Best Small Business Accounting Software

Discover the best small business accounting software to streamline financial management. Compare features, pricing, and ease of use to find the perfect solution for your business needs.

Imagine being a small business owner passionate about their industry and driven to succeed. As the business expands, financial responsibilities grow as well. Managing invoices, expenses, and tax deadlines becomes increasingly challenging. This is where small business accounting software can make a significant difference in managing financial tasks efficiently.

Do I Really Need Accounting Software?

We’ll be kind and simply say, “Yes.” Running your business without an accounting software application is like flying a plane without instruments. It can be done for a while. And then, well, you know what happens. It can’t be done in Excel. It can’t be done with a paper system.

If you are going to be successful (and you are) then you need a small business accounting software solution.

After reading this article, if you are convinced but still say, “I’m not an accountant, I can’t afford a CFO right now and I don’t want to become one!” No problem. Many bookkeeping services are available that run online accounting software that will let them do the work remotely and let you reap the benefits.

Business Accounting Software is a Must

Effective financial management is essential. Small business accounting software assists by streamlining financial tasks, automating repetitive processes, reducing human error, and providing real-time financial insights. The right accounting software can potentially transform your small business’s financial management.

With numerous software options, selecting the ideal one for your needs can be daunting. In this post, we will discuss the top small business accounting software options, compare their features, current pricing as of 2023, and ease of use. We will also provide guidance on choosing the most suitable solution for your financial management requirements.

Let’s delve into the world of small business accounting software and discover how it can empower you to master your financial management strategies.

Top Small Business Accounting Software Options

QuickBooks and Quickbooks Online – Comprehensive Accounting Software for Small Business

Features

QuickBooks is a popular and comprehensive accounting software designed for small businesses. In fact, it is the number one accounting software solution used by small businesses, offering both desktop or “on-prem” versions and online versions.

This robust platform offers many features to help you manage your finances efficiently. Some key features include:

• Invoice customization and tracking: Create professional invoices, track their status, and easily send reminders.
• Expense management: Record and categorize expenses, and connect your bank account for automatic updates.
• Time tracking: Monitor billable hours for employees and contractors, and integrate with project management tools.
• Payroll integration: Seamlessly manage payroll with direct deposit, tax calculations, and compliance features.
• Inventory tracking: Keep track of your inventory levels, set reorder points, and manage purchase orders.
• Financial reporting: Generate insightful financial reports, including profit and loss statements, balance sheets, accounts payable, accounts receivable, and cash flow statements.

Pricing

QuickBooks offers various pricing plans to cater to different business needs. As of quarter 2 of 2023, the plans are as follows:

• Simple Start: $30/month – Ideal for new businesses that need basic accounting features.
• Essentials: $55/month – Suitable for growing businesses with additional features like bill management and time tracking.
• Plus: $85/month – Designed for businesses that require advanced inventory tracking and project profitability analysis.
• Advanced: $200/month – Targeted at larger businesses with more complex needs, offering customized reports, dedicated support, and advanced user permissions.

Ease of Use

If you need help understanding accounting or bookkeeping principles, most accounting software applications are going to be difficult to use. Having said that, the following applies to the use of Quickbooks by someone who has a basic understanding of business accounting.

One of the main reasons QuickBooks has become a go-to accounting software for small businesses is its user-friendly interface. The software is designed to be intuitive, making it easy for users with limited accounting knowledge to navigate and manage their finances.

Additionally, QuickBooks offers extensive resources, including tutorials, webinars, and a supportive community forum, to help users become proficient in using the software.

The platform’s cloud-based nature allows easy access and collaboration among team members. Overall, QuickBooks is an accessible and efficient online accounting software for small businesses looking to streamline their financial management processes.

Xero – A Cloud-based Online Accounting Software Solution

Features

Xero is a highly-regarded cloud-based online accounting software solution tailored for small businesses. This innovative software provides various features designed to simplify financial management tasks.

