Best accounting software for tradespeople: Xero vs QuickBooks vs FreeAgent

Most tradespeople pick their accounting software based on what their accountant recommends or what they saw advertised. The result is often paying for features they never use, or missing features they desperately need. Here is a straight comparison of the three platforms that dominate the UK trade market — Xero, QuickBooks, and FreeAgent — covering what each does well, what it costs, and which type of trade business it suits best.

Why accounting software matters for tradespeople

HMRC's Making Tax Digital (MTD) programme requires all VAT-registered businesses to keep digital records and submit VAT returns using compatible software. If your turnover is above the VAT threshold (£90,000 as of 2026), you cannot use spreadsheets or paper records for VAT — you need MTD-compatible accounting software. All three platforms covered here are MTD-compliant.

Beyond compliance, good accounting software saves you money on accountancy fees (because your books are cleaner and less time-consuming to review), gives you a real-time view of what the business owes and is owed, and makes CIS (Construction Industry Scheme) deductions and returns far simpler to manage.

The key features to evaluate for a trade business are: VAT and MTD support, CIS handling, bank feeds, invoicing quality, mobile receipt capture, payroll (if you have employees or subbies), and integrations with job management tools like Trade2Base.

Xero: best for VAT-registered businesses with employees

Xero is the most feature-complete option and is the preferred platform for most accountants who work with trade businesses. It handles VAT returns, CIS deductions, bank feeds, payroll (via Xero Payroll, included in higher tiers), and expenses. The reporting suite is the strongest of the three, giving you profit-and-loss, balance sheet, and aged debtors reports without needing to upgrade.

For trade businesses on CIS — builders, groundworkers, and subcontractors — Xero's CIS module handles subcontractor verification, deduction calculations, and monthly CIS returns to HMRC. This alone is worth the premium over cheaper options if you are regularly deducting CIS from subbies or having CIS deducted from your own invoices.

Xero Starter costs around £16/month, but the plan limits you to 20 invoices per month — not enough for a busy trades business. Xero Standard (£33/month) removes the invoice cap and suits most sole traders and small teams. Xero Premium (£47/month) adds multi-currency and is overkill for most UK-only trade businesses.

The main criticism of Xero is complexity — there is a learning curve, and if you have no bookkeeping background, you will likely need a brief walkthrough from your accountant. The mobile app is functional but less intuitive than QuickBooks for on-the-go receipt capture.

QuickBooks: best for sole traders who want simple

QuickBooks Self-Employed and QuickBooks Simple Start are designed for people who want to track income and expenses without becoming an accidental bookkeeper. The interface is clean, the mobile app is excellent for photographing and categorising receipts on the go, and the mileage tracking feature (which logs journeys automatically via GPS) is genuinely useful for tradespeople driving between jobs.

QuickBooks Self-Employed (£10/month) is aimed at sole traders below the VAT threshold. It covers income, expenses, mileage, and a Self Assessment tax estimate. It does not support VAT returns or CIS — so if you are VAT-registered or on CIS, you need at least QuickBooks Simple Start (£14/month) or QuickBooks Essentials (£28/month) for multi-user access and time tracking.

QuickBooks is the easier platform to use without an accountant, and Intuit's customer support is generally well-regarded. The downside is that UK accountants are more likely to prefer Xero, so switching if you hire an accountant later is common.

FreeAgent: best for freelancers and very small sole traders

FreeAgent is a UK-built platform with a long history in the freelancer and contractor market. It handles self-assessment tax returns, VAT, MTD, invoicing, and expenses well, and the tax timeline feature — which shows you how much tax you owe at any given point in the year — is uniquely helpful for sole traders who want to set aside the right amount each month.

FreeAgent is free for NatWest, Royal Bank of Scotland, and Ulster Bank business account holders. For everyone else, it costs around £19/month for sole traders and £29/month for limited companies. It supports MTD VAT returns and basic CIS handling, but its CIS tools are less comprehensive than Xero's for businesses with multiple subbies.

FreeAgent works best for a sole-trader plumber, electrician, or decorator below or just above the VAT threshold who has no employees and wants a straightforward system. If your business grows — particularly if you take on employees or subbies — you will likely need to migrate to Xero.

Feature and price comparison at a glance

Here is a side-by-side summary of the key features for a UK trade business:

What features matter most for trade businesses?

When evaluating accounting software for a trade business, these are the features that actually move the needle day to day:

• Bank feeds: automatic importing of your business bank transactions. Without this, you are manually entering every payment received and expense paid. Bank feeds save several hours of bookkeeping per month.
• MTD VAT: mandatory if you are VAT-registered. All three platforms handle this, but check whether your current plan includes it or requires an upgrade.
• CIS: if you regularly work as a subcontractor or engage subbies, CIS handling is essential. Xero is the clear leader here.
• Mobile receipt capture: photographing and categorising receipts from the van or site as soon as you get them — rather than stuffing paper receipts in the glovebox — is a genuine quality-of-life improvement.
• Integrations: does it connect to your job management or CRM tool? This is where significant time savings come from for busy trade businesses.

How Trade2Base integrates with Xero

Trade2Base connects directly to Xero via a two-way integration. When you raise an invoice in Trade2Base from a completed job, it automatically creates the corresponding invoice in Xero — populated with the correct line items, VAT treatment, and customer details. You do not need to re-enter the data in your accounting software.

Payments recorded against invoices in either system sync back to the other. If a customer pays via bank transfer and your bank feed matches the payment in Xero, Trade2Base updates the job record to show the invoice as paid automatically. If you mark an invoice as paid in Trade2Base, the invoice in Xero is updated in real time.

Expenses recorded against jobs in Trade2Base — materials, subcontractor costs, hired plant — can also be pushed to Xero as purchase records, keeping your job-level profitability visible in Trade2Base and your accounts accurate in Xero without any double-handling. For a VAT-registered heating business processing 30 or more invoices per month, this integration typically saves 2–3 hours of bookkeeping time per month and eliminates the risk of invoices being omitted from VAT returns.

The bottom line: which should you choose?

If you are VAT-registered, have any employees or subbies, or are on CIS — go with Xero. The additional cost over QuickBooks and FreeAgent is repaid in accountancy fee savings and the CIS module alone. Most accountants who work with trade businesses will recommend it.

If you are a sole trader below the VAT threshold, just starting out, or want the simplest possible setup — QuickBooks Self-Employed or Simple Start is the easiest to get up and running without help. The mobile app is the best of the three for on-the-go use.

If you bank with NatWest or RBS, use FreeAgent for free — it is a solid platform for sole traders and the price (nothing) cannot be beaten. If you do not, the cost saving over Xero is modest once you account for the slightly higher accountancy time involved in managing FreeAgent's less comprehensive reporting.