The Best Accounting Software for Small Businesses

Introduction

Managing finances is a crucial aspect of running a small business. With the right accounting software, you can streamline your processes, stay organized, and make sure that you are compliant with tax rules.

In this curated list, we’ll explore some of the best accounting software options tailored for small businesses, considering factors like user-friendliness, features, and affordability.

Best Accounting Software

Quick disclaimer: The recommendations you find in this article are mostly objective but merely represent suggestions for you to choose from. They are not necessarily listed in any particular order.

1. QuickBooks
2. Xero
3. FreshBooks
4. Zoho Books
5. Wave
6. Sage Business Cloud Accounting
7. Kashoo
8. AccountEdge
9. FreeAgent

QuickBooks

• Pricing: Paid (Free trial available)
• Useful for: Small business owners, mid-size business owners, self-employed professionals.

QuickBooks is a comprehensive accounting solution trusted by all types of businesses worldwide. It offers features such as invoicing, expense tracking, and financial reporting, all accessible online.

QuickBooks Online offers four main pricing plans: Simple Start, Essentials, Plus, and Advanced. The pricing varies based on the features included in each plan, such as invoicing, expense tracking, and financial reporting. Additionally, there may be discounts or promotions available for new users.

Why choose:

• User-friendly interface, suitable for beginners and experienced users alike.
• Extensive integrations with third-party apps for enhanced functionality.
• Robust customer support and resources available.

Why avoid:

• Cost may be prohibitive for very small businesses or startups.
• Some advanced features require additional subscription tiers.
• Limited customization options for reports.

Xero

• Pricing: Paid (Free trial available)
• Useful for: Small business owners, accountants, and bookkeepers.

Xero is known for its intuitive interface and powerful features, making it a popular choice among small business owners. It offers tools for invoicing, bank reconciliation, and expense management.

Xero offers three pricing tiers: Starter, Standard, and Premium. Each tier includes different features and capabilities, such as invoicing, bank reconciliation, and project tracking. The pricing is based on the number of users and the complexity of your business needs.

Why choose:

• Strong focus on collaboration, allowing multiple users to access and work on the same data simultaneously.
• Extensive selection of add-ons and integrations to tailor the software to your business needs.
• Excellent mobile app for managing finances on the go.

Why avoid:

• Pricing can become expensive as your business grows or requires more advanced features.
• Some users may find the learning curve steeper compared to other options.
• Customer support response times can vary.

FreshBooks

• Pricing: Paid (Free trial available)
• Useful for: Small business owners, accountants, and self-employed professionals.

FreshBooks is designed with simplicity in mind, making it ideal for freelancers and small businesses. It offers features such as time tracking, project management, and customizable invoicing.

FreshBooks offers four pricing plans: Lite, Plus, Premium, and Select. The pricing is based on the number of clients you have and the features included in each plan, such as time tracking, project management, and customizable invoicing. There may be additional fees for certain add-ons or integrations.

Why choose:

• Intuitive interface with straightforward navigation and minimal learning curve.
• Excellent customer support, including phone, email, and live chat options.
• Built-in time tracking and project management features for service-based businesses.

Why avoid:

• Limited accounting features compared to more robust solutions.
• Pricing may be less competitive for businesses with larger client bases.
• Lack of inventory management capabilities.

Zoho Books

• Pricing: Paid (Free trial available)
• Useful for: Small business owners, mid-size business owners, startups, self-employed professionals.

Zoho Books offers a comprehensive suite of accounting tools suitable for small businesses of all types. It includes features for invoicing, expense tracking, inventory management, and more.

Zoho Books offers three pricing plans: Basic, Standard, and Professional. The pricing is based on the features included in each plan, such as invoicing, expense tracking, and inventory management. Additionally, there may be per-user fees or limitations on the number of transactions included in each plan.

Why choose:

• Affordable pricing plans with a generous set of features included in each tier.
• Seamless integration with other Zoho apps, such as CRM and inventory management.
• Customizable reports and dashboards for gaining insights into your business performance.

Why avoid:

• Some users may find the interface less intuitive compared to other options.
• Limited customer support options, primarily relying on email and chat.
• Advanced features may require additional add-ons or customization.

Wave

• Pricing: Freemium
• Useful for: Small business owners, self-employed professionals.

Wave stands out for its commitment to providing free accounting software for small businesses. It offers features such as invoicing, expense tracking, and financial reporting, with no hidden fees.

Wave offers a free accounting software solution with no hidden fees or limitations. However, there are optional paid add-ons available for features such as payroll processing and payment processing. The pricing for these add-ons is based on usage and varies depending on the services selected.

Why choose:

• Completely free accounting software with no hidden costs or limitations.
• User-friendly interface suitable for non-accountants and small business owners.
• Integration with payment processing for seamless invoicing and payments.

Why avoid:

• Lack of advanced features compared to paid alternatives.
• Limited customer support options, primarily community forums and email.
• Security concerns for businesses handling sensitive financial data.

Sage Business Cloud Accounting

• Pricing: Paid
• Useful for: Small business owners, mid-size business owners, startups, enterprises.

Sage Business Cloud Accounting is a scalable accounting solution suitable for small businesses and growing enterprises. It offers features such as invoicing, bank reconciliation, and financial reporting.

Sage 50 Accounting is a solution that targets small business owners and offers three main pricing plans: Pro Accounting, Premium Accounting, and Quantum Accounting. The pricing is based on the number of users as well as the features included in each plan, such as invoicing, bank reconciliation, and financial reporting. There may be additional fees for add-ons or integrations.

