Small business owner putting out open sign.

The Best Accounting Software For Your Small Business

Dan Miller5-minute read
July 13, 2022

Are you thinking about starting a small business? No matter what field you’re looking to get into, there are a lot of considerations. What constitutes a small business can run a wide range of fields, sizes and complexities. One thing that almost all small businesses have in common is that there is work being done in some manner in exchange for pay. Bookkeeping and invoicing are common terms used to describe this exchange of money for goods or services.

Automation For Your Small Business Bookkeeping

One of our best tips for starting a small business is for owners to try and automate as much as possible. You’ll want to stay focused on the core idea of your business. Simplifying your bookkeeping, invoicing and accounting by getting the right software is a smart way to let you focus on making more money. You’ll also want to make sure that you’re in good financial health by budgeting a small business emergency fund to help with your ongoing cash flow.

Do I Need Accounting Software For My Small Business?

If you’ve recently started a small business, you might be wondering if you need accounting software. Unfortunately, there is not a single straightforward answer that’s applicable and correct for all types of small businesses. If you’re self-employed or a single freelancer who is providing a service to a small number of clients, then you may not need anything more than a simple spreadsheet. This is especially true if you are comfortable with financial reports and bookkeeping.

On the other hand, as your situation starts to get more complicated, it may make more sense to streamline your finances through automation and by getting accounting software for your small business. Here are some indicators that small business accounting software may be a good fit:

  • You have multiple employees or are looking for payroll services, something to track time or expenses

  • You sell items and are responsible for collecting and remitting sales tax

  • You frequently pay for things or do online payments or payment processing via credit card or PayPal

  • You find that you are frequently tracking down invoices from companies or accounts payable/accounts receivable

  • You need to track inventory

  • Your CPA advised you to get accounting software

  • You know you struggle with and/or don’t enjoy math, accounting or financial reports

 

If any of these sound like your small business, it may be time to invest in some accounting software.

How To Choose The Right Accounting Software For Your Business

Choosing the right accounting tools for your business depends on what type of functionality is most important for your business. There are many different kinds of small business accounting software programs, and each one offers slightly different functionality at a different cost. Most accounting systems offer a certain amount of base functionality. This includes things like data entry, payment reminders, the ability to connect to your bank accounts, import bank transactions and perform basic bank reconciliation.

Take a look at the functionality that you need, and find one that fits your business needs and budget. Your CPA or bookkeeper can also be a good resource — they may prefer a particular piece of software and may have coupons or a special pricing deal.

Free Accounting Software For Small Businesses

Most accounting and bookkeeping software programs charge a monthly fee for use. However, there are a few that are free.

Wave

Wave offers much of the functionality, customization and ease of use of more expensive accounting software for no upfront or monthly cost. Wave allows you to do invoices, double-entry accounting and have an unlimited number of users, all for no charge. Wave also supports multiple businesses under the same account – so if you’re an Amazon seller who also drives for Uber, you can keep the income and expenses for each business separate.

Zipbooks

Zipbooks is another free accounting software program. Like Wave, Zipbooks does not charge anything for an unlimited amount of invoicing, payments or clients. If you find you need a little bit more, you can upgrade to Zipbooks’ paid plan starting at $15/month.

Paid Accounting Software For Your Small Businesses

The accounting and bookkeeping software in this section all have an upfront and/or monthly charge. Many of them offer free limited-time trials, and generally have multiple pricing tiers. So if you only need a small amount of functionality or limited customer support, you may prefer the Lite version, while growing businesses may need a Standard or Extra plan that comes with desired add-ons.

Freshbooks

Freshbooks has a 30-day free trial and then plans start at $15/month. Freshbooks has a user-friendly interface and allows an unlimited number of invoices as well as time tracking and expense tracking. One con of Freshbooks is that it does not have unlimited users – adding another user costs an additional $10/month. Integration with Gusto payroll is included in most plans.

Intuit Quickbooks Online

Quickbooks Online from Intuit is one of the original names in small business accounting software. Intuit Quickbooks has moved away from standalone software programs and towards Quickbooks Online, a more real-time cloud accounting solution available anywhere. Quickbooks Online is used by many CPAs and has a comprehensive suite of advanced features as well as a mobile app for both iOS and Android. The basic plan starts at $25/month, and you can choose either a 30-day free trial or 50% off your first 3 months.

Xero

Xero is another small-business accounting solution that offers unlimited users. Xero has three different plans, starting at $9/month, with a 30-day free trial. Integration with Gusto payroll, Stripe and GoCardless is also available with Xero. The $9 “Early” plan does limit you to 20 invoices and quotes and five bills per month. Xero’s “Established” plan also offers multi-currency support.

Zoho Books

Zoho Books has three different pricing tiers, starting at $9/month after a 14-day free trial. Zoho does not offer unlimited users – instead each plan comes with a certain number of users and additional users cost $2/month or $20/year. Zoho also has a suite of related tools that all integrate with each other. So you can start with Zoho Books for CRM, accounting and project management and then add Zoho Inventory which allows you to track inventory with their inventory management and tracking tools.

Sage

Sage has two different tiers – Accounting Start, which costs $10/month and Accounting, which costs $25/month. The lite version comes with a 30-day trial while the standard Accounting plan currently offers your first 6 months free. Sage’s user interface allows you to create invoices, and also syncs with your bank account, providing a real-time insight into your business finances.

Kashoo

Kashoo bills itself as “the world’s simplest accounting software.” After the 14-day free trial, plans start at $16.65/month. Kashoo comes with a mobile app for iOS and Android, or you can use it via a browser on Mac, Windows or other operating systems. Since Kashoo’s strength is its simplicity, it’s not as great of an option for small businesses that need inventory tracking or to track time.

Final Thoughts

Small-business owners are responsible for virtually everything from marketing and sales to bookkeeping and accounting. Set yourself up for success by automating the process with some of the best accounting software around.

Dan Miller

Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free/cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids.