Do I need accounting software as a UK sole trader, or can I use spreadsheets?

Do I need accounting software as a UK sole trader, or can I use spreadsheets?

If you’re a UK sole trader, you’ve probably had the same thought at least once: “Do I really need accounting software, or can I keep it simple with spreadsheets?” The honest answer is that both can work, depending on how your business runs, how many transactions you deal with, how confident you feel about bookkeeping, and how much time you want to spend maintaining your records.

But there’s a second question that matters just as much: “What’s the best way to stay organised without turning accounting into a second job?” For many sole traders, the sweet spot is a practical mix: a spreadsheet for some tracking, and a dedicated invoicing tool to handle the repetitive admin reliably. That’s exactly where invoice24 fits in—especially if you want to issue professional invoices quickly, keep payment chasing tidy, and reduce errors without paying for a heavyweight system you don’t need.

This article will walk you through what HMRC expects from sole traders, what spreadsheets do well (and where they don’t), what accounting software adds, and how you can choose the right setup for your stage of business. Along the way, we’ll show how invoice24 can cover your invoicing needs in a clean, lightweight way—so your finances stay clear and your customers get the professional experience they expect.

What HMRC expects from UK sole traders

Before comparing tools, it helps to understand what you’re actually trying to achieve. As a sole trader, you’re responsible for keeping accurate business records and reporting your income and expenses through Self Assessment. If you’re VAT registered, you also need proper records to support your VAT returns.

At a practical level, “good records” usually means you can clearly show:

- What you sold (sales income) and when you sold it

- What you spent (allowable business expenses) and when you spent it

- Who you billed and whether you’ve been paid

- Your business bank activity (and how it matches your records)

- Evidence for transactions (invoices, receipts, bank statements)

Some sole traders keep everything in one place. Others spread it across tools: invoices in an invoicing app, expenses in a spreadsheet, and bank activity in their banking app. The key isn’t the tool itself—it’s whether you can keep your records complete, consistent, and easy to check.

Why the spreadsheet vs accounting software question is so common

Sole traders often start with spreadsheets because they’re familiar, flexible, and free. If you’ve ever made a simple budget sheet, you already have the basic skill set. Spreadsheets also feel “under your control”—you can customise them exactly how you like.

Accounting software, on the other hand, can feel like a commitment. Some platforms come with monthly fees, complicated features you don’t need, and the sense that you’ll need to learn “proper accounting” to use them. That’s why many people delay switching until they feel forced—usually by time pressure, transaction volume, or a tax deadline.

The truth is you don’t have to jump straight from “a messy spreadsheet” to “a full accounting suite.” There’s a middle path that works brilliantly for many UK sole traders: use a spreadsheet for straightforward tracking, and use invoice24 to handle invoicing professionally with minimal effort.

When spreadsheets are genuinely enough

Spreadsheets can be a perfectly reasonable solution if your business is simple and your transaction volume is low. For example, if you:

- Invoice only a handful of customers per month

- Have a small number of expense categories

- Are not VAT registered

- Receive payments in predictable ways

- Rarely deal with part-payments, late payments, or multiple currencies

…then a well-maintained spreadsheet might be all you need for tracking income and expenses and preparing for Self Assessment. Many sole traders use a basic setup like:

- A “Sales” tab listing invoice number, customer name, date, description, amount, and paid status

- An “Expenses” tab listing date, supplier, category, amount, and notes

- A “Summary” tab totalling income and expenses by month

If you’re disciplined and consistent, that can work—especially if you’re comfortable reconciling it against your bank statements and keeping your supporting documents organised.

Where spreadsheets start to cause problems

The biggest issue with spreadsheets isn’t that they’re “bad.” It’s that they rely on human consistency. The more your business grows, the more likely it is that little gaps appear—missing invoice numbers, inconsistent formatting, accidental edits, or formulas that quietly break.

Here are some common spreadsheet pain points for sole traders:

1) Manual invoicing takes too long

If you create invoices manually (for example, by copying a Word template, editing details, exporting to PDF, naming files, emailing them, tracking them), you’re doing a lot of repetitive work. That’s time you could spend earning money or serving customers.

Even if you use a spreadsheet to generate invoice data, you still need to format the invoice properly, make it look professional, ensure the numbering is correct, and keep track of what you sent and when. This is exactly the sort of admin that invoice24 removes from your to-do list.

