Accounting software helps small business owners keep track of their accounts receivable and payable, understand how profitable their business is, and get ready for tax time. Small businesses can often use accounting software right out of the box, without having to make many changes. But as a business grows, its accounting needs may get more complicated, and it may need a custom enterprise resource planning (ERP) system.
The best one for your business will often depend on its features, price, and how well it fits your industry. Here are our top choices for the best accounting software for small businesses, based on our research and comparison of 19 options.
Best Accounting Software for Small Business of 2023
- Best Overall: QuickBooks Online
- Best for Micro-Business Owners: Xero
- Best for Service-Based Businesses: FreshBooks
- Best for Part-Time Freelancers: QuickBooks Self-Employed
- Best Free Software: Wave
Best Overall QuickBooks Online
Most accounting professionals who work with small businesses use QuickBooks Online. There are also a lot of online training resources and forums where you can get help if you need it. All accounting features can be easily accessed from a single main dashboard. This makes keeping the books easier and faster.
Pros & Cons
Pros
- Scalable
- Commonly used by accounting professionals
- Integration with third-party applications
- Cloud-based
- Has mobile app
Cons
- More users need to upgrade.
- Banks and credit cards sometimes have trouble syncing.
Overview
QuickBooks Online from Intuit has been one of the most popular accounting programs for small businesses and their accountants and bookkeepers. You can use a web browser or a mobile app to get to the software in the cloud.
After the 30-day free trial, there are four monthly subscription plans: Simple Start ($25 per month), Essentials ($50), Plus ($80), and Advanced ($180). Most of the time, the first few months come with a big discount.
As a business grows, the monthly fee for this software can be raised. The mobile app also has a lot of customization options that can be used to get paid, look at reports, take a picture of a receipt, and keep track of business mileage. QuickBooks Payroll is a payroll solution for businesses that want to use QuickBooks Online.
Each plan has more advanced features, such as managing inventory, keeping track of time, adding more users, and tracking cash flow. Most small businesses that offer services will find that Simple Start is all they need. Essentials or Plus will have more inventory and customization options for product-based small businesses.
The Advanced subscription is a new service that gives detailed financial reports powered by Fathom, a popular online tool that many large companies around the world use to analyze financial reports. All plans let you connect Stripe or PayPal or other third-party apps. The QuickBooks Online app store groups all of its apps by what they do and gives examples of how each one can help.
Best for Micro Business Owners Xero
This software has a clean interface and works well with a payroll service from a third party. By integrating with Stripe and GoCardless, Xero makes it possible for businesses to get payments from customers online.
Pros & Cons
Pros
- Cloud-based
- Has mobile app
- Payroll integration with Gusto
- Third-party app marketplace
- Simple inventory management
Cons
- Limited reporting
- Fees charged for ACH payments
- Limited customer service
Overview
Xero was started in New Zealand in 2006, and it now has more than 3 million users all over the world. People in New Zealand, Australia, and the UK use this accounting software a lot. Over 4,000 people work for Xero, and the company is also growing quickly in the U.S.
Xero has three options for monthly subscriptions and an add-on for full-service payroll: Starting out costs $12 per month, growing costs $34 per month, and being well-known costs $65 per month. Gusto has an option for full-service payroll that costs an extra $39 per month plus $6 per employee. The company gives a free trial for 30 days.
The Early plan has a limit on how much you can use it, and you can only enter 20 invoices or quotes and 5 bills per month. This limited plan might work for a small business that only does a few high-ticket transactions per month, like a consulting firm or small service provider.
Both the Growing and the Established plans let you send as many invoices and bills as you want. The only difference between the two plans is that the Established plan has extra features like managing expenses and figuring out how much a project will cost. Hubdoc, a way to scan bills and receipts, is included in all three plans.
Best for Service-Based Business FreshBooks
When it comes to billing, FreshBooks has more options than other accounting software. Its main job is to send, receive, print, and pay invoices, but it can also help with basic bookkeeping tasks for a business. This accounting software makes it easier for service-based businesses to send proposals, track the time they spend on projects, and get paid.
