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Best Accounting Software for Small Businesses

May 2024

The best small business accounting software makes it quick and easy to manage your business finances and keep a clear record of profit and loss.  While there are standalone options for invoicing software and tax software for small businesses, you'll generally find that dedicated accounting platforms will be more comprehensive.

Our Top Choice

Plus500

$15 3 months, then $30 /mo

Quick Books - Best Accounting software overall

Excellent inventory management, time tracking

Supports projects, payroll, and many add-ons

Great mobile apps

Numerous customizable reports

#1

MOST POPULAR

Best ACCOUNTING SOFTWARE 2024

Read more

EXCELLENT

REVIEW

5.0

05/2024

Why Every Small and Medium Sized Business Should Use Accounting Software

Firstly,as business owner, you need to manage your accounting, pay taxes, and submit financial reports. Given the demands of growing a business, many owners find little time to focus on these tasks. Accounting software becomes an essential tool, simplifying and streamlining your obligations to financial authorities.


For small business owners, the past three years have been exceptionally challenging. You navigated the peak of the COVID-19 pandemic, only to face severe supply chain disruptions. The inflation surge in 2022 only added to your financial strain. With a closer eye on your finances than ever, small business accounting software is critical for making informed decisions and planning for an unpredictable future by organizing and automating your day-to-day financial activities.

We evaluate and rank the best accounting apps for small businesses based on user-friendliness, functionality, and cost. Some apps are ideal for sole proprietors, freelancers, and very small teams. Others are suited for larger or expanding enterprises. Here are the top eight small business accounting software options, along with details on what sets each apart.

The Results

Plus500

$15 3 months, then $30 /mo

Quick Books - Best Accounting software overall

Excellent inventory management, time tracking

Supports projects, payroll, and many add-ons

Great mobile apps

Numerous customizable reports

#1

MOST POPULAR

Best ACCOUNTING SOFTWARE 2024

Read more

EXCELLENT

REVIEW

5.0

05/2024

Read more

QuickBooks Solopreneur - Best for Solo Freelancers

Easily separates personal and business expenses

integrates with Intuit tax apps

GOOD

REVIEW

4.9

05/2024

$20 monthly (first 3 month 50%)

Read more

FreshBooks - Best for ease of use

Rich invoicing and proposal tools

Reporting features not available in mobile app

GOOD

REVIEW

4.6

05/2024

Starting from $17 per month

Read more

Zoho Books - Best free version

Free tier and free trial

Lack of payroll

GOOD

REVIEW

4.3

05/2024

Starting from $10 per month

Read more

Xero - Best for advanced features

Quotes and invoices, bank reconciliation

Mobile App

GOOD

REVIEW

4.2

05/2024

Starting from $15 per month

How to Select the Right Accounting Software for Your Business

Choosing the ideal accounting software for your business involves considering several key factors such as cost, features, software type, and your specific business needs.



Different Types of Accounting Software

  1. Cloud-based accounting software: This is hosted on the vendor's servers and accessed online, generally more affordable and accessible from anywhere compared to on-premises software.

  2. On-premises accounting software: Installed directly on your company's servers, this option tends to be more costly and complex to maintain than cloud-based systems.

  3. Enterprise accounting software: Designed for large companies with sophisticated accounting needs, offering extensive features and customization at a higher price point.

  4. Small business accounting software: Tailored for simpler accounting needs, this software is less expensive and has fewer features, making it ideal for small enterprises.

  5. Open source accounting software: While free and highly customizable, these systems may require more technical skill to set up and manage.

  6. ERP accounting software: Integrates with other business systems like CRM and e-commerce platforms, usually more costly and complex to implement.

  7. Commercial accounting software: Available for various business sizes and can be cloud-based or on-premises.

  8. Industry-specific accounting software: Customized for particular sectors like construction or retail, offering specialized features relevant to those industries.



Key Features to Look For

  • Accounting: Handles tasks like managing invoices, tracking expenses and revenues, and preparing financial statements.

  • Billing and invoicing: Facilitates issuing invoices, tracking payments, and managing customer data.

  • Inventory management: Monitors inventory levels, estimates costs, and manages purchase orders.

  • Payroll: Some software offers payroll processing, including tracking employee hours and calculating taxes.

  • Project management: Helps in budgeting, task assignment, and progress tracking of projects.

  • Reporting: Generates financial reports, tracks business performance, and customizes reports.

  • Customer Relationship Management (CRM): Manages customer interactions, tracks contact information, and sales opportunities.



Challenges and Limitations

  • Cost: Can be expensive, particularly for complex needs.

  • Implementation: Setting up and learning new software takes time and effort.

  • Integration: May require linking with other systems like CRM or e-commerce platforms.

  • Support: Some software might be complex, needing expert assistance for troubleshooting.

  • Security: Important to choose software with robust security features due to sensitive data.

  • Customization: Not all software offers the desired level of customization.

  • Scalability: As your business grows, you might need a more sophisticated system.

  • Data entry: Manual data entry is time-consuming and error-prone.

  • Reporting: Complex data can make report generation challenging.

  • Training: Employees may need training to effectively use the software.

Despite these potential challenges, accounting software remains a crucial asset for any business, streamlining operations and providing vital insights. When selecting software, compare different options based on your business needs to find the best fit.

What Is the Best Accounting Software for Small Businesses?

With more than 7 million users, QuickBooks is the go-to tool for SMBs to manage their finances

Plus500

$15 3 months, then $30 /mo

Quick Books - Best Accounting software overall

Excellent inventory management, time tracking

Supports projects, payroll, and many add-ons

Great mobile apps

Numerous customizable reports

#1

MOST POPULAR

Best ACCOUNTING SOFTWARE 2024

Read more

EXCELLENT

REVIEW

5.0

05/2024

Bottom Line

QuickBooks Online leads our rankings due to its scalability, extensive training resources, and robust mobile app. However, Xero might be a more cost-effective choice for micro-businesses, while QuickBooks Solopreneur is ideal for self-employed professionals who need to separate personal and business expenses. For service-based businesses that prioritize top-notch invoicing capabilities and customization, FreshBooks is the optimal choice. Meanwhile, if you're in search of a free solution for your business's invoicing and accounting requirements, Wave stands out as a solid choice.

FAQ

What are the benefits of using accounting software for SMBs?Accounting software can greatly simplify financial management for small and medium-sized businesses by automating tasks such as invoicing, payroll, and tax calculations. It can also provide valuable insights into financial health through detailed reports and analytics, helping businesses make informed decisions.

How do I choose the right accounting software for my business?When choosing accounting software, consider your business size, industry, budget, and specific accounting needs. Evaluate features like cloud accessibility, user interface, customer support, integration capabilities with other tools, and security measures. It's also wise to consider software that can scale with your business growth.

Is cloud-based accounting software better than on-premises software?Cloud-based accounting software offers several advantages over on-premises solutions, including lower upfront costs, ease of access from any location with internet connectivity, automatic software updates, and reduced need for in-house IT maintenance. However, the best choice depends on your specific business needs, such as data control and compliance requirements.

Can accounting software handle payroll and inventory management?Many accounting software solutions offer integrated payroll and inventory management features. These integrated tools can help streamline operations by keeping financial records in sync with payroll data and inventory levels, reducing errors and saving time. Check specific software offerings to ensure these features meet your business requirements.

What should I do if my business outgrows the current accounting software?If your business outgrows its current accounting software, you can either upgrade to a more robust version offered by the same provider or switch to a new software that better suits your expanded operations. It's important to plan for data migration and provide training for your team on the new system to ensure a smooth transition.

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