Are you interested in starting your own accounting software business? There is no doubt that it can be overwhelming at times. There is so much information out there, so many competitors, and so many things to consider when making a decision. There are so many things to consider that it is hard to even begin. It is for this reason that I have written this guide on accounting software for businesses.
In the early stages of starting a new business, accounting software is one of the most important business applications you need to get. A good accounting program will allow you to create invoices, record incoming and outgoing payments, identify and follow up on past-due receivables, as well as to generate reports that will help you analyze your financial health and other aspects of your business.
The Best Accounting Software Providers
- QB Online by Intuit
- Plooto
- NetSuite by Oracle
- FreshBooks
- Zoho Books
- ZarMoney
- GoDaddy
- Wave Financial
- Sage Business Cloud Accounting
- Xero
- Melio
Ideally, the best accounting software should be a complete accounting and invoicing system that automates your time tracking, expense management, and invoicing workflows. Moreover, it should be able to support the processing of payments as well as collaboration on projects.
Those small businesses that only require basic invoicing and reporting capabilities should be able to get by with free or low-cost cloud-based accounting programs. There are a number of features and functions that can be added as your business grows.
Businesses that have more complex accounting needs have a wide range of choices when it comes to accounting software. The accounting application that will work best for your business will be determined by the specific needs of your business.
It is important for businesses to choose accounting software vendors who are transparent about the pricing of their software.
Our team of experts has examined more than 100 accounting software applications in order to help you find the best one for your company. Our mission was to find an affordable, easy-to-use accounting program that was both affordable and easy to learn.
It should have features that would save us time, such as automated bank feeds, automatic payment reminders, and the ability to accept online payments and invoices. It was also important for us to find a software package with comprehensive, customizable, real-time financial reporting because that is what is going to make it easier for you to manage and understand your business finances in real time.
Below you will find the best picks from our selection process and a description of how we chose them. We have compiled a buyer’s guide for accounting software that explains everything you need to know about what to look for in a software package.
Accounting Software Review Summary
| Accounting software providers considered | 31 |
| Minimum monthly cost | Free |
| Maximum monthly cost | $350 per month |
| Free trial available | 30 day |
COMPARE OUR BEST PICKS
| Accounting software | Use case | Starting price | Free trial period | Mobile applications | Integration options | Bill pay tools |
| QuickBooks | Small businesses | $15 per month | 30 days | Yes | Yes | Yes |
| FreshBooks | Invoicing | $4.50 per month | 30 days | Yes | Yes | Yes |
| Zoho Books | Microbusinesses | $9.00 per month | 30 days | Yes | Yes | Yes |
| Oracle Netsuite | ERP tools | Custom | N/A | Yes | Yes | Yes |
| Zarmoney | Transparent pricing | $15.00 per month | 14 days | Yes | Yes | Yes |
| GoDaddy | Online merchants | $4.99 per month | No | Yes | Yes | Yes |
| Wave Financial | Free option | Free | N/A | Yes | Yes | Yes |
| Sage Business | Freelancers/self employed | $10.00 per month | 30 days | Yes | Yes | Invoicing |
| Xero | Growing businesses | $11.00 per month | 30 days | Yes | Yes | Yes |
| Melio | Free accounts payable | Free | N/A | No | Limited | Yes |
| Plooto | Automating accounts payable | $25.00 per month | 30 days | No | Limited | Yes |
OUR REVIEWS
Intuit QuickBooks Online: Best for Small Businesses
Using QuickBooks Online, you can create invoices, send and accept payments, manage and track expenses as well as manage your finances with ease. With QuickBooks Online, you can meet the accounting needs of businesses of all sizes. Live Bookkeeper, a service offered by QuickBooks, provides professional help. If you have a self-employed plan, you cannot upgrade to a small business plan.
Is there anything that QuickBooks cannot do? There are many small businesses across the country that use the extremely popular accounting software. A number of accountants have praised the application as being a cost-effective, user-friendly and effective application. As a small business person, it is hard to find many faults with QuickBooks, especially when you consider the needs that small businesses face today. There are plenty of features to choose from when it comes to QuickBooks Online accounting software. It’s easy to use, integrates with a wide range of business applications, and is not expensive. A lot of businesses find it helpful to connect their credit card processing provider to their accounting software so that they can keep track of their sales more effectively. Our favorite feature of the software is that it is cloud-based and that it is continuously updated.
Editor’s score: 9.5/10
As a small business, QuickBooks Online is our top choice for accounting software as it offers a variety of features. With the help of this accounting software, you will be able to create professional invoices, accept payments, keep track of your expenses, and keep an eye on your cash flow at all times. That’s just what you’ll get with the Basic plan; if you upgrade to the higher-priced plan, you’ll be able to send batch invoices, engage in deep analytics and even have access to a dedicated accounting team. You can integrate QuickBooks Online with a variety of popular business applications, such as Bill.com, Salesforce, and HubSpot, among others.
QuickBooks allows you to create financial reports without the need to create them from scratch. These reports are already included in the software, and include reports such as trial balances, general ledgers, and 1099 transaction detail reports you will need at tax time, so you won’t have to create them from scratch. Reports can be marked as favorites if you use them frequently, which will make it easier to locate them at the top of the page of Reports if you need them quickly. As part of the software, you can also schedule the reports to run automatically at a certain time and frequency, such as every day, every week, every month or every quarter, and schedule them to be emailed to you automatically as well. In our review of accounting software programs, QuickBooks offers some of the best options when it comes to reporting.
In addition to its versatility, QuickBooks Online also offers a wide range of support options. There are a number of ways in which QuickBooks can help you, whether you wish to do it yourself or prefer more hands-on help. With its Live Bookkeeping service, you can get assistance from a bookkeeper who will help you get your software set up, categorize transactions, reconcile your accounts, and close your books on a monthly and yearly basis. The pricing for Live Bookkeeping depends on your needs, which means that you will not be charged for services that you don’t require.
It is easy to collaborate with QuickBooks if you already have an accountant on your team. You can give your accountant access to the software for free through the software. They just need to accept the invitation to gain access. There is no need to worry about removing access at any time. With its reputation and adoption rate standing out in the marketplace, QuickBooks provides small businesses with a ton of accounting features without breaking the bank, making it a great choice for all types of small businesses.
As of August 2021, QuickBooks has launched a new payment device that enables small businesses to accept credit card payments wherever they are. In addition to integrating with QuickBooks Payments, the small contactless card reader can also be used on its own. As a result of the pandemic, a shift has taken place in the way small businesses accept payments, which has led to the creation of the new device.
A number of small and medium sized businesses have reported that Intuit has acquired Mailchimp, the marketing platform that is used by millions of them. As part of its strategy to offer customers actionable information on how to grow their business, the accounting software company plans to integrate data from Mailchimp with QuickBooks. As a result of this acquisition, Intuit is continuing its strategy of offering small businesses the digital tools necessary for their growth in order to stay competitive.
April 2021: Intuit has launched a new DocuSign feature for QuickBooks that lets small businesses sign estimates directly from its online platform. By using DocuSign eSignature Connector, you can expedite the process of sending estimates and track the progress of your estimates in real time.
May 2021: QuickBooks Online is making it easier for business owners and accountants to manage their finance apps with the integration of Docyt. A tool powered by artificial intelligence (AI) is Docyt. With this tool, business owners are able to pay bills, manage expenses, capture receipts, and run reports from a single location. Docyt’s integration with QuickBooks allows business owners to manage their finances using a single app, rather than dealing with a variety of apps to do so.READ INTUIT QUICKBOOKS ONLINE REVIEW FOR MORE INFORMATION
There are a number of reasons why FreshBooks accounting software is the best for invoicing
Accounting Software FreshBooks allows you to easily create invoices, accept payments via invoices, track expenses, and send automatic reminders. You get a full suite of accounting tools to do everything from tracking time and expenses to running financial reports. If you need to add several team members, it can be quite expensive. Visit the site to find out more.
If you need to create and send invoices for your small business, you may find that finding a small business accounting app that meets your needs can be challenging. There are some solutions that excel at invoicing and do not include any accounting features, while others include solid accounting features but lack quality invoicing tools at the same time. On the other hand, FreshBooks, on the other hand, succeeds in both of these areas.
Editor’s score: 9/10
It is true that all accounting software products have invoicing tools, but FreshBooks is one of the easiest accounting software products to use, which is why we chose it for our list of the best accounting software for invoicing. You can easily add billable time and expenses to the invoice with just a few clicks, customize the look of the invoice, set up recurring invoices to ensure payment is received on time, and set up automatic reminders to ensure payment is received on time.
With the help of this accounting software, you can manage your finances, generate various reports, track time and track the progress of your projects. In addition to this, FreshBooks also gives you the option to allow clients to pay bills based on invoices, which is a great way to speed up the payment process for you. FreshBooks allows you to gently remind clients who are late in paying their bills when it is time for them to do so via reminders and alerts when bills are due or past due in order to encourage them to pay on time. Using this accounting software, you’ll be able to keep track of when customers receive and open invoices from you.
In addition to its invoicing capabilities, FreshBooks has a number of other advantages that have made it a top pick among our best picks. You can, for example, keep track of time spent on projects as well as snap photos of receipts on your phone and log them on-the-go. A double-entry accounting system ensures that any mistakes you make will not throw off your ledger in the future, as you will not be prone to making mistakes. Your debits and credits will be accounted for automatically with the help of automatic checks and balances, which will ensure they balance. In addition to the software itself, this software can be integrated with over 80 popular business applications to give you a better overview of your business as a whole.
In terms of accounting and invoicing software applications, FreshBooks is fully equipped to meet the needs of small businesses. Although FreshBooks does not offer as extensive a range of features as some of the other accounting software options on the market, it offers tremendous value as accounting software with excellent invoicing capabilities. FreshBooks is one of only a few accounting software tools that can combine invoicing tools with accounting software tools, but it does the job effectively. While other accounting software may be more suitable for businesses that don’t send invoices, freelancers and small, project-based businesses will naturally be attracted to FreshBooks due to its features and affordability.Read our FreshBooks review to find out more.
Oracle NetSuite Accounting Software: Best ERP Tools
Oracle NetSuite Accounting SoftwareNetSuite offers a variety of features, including enterprise resource planning tools. The software is focused on automation, making it easy to send and collect invoices. However, the website doesn’t specify the cost, so you’ll need to speak to a sales representative to determine the price.
Small business owners who are looking for a complete picture of their business as well as an automated approach to accounting will be pleased to learn that Oracle’s NetSuite is a great alternative. NetSuite is the best accounting software with enterprise resource planning (ERP) tools we have reviewed for the best accounting software that enables you to manage all aspects of your business from a single dashboard, making it our recommendation for the best accounting software.
Editor’s score: 8.5/10
Designed for businesses with complex accounting and ERP needs, NetSuite is a powerful, full-featured ERP and accounting program. In addition to making and receiving payments, you can run a whole host of reports and manage taxes as well. As a result of NetSuite’s embrace of automation, it has made it easier to send invoices and receive payments, and it also has rich tax management features that support all currencies and exchange rates across the globe. When you have international sales, the software automatically processes sales and payments based on the local laws that apply in the country where you are selling or operating. There is also a revenue recognition management solution on the market that is designed to help business owners meet accounting standards and ensure timely reporting of their financial results.
Additionally, managing your cash flow is very simple thanks to a robust set of features that allow you to gain insight into your cash flow, making it easier to optimize your cash flow, control your bank accounts, and remain compliant with all the rules and regulations that govern your industry. With NetSuite’s payment management system, you can manage your payments centrally, while the planning and budgeting feature makes it easy for you to organize your data and plan your financials. In addition, a large variety of reports are available on many aspects of your business, including budgets and forecasts, what-if scenarios, and what-if analysis. It is possible to set permissions on NetSuite to maintain control over who can access what information.
It is also important to note that NetSuite has a number of ERP tools that will allow you to better manage finances, inventory, production, and the supply chain, as well as help you plan for the future. Because NetSuite comes with so many features and tools, it can be extremely difficult to get an accurate price without contacting a NetSuite sales representative first. To set up a free demonstration, you can fill out an online form and we will be in touch shortly.
If you are a sole proprietor or a microbusiness without a lot of complex needs, NetSuite may not be a good fit for you. Nevertheless, if you need a more holistic approach to accounting, as well as the ability to budget, plan, and forecast your business’s finances, Oracle NetSuite is a system that deserves your serious consideration.
Zoho Books Accounting Software: Best for Microbusinesses
There are apps for a number of popular operating systems and devices – including Apple, Android and Windows – which allow you to send invoices, reconcile accounts, and accept payments while on the go. With the help of Xero, you can track and manage your bills and vendor credits through a web-based platform. Xero has a limit of 5,000 transactions per month, which may not be enough for some businesses.
This is the reason why Zoho Books is a great choice for microbusinesses since it offers simple accounting software. With Zoho Books, microbusinesses will have all the essential features they need as well as advanced tools such as project billing and time tracking, which are essential for microbusinesses. Moreover, it has the ability to integrate with other software, so you can continue to use the software as your business grows and expands. Because of its simplicity and value for microbusinesses, we selected Zoho Books as the best accounting application for microbusinesses.
Editor’s score: 8.75/10
There is no better way to manage your business finances on the go than with the mobile apps offered by Zoho Books for Apple, Android, and Windows. Even the Apple Watch and Android smartwatches have apps that are specifically designed to work with the Apple Watch. By being able to create and send invoices straight from the app, you will be able to bill your clients as soon as you finish a job, instead of waiting until you get back to the office to send an invoice.
