Deeper Dive: Our Top Tested Picks
Best for SMBs
Intuit QuickBooks Online
- In-depth contact records and transaction forms
- Excellent inventory management, time tracking
- Numerous customizable reports
- Supports projects, payroll, and many add-ons
- Useful mobile apps
- Expensive
- Mobile app hides some features
Intuit QuickBooks Online has been the small business accounting service to beat for many years. It puts highly effective accounting functionality into an exceptional user experience. The service stands out because it’s easily customizable, comes in multiple versions with hundreds of add-on apps, and offers better mobile access than most rivals.
Intuit QuickBooks Online is expensive, so it’s most appropriate for small businesses with a technology budget. QuickBooks Online is easy enough for an inexperienced bookkeeper to learn but feature-rich enough that a more demanding user can tap its advanced accounting tools. Because it’s so customizable and user-friendly, it appeals to a wide variety of business types.
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Best for Very Small Businesses
FreshBooks
- Excellent user experience
- Context-sensitive settings
- Some unusual yet helpful features, like retainers
- Projects and time tracking
- Great mobile apps
- Extra costs for team members, 1099s
- Weak inventory tracking
FreshBooks’ good looks and simplicity are deceptive. It’s actually a full-featured, double-entry accounting system that happens to offer an exceptional user experience. For these reasons, it’s an Editors’ Choice winner and is one of the first accounting options a small business should consider. It’s intuitive enough for novice bookkeepers to learn but supports all the elements that a larger business would need, including payroll.
We recommend FreshBooks for sole proprietors and companies with perhaps an employee or two—though it’s capable of handling more. Very small businesses can use it for basic money management, like sending invoices, monitoring financial accounts, accepting payments, and tracking income and expenses. More complex companies can add advanced tools that include projects and proposals, mileage and time tracking, and reports. It’s especially good for service-based businesses.
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Best for Multi-User Small Businesses
Xero
- Thorough accounting features
- New inventory add-on
- Gusto integration for payroll
- Exceptional online help
- Good mobile apps
- Must link time entries to projects
- Transaction templates are difficult to modify
Xero supports every major financial element you expect in a double-entry small business accounting solution: sales, purchases, bills and expenses, inventory, and payroll. Xero offers exceptional reports and advanced analytics and provides tools for tracking projects. It makes good use of artificial intelligence to automate processes and improve connectivity with related financial websites. Its usability, features, integration options, and network of advisors make it one of the best small business accounting applications available today.
Xero is best for small businesses where multiple people need to access the accounting software. It’s also ideal for businesses that would make use of the lion’s share of its well-integrated features, and that need powerful reporting tools. Xero lets you track fixed assets, which is an unusual tool in the category of small business accounting software. While the user experience is not exactly on the cutting edge, it’s still fairly easy to learn. We don’t recommend Xero for sole proprietors or freelancers, even though it has a starter pricing level that would suit those budgets.
- Exceptionally easy to use
- Suitable selection of features for very small businesses
- Good invoice and transaction management
- Multicurrency support
- Improved mobile apps
- Formerly free features now cost money
- Sparse record templates
- No time tracking or projects
Wave has always been free unless you needed payroll and payments. Recently, the company added an $8-per-month charge for scanning expense receipts, which puts a dent in its appeal, though it’s still an excellent service that gives you a lot for free. Wave follows standard accounting rules and is especially skilled at invoicing and transaction management. The app supports multiple currencies and has a smart selection of features for very small businesses. It doesn’t have a dedicated time-tracking tool, comprehensive mobile access, or inventory management, though.
Wave is for sole proprietors and freelancers who need an online accounting service and may want a little room to grow. It’s especially good for very small businesses that do a lot of invoicing. Integrated payroll and double-entry accounting support make it a potential option for small businesses with a few employees, though there are better choices for those companies. And because it has a simple, understandable user interface, even financial novices can use it.
Best for Inventory Tracking
Sage 50 Accounting
- Great dashboard
- In-depth record and transaction forms
- Advanced inventory management tools
- Voluminous reports
- Microsoft 365 integration
- For Windows only
- Resource-heavy
- Some UI elements look dated
- No mobile apps
Sage 50 Accounting—also sometimes known as Sage accounting or Sage business cloud accounting—is a massive small business accounting application that’s designed for desktop use. It’s the most comprehensive accounting program we review, and it does more than what many small businesses need. It costs a bit more as well. The software offers built-in online connections that support some remote work since it integrates with Microsoft 365 Business. Though it has a dated interface, doesn’t have a mobile app, and requires you to install the software on a desktop or laptop computer, Sage 50 Accounting is still a powerful piece of software.
