Best Accounting Software

As a business owner, you already have plenty to keep you busy – and accounting hassles are the last thing you want to add to your plate.

Running a small business isn’t easy. Owners need to know how to keep track of their cash flow and financial transactions and evaluate whether the business is indeed making profits. You also need to prepare for tax time and avoid penalties. For these reasons, small businesses need to have good accounting software. 

But how does one choose a “good” accounting software? What are the best options available on the market? This guide is here to help you out.

Why Get An Accounting Software For Your Small Business?

Accounting software is used to help businesses monitor their cash flow, keep track of payables and receivables, and gain enough information to assess if the business is making profits or not. The software can also help manage tax complexities so that they can file their taxes accurately and on time.

But despite what they are called, accounting software can do so much more than just balance your assets and liabilities on paper. Here’s a quick look at all the benefits your small business can get from accounting software:

Makes processes easier

Accounting software can be used to automate many processes involved in your small business. These include bookkeeping, invoicing, payment reminders, importing data into spreadsheets, and more. Automating these means avoiding the errors that normally occur when these are done manually. You will also free yourself to do other things important to your business, such as dealing with customers.

Organizes your business records

Accounting software makes it easy for businesses to organize information and sync it across multiple platforms. This means all of the information relevant to your business, such as its transactions, receipts, invoices, bank accounts, and payroll data, can be accessed from just one source. The software will make it easier for you and other members of your business to access records when necessary, such as when preparing for tax time.

Generates financial reports easily

Aside from making bookkeeping and recording easy, accounting software can also help you make reports in just a few clicks. For example, if you want to view your business’s trial balance or want to verify if you still have some accounts receivable, the software will make it easy for you. This will allow you to evaluate your business’s performance in real time so that you can make important decisions—like when to add new products or hire new workers—on time.

Minimizes accounting errors

Small mistakes, such as the positioning of a dot, can throw your accounting journals, ledgers, or spreadsheets out of balance. Accounting software helps you avoid making these errors so that your records are accurate. 

In case you don’t realize just how important this is, consider how suddenly the stock market crashed back in 2010. At the time, over $1.1 trillion of investor dollars was gone. This was caused by a simple error: a sell order was supposed to have the letter “M,” but it had the letter “B” instead.

Minimizes inventory errors

Some accounting software contains inventory management features, allowing you to monitor the number of items you have on hand in real-time. These will help you avoid mistakes when recording the quantities of your products, ensuring you always know when you’re running low and need to replenish your inventory. This, in turn, improves your ability to serve your customers effectively.

Makes payroll easier

Accounting software can help small businesses manage their payroll easier. Instead of having to manually compute payments to employees and healthcare and insurance contributions, among others, you can use accounting software to compute these for you automatically and in real time. It will also help you avoid errors so employees are not over- or underpaid.

Easier tax filing

Your accounting software will help ensure accuracy in your financial records and organize them in one place. This will then help your business generate the necessary reports and file your taxes on time. Some accounting software can even help you compute the taxes you need to pay the IRS.

How To Choose The Best Business Accounting Software

While all accounting software in the market is designed to help you with basic accounting work, some of them have features tailored for certain uses. Others have more advanced options but are not that easy to use. 

As such, when choosing the best accounting software for your small business, you need to consider the following:

Ease of use

First off, every good accounting software must be user-friendly enough, even for business owners with no accounting experience. Look for accounting software that has an interface that’s easy to navigate and one that can provide help articles, webinars, and tutorial videos when you need guidance. This will help even the inexperienced deal with the tedious and complicated task of monitoring financial transactions. 

Industry-specific features

Next, consider the industry your business belongs to. While all accounting software contains the basic functions, some have specific features that will help certain businesses monitor profitability or work with other software. For example, if your business provides website development services, the ideal accounting software should have project costing features so you can keep track of your potential profits.

Reporting capability

Profit & loss reports, balance sheets, cash flow statements, accounts receivable, and accounts payable aging—these reports, among others, all serve different purposes. The best accounting software helps you generate specific reports for different needs. This will help you deal with various situations, such as when preparing for tax time or reports for existing and potential investors.

