So you’ve decided to enter the world of entrepreneurship. Congrats! As liberating and exciting as it can all be, it still leaves the question of how to manage your finances. Fortunately, with modern technology advancing left and right, you have an abundance of options to streamline your finance management. 

However, the multitude of choices can potentially hinder your decision-making. In this article, we’ll be showcasing the best accounting software for small businesses and the top things to keep in mind as you make your decision. 

QuickLook: Top Free Accounting Software

Introduction

In the precarious stages of a small business, every second and every dollar counts. Accounting software helps business owners keep track of their finances and ensure they stay on the right side of profitability and compliance. By automating complex tasks and providing real-time insights, these platforms allow businesses to focus on growth instead of getting lost in numbers.

Here are the key benefits of investing in accounting software:

• Automates repetitive tasks.
• Reduces manual errors in financial entries.
• Provides real-time financial overviews and reports.
• Helps adhere to tax codes and regulations.
• Adapts to changing business needs.
• Seamlessly works with other business tools.

Best Accounting Software for a Small Business

We know you must have a million things to do other than sift through a list of accounting software, so let’s get to it. Here’s the breakdown of the best accounting software for small businesses. 

1. QuickBooks

Developed by Intuit, QuickBooks stands as one of the giants in the accounting world. Catering to a diverse range of businesses, its intuitive design and powerful features like detailed financial reporting and full-service payroll make it a top choice. The platform’s cloud-based nature further ensures that users can access their accounts anytime, anywhere.

Key features of QuickBooks include:

• Automated Invoicing: Customizable invoices that can be scheduled and sent automatically.
• Expense Tracking: Snap photos of receipts and QuickBooks automatically sorts and categorizes expenses.
• Full-Service Payroll: Automatic tax calculation and end-to-end payroll management.
• Inventory Tracking: Seamless inventory management that updates in real time.

Pricing:

• Simple Start: $30/month 
• Essentials: $60/month 
• Plus: $90/month 

Pros:

• Intuitive User Interface: QuickBooks is known for its user-friendly design that simplifies complex tasks.
• Integration Capabilities: Easily integrates with a multitude of third-party apps and services.
• Reliable Cloud-based System: Accessible on any device with an internet connection.

Cons:

• Pricier for Advanced Features: While it offers various price points, the more advanced features come at a higher cost.
• Learning Curve: Some features may require time to fully understand.
• Occasional Sync Issues: Some users have reported occasional sync issues with bank accounts.

Get started with QuickBooks

2. FreshBooks

FreshBooks is especially popular with freelancers and small businesses. With its user-friendly interface, it simplifies invoicing, time tracking, and expense management. The software places great emphasis on visual analytics, allowing users to keep track of their finances at a glance, and making it easier even for those who have no experience with accounting.

Key features of FreshBooks include:

• Customizable Invoices: Create professional invoices with ease, and set up recurring ones for regular clients.
• Expense Management: Automatic expense tracking by linking bank accounts or using the mobile app to snap photos of receipts.
• Time Tracking: Track billable hours for client projects directly within the platform.
• Projects: Collaborate with clients or team members on specific projects, sharing updates and files.

Pricing:

• Lite: $17/month 
• Plus: $30/month 
• Premium: $55/month 

Pros:

• Ease of Use: Intuitive design that doesn’t require an accounting background.
• Efficient Client Collaboration: Share estimates and proposals, and get feedback directly within the software.
• Robust Reporting: Comprehensive financial reports that can be generated with a few clicks.

Cons:

• Limited Features in Lite Plan: The most basic plan is limited in terms of client numbers and features.
• Additional Costs for Additional Team Members: If more than one person needs access, there’s an additional monthly charge.
• No Inventory Tracking: Not suitable for businesses that need inventory management.

Get started with FreshBooks

3. Wave

Wave distinguishes itself with its collection of genuinely free, all-encompassing accounting resources designed specifically for freelancers and sole proprietors. Its user-friendly interface and no-cost approach make it exceptionally appealing. What sets it apart is that, despite being free, it doesn’t compromise on critical functionalities such as invoicing, receipt scanning, and financial reporting.

Key features of Wave include:

• Unlimited Invoicing: Create and send as many professional invoices as needed, without restrictions.
• Receipt Scanning: Use the mobile app to capture and categorize business expenses on the go.
• Integrated Financial Reporting: Access detailed balance sheets, profit & loss statements, and other crucial reports.
• Multi-Currency Support: Conduct and record business transactions in multiple currencies.

