A Guide to Small Business Accounting Software

By Pam Baker | Posted November 11, 2010

Small Business Accounting Software or Invoicing and Expense Software

Updated on 5/01/2012

Editor's Note: Back in 2010 when we first posted this article, it offered great information on small business accounting software. But if you’re looking for the best picks and the latest information for 2012, be sure to read The Ultimate Small Business Accounting Software Guide.

The impulse to buy small business accounting software and just run with it can be tempting. Leading brands such as QuickBooks and Peachtree leap to mind followed by a quick price evaluation. Pick, click and done, right? While this approach is very common it is also commonly wrong. Why? Because you end up buying the tool before you properly define the job.


The best plan is to make a list of all the tasks you need small business accounting software to do. This is the list by which you will judge all small business accounting software packages. Your top consideration should be whether you need a full accounting program that can do everything or a lighter-weight invoicing/expense program that simply helps you to stay on top of your cash flow. You can give your accountant data from either type of program for tax filing purposes, and many of these software programs let you import the data into one or more tax preparation programs.

GNUCash; small business accounting software
GNUCash is a free, open-source accounting program with a Plain Jane interface, but it's chock-full of in-depth accounting functions and features.
(Click for larger image)
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The choice is really more about the details you want to see in your daily operations. Want to know how your business and your investments are doing? Go for the full accounting programs. Want to know who owes you money, who is in arrears and whether you’re on budget? Then go for one of the lighter programs. This guide includes both types of accounting software to fit a variety of needs.

There are the obvious needs common to all small businesses: payables, receivables, expenses, and tax reporting. You may also need inventory, CRM, business intelligence, and sales projections, for example, depending on what type of business you run. Whatever it is you need, put it on the list. If you are unsure what you need, ask your accountant or consult with a business expert at a local university or with a reputable organization such as SCORE.

Now that you know what features you need, all you have to do is compare the products to your list. This will allow you to narrow product choices to those that can do what you actually need. Next, compare those software choices based on their security features, ease-of-use and price. The descriptions and chart (at the bottom of page 2) will help you sort your choices.

Free Accounting Software for Small Business

BizFusion

This free online small business accounting system consists of nine modules all on a single interface that resembles Microsoft Outlook 2007. BizFusion also offers a mini-mode option that pushes menu items to a menu bar and makes screen space available for more data; this option is ideal for smaller screens such is found on laptops and netbooks.

The system focuses on inventory, project and asset management with a full small business accounting solution built-in. the provides a more complete business picture (including an analysis of your competitors) in a single system. BizFusion's easy enough for beginners but comprehensive enough to satisfy people with more advanced skills.

Outright; small business accounting software
Outright automatically pulls information from your checking accounts, credit cards and scanned receipts and presents clear reporting charts so you can see where you stand at a glance.
(Click for larger image)
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FreshBooks

While not a true accounting system, FreshBooks is a good fit for service companies that are primarily interested in an invoicing application with expense and time tracking. There is a free version, but it's extremely limited in terms of the number of users and customer accounts. You can, however, upgrade the free version to add users or customer accounts -- or both -- starting at $10 per upgrade unit.

The system will mail invoices for you at roughly $1.79 per invoice, which covers printing, mailing and enclosing a return envelope. FreshBooks works with several online payment services too, including PayPal.

GNUCash

This open source freeware is a double-entry bookkeeping system with a boring-but-familiar user-interface that closely resembles many online banking interfaces. GNUCash is easy to use immediately if you are familiar with accounting terms. If you are not familiar with accounting terms, be sure to view the tutorial first to avoid confusion on where to enter what figures.

The small business accounting software includes an installation wizard, which helps to simplify that particular task. GNUCash is an ongoing project, and it updates frequently. However, new updates are labeled "unstable," which merely means they are in beta and may or may not work well at the moment. For this reason, most people should avoid installing updates until the update label changes from unstable to stable.

Reconciling checking accounts, tracking investments, viewing spending reports and other functions are easy to use and understand. The large open source user community is also helpful in resolving problems. Overall, GNUCash is a better choice for people who understand accounting basics and are tech savvy enough to get the most out of open source's customization capabilities.



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