5 Best Cloud Accounting Software for Small Businesses

QuickBooks Online is known for its robust feature set, including key features, like project management and inventory accounting—and this makes it our overall best small business accounting software. It is ideal for small business cloud accounting because it allows you to invite your bookkeeper as an accountant user without counting toward your paid users.

Unlike the other software on this list, QuickBooks Online has a “My accountant” tab in its dashboard that lets you communicate with your bookkeeper efficiently. For instance, your accountant can create to-do lists and requests, and conversely, you can add documents, complete requests, and leave comments for your accountant to review.

Standout Features

• Free guided setup with a QuickBooks ProAdvisor: Gain access to guided setup with a QuickBooks ProAdvisor if you need assistance with setting up your account. This is a unique feature of QuickBooks and is especially helpful if you are a novice and can use the assistance of an expert in the software.
• Project accounting: Get strong project accounting features, including the ability to create projects and convert estimates to invoices. While you’re unable to set up cost estimates for projects and compare them with actual costs, you can assign wages, income, and expenses to projects with QuickBooks Online.
• Reporting: Generate over 100 reports and customize these reports to obtain the data you’re seeking. Reports can be saved and exported to Excel or PDF format.
• Access to QuickBooks experts: Get access to a wide network of independent QuickBooks ProAdvisors. You can also choose to work with a ProAdvisor through QuickBooks Live; services from QuickBooks Live include categorizing transactions, reconciling bank accounts, and meeting regularly to review reports and answer questions.
• Integrations: Use over 800 third-party integrations, with access to thousands more apps via Zapier. This includes a wide range of popular tools like PayPal, Square, Stripe, Google Sheets, and Salesforce.
• Banking and cash management: Record activity manually or import bank transactions through either a live bank feed or by importing your bank statement. QuickBooks Online also has a powerful reconciliation feature that allows you to generate reports to view cleared and uncleared transactions.

Use Cases

• You want to be hands-on with your bookkeeping: We selected QuickBooks Online as the overall best small business accounting software, and it was designed to be used by business owners who don’t have a formal accounting or bookkeeping education. Its UI is intuitive and easy to use, making it a good fit if you want to handle your own invoicing, bill payment, and other bookkeeping tasks.
• Startups: We ranked QuickBooks Online as the best startup accounting software because of its scalability. From the Simple Start to the Advanced Plan, it allows your business to add more advanced accounting features and users as it grows.
• Real estate businesses: QuickBooks Online allows you to separate activity by class and location, which allows real estate businesses, such as property management companies, to track income and expenses for various segments and locations.

QuickBooks Online scored well in most categories, and it even aced my assessment of general features, reporting, banking, and integrations. However, it took a slight hit with value because other software with similar features is available for a slightly cheaper price. If pricing is important to you, I recommend Xero, which can accommodate unlimited users.

While QuickBooks Online has no client portal, you can add notes and documents to transactions if there is important information that you want to relay to them. Further, the program is secure, as it uses advanced industry-recognized security measures, such as SSL encryption, password-protected log-ins, and firewall-protected servers.

For those who often work on the go, you’ll appreciate its mobile app, which you can use to capture expense receipts, create and send invoices, and accept payments. However, QuickBooks’ mobile app didn’t score as high as Zoho Books, which earned a perfect score.

I recommend FreshBooks for sole proprietors and freelancers because of its strong time tracking and invoicing features. It has a built-in time tracker, and it’s easy to add time entries to your invoices when billing clients. Since only one seat is allowed in each subscription (unless you pay for additional seats), it’s ideal for freelancers or business owners who don’t require collaboration with multiple team members.

Just like QuickBooks Online, FreshBooks allows you to invite your bookkeeper as an accountant user through email. Once set up, they can work on reports, expenses, journal entries, and more. Meanwhile, for smoother transactions with your customers, they can create free client accounts that allow them to save, view, and comment on their invoices, estimates, and proposals. They can also collaborate on any projects that they are invited to.

Standout Features

• Invoicing: Personalize invoices by adding a logo and a personal message. Also, create recurring invoices, which is especially useful if you bill for the same service regularly. Monitoring outstanding invoices is also easily accessible.
• Project accounting: Get project management features that work directly with FreshBooks’ invoicing tool. It allows you to create estimates, and once they are approved, you can convert them to a project and allocate actual labor cost details.
• Expense tracking: Easily track your business expenses with FreshBooks by snapping photos of your receipts and categorizing them or connecting your bank account to automatically import transactions.

