The software a startup needs in its first year.
In the first year most startups need accounting software, a bank account connected to it and a way to capture receipts. This page covers what you need later and what can wait.
The software a startup needs, in order
- 1Accounting — Xero, from day one
Buzz is a Xero Gold Partner. Xero handles more than one currency, stock, projects and larger teams as you grow, and its UK plans start at £18 a month + VAT, paid to Xero. For a simpler company, FreeAgent is included in our fee. Both keep digital records and file VAT returns under HMRC’s Making Tax Digital rules.
- 2A bank account connected to it
A bank feed sends your transactions into the accounting software every day, so the books stay up to date without typing them in. Our business banking page sets out the options, including which startups the free account does not suit.
- 3Receipt capture
Photograph each receipt when you get it. Xero and FreeAgent both capture receipts in their mobile apps, so you do not need a separate tool.
- 4Payroll, at your first hire
Payroll software sends HMRC a Real Time Information report every payday, and your auto-enrolment pension duties start on an employee’s first day. Payroll is part of our instant quote, which asks how many people you pay and how often.
- 5Cap table, at your first investor
A cap table records who owns which shares. A spreadsheet is fine for two founders. Once there is a funding round and an option scheme, the register of shareholders has to agree with Companies House, and we keep it in agreement as part of our share structure work.
- 6Forecasting, before cash gets tight
Start with our free cashflow template, and buy forecasting software only when a spreadsheet can no longer cope.
Software that can wait
- Customer relationship management (CRM) software, until you have more customers than you can keep track of.
- Expense management software, until you have staff spending company money.
- Project and time tracking software, unless you bill clients by the hour, in which case you need it from the start.
- Software sold as a way to save tax that does not name the tax relief involved.
- A second accounting system alongside the first, because two sets of records soon stop agreeing.
Common questions
What accounting software should a UK startup use?
We recommend Xero for a startup that plans to grow. Buzz is a Xero Gold Partner. Xero handles more than one currency, stock, different permission levels for a larger team and the reporting investors ask for. Its UK plans start at £18 a month + VAT, paid to Xero. For a simpler company, FreeAgent is included in our fee.
Do we need anything beyond accounting software in year one?
Usually a business bank account, accounting software and a way to capture receipts. You need payroll software when you take on your first employee, and software to track shareholdings and share schemes once you have investors or share options. Everything else can wait.
Is free accounting software good enough?
For a dormant company, or one that has not started trading, often yes. Once you are trading, you need software that keeps your records up to date. Once you are registered for VAT, HMRC's Making Tax Digital rules require digital records and VAT returns filed from compatible software.
When do we need cap table software?
A cap table records who owns which shares. A spreadsheet is fine for two founders and no investors. Once you have a funding round, an option scheme and a register of shareholders that has to match Companies House, dedicated software is worth paying for. Keeping the statutory registers in agreement with it is part of our share structure work.
