When you’re starting a small business, tracking your financial transactions to record profit and loss as accurately as possible will give you a clear view of your profitability. This makes finding the best small business accounting software as one of the first actions you should take.
Since accounting software is something your small business will use everyday, it’s important you choose one that is easy to use, easy to implement, and within your budget. Most small businesses may opt for a simple out-of-the-box software that does not require any additional add-ons or customization.
There are hundreds of accounting systems on the market today–so which is right for your business? You may need to create invoices, run financial reports, or identify and follow up on past-due balances. The number of employees and your industry will also be a factors considered.
To help you find the best accounting solution, we’ve conducted research on a wide range of management software and put together a collection of our best picks for small business accounting software.
FreshBooks is a true all-in-one accounting software that improves cash flow and automates your administrative tasks such as basic invoicing, organizing expenses, and tracking your time worked on projects. It also offers a large quantity of reports that help monitor the finances and financial health of your business.
The biggest benefit of FreshBooks is what you get included for the price. Rather than offer a limited base version of their software (such as only invoicing), their “Lite” package includes a full suite of unlimited invoices, expense entries, estimating, and time tracking. It can also accept credit card payments and ACH bank transfers and has an automated bank import feature built in.
AcountingSuite is basic option intended for the growing small business. Due to offering an integrated suite of banking, sales, purchasing, inventory management, and accounting in it’s base package, the solution encourages you to continue to use it as you grow and does not require 3rd party add-ons or outside stand-alone options.
AccountingSuite includes as many CPA/bookkeeper seats as needed so your accountant can help you use the program. The solution starts at $19/month for 1 user and the cost is mostly dependent on the number of users.
Wave is a forever-free accounting solution that offers accounting, invoicing, payments, payroll, and receipts. Wave is very transparent into their pricing structure. The accounting, invoicing, and receipt scanning is 100% free. Collecting payments via credit card or bank transfers, or running payroll for your employees, does come at a price, however.
Wave is not only one of the most popular free accounting solutions, it can also be thought of as one of the most popular accounting solutions period. Because of this, it’s a great choice for freelancers and start-ups who are strapped for cash.
Kashoo is a complete bookkeeping solution for small business owners, providing invoicing, income/expense tracking, and credit card payment processing. However, Kashoo has it’s roots as primarily a powerful invoicing tool, which provides unlimited invoices and unlimited users. You can brand your invoices with your company logo, include payment instructions, and send invoices on a recurring basis.
Billing and invoicing capabilities in in Kashoo will help customers make payments on-time through automatic payment reminders and notifications. Kashoo’s dashboard was designed to quickly enter income and expense transactions. There are some key metrics found on the right-hand side, but the home screen is mainly a form for entering income and expenses, which shows you where it’s priorities lie.
Want more results? Check out our list of best small business invoicing software.
Xero is very scalable online accounting software, meaning many small businesses continue to use Xero as they grow into larger enterprises and upgrade to more advanced versions. Because of this, over 1.3 million users have chosen Xero as their primary accounting software.
Online accounting solutions (also known as cloud accounting software) such as Xero provide a “log in from anywhere” approach, which is intended to increase usage given the ease of access. On top of being able to access your financial information from anywhere you have access to a web browser, Xero has a mobile app for iOS devices, which can provide accounting features such as receipt scanning.
Xero learns and categorizes each transaction to help save your business time. Xero also has a large customer support network and an online “checkup tool” that lets the customer support team run some system checks to identify issues and handle issues via chat support.
QuickBooks for Mac is the Mac-exclusive version of one of the most widely used accounting products ever, QuickBooks Desktop. New in 2020, the Mac version includes modernized reporting, an improved customer snapshot, a dark mode, electronic invoices with online ACH, credit card, or e-check payment options, and bounced check processing.
Due to the widespread popularity of PCs, many software developers have a “Windows-first” approach when it comes to creating their software. While it can be challenging to find an accounting software with a Mac-specific UI, QuickBooks for Mac gives all the same features provided to it’s Windows counterpart. This is a relief for Mac users who prefered a locally installed option rather than QuickBooks Online accounting software.
QuickBooks for Mac primarily serves small businesses and starts at only $299 for a one-time purchase.
Want more results? Check out our list of best mac accounting software.
From a small-business that may require an off-the-shelf option to a larger enterprise that desires a vast amount of financial management customization, this buyer’s guide will cover everything you should care about during your search when reviewing accounting software.
This guide will provide you with information on the following topics:
Accounting software at a minimum keeps track of financial transactions to record profit loss and better improve business finances and overall cash flow. Core functionalities include general ledger (GL), accounts payable (AP), and accounts receivable (AR). Common additional functionalities include bank transactions, purchase orders, payment reminders, and payroll service.
Many industries have customized financial management functionalities/requirements like fund accounting for nonprofits, job costing for construction firms, or DCAA compliance for government contractors.
There are also different ways of conducting your accounting process, such as single-entry or double-entry accounting.
In larger organizations, the terms “accounting software” and “ERP” are often used interchangeably. The right software will provide the data management tools you’ll need for accurate account balances and let you be ready at tax time.
Business accounting software has features and applications that can be broken down into basic categories, such as common (typically found in all accounting software), industry-specific (only found in certain types of accounting software), and advanced features (only used by mid-sized to larger businesses).
While many top accounting software features exist to benefit your business, lets focus on some of the essentials.
Our recent accounting software buyer trends report found that payroll, inventory control, and invoicing were the most requested additional accounting features that buyers search for more on top of the “core accounting” of accounts payable, accounts payable, and a general ledger.