Pros & Cons
Pros
- Cloud-based
- User-friendly interface
- Third-party app integration
- Affordable
- Advanced invoicing features
Cons
- The mobile app has limitations
- Must pay annually to get a discount
Overview
FreshBooks was started in 2003 in Toronto as just a way to send invoices. FreshBooks has added more features over time, and as of 2023, it has more than 30 million users. There are four different plans, and if a business pays yearly instead of monthly, it can save 10%. FreshBooks also often give discounts for the first few months you use it.
There are four plans: Lite, which costs $17 per month or $183.60 per year, Plus, which costs $30 per month or $324 per year, Premium, which costs $55 per month or $594 per year, and Select, which is a custom service with custom pricing. Without any discounts, these are the prices.
The biggest difference between the four plans is how many clients can be billed each month. In the Lite plan, you can bill up to five clients per month. With the Plus plan, you can bill up to 50 clients per month. In the Premium plan, you can bill as many clients as you want each month.
The Select plan also doesn’t limit how many clients can be billed per month, but it does add some extra features. Multiple team members using the accounting software costs an extra $10 per month, and the advanced payment feature, which lets users charge a client’s credit card in real-time or set up recurring charges, costs an extra $20 per month.
There are many ways to connect third-party apps, such as Gusto, G Suite, and more. One unique thing about FreshBooks is that invoices can be styled and changed in many ways to look and feel professional. FreshBooks is a great tool for making project budgets, sending estimates or proposals, and getting paid by customers.
Best for Part-Time Freelancers Quickbooks Self Employed
This is our top pick for part-time freelancers and independent contractors whose main goal is to track their income and expenses for their tax returns. It is made for business owners who file a Schedule C on their individual tax returns. It adds up all business transactions automatically.
Pros & Cons
Pros
- Cloud-based
- Mobile app available
- Tracks mileage
- Differentiates between business and personal expenses
- Syncs with TurboTax
Cons
- Data cannot be easily transferred to other accounting software
- Limited reporting
Overview
QuickBooks Self-Employed is a product made by Intuit. It has an online interface that is based on the cloud and a mobile app. This software was made to help freelancers get ready for tax time every year. With QuickBooks Self-Employed, you can track your mileage, sort your expenses, organize your receipts, estimate your taxes, and file them all at once through TurboTax.
The Self-Employed plan costs $15 per month, the Self-Employed Tax Bundle costs $25 per month, and the Self-Employed Live Tax Bundle costs $35 per month. For the first three months, you can save 50%. In both of the tax bundles, you get a TurboTax subscription to help you file your income taxes.
With the Self-Employed Live Tax Bundle, you also have access to a CPA who can answer your questions all year long and during tax season. The CPA will also look over your TurboTax tax return one last time before you send it in.
The mobile app makes it easy to track mileage while driving and take photos of receipts for business expenses. Most accounting software isn’t made to tell the difference between business and personal transactions. However, QuickBooks Self-Employed has a special feature that lets you mark each transaction as business or personal. This is helpful for freelancers who don’t have a separate business bank account.
Best Free Software Wave
Wave is the best accounting software for a small service-based business that sends simple invoices and doesn’t need to do payroll. At the end of the year, accountants can pull the reports they need from Wave to prepare the tax return for a business.
Pros & Cons
Pros
- Free accounting, invoicing, and receipt scanning
- No transaction or billing limits
- Run multiple businesses in one account
- Unlimited number of users
- Mobile app available
Cons
- Integrations only through Zapier
- Higher fees for credit cards and ACH payments
- Full-service payroll is limited to only 14 states
overview
Wave started in 2010 and has its headquarters in Toronto. After nine years, it was bought by H&R Block, which now has more than 250 employees. This free accounting software has the basic features that most small businesses need, like tracking income and expenses, making financial reports, sending out invoices, and scanning receipts. You can use the website or the mobile app to get to these features.
Payroll and processing payments from customers are considered premium services that cost more, but bookkeeping, billing, and reporting are all free.
Wave’s payment gateway is how it makes money. Wave charges 2.9% plus 60 per transaction for Visa, Mastercard, and Discover and 3.4% plus 60 per transaction for American Express to process a customer’s payment. These fees are a little bit higher than those for other accounting software. Wave also charges 1% per transaction and a minimum of $1 to process ACH payments instead of credit card payments.
Wave has two payroll plans that can be used as an extra service. The first plan costs $20 per month plus $6 per employee or contractor. In this plan, Wave will handle payroll and figure out payroll taxes, but the user will have to fill out payroll tax forms and send in tax payments by hand. The second plan costs $35 per month plus $6 per employee or contractor. In this plan, payroll is full-service, which means that Wave takes care of all tax filings and payments. You can only get it in 14 states.
Final Verdict
QuickBooks Online was the best on our list because it can grow with your business, it has training tools, and it has a mobile app. If QuickBooks isn’t the right choice for your small business, you’re sure to find a good fit with one of our other options, like FreshBooks, Wave, or QuickBooks Self-Employed.
Compare Best Accounting Software for Small Businesses
| Company | Price | Integrations | Cloud-Based | Mobile App |
| QuickBooks OnlineBest Overall | $25 (monthly) and up | Yes; multiple | Yes | Yes |
| XeroBest for Micro-Business Owners | $12 (monthly) and up | Yes | Yes | Yes |
| FreshBooksBest for Service-Based Businesses | $17 (monthly) and up | Yes | Yes | Yes; limitations |
| QuickBooks Self-EmployedBest for Part-Time Freelancers | $15 (monthly) and up | Yes | Yes | Yes |
| WaveBest Free Software | Free | Limited | Yes | Yes |
The Best Accounting Software for Small Businesses: A Buyer’s Guide
By letting users link their business bank accounts and credit cards to the software, accounting software cuts down on the time needed to enter data. Once transactions are synced, they will flow into the accounting software and can be put into different accounts. Even though most accounting software is easy to use, you still need to know the basics of accounting to make sure that financial reports are correct.
Because of this, many businesses hire bookkeepers or accountants to keep track of their books or look over them. Online accounting software that is based in the cloud makes it easy for businesses and their bookkeepers or accountants to access their books at the same time.
Also, a lot of accounting software lets you integrate third-party apps. For example, if a business owner uses a point of sale (POS) system to track sales, the POS system could connect with the accounting software to record specific transactions, sales tax liabilities, sales by subcategory, and more. In a service-based business, a time-tracking app could connect to the accounting software so that labor could be added to a client’s bill.
Even though the more advanced plans let businesses track inventory, make more customized financial reports, run payroll, and choose from more invoicing options, most accounting software for small businesses comes with the following basic functions:
- Invoicing
- Bank and credit card synchronization
- Accounts receivable
- Accounts payable
- Customer payment collection online
- Preparation of basic financial statements, such as profit and loss statements, balance sheets, and cash flow statements
- Accountants and tax professionals have access to the system.
Frequently Asked Questions
How Much Does Small Business Accounting Software Cost?
Accounting software for small businesses costs anywhere from $0 to $150 or more per month. Basic plans cost between $0 and $40 a month and are a good place to start. With a basic plan, a small business will be able to group income and expenses into categories, send invoices, and make financial reports. Most software is scalable, which means that as a business grows, it can be easily upgraded to meet new needs, but it will cost more than a basic package.
Which accounting program is the easiest to use?
Wave is the easiest program to use for businesses that don’t need to do payroll. It lets businesses that provide services send simple invoices and pull reports that can be used to make an annual tax return. Wave is also free and has no limits on the number of transactions or bills you can pay. If you want to add payroll services, it costs $20 per month plus $6 per employee.
Is QuickBooks for small businesses a good investment?
Yes, QuickBooks is helpful for many small businesses, especially because it can be expanded. So, it can grow as your business does. It can also work with apps from other companies. Also, QuickBooks lets you try it for free for 30 days so you can see if it meets the needs of your business.
What Accounting Method is Best for a Small Business?
How a small business decides what kind of accounting software to use depends on a number of things. A freelancer or part-time consultant might need something simple or free, while a business that is growing might choose software that is easy to update. QuickBooks is a popular choice because the company makes a wide range of products.
Methodology
Before deciding on our top five software options, we looked at 19 companies that make accounting software for small businesses. We looked at price, ability to grow, ease of use, reputation, and accounting tools.
Reputation was a big factor because the longer a company has been in business, the more likely it is that any technical problems have been fixed. This makes sure that a company’s important financial information is reported correctly. Scalability was the next most important thing to think about, because as a company grows, so do its accounting needs, and it can be hard to move financial information to new software.
Lastly, we thought about how easy it would be for business owners, employees, and accountants to work together since it’s important for everyone to be able to look at the financials at the same time.
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