Best Accounting Software for Small Business
Chloe Della Costa is a freelance copy editor and writer with a degree from Bard College. She specializes in copy editing and fact-checking content related to personal finance, insurance, and business.
When searching for the best accounting software for small business, you want something that can handle the essentials, such as tracking expenses, sending invoices and generating financial reports. But you also need something that fits your budget and is easy to use.
Fortunately, you have several options, from free apps with basic accounting features to more robust solutions with all the bells and whistles. Our guide will help you decide on the best small business accounting software for you.
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Best accounting software for small business
Choosing the best accounting software for small business isn’t a one-size-fits-all proposition. Each company has unique needs. We kept that in mind when we came up with our list of the best business accounting software options.
| Accounting software | Best for | Starting price per month | Free trial |
|---|---|---|---|
| QuickBooks Online | Overall | $15 | 30 days or 50% off for three months |
| Xero | Startups | $12 | 30 days |
| FreshBooks | Freelancers and sole proprietors | $15 | 30 days or 50% off for four months |
| Zoho Books | Mobile users | $0 | 14 days |
| Wave | Budget users | $0 | No |
QuickBooks Online: Best overall
| Pros | Cons |
|---|---|
Tracks business miles automatically using the mobile app Cloud-based so it’s accessible from any device with an internet connection You can upgrade to another plan as your business grows | Adding payroll features costs an extra $45 per month plus $5 per employee, at a minimum, and is capped at 150 employees Cannot access accounting data offline |
Plans and pricing
- Self-Employed: $15 per month
- Simple Start: $30 per month
- Essentials: $55 per month
- Plus: $85 per month
- Advanced: $200 per month
Currently, QuickBooks Online is offering 50% off for three months upon sign-up.
Features
- Send invoices and accept payments
- Prepare commonly used financial reports
- Attach images of receipts to transactions
- Estimate quarterly taxes
- Calculate sales tax (Simple Start plan and above)
- Prepare and file 1099s (Simple Start and above)
- Inventory management (Plus and above)
Who it’s best for:
While QuickBooks Online can be pricey, it has many beneficial features for small- and medium-sized businesses. It also supports hundreds of add-ons and integrations with other applications. All versions include a dashboard on the homepage that displays an overview of your business’s finances, including the status of outstanding invoices, monthly revenues and expenses and bank balances. The dashboard makes it easy to get a real-time overview of your company’s finances every time you log into the software.
Xero: Best for startups
| Pros | Cons |
|---|---|
Early plan limited to 20 quotes and invoices and five bills per month Discounts available if you use Xero for more than one business | Payroll only available via a third-party application, which comes with an additional fee of $40 per month plus $6 per employee Multicurrency support only available in highest-priced plan |
Plans and pricing
- Early: $12 per month
- Growing: $34 per month
- Established: $65 per month
Features
- Send quotes and invoices to clients
- Online bill payments
- Bank reconciliations
- Built-in cash flow planning tools
- Expense management tools (Established plan only)
Who it’s best for:
Xero is a great option for startups and growing businesses because, in addition to providing all of the essential accounting features, it integrates with thousands of other useful apps, including the payment platforms PayPal, Square and Stripe. Plus, if there’s anything you can’t do with Xero and one of its existing add-on applications, Xero’s open application programming interface (API) makes it possible to design a script that can.
FreshBooks: Best for freelancers and sole proprietors
| Pros | Cons |
|---|---|
Customized pricing available for businesses with more complex needs Supports billing customers on a subscription basis (Plus plan and above) | Granting access to more than one team member costs an extra $10 per person, per month Double entry accounting reports not available in Lite plan |
Plans and pricing
- Lite: $15 per month
- Plus: $30 per month
- Premium: $55 per month
Currently, FreshBooks is offering 50% off for four months upon sign-up. Discounts are also available when you pay annually.
Features
- Estimates and invoicing
- Expense tracking
- Accept payments via credit cards and bank transfers
- Financial reporting
- Mileage tracking with mobile app (Plus plan and above)
Who it’s best for:
FreshBooks is an easy-to-use and affordable alternative for freelancers and sole proprietors. It integrates with over 100 different applications, including Gmail, which allows business owners to create and send invoices from their email. One of the main differences in subscription tiers is the number of clients you can work with in each plan. The Lite plan limits you to invoicing five clients. Upgrading to Plus will let you invoice up to 50 clients, and you can have unlimited clients under the Premium plan. If adding a new client pushes you over the allowable clients for your current pricing tier, FreshBooks will automatically upgrade your account on the next payment date. You must delete a client to avoid an upgrade — you can’t just archive them.