Use Cases

• You’re a freelancer or solopreneur: Self-employed individuals, such as consultants, coaches, and designers, who want DIY bookkeeping will find FreshBooks intuitive, even without bookkeeping experience. We included FreshBooks in our guide to the best accounting software for freelancers because of its simplicity and ease of use.
• You need to track time for client projects: FreshBooks is particularly useful for service-based businesses, such as law firms, marketing agencies, and accounting firms, needing to track their time and billable hours for client projects. You can also track time using the mobile app.
• You’re seeking strong customer support options: FreshBooks’ customer support makes it easier for users to contact the support team for assistance. You can call FreshBooks directly or request that a rep call you, communicate via chatbot, or access the online self-help information.

FreshBooks took a hit for value because it charges for additional users, which can become expensive if you need more than one; I recommend Xero if access to unlimited seats is necessary. FreshBooks is also lacking in its banking features, so QuickBooks Online is the better choice with its perfect score in that category.

On the downside, unlike QuickBooks, FreshBooks doesn’t have a special “My accountant” feature or something similar where you can easily upload documents requested by your accountants or bookkeepers. Its inventory features are also almost nonexistent, so I recommend Xero again in this case. Nevertheless, FreshBooks is easy to use, with a clean UI and intuitive navigation.

Wave is a good choice for service-based businesses with basic bookkeeping needs, including income and expense tracking and invoicing. Its free subscription is often suitable for businesses handling a few transactions daily, but I recommend the paid plan for automatic bank feeds and receipt scanning. The free tier allows you to upload transactions from a monthly bank statement, which is a time-saver, but this is not as convenient as a live bank connection.

Additionally, when you upgrade to the paid option, you can set up as many users as needed, and everyone can access the software simultaneously. It also has a built-in email feature that lets you send invoices and other documents instead of sending them via your personal email.

Standout Features

• Free accounting and invoicing: Enjoy no-cost accounting and invoicing with Wave’s free plan. Its basic features are more than enough for solopreneurs who want to track their income and expenses.
• Bookkeeping support: Subscribe to assisted bookkeeping for $149 per month through the Wave Advisor program, which is more affordable than other virtual bookkeeping services like QuickBooks Live and Bench.
• Receipt scanning: Get receipt scanning and uploading features, letting you attach receipts to invoices or expenses easily. We chose it as one of the top receipt scanner apps because of its optical character recognition (OCR) capabilities, which help with extracting data from receipts automatically.

Use Cases

• You need to compile income and expenses after the fact: If you don’t compile your income and expenses until after the year, there is no point in spending money on expensive software. Wave will do a great job of uploading transactions from a bank statement and helping you group them into income and expense categories.
• You’re a small-scale property manager: Wave is ideal for tracking rent income and expense for landlords with a few properties for lease, and we chose it as one of the top real estate accounting software.
• You’re looking for affordable payroll: Wave charges $20 to $40 per month plus $6 per employee for payroll services, and it allows you to offer features, such as direct deposit to your employees. Learn more through our review of Wave Payroll.

Wave did great in the value category because it offers everything freelancers need for only $16 per month. It also did well with its general features and ease of use. It struggled the most in the areas of inventory and project accounting, as well as its mobile app and ease of setup. I recommend Xero for project accounting and inventory management and Zoho Books for its mobile app because of its perfect mark in that category.

There is no special designation for accountant users in Wave, but you can add them as a normal user in the paid subscription since you’re allowed unlimited seats for a single price. However, there’s no option to attach documents to transactions to share them with your accountant, so you’ll have to use your email or phone to send documents. This may not be a big deal for businesses that manage minimal transactions daily.

A mobile app is a crucial feature of cloud accounting software, and Zoho Books nails it in this area, which is why I selected it as the best mobile app for this guide. All the other software on this list has mobile apps, but Zoho Books’ has more enhanced features, such as the ability to enter and track unpaid bills and record time worked by your employees and then assign them to a customer or project.

Another feature I like about Zoho Books is its client portal, which is unavailable in most of the other software I’ve reviewed. This feature helps improve communication with your clients as it allows them to track their transactions and interact with you in real time through comments. This is useful for businesses that are working with many clients.

