As a small business owner just getting your venture off the ground, you wear many hats. You’re not only the founder of your company, but you’re its number one sales rep, the chief marketer, the go-to office manager, and oftentimes its business accountant.
When you’re just starting out, bookkeeping, accounting, and tax preparation often falls onto your plate. But when things really get busy, choosing the right small business accounting software to help you get your accounting work done can make your life as an entrepreneur a whole lot easier.
With so many choices out there, though, how do you know which software will work best for you and your business?
Here’s a closer look at 6 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.
Let’s weed through the different QuickBooks options out there to determine which of QuickBook’s small business accounting software is right for you.
QuickBooks Desktop is a small business accounting software that’s been around for some time—serving small businesses and their accounting needs since the 1990s.
The QuickBooks Desktop package is small business accounting software that you need to install onto your computer. QuickBooks Desktop is generally geared to small businesses that need inventory tracking systems—usually product-based businesses.
There are two QuickBooks Desktop versions you need to know, though: QuickBooks Pro and QuickBooks Premier.
QuickBooks Pro is the more simple version of QuickBook’s small business accounting software. But don’t let its simplicity fool you—it’s one of the most robust and powerful accounting softwares for the right kind of small business.
The QuickBooks Pro 2017 small business accounting software (the most basic version of QuickBooks Desktop) comes at a starting one-time payment price of $219.95.
Here’s what you’ll get with QuickBooks Pro 2017:
QuickBooks Pro 2017 offers more than just this list of features—and once you access all of its accounting tools, you’ll find that you can get a lot of bang for your buck with the Pro version.
QuickBooks Pro is the small business accounting software that everyone knows and almost everyone has used for their business before. It’s the most general—but powerful—small business accounting software out there. A mid-market company can get about 80% of its daily needs out of it, so we bet that you’ll get what you need from this QuickBooks Desktop version.
But that doesn’t necessarily mean you couldn’t find a better small business accounting software. Let’s review QuickBooks Desktop Premier.
QuickBooks Premier is the next step up from QuickBooks Pro. It comes in at a one-time price starting at $379.95, which is pretty steep for a small business accounting software.
You’ll of course get more out of QuickBooks Premier than you would QuickBooks Pro.
There are a few different versions of QuickBooks Premier, and some of those versions offer what QuickBooks Pro does and then some.
But in general, here’s what sets QuickBooks Premier above the Pro version:
When it comes down to it, there are a few reasons why a business would choose QuickBooks Premier.
For one, Pro doesn’t allow you to track your back orders—showing you what products were invoiced and what’s left over to ship to your customer. Premier does.
Premier also has an easier sales order workflow management, allowing you to access a sales order fulfillment worksheet.
Premier sets itself apart by having current availability tracking, letting you know exactly what you have on hand to promise a customer. QuickBooks Pro doesn’t allow you to see your available inventory based on what’s available and what has been committed to other customers.
Another main reason why certain business owners—like contractors—would choose Premier is the ability to estimate a purchase order. Say you have an estimate with 25 lines of materials you need to purchase to get a job done. Premier allows you to create a purchase order just from that estimate.
Finally, Premier allows you to do previous reconciliation reporting—making Premier a standout among accountants.
All in? Of the QuickBooks Desktop versions, Premier is the better small business accounting software option—you’ll get more out of it for your business’s accounting needs.
The next QuickBooks product that you should consider for small business accounting software is QuickBooks Online.
QuickBooks Online isn’t a software per say—you don’t need to install it onto your computer, but you’ll access your account through an online portal.
In general, QuickBooks Online (unlike QuickBooks Desktop) works great for small businesses that don’t have inventory tracking needs, but instead are service-based businesses that have simple invoicing requirements.
There are three types of QuickBooks Online versions: QuickBooks Simple Start ($10 per month), QuickBooks Essentials ($21 per month), and QuickBooks Plus ($28 per month).
All three QuickBooks Online accounting tools are affordable options for small business owners. Let’s run through why you’d choose each one for your business.
QuickBooks Online Simple Start is probably the best option if you run a very small business. The one-person, freelancer, contractor or home-based business can get everything they need for their accounting with Simple Start ($10 per month).
This small business accounting software helps you:
Simple Start is the most bare-bones version of QuickBooks Online. Once you grow your business, it’s pretty likely that you’ll grow out of Simple Start, too.
As you ramp up from Simple Start, you get more automation and more insights into your business with QuickBooks Online Essentials ($21 per month).
For just $11 more a month, QuickBooks Online Essentials gives you more than Simple Start:
And as you would expect, bigger small businesses can benefit from the next level up: QuickBooks Online Plus ($28 per month). If you have employees or independent contractors, maintain inventory, or need to track billable hours, consider the most expansive QuickBooks Online version.
QuickBooks Online Plus has everything you’ll get from Simple Start and Essentials, plus it:
For only $7 more than the Essentials package, the QuickBooks Online Plus offers the most features and the most robust small business accounting software for QuickBooks.
QuickBooks wins out by time-tested accounting features, reliability, and a wide array of product offerings. Any accountant can get exactly what they need from one of the QuickBooks small business accounting software packages.
Now that we’ve reviewed all—or at least most of the important stuff—that QuickBooks has to offer, how do you choose between the Desktop or Online versions?
Well, Intuit itself says that 3 out of 4 business owners get more work done with QuickBooks Online. Why? Probably because QuickBooks Online has great time-saving features and is very easy to use—you might just be more productive with the accounting features you absolutely need. Plus, you’ll be able to access your QuickBooks account anywhere, offering a distinct advantage for small business owners on the go.
But if you’re running a pretty big operation, you might want to go beyond QuickBooks Online and get industry-specific accounting features for your retail, manufacturing/wholesale, professional services, nonprofit or contractor business. If that’s the case, then you should check out QuickBooks Premier small business accounting software, offering an annual subscription that includes upgrades, support and data backups.
If you, like many, 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. FreshBooks is on the list of the top small business accounting software packages, but it’s actually a fully mobile platform.
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.
While FreshBooks is simple enough for any small business owner to use, it doesn’t lack the functionality you need from small business accounting software.
All FreshBooks products allow you to:
With enough powerful features to make any accountant happy, FreshBooks might win out on your search for the right small business accounting software just based on its pricing.
The mobile app itself is free to download, but you’ll have to purchase a FreshBooks subscription to use it.
For a very small business, consider “Lite,” which costs $15 a month and handles up to 5 active clients.
If you have employees or freelancers and over 25 clients, step up to Plus—$25 per month and the most popular FreshBooks small business accounting software product. FreshBook Plus enables integration with project management tools, as well as time tracking and team expense reporting.
If you bill up to 500 active clients, then you’ll need Premium ($50/month).
Why would FreshBooks be the perfect small business accounting software for you?
The FreshBooks mobile app is actually quite easy to use—making accounting easier to swallow for the reluctant small business owner. Small business owners care about taking the time and stress out of managing business finances, and FreshBooks will do just that.
Plus, 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.
However, if your business maintains a lot of inventory and needs very robust small business accounting software, this probably isn’t your perfect small business accounting software.
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 is well-known as the QuickBooks alternative for small business owners looking for more simplicity for their accounting.
Xero is a powerful small business accounting software that’s probably most comparable to QuickBooks Online.
Xero actually has many of QuickBooks’ features but with a little more:
Xero also 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?
The most basic plan, Starter, starts at $6.30 for the first 6 months, and bumps up to $9 per month thereafter. The Starter Plan is for business owners who don’t invoice more than 5 customers.
If you need to generate more than five invoices monthly, begin with the Standard plan, which starts at $21 for the first 6 months and is $30 thereafter. The Standard plan 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 Premium version, which starts at $49 for 6 months and is $70 per month thereafter. Premium handles multiple currencies, payroll for 10 employees, and unlimited users on the platform.
As far as small business accounting software goes, Xero wins out by balancing power and price.
Xero offers a suite of features that will get your small business accounting done, but doesn’t come with a steep price tag.
While Xero offers what you need in a small business accounting software, one downside is that not all accountants in the United States use it. This will only be an issue if you decide to hire an outside small business accountant to manage your books or handle small business taxes. Xero tries to solve this issue by providing accountant access to business accounts and user access to partner accountants and accounting firms.
Wave comes in as a top small business accounting software for it’s easy-to-use and free basic accounting services.
That’s right—the most basic Wave package is free for small business owners. But just because it’s free doesn’t mean it’s not powerful. Wave has strong accounting and invoicing tools—with a large customer service network—to help newer and smaller businesses master the art of accounting.
Wave is a free accounting and invoicing platform, making it a good option for smaller businesses and sole proprietors.
You’ll find Wave an especially good option if you, like many entrepreneurs, don’t have a strong background in accounting and feel overwhelmed by other small business accounting software packages.
Wave sets itself apart from the other small business accounting software programs by sticking to the accounting essentials. It allows you to:
Wave offers surprisingly strong accounting tools with their basic package for free. No conditions or surprises.
