Small business owners benefit from accounting software because it helps them track accounts receivable and accounts payable, have a clear understanding of their profitability, and be prepared for tax season. In the world of accounting software, a small business is one that can use out-of-the-box software without requiring extensive customization. As a business grows, its accounting needs become more complex, and a custom enterprise resource planning (ERP) system is often needed.
Below are accounting softwares best suited for small businesses:
QuickBooks Online
QuickBooks Online is the best overall accounting software for small businesses of those reviewed. Not only do the majority of small business accounting professionals use QuickBooks Online, but there are also endless online training resources and forums to get support when needed. All accounting features can be conveniently accessed on one main dashboard, making bookkeeping more fluid and efficient.
Pros
Scalable
Commonly used by accounting professionals
Integration with third-party applications
Cloud-based
Mobile app
Cons
Upgrade required for more users
Occasional syncing problems with banks and credit cards
Xero
Xero is the best in our review for micro-businesses that are looking for very simple accounting software. This software has a clean interface and also fully integrates with a third-party payroll service. Businesses can collect payment online from customers through Xero’s integration with Stripe and GoCardless.
Pros
Cloud-based
Mobile app
Payroll integration with Gusto
Third-party app marketplace
Simple inventory management
Cons
Limited reporting
Fees charged for ACH payments
Limited customer service
FreshBooks
FreshBooks offers more customization for invoicing compared to other accounting software. Its primary function is to send, receive, print, and pay invoices, but it can also take care of a business’ basic bookkeeping needs as well. This accounting software makes it easier for service-based businesses to send proposals and invoices, request deposits, collect client retainers, track time on projects, and receive payments.
Pros
Cloud-based
User-friendly interface
Third-party app integration
Affordable
Advanced invoicing features
Cons
No inventory management
No payroll service
Mobile app has limitations
Wave
Wave is an ideal accounting software platform for a service-based small business that sends simple invoices and doesn’t need to track inventory or run payroll. For many freelancers or service-based businesses, Wave’s free features will cover all of their accounting needs and is the best free software in our review. At year-end, accountants can pull the necessary reports from Wave to prepare a business’ tax return.
Pros
Free accounting, invoicing, and receipt scanning
No transaction or billing limits
Run multiple businesses in one account
Unlimited number of users
Mobile app
Cons
Limited third-party app integrations
Higher fees for credit cards and ACH payments
Full-service payroll is limited to only 14 states
No inventory management