Good, Better, Best: A Comparison of the Top Small Business Accounting Software
Choosing the right small business accounting software can make your life a lot easier. But with so many choices out there, how do you know which software will work best for you? Here’s a closer look at three of the most popular small business accounting software applications.
Intuit’s QuickBooks is the 800-pound gorilla of small business accounting software. Designed to be simple enough for non-accountants to use, QuickBooks is a program your accountant will be quite familiar (and happy) with. Its widespread use means a variety of apps including Square, TurboTax and Concur can integrate with it.
The QuickBooks line offers a wide range of options to suit any size and type of business, including both desktop and cloud-based software. One of the nice features of QuickBooks small business accounting software is that you can start with more basic versions and move up as your business grows.
Very Small Business: For the one-person, freelancer, contractor or home-based business, take a look at QuickBooks Online Simple Start ($12.95/month). This small business accounting software helps you separate business and personal finances, maximize tax deductions and set aside money for quarterly taxes. You can also share data with your accountant, access it anywhere from the cloud and integrate with other applications.
As you ramp up from Simple Start, you get more automation and more insights into your business. For instance, QuickBooks Online Essentials ($26.95/month) adds the ability to set up recurring invoices, manage and pay your own bills, schedule future payments, and see how your business compares to others in your industry.
Bigger Small Business: If you have employees or independent contractors, maintain inventory, or need to track billable hours, consider QuickBooks Online Plus ($39.95/month). It tracks inventory and billable hours, handles 1099s and W2s, allows multiple users and provides more than 65 reports on your business’s finances. You also have the option to add on payroll services or mobile payment acceptance for an additional monthly fee.
Biggest Small Business: Want to go beyond Online Plus and get industry-specific accounting features for your retail, manufacturing/wholesale, professional services, nonprofit or contractor business? Then you should check out QuickBooks Premier small business accounting software, which starts at $299.95 for an annual subscription that includes upgrades, support and data backups. For example, a contractor can create job estimates and track change orders, analyze each job’s profitability in detail and organize job costs by vendor.
If you, like me, break out in a rash at the mere thought of bookkeeping, take a look at FreshBooks. This cloud-based small business accounting software stands out for its excellent customer service, intuitive interface and ease of mobile use. Simple enough for the most financially clueless small business owner to jump into right away, FreshBooks still provides enough information to keep your accountant satisfied. Live, free phone and email support is a big plus.
Finally, FreshBooks’ mobile functionality is impressive because it was designed to be mobile from the start. If you’re on the go most of the time—overseeing client jobs, consulting or making sales calls—but still want to keep up with your accounting on the fly, this could be the tool for you. (If your business maintains a lot of inventory, however, this probably isn’t your perfect small business accounting software.)
All FreshBooks products let you create invoices and estimates, track expenses, accept credit cards online, and import or export information from and to bank and business credit card accounts. For a very small business, consider “Seedling,” which costs $19.95 a month and handles up to 25 clients. If you have employees or freelancers and over 25 clients, step up to Evergreen ($29.95/month), which enables integration with project management tools, as well as time tracking and team expense reporting. Want to let five people (instead of just one) access FreshBooks? Then you’ll need Mighty Oak ($39.95/month).
Are you looking for the best of both worlds—the full functionality of QuickBooks with the simplicity and mobile-friendliness of FreshBooks? Then you might want to check out Xero. This small business accounting software, which launched in New Zealand and is widely used in Australia and the U.K., is now expanding into the U.S.
Xero touts its simplicity compared to QuickBooks. For example, bank reconciliations—a dreaded task for my business partner—are “gamified” so they’re fast and actually kind of fun.
Xero allows unlimited users access and integrates payroll into all versions of its software, while QuickBooks and FreshBooks charge extra for additional users, and QuickBooks charges for payroll. In addition, Xero integrates with over 350 apps.
Which Xero plan is best for you? If you need to generate more than five invoices monthly (I assume most businesses do), begin with the Standard plan ($30/month), which handles payroll, direct deposit and e-filing taxes for up to five employees. If you have 6 to 10 employees or sell internationally, you’ll want the ($70/month) version, which handles multiple currencies. (There are other plans, but right now the maximum Xero can handle is 100 employees. If you have rapid growth plans or close to 100 workers, it might not work for you long-term.)
Still not sure which small business accounting software is ideal for your business? All of the products mentioned above offer a one-month free trial. Try out several and see which one serves your needs best. Happy accounting!
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