If you want to up your capability with Wave’s small business accounting software, you can pay more to do so. For instance, if you want to start credit card processing with Wave, they’ll charge you 2.9% + 30 cents per transaction for all credit cards. And if you want to use their payroll services, you’ll pay a $15 base fee and a $4 fee per employee. (Discounts are available if you have more than 10 employees.)
Wave is the obvious choice for small business owners who just don’t want to spend money on their accounting—it’s without a doubt the best free small business accounting software available.
Wave is also a strong choice for small business accounting newbies. It’s very easy to create your account, and the main accounting dashboards are easy to use and understand.
Although Wave is a solid free option for small business owners, you might find that the accounting functionalities aren’t enough for you. You’ll have to pay for payroll services, for instance, and you won’t get as many tools as you will with QuickBooks, FreshBooks, or Xero.
If you run a very small business, you might not be willing to dish out your hard-earned cash for the most robust small business accounting software.
And you’re probably right—businesses with fewer than 10 employees probably don’t need the most powerful QuickBooks, FreshBooks, or Xero small business accounting software.
That’s why Zoho Books is on our list of the top small business accounting software available. Zoho Books can be the perfect affordable accounting software for the smallest businesses.
Zoho Books offers a simple small business accounting software that covers all the basics:
Zoho Books offers a strong and very easy-to-use accounting and invoicing platform. It’s a “no-nonsense” kind of service, with a simple dashboard that has everything you need to know in one place.
While Zoho Books is a great service for small businesses, it isn’t free like Wave. Zoho Books is by no means expensive, though, coming in at $24 per month for a full suite of services and an unlimited number of users.
Zoho Books makes sense for the smallest of small businesses—micro-businesses are a great fit. It’s specifically designed for businesses with 10 or fewer employees, and is there to help you get your basic accounting tasks done.
While you do have to pay for Zoho Books, you’ll probably get more out of the accounting tools than you would with Wave’s free small business accounting software. So if you’re willing to pay just a little bit for an accounting software, Zoho Books could be worth the $24 per month price.
Of course, most small businesses with more than 10 employees won’t get the most powerful accounting help from Zoho Books. For instance, it doesn’t allow any sort of payroll management for small businesses.
You also won’t get the established network that you would with QuickBooks, FreshBooks, or Xero. As a relatively new accounting service, Zoho Books is just starting to build up it’s small business and accounting base. You’ll find that Zoho Books doesn’t integrate with as many third-party products and solutions, and it might not have the same network of accountants as the other software services do.
When it comes to choosing from the list of the top small business accounting software available, you have a lot to consider.
First off, the right choice for your business totally depends on the size and kind of business you run. If you’re a smaller business with only a few clients, not much inventory tracking needs, and only a few employees to manage, a more limited (and cheaper!) service like Wave and Zoho Books is a safe bet.
On the other hand, if you need heavy-duty inventory, invoice, and expense management, working with the tried-and-true accounting softwares like QuickBooks, FreshBooks, and Xero makes more sense.
Remember—small business accounting might seem like a thorn in your side, but it’s crucial that you put your attention and resources to it. Mismanaged bookkeeping or small business taxes can hurt your business in the long-run. So if you need a robust set of accounting tools, don’t worry about the price tag and go for the full-service suite that fully meets your accounting needs.
Plus, almost all of these small business accounting software products come with a one- to three-month long free trial, so you can test out what you really need before you dish out the cash!
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Great to see accounting software comparison in one place. I have been going with Apptivo, so guys give reviews about this tools. I am waiting for your updates.
Great article! Each one of these are awesome for different reasons.
Rieva, great list! I know FreshBooks and I live it. On my current project we work with http://moneypenny.me. Its key features are invoicing and time tracking. You can create an invoice in a couple of minutes (same for estimates). If you using the Apple/Android app you can easily add receipts to your projects just by taking a photo. If you work in a team you can invite the people and manage their tasks and roles. I hope MoneyPenny makes it into your list someitme in the future.
Hi Kenan, great question! I've been following InDinero for awhile now...for awhile it seemed they were going the route of being a "Mint for small business" and have only recently pivoted to the all-inclusive accounting package world. I love the idea of outsourcing the whole process, but to be honest, I have yet to find a business owner that I know that uses them. We hesitate to recommend products that we can't get personal recommendations from our customers/networks on. I'm really, really interested to watch InDinero grow and learn more about them. In fact, when you guys switch over, I'd love to hear about your experience. Who knows, maybe it will inspire a blog post :). My email is meredith at fundera dot com!
Did you guys research InDinero at all? We are currently switching over to them and I haven't heard any reviews. I'd love any insight.