Pricing:

• Accounting, Invoicing, and Receipts: $0 – Completely free with no hidden costs.
• Wave Payments: Pay-per-use – 2.9% + 60¢ per transaction for credit cards, and 1% for bank payments (min $1).
• Wave Payroll: Varies by state – Starts from $40/month + $6 for each active employee or contractor.

Pros:

• Genuinely Free: Essential accounting tools are offered without any subscription fees.
• User-friendly Design: Easy-to-navigate dashboard suitable for non-accountants.
• Secure and Cloud-Based: Data is encrypted and stored in the cloud, enabling access from anywhere.

Cons:

• Limited Advanced Features: While it covers basics excellently, some advanced features available in paid software might be missing.
• Payment Processing Fees: While basic tools are free, transaction fees apply for Wave Payments.
• No Inventory Management: Not optimal for businesses with inventory needs.

Get started with Wave

4. Xero

Xero provides a fresh approach to cloud-based accounting. It’s known for its collaborative features, enabling teams to work together seamlessly on financial tasks. With a plethora of third-party integrations, Xero fits comfortably within any business’s tech ecosystem.

Key features of Xero include:

• Real-time Collaboration: Multiple users can work on the platform simultaneously, viewing real-time data and updates.
• Third-party Integrations: Xero’s App Marketplace hosts over 700+ business apps for integrations, spanning from inventory to CRM to time tracking.
• Automated Bank Feeds: Connect your bank account to automatically import and categorize bank transactions.
• Dashboard Overview: Gain instant insights with charts and tables showcasing bank balances, invoices, bills, and more.

Pricing:

• Early: $15/month 
• Growing: $42/month
• Established: $78/month

Pros:

• Sleek User Interface: Modern and intuitive design that enhances the user experience.
• Mobile Capabilities: With the Xero mobile app, manage your finances on the go.
• Extensive Integrations: Fits effortlessly into various business software ecosystems.

Cons:

• Learning Curve: While feature-rich, it might take some time for new users to get acquainted.
• Limited Features of Basic Plan: The ‘Early’ plan can be restrictive for growing businesses.
• Additional Costs for Add-ons: Some essential features might require additional purchases or subscriptions.

Get started with Xero

5. Zoho Books

Part of the extensive Zoho suite, Zoho Books offers a comprehensive accounting solution with a focus on automation. The platform excels in facilitating automatic bank feeds, sending recurring invoices, and auto-categorizing expenses, making it an asset for businesses looking to reduce manual entry.

Key features of Zoho Books include:

• Automated Bank Reconciliation: Links directly to bank accounts to fetch transactions automatically and categorize them for easy reconciliation.
• Time Tracking: Keep tabs on billable hours directly within the platform to invoice clients accurately.
• Inventory Management: Track items in stock, set reorder points, and manage a database of products and services.
• Customizable Invoices: Create and send professionally designed invoices, tailored to your brand.

Pricing:

• Standard: $15/month
• Professional: $40/month 
• Premium: $120/month

Pros:

• Integration with Zoho Suite: Works seamlessly with other Zoho apps, providing a holistic business management solution.
• Automation Capabilities: Greatly reduces manual work with smart automation features.
• Global Compatibility: Supports multiple currencies and is available in various languages.

Cons:

• Lacks Payroll Features: Businesses may need to seek other tools or integrations for full payroll functionalities.
• Might be Overwhelming for New Users: Due to its comprehensive feature set, new users may find it overwhelming to navigate the complexities of the software initially. 
• Add-on Costs: Some features require additional payments or come as part of a higher tier.

Get started with Zoho Books

6. Sage

With its deep roots in the accounting industry, Sage offers robust solutions suitable for small as well as larger businesses. Its strength lies in its versatility and comprehensive suite of tools, from payroll management to advanced inventory tracking. Sage’s commitment to innovation ensures users always have access to up-to-date features.

Key features of Sage include:

• Comprehensive Payroll Management: Provides seamless payroll processing with integrated time tracking and compliance updates.
• Advanced Inventory Control: Monitor stock levels, set up reorder points, and manage vendors and purchases efficiently.
• In-depth Financial Reporting: Analyze business health with customizable reports and real-time data.
• Secure Cloud Backup: Ensures data safety with regular backups and stringent security measures.

Pricing:

• Sage provides a quote-based system to ensure each business gets a solution aligned with its unique needs.

Pros:

• Scalability: Sage offers a range of products that cater to businesses of all sizes, allowing companies to upgrade as they grow.
• Integration Capabilities: Seamless integrations with popular tools and its own suite of business management solutions.
• Highly Secure: Advanced encryption and security protocols to keep business data safe.

