By Boris Diakonov, co-founder and co-CEO of ANNA Money
The days of finance teams spending hours on manual bookkeeping, invoicing and tax returns are over. Instead, automation and artificial intelligence (AI) are becoming an inescapable part of the way businesses large and small function, taking on the jobs which once sat firmly with accountants.
For many small business owners, that shift brings an understandable concern: if AI helps prepare my tax return and something goes wrong, who is responsible?
The answer is the same as it has always been. Whether a business relies on an accountant, a bookkeeper, accounting software or a spreadsheet, the ultimate responsibility for accurate financial reporting rests with the business owner.
But that shouldn’t be a reason to fear AI. The fact that responsibility remains with the individual does not make the technology inherently risky. If anything, the right AI tools can help businesses stay more organised, spot issues earlier and reduce the likelihood of costly mistakes.
There’s no question that AI, like the humans who created it, can make mistakes. Instead, businesses should be asking whether the technology helps them understand their finances, allows them access to the information they need when they need it, and makes it easier to remain compliant. When AI is deployed with the right safeguards, transparency and human oversight, it becomes less about replacing judgement and more about strengthening it.
That distinction is becoming increasingly important in the UK. As Making Tax Digital continues to reshape how businesses manage and report their finances, more businesses are moving online whether they are ready or not. The challenge is no longer whether to adopt digital tools, but how to use them confidently and responsibly.
Trust matters more than automation
Once upon a time a small business owner or sole trader hiring an accountant meant face-to-face meetings, the ability to phone and ask questions, and crucially, the assurance that a regulated professional was handling their tax affairs.
When it comes to auto accounting, trust is built in a different way. Small business owners may no longer be relying on a person at the end of the phone or a familiar spreadsheet they have managed themselves for years. Instead, they need confidence that transactions are categorised correctly, deadlines are not being missed, tax calculations are accurate, and the software is keeping pace with the latest HMRC requirements.
That is why not all AI tools should be treated as equal. Before adopting auto accounting software, small business owners should ask a few practical questions. Is it recognised by HMRC for services such as Making Tax Digital? Can I see what the software is doing and review it before anything is submitted? Does it explain decisions clearly, rather than hiding them in a black box? And, when I need help, can I speak to a real person?
These are not reasons to avoid AI. They are the guardrails that make AI useful. Technology should reduce stress, not add to it. When auto accounting software combines automation with transparency, compliance checks and access to human support, it can give small business owners more control over their finances, not less.
As AI becomes more widely used across financial services, regulators are working to ensure innovation is matched by appropriate oversight. The FCA has launched initiatives such as its AI Lab and “Supercharged Sandbox”, allowing firms to test AI-powered tools in controlled environments using regulatory guidance and synthetic data before bringing them to the market. At the same time, HMRC has signed a £175 million deal with British tech firm Quantexa to use AI to help identify fraud, detect errors in tax returns and improve customer service efficiency.
These developments reflect an important reality: AI is no longer a future technology. It is already becoming part of how businesses manage their finances and how public bodies administer the tax system.
The goal now should be to ensure that innovation is accompanied by the right safeguards. Businesses need confidence that the tools they are using are transparent, reliable and accountable, while technology providers need clear frameworks that allow them to continue improving their products. Striking that balance is critical. Done well, regulation can help build trust in AI and accelerate adoption of tools that make it easier for small businesses to stay compliant, save time and make better financial decisions.
Why this matters most for SMEs
One of the main concerns we see around AI adoption is that too many conversations focus on large corporations deploying advanced technologies at scale, despite SMEs accounting for more than 99% of the UK’s private businesses.
For smaller businesses, the stakes are often much higher. Large organisations can spread accountability across legal, compliance and finance teams when problems occur. Sole traders, and small business owners rarely have those layers of protection. Instead, they may rely on an accountant called Sarah in Norwich, or managing everything themselves whilst answering emails, serving customers and paying suppliers. When something goes wrong, there isn’t a legal department waiting in the wings. The responsibility lands directly on the business owner.
That reality is exactly why trust, transparency and overnight matter so much when it comes to AI. The best financial software doesn’t remove accountability or replace human judgement. Instead, it helps business owners make better decisions by reducing repetitive admin, highlighting potential issues before they become problems and making it easier to understand what is happening behind the numbers. Used well, AI becomes a support tool rather than a substitute for decision-making.
For small businesses, that’s where the real value lies. Not in handing control over to a machine, but in gaining the confidence that comes from having better information, fewer administrative burdens and more time to focus on running and growing the business.
The future of finance isn’t AI versus humans. It’s AI and humans working together, each doing what they do best. Automation can handle repetitive work, process information at scale and help identify challenges. Human judgement, experience and accountability remain essential.
For sole traders and small businesses, success won’t come from finding software that replaces people. It will come from choosing software they can trust – tools that are transparent, reliable and designed to keep them in control. When those foundations are in place, AI stops being something to fear and becomes what it should be: a practical tool that helps businesses save time, stay compliant and make better decisions.
