What Is The Best Bookkeeping Software For Small Businesses?

Accounting software is beneficial to owners of small businesses because it enables them to handle accounts receivable and payable, monitor profitability, and get ready for tax season. In the context of accounting software, a small business is defined as an organisation that is able to use commercially available software without requiring significant customization.

However, accounting needs get increasingly complex as a firm grows, necessitating the usage of a specialist enterprise resource planning (ERP) system.

The accounting software designed for smaller businesses is available in a variety of flavours, each of which has its own distinct set of features and price point.

When selecting the best accounting software for their company, owners of small businesses should take into account both the nature of their sector and the size of their workforce. For example, someone who works as a freelancer does not require the same accounting software as someone who owns a restaurant.

You can’t afford to let the cash flow of your business get away from you (literally). You are in luck since there are a number of alternatives to accounting software that may assist you in keeping track of your finances, organising your expenditures, and billing customers. The most important thing is to search for accounting software that has all of the features you need at a price that is within your budget.

Don’t freak out just because there are so many different options available when it comes to accounting software; it’s easy to get lost in the sea of choices. Below, we will go over our top ten recommendations in order to make your decision a little bit easier.

Accounting software is one of the first business apps you should get when starting a company. You’ll use it every day to track the money coming in and out of your business, so picking the appropriate one is critical.

You may use it to produce invoices, track incoming and outgoing payments, discover and follow up on past due accounts receivables, and run reports to monitor your organisation’s financial health and other elements.

It might be difficult to pick from the hundreds of accounting software solutions available.

In our search for the best accounting software for small businesses, we sought for economical, user-friendly accounting packages. In addition, we wanted them to be cloud-based with a mobile app so you could view your data from anywhere at any time.

Small company owners may use the best accounting software to simply handle their accounts, prepare for tax season, and keep track of their finances.

It’s a more cost-effective option to employing a large agency to handle taxes and payroll for many small firms.

However, picking one might be difficult with so many options available today. As a result, we’ve developed a list of the top small company accounting software to help you quickly identify the best fit.

We sought for time-saving features like automated bank feeds, automatic payment reminders, and online invoicing and payment acceptance in accounting systems.

We also searched for software that provided extensive, configurable, real-time financial reporting, which is critical for keeping track of and understanding your company’s finances.

Best Accounting Software for Small Business of 2020

Like choosing good accounting software, accounting does not have to be complex. There are several full-featured, capable accounting tools available on the cloud that are simple to use and may assist small business owners in gaining control of their money.

We’ll go through the top nine accounting software applications in this article.

Price, ease of use, accessible features, and user evaluations were all factors in our decision.

Each product on this list has important corporate accounting tools and automations that will simplify your accounting activities.

It’s nice to have a list of software options, but how do you know which one is best for your company? Keep the following items in mind while shopping for accounting or bookkeeping software.

Determine what it is you require

Do you require a platform that allows you to manage inventories, or do you have more immediate issues such as receipt tracking and sales tax? Please establish a list of your accounting requirements and rank them in order of importance.

Before you begin looking for solutions, decide on a target amount of requirements that your selected program will satisfy.

You may be flexible here, but the bells and whistles of a solution that solves for 18 needs you don’t have are tempting to get sidetracked by.

Be truthful about your spending

Setting a budget is probably not at the top of everyone’s list of things to accomplish. Examining your spending patterns may be a difficult and unpleasant task.

However, if you give it some thought, creating a personal budget can be able to assist you in regaining control of your financial situation and ensuring that you remain on track to achieve your monetary goals.

Before you begin the research phase of the procedure, you should first determine how much of an investment you are able to make in accounting or bookkeeping software.

After that, when you have a better idea of how much money you can put aside, you should make an effort to avoid wasting too much time researching software that can’t be used in your business.

It is common for budgets to have some wiggle room, but you should make it a rule to reject a solution if the overall cost of implementing it is more than 25 percent of your total budget.

Look into features that suit your requirements

It is very simple to become preoccupied with minute particulars. Nevertheless, let’s say you’re thinking about purchasing software that specialises in providing accounting services to teams located all over the world, but you only conduct business in Australia. If this is the case, you run the risk of paying for many things for which you have no use.

Be careful not to get too excited. Instead, you should consult your list of needs in descending order of importance and select software that satisfies the majority of those requirements.

Intuit QuickBooks Online

QuickBooks is often recognized as the best accounting software option for small businesses. QuickBooks is a dream accounting software tool for small businesses, whether it’s because of the inexpensive cost, the numerous pricing levels, or the exceptional features.

This small company software is popular because of its receipt capturing, 24/7 chat support, and interfaces with PayPal, Shopify, and Square.