When you use simple accounting software, you don’t want an outdated user interface or a feature set that is so basic you can’t get any meaningful business insight from your data if you use an outdated accounting software. I think that’s what makes Zoho Books stand out: despite its ease of use, it doesn’t lack features, and it has an interface that is modern and sleek to make it stand out from the crowd. In addition to speeding up many business processes by automating them, it can also help you save time on many of these processes.
With Zoho Books, you can create recurring invoices and get automatic reminders to pay your invoices. It is also possible to accept payments directly from invoices through the integration with your payment processor. There are other ways to automate reporting in Zoho Books, too; you can schedule when a report is to run, and the software will send you an email as soon as it has been run.
In addition to Zoho Books’ client portal, another feature that sets it apart from its competitors is the fact that it is a website where customers can view invoices, leave comments, and pay online without leaving your website. There is no doubt that this is a useful feature for businesses that are involved in close working relationships with their clients. As long as you set up the customer feedback portal in a way that allows them to provide feedback on your service, you can get feedback from your customers.
As part of its suite of integrated business applications, Zoho also has customer relationship management (CRM) software, email marketing and social media marketing solutions, spreadsheet editors, and other productivity tools that are compatible with Zoho. In a similar vein to its competitors, Zoho Books is integrated with multiple third-party productivity apps and business solutions, such as Google apps, Square point-of-sale (POS) systems, several credit card processors, and tax preparation services, such as Tax1099 and Avalara. As well as that, it features a Zapier integration that enables you to connect to more than 1,000 third-party apps through Zapier. As you can see, Zoho Books is one of our top picks for the best accounting software for microbusinesses as it includes all these features and services.
During the month of September 2021, Zoho made its Zoho Invoice platform free to its customers as a way of encouraging small business owners to emerge from the pandemic. It’s not just about sending invoices, the software also allows you to track time for your projects, manage the billing for your projects, and access more than 30 features and tools to help you get paid and collect past-due bills. READ THE REVIEW OF ZOHO BOOKS ACCOUNTING SOFTWARE.
Xero: Best for Growing Businesses
There are more than 700 app integrations available with Xero, which allows you to manage every aspect of your business. Our customer support team is available 24 hours a day, 7 days a week, via email and live chat. There is no doubt that Xero is not as well known as QuickBooks, which may affect your accountant’s ability to learn the software.
The beginning of a business is usually a fairly simple one, but that does not mean that it will always be that way. With Xero, you are able to choose accounting software that grows along with your business, making it perfect for growing companies.
Editor’s score: 8.5/10
ZarMoney: Best for Transparent Pricing
There is a clear explanation of pricing on ZarMoney’s website. There are over 9,600 banks in the U.S. and Canada that ZarMoney connects to, which means that bank transactions can be automatically imported from these banks to ZarMoney. As of right now, you are not able to send recurring invoices.
It is important to note that ZarMoney does not hide its pricing in any way. As part of our research for the best accounting software for transparent pricing, we chose this company because its website states exactly how much you will pay per month. There are many reasons why we chose this company as our pick. Most of the time, it is extremely difficult to make a comparison of the price of an accounting program due to the difficulty of determining its cost. ZarMoney, on the other hand, is known for being straightforward, and it is evident from their clearly defined pricing plans that they are committed to being straightforward.
Editor’s score: 8.25/10
Plooto: Best for Automating Accounts Payable Processes
You can manage payments, approvals, reconciliation, and reporting all from one central location with Plooto’s payment platform. This software automates the accounts payable and accounts receivable processes, therefore speeding up the payment process. As of now, Plooto is only compatible with QuickBooks and Xero, so it may be limited in its functionality.
It goes without saying that most small businesses are always short on time, so any method that can save them some time is welcome. The best accounting software for automating accounts payable processes that we have found is Plooto, which has a lot to offer for a low price and is why we selected it as the best accounting software for small businesses.
Editor’s score: 7.75/10
GoDaddy Online Bookkeeping: Best for Online Merchants
Among the many features of GoDaddy Online Bookkeeping is the integration of sales data from Amazon, Etsy, and PayPal. By utilizing real-time information, you will be able to generate reports and make business decisions based on what you see. Depending on the size of the business and the type of merchant, there are three pricing plans that you can choose from. In general, GoDaddy Online Bookkeeping is designed with the sole proprietor and limited liability company in mind; larger companies may require a program with more accounting features for their accounting needs.
The sales channels are blurring for small business owners who must manage both online and offline sales, which is why it’s important for those businesses to have an accounting program that can keep all of those transactions together. In this sense, GoDaddy Online Bookkeeping stands out from the crowd, thanks to its integration with marketplaces such as Amazon, Etsy and PayPal, as well as the ease with which invoices can be sent and payments accepted; and the ability to generate a number of different reports. Furthermore, GoDaddy Online Bookkeeping is one of the most affordable accounting software solutions available on the market, making it our choice as the best accounting service for online merchants.