Sage 50 Accounting is especially appropriate for companies that need robust inventory-tracking capabilities. Additionally, it’s best suited to companies that need more advanced accounting capabilities, customizability, and data capacity; who aren’t averse to desktop software; and whose remote employees have their own installations of the software, though they can share company data through Sage’s Remote Data Access.
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Best for Larger Small Businesses
Zoho Books
- Depth and flexibility in every module
- Comprehensive, customizable records and forms
- Generous multicurrency and language options
- More reports than competitors
- Great mobile apps
- Might be too complex for some smaller businesses
- Time tracking is locked to projects
- Several features require add-ons
Zoho Books is the small business accounting element of Zoho’s business software ecosystem. Your accounting data can be tightly integrated with numerous related apps and functions, like CRM, customer service, and email. Zoho Books’ usability, flexibility, and depth in standard bookkeeping areas (sales and purchases, time and project tracking, and inventory management) equals and sometimes surpasses what’s offered by competitors.
Zoho Books is surprisingly affordable, and it even has a free version. Overall, though, Zoho Books is best for businesses that use other Zoho applications, but its appeal isn’t limited to such cases. We also recommend it to larger small businesses, growing businesses, and established businesses that want its customizability, depth, and usability. That said, the depth of its features might be overwhelming to very small businesses but welcomed by companies with more advanced needs.
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Most Affordable
Patriot Software Accounting
- Competitive price
- Easy-to-use and attractive interface
- Good mobile access
- Lots of support options
- No time tracking
- Can’t track inventory
- References some advanced accounting concepts
- Minimal fields in contact and product records
Patriot Software has a payroll application, which we’ve reviewed for years, and we wanted to see what the company’s integrated accounting counterpart was like. It’s affordable and simple, with robust support. Uncomplicated navigation, an attractive, intuitive UI, and exceptional mobile access add to its appeal. It’s missing some features that competitors offer, and it includes some language and concepts that rivals keep in the background, but it’s a solid, inexpensive solution.
Patriot Software Accounting is best for uncomplicated small businesses that probably won’t outgrow it. The integration with Patriot’s payroll application is a definite plus, but the accounting side lacks depth in areas like contact records, inventory, and time tracking. Its price, voluminous support, and usability make it a great choice for a novice or a small start-up.
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Best for Solo Entrepreneurs
TrulySmall Accounting
- Exceptional user experience
- No accounting knowledge required
- Good mobile apps
- Supports sales tax, payments, statements
- New expense management
- Expensive
- No product or service records
- Can’t save invoices as PDFs
- Few reports
TrulySmall Accounting comes from the same company behind Kashoo, which we’ve reviewed for many years. It supports only transaction and contact management, invoices, and bills at this early stage, and it’s likely to stay small and uncomplicated. We liked it for its simplicity, its usability, and its unusual approach to accounting when so many competitors are going the opposite direction and offering more features and services.
It’s refreshing to see a software developer take a step back and develop a very simple accounting application for the many millions of extremely small businesses that process fewer than 500 transactions per year. The user experience was clearly designed for novice bookkeepers who are just starting out, or for established but still small companies that just don’t need many accounting features.
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Buying Guide: The Best Accounting Software for Small Businesses in 2024
How We Pick the Best Small Business Accounting Software
Eight small business accounting applications scored high enough to be included in our list of the best small business accounting software. Two, Wave (free except for a $8 per month charge for scanning receipts) and TrulySmall Accounting ($20 per month), are best for microbusinesses, like independent contractors, freelancers, and sole proprietors. The other six target small businesses with at least a few employees. Each has multiple tiers of service to meet the needs of businesses that vary in size and functionality.
We rate these applications primarily based on how easy they are to use, how much they do, and their price. We also consider anything we encounter during our hands-on testing.
What Do Small Business Accounting Services Do?
Financial bookkeeping is complicated and time-consuming. Business owners find it challenging enough to cover the basics—paying the bills and tracking incoming revenue—let alone answering critical questions like, “Are we profitable, and why or why not?” Will your business have enough money to make the required tax payments on time? Should you invest in new equipment? Do you need to explore financing? Can the appropriate staff access your accounting data if they have to work from home?
(Credit: Intuit QuickBooks/PCMag)
A good small business accounting service gives you information that helps you answer these questions based on the input you supply. Once you populate the service with details about your financial accounts, customers and vendors, and the products or services you buy and sell, you can use that data to create transactions that the software can, in turn, use to create insights. Instant search tools and customizable reports help you track down the smallest details and see overviews of how your business is performing. Mobile apps and websites give you access to your finances no matter where you are.
How Do You Set Up Accounting Software?
Depending on how long your business has been operating, getting started with a small business accounting service can take anywhere from five minutes to several hours after you sign up for an account. Most offer free trials or a demo account and charge monthly subscription fees once you’re ready to commit. Generally speaking, the more you need from an accounting service, the longer it takes to set one up and the higher the monthly payment.
Early setup involves creating an account and answering questions like what your business type is and when your fiscal year starts.
Next, you have to ask yourself whether you want access to the transactions you have stored in online financial accounts (checking, credit cards, and so on). Enter your login credentials for that account, and the software imports recent transactions, usually 90 days’ worth, and adds them to an online register. This process is not as simple as it used to be. Banks have been tightening up their security (which is a good thing), so you may have to jump through a couple of security hoops to get connected. Sometimes, the connections break, forcing you to set them up again.
Would you like to let customers pay with credit cards and bank withdrawals? Then, you need to sign up with a payment processor such as PayPal or Stripe. It’s also a good idea to browse the accounting software’s settings. For example, do you plan to use specific features such as purchase orders and inventory tracking? You can usually turn tools on or off, which can help you either simplify the user interface or maximize the functions.
It’s possible to do a minimal setup and then jump into creating invoices, paying bills, and accepting payments. All the accounting services we review let you add customers, vendors, and products during the process of completing transactions. You need to do this anyhow as you grow and add to your contact and inventory databases. You have to decide whether you want to spend the time upfront building your records or take time out when you’re in the middle of sales or purchase forms. Most small business accounting services also offer the option to import existing lists from CSV and XLS files.
What’s the Best Free Accounting App for Small Businesses?
Wave, also sometimes known as Wave accounting, is the best free accounting software, although it’s not as free as it used to be. It now costs $8 per month if you want the ability to scan and upload expense receipts, a feature many other small business accounting apps offer for free. Wave’s core accounting features are free, and they’re good enough for many small businesses. If you need payment services and payroll software, those cost extra (they always have with Wave).
Zoho Books also has a surprisingly robust free version. It’s an excellent choice for anyone who already uses other Zoho software and businesses that plan to grow. Features include client management, multilingual and recurring invoicing, expense and mileage tracking, and reports. You can import bank and credit card statements but can’t set up direct connections to your financial institutions.
Which Accounting Software Is Easiest to Use?
Accounting can be complicated, and it needs to be done correctly. The companies that make small business accounting software have worked hard to make it as simple and pleasant as possible. Wave, TrulySmall Accounting, and FreshBooks are among the easiest accounting programs to use.
(Credit: FreshBooks/PCMag)
Accounting professionals love to use terms like “accounts receivable” and “accounts payable” to describe the primary elements of accounting: recording and tracking income and expenses or tracking sales and purchases. QuickBooks Online and FreshBooks are still understandable if you don’t use that terminology because they rarely use it. Their dashboards show a real-time overview of the financial information you need to see frequently, including charts comparing income and expenses, account balances, and invoices and bills that need immediate attention.
After you’ve entered information about your company structure, one of your next setup tasks is to add information about your customers and vendors. Some online accounting software lets you include more than basic contact details (“customer since” date, birthday, and other similar fields), which can be helpful as you develop and maintain relationships with them. You do the same thing for the products and services you buy and sell, so you can add them easily to transactions.
One of the great things about using small business accounting software is that it reduces repetitive data entry. Once you fill in the blanks to create a customer record, for example, you never have to look up their ZIP code again. When you need to reference a customer in a transaction, they appear in a list. The same goes for vendors, items, services, and employees. No more filling out card files or messy spreadsheets.
Once you have a customer record and start creating invoices, sending statements, and recording billable expenses, you can usually access historical activities within the record itself.
Record templates vary in complexity, so you need to understand the differences before you go with one accounting service or another. Some, such as Patriot Software Accounting Premium, simply let you maintain descriptive product records. Others, such as Intuit QuickBooks Online, do more, like asking how many of each product you have in inventory when you create a record and at what point you should be alerted to reorder. Next, they actively track inventory levels, which provides insights into selling patterns and keeps you from running low.
Which Transactions Do Accounting Services Support?
The most common types of transactions that a small business needs are invoices and bills, and most of the services we review support them.
Xero and Zoho Books go further by letting you create more advanced forms, like purchase orders, sales receipts, credit notes, and statements. They provide templates for them, too. All you have to do is fill in the blanks and select from lists of variables like customers and items.
(Credit: Zoho Corp./PCMag)
How Are Completed Transactions Handled?
Once you have completed an invoice, for example, you have several options. You can save it as a draft or a final version and either print it or email it. If you do the latter and have established a relationship with a payment processor, then your invoice can contain a stub explaining how the customer can return payment via credit card or bank withdrawal. You can sometimes create a PDF version of the invoice, copy it, record a payment on it, and set it up to recur on a regular schedule.
Can You Manage Expenses and Bills With Accounting Software?
Accounting services pay special attention to your company’s expenses—not bills that you enter and pay (though some support this), but rather other purchases you make. This is an area of your finances that can easily get out of control if you don’t monitor it. So, small business accounting software separates them into expense types. Next, the software compares them to your income using totals and colorful charts.
If you’re traveling and have expenses on the road, you can usually take pictures of receipts with your smartphone and upload them to your accounting app. Some accounting services attach these receipts to an expense form. Others, such as Intuit QuickBooks Online and Xero, read the receipts and transfer some of their data (such as date, vendor, and amount) to an expense form using optical character recognition technology.
Why You Should Import Transactions and Bank Balances
Daily accounting work typically involves paying bills, sending invoices, and recording payments. But you also need to closely monitor your bank and credit card activity. If you have connected your financial accounts to your accounting tool, then it’s easy to do. Balances usually appear on the app’s dashboard. You can also view each account’s online register, which contains transactions that have cleared your bank and been imported into your accounting app (along with those you’ve entered manually).
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You can do a lot with these transactions once they appear in a register. First, they should be assigned a category, such as office expenses, utilities, and travel. That way, you know where your money is coming from and where it’s going. Every accounting solution guesses how at least some transactions should be categorized. You can change them if they’re incorrect. Diligent categorization gives you more accurate reports and income tax returns.
You can also match related transactions, such as an invoice entered into the system and a corresponding payment that has come through. Again, some accounting services make educated guesses here. You can split transactions that should be assigned to multiple categories, make notes, and reconcile your accounts with your bank and credit card statements.
Creating Reports to Improve the Business
Reports are your reward for keeping up with your daily accounting and doing it correctly. Every small business accounting service has templates for numerous types of insightful output. You select one, customize it with the filter and display options, and let the software pour your company data into it. It takes only a few seconds to generate a report.
There are two kinds of reports. Most are the type that any small business owner could customize, generate, and understand. They tell you who owes you money, which of your products and services are selling well, whether you’re making money, which expenses and services haven’t been billed yet, which customers are buying the most, and how much you owe in sales tax.
There are other reports, though, that aren’t so easy to understand. Standard financial reports—such as Balance Sheet, Statement of Cash Flows, Trial Balance, and Profit and Loss—are the kind of documents you need if you ever want to get a loan from a bank or attract investors. Small business accounting software can generate them, but you may need an accounting professional to analyze them and tell you in concrete terms what they mean for your company.
Getting Help
All online accounting services simplify the accounting process, but there will undoubtedly be times when you have questions. You can often get help via chat, email, and phone. Some apps provide context-sensitive help along the way and a searchable database of support articles.
Intuit has an option called QuickBooks Live that adds bookkeeping support to Intuit QuickBooks Online. You communicate with a dedicated bookkeeper through one-way video chat (they can’t see you) or email. This individual and their team work with you on customizing your setup and monitoring your transactions so they’re accurately entered and categorized for tax purposes. They reconcile your accounts and close your books at month’s end to prevent errors. Plus, they’re available for questions during regular business hours. Finally, they generate the reports you need so you’re ready to prepare your taxes or hand them off to your accountant. Wave offers fee-based bookkeeping services but lacks Intuit QuickBooks Live’s interactive quality.
What Is the Best Accounting Software for Small Businesses?
Choosing a small business accounting application is challenging. The best one for you depends on your business needs. You want the product to allow room for your business to grow, but you don’t want to spend a lot of extra money on features you may never need. Most of the accounting services we review are available in multiple versions, so you can start at the low end and upgrade to a more powerful edition that looks and works similarly.
We recommend reading our in-depth review of any service that catches your eye to ensure it fits your needs—and your budget.
While you’re thinking about your money, you should also consider our reviews of online payroll services and personal finance apps.
