Questions to ask before you sign up for accounting software

For small business owners and landlords who suddenly find themselves in need of digital accounting software to comply with Making Tax Digital (MTD) for Income Tax, it can be a headache trying to work out the right fit. It’s easy to go for the first, cheapest, or what looks like the simplest option… just to get it out of the way.

With HMRC’s new way of reporting qualifying income and costs impacting millions of sole traders and landlords over the next couple of years, software providers are popping up all over the place, promising perfect solutions. At the time of writing, there were 144 results on HMRC’s MTD for Income Tax software finder.

But not all software is created equal. It’s crucial to look a bit deeper before you commit, to make sure that the software package you choose won’t pile on extra charges for features you need, leave you high and dry at the end of the tax year, or fall short further down the line.

To help you spot potential pitfalls, we’ve created this helpful checklist of questions you should ask before you sign up for accounting software.

• What sort of business income do you have?
• Can the software handle your business needs now and in the future?
• Is the software HMRC-recognised?
• Will it handle your day-to-day business?
• Is it tried and tested - or a quick-fix that’s been rushed out?
• What’s included as standard - will there be costly add-ons?
• Can it handle all the ways customers pay you?
• What happens if you change your mind?
• Does it have a mobile app?
• How comfortable are you with accounting software?
• Can your accountant or bookkeeper access it directly?
• What support is available?
• If it’s free, are you getting the full version?

What sort of business income do you have? 

Check the software will cope with all your sources of income, especially if you make money from multiple income streams - such as income from renting out property, as well as a sole trade. And ask if you can connect more than one bank account to your software.

With MTD for Income Tax, you need to make a separate submission to HMRC for each of your qualifying income streams, i.e. income from a sole trade and/or income from property - so you need to be confident you will be able to file correctly for each of your sources of income using your software. FreeAgent has a useful guide explaining how to make it easier to manage multiple income streams for MTD for Income Tax. 

It’s also important to check if the software you choose is able to deal with more complex business needs such as VAT, or payroll for employees if you have staff.

Can the software handle everything you need - not just today but for your business’s future?

It’s worth thinking ahead about how your business might grow or develop, and considering whether the software you’re looking at will be able to grow with you - as well as how much more it might cost that future you! A basic solution now might not suit you in a year or two, meaning you’d have to move your accounts to a new software provider (not ideal!). 

It will save time (and potentially also money) if you choose a software that’s fully equipped for whatever comes your way - whether that’s more employees, or doubling your sales. 

Long-time FreeAgent customer Clive Steed, Managing Partner at infrastructure consultancy Utility Results, says he loves how FreeAgent has been there for his business as they’ve grown over the last decade. “FreeAgent has evolved over time, it’s grown with us,” he explains. 

Note: This is especially important to consider if you are using MTD for Income Tax. You can only change your software at the start of a tax year with MTD for Income Tax - not at any other time. If you switch mid-year you have to re-create your records from the beginning of the tax year, in your new software.

Is the software HMRC-recognised?

Accounting software must be HMRC-recognised in order to file MTD for Income Tax or MTD for VAT submissions, so check your chosen software package is on the recognised providers list before you sign up for anything. 

In the rush to offer a basic service, nearly all software providers are still working on creating the tools to send your MTD for Income Tax final declaration, so they’re not yet fully ready. Not FreeAgent. Our full solution is already in place. In fact, as of September 2026, HMRC’s internal numbers showed FreeAgent had more customers who had successfully filed a full year’s MTD for Income Tax under the 2025/26 trial phase than any other solution on the market. That’s customers who had completed all quarterly updates and the final declaration. Here’s what some of FreeAgent’s MTD early adopters had to say about their experience.

Will it handle your day-to-day business?

You need to make sure the software will accurately and efficiently handle day-to-day bookkeeping tasks, so everything is in order when it comes to submitting quarterly updates and your final declaration to HMRC for MTD for Income Tax. 

It’s important that your income and expenditure are correctly recorded and categorised as you go along - and that you will be able to review and update them if required. Otherwise you could end up with a lot of unpicking and correcting to do when you’re up against the final tax deadline.

Tattoo artist Poppy Luna uses FreeAgent to do her books every month - making sure she never has any unpleasant surprises come tax time. “Even when it’s January and time for taxes, I’m not stressing, my money is already set aside,” says Poppy.

Is it tried-and-tested accounting software… or a basic quick fix that’s been hurried out to capitalise on the MTD rush? 

You may have seen business bank accounts adding integrated MTD tools. It can sound like an attractive, simple proposition… but it’s worth checking the fine print. Many only offer a limited MTD for Income Tax service, without any additional tax or business admin capabilities. 

Fully-fledged accounting software can do so much more than simply sending your MTD for Income Tax submissions to HMRC. It can be an incredibly powerful tool to save you time on business admin, and provide real-time insights into your profit and loss and tax liabilities, giving you confidence and helping you to plan more clearly. So, look at what it offers beyond filing tax returns.

Psst! FreeAgent has automations for things like invoicing, to spare small business owners the hassle of chasing up payments, and Smart Capture for expenses, to instantly keep on top of day-to-day costs on the go with one snap of the phone camera. From time tracking to payroll, discover the range of features at your fingertips with FreeAgent.

How many features are included as standard - and will there be add-ons that increase your costs down the line?

Check what’s included as standard in the software package before you sign up, and also be clear about which features come with an extra charge. The headline pitch may say it’s free to submit MTD for Income Tax updates - but costs can quickly mount up if, for example, you have a limit on how many invoices you can send before extra charges kick in. FreeAgent is transparent about everything that’s included and the two add-ons you might choose to pay for.

Can it handle all the ways customers pay you? 

Think about how your customers pay you, and check your bookkeeping software will be able to accommodate it all - so you don’t end up with a mountain of information you have to input manually. Will it recognise income from multiple bank accounts? Is it easy to record cash transactions, or expenses paid personally? If you take payment by card, does the software include Tap to Pay? Can you easily create and send invoices to clients? If you sell online, what sort of e-commerce does it support - and can your sales platforms link to your software? Being paid is the ultimate goal of your business, so make sure your software has your back.

What happens if you change your mind and want to switch to a different software?

If you signed up for new software but later change your mind, you need to know how to get your business data from the old software into your new one. This can be time consuming if you belatedly discover you have to input all your past transactions manually.

So ask how you will be able to download your information from the software - e.g. your opening balance, customer contacts lists, bank statements, debtors and creditors. Can you get a CSV or similar file? Downloading your existing accounting data in an accessible format should make it more straightforward if and when you want to set up new software. Here’s how that works in FreeAgent.

Do you want to be able to access your accounts and do your admin when you’re on the go? 

If your work takes you out and about, look for software with a reliable mobile app. The best offer a wide range of functions to help you nail admin on the go. Time tracking, recording mileage and expenses, invoicing, and even filing MTD for Income Tax quarterly updates are all easy to do by mobile if you are using an app packed with plenty of features.

FreeAgent customers tell us they’ve done their accounts in all sorts of weird and wonderful places, from the Big Brother: Late and Live set to a maternity ward!

But if work normally finds you at your desk… a purely mobile offering might hold you back instead of setting you free. Find a software package that has a friendly and clear app for laptop or desktop computers. (Or why not have both with FreeAgent?) 

How comfortable are you with accounting software?

If you’re not too familiar with bookkeeping and accounting software, it will help if you choose software that’s friendly, clear and easy to understand, with a solid range of options for support when you need it. Good software should be intuitive and make taking care of business as smooth as possible. 

“You want it to be very easy. You want it to be really user friendly. And you want it to be efficient,” says FreeAgent customer and deli owner Lynsey Hogg. “FreeAgent does all that. It’s doing the work for you.”

Can your accountant or bookkeeper access it directly?

If you already work with an accountant or bookkeeper, they will need to be able to access your accounting records - all your income and expenses, your tax records, and MTD for Income Tax quarterly updates and final declaration. So ensure that your software will also provide access for your accountant. 

What support is available if you get stuck?

Read reviews to see how highly rated (or not) the company’s support is. Are you restricted to a chatbot? Does the software provider have a searchable database of guides to help you use their product? Do they have library of business support articles you can use 24/7? Are there webinars - live or recordings - you can watch for even more support?

These are a great starting point. But accounting and tax are among the biggest stressors for small business owners - so it’s good to know whether there’ll be a friendly, knowledgeable human available if you need more support. And read the small print so that you’re clear if there will be extra charges for accessing the full range of support options.

If you’re getting software free - are you getting the full version?

Some ‘free’ software offers are so basic customers quickly find they have to fork out an additional monthly fee to access the essentials - things like human support on webchat or adding more than one bank account.

When you get FreeAgent for free with an eligible bank account, you get the full package with no hidden surprises or unexpected added fees. There are optional add-ons that might suit some businesses - but you have full access to all FreeAgent’s core functions (including human support) if you have a business bank account with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle. 

What’s the big takeaway?

Your big takeaway should be: ask questions and shop around. Don’t rush in and get tied down to ‘free’ accounting software that’s weighed down with hidden charges, and don’t end up with an option that simply doesn’t have the capability to do everything you need for now and the future.

Find out more about how FreeAgent can help you get MTD done. 

Ready to join over 250,000 happy customers? Sign up for a free, 30-day FreeAgent trial now. Or find out how you can get FreeAgent free for as long as you maintain an eligible business account with NatWest, Royal Bank of Scotland or Ulster Bank, or make one transaction a month from your Mettle account.