If you want to know what is the best accounting software for small business accounts, the time to evaluate your options is now. There are a lot of options when looking for small business accounting software, from free to paid solutions. But there are a few things to consider before deciding what is the best accounting software for your business.
All small business owners, especially new ones, question whether they should hire an accountant or do their own bookkeeping. Often it becomes clear that hiring an accountant is the better choice. But there are so many accounting software packages out there, which one do you choose? Small business accounting software is necessary for managing the financials of a small business.
Whether you’re a freelancer or a small business, accounting software can help you manage your finances. Learn about the different options and choose the best accounting software for your business in this post.
The Best Accounting Software for Small Business
Small businesses aren’t competing in the same space as large businesses when it comes to accounting software. There are features that small business owners will not need in their accounting software, which vary significantly from what larger businesses requirements when it comes to accounting software.
FreshBooks
Best for Small Business and Sole Proprietors
FreshBooks is an online invoicing and accounting tool for freelancers, consultants, and creative agencies. Thousands of customers give it great reviews and rate it as the best and easiest-to-use service in its class and we’ve used FreshBooks extensively over the past three years for our web design business, and it has never let us do down.
Making sure your business stays on top of its finances is tricky, even without the need to worry about managing payroll, taxes, and invoicing. But the answer to both your accounting and invoicing needs is FreshBooks, a cloud-based accounting solution for small businesses.
It’s fundamentally changed how we manage our finances. Here are some of the reasons why you should be using FreshBooks too.
What it Does Well:
- Offers a wonderful user experience
- Double-entry method of accounting
- Track and monitor inventories
- With detailed client records
- Time tracking and collaboration
- Estimation and retainer functions
- Supports proposals and projects
- Mileage tracking
Disadvantages
- No quarterly tax estimates.
- Minimal setup help
- Some dashboard deficits
- Limited invoice customization
- Mobile apps lack some site features, interface excellence
There have been significant changes made to FreshBooks. Most importantly, FreshBooks follows the industry-standard double-entry accounting rules that accountants and other small business accounting firms use.
Wave Financial (Us & Canada Only)
Best Free Accounting Software
Wave is a cloud-based, double-entry accounting tool, with a price tag that would appeal to startups, freelancers, and independent contractors. It’s 100% free. No trials, no catches, and no limits. This accounting, invoicing and receipt tracking software will do all the bookkeeping work so that you can better understand your business finances, for free.
Unless you sign up for payroll or customer payments. The company occasionally rolls out a major feature update for its small business accounting service, but it’s always making smaller internal changes that can affect your daily accounting workflow for the better.
Wave delivers an excellent, free accounting service for freelancers. Its invoice creation and management tools are good, too, though the invoices could stand to be more flexible.
What it Does Well:
- Free (payments and payroll incur fees)
- Smart selection of features for very small businesses
- Double-entry accounting
- Excellent invoice and transaction management
- Can pre-authorize recurring credit card payments
- Good user interface and navigation tools
- Context-sensitive help
- Multicurrency support
- Instant Payouts
Disadvantages
- Can’t offer discounts
- No dedicated time-tracking features
- No comprehensive mobile app
- Receipts by Wave app unavailable on Android
- Simple record templates
- Invoice customization could be stronger
- Payroll features not as capable as other solutions
Wave accounting software is a top free accounting program to consider from the beginning of your search. You can connect unlimited bank accounts and credit card accounts through this option. You can also track your income, expenses, and invite guest collaborators free of charge. In addition, you will be able to scan receipts and invoices for free.
There’s one thing to keep in mind, though: If you wish to let your invoiced customers pay online directly via the invoice, you’ll need to pay for that. ACH payments are charged 1% (with a minimum of $1) and credit card payments are charged 2.9% + $0.30. In addition, payroll needs to be paid through Wave. In principle, there will be a $35 or $20 base fee per month, plus $4 per employee and contractor with your payroll.
Zoho Books
Best Free Accounting Software for Global Users
Wave only supports U.S and Canadian businesses but Zoho is another top free accounting software for small businesses. Zoho Books offers all the crucial features of accounting software—reports, bank syncing, billing, expense management, and invoicing—in one free account.
Zoho Books makes invoicing and managing receivables effortless. Send customized statements to your clients and receive payment in multiple currencies with Zoho books accounting software.
Bookkeepers, accountants, and business owners can manage their finances with Zoho Books, which is a cloud-based accounting software.. Business workflows can be automated, and users are able to collaborate across departments to monitor receivables and payables, manage inventory, match bank feeds automatically, and track projects in real-time for invoicing.
Zoho Books can access data from other Zoho applications, such as customer relationship management, customer service, and inventory management. Reports can be generated from Zoho Analytics by consolidating data from all these applications.
QuickBooks
Best for Growing Businesses and General Purpose Accounting
Small businesses find this software to be a great option since it is scalable and is a very popular accounting solution. QuickBooks Online is a solid choice for a wide variety of businesses, especially those that plan to work with a bookkeeper or accountant regularly. It provides a high level of functionality, flexibility, and scalability – you can adapt it to meet the needs of your business.
Accounting software for small businesses is dominated by QuickBooks Online for a reason. You can maintain detailed, comprehensive records. You can track inventory and cost of goods with QuickBooks Online Plus and Advanced.
Also, you can use third-party platforms like Amazon and Shopify to connect your inventory with purchase orders, vendors, and management. Over 600 apps are available in the QuickBooks Online Marketplace, including third-party tools and QuickBooks add-ons.
Features of QuickBooks include:
- Financial institution integration as well as integration with PayPal, Square, Shopify, and more
- Help to file quarterly and annual tax returns with user guides and exporting tax data
- Sales tax calculations, returns, and recorded tax payments
- Automatically sort transactions and expenses into tax categories
- Track expenses in one place
- Scan receipts and attach them to invoices
- Share with your accountant or export documents
- Create customized reports with cashflow tracking visible on your dashboard
- Track miles with your smartphone’s GPS
QuickBooks offers tiered pricing so you can pick the best plan for your needs:
- Simple Start: $12.50 per month for businesses just getting started
- Essentials: $20 per month for managing growing businesses
- Plus: $35 per month to help you get better organized and manage projects, inventory, and contractors
- Advanced: $75 per month to help your business grow with deeper insights and dedicated support
It won’t be difficult for you to access resources related to QuickBooks Online, regardless of whether you do your bookkeeping yourself or hire a professional.
Sage 50cloud
Best for Sophisticated Accounting and Inventory management
Sage 50cloud is more complex than other online accounting software, while this complexity might turn off smaller, simpler businesses, this complexity also gives it amazing power and advantage over others and it makes it the number one choice for companies that require advanced accounting operations, high-level inventory management and other levels of complexity. It is a comprehensive accounting solution any day or time.
It is a powerful accounting application for small businesses that is designed for desktop use. One of the features that make it different from its competitors is that it integrates with Microsoft 365. Although you can access some of Sage 50cloud’s data remotely, you must have Sage 50cloud installed on your local computer (or a very good laptop, as it is very resource-intensive) to take full advantage of its features. Sage 50 can only be accessed through Windows machines, which puts it at a disadvantage to alternative accounting software that can be accessed through any internet-connected device.
What it Does Well
- Exceptionally sophisticated feature set
- Great customizability
- In-depth contact and item records
- Unusually strong inventory management tools
- Can scale up to other versions
- Good (mandatory) support options
- Microsoft 365 integration
Disadvantages
- Windows only
- Resource-heavy
- Expensive
- No dashboard
- Interface looks dated, crowded
- No dedicated time tracking
- Many links open new windows
- Lacks comprehensive mobile app
Xero Accounting
Best for Versatile Usage
While a lot of software has been mentioned, Xero is another top web-based accounting system designed for small and growing businesses. We choose Xero to be on this list because it offers small businesses the options to customize and integrate thousands of apps.
Xero comes with the best extra features that might not be visible on the surface, for general-purpose business transactions but will be needed in some areas of other businesses. So if you have a unique accounting concern that other software might not cover, try Xero because it offers several useful features, including a Hubdoc where you can capture bills and receipts and project tracking and costs.
Xero’s features include:
- Create expense claims
- Send invoices
- Fast bank reconciliation and integration with your financial institution and other apps including HubSpot, Square, and over 450 different programs
- Up-to-date financial reports
- Business data protected
- Real-time cash position
- Collaborate with staff or your accountant
Pricing for Xero is as follows:
- Early: $4.50 per month, send 20 invoices, enter five bills, reconcile bank statements, and capture bills and receipts
- Growing: $32 per month, send invoices and quotes, enter bills, reconcile bank statements, and capture bills and receipts
- Established: $62 per month, includes all Growing tier features plus multi-currencies, expenses, and projects
Each plan comes with a free 30-day trial for unlimited users.
Conclusion
Accounting software for small businesses varies in features and functions, so it also varies in price. Most software is offered as a subscription-based model where you choose your tier and pay monthly. Typically, you can expect to pay anywhere from about $5 to $75 per month, depending on the number of users and functions that you need the accounting software to handle. Other software offers a one-time fee and monthly fees. The one-time fee usually starts at $149, and annual fees start at $199.
Custom options are available, and custom pricing coincides with the features that you choose. Most software also offers add-on features such as payroll services, state tax compliance, CRM, human resources, and inventory control. These prices vary based on features, the state you’re based in, and the number of users.