Cloud-based

Both cloud-based and desktop software have their advantages and limitations. That said, with the increasing developments in technology, including those used for businesses, it simply makes sense to shift to using cloud-based, or at least cloud-compatible, accounting software.

Cloud-based accounting software presents many benefits compared to desktop alternatives. For one, it can be used anywhere as long as you have an internet connection. Some software will even come with a mobile app that lets you use its features remotely using a smartphone or tablet. 

Moreover, unlike desktop alternatives requiring you to pay costly one-time fees, cloud-based accounting software is usually paid via a monthly subscription fee. This allows you to pay smaller amounts as long as you need the features, which is convenient for small businesses. You won’t even need to worry about updating the software since they’re online.

Security

A good accounting software must be able to store your business and financial data securely and away from hackers or leaks. This is a critical concern due to the increasing number of reported breaches in enterprise resource planning (ERP) systems. Hackers often target these systems to gain access to valuable sales data and insights about their potential targets.

Additionally, the software you use must feature “role-based security,” where users are granted permission to view information based on the roles they play in your business. This will help safeguard all the important financial details involved in your venture.

Scalability

Once your small business grows, your accounting software should grow with it. Thus, choose software that can be upgraded with more options to accommodate the changes in your growing business. For example, it should allow you to add more users, time tracking, and so on. Ideally, the software you use must also integrate with other apps used for other aspects of your business, such as HR.

Bank compatibility

Use accounting software compatible with the one used by your bank. This integration will allow you to download transactions directly from your bank, allowing you to complete reconciliations easily. Automating the process makes it even easier—you won’t have to do it yourself manually; just view the transactions when they’re done.

Customer support

The best accounting software is backed by reliable customer support. If you are confused with certain features or need some guidance when using the software, customer support should be available and willing to help you out. Ideally, support should be available 24/7, but most will offer help within a time window. Make sure that the availability of support aligns with your working hours.

Community support

If customer support is not available 24/7, you will greatly benefit from a huge community of active users. Thus, make sure that the accounting software you choose has an active user community you can connect with if you have questions. You can typically find official community links on the software’s website or by searching online. Usually, there are forums for a lot of them, too.

Pricing

Last and more importantly, choose an accounting software that fits your budget. Some software has a one-time fee, while others require monthly subscription costs. Others have hidden fees such as setup, cloud storage, and continued customer support, so take that into consideration as well.

11 Top Small Business Accounting Software

Here’s a quick look at some of the best accounting software that is guaranteed to make accounting processes easier for your business, regardless of your experience. We reviewed more than a dozen highly recommended options in the market, so you don’t have to go searching for them individually.

Best overall accounting software: Intuit QuickBooks

Pros:

  • Comprehensive software features
  • Scalable
  • Integration with other software and apps
  • Popular among accounting professionals
  • Accessible via mobile app
  • Has phone support

Cons:

  • Expensive
  • Online support needs improvements
  • Problems syncing with banks

Website: www.quickbooks.com

QuickBooks is the best accounting software for small businesses. This software makes it easy for you to keep track of your income and expenses, manage invoices, accept payments, and organize receipts, among many features. QuickBooks also allows you to read running reports, monitor sales, compute sales tax, and maximize tax deductions even without having to sit down in front of a laptop or desktop computer.

Some of the downsides to this feature-rich accounting software include its pricing and overall ease of use. It also has advanced accounting tools that are complicated for those without any accounting experience. 

Even if you do not need to use advanced accounting tools, you can still maximize QuickBooks’ basic features. Plus, since the software is customizable and user-friendly, it can cater to your business regardless of the industry it belongs to.

QuickBooks subscription starts at $30 per month. It also has a mobile app that gives you access to its accounting features on the go.

Best for small businesses looking for an integrated suite of apps: Zoho Books

Pros:

  • Has a plan that’s free forever
  • Paid plans are cheap
  • Integration with Zoho’s suite of apps
  • Payments made easier
  • Recurring invoices
  • Manage 1,099 contractors

Cons:

  • Many payroll options are hidden behind a paywall

Website: www.zoho.com

Zoho Books is part of Zoho’s collection of apps aimed at helping businesses work better. It is a comprehensive accounting software that provides you with basic bookkeeping tools, like invoicing, payment tracking, and report generation.

