There are numerous factors why you need to find the best accounting software for your business. It may be that you are self-employed and want to keep things under control; or maybe you own a small business where smooth bookkeeping is necessary for making the right decisions. Whatever the reason is, finding an accounting application that fits your situation can be challenging. There are various solutions around, but not all of them are appropriate for your business.
Here are the best!
Xero
Xero tops the best accounting software lists in New Zealand, Australia, and several European countries. It’s gaining ground in the United States, too
Similar to QuickBooks Online, Xero has an extensive network of accounting professionals who support it, and it’s easy to find good online training resources. Self-employed users will especially appreciate the lack of accounting jargon that Xero uses. That means no “debits” and “credits” here—just good old-fashioned “money in” and “money out.”
If you’re in a creative industry, Xero may be the best fit for you; it’s popular with marketing firms, writers, designers, etc.
Accounting Seed
Pricing: Available Upon Request
Accounting Seed offers subscription or recurring billing options, has a secure and reliable API, and works with your company to link critical business applications and bank accounts for real visibility into the financial state of your business. And it automates many of the menial tasks that eat up your day.
Best for Businesses Looking for a Solid Cloud-Based Platform
It’s also a cloud-based platform, meaning you can log in anytime, anywhere — giving you a degree of flexibility and mobility that you might not be able to find with every solution on this list. The platform also lends itself to easy collaboration, offering data visibility to any stakeholders at your business.
BEST FOR PART-TIME FREELANCERSQuickBooks Self-Employed
QuickBooks Self-Employed accounting software is our top choice for part-time freelancers and independent contractors who primarily want to track their income and expenses for their tax return. This software is designed for business owners who file a Schedule C on their individual tax return.
Without keeping up with business activity using a software like this, freelancers would need to dig through all of their bank and credit card statements to add up their income and expenses at the end of each year, which can be quite daunting. QuickBooks Self-Employed will total up all business transactions automatically.Pros
- Cloud-based
- Mobile app
- Track mileage
- Differentiate between business and personal expenses
- Syncs with TurboTax
Cons
- Data cannot be easily transferred to other accounting software
- Limited reporting
- Limited invoicing functionality and customization
QuickBooks Self-Employed is an Intuit product with a cloud-based online interface and a mobile app. This software was created to help freelancers stay organized each year for tax season. Features of QuickBooks Self-Employed include tracking mileage, sorting expenses, organizing receipts, sending invoices, and estimating and filing taxes seamlessly through TurboTax.
Users can choose between three plan options: Self-Employed at $15 per month, Self-Employed Tax Bundle at $25 per month, and Self-Employed Live Tax Bundle at $35 per month. There is a 50% discount for the first three months. The two tax bundles include a TurboTax subscription for income tax filing. The Self-Employed Live Tax Bundle also gives you access to a CPA to answer questions throughout the year and during tax season. The CPA will also perform a final review of your tax return in TurboTax prior to filing.
The mobile app makes it easy to track mileage while driving and capture photos of receipts for business expenses. Most accounting software is not designed to separate business transactions from personal transactions, but a special feature of QuickBooks Self-Employed provides an option to mark each transaction as business or personal. This is helpful for freelancers who don’t have a separate bank account for their business activity.
BEST FREE SOFTWAREWave
Wave is an ideal accounting software platform for a service-based small business that sends simple invoices and doesn’t need to track inventory or run payroll. For many freelancers or service-based businesses, Wave’s free features will cover all of their accounting needs and is the best free software in our review. At year-end, accountants can pull the necessary reports from Wave to prepare a business’ tax return.Pros
- Free accounting, invoicing, and receipt scanning
- No transaction or billing limits
- Run multiple businesses in one account
- Unlimited number of users
- Mobile app
Cons
- Limited third-party app integrations
- Higher fees for credit cards and ACH payments
- Full-service payroll is limited to only 14 states
- No inventory management
Wave was founded in 2010 and is based in Toronto. The company has over 250 employees and was purchased by H&R Block in 2019.34 The foundational accounting features that most small businesses need, such as income and expense tracking, financial reporting, invoicing, and scanning receipts, are all included with this free software. These features can be accessed online or on the mobile app. Customer payment processing and payroll are considered premium services that cost extra, but all of the bookkeeping, invoicing, and reporting features are completely free.
Wave makes its money on its payment gateway. To process payment from a customer, Wave charges 2.9% plus 30¢ per transaction for Visa, Mastercard, and Discover, and 3.4% plus 30¢ per transaction for American Express. These fees are slightly higher than other accounting software. Additionally, to process an ACH payment, rather than a credit card, Wave charges 1% per transaction with a $1 minimum fee. This is unique to Wave, as the majority of accounting software does not charge a fee for ACH payment processing.
Wave offers two payroll plans as an add-on service. The first plan is $20 per month plus $6 per employee or contractor. In this plan, Wave will process payroll and prepare payroll tax calculations, but the user is responsible for manually completing payroll tax forms and submitting tax payments. The second plan is $35 per month plus $6 per employee or contractor. In this plan, payroll is full-service, which means that all tax filings and payments are completely managed by Wave. This full-service payroll option is only available in 14 states.
FreshBooks
FreshBooks started out as time-tracking and online-invoicing software. But it’s evolved into a platform that can be ideal for simple, service-based businesses.
If you have inventory, payroll, or need advanced job costing, you’ll need to look elsewhere for accounting software, or plan to learn an integrated app, too. But if your business is a relatively simple service-based business with no fixed assets to track, FreshBooks could be the best self-employed accounting software for you.Buy FreshBooks Now For 60% Off
Sunrise by Lendio
Pricing: Free; More Robust Plans with Dedicated Support From a Bookkeeper Starting at $149/Month
Sunrise by Lendio has a suite of features including automatic bank reconciliation, profit and loss reports, easy tax options, and branded invoicing. It’s also particularly notable for its ability to accept credit cards and set up automatic payments.
Best for Businesses That Want a Dedicated Bookkeeper
One of the main distinguishing factors that sets Sunrise apart from other tools on this list is its plans that include dedicated bookkeeping services. If your business is willing to spend a little extra to outsource some of those responsibilities through your accounting software, you should consider leveraging Sunrise by Lendio.
Zoho Books
If you already use the Zoho platform for your CRM, mail, and/or expenses, adding Zoho Books could be the accounting software solution of your dreams. All of Zoho’s products integrate nicely with each other, giving you a true ecosystem for a relatively low investment.
We think Zoho Books works best for extremely small and simple businesses. If you often have “split” expenses (i.e., you go to the office supply store and buy not just office supplies but also janitorial supplies and have brochures printed for advertising), you might find Zoho Books a bit frustrating. That’s because you can’t easily split expenses from the bank feed.
There are some other quirks to Zoho Books, too, but again, these only really become an issue in more complex businesses.
Unlike Xero, Zoho Books sometimes uses terminology that isn’t the most intuitive to non-accountants. Still, with a little patience during the learning process, small businesses already in the Zoho ecosystem may enjoy working with this accounting software.Start Zoho Books Free Trial
Sage
Sage is often underrated. Its platform is competitively priced, it’s easy to learn and use, and Sage software has an international presence.
Sage is worth a good look. It’s robust enough to grow with you but simple enough to not overwhelm you as you’re getting started.
Conclusion
Whether you’re a sole-proprietor or first-time business owner, the right accounting software is essential for organizing your finances, automating the more time consuming aspects of your business and analyzing trends so you can grow your company more effectively.