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Top 5 Best Accounting Software for Small Businesses


Accounting software has become an essential tool for small businesses to manage their finances efficiently, offering automated features such as invoicing, expense tracking, financial reporting, and integration with other business tools. But which one is best for your needs?

What is accounting software?

Accounting software refers to tools used by businesses to manage their financial transactions, generate reports, and automate manual accounting tasks. Their purpose is to streamline and simplify financial management processes, allowing businesses to stay organized, compliant, and informed about their financial health.

For small businesses, accounting software offers a range of key features and benefits. They allow for easy tracking of income and expenses, helping businesses to keep a close eye on their cash flow. Many accounting software also provides bank connections, allowing for seamless integrations with business bank accounts, as well as reconciliation tools to ensure that all transactions are accurately recorded.

Moreover, accounting software often integrate with other business software, such as point of sale systems, inventory managements, and customer relationship management tools, providing a comprehensive view of the business’ financial data and operations. These features help small businesses to save time, reduce errors, and make more informed financial decisions.

Do I need accounting software?

Accounting software can greatly benefit your business by automating repetitive processes, such as invoicing, payroll, and expense tracking. This automation can save valuable time for your staff and reduce the possibility of human error.

Additionally, accounting software can generate timely and accurate financial reports, providing clear insights into your business’s financial health. With the ability to organize and categorize financial records, the software makes it easy to track expenses, monitor cash flow, and prepare tax filings. This organization not only saves time but also helps ensure compliance with financial regulations.

By reducing errors and streamlining day-to-day financial tasks, accounting software can improve overall business efficiency. Errors in financial calculations and reporting can be costly and time-consuming to rectify. Automation and organization provided by the software can free up your time, allowing you and your staff to focus on strategic business decisions and growth opportunities.

Alternatively, if your team has the budget, hiring a full-service accounting firm can be a better choice in the long run. Accounting firms can provide personalized support that can save your company more money and provide valuable insights into your business.

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How to choose accounting software

There are many accounting software options available, and choosing the right one can be a daunting task. Whether you are a small business owner, a freelancer, or a large corporation, finding the right accounting software is crucial to the smooth operation of your business. It’s important to consider factors such as the size and complexity of your business, your budget, and the specific features you need. In this guide, we will discuss several important factors to consider when choosing accounting software and provide tips to help you make the best decision for your business.

QuickBooks Online

Best option for large businesses

QuickBooks Online offers a range of key features including automated bookkeeping, inventory tracking, customizable invoices, and financial reporting. The software is available in four pricing options: Simple Start for $25 per month, Essentials for $50 per month, Plus for $80 per month, and Advanced for $180 per month. Each plan offers different features and supports a different number of users.

Subscribers have access to online training resources such as tutorials and webinars, as well as community forums for peer support and advice. QuickBooks also provides a mobile app, allowing users to manage their finances, track expenses, and send invoices on the go.

The Simple Start plan is ideal for solopreneurs, while the Advanced plan is suitable for larger businesses with multiple users and complex reporting needs. With a QuickBooks Online subscription, users can access a variety of features tailored to their business needs, as well as resources for learning and support, and the convenience of a mobile app for managing finances from anywhere.


Best option for small businesses

Xero is an ideal accounting software for micro-business owners due to its user-friendly interface and affordable subscription options. With plans starting at just $9 per month, micro-business owners can access key features such as invoicing, bank reconciliation, and expense tracking. Xero’s cloud-based platform allows for easy access from anywhere, making it suitable for on-the-go entrepreneurs.

While the basic plan has limitations on the number of invoices and bills that can be processed, the benefits of upgrading to higher-tier plans include unlimited invoicing and multi-currency support. Additionally, Xero’s robust third-party app marketplace allows for seamless integration with payroll software and other business tools.

The Xero mobile app also allows micro-business owners to manage their finances on the go, while payroll integration streamlines the process of paying employees. Xero’s intuitive interface, affordable subscription options, and integration capabilities make it a top choice for micro-business owners looking for a comprehensive accounting solution that can scale with their business over time.

Zoho Books

Best option for existing Zoho users

Zoho Books is a cloud-based accounting software designed for small businesses. With pricing options starting at $9 per organization per month, it offers affordability for businesses of any size. Its mobile functionality allows users to manage their accounting on the go, with a dedicated mobile app for both iOS and Android devices.

One of the key features of Zoho Books is its ability to integrate seamlessly with other Zoho applications, allowing for a complete business management solution. The software also provides automated processes and tools for invoicing, expense tracking, and inventory management, saving time and effort for users. If your business already uses other Zoho applications, Zoho Books might be a good option for you.

Zoho Books offers an affordable and mobile accounting solution with integration capabilities, making it a suitable choice for small businesses and freelancers looking for efficient accounting software.


Best option for service-based businesses

FreshBooks is a great choice for service-based businesses due to its key features designed to streamline operations and improve client interactions. With FreshBooks, users can easily create professional-looking proposals, track time on projects, and receive payments seamlessly. This makes it a valuable tool for service-oriented businesses looking to manage their operations efficiently.

FreshBooks offers different pricing plans to suit businesses of all sizes, with client limitations ranging from 5 to 500. The Select plan offers additional features such as advanced payments, dedicated account manager, and customized training, making it ideal for larger enterprises.

The platform also offers a wide range of third-party app integrations, allowing users to connect their other business tools for a seamless workflow. This makes it easy to sync data and improve overall productivity. FreshBooks also offers unique invoicing features such as payment reminders, late fees, and recurring invoices, making it stand out from other accounting software.

Overall, FreshBooks is an ideal choice for service-based businesses looking to streamline their processes, manage client interactions, and improve overall efficiency.


Best option for growing businesses

Wave accounting software offers free accounting and invoicing for small businesses. The free features include unlimited income and expense tracking, customizable invoices, and financial reports. For additional functionality, Wave offers paid features such as payment processing and full-service payroll, which are priced competitively.

However, there are limitations and fees associated with certain features. Credit card payments carry a fee of 2.9% + 30¢ per transaction, while receipt scanning incurs a fee of $2.99 per month. Full-service payroll is available at a monthly cost, with fees based on the number of employees.

Founded in 2009, Wave was acquired by H&R Block in 2019. Despite being part of a larger company, Wave still operates independently and continues to provide accounting services to over 4 million users worldwide. The company currently has around 250 employees, focused on delivering affordable and user-friendly accounting solutions.

Pick a solution that will grow with you.

When evaluating if a software solution will grow with your business, it’s essential to consider the pricing model and scalability.

QuickBooks Online, Xero, Zoho Books, FreshBooks, and Wave accounting are all amongst popular options for small businesses. However, when inquiring about a software solution, ask sales representatives about how their product grows with clients. Inquire about any existing clients who have scaled their business while using the software. Find out if the software has features and functionalities specifically designed to accommodate growing businesses.

Additionally, ask about any potential limitations or additional costs associated with scaling up. By understanding the pricing model and scalability of the software, as well as gathering insights from the sales rep, you can ensure that you pick a solution that will grow with your business.

One way to ensure your accounting will scale with your needs is to hire an accounting firm. Dedicated firms provide a more personal service that can have a tangible impact on your finances over time.

Confused about the options and looking for guidance? Schedule a free consultation with us today to receive expert advice and make the best decision for your business.