Zoho Books offers an impressive advantage with its integration capabilities. It seamlessly works with over 50 Zoho apps, including Billing, Expense, Inventory, and more. This integration empowers you to perform various tasks effortlessly. For instance, you can efficiently create and send invoices, maintain control over expenses to manage cash flow and stay on top of your inventory to prevent stock shortages, particularly for high-demand items.

Businesses who earn less than $50,000 a year can even avail of Zoho Books’ free plan. This gives one user access to Book’s powerful collection of accounting tools, allowing you to create and issue recurring invoices, track income and expenses, and manage up to 1,099 contractors.

If you want access to Zoho Books’ other advanced features, you can get paid plans from $15 per month. Benefits of using the paid versions include user support, reporting tags, and more.

Best software for sole proprietors: FreshBooks

Pros:

  • Very user-friendly
  • Inventory tracking features
  • Mobile app allows automatic mileage tracking
  • Time tracking tools
  • Allows collaboration
  • Affordable subscription plans

Cons:

  • Onboarding can be better
  • Limited clients
  • No document management options

Website: www.freshbooks.com

FreshBooks is an accounting software designed to be used by solo owners with no accounting background. It features a user-friendly interface that makes tracking income and expenses, as well as other accounting basics, easy for the inexperienced.

This online accounting software is known for its invoicing features. With it, you can create customized invoices, send them to clients, and monitor them to see if they have been received and paid. Its online invoicing feature also allows clients to pay for services rendered straight from the invoice itself. 

Aside from invoicing, FreshBooks also has other features for time tracking, expense tracking, and project management.

FreshBooks is good for businesses that do not have employees and sole proprietorships focusing on service-based offerings. These include web designers, photographers, personal trainers, and so on. In fact, if your business has five or fewer clients, there’s an option for you in FreshBooks Lite, which allows unlimited expense tracking, bank transfers, sales tracking, unlimited invoicing for up to five clients, and more. This plan costs $17 per month. 

As your business expands beyond 50 clients, however, consider upgrading to FreshBooks’ Plus plan, priced at $30 per month. This plan not only encompasses all the features of the Lite plan but also introduces additional capabilities like double-entry accounting reports, unlimited invoicing for up to 50 clients, and convenient mobile mileage tracking.

Best for small businesses with no employees: TrulySmall Accounting

Pros:

  • Designed for this with zero accounting knowledge
  • Makes invoicing work easy with automation
  • Focused features for micro businesses
  • Excellent UI
  • Easy invoice creation

Cons:

  • Might be pricey for its target market
  • No payroll options
  • Cannot customize invoices

Website: www.trulysmall.com

As its name implies, TrulySmall Accounting is an accounting software designed for microbusinesses. It has a collection of select features designed for businesses with no need for payroll support. 

While it can only do basic bookkeeping processes, it does them very well—enough for even the inexperienced to use it properly. It offers support for only a few processes, namely transaction management, contact management, invoicing, and billing. 

For $20 a month, you can already benefit from many essential features, such as automation of invoice creation and sending, sales tax tracking, income and expense tracking, reporting, and double-entry ledgers. There are no payroll options, and invoices cannot be customized. Nevertheless, its suite of tools is enough if you aren’t paying hired hands and have no need to issue customized invoices.

By omitting all the features other accounting software offers, TrulySmall is able to help novice users focus on what matters most in the accounting process.

Best for payment plans and keeping track of projects: Xero

Pros:

  • Very scalable
  • User-friendly
  • Great for reconciling bank transactions
  • Exceptional customer support

Cons:

  • Payroll features hide behind a $40 paywall
  • Multiple currency features available only in the most expensive plan

Website: www.xero.com

Xero is very popular among small businesses because of its scalability and reliable invoicing software options. While it doesn’t have a free version, its lowest-tier “Early” plan at $13 includes bank reconciliation features, short-term cash flow and business snapshot, bills and receipts capture, and up to 20 online invoices.

Other desirable features can be accessed by subscribing to the higher-tiered plans. The $21/month Growing plan, for example, allows you to create and send more than 20 invoices and also handle bulk reconcile transactions. The highest-tier plan, Established, lets you track projects, claim expenses, use multiple currencies, and use Xero’s Analytics Plus feature at $39 per month.

Regardless of the plan, Xero users can add the optional Payroll with Gusto features for $40 per month. While this add-on is more expensive than the Established plan, it lets Xero users automate payroll processes such as payments, taxes, and deductions. Businesses running online businesses will be able to manage payroll for remote employees from other states as well.

In addition to all of these, Xero also has other benefits for users. It is cloud-based, allowing businesses to use it anywhere. The software also has double-entry features, so entries are automatically entered as debit and credit.

Best accounting software with invoicing: Patriot

Pros:

  • Friendly UI
  • Easy navigation use
  • Reliable customer support
  • Competitive Pricing
  • Payroll integration

Cons:

  • Cannot customize reports
  • Doesn’t track inventory

Website: www.patriotsoftware.com

Patriot Software is an easy-to-use accounting software for those without any experience at all. It features an intuitive UI and an Overview page that provides useful information that will help you in the onboarding process, as well as when you are already using it.

Patriot has some powerful features made available to those who signed up for its Basic plan at $20 per month. These include Patriot’s patented Dual Ledger Accounting, which allows both user and accountant to easily switch between cash-basis, modified cash basis, and accrual accounting, as well as the ability to send and keep track of an unlimited number of invoices to as many customers as possible.

Patriot’s Premium accounting plan ($30/month) adds more features, such as creating custom invoice templates, automatic invoice reminders, easy bank reconciliation, and up to eight levels of sub accounts so that business owners can categorize transactions better.

Moreover, this accounting software integrates seamlessly with Patriot’s well-known payroll software. This integration makes it easy for businesses to keep track of employee payments, taxes, contributions, and more.

Best software for super small companies: Wave

Pros:

  • Accounting features are absolutely free
  • Designed for very small businesses
  • Support for various currencies
  • Invoice and transaction management features
  • Intuitive dashboard

Cons:

  • Payroll and payment options hidden behind a paywall
  • Mobile app features are lacking
  • Customer support is costly

Website: www.waveapps.com

Wave is a cloud-based accounting software that’s absolutely free unless you want to use its payroll and payment features. The software contains all the essential accounting features your business will need, including invoicing and transaction management. 

It has a simple user interface that even beginners will find easy to understand.

Wave is a versatile accounting software that accommodates an unlimited number of users and even enables you to manage multiple businesses within a single account. It offers support for various currencies and provides the convenience of a mobile app for monitoring invoices and transactions on the go. However, the mobile app itself has a limited set of features, preventing users from maximizing the software’s potential.

Wave is designed for sole proprietors and freelancers seeking cloud-based accounting software primarily for generating invoices. So, if you require multiple payment and payroll options, be prepared for potential additional costs. Credit card payments, for instance, come with a minimum charge of 2.9% + $0.60 per transaction. Payroll plans initiate at $20 per month, with extra expenses incurred for each additional employee or contractor at $6 per individual.

This accounting software also gives businesses the option to get professional accounting help, albeit at a great cost. For example, bookkeeping support costs $149 monthly, while bookkeeping and payroll coaching are available for a one-time fee of $379.

Best for businesses in need of inventory tracking features: Sage 50

Pros:

  • Excellent customer support
  • Inventory management tools
  • Microsoft 365 integration
  • Transaction tracing
  • Project costing, tracking, and reporting

Cons:

  • Limited to Windows computers
  • Resource-heavy
  • No mobile app
  • Expensive

Website: www.sage.com

Sage 50 is a powerful accounting software equipped with a ton of features small businesses need to stay on top of their invoicing and payroll needs. It is not cloud-based, unlike Sage Business, and also costs more than other software mentioned in this list, but it offers a robust set of features that a small business will need, especially as they grow in scale.

