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Best Accounting Software for Small Business

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Tracking income and expenses are critical for businesses of any size, but it isn’t easy to manage without the right tools. For some, a simple spreadsheet might suffice. However, if you need to track outstanding invoices and classify several different categories of expenses, accounting software can save a lot of time.

There are several types of accounting software available to you, from free options with basic functions to robust solutions with all the bells and whistles. Our guide will help you decide on the best accounting software for your small business.

5 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 criteria for the best accounting software:

  • Ease of use
  • Online/mobile access
  • Pricing
  • Features
Small Business Accounting Software Comparison
QuickBooks Online Wave Xero FreshBooks Zoho Books
Software format Online & mobile Online & mobile Online & mobile Online & mobile Online & mobile
Subscription 4 Tiers 1 Option 3 Tiers 3 Tiers + Custom 3 Tiers
Price $15 to $150 per month $0 $9 to $60 per month $15 to $50 per month $9 to $29 per month
Free trial 30-day 30-days 30-days 30-days 14-days
Multi-user capabilities Yes Yes Yes Yes Yes
Mobile app Yes Yes Yes Yes Yes
Integrations Yes Yes Yes Yes Yes

Best overall: QuickBooks Online

Price: Plans range from $15 to $150 per month. Currently offering a 30-day free trial and 50% off the monthly subscription price for the first three months. Adding payroll services costs an additional $45 to $125 per month, plus $4 to $10 per employee, per month.

While QuickBooks Online can be expensive, it has a wealth of beneficial features for small- and medium-sized businesses and supports hundreds of add-ons and integrations with other applications.

For freelancers and self-employed people who need basic business and personal-expense tracking, QuickBooks Self-Employed is a good fit. Also, the software has the ability to digitally store and organize receipts, track mileage, invoice clients, and accept payments via credit card and ACH. The Advanced version offers those features plus the ability to manage 1099 contractors, track time, manage inventory, send project estimates and more. You can add payroll to most subscriptions, too.

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 added features make it easy for you to get a real-time overview of your company’s finances every time you log into the software.

Pros

 Easy to use and navigate

 Several subscription levels to meet the needs of different businesses

 Report center includes several customizable reports

 Supports hundreds of add-ons and integrations with other applications

Cons

 Expensive

 Payroll only available for an additional cost

 Cannot access accounting data offline

Best free accounting software for small business: Wave

Price: $0. If you want to accept payments via credit card, Wave charges 2.9% of the transaction amount plus $0.30 for Visa, Mastercard and Discover. American Express transactions cost 3.4% plus $0.30. ACH payments cost 1% of the transaction amount, with a minimum fee of $1. You can also add payroll for an additional $20 to $35 per month, plus $6 per employee, per month.

A small budget doesn’t have to keep you from managing your small business accounting like a pro. There are a few options for free accounting software for small business, and Wave is our pick in this category.

This web-based application offers a pretty extensive list of features for a free software-as-a-service (SaaS), including unlimited tracking of income, expenses and sales tax; connection to your bank and credit card accounts; and the ability to generate reports and year-end financial statements.

You can also use Wave’s mobile app to scan and store copies of receipts, ensuring you’re always ready to support your tax deductions in the event of an IRS audit.

Pros

 Free to use (although fees apply to payments and payroll)

 Good selection of features for very small businesses

 Email support available for invoicing, accounting and receipt scanning issues

Cons

 No time-tracking features

 Live support is only available for paid services (payments and payroll)

 Payroll only available for an additional cost

Best accounting software for startups: Xero

Price: Plans range from $9 to $60 per month. 30-day free trial available.

Xero is a great choice for startups because it was designed for nonaccountants. Rather than relying on traditional accounting terminology like accounts receivable and accounts payable, it uses plain language like “Invoices owed to you” and “Bills you need to pay.” This user-centric approach makes it simple for bootstrapped startups to manage their own accounting and bookkeeping.

If you need a little extra help — or want to outsource your accounting entirely — you can give your accountant or bookkeeper access to your account and assign them an advisor role. This lets your advisor reconcile bank accounts, edit transactions, adjust existing transactions and balances, and any other features they might need to ensure your books are in good order.

Xero integrates with hundreds of other useful apps, including Gusto (payroll), Receipt Bank (managing bills and expenses) and payment platforms PayPal and Stripe. Plus, if there’s anything you can’t do with Xero and all of those add-on applications, Xero’s open application programming interface (API) makes it possible to design a script that can.

Pros

 User-centric design

 Three subscription levels to meet the needs of different businesses

 Open API

 Easy to get professional help using the “Find an adviser” tool

Cons

 Payroll available through integration with Gusto requires an additional subscription

 Support not available via phone or chat

Best accounting software for freelancers: FreshBooks

Price: Plans range from $15 to $50 per month. Receive a 10% discount when you purchase an annual plan. Currently offering 60% off for the first three months.

FreshBooks allows you to send invoices, organize expenses and receipts, track time, accept credit card payments and run various accounting reports. Also, it integrates with over 100 other applications, including Gusto, Stripe and Dropbox.

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 unlimited invoices for five clients. Upgrading to Plus will let you invoice up to 50 clients, and you can have up to 500 clients on the Premium plan. FreshBooks also offers custom pricing if you need more.

A note of caution: Your FreshBooks subscription is based on both active and archived clients. If creating an invoice for a new client pushes you over the number of clients included in your current pricing tier, FreshBooks will automatically upgrade your account on the next payment date. To avoid an upgrade, you have to delete the client — you can’t just archive them. This nuance can be a hassle if you work with several clients.

Pros

 Time-tracking tools included in all price levels

 Automatic mileage tracking with the mobile app for Plus subscription and above

 Supports estimates and proposals

Cons

 Payroll available through integration with Gusto requires an additional subscription

 May have to delete clients to maintain current subscription tier price

 Additional users cost $10 per person, per month

Best accounting software for mobile users: Zoho Books

Price: Plans range from $9 to $29 per month. Get two months free when you pay annually.  14-day free trial available.

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 in its app as it does in its browser-based version.

It also offers most of the features small businesses need at a very affordable price. All versions of Zoho Books allow you to reconcile bank accounts, prepare invoices, track expenses and manage projects and timesheets. The mid-tier plan adds purchase approval functionality. The top-tier enables you to prepare purchase and sales orders, track inventory and offers a vendor portal that lets the company’s vendors view and access their transactions.

The one drawback to Zoho Books is its lack of payroll service and widespread integration with an outside payroll provider. Currently, payroll integration is only available in California, New York and Texas. Any small business with employees outside of those three states are better off using one of our other picks.

Pros

 Affordable pricing

 Robust mobile app

 Plenty of useful features

Cons

 Limited payroll integration

 Not widely used by professional accountants and bookkeepers

 The free trial is only 14 days long

What to look for in business accounting software

When choosing small business accounting software, it’s tempting to focus on price. But if saving a few dollars on your monthly accounting software subscription results in extra time spent on manual tasks or requires extra money spent for add-ons, it may not be the best investment.

Here are a few items to keep in mind when making your accounting software comparison:

  • Cloud/mobile access. Being able to access your accounting data anywhere, anytime and on any device is a necessity in an increasingly cloud-based world.
  • Features. What do you need your accounting software to do? Any accounting software application can track revenues 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.
  • Multiuser access. Whether you handle your accounting on your own, hire an in-house accounting team, or outsource bookkeeping to a professional, you’ll need to share your accounting data at some point. Providing appropriate access to additional users is a lot easier than emailing reports and spreadsheets back and forth.

Small business accounting software FAQs

How does business accounting software work?

At its most basic, accounting software allows you to create invoices, collect payments from clients and track expenses. Today’s solutions typically connect to your business bank account to download and automatically 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 tax return in one place.

What is the best accounting software for small business?

The best software will depend on your needs and budget. QuickBooks Online is our best overall pick in our accounting software comparison, but other options like Wave and Zoho Books might provide the functionality you need at a lower price. The best way to decide is to take advantage of the free trials and test-drive them.

How much does accounting software for small business cost?

Prices vary depending on the number of clients, transactions and features you need. Some accounting tools for small businesses are free. Others can cost up to $150 per month or more, depending on the features required to run your business.

Should I hire an accountant for my small business?

An accountant can help you with everything from getting funding from loans or investors to handling necessary tax filings, but that doesn’t mean you need to hire someone full time. You may be able to outsource your accounting needs on an hourly or per-project basis at a fraction of the cost of hiring a full-time employee.

Prices current as of publication date. 

 

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