All plans include features such as tracking revenue and spending, sending invoices and receiving payments, running reports, sending estimates, tracking sales and taxes, and capturing and organizing receipts. Advanced plans include inventory tracking, time tracking, and full-service payroll.

QuickBooks Online was found to be the most effective accounting software for small businesses after being put through its paces.

Not only do the overwhelming majority of accounting professionals working for small businesses use QuickBooks Online, but there is also a variety of online training materials and forums where you can receive assistance if you have a question or problem with the software. In addition, all accounting tasks may be accessed from a single dashboard, which makes bookkeeping much simpler and more effective.

The accounting software offered by QuickBooks Online has been used for a long time by small businesses and the professionals who handle their bookkeeping and taxes.

The application is hosted in the cloud, and users can access it using a mobile app or a web browser on their computer.

After the initial 30-day free trial, the following membership levels are available: Simple Start (for a fee of $25 per month), Essentials (for a fee of $40 per month), Plus (for a fee of $70 per month), and Advanced (for a fee of $150 per month). The majority of accountants will offer a large discount for the first few months of working together, and some accountants are even able to provide small firms with wholesale prices.

Receiving payments, analysing reports, taking a picture of a receipt, and tracking business travel are all features that can be customised using the mobile app, and the monthly subscription to this programme may be adjusted as the business grows. In addition, if you want a payroll solution that is compatible with QuickBooks Online, you can use the QuickBooks Payroll system.

Inventory management, time monitoring, extra users, and budgeting are all included in each plan.

The requirements of the vast majority of service-based small businesses are met entirely by Simple Start. Essentials or Essentials Plus will give product-based small businesses access to extra inventory as well as additional possibilities for customisation.

The Advanced subscription is a brand-new product that was only released recently and it contains financial reports that are driven by Fathom.

Many of the most important companies in the world use a technology called Fathom, which is a sophisticated online platform for conducting financial report analysis.

Even while FreshBooks offers a fantastic user experience, no one has yet been able to find a way to compete with the winning combination that QuickBooks has found.

For many people, QuickBooks is the name they trust when it comes to accounting software, and the company is unquestionably one of the most dominant forces in the market.

The reason that the name QuickBooks has become synonymous with accounting for small businesses is because the company’s software satisfies all of the requirements and provides an outstanding user experience.

QuickBooks may be accessed from any device with an internet connection because it is a cloud-based solution. 

On the other hand, there are apps that are designed specifically for mobile platforms that make it easy to manage your account even while you are travelling.

Unfortunately, the mobile applications offered by these organisations are typically subpar in comparison to the web-based experiences they offer. On the other hand, QuickBooks stands out as an exception, and its mobile application is without a doubt the best one we’ve ever utilised.

Because of the gravitas of its brand name and the high level of service it delivers, QuickBooks naturally has a pricing point that is more expensive than that of its competitors.

QuickBooks will almost certainly be able to do any tasks that are assigned to it for any small business that is willing to pay the fee that is being asked for it. When it comes to the cost of entry, though, QuickBooks can be more than you need if you are working with a limited budget.

Inventory tracking and payroll services are two areas QuickBooks lacks, which might be a deal-breaker for certain firms.

However, this may not be an issue for some organizations because third-party apps are integrated.

If you are going to use these features, make sure they are compatible first.

All options include third-party app integration, such as Stripe or PayPal. The app shop for QuickBooks Online organizes all of their apps by function and includes useful samples of each product’s benefits.

Xero

With over 2.7 million users worldwide, Xero is a cloud-based accounting software platform for small companies.

Small company owners and their advisers may access real-time financial data using Xero at any time, from any location, on any device.

In addition, Xero has a community of over 1,000 third-party apps and over 300 banking and financial partner integrations.

Xero is the best option for microbusinesses searching for simple accounting software in our analysis.

This software has a user interface that is easy to use, and it integrates very well with a payroll service that is provided by a third party. In addition, companies are able to take online payments from customers by utilising the interface that Xero has developed with Stripe and GoCardless.

The first version of Xero was released in New Zealand in 2006, and the company now boasts more than two million customers all around the world.

This particular accounting programme is utilised in New Zealand, Australia, and the United Kingdom respectively. Over three thousand individuals are currently employed by Xero, and the company is seeing rapid growth in the United States.

Xero has three different monthly membership options, each costing $9 per month: Early, Growing, and Established. Additionally, a full-service payroll add-on is available for purchase.

Gusto provides a solution for full-service payroll processing for an additional $39 per month in addition to $6 per employee. In addition, the company offers a free trial period of thirty days in addition to a discount campaign of fifty percent off for a period of two months.

The usage is limited to five invoices or quotations, five bills, and the reconciliation of twenty bank transactions each month with the Early plan.

This limited plan might be suitable for a microbusiness such as a consultant or a small service provider that completes a moderate number of high-ticket transactions each month.

On the other hand, invoices, bills, and transactions are limitless in both the Growing and Established subscriptions.

The only real difference between the two plans is that the Established one comes with additional features such as multi-currency support, spending control, and project costing. In addition, a tool called Hubdoc that can capture bills and receipts is provided in all three tiers of the service.

Website catering to the accounting needs of small businesses Xero excels in a variety of areas, including account reconciliation, data imports, inventory management, and project monitoring, to name just a few of those areas.

Because of the recent improvements that have been made in areas such as reporting, projects, and document management, it is currently considered to be one of the best solutions available for today’s small businesses.

Zoho Books

Zoho Books includes a variety of useful features, including analytical reports, bank feeds that are automatic, a client portal that allows for collaborative work, accounting and taxes, online payments, and invoice templates.

In addition, users of the system are able to manage numerous time sheets for various projects and keep tabs on reimbursable expenses.

Zoho Books is an end-to-end accounting system that manages a company’s finances across the entire organisation and is available to companies of varying sizes.

The system will automatically take care of your accounts payable and receivable, as well as your time tracking, payroll, transaction management, inventory control, and banking needs.

Additionally, Zoho Books handles customer and supplier connections via the client portal, which enables customers to safely store their payment information for recurrent transactions. This functionality is available at no additional cost.

Zoho Books is a great option for accounting in the cloud for smaller businesses since it has a pleasant user interface, reasonable prices, and a comprehensive set of features.

On the other hand, the constrained nature of its payroll service may encourage some customers to look elsewhere.

FreshBooks

FreshBooks might be the appropriate choice for your company if you need to track time, send out recurring invoices, or operate a firm that is reliant on subscriptions. You can even track where a customer opened your invoice, which will allow you to avoid the aggravating disputes of “I never got it.”

They are compatible with a wide variety of business tools and provide a centralised dashboard for the management of finances and accounts. You are provided with frequent backups, and the use of a mobile app gives you the ability to monitor the status of your company at all times.

For the vast majority of service-based businesses, the most crucial accounting requirement is accurate billing.

FreshBooks offers greater customization options than competing accounting software. Its major role is to transmit, receive, print, and pay invoices, but it may also help a firm with basic bookkeeping. This accounting software may be used by service-based businesses to issue proposals and invoices, collect deposits, manage project time, and receive payments.

FreshBooks originated in Toronto in 2003 as a basic invoicing program. FreshBooks now employs over 300 employees and has added more features over time. There are four distinct alternatives to choose from, and paying yearly rather than monthly may save companies 10%.

FreshBooks also offers a 60 percent monthly discount for a six-month term. Lite ($15/month), Plus ($25/month), Premium ($50/month), and Select ($50/month) are the four tiers. Select is a one-of-a-kind service with a one-of-a-kind price.

The greatest point of differentiation between the four possibilities is the number of distinct customers who can be billed on a monthly basis. On the Lite plan, you are permitted to send an invoice to a maximum of five customers per month. With the Plus service, you can send invoices to up to 50 different customers each month.

With the Premium subscription, you can send invoices to up to 500 consumers every single month.

Last but not least, with the Select package, there is no restriction to the number of customers who can be billed on a monthly basis.

However, adding new team members will cost an additional $10 per month, and the advanced payment option will cost an additional $20 per month. The advanced payment option gives customers the ability to charge a credit card in real-time or to set up regular credit card charges for a customer.

Shopify, Gusto, Stripe, G Suite, and other third-party software connectors are also accessible. FreshBooks invoices may be fully personalized and adjusted for a professional appearance and feel, which is a unique feature. FreshBooks is an excellent tool for planning tasks, delivering estimates or proposals, and collecting money from customers.

FreshBooks, in contrast to Xero, does not impose any stringent restrictions on the user of its software.

Because it is so simple to use, one of our favourite features of FreshBooks is its intuitive interface. The user interface has been simplified to the greatest extent feasible, which makes it a breeze to generate customised receipts using your mobile device, tablet, or laptop computer. You merely need to subscribe to FreshBooks at the most fundamental level, which costs ten dollars per month, in order to make use of all of FreshBooks’ possibilities.

However, depending on the type of FreshBooks membership you have, the number of customers you can store in your address book may be restricted. You are free to send an unlimited number of invoices to each customer, but the system will only allow you to keep data for a maximum of five customers at a time unless you upgrade to a more expensive plan. This suggests that similar to Xero, the lower-tier plans offered by FreshBooks are better suited to businesses and freelancers that are just getting started using the software. As your organisation grows, you will need to upgrade to one of the more expensive plans that covers between 50 and 500 clients.