Sage 50 shines the most when it comes to helping businesses keep track of their inventory. The software’s advanced inventory features include the ability to customize units used to measure stock, create inventories with item classifications, create and track serialized items using multiple reports, and more. These features allow you to monitor stock on a daily basis based on transaction dates and item classifications, so you know what’s in stock and what needs to be replenished at the right time.

Sage 50 also contains job and project costing features so you can gain insight into your business’s overall profitability. It allows you to get a good look at how long projects take to finish and also estimate the amount of profit you will make from them.

But again, Sage 50 is not cheap. The base Sage 50 Pro Accounting subscription plan, which is good for one user only, costs $63.33 per month. Those who need advanced inventory and budgeting options, among others, should buy the Sage 50 Premium Accounting plan at $89.92 per month. The highest-tiered Sage 50 Quantum plan adds collaboration features for up to five users for $400.42 per month. Integration with Microsoft 365 and Payroll features are available for additional fees.

Best software for inventory management: ZarMoney

Pros:

  • Advanced inventory management features at competitive prices
  • More inventory options than most accounting software
  • Automation features make inventory and invoicing easy
  • Reliable customer service

Cons:

  • Customization is hidden behind a paywall
  • No mobile app
  • No bills and expense receipts capture features

Website: www.zarmoney.com

For businesses in need of advanced inventory tools but find Sage expensive, ZarMoney is a gold mine. This accounting software contains more inventory-focused features compared to QuickBooks, Xero, and Zoho Books but costs way less than Sage 50 Pro. This makes ZarMoney a viable option for businesses selling a huge selection of products that tend to run out fast.

ZarMoney’s suite of management features allows you to handle inventory with ease. It lets you customize product fields and create inventories dedicated to a product line so that your inventory is streamlined and organized according to your business’s specific needs. The accounting software then updates inventory details in real time so that you are aware of the availability of your products. 

Moreover, ZarMoney collects all relevant inventory information, including when clients order products from you, in one place so that it’s easier to access them.

What’s interesting about ZarMoney is that it also allows users to manage inventory at more than one location despite being a non-ERP accounting software. This feature, called multi-location inventory management, will help you handle inventory in case your small business starts branching out to other places. In addition, it has split view mode so that you can review and compare your inventories by location, helping you make better decisions with regard to restocking.

Despite its slew of good features, ZarMoney also has its downsides. For one, it doesn’t file taxes on your behalf, unlike QuickBooks. It also doesn’t capture data found on photos of bills or expense receipts—a feature commonly found among other accounting software. ZarMoney also doesn’t have a mobile app. 

All that said, the basic Entrepreneur subscription plan, which only costs $15 per month, already gives you a powerful suite of bookkeeping and inventory tools comparable to more expensive accounting software. At this price, it also allows you to automate invoicing with customer payments and updates, which is a big win for small businesses.

Best for handling accounts payable and receivable: Plooto

Pros:

  • QuickBooks and Xero integration
  • Eliminates manual bill payment
  • Lets you get discounts with timely payments

Cons:

  • Technically not a bookkeeping platform

Website: www.plooto.com

Plooto is a quick and effective solution for QuickBooks and Xero users who want to improve the handling of bill payments. It’s not a full-scale accounting software platform, meaning it cannot file taxes, track time spent on projects, or generate reports. It is an automated processing software that helps users monitor their cash flow better than when they use accounting software alone.

The Plooto Network has more than 250,000 vendors on its list. If your suppliers or billers are included in its network, you can add them to your list of payees with just a few clicks. After that, you can then automate your bill payments so that your business pays them on time to avoid potential problems.

What’s great about Plooto is that it will post payments to your accounting software (such as QuickBooks and Xero, if you are using them) automatically. It will then reconcile transactions so that your trial balance ends up accurate. You won’t have to go through the tedious process of manually inputting payment details to your accounting software and reconciling your records—Plooto does that for you after you set it up.

Plooto’s features also allow you to enjoy better control of your receivables and payables. It lets you set your own rules as to who approves bills and when before they are paid. For example, you can direct bills to the person in charge of their payment so they can approve them on time. The software also allows you to set up timed payments in advance so that your business automatically pays bills on time, sometimes even during discounted periods so that you can save more.

