GnuCash Review: What You Need to Know
As a small business owner, learning to effectively manage your accounting processes is one of the most important pieces of your business finances. Luckily, whether you’re just starting out or have been operating for a few years, utilizing a business accounting software can help you streamline your bookkeeping tasks and day-to-day accounting operations.
This being said, however, many accounting software platforms come at a cost, which can be a deterrent to many small business owners, especially those just starting out. That’s where a free option, like GnuCash, comes in.
Although there are very few truly free accounting software options on the market, as an open-source platform, GnuCash is free to download and install and can be used to manage your basic bookkeeping and accounting processes.
Is GnuCash the right solution for your small business?
We’re here to help you find out. In this GnuCash review, we’ll break down everything this software has to offer—including features, pricing, and more. We’ll also discuss some top alternatives, so that you have all the information you need to make the best decision for your business.
GnuCash Accounting Software
Let’s start with the basics: What is GnuCash and how does it work?
As we mentioned, GnuCash is free accounting software—it can be downloaded from the GnuCash website (and has actually been translated into several languages) and installed directly onto your computer. GnuCash is compatible with both Windows and iOS computers and is also available through some Linux distributions.
In this way, GnuCash is different from many other typical accounting platforms. Unlike QuickBooks Online, Xero, or FreshBooks, GnuCash is both an open-source and locally installed software.
Essentially, this means that as an open-source platform, the most current version of GnuCash can be downloaded for free and the code of the software is available for anyone to develop or edit as they see fit. In addition, GnuCash is locally installed (in this way, it’s similar to QuickBooks Desktop) meaning it’s directly downloaded, installed, and used on one computer and cannot be accessed via a web browser. This being said, if you’re wondering: “Is GnuCash cloud based,” this means the answer is no. Whereas platforms like QuickBooks Online and Xero can be accessed using the internet regardless of computer or location, GnuCash is not an online-based platform and does not store any data in the cloud.
Keeping this important distinction in mind, the GnuCash software can be used to manage your business’s daily bookkeeping and accounting tasks. In fact, GnuCash isn’t exclusively designed for businesses, but can also be used as a personal financial management software.
- Simple and easy to use
- Limited accessibility
- Lacking in-depth features
- Manual compared to competitors
Now that we have a better sense of the GnuCash accounting software as a whole, let’s break down the specific features offered within this platform.
First and foremost, GnuCash is a double-entry accounting software platform, meaning every transaction on your books must debit one account and credit another the same amount.
You can record transactions in your “checkbook-style register,” including checking, credit card, income, stock, and currency transactions. In addition, you can enter split transactions, mark transactions as cleared or reconciled, autofill entered transactions, display multiple accounts in a single window, and view a summary bar of an account’s balance information. GnuCash also provides a reconcile tool that helps you compare entered transactions against a bank statement.
Moreover, GnuCash allows you to categorize your transactions into income and expense account types, as well as customize the appearance and display style of your register. GnuCash can also accommodate multiple currencies—even between different accounts within one system. You can also set up recurring transactions with preset amounts and a designated timeline—within this feature, you can also schedule a reminder of when a transaction is due.
All of this being said, although GnuCash is largely designed to accommodate manual transaction entry, the system does allow you to import external transactions using Quicken, QIF, or OFX files.
Graphs and Reporting
Within GnuCash, you can view your financial data in the form of a bar graph, pie chart, or scatter plot. You can also utilize their full suite of reports—which includes both standard and customizable options—like profit and loss statements, balance sheets, portfolio valuation, cash flow statements, and more.
As a locally installed accounting software system, GnuCash can only accommodate a single user. Multiple users can take turns accessing a single, shared account file; however, only one user can be logged in at a time.
Since GnuCash is not a cloud-based software system, the data you add and files you create are stored locally on your computer. This being said, however, GnuCash does create an automatic backup every time you save a file. By default, these backups are created in an xml format.
GnuCash also offers an “experimental feature” that allows you to store data in an SQL database. The website warns, however, that some use cases of this feature have resulted in data loss.
GnuCash offers a companion mobile app for Android users available in the Google Play store. This app allows you to record transactions anywhere for later import into the desktop version.
With this point, it’s important to emphasize that unlike business accounting apps for online-based software platforms that can sync automatically between mobile and web versions, any data stored in the GnuCash app must be manually imported into the desktop version.
Once again, the GnuCash app is Android only, and there currently is no iOS-compatible version.
Small Business-Specific Features
Overall, the features listed thus far could be utilized by any individual looking for accounting software. Although these are the core capabilities of the GnuCash platform, GnuCash also offers what they call “advanced features” specifically for small businesses. These include:
- Customer and vendor tracking
- Job assignments
- Bill pay
- Sales tax management
- Payroll management through accounts receivable and accounts payable
- Budget creation and management
- Check printing
Finally, whereas most web-based accounting software platforms include customer support in some form, as a free open-source software, GnuCash only offers online self-service tools.
Through the GnuCash website, therefore, you can access extensive documentation, as well as tutorials, guides, and a comprehensive Wiki page for help setting up and utilizing this accounting platform.
When it comes down to it, GnuCash is genuinely a free accounting software solution. As long as you have a computer, you can download, install, and use GnuCash at no cost.
This being said, however, because GnuCash is an open-source, locally installed platform, it’s important to consider that (depending on your technical experience) you may need professional assistance to update and maintain the software. Generally, GnuCash seems to be fairly straightforward for most users—but if you do encounter issues, it may be necessary to pay for a developer or IT professional to help you with the system.
Along these lines, GnuCash is largely a manual system—that is, opposed to an automatic one that connects directly to your bank account to pull transactions—and therefore, it may be even more worthwhile to work directly with a professional bookkeeper or business accountant to review your books and ensure that everything is accurate. In either case, there will be costs associated with hiring professional help.
Finally, it’s also important to remember that unlike some free or low-cost accounting platforms that offer additional features for associated costs, GnuCash does not function in the same way. This being said, whereas Wave (as we’ll discuss in greater detail below) allows you to upgrade your free software and pay for the ability to accept online payments, GnuCash does not have these add-on options. In theory, you could work with a developer to add certain features or capabilities to the GnuCash system, but that would require significant time and costs.
GnuCash Review: Pros and Cons
How does GnuCash stand up against other accounting software products on the market?
Based on the information we’ve explored thus far in our GnuCash review, we’d say the advantages and disadvantages of this software can be broken down as such:
- Free—ideal for small businesses on a budget and for freelancer accounting software
- Simple—includes essential features needed to manage basic finances
- Locally hosted, meaning very limited accessibility
- Lacking more in-depth features that could be useful for businesses
- Very manual system and outdated in comparison to most platforms
Pros of GnuCash
As we outlined above, the most notable benefits of GnuCash boil down to cost and simplicity. First, in terms of pricing, it’s hard to beat a totally free accounting software, especially if you’re a new or very small business.
Along these lines, not only is GnuCash free, but it’s also straightforward with essential features focused on basic bookkeeping. Although GnuCash does include features for invoicing, customer tracking, and budgeting, most of their capabilities are focused on recording transactions, reconciliation, and general financial management. In this way, small businesses that only need these core functions aren’t overwhelmed by a platform with a multitude of advanced features they don’t actually need.
Plus, even though GnuCash is simple, it’s still a double-entry system, which is generally considered the more accurate accounting method—and this feature takes the GnuCash software up a notch from a simple spreadsheet, like Excel, which makes double-entry accounting extremely difficult.
Cons of GnuCash
On the other hand, the advantages of GnuCash—its price and simplicity—also play a direct role in its weaknesses. When it comes down to it, GnuCash is lacking much of the accessibility, tools, and general user experience that is offered by most accounting software solutions out there.
Since GnuCash is a locally installed software, it severely limits a business owner’s access to their financial data. Although there are certainly business owners who prefer a desktop-based method, online-based solutions are becoming more and more popular as they are often more flexible, user-friendly, and can be utilized regardless of location on a variety of devices.
In addition, even though GnuCash’s simplicity can be a benefit, it can also be a drawback, as this software is very limited in its functionality. Most accounting software competitors on the market can accommodate multiple users, advanced reporting, receipt scanning, online payments, third-party integrations, and more. In comparison, GnuCash only allows one user, cannot integrate easily with third-party tools, and only offers a mobile app for Android—which requires manual import.
Ultimately, GnuCash seems outdated in their offerings, especially considering how manual the system is. Even a desktop-based software like QuickBooks Pro allows you to automatically connect to your bank and other accounts to streamline your processes and avoid manual data entry errors. Therefore, although the GnuCash system might offer you a step up from an Excel-based system, it still requires significant time and effort to manage.
GnuCash User Reviews
As you’re trying to determine if GnuCash is right for your small business, it’s worth taking a look at what other users have said about the platform.
Based on our research, GnuCash user reviews are generally positive. Although some business owners have their complaints, it seems like most software users are satisfied with their experience.
In particular, reviews highlight the cost of GnuCash, its large online community base, and the ease with which they were able to set up and use the platform. Additionally, many reviewers comment on how userful GnuCash is for freelancers, small businesses, and even for individuals.
On the other hand, although there aren’t many wholly negative reviews, users who offered critiques of the software seemed to agree on a few points. First, reviewers comment on how manual the GnuCash system is and how this can be both time-consuming and confusing, especially if you’re unfamiliar with double-entry accounting.
Additionally, some users write that the interface of the platform is outdated, could be more intuitive, and generally, GnuCash has a learning curve to get started. Finally, many user reviews note the difficulty with importing transactions, the lack of multiple user access, and limitations of a locally hosted platform as other top complaints.