Zoho Books: Best for mobile users
| Pros | Cons |
|---|---|
Affordable pricing Robust mobile app Plenty of useful features | Payroll only available in California, Florida, Illinois, Kansas, New York, North Carolina, Tennessee, Texas, and Washington Free trial is only 14 days long |
Plans and pricing
- Free: $0
- Standard: $20 per month
- Professional: $50 per month
- Premium: $70 per month
- Elite: $150 per month
- Ultimate: $275 per month
Discounts are available when you pay annually.
Features
- Automated payment reminders
- Accept payments online and offline
- Expense tracking
- Mileage tracking
- Common financial reports
Who it’s best for:
While all of our picks for best accounting software for small business offer mobile apps, Zoho Books is unique in that its mobile app provides nearly as much functionality as the browser-based edition. All versions of Zoho Books allow you to send invoices, accept payments, track expenses, reconcile bank accounts and track mileage. The Free version — available for businesses with less than $50,000 in revenue per year — allows you to send up to 1,000 invoices annually. Upgrading to a paid plan enables you to send more invoices, add additional users and access other features.
Wave: Best for a budget option
| Pros | Cons |
|---|---|
Free to use (although fees apply to payments and payroll) Good selection of features for small businesses | Live support only available for paid plans Adding payroll requires a fee |
Plans and pricing
- $0 for unlimited invoicing, accounting and banking features
- Accepting payments via credit card: 2.9% of the transaction amount plus $0.60 per transaction
- Accepting ACH payments: 1% of the transaction amount, with a minimum fee of $1
- Payroll: $20 to $35 per month plus $6 per active employee or independent contractor
Features
- Invoicing
- Automated payment reminders
- Accept payments via credit card and ACH (fees apply)
- Expense tracking
- Unlimited number of users
Who it’s best for:
Free business accounting software is usually only available to very small businesses — most companies base availability on the number of invoices you send or your annual revenue. Wave’s invoicing, accounting and banking features are free no matter the size of your business.
The web-based application offers a pretty extensive list of features for a free software-as-a-service (SaaS) option, including unlimited tracking of income and expenses to help simplify tax season, connections to your bank and credit card accounts and the ability to generate reports and year-end financial statements. You can also use Wave’s Invoicing app to create and send unlimited invoices, check invoice status, send reminders and record payments.
How to choose accounting software for small business
When choosing an accounting software program for your small business, it’s tempting to focus on the cost. But if saving a few dollars on your monthly accounting software subscription results in spending more time on manual tasks or requires pricey add-ons, it might not be the best option.
Here are a few questions to consider when making your accounting software comparison.
- Is there a mobile app or cloud platform? Accessing your accounting data anywhere, anytime and on any device is helpful in an increasingly mobile world.
- What integrations are available? Most businesses rely on various tools and apps for customer relationship management, scheduling, sending proposals and managing projects. If your accounting software doesn’t integrate with other platforms, you’ll spend a lot of time on duplicate data entry.
- Is it scalable as your business grows? Hopefully, your business will continue to grow and change. So you need accounting software that has the flexibility to scale. Don’t just think about the features you need right now. Think about what you’ll need five to 10 years from now.
- What tasks do you need it to do? Any accounting application can track revenue and expenses. However, if you need your software to run payroll, track inventory or manage projects and contractors, you’ll likely pay more for those features.
- What does your accountant use? Whether you handle your accounting on your own, hire an in-house accounting team or outsource bookkeeping and tax preparation to a professional, you’ll need to share your accounting data at some point. Providing access to additional users is much easier than emailing reports and spreadsheets back and forth.
Methodology
To compile our list of the best accounting software programs, we took the following factors into account: the overall cost of the program, integrations with other bookkeeping software programs, ease of use and additional integrations it offers, like tax preparation or payroll services.
Frequently asked questions
At its most basic, accounting software allows you to create invoices, collect client payments and track expenses. Today’s solutions connect to your business bank account to automatically download and classify transactions. This makes it easy to keep track of your business finances and simplifies tax time, as you’ll have everything you need to prepare your return in one place.
Most accounting software options for small businesses are designed to be easy to use. After all, it’s supposed to simplify managing your business finances, not cost you more time. QuickBooks and FreshBooks offer plenty of training resources, self-help articles and live support. You should also ask your accountant or tax advisor which platform they recommend, as they can usually assist when needed.
Prices vary depending on the number of clients, transactions and features you need. Some accounting software for small business is free. Others can cost $200 per month or more, depending on the features required to run your business.
Your requirements depend on your industry and the size of your business. However, most small businesses need to send invoices, accept payments, track expenses and prepare year-end financial reports for tax purposes. Depending on your business, you may also need to add inventory management, payroll and other features.
QuickBooks has been the top-rated accounting software for small to midsize businesses for years because it’s built to serve a wide variety of small businesses and offers a wealth of features. That said, it can be expensive. Before signing up, consider whether you need all the bells and whistles, such as mileage tracking, estimates, cash flow tools and preparing 1099s for contractors. If you don’t use those features, you might be able to save money using a less expensive (or free) alternative.