Small business owners benefit from accounting software because it enables them to manage accounts receivable and payable, evaluate their profitability, and get ready for tax season. Accounting software that comes out of the box can be used by small businesses without major modifications. A tailored enterprise resource planning (ERP) system is required as a firm grows and its accounting needs become more complex.

There is accounting software available for small businesses with a range of features and costs. In general, the number of employees and the industry are factors that could help a small business owner choose the best accounting software. For instance, a freelancer doesn’t need the same accounting software features as a restaurant proprietor.

We researched and assessed 19 accounting software vendors before deciding on our top five accounting software companies for small businesses. We assessed businesses based on their cost, ease of use, features, integrations, and scalability.

5 Best Accounting Software-Overview

• QuickBooks Online– Best Overall
• Xero- Best for Micro-Business Owners
• FreshBooks– Best for Service-Based Businesses
• QuickBooks Self-Employed– Best for Part-Time Freelancers
• Wave– Best Free Software

QuickBooks Online- Our Top Choice

The best accounting software for small businesses overall, according to the reviews, is QuickBooks Online. QuickBooks Online is the preferred accounting software for small businesses, and there are numerous online training resources and discussion groups where you can get support when you need it.

A single central dashboard provides easy access to all accounting components, facilitating more fluid and effective bookkeeping.

One of the most well-liked accounting applications among small businesses and their bookkeeping and tax specialists for a long time has been QuickBooks Online from Intuit. The cloud-based program can be accessed using a web browser or a mobile app.

Simple Start ($25 per month), Essentials ($50 per month + $80 per month), and Advanced ($180 per month) are the four membership options after the 30-day free trial. The first few months are typically marked down significantly, and some accountants may even be able to give small businesses wholesale pricing.

Each plan comes with additional features including cash flow, time monitoring, additional users, and inventory management. The great majority of small enterprises that provide services will have their needs met by Simple Start. Small businesses that sell products will have more customization and inventory options with Essentials or Plus. A new option that offers extensive financial reporting is a Fathom-powered Advanced membership. A leading supplier of financial services online is Fathom.

Xero-Best For Micro-business Owners

Our research shows that the best option for microbusinesses searching for reasonably straightforward accounting software is Xero. This program collaborates with a different payroll source and features an intuitive user interface. Due to Xero’s integration with Stripe and GoCardless, customers may make online payments to businesses.

Since its 2006 debut in New Zealand, Xero has grown to include more than 3 million users worldwide. In countries like Australia, the United Kingdom, and New Zealand, this kind of accounting software is widely utilized. About 4,000 employees work for Xero, which is rapidly growing in the US.

In addition to a full-service payroll add-on, Xero offers three different monthly membership options: Early ($12), Growing ($34), and Established ($65).

Gusto charges an additional $39 per month plus $6 for each employee for a full-service payroll solution. They provide a 30-day free trial.

A maximum of 20 invoices or quotations and five monthly bills may be used under the Early plan. This restricted plan can be appropriate for a small service provider or consultant who does a few high-ticket transactions each month. Unlimited invoices and bills are included in both the Growing and the Established plans. The Established plan has extra features including multi-currency, spending control, and project costing, which is the only distinction between the two. All three tiers of Hubdoc, a program for keeping track of invoices and receipts, are accessible.

Freshbooks- Best For Service-based Businesses

Invoicing is typically the most important accounting need for service-based firms. More customization options for invoices are available with FreshBooks than with other accounting software. Its main job is sending, receiving, printing, and paying invoices, but it can also do some simple bookkeeping for a business. For service-based enterprises, this accounting software automates sending bids, monitoring project time, and accepting payments.

When FreshBooks was first established in 2013, it began as an invoicing program. FreshBooks now has over 30 million users and has more features added. There are four alternatives, and businesses can save 10% by paying annually as opposed to monthly. In addition, FreshBooks regularly provides special prices for the first few months of your subscription.