Editor’s score: 7.75/10
Wave Financial: Best Free Option
Using Wave Financial, you will be able to track expenses automatically by integrating your bank accounts and credit cards. You can use Wave’s free bookkeeping services to keep track of your finances. In comparison to some of its rivals, Wave’s integrations are more limited than some of its competitors.
With Wave Financial, you can take advantage of many important, high-quality accounting features for free. You will be able to connect to your bank accounts in real time, and have access to payroll and invoicing features, as well as unlimited accountant connections. As you can see, these are just a few of the factors that lead us to pick Wave as the best free accounting software in our review.
Editor’s score: 8/10
Sage: Best for Freelancers/Self-Employed
It offers 24/7 support via live Q&A chats with Sage experts, as well as one-on-one sessions with an accounting expert. Sage lets you create and send invoices, track payments, and reconcile bank entries automatically. The software is compatible with only one point of sale system, which is Sage.
There is a need for freelancers and self-employed individuals to have an affordable accounting program that will allow them to send invoices and receive payments. Our top pick for the best accounting software for freelancers and the self-employed is Sage Business Cloud Accounting since it offers this, as well as so much more.
Editor’s score: 7.5/10
Despite it being an inexpensive accounting software package, Sage Business Cloud Accounting packs a lot of punch. In addition to creating and sending invoices, you can track payments and automatically reconcile bank entries with the entry-level plan.
Sage also offers a plan for $25 a month that allows unlimited users to access the software. As a result, you can send invoices, quotes, and estimates; run reports and analyze cash flow forecasts; manage purchase invoices; automatically snap and post receipts; and run reports and analysis to forecast cash flow. There is a promotion that Sage is currently running that gives business users 50% off the higher-tier plan for a period of six months, and the company makes that service free for the first three months.
Moreover, Sage offers a 30-day free trial period, which is something we find very attractive. It is also very easy to cancel your subscription with Sage; you don’t have to sign a long-term contract that will cost you extra to break, but you do have to give the company in advance notice if you want to cancel your subscription. Another reason we chose Sage for freelancers and self-employed people is that it is easy to get started and that it is extremely intuitive to use. Using the software, you will be able to automate most of the accounting processes that are normally done manually, such as posting expenses and payments, sending invoices, and reminding you when your bills are past due. When your business grows, Sage’s integrations and apps make it easy for it to be expanded as your business grows as well. Among a wide variety of apps the company integrates with, there is AutoEntry, Draycir, Avalara, and Credit Hound, and the company operates an online app marketplace.
There is some good news for freelancers and self-employed people who do not have any accounting experience since Sage’s customer service is very accessible. If you need assistance or if you have any questions, you can contact our customer support team 24/7 via live chat or through live Q&A sessions. It is also possible to get one-on-one help from Sage accounting experts through one-on-one online sessions.
Self-employed and freelance workers need to be able to send invoices quickly and easily, as well as track payments for their work. Using Sage Business Cloud Accounting, you can keep track of your cash flow in an affordable and convenient way, making it a perfect accounting software for freelancers and self-employed individuals.
Melio: Best Free Accounts Payable Software
There is no charge for Melio if you want to make and accept payments from bank accounts. You are able to schedule and track payments as well as control who has access to your accounts payables and receivables. Melio charges a 2.9% fee for credit card transactions.
There are some business owners who do not need complex accounting software to run their business. If all you need to do is to send invoices to your customers and receive payments from them, Melio may be the perfect solution for you. Among our top picks for free accounts payable software, we chose this one because it provides many features such as the ability to make and accept payments, manage bills, and integrates with QuickBooks for free.
Editor’s score: 7.25/10
ACCOUNTING SOFTWARE PRICING
Accounting software streamlines the billing and accounting processes for small and medium-sized businesses, and it doesn’t have to be expensive in order to be effective. There are several plans available from most programs, so you are sure to find one that fits your needs and budget.
As a rule of thumb, accounting software typically comes with two types of pricing models: perpetual licensing and recurring subscriptions. Perpetual licensing models entail the payment of a one-time fee for an unlimited subscription to the software in exchange for a one-time payment. Whenever you choose a subscription pricing model, you will be required to pay a monthly or annual fee for the use of the software.
For a basic starter plan, you can expect to pay around $4.99 per month, and for a more advanced service plan, expect to pay anywhere between $60 per month and $200 per month. The monthly cost will also be affected by other factors such as the number of users and the features included in the service.
Regardless of the pricing model you choose, you should be on the lookout for hidden fees, which may include additional charges for customization options, installation or setup services, integration and maintenance and support services.
You might want to consider free accounting software if you run a small business on a very limited budget. Wave, for instance, offers many of the accounting and invoicing features you would find in paid programs.
Whenever you’re choosing an accounting or billing software solution for your business, we highly recommend that you take advantage of any free trials that may be available to test out the programs and see which one will offer you the features and tools you need. Aside from that, if you spend some time working with the software before you make a decision, you will feel more confident about your choice.
KEY FEATURES OF ACCOUNTING SOFTWARE
The accounting software program has many features that make it a useful tool for a wide range of businesses. It is imperative that you know what features to look for as a small business owner before making a purchase. There are a number of features included in most online accounting software, including accounts receivable, accounts payable, banking and reporting. In addition, some of these programs also include tools for managing inventory, managing projects, tracking time, and managing payroll.
As a general rule, you should look for the following features in accounting software:
Bank Feed
Using this feature, you will be able to receive a daily update of the transactions on your business bank account and credit card account through your software. By doing this, you will be able to save time, as you will not have to manually upload transactions. In addition to that, it also gives you a daily overview of your accounts rather than a monthly one. If you enable a real-time bank feed feature, you will be able to make reconciliation a much simpler task to do than it was previously, making it a small daily task rather than a monthly chore.
Dashboard
Whenever you log into your account, you are greeted by a dashboard that shows you an overview of your account activity and key metrics, including cash flow, profit and loss, account balances, expenses, accounts payable and receivable, as well as sales data. In some accounting programs, you have the option of changing the order in which the information is displayed by rearranging the columns.
Online Invoicing
Having the ability to send invoices via email and accept online payments is helpful if your business sends out invoices for payment. While some accounting programs integrate with third-party payment processors, others require you to use their own in-house processing services when it comes to processing payments. When an accounting software is able to also serve as a generator of invoices, it is a major plus.
Recurring Invoices
It is possible to schedule this feature so that the system generates and sends invoices automatically for recurring charges, such as subscriptions, so that the client does not have to manually do it. If you do not wish to have your invoices sent on a regular basis – daily, weekly, monthly or annually – then you can indicate whether the billing is going to end on a specific date.
Automatic Payment Reminders
You can use this feature to remind your customers about their upcoming and past-due payments. Some of these templates have samples of email text that you can use as is or customize according to your needs. If you want the reminders to be sent at a specific time, you can choose when to send them. When you receive a customer’s payment through some programs, you have the option to send them a thank-you email as soon as you receive it.
Bank Reconciliation
It is possible to use smart reconciliation tools in order to identify possible matches between your bank transactions and the invoices and bills you’ve entered into your accounting software, saving you the time it would take to go through your bank account in search of this information. As a result, you will be able to approve or deny the suggested matches. There are a few applications that offer a reconciliation tool in their mobile apps, allowing you to compare your accounts as you reconcile them.
Financial Reporting
Financial reports can be generated by any accounting software program that is capable of generating them. Some of the tools are more basic than others, and some require you to subscribe to a more expensive plan in order to access advanced reporting features. It is important to make sure that the software application and plan you pick includes the features you need in order to generate specific types of financial reports. Having detailed reports of your financial data can help you to make accurate business decisions by allowing you to interpret the information.
Mobile Apps
The best accounting and invoicing programs come with mobile apps, but not every accounting and invoicing program does. The capabilities of mobile apps can, however, be very varied based on the device and the operating system. Some of the web-based software can only capture receipts for tracking expenses, while others can create invoices and send them, and some have almost all of the features that the web-based software has. If you are considering purchasing a certain piece of software, it is important to find out if it offers a mobile app and, if it does, what features it offers that will allow you to manage your business even when you are away from your workstation.
Integrations
In the event that your accounting software has the ability to connect to other business programs you use, you will be able to save a lot of valuable time because you will not have to manually transfer data from one system to another. Payroll, payment processing, point of sale and CRM software are just a few examples of popular types of integrations that are available with accounting software. By integrating your software with the existing systems you use, you are also able to reduce the amount of time employees will need to spend on training.
Tracking for Billable Hours
It is important to use software that allows you to track and bill your time, or that integrates with the time-tracking program you use already, if you are a consultant or your business charges clients by the hour. Freelancers should take advantage of this feature as it is crucial.
Inventory Management
Whether you are running a retail, e-commerce or distribution business, you need an application that helps you track your inventory and make purchase orders in order to run your business smoothly. In order to access this feature, you may need to subscribe to a top-tier plan. Look for software that integrates with a dedicated inventory management system if you need more advanced inventory management features.
