The 3 Best Bookkeeping Software Applications—According to Bookkeepers

Updated on November 18, 2020
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There’s no surprise that bookkeepers tend to agree on one thing when it comes to cloud accounting software: that the two best bookkeeping software applications are QuickBooks Online and Xero.

Within those top two, however, the jury is still out on which one is better and why.

But that’s not the question we’re addressing today. We want to go beyond the top two to find out what the top three bookkeeping software options are—according to bookkeepers.

I took to my “Between Wall and Main” strategy forum, which has (as of March 2018) over 1,000 accountants, bookkeepers, and business owners, to see what they thought, and the results might surprise you.

But first, to get some context, let’s go over what criteria you should consider when you choose the best bookkeeping software for your business:

What Small Business Owners Should Look for in Bookkeeping Software

At the end of the day, one of the main purposes of bookkeeping software is to make small business owners’ lives easier. So, even with all of the fancy bells and whistles, a bookkeeping software needs to help you automate and optimize your business’s financial processes.

And the feature that achieves this end most effectively is the bank feed feature of bookkeeping software. As a small business owner, you’ll want to look for bookkeeping software with an intuitive and helpful bank feed feature. This feature will allow you to connect your business bank accounts and business credit card accounts to your bookkeeping software account so that all of your financial activity automatically loads into your books. This will allow you and your bookkeeper to shave some serious time off of bookkeeping duty.

As a result, in your search for the best bookkeeping software for your business, you’ll want to keep an eye out for user-friendly, glitch-free bank feeds that are compatible with your business’s bank.

What Accountants Want From Bookkeeping Software

On the other hand, speaking from experience, your accountant will probably look for other criteria in their search for the best bookkeeping software for your business. Specifically, your accountant will more than likely want a bookkeeping software that allows them to produce stellar reports.

How easy does your bookkeeping software make it for your accountant to get the information they want, formatted like they want it?

In order for your accountant to consider which one is the best bookkeeping software application for your business, they are going to want the very best reporting capabilities they can get. They’ll want to be able to customize reports, and they’ll want to be able to answer to you, the small business owner client, when you want to know, for example, how profitable a specific project or piece of inventory is.

The Best Bookkeeping Software for Both Accountants and Small Business Owners

With the two main criteria covered, let’s take a look at the top bookkeeping software options on the market:

According to the many members of my strategy forum who contributed to finding them, these top three bookkeeping software products are the best at addressing both the needs of small business owners—intuitive, easy-to-use bank feeds—and of accountants—high-power report capabilities.  As a result, they’ll provide the perfect balance for small business bookkeeping software needs—saving you time while also allowing your accountant to do their thing.

Bank Feeds in the Best Bookkeeping Software Options

Small business owners shopping specifically for good bank feeds within their bookkeeping software options should know that the bank feeds in each of the three best bookkeeping software products are probably about equal. Though all three will come with slightly different setups, they’ll all work remarkably well. They all allow you to easily reconcile your books with your bank and credit card transactions with the click of a button, and they’ll all more than likely be compatible with your business bank account.

Sage One, the smallest name of the three, won’t necessarily be able to connect directly with your business bank account. However, through the third-party capabilities of Yodlee bank feeds, they’ll be able to stream bank account and credit card activity straight to your bank feed.

Xero, a slightly bigger company, will have some banks—like Capital One, Wells Fargo, and Silicon Valley Bank—that it will be able to connect accounts with directly. However, users will also have the option to set up a Yodlee feed as they would with Sage One.

QuickBooks Online, the biggest name of all, provides the most direct bank feed possibilities. This means that you’ll more than likely be able to connect your business bank account directly to your bookkeeping software bank feed, though you should double check to make sure if you work with a smaller, local bank.

Reporting in the Best Bookkeeping Software Options

Reporting capabilities are where the top three bookkeeping really start to vary.

When it comes to reporting, Sage One and Xero have a great set of standard reports, but they are both limited in terms of the ability to customize reports.

Admittedly, Xero has recently added in a very robust module that lets you move things around on your reports and create sections. You can even write formulas to calculate crucial data on these Xero reports. However, the problem with Xero’s reporting is that even with all of that sophistication, it lacks the ability to give you some very basic, yet very important information. In short, the ability to drill into an account’s details, and quickly total by name, is very glaringly missing from Xero’s reporting capabilities.

Meanwhile, Sage One has no capabilities for customizing reports. That said, the standard reports that do come with Sage One are great. In fact, they have included one important report that the others haven’t—uncleared transactions, which can provide some important insight for small business owners and their accountants.

QuickBooks Online is superior to each of the other two when it comes to reporting. The main reason, as you’ll see in the video above, is how easy it is to customize reports and get the information needed.

As someone who works in the capacity of an outsourced CFO, I can appreciate how important it is to be able to get valuable information quickly through a business’s bookkeeping software. QuickBooks Online makes that easy to do.

At the end of the day, if you want to make your accountant happy, use QuickBooks Online.

The Last Word for the Best Bookkeeping Software on the Market

There you have it—the three best bookkeeping software options for small business, all laid out in front of you. Short of hiring a bookkeeper, which requires intensive recruiting and interviewing, these software options will help you get the job done.

Through this bookkeeper’s guide to the best bookkeeping software on the market you’ve learned:

a) to look for the best bank feed and reporting features in your bookkeeping software options


b) that the most powerful crossovers between these two criteria will be found in:

  • Sage One
  • Xero
  • QuickBooks Online

All in all, unless you’re particularly tied to your other two bookkeeping software options, QuickBooks Online, with its customizable reports, is a clear frontrunner and will allow your accountant to access crucial insights to your business’s financial health.

Seth David
Contributing Writer at Fundera

Seth David

Seth David is the chief nerd and president of Nerd Enterprises, Inc. which provides consulting and training services in accounting and productivity based software. Consulting services range from basic bookkeeping to CFO-level services such as financial modeling.

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