Accounting software has made running a limited company considerably easier. Invoicing, expenses, VAT, payroll and tax are now handled from the same online account, which you can share with your accountant.
We’ve used FreeAgent at IT Contracting for 16 years, so we’ve had plenty of time to find out what it does well – and where it has its limitations.
One particular platform – FreeAgent – has built a strong reputation among small businesses, contractors and accountants.
We’ve used FreeAgent for our accounts at IT Contracting for the past 16 years, so we thought we’d describe its key features and explain why it’s the accounting software of choice for so many contractors and their accountants.
Of course, several popular alternatives to FreeAgent exist. We’ve mentioned them, too, at the end of the article.
We’ve used FreeAgent ourselves for 16 years. It’s easy to use, deals with most of the day-to-day accounting jobs a contractor needs, and gives your accountant access to the same figures. For many contractors, access is also included in their monthly accountancy fee.
FreeAgent – key features
Before we look at the benefits FreeAgent users get, it’s worth spending a little time on the key features it provides.
FreeAgent is an online accounting platform specifically for small businesses, freelancers, and contractors.
It is compatible with Making Tax Digital and provides tools for most of the financial tasks you’ll come across when running a limited company, including:
- Integration with your business bank account via automated bank feeds
- Creating and sending invoices
- Tracking unpaid invoices
- Recording and managing expenses
- Profit and loss reports
- Balance sheets
- VAT returns
- Tax timelines and forecasts
- Running payroll and making monthly RTI submissions
- Timesheet reporting
- Payment integrations
- Preparing and filing Self Assessment returns where supported
- Preparing and filing limited company accounts where supported
- Preparing and filing Corporation Tax returns where supported
FreeAgent can also generate invoices, send them to clients and track whether they’ve been paid.
A particularly useful feature is the ability to photograph a receipt using the mobile app and attach it to the relevant expense. There’s no need to keep a drawer full of paper receipts.
FreeAgent has mobile apps for Android and iOS.
In our experience, the app is fairly limited in functionality compared to the desktop version, but it’s still useful for high-level tasks and for managing expenses while you’re out and about.
Why is FreeAgent so popular with contractors?
The main attraction is that it makes many of the financial jobs involved in running a small company considerably easier.
It’s easy to use
Within just a few minutes of using FreeAgent, you will notice how easy it is to use – even for complete newcomers.
The platform is intuitive, with most things just a click or two away. Graphs, charts, invoices and other information can be viewed and managed through its central dashboard.
We’ve used it for many years at IT Contracting, and the software is constantly improving, with new features and upgrades appearing regularly.
The support feature is good too. We’ve used the online support service several times over the years, and the support team has always solved our problems quickly.
It has pretty much everything a small company needs
FreeAgent was designed specifically for small businesses rather than large organisations with complicated accounting requirements.
For a typical contracting company, that means most of what you need is in one place.
You can raise invoices, connect your business bank account, record expenses, run payroll, deal with VAT and keep an eye on upcoming tax bills.
For accountants too, online accounting software has transformed the way they work. Your accountant can see the same records you can, which makes it much easier to identify problems or answer questions without sending spreadsheets and paperwork back and forth.
Almost all the contractor accountants we work with recommend FreeAgent as their software platform of choice.
Simple repeat invoicing
An essential element of the equation for most contractors is invoicing, and it’s not unheard of for regular billing to be forgotten when you’re busy running your company.
FreeAgent lets you create and customise invoices, track which ones have been paid and see which are still outstanding.
You can also set up automatic reminders for overdue invoices and ‘thank you’ messages when clients pay.
For contractors who typically send one or two invoices each month, it’s very straightforward.
Bank feeds save a lot of time
You can connect most UK business bank accounts to FreeAgent using automated bank feeds.
Your transactions are then imported into the software, where you can explain or categorise them. FreeAgent can also learn from previous transactions and suggest how new ones should be treated.
This saves a surprising amount of bookkeeping time compared with manually entering transactions.
Every now and then you’ll need to reconfirm an Open Banking connection, but this only takes a minute or so.
FreeAgent also integrates with payment providers and other services. These can be useful for general small businesses, although most contractors simply get paid by bank transfer from their agency or client.
It makes tax return time less stressful
Many business owners tell us that tax return time can be stressful as they gather all the required information.
With FreeAgent recording your transactions throughout the year, much of the information is already there when a return becomes due.
For limited companies, FreeAgent can calculate Corporation Tax and populate most of the CT600 using the information you’ve entered during the year. It can also prepare and file supported company accounts and Corporation Tax returns.
VAT-registered businesses can submit their VAT returns to HMRC through FreeAgent using the Making Tax Digital connection.
FreeAgent also supports Self Assessment filing for limited company directors in many circumstances, although some parts of the tax return aren’t supported.
If you use FreeAgent through an accountant, your accountant may deal with some or all of these submissions for you.
What don’t we like about FreeAgent?
We’ve used the software for a long time, but that doesn’t mean everything is perfect.
As mentioned above, the mobile app doesn’t offer everything you’ll find in the desktop version. We tend to use the main browser version for anything beyond basic tasks.
FreeAgent is also designed primarily for small businesses. That’s one of its strengths for contractors, but businesses with more complicated accounting requirements may need functionality it doesn’t provide.
And while FreeAgent can prepare and submit an impressive range of returns, there are exceptions. If your tax affairs are complicated, you’ll probably still need your accountant to deal with some of the work outside the platform.
For a typical one or two-person contractor company, though, we’ve never found these limitations particularly troublesome.
Making Tax Digital
FreeAgent supports Making Tax Digital for VAT, allowing VAT-registered businesses to keep digital records and submit their VAT returns directly to HMRC.
MTD for Income Tax became mandatory from April 2026 for qualifying sole traders and landlords, with further groups joining in subsequent years.
This is mainly relevant if you’re using FreeAgent as a sole trader or landlord rather than through your limited company.
Lots of other good accounting software providers
There are several other well-known accounting software providers, including Xero, Sage and FreshBooks. Read our extensive guide to limited company accounting software.
Pricing varies based on the package you choose and, in some cases, your business structure.
If you’re setting up a new business and hiring an accountant, check which software they use before paying for a subscription yourself.
You will often receive access to FreeAgent, Xero or another platform as part of your monthly or annual accountancy fee. Otherwise, your accountant may be able to provide discounted access.
For contractors in particular, we’d also consider how familiar your accountant is with the software rather than choosing purely on price.
Our verdict
We’ve used FreeAgent to manage IT Contracting’s accounts for 16 years, which probably says more than a star rating could.
It’s straightforward to use, has all the main features we’ve needed, and ensures that both we and our accountant are working from the same set of figures.
For a typical contractor running a small limited company, FreeAgent is very hard to fault.
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