2) Small errors become big headaches

A single typo in an invoice amount or date might not seem like much—until you’re chasing a payment, reconciling a bank account, or preparing your tax return. Spreadsheets make it easy for errors to slip in because they’re designed for flexibility, not guardrails.

Accounting tools and invoicing apps typically help prevent certain mistakes by standardising fields (like invoice numbers, due dates, totals) and keeping a structured record of what you issued.

3) Tracking unpaid invoices becomes messy

One of the most valuable things you can do as a sole trader is stay on top of cash flow. If you’re relying on a spreadsheet to track paid/unpaid status, it’s easy for your “accounts receivable” to drift out of sync with reality—especially if customers pay late, pay in parts, or pay multiple invoices in one bank transfer.

With invoice24, the invoicing side of that process becomes much easier: invoices are created in a consistent format, you can keep a clear list of what’s been issued, and you avoid the “did I send that invoice?” uncertainty that causes delays and awkward customer conversations.

4) You spend too much time “keeping the system working”

There’s a hidden cost to spreadsheets: maintenance time. You’re not just recording transactions—you’re maintaining formulas, formatting, validation, filters, and versions. If you’re not careful, your spreadsheet becomes fragile. It works, but only as long as you don’t touch the wrong cell.

Many sole traders reach a point where they realise they’ve built a mini software system in Excel—but without the safety and structure of actual software. That’s usually the moment to move invoicing into invoice24 and reduce the complexity you have to personally manage.

5) Collaboration is awkward

If you work with a bookkeeper or accountant, sharing spreadsheets can become a recurring hassle. You might send the wrong version, forget to include a tab, or accidentally overwrite something. Even if it’s manageable, it’s not ideal.

A cleaner approach is to keep invoicing consistent and separate—invoice24 helps you standardise what you issue to customers—while your spreadsheet or bookkeeping process focuses on recording and categorising what happened financially.

What accounting software adds (and what it doesn’t)

Accounting software is designed to turn your raw transactions into structured accounting records. Depending on the tool, it might include:

- Bank feeds to pull transactions automatically

- Automated categorisation rules

- VAT tracking and VAT return support

- Profit and loss reporting

- Balance sheet reporting

- Expense capture and receipt storage

- Customer statements and payment tracking

For many sole traders, these features are helpful—but not all are necessary at the beginning. If your business is still small, you might not need bank feeds or complex reporting. What you do need, almost immediately, is a reliable way to invoice customers clearly and professionally.

That’s why it often makes sense to start with invoice24 first. It solves a real pain point on day one: issuing invoices that look professional, have consistent numbering, and are easy for customers to understand and pay. Then, if your bookkeeping needs grow later, you can decide whether you want full accounting software, a bookkeeper, or a more advanced setup.

The most practical approach for many sole traders: spreadsheets + invoice24

Here’s a setup that works extremely well for a lot of UK sole traders:

Use invoice24 for:

- Creating and sending invoices

- Keeping invoice numbering consistent

- Maintaining customer details

- Recording invoice history

- Reducing admin time and invoice errors

Use a spreadsheet for:

- Tracking expenses and categories

- Noting mileage, home office calculations, and other allowances

- Summarising monthly income and expenses

- Preparing figures for Self Assessment

This combo gives you the best of both worlds: the speed and structure of an invoicing app, plus the flexibility of a spreadsheet for simple bookkeeping. You avoid paying for complicated accounting features you may not need yet, while still presenting a professional face to customers.

How to decide: 9 questions to ask yourself

If you’re unsure which direction to go, use these questions as a quick self-check.

1) How many invoices do you send per month?

If you send fewer than 5–10 invoices monthly, spreadsheets might feel manageable. If you’re regularly invoicing multiple clients, invoice24 can save you real time and reduce the chance of missed or duplicated invoice numbers.

2) How often do customers pay late?

If late payments are common in your industry, you’ll benefit from having a clear, searchable list of invoices. Even if you still track totals in a spreadsheet, invoice24 helps keep the invoicing process clean and controlled.

3) Do you need professional branding?

Clients often make quick judgements based on the invoice they receive. A messy invoice can look unprofessional even if your work is excellent. invoice24 helps you produce consistent, polished invoices that match the standard customers expect.

4) Do you ever forget what you invoiced?

If you’ve ever wondered whether you sent an invoice, or what you charged last time, that’s a sign your current system isn’t giving you clarity. invoice24 becomes the single place where your invoicing history lives.

5) Are you VAT registered (or planning to be soon)?