Why choose:

• Scalable pricing plans that grow with your business needs.
• Robust inventory management capabilities for businesses selling products.
• Comprehensive financial reporting tools for gaining insights into your business performance.

Why avoid:

• User interface may feel dated compared to more modern solutions.
• Some users report issues with customer support responsiveness.
• Limited integrations with third-party apps compared to other options.

Kashoo

• Pricing: Paid
• Useful for: Small business owners, accountants, and bookkeepers.

Kashoo is a straightforward accounting software designed for small businesses and sole proprietors. It offers features such as invoicing, expense tracking, and bank reconciliation, all accessible via the cloud.

Kashoo offers two pricing plans: trulySmall Accounting and Kashoo. The pricing is based on the number of projects, customiztion options and the features included in each plan, such as invoicing, expense tracking, and bank reconciliation. There may be discounts available for annual subscriptions.

Why choose:

• Simple and intuitive interface, ideal for those new to accounting software.
• Automatic bank feeds for easy reconciliation and tracking of transactions.
• Affordable pricing plans with no hidden fees or contracts.

Why avoid:

• Limited scalability for businesses with complex accounting needs.
• Lack of advanced features compared to more comprehensive solutions.
• Some users may experience occasional bugs or glitches.

AccountEdge

• Pricing: Paid (Free trial available)
• Useful for: Small business owners

AccountEdge is a comprehensive accounting solution designed for small businesses with advanced needs. It offers features such as invoicing, inventory management, payroll processing, and financial reporting.

AccountEdge offers three pricing plans: Pro, Network, and Hosted. The pricing is based on the number of users and the edition selected, such as AccountEdge Pro, AccountEdge Network Edition, or AccountEdge Hosted. There may be additional fees for add-ons or customizations.

Why choose:

• Robust feature set suitable for businesses with complex accounting requirements.
• Offline access to data for businesses operating in areas with limited internet connectivity.
• Dedicated customer support with phone, email, and live chat options available.

Why avoid:

• Higher pricing compared to cloud-based alternatives.
• Steeper learning curve due to the extensive feature set and customization options.
• Limited scalability for very large businesses or enterprises.

FreeAgent

• Pricing: Paid (Free trial available)
• Useful for: Small business owners, self-employed professionals, and accountants.

FreeAgent is a cloud-based accounting solution designed for freelancers, consultants, and small businesses. It offers features such as invoicing, expense tracking, time tracking, and project management.

FreeAgent offers four pricing plans: Universal, Sole Trader, Partnership, and Limited Company. The pricing is based on the features included in each plan, such as invoicing, expense tracking, and tax reporting. Additionally, there may be discounts available for annual subscriptions or multiple users.

Why choose:

• User-friendly interface with intuitive navigation and customizable dashboards.
• Comprehensive features for managing finances, projects, and tax obligations.
• Integration with third-party apps such as PayPal, Stripe, and Slack for enhanced functionality.

Why avoid:

• Pricing may be less competitive compared to other cloud-based accounting solutions.
• Limited customer support options, primarily email and knowledge base.
• Some users may find the reporting capabilities less robust compared to other options.

5 Tips for Choosing the Right Accounting Software

Here are five essential tips to consider when selecting the best accounting software for your business:

1. Assess Your Business Needs:

Before diving into the myriad of accounting software options available, take the time to assess your business needs. Consider factors such as the size of your business, industry-specific requirements, number of users who will need access, and the complexity of your financial transactions. Understanding your needs will help you narrow down the options and choose software that aligns with your specific requirements.

2. Evaluate Features and Functionality:

Different accounting software solutions offer a wide range of features and functionalities. Identify the key features that are essential for your business operations, such as invoicing, expense tracking, payroll processing, inventory management, and financial reporting. Look for software that offers the right balance of features to support your business processes without overwhelming you with unnecessary complexities.

3. Consider Scalability and Growth:

While your current business needs are essential, it’s also crucial to consider the scalability of the accounting software as your business grows. Choose software that can accommodate your future growth and evolving needs without requiring frequent migrations or significant disruptions to your operations. Scalable software will save you time and resources in the long run by allowing you to seamlessly expand your usage as your business expands.

4. Ensure Compatibility and Integration:

Accounting software should integrate seamlessly with other tools and systems you use in your business, such as CRM software, payment processors, and e-commerce platforms. Check for compatibility and integration capabilities to ensure that your accounting software can communicate effectively with other systems, reducing manual data entry and streamlining your workflows. Look for software that offers a robust API or pre-built integrations with commonly used business tools.

5. Consider Security and Compliance:

Protecting your financial data is paramount, especially in an era of increasing cybersecurity threats and regulatory requirements. Choose accounting software that prioritizes security measures such as data encryption, multi-factor authentication, and regular security updates. Additionally, consider software that complies with relevant regulatory standards such as GDPR, HIPAA, or industry-specific regulations to ensure that your business remains compliant and avoids potential fines or penalties.

By following these tips and conducting thorough research, you can confidently choose the right accounting software for your business that will support your financial management needs and contribute to your long-term success.

Conclusion

Choosing the right accounting software is crucial for the success of your small business. Whether you prioritize affordability, ease of use, or advanced features, there’s a solution on this list to suit your needs. Explore the options, consider your business requirements, and make an informed decision to improve your financial management processes.