FreeAgent vs Xero: which accounting software should a startup use?

By Buzz Accounting · Updated 2026-07-13 · Startups guide

FreeAgent and Xero are both online accounting software packages used by UK companies. Which suits your startup depends mainly on how far it plans to grow.

For a startup that plans to grow or raise money, Xero is the better choice. It handles several currencies, stock, projects and a larger team, and connects to a large range of other business apps. FreeAgent is simpler, is free with a Mettle business account, and suits a straightforward company that expects to stay small.

FreeAgent vs Xero at a glance

	FreeAgent	Xero
Built for	Freelancers & small businesses	Small to mid-sized businesses
Ease of use	Very easy	More features, and takes longer to learn
Cost to you with us	Included in our fee for simpler companies	From £18 a month + VAT, paid to Xero
Several currencies	Limited	Yes, on the £55 and £70 plans
Inventory / stock	Basic	Yes
Works with Making Tax Digital	Yes	Yes
Best for	Simple companies that expect to stay small	Startups that plan to grow

Xero for a startup that plans to grow

Xero handles sales in several currencies, stock, project tracking and a larger finance team, and connects to a large range of other business apps. Several currencies come with the Comprehensive and Ultimate plans, at £55 and £70 a month + VAT, and project tracking with Ultimate. Buzz is a Xero Gold Partner, and we set Xero up around how your business makes money.

FreeAgent for a simple company

FreeAgent is easy to use, and its tax timeline shows corporation tax and VAT building up through the year. It is free with a Mettle account, and it suits a straightforward company that expects to stay small.

Which to choose

Start on Xero if you plan to grow, hire or raise money, so that you do not have to move your records to new software later. FreeAgent suits a company whose finances will stay simple.

Our verdict

A startup that plans to grow should use Xero. It handles several currencies, stock and a larger team, and starting on it avoids moving to new software later. FreeAgent suits a simple company that expects to stay small.

Common questions

Is FreeAgent or Xero better for a startup?

Xero suits a startup that plans to grow or raise money, because it handles several currencies, stock, projects and a larger team. FreeAgent is simpler, is free with a Mettle business account, and suits a company that expects to stay small.

Is FreeAgent free?

It is free with a Mettle business account if you make at least one transaction a month from it, and with a NatWest, Royal Bank of Scotland or Ulster Bank business current account. We also include it in our fee for simpler companies. Subscribing directly costs a limited company £330 a year + VAT on annual billing.

Can I switch from FreeAgent to Xero later?

Yes. We work in both and can move your records across. If you already expect to grow, starting on Xero avoids the move.

Do both work with Making Tax Digital?

Yes. FreeAgent and Xero both work with Making Tax Digital for VAT and for Income Tax.

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