Freshbooks is a fantastic programme that makes it easy to create and manage invoices, as well as manage your money over time, which makes it a great choice for small businesses. With the click of a few clicks, users have the ability to check precise breakdowns of how much money they have brought in, how much money they have spent, and how much money they have taken home as profit. In addition, customers are able to easily modify these reports to cover any time period of their choosing and compare their results over the course of time.

Sage

Sage is a well-known accounting software program. It’s a favourite among solo traders, small firms, and accountants.

Sage can help you manage your firm’s cash flow, sales, and taxes. It also makes reporting a lot easier and more efficient. It’s a multi-functional solution that caters to a variety of corporate requirements.

The platform also provides a variety of capabilities that are more complex, making it suitable for use when you are ready to expand your business. Among these are things like inventory management, processing payments with credit cards, and module-level security.

There is a wide array of hardware and software platforms compatible with mobile applications developed for Android, Apple, and Blackberry.

In addition, other commercial productivity suites, such as Adobe Reader and Microsoft Office, can be easily connected with Sage without any difficulty.

Sage is typically the first choice for businesses due to the fact that it has been the industry leader for a number of years; nevertheless, if you do not have any prior expertise, using Sage might be challenging.

If, on the other hand, you are looking for accounting software that is ready to use right away, Sage is a fantastic solution to consider.

Wave

Wave is a fantastic accounting software platform for a service-based small business that does not require inventory management or payroll processing. Wave’s free features can manage all of a freelancer’s or service-based business’ accounting requirements, making it the best free software in our review. Accountants may utilize Wave to pull the reports they need to complete a company’s annual tax return.

The Wave is a corporation located in Toronto that was founded in 2010.

The company, which employs over 250 people, was recently purchased by H&R Block.

This free accounting software contains all of the necessary accounting capabilities for most small firms, including income and expense management, financial reporting, invoicing, and receipt scanning.

These features are accessible both online and via the mobile app. Customer payment processing and payroll are optional premium services, although bookkeeping, invoicing, and reporting are all free.

The payment gateway is where Wave makes its money.

Wave charges 2.9 percent plus 30 percent per transaction for Visa, Mastercard, and Discover, and 3.4 percent plus 30 percent for American Express to process a customer’s payment.

These fees are slightly more than those charged by other accounting software. When using an ACH payment instead of a credit card, Wave charges 1% each transaction with a $1 minimum fee. Because most accounting software does not charge a fee for ACH payment processing, Wave is one of the few exceptions.

As an add-on service, Wave provides two payroll options. The first option is $20 per month + $6 for each employee or contractor.

Wave will handle payroll and calculate payroll taxes under this plan, but the user will be responsible for manually filling out payroll tax forms and sending tax payments. The second option is $35 per month + $6 for each employee or contractor.

This package includes full-service payroll, which means that Wave handles all tax filings and payments. Unfortunately, only 14 states provide this full-service payroll solution.

It’s hard to top obtaining something for nothing. Free software frequently comes with a slew of disclaimers and/or integrated advertisements. Wave, on the other hand, does not fall under this category. Wave is a completely free accounting program that small businesses may use to their advantage.

Despite the fact that there is no cost to use Wave, it instantly provides customers with a user-friendly dashboard and sleek layout that makes browsing the various functions available as simple as possible. Many of the capabilities given by Wave are only available as paid features in rival apps, so it’s wonderful to have them available for free here.

Wave may also be used to manage many enterprises, making it ideal for any freelancer with a few side hustles. In addition, you may use Wave to handle both accounts in tandem, for example, if you moonlight as an Amazon seller while you’re not generating money from selling your drawing skills.

How Does Accounting Software Work?

Once a company’s bank accounts and credit cards have been synced with the accounting software, transactions will appear in a queue and may be sorted into the categories stated on the chart of accounts.

When the relevant category is selected, transactions begin to populate the company’s financial records.

By producing a financial report, business managers may examine profitability, compare income and costs, verify bank and loan balances, and predict tax liabilities in seconds. In addition, business executives can make key choices faster when they have rapid access to financial data.

Many accounting programs also support third-party application integration.

Consider the case of a business owner who utilizes a point of sale (POS) system to track sales. In such situation, the POS system and accounting software might work together to track particular transactions, sales tax liabilities, sales by subcategories, and more. A time tracking program might be integrated with accounting software to add labour to a customer invoice in a service-based firm.

How Did We Choose Accounting Software for Small Business?

Before determining our top five software solutions, we looked at nineteen accounting software vendors with specialized products for small businesses.

Cost, scalability, simplicity of use, reputation, and accounting features were all factors.

The longer a firm has been operational, the more likely any technology issues have been rectified, ensuring that essential financial information is provided properly.

The second most significant factor was scalability because as a company expands, so do its accounting demands, and moving financial data to new software may be time-consuming.

Finally, because all users must be able to access and analyze financials at the same time, simplicity of use and cooperation for business owners, employees, and accountants were examined.