Key features include:

• Invoicing and quotes: Create and customize professional invoices and quotes, set up automated reminders, and automate recurring billing.
• Bank reconciliation: Connect your bank account for automatic import, categorize transactions, and simplify reconciliation.
• Expense tracking: Capture and manage expenses, create spending rules, and streamline approval through a mobile app.
• Inventory management: Monitor stock levels, track the value of goods, manage orders and suppliers, and receive inventory alerts.
• Payroll integration: Manage payroll with direct deposit, tax calculations, compliance features, and integration with third-party payroll providers.
• Reporting and analytics: Generate comprehensive financial reports, such as profit and loss statements, balance sheets, cash flow analyses, and tax summaries.

Pricing

Xero offers various pricing plans to accommodate diverse business needs. The plans as of Q2-2023 are as follows:

• Early: $3.25/month (75% off the current price of $13 per month for three months) – Good for sole traders, new businesses, and the self-employed, with basic accounting features and limited transactions.
• Growing: $9.25/month (75% off the current price of $37 per month for three months) – Good for growing small businesses, including unlimited transactions and additional features such as entering bills, reconciling bank transactions, capturing bills and receipts with Hubdoc, and access to short-term cash flow and business snapshot.
• Established: $17.50/month (75% off the current price of $70 per month for three months) – Good for established businesses with advanced features, including multiple currencies, project tracking, expense claiming, in-depth analytics, and optional add-ons.

Optional add-on:

Payroll with Gusto: From $40 per month.

Ease of Use

As noted earlier in this article, any accounting software will be challenging to someone without a basic understanding of business accounting processes. Having said that, the following observations apply to Xero’s ease of use.

Xero is renowned for its user-friendly interface, which makes it accessible for users with minimal accounting experience to manage their finances effectively. The software’s intuitive dashboard provides a clear and comprehensive overview of your financial situation, displaying essential information and tasks visually appealingly. This helps users quickly understand their financial health and make informed decisions.

Xero’s step-by-step setup process ensures that new users can easily configure their accounts, while its clean and organized layout simplifies navigation. As a result, users can customize the platform according to their needs, enabling them to focus on the most relevant aspects of their financial management.

Additionally, Xero offers a wealth of resources to support users in mastering the software. These include tutorials, webinars, articles, and a responsive support team available via email, phone, and live chat. The Xero community forum also provides a platform for users to ask questions, share experiences, and learn from their peers.

Being cloud-based, Xero allows for seamless collaboration among team members, granting them real-time access to financial data from any device with an internet connection. This feature is especially valuable for businesses with remote employees or multiple locations, as it facilitates communication and ensures that everyone stays informed and up-to-date.

Xero offers a mobile app for iOS and Android devices, enabling users to manage their finances on the go. The app allows users to create and send invoices, track expenses, and reconcile transactions, making it a valuable tool for busy entrepreneurs.

FreshBooks – A User-friendly Bookkeeping Software for Small Businesses

Features

FreshBooks is a user-friendly bookkeeping software specifically designed for small businesses and freelancers. It offers many features to help businesses manage their finances efficiently and effectively.

Some of the key features include:

• Invoice customization: Create and personalize professional invoices with your branding, set up recurring invoices, and send automated payment reminders.
• Expense tracking: Record and categorize expenses, making it easier to monitor spending and prepare for tax season.
• Time tracking: Track time spent on projects and tasks, allowing for accurate billing and better project management.
• Project management: Collaborate with team members and clients, set project budgets, and track project progress.
• Financial reports: Generate standard financial reports, such as profit and loss statements, balance sheets, and cash management reports.
• Integration with popular apps: Connect with third-party apps like Stripe, PayPal, and G Suite for seamless business operations.

