Best Accounting Software For Small Businesses

Every small business owner needs to manage their accounts properly. Having the right accounting software makes this much easier. Here are our picks for the best accounting software out there for small businesses in 2020.

Best Invoicing: FreshBooks

FreshBooks doesn’t impose any draconian limits on the user in the way that Xero does. In fact, one of our favorite aspects of FreshBooks is how simple it is to use. The interface is as user-friendly as possible and makes it simple and straightforward to generate customized receipts from your smartphone, tablet, or laptop. You only need the most basic plan, which costs $10 a month, to benefit from the full range of features that FreshBooks offers.

However, FreshBooks’ plans do come with limits on the number of clients that you can keep stored in your address book. You can send as many invoices as you like to each client, but you can only store the records for 5 at a time unless you upgrade to a more expensive plan. Like Xero, this means that the lower-tier plans on offer from FreshBooks are better-suited to freelancers that are just starting out or businesses that have just opened their doors. As your business grows, you will want to upgrade to one of the more expensive plans that provides support for 50 - 500 clients.

Not only does Freshbooks make it easy to generate and manage invoices, but it is also a great tool for tracking your finances over time. With the press of a few buttons, users can see detailed breakdowns of how much money they have been bringing in, how much they have been spending, and what sort of profits they have been taking home. Users can easily adjust these reports to cover whatever time period they desire and easily compare their performance over time.

Features:

  • Easily-customizable invoices
  • Send payment reminders to clients through the app
  • Automatically add late fees to your invoices as appropriate
  • Enable clients to pay via credit card by clicking a link in the invoice
  • Set up recurring invoices to save you time with your regular clients
  • Expense tracking with receipt attachments. Use your smartphone camera to instantly make a record of any expense receipts.

Price: $15.00/month, 30-day free trial

Pros

  • Every plan offers time tracking and expense tracking features
  • Plans start at $15/month, which is a great price for the features you will gain access to
  • It’s easy to customize invoices, estimates, and other documents as you need to.

Cons

  • You can only store details for five clients on the most basic plan
  • There are no inventory tracking features at any level. However, there is some compatibility with third-party apps.

Most User-Friendly: QuickBooks Online

While FreshBooks provides a great user interface, no one has quite been able to replicate the magic formula that QuickBooks has stumbled upon. For many people, QuickBooks is the name in accounting software; they are certainly one of the most prominent forces in the whole industry. There is a reason that the QuickBooks name has become synonymous with small business accounting, it’s because their software ticks all the right boxes and provides an exceptional user experience.

As a cloud-based solution, QuickBooks can be accessed from any device with an internet connection. However, there are dedicated apps available for mobile platforms that enable you to manage your account while on the go with ease. It is often the case that the mobile apps these businesses offer aren’t as good as their web-based interfaces. However, QuickBooks is the exception, and the QuickBooks app is the best one that we have used.

Of course, given how much weight the brand name carries and the quality of the service that they offer, QuickBooks charges a premium price compared to its competitors. For any small business that can afford the asking price, QuickBooks is all but guaranteed to handle whatever tasks you throw at it. However, if you are working on a strict budget, then QuickBooks might be overkill when you consider the cost of entry.

Two things that QuickBooks doesn’t provide, and which might be a deal-breaker for some businesses, is inventory tracking and payroll features. There is some integration with third-party apps, so this might not be an issue for some businesses. However, if you will need these features, then you should check compatibility beforehand.

Features:

  • Easily track your income and expenses thanks to the ability to attach photos of receipts and other documents.
  • Ability to automatically sort your transactions according to which tax category they fall into.
  • Send professional-looking invoices that can be customized to suit your business.
  • Support for partial invoices and regular and recurring invoices.
  • Easily sort your expenses according to their tax deduction.
  • Run detailed reports about your business and its finances

Price: $25.00/month, 30-day free trial

Pros

  • The go-to option for many small businesses and one of the highest-rated options.
  • Offers a comprehensive toolset and an impressive suite of easy-to-use features.
  • Provides detailed financial reports.
  • Offers extensive tracking features at all levels

Cons

  • More expensive than its competitors.
  • The inventory tracking and payroll features leave a lot to be desired.
  • Their customer service is a notable weak spot.

Third Place: Sage

Sage is one of the best-known accounting solutions. It is popular with sole traders, small businesses, and accountants. You can use Sage to manage your business’s cash flow, sales, and taxes. It also makes reporting much smoother and more streamlined. It is a multi-function solution that satisfies a number of needs for businesses of all sizes.

The platform also offers a number of more advanced features for when you are ready to scale up your business. These include inventory management, credit card processing, and module-level security.

There are mobile apps available for a range of devices and operating systems, including Android, Apple, and Blackberry. Sage also integrates seamlessly with other business productivity suites, such as Microsoft Office and Adobe Reader.

Because Sage has been a market leader for many years, it’s often the first choice for businesses, but it can be a difficult to use accounting system if you have no previous experience. However, if you want an accounting package you can use straight out of the box, Sage is a good choice.

Features:

  • Cloud-based
  • You can access the software on multiple devices, including smartphones
  • Collaboration is easy
  • Business compliance features
  • Great customer support via 24/7 Sage Advisor
  • Helpful third-party app integration

Sage Pricing:

There is a free trial available if you want to try sage out.

Pricing plans are payable monthly. Prices vary depending on whether you buy a software license for one user or multiple users. The monthly costs for one user are as follows:

  • Pro $50.58
  • Premium $78.25
  • Quantum Accounting $131.66

Pros

  • Create modifiable reports
  • The program supports multiple users at once
  • The program works remotely on a wide variety of devices
  • The software is scalable
  • Automatic accounting checks
  • Security is excellent

Cons

  • Can be difficult to set up
  • Quite costly for small businesses
  • Journal entries are inefficient

Most Affordable: Wave

You can’t beat getting something for free. When it comes to software, free software often comes with a lot of caveats and or embedded adverts. But we’re happy to report that this isn’t the case with Wave. Wave is a truly free accounting solution that small businesses can benefit from enormously.

