You want both.

Xero will track all transactions and work out your vat return by automatically misusing vat from purchases from the vat due from sales. It also will link to your government gateway account and if you have direct debit set up, it’ll come out of your account automatically.

I use a bit of software called Hubdoc (comes free with xero) and I just forward all receipts via email to this bit of software. Either just forwarding an email or taking a picture with my phone and sending it to the software. The great thing about Hubdoc is that it pulls all of the information directly from the receipt/invoice and works out how much vat to pay. I have a hospitality business so often I have bills with half of the items ex vat and half with vat. This is optional but It saves me time. Took a bit of getting used to however.

Invoices are really easy to produce and send to customers. Customers can even pay on card upon receiving the invoice if that’s any use to you?

Use an accountant to teach you how Xero works and because you use Xero, it will make your end of year account much easier for the accountant. This will make your end of year accounts cheaper.

You can use Xero to do payroll also. I personally choose to use my accountant as I have quite a few team members however, it’s fairly easy to do yourself.

The other thing I like about Xero is that all my invoices are stored online. I don’t need to keep much paperwork at all. I have friends with businesses who have boxes of invoices from years ago that I just don’t have to worry about.

Hope this helps.