Project-Based Billing
There are many reasons why firms, freelancers, and consultants who work on projects or jobs with clients should look for accounting software that helps them keep track of the tasks and budgets associated with those projects. The software should allow you to invoice customers for tracked time and bill them for project expenses.
Support for Multiple Businesses
It is possible to add more than one business to your account with several of the programs we evaluated; however, some companies charge an extra fee for this convenience. It is also important to bear in mind that the type of accounting tools that will be essential to you will be dependent upon the specific needs of your business. A project-based billing system might prove to be one of the most valuable features to you if you run a small freelance business. If you’re planning to do some work on your mobile device in the near future, a fully-featured mobile app might be the best option for you.
BENEFITS OF ACCOUNTING SOFTWARE
The management of your finances is crucial to the success of your business, and the right accounting software can greatly improve your chances of achieving this goal. Accounting software has a great deal of advantages over pen and paper or Excel spreadsheets, and there are many benefits to switching from both. Here are some of them that you might want to take a look at.
Improves organization
Small businesses cannot afford to not have their finances in order at all times. In order to get the information you need and get it as soon as possible, it can be hard if you are not organized whether you are trying to pay your tax bill or forecast for the next year. A good accounting software program will assist you in keeping track of all your financial data. In addition to organizing and storing financial information, it also automates many time-consuming accounting processes, which allows you to concentrate on the operations of your business instead of on the accounting system.
Doesn’t break the bank
Throughout the years, the price of accounting software has come down greatly thanks to the advent of cloud-based offerings. Currently, there are a variety of accounting software options available to small businesses: Costs range from free to $350 per month depending on the package. Your accounting needs and the size of your business determine how much you are required to pay for accounting services. It is probably worth it to spend those extra dollars if it means you’ll be able to optimize your cash flow, meet your tax obligations, and identify growth opportunities.
Ensures best practices
There is no denying that taxes are an integral part of running a business, and many accounting software vendors are well aware of this fact. Thus, they have developed software that prepares tax forms, calculates sales tax, and even files taxes for you without you having to do anything besides use the software.
FAQS
How does accounting software work?
Accounting software records transactions and tracks different accounting metrics. You can set up the software to automatically receive financial information from your bank or use an extremely basic version that might require manually inputting the data. We encourage you to use software that automatically receives financial information from your bank and credit card provider to track your business’s finances. Further, most software solutions store the information in the cloud, so your data will be secure and safe if your computer crashes or you experience other technical issues.
Which small business accounting system is best?
Based on our research, QuickBooks Online is the best small business accounting system. But, depending on the specific needs of your business, another system may be a better fit or better value. For example, if your business provides a service and sends a lot of invoices, FreshBooks might be the best choice for you because of its robust invoicing features. See our best picks above for our specific recommendations for different business sizes and needs.
What do you need from your accounting software?
You need accounting software that tracks the money moving in and out of your business, with both accounts payable and accounts receivable features. Some software solutions don’t include both accounts payable and accounts receivable information. Also, accounting software should connect to your bank and credit card accounts and automatically download your transactions. If your business is service based, you may need project management tools. If your business sells products, you may want an accounting solution that has inventory management features. Last, look for software solutions that offer greater advantages by connecting to other business applications you already use, such as your point-of-sale system, customer relationship management system or email marketing software.
Do you need online bookkeeping software instead of accounting software?
For small businesses, the term “online bookkeeping software” is usually interchangeable with “online accounting software.” (However, there is a difference between bookkeepers and accountants.) The best online accounting programs for small businesses have bookkeeping capabilities that allow you to record debit and credit transactions, as well as accounting features that let you run reports and analyze your business’s financial performance. Look for more than just a bookkeeping solution; accounting software should include more detail and let you generate invoices and detailed reports.
Should your accounting software also act as an invoice generator?
It depends on your business. If you generate (or expect to generate) a lot of invoices to send to clients and customers, we recommend that you find a comprehensive accounting application with invoice-generating features. Freelancers should consider using accounting software that can generate invoices.
What does an online accounting service do?
Online accounting services can perform a wide range of tasks for busy business owners. Some focus on bookkeeping duties, such as entering and categorizing transactions, reconciling accounts, and generating financial statements and reports that you can take to your CPA at tax time. Others provide payroll and tax preparation services. Some – such as virtual controllers, chief financial officers and CPAs – provide high-level accounting services, like internal audits and financial planning and analysis.
How much should a small business plan expect to pay for accounting software?
