Sole trader accounting software to simplify your business
Sole trader accounting software saves time on bookkeeping and helps you stay on top of your finances.
Published Monday 13 October 2025
Table of contents
Key takeaways
• Choose accounting software with essential features like automated invoicing, expense tracking with receipt capture, bank reconciliation, and GST/tax management tools to streamline your financial operations from day one.
• Avoid using spreadsheets for accounting as they lack real-time insights, create error-prone manual processes, provide no audit trail, and cannot scale with your business growth.
• Prioritize cloud-based accounting software that offers remote access from any device, automatic data backups, and secure data sharing capabilities with your accountant or bookkeeper.
• Test accounting software through free trials before purchasing to ensure it fits your workflow, and select a solution that can grow with your business even if you don't need advanced features immediately.
Software that helps you work smarter
More people are starting solo businesses, so you need simple financial tools.
- Remote accessibility: Manage finances from anywhere without being tied to an office
- Tax automation: Stay on top of tax obligations, revenue tracking, and expense management
- Cash flow visibility: Monitor business performance in real-time
- Time savings: Automate routine bookkeeping tasks that traditionally required manual data entry
Find out what accounting software can do and use this guide to help find the right package for your business.
Best accounting software options for sole traders
When you're running the show yourself, you need tools that work as hard as you do. There are several accounting software options out there, but the best one for you is the one that fits your business and simplifies your life.
Choose software designed for sole traders that makes managing your finances simple and efficient. With Xero, you can start managing your finances easily from day one.
Essential features to look for in sole trader accounting software
Choosing the right software comes down to the features that will save you time and give you a clear view of your business finances. Here are some essentials to look for:
- Invoicing and quotes: Create and send professional invoices from anywhere, and get paid faster with online payment options.
- Expense tracking: Record expenses and capture receipts with your phone. This helps you track spending and maximise deductions. For example, to claim vehicle costs, the Inland Revenue Department (IRD) says you can keep a logbook for three months to work out your business-use percentage.
- Reporting: Get a real-time view of your cash flow and business performance with easy-to-understand reports.
- GST and tax management: Simplify tax time with tools that help you calculate GST, a key task given that New Zealand's Inland Revenue Department requires you to register if you earn over $60,000 a year, and prepare the information needed for your tax returns.
Why use accounting software instead of spreadsheets
Spreadsheets aren't designed for accounting and create significant risks for sole traders. While Excel might seem cost-effective, it lacks the essential features that proper accounting software provides.
Here's why spreadsheets fail as accounting solutions:
It's hard to see an up-to-date picture
Spreadsheets only show static numbers. With accounting software, you get real-time insights into your finances.
Spreadsheets can be riddled with mistakes
You might start with a simple spreadsheet, but accounting software helps your business run more efficiently and grow.
Spreadsheets aren't scalable
Sole trader accounting software is designed to grow as you do. It will help you with tasks like payroll, direct payments and automating your bookkeeping. And you'll be able to share data with your accountant and bookkeeper remotely.
Accounting software gives you features like payroll, direct payments, and easy data sharing with your accountant or bookkeeper.
There's no audit trail
Accounting software keeps track of every entry and who made it. This is called an audit trail and it's a vital part of accounting. Accounting software keeps a record of every entry and who made it, so you always know what has changed.
Choosing the right accounting software helps you save time and avoid future issues.
Benefits of online accounting software for sole traders
Online accounting software gives sole traders secure, anywhere access to their financial data while automating time-consuming bookkeeping tasks.
Key advantages for sole traders:
Access from any device
Log in to your accounting software from your laptop, smartphone or tablet. You're not stuck using a single computer in an office.
Simple, easy-to-use features
Sole trader accounting software gives you the essential tools for invoicing, expense tracking, and reporting, so you can work efficiently.
Data entry automation
Smart accounting software automates data entry and can send payment reminders to your customers. Instead of organising and manually typing data into your accounts, the numbers can flow in automatically from your bank and with the help of data capture tools.
And you can set up automatic invoice reminders. Automation solves the major problems with accounting data entry by saving time, reducing costs and eliminating human error.
Log in from anywhere
You can work from anywhere with online sole trader accounting software. Online sole trader accounting software lets you do that. Wherever there's an internet connection, you can get to your accounts and issue or pay invoices.
You don't need to worry about technology
You don't need to update software yourself. Online accounting software updates automatically and backs up your data for you.
Airtight security
Online accounting software keeps your accounts secure. Only people you choose can access your data. Cloud security protects your information better than storing it on a hard drive or USB stick.
Ability to share data
You can share your data with your accountant or bookkeeper by giving them remote access and controlling their permissions.
Pay as you go
You pay a small monthly fee for your subscription. Some providers let you pause your subscription if your business is seasonal.
Tax and compliance support
Accounting software helps you track income and expenses, calculate GST, and prepare the reports you need to file your returns on time. You can stay organised and compliant with less effort.
How to choose the right sole trader accounting software
Choosing the right accounting software requires evaluating your specific business needs against available features and getting hands-on experience before committing.
Here are some tips to help you choose:
1. Ask for recommendations
Ask other sole traders, your bookkeeper, or your accountant for software recommendations.
2. Plan for growth
If your business grows you may need to hire employees. Find software that will scale with your business, even if you don't need advanced features like payroll today.
3. Try before you buy
Try the software before you buy. Use a free trial to see if it fits your workflow. Learn more about Xero accounting software, and try it out.
Getting started with accounting software for your business
The right accounting software transforms how sole traders manage their finances. It reduces time spent on bookkeeping, improves financial visibility, and helps you make better business decisions.
Accounting software saves you time and helps you control your finances. Choose software that fits your business needs and workflow.
See how accounting software can streamline your business. Try Xero for free and experience the benefits of cloud-based accounting for sole traders.
FAQs on sole trader accounting software
Here are answers to common questions about accounting software for sole traders.
Is Xero worth it for sole traders?
Yes, Xero is ideal for sole traders. It simplifies your finances, saves you time, and gives you a clear view of your business. Xero is easy to use and grows with your business.
What's the difference between accounting software for sole traders vs small businesses?
Sole trader software is simple and covers income, expenses, and basic tax preparation. Software for larger businesses includes features like payroll, inventory management, and multi-currency support.
Can I use free accounting software as a sole trader?
You can start with free software, but it often limits invoices, clients, or features. A paid plan like Xero gives you more tools, better support, and room to grow.
How much does sole trader accounting software cost?
Most accounting software is offered as a monthly subscription, with prices varying based on the features included. Accounting software saves you time and helps you stay organised and compliant.
Do I need accounting software if I'm just starting out?
Start using accounting software from day one. It helps you build good habits, track your performance, and prepare for tax time.
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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