The least expensive of the four options, Lite, is $15 per month. The monthly prices for Plus and Premium are $25 and $50, respectively. And Select, which offers individualized care and discounted prices. Prior to any discounts, these are the costs.

The number of clients who can get monthly invoices makes a significant difference. The Lite plan allows for the monthly payment of up to five clients. The Plus plan allows for the monthly payment of up to 50 clients. Under the Premium package, an unlimited number of customers may get monthly invoices.

Although there is no cap on the number of customers who can get monthly invoices under the Select plan, there are some special advantages. The accounting program may be used by several team members for an additional $10 per month, and the advanced payment feature, which enables users to instantly charge a credit card or set up regular credit card charges for clients, costs an additional $20 per month.

Gusto, G Suite, and other third-party software connections are among those that are accessible.

A distinctive feature of FreshBooks invoices is the ability to change and customize them for a professional appearance.

Planning projects, providing estimates or proposals, and collecting money from clients are all really easy with FreshBooks.

Quickbooks Self-employed- Best For Part-time Freelancers

Our best recommendation for part-time freelancers and independent contractors who wish to monitor their income and spending largely for tax purposes is QuickBooks Self-Employed accounting software. Small business owners who include a Schedule C with their tax filings are the target audience for this program.

Freelancers would have to sift through all of their bank and credit card accounts at the end of the year to tally their revenue and spending if there was no software to track business activities. This may take a lot of time. All business transactions in QuickBooks Self-Employed will be automatically totaled.

An Intuit product called QuickBooks Self-Employed has both a mobile app and a cloud-based web interface. This program was created to help independent contractors maintain their organization during tax season. The features of QuickBooks Self-Employed include tracking mileage, categorizing expenses, organizing receipts, and tax computation and filing via TurboTax.

Self-Employed ($15/month), Self-Employed Tax Bundle ($25/month), and Self-Employed Live Tax Bundle ($35/month) are the three plan choices available to users. 50% off is offered for the first three months. A membership to TurboTax is included with both tax preparation packages. Access to a CPA both throughout the year and during tax season is also included in the Self-Employed Live Tax Bundle.

The CPA will also finish the final audit of your TurboTax tax return before submitting it.

The smartphone app makes taking pictures of receipts for business expenses and calculating miles traveled while driving straightforward. The vast majority of accounting software is not designed to differentiate between business and personal transactions. However, QuickBooks Self-Employed has a function that lets you specify whether a transaction is private or commercial. For independent contractors without a separate company bank account, this is helpful.

Wave- Best Free Software

For a service-based small business that produces basic invoices but doesn’t require payroll processing, Wave is a great accounting software platform. Wave is the best free software in our study since its free features can meet the accounting demands of many independent contractors or businesses that provide services. In order to compile a company’s tax return at the end of the year, accountants can use Wave to retrieve the reports they need.

The wave is a Toronto-based company that was established in 2010. The company, which has over 250 employees, was acquired by H&R Block in 2019. Most small firms may use this free accounting software for basic accounting functions like income and cost management, financial reporting, invoicing, and receipt scanning.

Both the mobile app and the internet offer these features. Payroll and customer payment processing are premium services that are optional, but other bookkeeping, invoicing, and reporting activities are free.

Two payroll options are available as an add-on service from Wave. The first month’s payment is $20 plus an additional $6 for each employee or contractor. The user is in charge of manually filling out payroll tax forms and sending tax payments under this plan, but the wave will handle payroll and calculate payroll taxes. The second choice is $35 a month plus $6 for each worker or contractor. With this plan, payroll is full-service, meaning Wave takes care of all tax filings and payments. This option for full-service payroll is only available in 14 states.

Best Accounting Software- Conclusion

After a thorough analysis of 20 options, we discovered the best accounting software. The top eight were then selected based on accounting features, functions, non-accountants usability, and affordability.

Our best solutions need minimum accounting expertise, provide cloud-based backup options, and provide affordable, adjustable accounting features that connect with other programs and applications.