For some small business owners, an accounting platform that tracks expenses and sends invoices is all that’s needed. For others, advanced reporting, inventory management, and e-commerce are more important. The camp you fall into will dictate how much you pay for accounting software. Some accounting software options are free, while paid versions can cost as much as $25 per month, per user. The total cost of what you spend will be determined by the complexity of the software you choose and how many employees you want to have access to it.
Should small businesses look for certain accounting software attributes?
Small business owners should look for accounting software that is easy to install, simple to use, easily integrates with third-party apps, and provides a bevy of features and functionality including invoicing and inventory management. The best accounting software enables easy collaboration between you and your accountant.
COMMUNITY EXPERTS
When searching for accounting software, it is important to find a solution that not only offers all the features and tools you need but also fits within your budget. Candace Galiffa, the founder of NewWay Accounting, said she chose QuickBooks Online because it checked both of those boxes.
Not only does Galiffa feel the software is affordable, but it also has a number of key features that stand out to her, such as its ability to connect with banks and its invoicing platform.
“At the end of the day, most business owners are on a cash basis, and we want to make business banking as simple as possible,” said Galiffa. “This really allows business owners not to miss any deductions.”
QuickBooks’ customer service was also a plus to Galiffa. Their representatives offered guidance on using the software, which made the accounting program easier to navigate.
FreshBooks was the software of choice for Katie Thomas, CFO of Diamond J Accounting. One aspect of the software she finds particularly appealing is its bank reconciliation process. This is a key function she looks for in accounting software, because business owners receive automatic transaction updates.
However, one concern Thomas had with FreshBooks was the lack of customization available with the software’s features. “As small business owners, you want something that is going to be easy to use, accessible and can grow with you,” Thomas said. “Just because you’re a small business doesn’t mean you have to think small. You want something that can adapt and something that offers project tracking.”
Thomas referred to Xero as a fair program because of its open API and project management software integrations. For Thomas, these features were worth mentioning because they help make operations more organized and streamlined.
WHAT TO EXPECT FROM ACCOUNTING SOFTWARE IN 2021
Despite the COVID-19 pandemic, the accounting software market has continued to grow as businesses migrate to the cloud. More of the same is expected in 2021 as businesses of all sizes look for ways to reduce costs and complexity. According to market research firm Gartner, worldwide information technology spending is forecast to hit $3.8 trillion in 2021, up 4% from 2020. Enterprise software is projected to see 7.2% growth, and that includes cloud accounting applications.
Working from home was the only option for many people during the pandemic and will continue to be popular with workers and employers across the globe in 2021. Accounting software vendors are responding by automating even more aspects of accounting.
Accounting software providers are increasingly relying on artificial intelligence and machine learning to reduce manual data entry. That trend is expected to accelerate in 2021. For example, BlackLine, which makes accounting automation software, recently inked a $150 million deal to buy AI company Rimilia, which operates a software-as-a-service platform that simplifies cash flow and collection.
In 2021, the COVID-19 pandemic, which has hurt small businesses deeply, will continue to affect business owners. Accounting software vendors have responded by providing deals and discounts to help small business owners. If there’s another shock to the economy due to the pandemic, we can expect accounting software providers to step up again.
OUR METHODOLOGY
To determine the best accounting software for small businesses, we spent dozens of hours researching the top applications. Here is an explanation of our selection process.
Locating the Best Services
We began our research by asking business owners which accounting software they use, what they love about it and what they think makes it the “perfect” application. We also researched popular accounting apps that frequently appear on reputable review websites, top lists and business websites.
Choosing the Best Services
We then created an extensive list of accounting software that included the apps we identified from our research, applications we were already familiar with and vendors that have pitched their software to us.
We narrowed this list further based on different use cases and a wide range of criteria, including cost, features and limitations. As a part of our research, we studied user reviews, watched tutorials and checked out customer resources, such as knowledgebases, blogs and guides.
Researching Each Service
Next, we evaluated each program by signing up for a trial or demo account and testing the software ourselves. This firsthand experience helped us understand how the features work, whether the programs are worth their price tags and if the software really is as easy to use as the vendor claims it is. To further inform our decisions, we contacted each vendor to measure the quality of its customer support.
Analyzing Each Service
We started with more than 100 accounting software products on our list; however, following our research and evaluation, only 11 made it to our short list: Billy, FreeAgent, FreshBooks, Intuit QuickBooks Online, Kashoo, OneUp, Sage One, Wave Financial, Xero, ZipBooks and Zoho Books. Our picks for the top accounting software programs are QuickBooks Online, FreshBooks, Xero, Zoho Books and Wave Financial.
Conclusion
Did you know? It’s been said that the average company loses 5% of its revenue each year from accounting errors. You should invest your money wisely and think about hiring an accounting software for managing your finances at a fraction of the cost of other software companies out there.