Every small-to-medium business should be using some sort of cloud-based accounting software to both simplify and streamline their business processes.
If you’re worried about heading for the cloud, or just simply want to get up to lightning speed with today’s very best accounting systems then you’ve come to the right place.
Best Accounting Software for Small Business
Accounting records date as far back as over 7,000 years ago to ancient Mesopotamia the Middle East, where even then it was important for businesses to be able to track their income and expenses for traded goods and services. But although the concept has remained largely the same, the methods have changed…drastically.
We’ve compiled a list of accounting software ranking the top software in order and listed the key features of each one.
Accounting software for small business comparison:
1. QuickBooks Online
QuickBooks Online is a leading cloud-based double-entry accounting software offered by Intuit that has vastly dominated the accounting software market for last 20 years, serving over 29 million businesses in the US alone! The cloud software is easy to use and is rich in features. It enables users to manage their businesses on the go through a customized, intuitive dashboard and simple reporting.
QuickBooks offers both cash-based and accrual accounting and is ideal for small-to-medium businesses who want to be able to manage their accounts from anywhere and everywhere.
A great feature of QuickBooks is that it allows businesses to provide access to their online accounts allowing accountants to collaborate and also integrates with over 80 partner apps including inventory management tools and more. With QuickBooks, you’ll be able to see a clear snapshot of the health of your business with access to over 20 reports that are all customizable.
The company offers a free 30-day trial with no annual contract required and has 3 payment tiers offering multiple features.
Key Features of QuickBooks Online:
- Customized invoicing
- Customer portal
- Expense tracking
- Bank reconciliation
- Accounts payable
- Inventory management
- Time tracking and project management
- Customized tax rates
Born in 2006, cloud-based software Xero is trying to catch up with QuickBooks boasting over 1 million subscribers worldwide. Known for its simple interface, its features include inventory management, purchasing, payroll, expense and asset management in addition to its regular accounting capabilities.
It’s ideal for SMBs in the retail, creative, e-commerce and high-tech industries. It’s also suitable for startups.
Xero is also accessible through its iOS or Android applications. Its dashboard gives users a real-time view of their cash flow from invoice tracking through to payments. Users can send invoices, fast-track payments and set up reminders to customers of late payments.
Xero automates bank reconciliation as it imports your most recent transactions and categorizes them for you as well as links purchase orders to bill automatically, ensuring speedy payments.
Key Features of Xero:
- Online invoicing
- Expense management
- Asset management
- Bank reconciliation
Zoho Books is a double-entry accounting software for small-to-medium businesses, helping them to better manage their business finances. Zoho’s business accounting software helps keep cash flow healthy by streamlining workflow and centralizing business transactions. Like Xero, you can send invoices to customers and also allow customer payments by linking to a payment gateway. By simplifying the payment process, you’re more likely to get paid faster by your customers. Zoho will also save you time as your accounting tasks are automated – you can set up payment reminders, auto charges, and recurring invoices.
From an accounting perspective, you can create financial reports, generate purchase orders, sales and tax reports and more. Zoho includes many other features, such as project management for team collaboration, inventory, expense, and sales management. Zoho is ideal for businesses that manage projects or bill by the hour as it has strong time tracking, project management, invoicing and payment features.
You can try out Zoho for free with their 14-day free trial.
Key Features of Zoho Books:
- Time Tracking & Project Management
- Inventory management
- Bank automation
4. Wave Financial
It’s Free! Now we’ve got that huge benefit out of our system, here’s a look at Wave Financial’s accounting software…
For businesses that are perfectly happy without all the fancy features and just want to get to it, Wave Financial offers a cloud-based accounting software. It’s a great option for service-based and start-up businesses – those without inventory preferably. The software is easy to use, and seriously easy to set up. You’ll be greeted with a simple customizable dashboard displaying sales, accounting, purchases, banking, payroll and reports. At a glance, you’ll be able to see your cash-flow, profit and loss, accounts, payables and receivables. With such a user-friendly interface, it’s easy to see exactly where you are at.
A neat feature of Wave is that along with accepting credit cards and ACH payments for invoices online, Wave Checkouts allows you to send a link instead of an invoice, to a client who can then make payments online. If you have a website with, this link can be embedded at the checkout – perfect for businesses that need upfront payments.
Due to its free nature, it is lacking a few features that some businesses may not want to miss out on, such as, tracking billable hours, inventory and asset-management tools (this could be an issue if you want to calculate depreciation for taxes).
Key Features of Xero:
- Bank feed
- Automatic backups
- Mobile app (iOS and Android)
- Financial reports
- Integrations with 100’s of apps
- Simple dashboard
The catch: Wave’s basic accounting software is free, however, if you’d like to add online credit card processing for invoices, there will be more fees. Bank payment processing costs 1% per transaction etc. Be sure to double check all pricing before diving in.
FreshBooks accounting software caught our attention due to its incredible ease of use and simplicity – the user experience is exceptional. When it comes to invoicing software for businesses and freelancers it is right up there.
When it comes to expense tracking, receipt photos can be uploaded, categorized, attached to clients and even projects so you can see exactly what you’re spending and where. More notably, you could use FreshBooks as your project management hub to track all projects (set deadlines, track employee hours and bill clients for hours tracked). Employees can use it to track their time and add expenses, you can even add contractors to the account where they will only see what you allow them.
Limitations: FreshBooks lacks inventory-management and purchase-order features, therefore, it is less suited to businesses with inventory and better for those with service or project-based businesses.
Key Features of FreshBooks:
- Mobile accounting
- iOS and Android
- Customizable invoices
- Automatic payment reminders
- Expense tracking
- 80 app integrations
- Time tracking
- Project management
- Schedule recurring invoices
You can try out FreshBooks for free by taking advantage of their 30-day free trial. Plans then range from $15-$50 a month depending on which you choose.
For those businesses that are still using an Excel spreadsheet or even the old ‘shoe-box’ method to track income and expenses, then ZipBooks’ starter plan (which is free by the way) could be a good place to start. Their paid plans cost between $15-$125 a month.
ZipBooks covers all the basics but is missing a few elements: processing of employees payrolls, users are limited to one (unless you upgrade your plan), you can only connect one bank/credit card account, and you aren’t able to run a statement of cash flows.
Key Features of ZipBooks
- Manage accounts receivable
- Manage accounts payable
- Connect bank/credit cards
- Generate financial statements
- Mobile access
What is small business accounting software?
Not sure what an accounting system actually is? Find out here:
An accounting system is simply how you keep track of your business’s records. It is here that you enter all of your incoming money be it from invoices or funding, as well as listing all the money leaving your business be it from bills, business costs or any money spent from your business’s bank account. Think of it like your business financial activity tracker capable of detailed statistical reports to aid in your business decision making.
What does small business accounting software do?
- Expenses – cash leaving the company
- Income – any money coming into the business
- Invoices – something important to keep the image of your company professional and trustworthy
- Funding – business liabilities including business loans, accounts payable and mortgages – for businesses seeking funding solutions that are compatible with accounting systems, be sure to check out Become
We’ve come a long way in the last 7,000 years, we no longer use stones, pen and paper are a thing of the past and even manually inserting figures into excel (where you’ll need to categorize each expense) is slowly becoming extinct. Business accounting software today is generally automated and computer-based using either software of specialized cloud-based services.
How can small business accounting software benefit your business?
Now you know what an accounting system is, we’ve listed some key advantages and benefits of using accounting software:
- HUGE time savings – this is definitely the biggest advantage. You can say goodbye to manually entering and calculating everything. Accounting systems can prepare bank deposits, invoices, write checks and make all your calculations for you while reducing labor costs – winning!
- Minimize errors – computerized systems are always subject to human error, be it lousy math or even typos, it happens. Switching to an accounting software will minimize your errors as the system performs all calculations.
- Discover unpaid invoices – the system will even be able to spot unpaid invoices. You’ll be able to see who owes you what and for how long all neatly organized. This will enable you to contact late-payers and minimize losses.
How to choose the best accounting software for small business?
If all of these systems are clouding your judgment we advise giving the free tryouts a go to see which is best for your business. Hiring a CFO for your business, or getting your CFO to compare and see which best suits them would be the most logical options – after all, they will be working with the software.
These accounting software systems offer comparable features, however, some may be better suited to specific businesses. QuickBooks Online has demonstrated itself not only as an industry leader but as the software with the most features with the most comprehensive and customizable reports. An accounting system is pretty much useless unless you can get the desired information clearly organized out of the system to interpret your data.
The right fit, however, depends on your industry, business type and size, and also payment structure. For example, if your business mostly bills hourly rates or per project, then you may prefer Zoho as it is strong in time-tracking and project management.