Pricing

FreshBooks offers three pricing plans catering to the diverse needs of small businesses and freelancers. The plans below represent pricing as of April 1, 2023:

• Lite: $17 per month or $204 annually – Suitable for businesses with up to 5 clients, offering essential features like invoicing, expense tracking, and time tracking.
• Plus: $30 per month or $360 annually – Ideal for businesses with up to 50 clients, including all Lite features, project management, and advanced reporting capabilities.
• Premium: $55 per month or $660 annually – Designed for businesses with up to 500 clients, providing all Plus features with additional client capacity.

Ease of Use

The comments below assume a basic understanding of accounting and bookkeeping processes.

FreshBooks is highly regarded for its intuitive interface and ease of use, making it an excellent choice for small business owners with limited accounting experience. The software’s dashboard offers a clear financial health overview, with easy access to essential tasks and information.

FreshBooks simplifies the setup process with guided onboarding, and its well-organized layout ensures that users can navigate the platform effortlessly. Additionally, FreshBooks offers extensive support resources, including video tutorials, webinars, and a responsive customer support team available via phone, email, and chat.

Being cloud-based, FreshBooks enables seamless collaboration among team members and real-time access to financial data from any device. In addition, the FreshBooks mobile app, available for iOS and Android devices, allows users to manage their finances on the go, enhancing the software’s user-friendly appeal.

FreshBooks is a powerful, user-friendly bookkeeping software that streamlines financial management for small businesses and freelancers. Its comprehensive features, affordable pricing plans, and ease of use make it a top choice among accounting software for small businesses.

Zoho Books – A Feature-rich and Customizable Accounting Software

Features

Zoho Books is feature-rich and customizable accounting software designed to cater to the needs of small businesses. The platform offers a wide array of features that help businesses manage their finances with ease and precision.

Some of the key features include:

• Customizable invoicing: Create personalized invoices with your branding, set up recurring invoices, and automate payment reminders.
• Expense management: Track and categorize expenses, making monitoring spending and budget easy.
• Bank reconciliation: Connect your bank account to effortlessly import transactions and reconcile them with your records.
• Inventory tracking: Manage inventory levels, receive low-stock alerts, and handle orders and suppliers.
• Project accounting: Track project expenses and billable hours and monitor project progress.
• Financial reporting: Generate detailed financial reports that would be expected in all accounting applications. These include profit and loss statements, balance sheets, and cash flow statements.
• Integration with other Zoho apps: Seamlessly connect with other Zoho applications, like Zoho CRM and Zoho Expense, for a unified business management experience. If you’re a user of other Zoho applications, this will be a big advantage.

Pricing – Billed Annually

Zoho Books offers various pricing plans to accommodate the diverse needs of small businesses, including, not just a free trial, but a free version. The pricing plans below are current as of early 2023.

• FREE: $0 – For businesses with revenue offering basic accounting features.
• STANDARD: $10 Per Organization/Month – Includes additional features such as expense tracking, recurring transactions, and bank reconciliation.
• PROFESSIONAL: $20 Per Organization/Month – Ideal for growing businesses, including inventory management, project accounting, and purchase orders.
• PREMIUM: $30 Per Organization/Month – Designed for businesses with more extensive needs, offering advanced features such as multi-currency support and budgeting.
• ELITE: $100 Per Organization/Month – Provides even more advanced features, including custom functions, priority support, and dedicated account management.
• ULTIMATE: $200 Per Organization/Month – Tailored for large businesses with comprehensive needs, offering all Elite features and a custom number of users and contacts.

Ease of Use

Zoho Books is designed to be user-friendly, making it simple for users with limited accounting experience to manage their finances effectively. The software’s well-organized dashboard presents a clear overview of your financial situation, with essential tasks and information easily accessible.

Zoho Books provides step-by-step guidance for setting up the platform and offers a wealth of resources, including video tutorials, webinars, and a responsive support team, to assist users in mastering the software. Being cloud-based, Zoho Books enables seamless collaboration among team members and real-time access to financial data from any device.

Zoho Books is feature-rich and customizable accounting software that simplifies financial management for small businesses. Its wide range of features, flexible pricing plans, and user-friendly interface make it attractive for businesses seeking efficient and reliable accounting software.