Undoubtedly in using any business software solution, you’ll find things you like as well as dislike. The best accounting systems will help alleviate pain points from manual methods, but they may also bring about some technological pain points that you’ll want to be prepared for.
Companies that do not have a complete (all-in-one) software will look to combine more than one software to meet all of their applications needs. A common example is having a bookkeeping software and an inventory tracking option that do not integrate.
An off-the-shelf software that handles core accounting may lack additional applications such as payroll, advanced reporting, or more involved inventory tracking. Once the need for these accounting features arrives, many buyers may lack the means necessary to integrate the programs together.
While a simple and inexpensive program may meet your accounting needs in the short-term, if you desire additional capabilities down the road (such as payroll service, client portals, or an improved user interface), you may be better off choosing a more advanced software from the start.
Integrations, or APIs, allow distinct products to talk with one another. For example, your payroll system could update your HR team with a chat program (such as Slack) of any processing errors. Your payment processor might automatically push new receivable entries to your accounting system. Your accounting software could share available funds with BI systems.
Expect inter-software communication abilities to increase in most products. While some accounting products may try and provide an “all-in-one” tool, others will focus on being the best at a few main areas, and offer integrations to tools that they feel help complete their program.
As consumers demand functionality more in-tune with their industry needs, software developers are doing everything they can to make those dreams a reality.
While a super-niche industry may not have a software option exclusively developed for them, be on the lookout for specialized vendors. These are companies that pride themselves in implementing specific software solutions into certain environments, and will offer customizations or add-ons for a generic-product that will make it more in line with what the business expects on a day to day basis.
Many companies will try to make due with a lower-cost solution at the expense of functionality. Options such as Sage 50c, Zoho Books, and Quickbooks Online are great low priced options for new businesses, but they’ll lack ways to customize the software towards your business.
Popular accounting software customizations include:
Bottom line, don’t sacrifice functionality for cost if it’s something you may look to add within a year down the road.
Also known as software-as-a-service (SaaS), cloud adoption rates have picked up over the past decade. In 2015, 76% of the buyers we spoke to indicated a receptiveness to have their software hosted externally, off-premise. In 2017, this percentage rose to 84%.
With cloud-based software, products are leased, rather than licensed, which becomes more attractive for smaller businesses with limited funds. The software industry has responded by making software more available on a cloud basis.
In 2016, mobile web browsing surpassed desktop browsing in user counts. Naturally, usage has translated into business demands.
Accounting software developers have responded in kind, especially within fields that require on the site analysis such as construction & field service. This also makes accepting credit card payments in the field easier than ever.
Over the past five years (2012-2017), we’ve seen a whopping 42% increase in end users looking to evaluate Business intelligence software. Business intelligence software is used in virtually every industry.
Consulting firms need to track employee productivity by project/company. Retailers need to track profitability by SKU. Financial institutions set new account goals for personal bankers.
In an effort to improve financial reporting, the Financial Accounting Standards Board (FASB) issued a new standard on lease accounting.
Each asset with a 12+ month lease term needs to be included on a balance sheet. This includes equipment, buildings, vehicles, and other assets your company leases.
The new standard went into effect for public companies for fiscal years & interim periods beginning after Dec 15, 2018, and for private companies for fiscal years beginning after Dec 15, 2019 and interim periods within fiscal years after Dec 15, 2020.
Read more on our lease accounting software guide.
Creating financial management reports with your data, using mobile apps, finding a new support vendor, or finding the cheapest cloud-based accounting option; everyone has their main motivation for finding a new solution.
The needs and motivations of many buyers will differ from project to project. While many types of buyers exist, most can fit into these common categories below.
New buyers will likely desire a basic solution that can easily and automatically manage their finances and help them pay bill. 37% of the companies we surveyed are buying accounting software for the first time. Many small business software buyers were looking for increased functionality over their current methods, which ranged from a manual bookkeeping method (pen and paper) to a popular starter solution such as Zoho Books or Sage 50c (Peachtree).
Over 20% of buyers said they need more software that handles payroll, inventory management, and invoicing. These features are common in enterprise business accounting software. A growing business also has more users in the system, which means vendor support may be needed more frequently if your staff isn’t trained properly.
Companies that require a healthy amount of users or manage multiple entities are more commonly shopping for small business ERP software that will include a full suite of functionalities to go along with their accounting.
More than 70% of larger businesses surveyed desired software that handles advanced budgeting and forecasting or a business intelligence (BI) package for better analytics and creating financial statements. Larger businesses also expressed a desire for fund accounting capabilities and a way to manage their procurement.
Maybe your business feels it doesn’t even need an accounting software system and can get by with outsourced accounting services from a local accountant or CPA. While the service offered by these professionals is usually of a higher quality, owning your own software in-house almost always leads demonstrates a higher ROI.
There are instances where the best option is an outsourcing service, and instances where having software will work better in the long-term. Figuring out which path to take depends on 3 critical angles:
Undoubtedly, QuickBooks is a massively popular product. While a product such as Intuit QuickBooks Online can serve many needs, it’s also the most commonly replaced accounting software on the market.
Our previously mentioned buyer trends survey found that 33% of upgraders are coming from QuickBooks.
We also conducted a study on over 4,000 previous users for their most popular Quickbooks replacement products. The Quickbooks alternatives will vary by industry, but these options were found to be the most common choices for companies to review:
What is your business isn’t trying to upgrade from QuickBooks? Perhaps you are just looking for an alternative small business acounting software that still provides ease of use and an affordable cost. With the amount of options available today, some businesses may dislike an accounting program simply due to the interface or a lack of a mobile app.
For those businesses, we recommending looking at comparable options that are popular in 2020 with great sign-up offers, such as: