Whether you are a freelancer or the owner of a small business, you know what it means to micromanage your finances. When you work on a small scale, keeping a close eye on your finances is an essential ingredient in the recipe for success.
The smaller your operation, the less likely you are to have an accountant on staff, and no matter how closely you track cash flow, things always get complicated when it comes to bookkeeping. Even the best business blogs that successful people read every day can’t tell you how to become your own accountant and clean up your books.
Some business accounting software options were created to remedy this issue for small businesses and freelancers with tight budgets. However, there are so many business accounting software options that it can be difficult to know where to start. To help you sort through the noise, we’ve done a bunch of research and created this list of the top 5 small business accounting software options.
Best Small Business Accounting Software
Even if you have the ability to hire a bookkeeper or an accountant to record your expenses, it’s still crucial to stay informed on your own, so you can track important metrics like your business’s Profit and Loss statement and accounts payable. What is the best accounting software to help you measure your goals and maintain a thriving business? Well, that depends on a few factors, such as:
- Business Size: Medium, small, sole proprietorship, freelancer, etc.
- Industry: IT, retail, food service, hospitality, etc.
- Business Structure: Non-profit, sole proprietorship, LLC, S-Corp, etc.
- Budget: Large, small, non-existent
The way these factors play out in your business defines the rules and regulations regarding bookkeeping and accounting that you have to abide by. While tracking your finances and keeping neat and organized records will make tax season a breeze, business accounting software can do so much more than that. Let’s explore each software and its pros, cons, and service plans.
FreshBooks is the best accounting software for sole proprietors and very small businesses that need a better invoicing solution. It was created for small client-service businesses. This software is exclusively for invoicing.
- Lite: Up to 5 billable clients, costs $108/year
- Plus: Up to 50 billable clients, costs $180/year
- Premium: Up to 500 billable clients, $350/year
- Select: Over 500 clients, custom pricing
- Excellent user experience
- Detailed client records
- Tools for team collaboration and time tracking
- Estimate and retainer functions
- Track inventory
- Proposal and project support
- Double-entry accounting
- iOS automatic mileage tracking
- Little to no setup assistance
- Dashboard leaves more to be desired
- Limited customization options
- Lesser mobile app experience
- No quarterly tax estimates
Intuit QuickBooks Online
The best accounting software for small businesses is Intuit QuickBooks Online. This full-service software offers in-depth services, and it’s designed to be flexible and seamlessly integrate new capabilities and functions.
- Simple Start: $12.50/month for basic functions
- Plus: $25/month, up to 5 users, additional add-ons
- Advanced: $75/month, up to 25 users, additional add-ons
- Self-Employed: $7.50/month, freelancer package
- Beautiful, simple interface and navigation
- Detailed contact records and transaction forms
- Profit projections
- Report customization
- Complete payroll support
- Add-ons and integrations supported
- Cash flow tracking
- Hybrid sales tax options
- High price tag
- Inaccurate auto-categorization
- Online support is lacking
- Lesser mobile app experience
Sage 50cloud is the best accounting software for inventory tracking. This software is a
desktop accounting application that’s integrated with Microsoft 265. It’s built to integrate financial tools and customization options, creating the comprehensive solution you’ve been searching for.
- Pro Accounting: single user, $567/year (add Microsoft 365 for $150/year)
- Premium Accounting: Up to 5 users, price ranges from $850/year to $1,947/year. Microsoft 365 can be added to any plan for $150.
- Sophisticated features
- Super customizable
- Detailed contact and item records
- Uniquely strong inventory management tools
- Support options
- Microsoft 365 integration
- Only compatible with Windows
- No dashboard
- Interface looks old and disorganized
- No time tracking
- A lot of links
- Mobile app is not comprehensive
Wave Accounting is the best accounting software for free invoicing. In fact, it’s completely free accounting software that actually works great and offers a lot of extras for small businesses.
- Accounting: $0
- Invoicing: $0
- Receipts: $0
- Pay-Per-Use Payments: CC processing for AmEx: 3.4% + $0.3, CC processing for all other cards: 2.9% + $0.3, bank payments: 1%
- Monthly Payroll: Tax service states: $35 monthly base fee + $6/active user + $6/independent contractor. Self service states: $20 monthly fee + $6/active user + $6/independent contractor.
- Free (except payments and payroll)
- Features for very small businesses
- Top-notch invoice and transaction management
- User-friendly interface and navigation
- Instant payouts
- Excellent support
- Simple record templates
- No time tracking
- No mobile app
- Can’t get receipts on Android
- Payroll features are lacking
Xero is the best accounting software for those who love integrated add-ons. This software has excellent account reconciliation and data imports. You can use it to track projects and sales and purchase transactions. It is designed for small businesses.
- Starter: $15/month, limited capabilities, optional add-ons
- Standard: $40/month, increased capabilities optional add-ons
- Premium: $52/month, unlimited capabilities optional add-ons
- Nice dashboard
- Good setup process
- Business views
- Interactive quotes and lists
- In-depth reconciliation tools
- Top-tier online support
- Track projects
- Integrates with Gusto payroll
- Minimal phone and chat support
- Unclear invoice form
- Not comprehensive mobile apps
- Expenses are in a different mobile app
- No reorder inventory level
Start Using Reliable Accounting Software
As a small business owner, you know that worrying about operations, employees, paying the bills, and revenue is more than enough for one person to handle. There’s just not enough time in the day for you to also track things like profitability and projected tax payments. However, those things are still critical and need to be recorded. If you can track profitability instead of just profit, you can pinpoint ways to improve your business. These small business accounting software options can be a huge help to your small business.