cite statutory interest and, for construction, the Construction Act deadlines.