Despite not charging anything to access the service, Wave immediately presents its users with a user-friendly dashboard and slick interface that makes navigating the many features on offer as easy as could be. Many of the features that Wave offers are gated off as premium features in competing apps, so it’s nice to see them being offered free of charge here.

You can also use Wave to manage multiple businesses, which is ideal for any freelancer who has a couple of side gigs as well. For example, if you moonlight as an Amazon seller when you aren’t making money from selling your drawing services, you can use Wave to manage both accounts in parallel.

Features:

  • Comprehensive billing and invoicing features
  • Allows you to track investments as well as invoices
  • Generates detailed financial reports that are easily digested
  • Supports invoicing and payroll using multiple currencies
  • Personal budgeting tools alongside the business-focused tools
  • Receipt-scanning makes it easy to track expenses

Price: Free

Pros

  • Completely free yet still offers all the features a small business needs to manage its accounts.
  • Add-on payroll capabilities are reasonably priced
  • Allows you to manage multiple businesses from a single account

Cons

  • Doesn’t offer any inventory tracking features
  • Has very limited integrations with third-party apps
  • Only available under a single plan

Best Automation: Zoho Books

Bookkeeping is essential for any business, but it isn’t exactly fun. Fortunately, there are numerous ways that business owners can automate some or all of their bookkeeping processes, minimizing the amount of time that they need to set aside during the day to handle the admin. As a result, many small businesses are looking for software that will make automation simple. Zoho is that software.

Zoho makes it incredibly easy to automate your accounting workflows and minimize the amount of time it takes you to complete your end of day reconciliation. Automatic customer reminders are ideal for businesses that have a number of clients they need to stay on top of.

If you use other Zoho software in your business, then you can take advantage of the excellent integration support. The only area where Zoho is seriously lacking is in its payroll features. Zoho doesn’t currently offer any other payroll software to integrate.

Features:

  • Create customized invoices and enable clients to pay directly through their invoice
  • Generates documentation for professional quotes and enables you to convert them into invoices.
  • A client portal makes collaboration and communication considerably easier
  • Receipt-scanning allows for more accurate and reliable expense tracking.
  • Generate bills and keep track of what you owe
  • Record and organize your bank transactions after linking your bank account to Zoho.

Price: $9.00/month, 14-day free trial

Pros

  • Every plan comes with the tools you need to automate your workflow
  • Enables you to set up client portals for your clients to connect through, making collaboration a breeze.
  • Plans start at just $9 per month.

Cons

  • Only supports payroll for three places - Texas, California, and India
  • Integrates well with other Zoho products but not so well with third-party apps and software
  • Has a steeper learning curve than its competitors

Accounting Software FAQ

What is the best accounting software for a small business?

The best accounting software to use for any small business is going to depend heavily on what that business is and what it does. The biggest deciding factor, as with any business decision, is going to be your available budget. The more money you have to work with, the more options you will be able to consider. However, working with a relatively small budget doesn’t mean that you have to settle for sub-par accounting software, but you will need to think more carefully about your choices.

Everyone talks about QuickBooks, are they the best choice?

When most people think of accounting software for a small business, their mind goes straight to Quickbooks. We have already highlighted QuickBooks as offering the most user-friendly experience of any of the main options for small business accounting software, but this is just one of the many things that QuickBooks has going for it. For a variety of different reasons, QuickBooks has established itself as the go-to accounting software for small businesses.

However, there are several great options for small businesses, and the best one for you will depend on several factors. QuickBooks is mentioned the most often because it is the best choice for most “average” small businesses. However, more niche and specialized businesses will want to consider a wider range of options.

What’s the best free accounting software available?

If you are working on a very tight budget, then you might be looking to free options to enable you to equip yourself with the new accounting software that you desperately need to manage your books correctly. In terms of free software, Wave is the most popular choice and is the one that we would recommend looking at first. Not only is it free but it also comes with all the features that small businesses need to manage their accounts.

As well as Wave, ZipBooks and SlickPie are also excellent choices for any business looking for free accounting software.

Will my accounting software also handle payroll?

The majority of the mainstream accounting software options on the market today are able to integrate with existing payroll systems. There is a high degree of compatibility between the two, even when the respective software has been developed by completely different developers. QuickBooks, Zero, and FreshBooks are all able to synchronize with Gusto, which is one of the most popular payroll platforms available.

QuickBooks also offers its own payroll capabilities that you can unlock for a fee. However, it is usually a better idea to spend that money on Gusto or a similar payroll service that will integrate with QuickBooks.

Should I also hire a professional accountant?

Managing your own accounts makes sense when your business is relatively small and easy to manage. Not only does it ensure that you are kept fully informed about your business’s fortunes and know what your financial health is at all times, but it also saves you money as you won’t have to hire a professional to handle everything for you.

However, as your business grows, it is inevitable that you are going to need to bring on additional help to manage your accounts. Having the right software will definitely make it easier for you to manage your own accounts without the assistance of an accountant. Just remember that the consequences of poor bookkeeping are severe and can involve legal and financial penalties.

Having the right accounting software will make a huge difference to any small business. As your business grows, your needs will change, and you might have to switch providers. However, many accounting software platforms are highly scalable. You can simply upgrade your subscription package as you need to. All of the options we have identified in this guide are guaranteed to give you a great user experience with access to all the features and tools you could possibly want.

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