The Best Accounting Software for Small Retail Businesses

Opening a retail store is a big accomplishment. Whether you have a traditional brick-and-mortar operation, or you’re going all-in with an online store (or even a combo of the two), retail lends itself especially well to scaling and delegation. This allows you, the business owner, to enjoy the profits from your business without having to be entrenched in the day-to-day operations of the store.

To enjoy any possible profits of your retail store, however, you have to remain organized and properly manage your finances—making the right retail accounting software essential.

How do you determine which business accounting software is right for you? We’re here to help you find out.

In this guide, we’ll break down some of the best accounting software for small retail businesses—plus, discuss what to look for when choosing your accounting solution.

What Is Retail Accounting Software?

One of the first questions you might be asking is: What qualifies as retail accounting software?

In reality, any business accounting software can qualify as retail accounting software if you use it for your retail business. This being said, however, there are certain accounting software solutions that will be better suited for small retail businesses than others.

In addition to the standard bookkeeping and accounting tools you might look for in your retail accounting software, here are a few features, in particular, that will be important for retail businesses:

Inventory Management

Inventory is the lifeblood of a retail business—and therefore, it will be extremely helpful to have inventory management tools integrated within your accounting software.

This being said, however, inventory management should expand beyond monitoring the merchandise you have in stock. Along these lines, you’ll want to look for accounting software that can determine your cost of goods sold, the profitability of each product you sell, how long your inventory sits on the shelves or in the warehouse before it’s sold, the rate at which your entire inventory turns in a given period, and shrinkage due to theft or damage.

Although your point of sale system might be able to take care of some of these functions, it will nevertheless be beneficial to your business to have inventory tools within your retail accounting software.

Sales Tax Tools

Most states charge a sales tax, though certain items like medication, food, and clothing may be exempt in your state. With the increased impact of online business on sales tax revenues, many states are passing laws requiring out-of-state retailers to collect and remit sales taxes.

Therefore, you’ll want to look for retail accounting software that can track sales taxes due and customize your sales tax settings based on your business. Additionally, if you’re an online retail business, you may search for accounting software that caters specifically to the ecommerce industry in this way—a solution that can integrate with your ecommerce platform will be particularly helpful.

Payroll Capabilities or Integrations

If you have employees operating your retail store, payroll will be an important consideration to take with regard to your accounting software. Although payroll isn’t unique to retailers, it’s often one of the biggest expenses these businesses incur.

Therefore, you’ll want to make sure that your accounting software can handle your payroll correctly and efficiently. In this way, you might choose an all-in-one accounting solution that includes payroll functionality, or simply a platform that can integrate with separate payroll software.

Best Accounting Software for Small Retail Businesses

Ultimately, the best accounting software for your retail business will be the one that’s easy to use, affordable, and meets your unique financial needs.

With this in mind, you might start your search with these options—some of the top retail accounting software solutions on the market:

1. QuickBooks Desktop

As you search for the right retail shop accounting software, there’s no doubt you’ll come across the QuickBooks suite of products. QuickBooks is one of the most popular accounting solutions for small businesses out there—and for good reason.

In particular, the more traditional QuickBooks Desktop is a great option for brick-and-mortar retailers.

With QuickBooks Desktop, you can:

  • Track income and expenses
  • Create and send invoices
  • Run over 100 reports
  • Track sales tax
  • Manage bills and accounts payable
  • Track inventory with up to 14,500 items
  • Pay 1099 contractors

Additionally, QuickBooks Desktop can integrate seamlessly with QuickBooks Payroll, as well as QuickBooks POS, Payments, and TSheets.

retail accounting software, quickbooks enterprise

Inventory management in QuickBooks Enterprise. Image source: QuickBooks

With this in mind, there are three versions of QuickBooks Desktop—Pro, Premier, and Enterprise—which each offer an increasing level of functionality (with associated costs).

For retail shops just starting out, QuickBooks Pro will likely be the most affordable and suitable option, with a one-time cost of $299.95. On the other hand, businesses with more complex needs will find that Enterprise is one of the most powerful retail accounting software solutions out there.

All of this being said, it’s important to remember that QuickBooks Desktop is a locally hosted product—meaning you download it and run it on a specific computer. Therefore, if you operate multiple stores or an online business and want to be able to manage your finances wherever you go, you might instead choose to explore cloud-based retail accounting software.

2. QuickBooks Online

When it comes to cloud-based retail accounting software, QuickBooks Online is going to be one of the best solutions out there. Similar to QuickBooks Desktop, QuickBooks Online is known for its reliability, range of features, and powerful accounting tools.

Unlike QuickBooks Desktop, however, QuickBooks Online is web-based—meaning you can use your account anywhere you have internet access. In this way, QuickBooks Online is a much more flexible solution, making it a great choice for multi-store retail businesses, as well as online retailers.

This being said, although QuickBooks Online may not have a plan quite as powerful as QuickBooks Enterprise, it does offer four plan levels, allowing you to scale your retail accounting software as your business grows.

Overall, regardless of which of the four plan you choose, QuickBooks Online will allow you to:

  • Track income and expenses
  • Capture and organize receipts
  • Maximize tax deductions
  • Send estimates, invoices, and accept payments
  • Track miles
  • Run reports
  • Track sales and sales tax
  • Manage 1099 contractors
  • Utilize the QuickBooks mobile accounting app
  • Integrate with QuickBooks solutions (like QuickBooks POS, Payroll, and Tsheets) as well as hundreds of third-party tools

Along these lines, it’s important to note that the first two plan options Simple Start and Essentials, do not include inventory tools automatically within the platform. Therefore, you’ll likely either want to opt for the Plus plan or find an affordable inventory management software that integrates with QuickBooks Online.

retail accounting software, quickbooks online

Sales tax settings in QuickBooks Online. Image source: QuickBooks

Pricing for QuickBooks Online ranges from $25 per month to $150 per month, depending on the plan, making it an affordable solution for retail shops of all different sizes.

Additionally, as we briefly mentioned above, the accessibility of QuickBooks Online makes it a worthwhile accounting software for ecommerce businesses as well—especially since you can easily integrate with platforms like Shopify, Square, WooCommerce, and more.

3. Xero

With unlimited users, inventory management included in all plans, and over 700 third-party integration options, Xero accounting is one of the best accounting software solutions for online retail businesses. A top alternative to QuickBooks Online, Xero offers many of the same features, with a few slight differences.

First and foremost, as we mentioned, Xero includes unlimited users with all three of their plan options, as well as inventory management tools, among a full range of standard bookkeeping and accounting features.

Additionally, Xero’s three plans fall at a generally lower price point in comparison to QuickBooks Online, with the Early plan starting at $9 per month—although this plan limits the number of invoices, quotes, bills, and transactions you can make on a monthly basis.

For $30 per month, however, you can opt for the Growing plan, which eliminates these restrictions (and is a similar monthly cost compared to QuickBooks Online).

Overall, Xero is a robust retail accounting software option, offering:

  • Invoicing and quotes
  • Inventory management
  • Purchase order management
  • Bill pay and management
  • Reporting
  • File storage
  • Fixed asset management
  • Sales tax calculations and management
  • Contact management
  • Payment acceptance, and more

Plus, like QuickBooks Online, Xero is a cloud-based software—meaning you can access your account anywhere with an internet connection. Moreover, Xero has a dedicated mobile app, a partnership with Gusto for payroll services, and can connect to popular POS systems and ecommerce platforms, such as Square, Shopify, Lightspeed, BigCommerce, Magento, etc.

retail accounting software, xero

Item inventory tracking in Xero. Image source: Xero

All of this being said, with integrated inventory tools, a vast network of integrations, and general affordability, Xero is a great accounting software choice for online retail businesses and is certainly worth considering for brick-and-mortar stores as well.

4. Zoho Books

If you’re looking to bundle your retail accounting software with additional business tools from the same provider, you’ll want to look into Zoho Books.

On top of the Zoho Books accounting software, Zoho offers a range of products that can integrate seamlessly together—including Zoho Inventory, Expenses, Analytics, CRM, and more.

In addition, Zoho Books is one of the most affordable business accounting solutions out there, with their highest level plan, Professional, priced at $29 per month. This being said, the Professional plan includes a vast feature set, such as:

  • Invoices, bills, and estimates
  • Time and expense tracking
  • Reporting, budgeting, and banking
  • Customizable workflows
  • Vendor credits, purchase orders, and sales orders
  • Sales and purchase approval
  • Inventory management
  • Sales tax and 1099 tracking, and more

It’s worth noting that although Zoho Books has two lower-level plans, many of the retail-specific features—inventory, sales orders, purchase orders, etc.—are only available with the Professional plan.

retail accounting software, zoho books

Purchase order management in Zoho Books. Image source: Zoho

With this in mind, Zoho Books also offers a mobile accounting app, multicurrency and multi-lingual accounting, as well as project management tools.

Compared to solutions like Xero and QuickBooks, on the other hand, Zoho Books is relatively light on their integration options—but makes up for some of this with their own vast suite of business products.

Therefore, if you’re looking for affordable accounting software that you can bundle with other tools for your small retail business (whether brick-and-mortar or online), Zoho Books may be the right solution for you.

5. Wave

If you’re just starting your retail business, whether online or with a brick-and-mortar store, you may not have the budget to invest in accounting software. In this case, Wave accounting may be the best accounting software for your small retail business.

With Wave, you can sign up for an account and use their web-based software with no subscription fees. You’ll only pay associated fees if you choose to utilize their online payment processing services or integrated payroll. All of your bookkeeping and accounting tasks, however, you’ll be able to manage for free.

This being said, on the whole, Wave includes features like:

  • Bank and credit card connections
  • Income and expense tracking
  • Customizable invoicing and receipt scanning
  • Unlimited guest collaborators
  • Customizable sales taxes
  • Financial reporting
  • Bill and invoice reminders, and more

In addition, Wave offers a mobile app for their invoicing software, as well as one for mobile receipt capture.

retail accounting software

Wave accounting dashboard. Image source: Wave

Compared to other retail accounting software options on this list, Wave is lacking in some advanced features, as well as integration options, however, it’s hard to find free accounting software that’s as user-friendly and fully-functional as Wave.

Therefore, if you’re a new retail shop looking for accounting software on a budget, Wave will definitely be worth considering.

The Bottom Line

At the end of the day, these are just a few of the retail shop accounting software options that are available out there. Ultimately, therefore, it will be up to you to decide if one of these solutions or an alternative platform is right for your business.

This being said, as you compare different options, you’ll want to be sure to pay attention to their general accounting tools, as well as the features that are more specific to retail businesses—like inventory, sales tax, and payroll.

Additionally, you’ll want to consider the flexibility, accessibility, and of course, affordability of any retail accounting software—especially if you have multiple locations or run an online-based business. To this end, you’ll also want to ensure that any platform you choose can integrate or work with any existing business tools you utilize, particularly your point of sale system or ecommerce software.

Although it may be tempting to simply use some of the accounting adjacent tools that already exist in these solutions, you’ll find investing in a separate, accounting-specific software will greatly benefit your small retail business in the long run.

Billie Anne Grigg

Billie Anne Grigg has been a bookkeeper since before the turn of the century (yes, this one). She is a QuickBooks Online ProAdvisor, LivePlan Expert Advisor, FreshBooks Certified Beancounter, and a Mastery Level Certified Profit First Professional. She is also a guide for the Profit First Professionals organization. Billie Anne started Pocket Protector Bookkeeping in 2012 to provide an excellent virtual bookkeeping and managerial accounting solution for small businesses that cannot yet justify employing a full-time, in-house bookkeeping staff.
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