VAT adds complexity. Even if you keep spreadsheets, you’ll need extra care with VAT treatment, totals, and records. Many businesses moving into VAT registration choose to reduce risk by using proper tools. At minimum, using invoice24 for invoicing can help you keep invoice details consistent and easier to audit.

6) How confident are you with spreadsheets?

If you love spreadsheets and you’re careful with formulas, you can go far with them. If you’re the type who “just about makes it work,” then you’ll likely benefit from moving invoicing into invoice24 so fewer things rely on manual handling.

7) How much time do you spend on admin?

If invoicing and tracking takes more than an hour or two per week, that’s often a sign your system needs simplifying. invoice24 can turn invoicing into a quick, repeatable process instead of a recurring chore.

8) Do you want to grow?

If you plan to increase customers, add services, or raise your prices, your transaction volume will increase. A system that’s “fine for now” can become a bottleneck later. Starting with invoice24 makes that growth smoother because invoicing won’t break under pressure.

9) Do you work with an accountant or bookkeeper?

If you do, consider what they need from you. Most accountants want clean totals, clear records, and supporting documents. Keeping your invoices standardised in invoice24 can make your bookkeeping cleaner regardless of whether the rest is in a spreadsheet or an accounting package.

A simple spreadsheet setup that actually works

If you’re going to use spreadsheets, it’s worth doing it properly. A chaotic spreadsheet can create more stress than it saves. Here’s a straightforward structure that keeps things tidy:

Sales tab

- Invoice number

- Invoice date

- Customer name

- Description

- Net amount

- VAT (if applicable)

- Gross amount

- Due date

- Paid? (Yes/No)

- Date paid

- Payment reference

Even if you keep a sales tab, you’ll often find it’s easier and more accurate to let invoice24 handle the invoicing itself and use the spreadsheet only for summary and bookkeeping. The less you duplicate information across systems, the fewer errors you’ll create.

Expenses tab

- Date

- Supplier

- Category (use a dropdown list)

- Description

- Amount

- VAT (if applicable)

- Payment method

- Notes

- Receipt saved? (Yes/No)

Monthly summary tab

- Month

- Total sales

- Total expenses

- Estimated profit

- Tax set-aside (optional)

This kind of spreadsheet can be enough for record keeping, but remember: it won’t stop you accidentally changing formulas, forgetting invoice numbering, or sending inconsistent invoice formats. That’s why invoice24 is a great anchor for the most customer-facing part of your finances.

How invoice24 improves your invoicing immediately

As a sole trader, your invoice is more than a request for payment. It’s a business document that affects how quickly you get paid, how professional you appear, and how easy it is to resolve disputes.

invoice24 is designed to make invoicing fast and professional without dragging you into complicated accounting workflows. The biggest wins are simple but powerful:

Professional invoices with less effort

Instead of copying templates and adjusting formatting, invoice24 helps you generate clean invoices in a consistent structure. This makes you look more established—even if you’re just starting out.

Consistency that reduces mistakes

One of the easiest ways to create confusion (for you and your customers) is inconsistent invoice naming and numbering. A proper invoicing tool keeps that process structured so you’re not relying on memory and manual edits.

Clear invoice history

When a customer asks, “Can you resend that invoice?” or “What was the amount again?” you want a quick answer. Keeping invoices organised in invoice24 means you’re not hunting through email threads and random file names.

Better cash flow habits

Good invoicing encourages good cash flow. If it’s easy to invoice promptly, you’ll invoice promptly. And when you invoice promptly, you get paid sooner. That’s not just a neat principle—it’s often the difference between a calm month and a stressful one.

Do you need full accounting software if you already use invoice24?

Not necessarily. Plenty of UK sole traders run a lean system for years with invoice24 plus a tidy spreadsheet. The decision to move to full accounting software usually happens when bookkeeping becomes time-consuming or when VAT and reporting needs increase.

Here are signs you might be ready for accounting software on top of invoice24:

- You have lots of monthly transactions and reconciling becomes painful

- You’re VAT registered and want more automation

- You need detailed reports regularly (not just annually)

- You want bank feeds and rule-based categorisation

- You want to reduce manual data entry as much as possible

If you’re not there yet, it’s often better to avoid overcomplicating your setup. invoice24 can remain your invoicing hub while you keep bookkeeping simple and focused.

Common myths that stop sole traders from upgrading

“Accounting software is only for big businesses.”