Tips for Selecting the Best Accounting Software for Small Business

Assessing Your Business Needs and Requirements

Before choosing accounting software for your small business, assessing your specific needs and requirements is crucial. Start by identifying your business size, industry, and financial management goals.

Consider whether you require basic bookkeeping capabilities or more advanced features like inventory management, payroll processing, or project accounting. Understanding your unique requirements will help you select accounting software tailored to your business.

Comparing Features

When evaluating various accounting software options, be sure to compare their features and integrations. Look for features that align with your business needs and streamline your financial management processes.

While it’s true that most software applications do the same thing and seem to have similar lists of features and reports, don’t stop there. Find out what other small businesses in your industry use most often. You’ll often find that one application rises above the others for a specific type of business.

Integrations – The Hidden Differentiator

Consider the software’s compatibility with other tools you already use or plan to implement, such as customer relationship management (CRM) systems, e-commerce platforms, or payment gateways.

Integrations can significantly enhance the efficiency and effectiveness of your overall business management strategy. For that reason, business buyers often rate “integrations” as their most important feature when selecting a business accounting solution.

Evaluating Pricing

Pricing is often listed as an important factor to consider when selecting accounting software for your small business. Compare the costs of various software options, considering their features, support, and scalability. Be sure to consider the long-term value of the software, not just the initial investment.

Still, we encourage you not to rank cost as the most important consideration. For businesses of almost any size, the cost of your accounting software is not likely to be a major expense.

Scalability

As your business grows, you may require more advanced features or additional user accounts. Choose accounting software that can accommodate your evolving needs without incurring high costs.

Support

Investigate the resources and support the software vendor provides, such as tutorials, webinars, or a dedicated support team. A responsive and knowledgeable support team can be invaluable in helping you resolve issues and optimize your financial management processes.

Summary of How to Select a Business Accounting Software Application

Selecting the best accounting software for your small business requires careful consideration of your unique needs and requirements and thoroughly comparing features, integrations, pricing, and user experience. By following these tips, you can make an informed decision and invest in accounting software that will streamline your financial management, support your business growth, and ultimately contribute to your success.

FAQs

What Are The Benefits Of Small Business Accounting Software?

Small business accounting software offers numerous benefits, including:

• Streamlining financial management processes
• Enhancing accuracy and reducing errors
• Providing real-time insights into your financial health
• Automating repetitive tasks, such as invoicing and bank reconciliation
• Facilitating compliance with tax and financial regulations
• Simplifying collaboration and communication among team members
• Saving time and resources, allowing you to focus on business growth

What Accounting Software Is Available For A Small Business?

Various accounting software options are available for small businesses, including:

• QuickBooks
• Xero
• FreshBooks
• Zoho Books
• Wave
• Sage
• Kashoo

What Is The Most Effective Accounting Software For Accountants?

The most effective accounting software for accountants depends on their specific needs, preferences, and client base. However, some popular choices among accountants include QuickBooks, Xero, and Sage.

Which Software Is Used For Financial Accounting?

Several software options are used for financial accounting, including QuickBooks, Xero, FreshBooks, Zoho Books, Wave, and Sage. Each software caters to different business needs, sizes, and industries, offering a range of features and pricing options.

What Are the Most Important Accounting Functions For Small Businesses?

The most important accounting aspects for small businesses include the following:

• Accurate record-keeping of financial transactions
• Regular bank reconciliation
• Timely invoicing and payment processing
• Proper expense tracking and categorization
• Efficient management of cash flow
• Adherence to tax regulations and deadlines
• Comprehensive financial reporting for informed decision-making

How To Choose The Best Accounting Software For Your Business?

To choose the best accounting software for your business, consider the following factors:

• Assess your business needs and requirements
• Compare features and integrations
• Evaluate pricing and scalability
• Consider user experience and support

These factors will help you make an informed decision and invest in accounting software that meets your unique needs and contributes to your business’s success.