Why Your Accounting Needs a Stack
Modern accounting isn't just software that produces invoices. It's an ecosystem of connected tools that:
- **Captures receipts** automatically from photos
- **Tracks expenses** without manual data entry
- **Reconciles bank accounts** with live feeds
- **Processes payroll** and files with HMRC
- **Produces reports** for decisions and compliance
- **Shares data** with your accountant seamlessly
The right stack saves hours weekly, reduces errors, and gives you real-time visibility into your finances.
The Foundation: Core Accounting Software
Xero
**Best for**: Businesses wanting clean design, strong app ecosystem, accountant collaboration
**Pricing**:
- Starter: £15/month (limited invoices, no multi-currency)
- Standard: £30/month (unlimited invoices, multi-currency, projects)
- Premium: £42/month (all features plus expenses)
**Strengths**:
- Excellent UK bank feeds (direct connection to most UK banks)
- Beautiful, intuitive interface
- Strong app marketplace (1000+ integrations)
- Multi-currency handling
- Great for working with accountants
**Weaknesses**:
- Starter plan is restrictive
- Inventory management is basic
- Customer support can be slow
QuickBooks Online
**Best for**: Businesses wanting robust features, especially inventory and US/UK operations
**Pricing**:
- Simple Start: £12/month (1 user, basic features)
- Essentials: £24/month (3 users, bills, time tracking)
- Plus: £36/month (5 users, inventory, projects)
- Advanced: £76/month (25 users, advanced reporting)
**Strengths**:
- Powerful reporting
- Better inventory management than Xero
- Strong mobile app
- Good for businesses with US connections
**Weaknesses**:
- Interface feels busier than Xero
- Fewer UK-specific integrations
- Some features hidden in menus
FreeAgent
**Best for**: Freelancers, contractors, very small businesses
**Pricing**: £14.50/month (or free through some banks like NatWest/RBS)
**Strengths**:
- Simple, focused interface
- Excellent for self-assessment
- Self-employed tax estimator
- Free through partnership banks
**Weaknesses**:
- Limited scalability
- Fewer integrations
- Not suitable for larger businesses
Recommendation by Business Type
| Business Type | Recommended | Why |
|--------------|-------------|-----|
| Freelancer/Sole trader | FreeAgent | Simple, tax-focused, possibly free |
| Small service business | Xero Standard | Clean, great integrations |
| Product business | QuickBooks Plus | Better inventory |
| Growing business | Xero Standard or QB Plus | Both scale well |
| Working with accountant | Xero | Accountants love it |
Receipt Capture: No More Shoeboxes
Physical receipts fade, get lost, and create compliance headaches. Digital capture solves this.
Dext (Formerly Receipt Bank)
**Pricing**: From £20/month
**How it works**:
1. Photograph or forward receipts to Dext
2. AI extracts date, supplier, amount, VAT
3. Categorises automatically (learns your patterns)
4. Pushes to Xero/QuickBooks
**Strengths**: Excellent accuracy, integrates deeply with accounting software, handles invoices too
**Weaknesses**: Price adds up, overkill for very low volumes
Hubdoc
**Pricing**: Included with Xero Standard/Premium
**How it works**:
1. Forward documents or photograph receipts
2. Auto-extracts data
3. Publishes to Xero
**Strengths**: Free with Xero, good integration, fetches bills from supplier portals
**Weaknesses**: Less feature-rich than Dext
AutoEntry
**Pricing**: From £10/month (pay-per-document plans available)
**How it works**: Similar to Dext, with competitive pricing on lower volumes
**Strengths**: Flexible pricing, good accuracy, works with Xero and QuickBooks
**Weaknesses**: Interface less polished
Recommendation
- **Using Xero Standard/Premium?** Start with included Hubdoc
- **High receipt volume?** Dext is worth the investment
- **Budget-conscious?** AutoEntry's pay-per-document model
Expense Management
For businesses with employees making purchases:
Pleo
**Pricing**: From £0 (Starter) to £10/user/month (Pro)
**What it does**:
- Prepaid company cards for employees
- Real-time spending visibility
- Receipt capture via app
- Auto-categorisation and sync to accounting
- Spending limits per card/user
**Best for**: Teams making frequent small purchases, reducing expense claims
Soldo
**Pricing**: From £5/user/month
**Similar to Pleo** with slightly different features. Worth comparing both.
Moss (Formerly Spendesk)
**Pricing**: Custom (typically mid-market businesses)
**Features**: Expense management, virtual cards, approval workflows
Basic Alternative: Accounting Software Built-in
Xero and QuickBooks both have expense claim features:
- Employees submit claims via app
- Manager approves
- Reimbursement tracked
Less sophisticated but included in your subscription.
Payroll
UK payroll is complex: PAYE, NI, auto-enrolment pensions, RTI submissions. You need proper software.
Xero Payroll
**Pricing**: From £5/month + £1/employee
**Integrated with Xero**: Journals post automatically
**Handles**: PAYE, NI, student loans, pensions, RTI filing
**Strengths**: Seamless if using Xero, clean interface
**Weaknesses**: Basic pension management, no HR features
QuickBooks Payroll
**Pricing**: From £6/month + £2/employee
**Integrated with QuickBooks**: Similar seamless experience
**Handles**: Same compliance requirements
Gusto (UK)
**Pricing**: From £5/month + £5/employee
**Strengths**: Modern interface, employee self-service, some HR features
**Weaknesses**: Newer to UK market
Standalone Options
**BrightPay** - From £99/year (flat fee)
- Powerful, popular with accountants
- Excellent value for larger employee counts
- Integrates with Xero, QuickBooks
**Sage Payroll** - From £7/month
- Long-established, reliable
- Good for complex payroll scenarios
Recommendation
- **1-10 employees, using Xero/QuickBooks**: Use integrated payroll (simplest)
- **10+ employees or complex requirements**: Consider BrightPay for value
- **Growing team with HR needs**: Look at combined HR/payroll solutions
Banking Integration
Bank Feeds
Automatic transaction import is essential. Both Xero and QuickBooks support:
- **Direct feeds**: Real-time connection to major UK banks
- **Open Banking feeds**: Connection via secure API
- **Manual import**: CSV upload for banks without feeds
**Setup**: Link your bank in Settings → Bank Accounts. Most UK banks support direct or Open Banking feeds.
Reconciliation
Daily reconciliation takes minutes:
1. Transactions import automatically
2. Software suggests matches to invoices/bills
3. You confirm or categorise
4. Bank balance matches accounting records
**Tip**: Reconcile weekly at minimum. Daily is better. Backlogs become painful.
Integrations Worth Having
Payment Processing
**GoCardless** - Direct Debit collection
- Integrates with Xero/QuickBooks
- Auto-reconciles payments
- Great for recurring billing
**Stripe** - Card payments
- Integrates with most accounting software
- Online payment links on invoices
- Enables "Pay Now" functionality
CRM Integration
Connect your CRM to push invoices and see payment status:
- HubSpot → Xero/QuickBooks (native integration)
- Pipedrive → Xero/QuickBooks (via apps)
- Salesforce → Various connectors
E-commerce
If you sell online:
- **Shopify** → Xero/QuickBooks (dedicated apps)
- **WooCommerce** → Integrations available
- **Amazon** → Various connectors
Time Tracking
For billable hours:
- **Xero Projects** (included in Standard/Premium)
- **QuickBooks Time**
- **Toggl** → Both platforms
- **Harvest** → Both platforms
Building Your Stack
Minimal Stack (Freelancer/Sole Trader)
| Need | Tool | Cost |
|------|------|------|
| Accounting | FreeAgent or Xero Starter | £15/month |
| Receipt capture | Phone photos to app | Included |
| Invoicing | Built-in | Included |
| Banking | Direct feed | Included |
| **Total** | | **~£15/month** |
Small Business Stack (1-10 Employees)
| Need | Tool | Cost |
|------|------|------|
| Accounting | Xero Standard | £30/month |
| Receipt capture | Hubdoc | Included |
| Payroll | Xero Payroll | £5 + £1/employee |
| Payments | GoCardless + Stripe | Transaction fees |
| **Total** | | **~£45/month** + payroll |
Growing Business Stack (10-50 Employees)
| Need | Tool | Cost |
|------|------|------|
| Accounting | Xero Standard or QB Plus | £30-36/month |
| Receipt capture | Dext | £20/month |
| Expense cards | Pleo | £0-10/user/month |
| Payroll | BrightPay or integrated | £99/year or per-employee |
| Payments | GoCardless + Stripe | Transaction fees |
| Time tracking | Xero Projects or Toggl | Included/£8/user |
| **Total** | | **~£100-200/month** |
Working With Your Accountant
Advisor Access
Both Xero and QuickBooks allow you to invite your accountant:
- **Read-only access**: They can view but not change
- **Standard access**: They can make entries and adjustments
- **Advisor access**: Full access including settings
**Best practice**: Give your accountant proper access. Avoid sending exports—real-time access is far more efficient.
What Your Accountant Should Do
- **Monthly/quarterly review**: Check coding, reconciliation, adjustments
- **Year-end**: Prepare accounts, corporation tax, annual return
- **VAT returns**: Review and submit (or train you to do it)
- **Strategic advice**: Tax planning, business growth
**What you should do**: Keep transactions flowing, receipts captured, reconciliation current.
Authority Resources
- **HMRC Making Tax Digital**: [gov.uk/guidance/making-tax-digital](https://www.gov.uk/guidance/making-tax-digital) - Digital record-keeping requirements
- **HMRC RTI (Payroll)**: [gov.uk/running-payroll](https://www.gov.uk/running-payroll) - Payroll reporting requirements
- **The Pensions Regulator**: [thepensionsregulator.gov.uk](https://www.thepensionsregulator.gov.uk/en/employers) - Auto-enrolment duties
- **ICAEW Choose Your Software**: [icaew.com/technical/technology/software](https://www.icaew.com/technical/technology/software) - Accountancy body guidance
Your Accounting Tech Checklist
**Foundation**
- [ ] Core accounting software chosen and set up
- [ ] Bank feeds connected and working
- [ ] Chart of accounts configured appropriately
- [ ] VAT settings correct (scheme, frequency)
**Transactions**
- [ ] Receipt capture system in place
- [ ] Expense process documented (if applicable)
- [ ] Invoice template set up with branding
- [ ] Payment methods enabled (bank, card, DD)
**Payroll (If Applicable)**
- [ ] Payroll software connected to accounting
- [ ] Employees set up correctly
- [ ] Pension provider integrated
- [ ] HMRC Gateway linked
**Integrations**
- [ ] CRM connected (if using one)
- [ ] E-commerce connected (if selling online)
- [ ] Time tracking connected (if billing time)
**Accountant Access**
- [ ] Accountant invited with appropriate access
- [ ] Agreed who does what (responsibilities clear)
Getting Started This Week
**Day 1**: Sign up for Xero or QuickBooks trial, explore the interface
**Day 2**: Connect your bank account and import transactions
**Day 3**: Set up receipt capture (Hubdoc if Xero, mobile app if QuickBooks)
**Day 4**: Create and send a test invoice
**Day 5**: Invite your accountant (or find one if you don't have one)
The best accounting stack is the one you actually use. Start simple, get the habits right, then add complexity as needed. A connected, well-maintained system beats a sophisticated one that's neglected.