Accounting software is a critical tool for businesses that want to track and report on finances with accurate, up-to-date data. Especially for small businesses, accounting software can make the difference between a good month and a great month. There are many tools that can handle your bookkeeping needs, and our comparison will help you narrow your search.
- Top small business accounting software comparison
- QuickBooks Online: Best accounting software for scalability
- Wave: Best value accounting software
- Xero: Best accounting software for integrations
- Zoho Books: Best accounting software for automation
- Sage Business Cloud Accounting: Best accounting software for larger teams
- FreshBooks: Best accounting software for small teams
- Who needs bookkeeping software?
- Why not use Excel?
- Accounting software considerations
- How to choose the right SMB accounting software
Top small business accounting software comparison
| Vendor | Quickbooks Online | Wave | Xero | Zoho Books | Sage Business Cloud Accounting | FreshBooks |
| Expense tracking | Yes | Yes | Yes | Yes | No | Yes |
| Payroll | No | Yes | No | No | No | No |
| Unlimited transactions | No | Yes | No | No | Yes | Yes |
| Unlimited users | No | Yes | Yes | No | Yes | No |
| Automated payment reminders | Yes | Yes | Yes | Yes | Yes | Yes |
| Mileage tracking | Yes | No | No | Yes | No | Yes |
| Time tracking | Yes | No | Yes | Yes | No | Yes |
| Recurring invoice automation | Yes | Yes | Yes | Yes | Yes | Yes |
| Inventory management | Yes | No | Yes | No | No | No |
Quickbooks Online: Best accounting software for scalability
Pros
Quickbooks Online is one of the biggest names in accounting software, and that might be because of how easy it is to scale as your business grows. The Simple Start option provides all the basic functionalities for new businesses or very small teams, and you can easily move to the Essentials, Plus, or Advanced editions to access more tools and customizations. Many users love how easy Quickbooks is to learn and that it integrates with a wide variety of third-party platforms.
Cons
Many customers are drawn to Quickbooks Online because of its low cost for the first three months, but this quickly changes once the introductory 50% discount disappears. It’s more expensive than most of the other vendors on this list, and many users have expressed distaste for its customer support and payroll management functionality.
Pricing
Quickbooks Online comes in four different editions:
- Simple Start: $25/month
- Essentials: $40/month
- Plus: $70/month
- Advanced: $150/month
Wave: Best value accounting software
Pros
One of the most appealing aspects of Wave’s accounting platform is that it’s free to use for basic needs. You can manage your cash flow, invoices, and receipts without adding accounting software to your list of expenses. Many users love the intuitive interface and are surprised at Wave’s reporting capabilities. Payment processing and payroll management functionalities cost extra, but it can integrate with other applications if you have solutions for these needs already.
Cons
Wave customers have often expressed disappointment with the lack of support resources available. You can find answers to simple questions in their community forum or documentation, but you can only reach out to their support team via email (or live chat if you pay for payment processing or payroll). Alternatively, you can pay more for personalized support with Wave Advisors, but the $149/month price tag negates the value of using a free accounting application.
Pricing
- Accounting/Invoicing/Receipts: Free
- Payments:
- Visa, Mastercard, Discover: 2.9% + $0.30
- American Express: 3.4% + $0.30
- ACH bank payments: 1% ($1 minimum)
- Payroll:
- Tax service states: $35 per month base fee + $6 per employee/contractor
- Self service states: $20 per month base fee + $6 per employee/contractor
Xero: Best accounting software for integrations
Pros
If you have several applications you use to run your business and you want to integrate them with your accounting system, Xero might be the right tool for you. What makes Xero stand out from its competitors is its app marketplace, which has thousands of popular third-party applications you can connect directly to the Xero platform. This means you can customize not only the dashboards, permissions, and reports you get in Xero but also the data and functionality you get from other systems you’re already using.
Cons
Some Xero downsides to consider are the lack of support options and mobile experience. If you run into a situation where you need help from the Xero team, your only options are how-to articles and email support. They do offer live webinars, but you’ll be disappointed if you want to contact them via phone or live chat. Additionally, some users have commented that the Xero mobile apps for Android and iOS are a bit clunky and frustrating to use, especially since expense tracking is only available in a completely separate app.
Pricing
Xero is available in three different editions:
- Early: $11/month
- Growing: $32/month
- Established: $62
Zoho Books: Best accounting software for automation
Pros
Zoho Books is an ideal solution if you’re looking for an accounting software that will save you time when it comes to bookkeeping. You can use Zoho Books to automate manual tasks like generating recurring invoices, reminding customers of outstanding payments, and categorizing transactions. Plus, Zoho Books is one tool within an entire ecosystem of Zoho applications, including CRM, CMS, and HR management. This means you’ll be able to streamline all of your business processes with applications that are guaranteed to integrate seamlessly.
Cons
One thing to be aware of when evaluating Zoho Books is that it has some limitations on the number of transactions you can process per month. If you anticipate needing to process more than 25,000 payments in a single year, you should look elsewhere for a solution that will be able to sustain a higher volume of transactions.
Pricing
Zoho Books is available in three different editions:
- Standard: $10/organization/month
- Professional: $20/organization/month
- Premium: $30/organization/month
Sage Business Cloud Accounting: Best accounting software for larger teams
Pros
One of the biggest benefits of the Sage Business Cloud Accounting platform is that it can accommodate an unlimited number of users and transactions. If you have a bigger team of users who regularly generate quotes and estimates, manage invoices, or need to access accounting software for other needs, Sage might be the right choice for you. Many users have noted that it’s extremely quick to set up and easy to use, and the Sage support team is on standby to help if you run into any issues.
Cons
There are some accounting features that are noticeably missing from Sage Business Cloud Accounting. You won’t be able to automate some tasks, like invoice generation or billing reminders. Plus, automated data entry with receipts and other documents requires an additional monthly fee. This could be frustrating if you want an accounting tool that will cover multiple bases for you.
Pricing
Sage Business Cloud Accounting is available in two different editions:
- Sage Accounting Start: $10/month
- Sage Accounting: $25/month (70% off for first 6 months)
FreshBooks: Best accounting software for small teams
Pros
FreshBooks is a great solution if you don’t need a lot of eyes on your accounting data. It’s an extremely versatile platform that lets you manage your invoices, estimates, time tracking, mileage tracking, client billing, and expense tracking from one place. You’ll have to pay an additional $10 per month for each user you want to add to your FreshBooks account, so it’s a better solution for freelancers, solopreneurs, or very small teams.
Cons
Despite the number of things FreshBooks can do, there are some tasks you’ll need to integrate a third-party application to accomplish. For example, FreshBooks doesn’t support inventory management or payroll service, but it does integrate with prominent tools like Shopify and Gusto that can do these tasks for you. If you want a do-it-all accounting solution, you’ll have better luck with an alternative like Quickbooks.
Pricing
FreshBooks is available in four different editions:
- Lite: $15/month
- Plus: $25/month
- Premium: $50/month
- Select: Contact sales
Who needs bookkeeping software?
All businesses need a way to keep track of their finances, so pretty much everyone needs some type of bookkeeping or accounting software. It’s not merely a “nice to have” tool you could do without, like a social media management platform or a project management software.
However, there are alternative solutions that might be more appropriate for very small businesses. If you don’t have the budget or manpower to run accounting software in-house, consider looking for a freelancer or managed service provider you can use to outsource your accounting needs.
Related: How Can SMBs Tap into the Gig Economy?
Why not use Excel?
Unless your spreadsheet skills are top notch, opting for Microsoft Excel or another spreadsheet program over dedicated accounting software might be a mistake. Spreadsheet software like Excel is extremely versatile, and it’s great for completing a number of tasks. However, this also means it’s easy to make an error with the formulas that could throw off the entire spreadsheet or workbook. Security is also a concern with using Excel spreadsheets for accounting tasks—none of the data is encrypted, so there’s a significant risk that your information could be leaked or stolen.
Accounting software, on the other hand, was purpose-built for accounting. This means you’ll be able to spend less time on configuring formulas and reports and more time focusing on your top priorities. It also means there’s less risk of user error, so you can feel confident that the information you have is accurate. Plus, accounting software has advanced features that aren’t possible to build with Excel, like invoice generation and integration with other business apps.
Related: 5 Excel Tools You Need Right Now
Accounting software considerations
When searching for accounting software, there are a few things that are important to keep in mind.
Features and integrations
Look for solutions that have specific features to meet your unique needs, like invoice generation/processing, inventory management, property management, or expense reimbursement. Or, if you already have systems that address these needs, look for tools that will easily integrate with third-party applications. This could include your POS system, HR software, CRM software, or supply chain management software.
Reporting
Financial planning is a huge component of running a successful business, so your accounting software should be able to generate reports that provide actionable insight. Basic reporting capabilities include profit and loss analysis, balance sheets, accounts payable and receivable, and payroll summaries. Some accounting software solutions also offer customizable reports, which enable you to filter the most relevant information you need and visualize the data in a way that makes sense to you.
Mobile access
Like most applications in the digital age, accounting software is only partially effective if you can’t access it when you’re away from your office. Some vendors recognize this fact and offer a consistent user experience between the mobile, desktop, and web apps, but others treat the mobile experience as an afterthought. When you’re comparing accounting software vendors, take a peek at their rating in your mobile device’s app store.
Security
Your business data is your most valuable asset, so it’s important that your accounting software has appropriate security measures in place to protect it. Multi-factor authentication, automatic backup/recovery, and encryption are critical to ensuring your data is safe. For bigger teams, it’s also important to be able to specify who has access to what information and what actions they’re allowed to take with it. Some users, for example, might only need access to invoices, so it wouldn’t make sense to grant them full admin access.
How to choose the right SMB accounting software
The search for accounting software might feel overwhelming, but you can start narrowing your search by evaluating our top picks for small businesses. Then, do some of your own digging to see which vendors are best suited to your needs. You can read reviews from customers who are similar to you or take the software for a test drive yourself with a free trial or live demo.