Cons:

• Learning Curve: Due to its extensive features, new users might take some time to get accustomed to the platform.
• Pricing can get Steep: As you add more functionalities or move to advanced versions, the pricing can prove to be problematic for businesses with a tight budget. 
• User Interface: Some users find it less intuitive compared to newer cloud-based solutions.

Get started with Sage

7. OneUp

OneUp is known for its simplicity and direct approach to accounting, making it a favorite for small business owners. Its standout feature is its AI-powered bookkeeping, which can automatically categorize more than 95% of bank entries. This automation ensures businesses spend less time on data entry and more on decision-making.

Key features of OneUp include:

• Smart Bookkeeping: AI-powered tools that virtually eliminate manual entries, offering accurate financial tracking.
• Inventory Management: Oversee stock with real-time insights, ensuring businesses never miss a sale due to stock-outs.
• Seamless CRM: Integrating sales and accounting, this feature guarantees that every customer interaction translates to actionable financial data.
• Rapid Invoicing: Speed up the payment process with easy-to-generate invoices that can be sent in moments.

Pricing:

• Self: $9/month
• Plus: $19/month
• Pro: $29/month

Pros:

• Simplicity at Its Best: Intuitive design ensures that even those new to accounting can navigate effortlessly.
• Intelligent Automation: AI-powered features drastically reduce human error and increase efficiency.
• Comprehensive Dashboard: A holistic view that provides a pulse on the business’s financial health at a glance.

Cons:

• Limited Third-Party Integrations: While it offers core functionalities, some businesses might seek broader integration capabilities.
• Might Be Too Streamlined: Some users may desire deeper features as their business grows.
• Support Structure: Enhancements could be made to the promptness and efficiency of customer service responses.

Get started with OneUp

Key Features to Look for in Accounting Software

As you dive into the world of accounting software, especially as a small business owner, it’s important that you select certain features that can truly make a difference in your financial management. Here are some key elements to consider when choosing the best accounting software for your needs:

Invoicing and Billing Capabilities

Invoicing and billing are fundamental to ensuring consistent cash flow for any business. An efficient invoicing system allows for timely billing, ensuring that you get paid for your services or products without unnecessary delays. Furthermore, automated billing capabilities can streamline recurring charges, reducing the administrative burden and minimizing errors.

Bank Reconciliation and Expense Tracking

By leveraging software that offers bank reconciliation and expense tracking, businesses can quickly identify and rectify discrepancies, preventing potential financial pitfalls. This also simplifies the process of categorizing and monitoring expenses, aiding in budget management.

Financial Reporting and Analysis Tools

Understanding your business’s financial standing is the foundation of informed decision-making. With robust financial reporting and analysis tools, small businesses can gain insights into their profitability, liquidity, and overall financial health. Tailored reports can spotlight trends, enabling proactive responses to evolving market conditions.

Integration Options with Other Business Tools

As businesses grow, the need for various tools to manage different aspects increases. Accounting software that offers seamless integrations with other business tools, such as CRM systems or inventory management platforms, ensures that data flows smoothly across departments. 

Cost Considerations

While it’s vital to have robust accounting software, it’s equally important to ensure that the software is cost-effective. For small businesses operating on tighter budgets, understanding the total cost of ownership, including any hidden fees or potential upcharges for added features, is essential. 

User Reviews and Recommendations

Exploring user reviews and recommendations can shed light on the software’s strengths and potential areas of improvement. They provide a glimpse into user satisfaction levels and can guide businesses toward solutions that have proven track records.

Accounting software is the unsung hero that ensures businesses can accurately manage their finances. From the behemoth QuickBooks to the truly free Wave, there’s a solution for every type of business. In this article, we’ve shared the best accounting software for small businesses and shown you how to improve your business operations. By harnessing the right tool tailored to your company’s needs, you can streamline financial processes and set the foundation for sustained growth and success.

FAQs

What is the best accounting software for small businesses?

The best accounting software for small businesses varies based on specific needs, but popular options include QuickBooks, FreshBooks, and Wave, among others.

How can I determine which accounting software is suitable for my small business?

To determine which accounting software is suitable for your small business, assess your business needs, the size of your operations, budget constraints, and any specific features you require.

Are there any free accounting software options for small businesses?

Yes, there are free accounting software options for small businesses, with Wave being a notable example that offers truly free basic features.

Can accounting software integrate with other business tools?

Many accounting software solutions offer integrations with other business tools, such as CRM systems, payment gateways, and e-commerce platforms, thus enhancing overall workflow and efficiency.

What features should I look for in accounting software for a small business?

When choosing accounting software for a small business, look for features like invoicing, expense tracking, payroll processing, financial reporting, and ease of integration with other tools.