Top Alternatives to GnuCash
Before you decide whether or not GnuCash can meet your business’s accounting needs, it’s important to explore some top competitors and see if there’s another solution that might be better-suited for your business.
Overall, although there are a multitude of options on the market, we’d suggest Wave, FreshBooks, and QuickBooks Online as the top alternatives to GnuCash.
Like GnuCash, Wave accounting is one of only a few truly free accounting software solutions. Unlike GnuCash, however, Wave is a web-based platform known for its accessibility, flexibility, and general ease of use.
You can sign up for a free Wave account online, as well as utilize their invoicing and receipts mobile apps from anywhere. With the Wave software, you can manage all of your basic bookkeeping and accounting tasks and do so by connecting your business bank account, credit cards, and other accounts like PayPal or Etsy.
Wave also can accommodate customizable invoicing, receipt scanning, guest collaborators, bill and invoice reminders, and more—all within their free system. Plus, if you’re willing to pay for additional services, Wave also offers a pay-as-you-go solution for accepting online payments, as well as a payroll system.
Ultimately, Wave is the more modern version of GnuCash. Wave is similar to GnuCash in price and simplicity, but surpasses the open-source solution with its modern, online-based platform, range of features (including paid add-ons), and automatic system.
This being said, if you’re a small business who wants a simple, accessible, and affordable way to manage your basic finances, without having to spend significant time and effort on manually adding and reconciling transactions, Wave is certainly going to be an alternative worth considering.
FreshBooks Accounting Software
Although our next option, FreshBooks, is a paid accounting software system, it nevertheless is a competitive GnuCash alternative, especially for freelancers or small businesses who invoice customers and clients.
Among a full range of features, FreshBooks offers one of the best built-in invoicing software solutions—allowing you to create and send highly customized invoices and payment reminders, set recurring invoices, add tracked time and expenses to invoices, automatically calculate taxes on invoices, and more.
Plus, regardless of which of the three FreshBooks plans you choose from, each option includes automated bank import, the ability to accept online payments (with an associated cost), estimates, time tracking, project budgeting, third-party integrations, and more.
This being said, the first FreshBooks subscription plan, Lite, starts at $15 per month and limits the number of clients you can attach to your account. Although this is a potential drawback of the FreshBooks software, on the whole, this web-based option offers next-level functionality that surpasses both GnuCash and Wave.
Therefore, if you’re willing to pay for your accounting software and are an invoice-based business, there’s no doubt that FreshBooks is a top alternative to keep in mind.
Finally, you might also consider QuickBooks Online as one of the top alternatives to GnuCash. Although QuickBooks Online is different from GnuCash in many respects, there’s a reason that it’s one of the most popular accounting platforms for small business owners.
Ultimately, with four different subscription plans, internal and third-party add-on options, and the robust community and resources available, QuickBooks Online can accommodate almost any small business—and therefore, is a great solution for business owners who anticipate to grow or change quickly.
QuickBooks Online is a web-based software and—regardless of the plan you choose—includes income and expense tracking, automatic bank connections, invoicing, basic reporting, integrations, customer support, and more. With the higher-level plans, QuickBooks Online offers even more advanced features, such as inventory tracking, project management tools, and integrated time tracking.
Of course, unlike GnuCash or Wave, you do have to pay for a QuickBooks Online subscription—and pricing for the lowest-level plan, Simple Start, begins at $25 per month.
Therefore, although QuickBooks may not seem like the ideal option for freelancers or very small businesses, it’s a great option for product-based businesses or businesses that want the ability to grow and upgrade within a single solution. Plus, if you are a freelancer interested in a QuickBooks product, Intuit also offers QuickBooks Self-Employed as a more specified solution
At the end of the day, despite the cost of QuickBooks, this accounting solution is one of the most robust, popular, and user-friendly options on the market, and thus a worthy alternative solution to GnuCash.
The Bottom Line
Ultimately, only you can decide which accounting software solution—GnuCash or otherwise—is best for your business.
This being said, if you’re looking first and foremost for a free platform, your options will be more limited, and GnuCash may be a sensible choice. Considering the cost and simplicity of this software, it’s likely best-suited for smaller businesses or freelancers.
On the other hand, however, considering the weighty drawbacks of this accounting software—namely, the fact that it’s extremely manual, locally installed, and limited in features and accessibility, it’s hard to say that it’s a more effective solution than Wave or other low-cost options.
At the end of the day, if you’re still unsure whether GnuCash is the right choice for your business, you can always download it, install it onto your computer, and test it out for yourself. This way, you’ll be able to explore the platform firsthand, compare GnuCash’s accounting tools and functionality to any other options you’re considering, and finally, decide what software will work best for you.
Randa Kriss is a senior staff writer at Fundera.
At Fundera, Randa specializes in reviewing small business products, software, and services. Randa has written hundreds of reviews across a wide swath of business topics including ecommerce, merchant services, accounting, credit cards, bank accounts, loan products, and payroll and human resources solutions.