Best for growing businesses in need of advanced accounting features: Oracle Netsuite

Pros:

  • Powerful suite of features designed for growing businesses
  • Highly customizable features
  • Integration with other NetSuite programs allows different business departments to work together
  • Automation of journal entries and bank reconciliation
  • Excellent customer service

Cons:

  • Might be too expensive for some
  • Might become overwhelming for small businesses

Website: www.netsuite.com

NetSuite is a popular accounting software used widely around the world. It has a powerful assortment of features that allow the software to provide support for small businesses as they scale and grow into mid and large-sized companies.

Businesses looking for a more robust accounting software can rely on NetSuite to help them. It boasts automation features that make important processes, such as the creation of journal entries and reconciliation of statements, easy and stress-free once it is set up. This accounting software is also effective in monitoring and recording transactions and is able to generate all sorts of reports when needed. 

NetSuite also contains a bunch of compliance features so that your business won’t miss bills, taxes, and other payments. It can also be used with many currencies and will be even more useful for you once your business starts branching out to other places around the world.

More than just accounting software focused on financial transactions, NetSuite is actually an ERP platform that can be used for other business-crucial purposes. These include inventory management, tax management, payroll, HR, and so on. You can customize NetSuite according to your business’s needs and add more features, such as performance management, fixed assets management, manufacturing, and renewing contracts, for example. You can even view all of the important information related to every department in your business in just one dashboard.

All that said, NetSuite does have a learning curve that grows higher the more you customize it. This could make this accounting software complicated or overwhelming to use for new business owners. Still, if you understand how its features work, you will find that it is a powerful tool that can help your small business grow.

Key Takeaway

Having a reliable and easy-to-use accounting software helps you manage your business’s daily financial transactions. With the number of available options, however, it might be difficult to choose what to use. But when you understand what your business needs are and how much your budget is, you will be able to narrow down your choices. 

FAQs

Do I really need to get Accounting Software for my small business?

Technically, small businesses can continue to function without using accounting software. However, since bookkeeping has to be done manually, you should expect to spend a lot of time keeping track of records, verifying the accuracy of the information you include in your books, and balancing your ledgers. Accounting software exists to make this process easier for you.

What’s the difference between ERP and Accounting Software?

ERP, which stands for enterprise resource planning, is a software platform used to manage the different aspects of your business on a daily basis. ERP software is typically used to manage payroll, HR, marketing, sales, inventory, and so on. These systems collate all of the information in each of these departments into one so that the business can view necessary information and gain insight for improving operations and profitability.

Meanwhile, accounting software is primarily focused on the accounting side of your business. They are meant to help you monitor your cash flow, income, and expenses and keep track of your business transactions. Accounting software is also designed to help you manage your accounts receivable and accounts payable, generate reports, and view your trial balance as needed.

Is it safe to store financial information in the Cloud?

Yes, but it depends on the accounting software provider you choose. Cybercriminals are always looking for their next big target, so make sure to choose a company that has a good track record for keeping user financial details safe from breaches and leaks. Also, make sure to check if they have a history of leaks or security breaches.

Which is better to use: free or paid accounting software?

Some free accounting software, such as Wave, offer features that cover the basics for free. If your small business doesn’t need more than just monitoring income and expenses and creating and sending invoices, free accounting software will be enough.

On the other hand, if your business is growing and you need more than just the basic features, consider paid software. The monthly subscription or one-time fee is worth the benefits.

Does accounting software remove my need for an accountant?

Accounting software may contain features that make bookkeeping, reporting, and taxation easy for you, but they are in no way meant to replace your accountant. These programs are meant to help you and your accountant manage the financial aspects of your business. They can also help your accountant provide you with better service in the long run.

Should I keep financial records outside of the accounting software I am using?

While you can absolutely keep extra records of your business’s financial information outside of your accounting software, doing so takes a lot of time and effort but doesn’t result in significant benefits. You might even end up compromising your business if you fail to secure the extra records you made.

Instead of making extra records, just make backup copies of your data in the accounting software. This will help you keep a copy in case something happens to your provider. Also, consider keeping copies of crucial documents such as tax returns.

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