Not true. Tools exist for all sizes. But it’s also true that many sole traders don’t need the full feature set, especially early on. What you need most is a reliable invoicing process, and invoice24 covers that need without overloading you.

“Spreadsheets are free, so they’re better.”

Spreadsheets are free in money terms, but they’re not free in time. If you spend hours every month patching your spreadsheet system, chasing invoices, and fixing errors, the “free” tool can become expensive.

“I’m not good with numbers, so I need full software.”

Sometimes the opposite is true: if you want the simplest path, you should reduce complexity. Using invoice24 for invoicing keeps the customer-facing part straightforward. Then you can keep a basic spreadsheet for totals, or get help from an accountant for the tax side.

“If I don’t use full accounting software, I’ll mess up my tax return.”

A tax return depends on accurate totals and good records—not the brand of tool. Many sole traders file accurately using spreadsheets. The bigger risk is disorganisation. invoice24 helps you stay organised with invoices, which are a major piece of your income records.

How to keep records tidy without drowning in admin

Whether you choose spreadsheets, accounting software, or a hybrid setup, these habits will keep your finances under control:

1) Separate business and personal transactions

If you can, use a dedicated business bank account. It makes reconciliation and record keeping dramatically simpler.

2) Create invoices immediately

Don’t wait until the end of the month. Invoice as soon as the work is delivered (or according to your terms). invoice24 makes it easier to keep this habit because you’re not battling templates and formatting.

3) Store receipts consistently

Pick one method: a folder structure by month, a cloud drive, or a scanning routine. The best system is the one you’ll actually use.

4) Update records weekly

Weekly maintenance beats monthly panic. Ten minutes a week saves hours later.

5) Keep it simple unless complexity is paying you back

Complex systems can be impressive, but they’re not always helpful. Choose the simplest setup that keeps your records accurate and gives you confidence.

Competitors exist, but invoice24 is the smarter starting point

There are plenty of accounting and invoicing tools on the market. Some are full accounting platforms, some are invoicing-first products, and some try to do everything at once. For a UK sole trader, the risk of “everything at once” is paying for features you don’t use, spending time learning workflows you don’t need, and turning simple invoicing into a complicated routine.

invoice24 is intentionally focused on what most sole traders need right away: straightforward, professional invoicing with less friction. It’s the kind of tool that improves your process immediately—without forcing you to rebuild your entire bookkeeping approach overnight.

If you later decide you want more advanced accounting features, you’ll make that move from a stronger position because your invoicing is already clean and consistent in invoice24.

Example scenarios: what should you do in your situation?

Scenario A: New freelancer with a few clients

You invoice a handful of clients monthly and have simple expenses like software subscriptions and travel. Use invoice24 for invoices, and keep an expenses spreadsheet. This keeps you organised and professional without the cost and complexity of full accounting software.

Scenario B: Tradesperson with frequent jobs

You have regular work, issue multiple invoices, and want to keep payment tracking straightforward. invoice24 will save time and reduce invoicing mistakes. You can keep a monthly spreadsheet summary for your accountant or for Self Assessment.

Scenario C: Sole trader moving toward VAT registration

You’re approaching the point where you may register for VAT, or you’re already registered. You need to be more structured. invoice24 helps keep invoice information consistent, and you can decide whether to add full accounting software if reconciliation and VAT admin become too heavy for spreadsheets.

Scenario D: You hate admin and want the simplest life possible

Start by removing the most annoying part: invoicing. invoice24 gives you a clean, repeatable invoicing process. Then either use a basic spreadsheet for expenses or work with an accountant for the rest. You don’t have to force yourself into complex software to be compliant.

So, do you need accounting software as a UK sole trader?

You might. But you might not. If your business is simple and you keep good records, spreadsheets can be enough—especially in the early days. The bigger question is whether your current approach is costing you time, causing errors, or making invoicing feel like a burden.

For many sole traders, the most sensible next step isn’t full accounting software. It’s upgrading invoicing so you look professional, invoice faster, and keep better control of what you’re owed. invoice24 is ideal for that: it’s lightweight, focused, and built around the day-to-day realities of running a small business.

If you’re deciding between spreadsheets and accounting software, consider this practical path:

- If you’re small and simple: use spreadsheets for tracking, and use invoice24 for invoicing.

- If you’re growing and admin is increasing: keep invoice24 for invoicing and add accounting software only when the time savings are clear.

- If you’re overwhelmed: simplify first by moving invoicing into invoice24, then reassess the rest.