Standout Features

• Mobile app: Send invoices, accept payments, record time worked, and view reports. The app tops our list of the best mobile accounting apps because it can perform all the tasks available with the computer interface.
• Purchase review module: Enjoy this new feature that lets you track items that are either already delivered or yet to be delivered by your supplier or vendor. This is not offered by any of the other providers listed in this guide.
• Phone support: Contact Zoho Books by phone rather than submitting a first and waiting for an agent’s call—this makes Zoho Books stand out from its competitors. This is helpful if you encounter an urgent issue that needs to be resolved immediately.
• Project accounting: Get solid project management features. The Project module lets you create an estimate and assign it to a Project. You can also easily turn an estimate into an invoice.

Use Cases

• You work remotely often: The Zoho Books mobile app has more features than QuickBooks Online’s. For example, with Zoho Books, you can record bills and bill payments, whereas with QuickBooks, you cannot. This is ideal for business owners who often work remotely.
• You’re seeking an alternative to QuickBooks: Zoho Books tops our list of the best alternatives to QuickBooks because it offers many of the same features you’d find in QuickBooks Online but at a lower price. Its biggest weakness compared with QuickBooks is the lack of bookkeepers in the US proficient with Zoho Books.
• You already use other Zoho products: Zoho Books is one of the apps within the Zoho suite, which includes Zoho CRM, Zoho Expense, and Zoho Commerce. If you’re already using Zoho’s other platforms, selecting Zoho Books is more practical because the apps are interconnected.
• You want a client portal: Use the client portal to let customers view and manage their transactions, view their accounts, accept or reject estimates, and pay estimates. This is a feature that QuickBooks Online lacks.
• You’re self-employed or a freelancer: Zoho Books allows you to create and send professional invoices, track time and project expenses to include on invoices, and manage all of your clients in one place.

In terms of features, Zoho Books is almost on par with QuickBooks, making it our top option for the best QuickBooks alternatives. It has excellent project accounting and inventory features (where it earned perfect or near-perfect scores), and it also offers phone support, which is rare in accounting software. Additionally, your data is safe since it uses enhanced measures like transport layer security (TLS) technology. It also offers a best-in-class mobile app and strong integrations.

On the downside, Zoho Books’ free plan doesn’t allow you to invite your bookkeeper to work with your files, so you need to upgrade to a paid option to collaborate with them. QuickBooks Online is a good alternative here, since it lets you invite an accountant without taking up one of your allotted users.

Also, the free version is not that scalable, as it’s limited to businesses that make less than $50,000 in annual revenue. For a low-cost plan with more developed features, I recommend Xero.

Xero is a great option for businesses with multiple users, especially those needing excellent inventory management features. Unlike most similar software, you can add as many seats as needed for free in all its plans. Additionally, the program provides essential inventory features that most businesses need, such as the ability to create inventory items, track COGS, and view inventory levels.

To help you organize your documents online, you can use Xero’s online file storage feature to upload files to bills, invoices, receipts, inventory items, and contact records. You can also generate a new transaction from the file library with one or multiple files attached. Files can be sent directly to your clients through its built-in email.

Standout Features

• Sales and income tax: Integrate Xero with Avalara, a leading tax compliance software, and find out how well Xero does with taxes. In terms of tracking sales tax, Xero allows you to create sales tax items, charge sales tax on sales, and adjust sales tax due to credit memos. You can also pay your tax liability through Avalara.
• Fixed asset manager: Benefit from Xero’s fixed asset manager if your business uses special equipment or machines for production. The fixed asset module allows you to track your fixed assets, calculate depreciation, and account for disposals in the future. None of the other software in this guide offers a fixed asset manager.
• Project accounting: Enjoy strong projecting accounting features, including the ability to compare estimated and actual project costs, which is crucial in budgeting. It can also accurately compute the cost of job orders and provide quotes to customers.
• Assisted bookkeeping: Get assisted bookkeeping through Xero’s partner, Bookkeeper360, which offers on-demand access to a team of accounting and tax professionals who can help you manage your bookkeeping duties. Packages are available on a pay-as-you-go, monthly, or weekly package. For detailed information about features and pricing, head to our Bookkeeper360 review.
• Inventory: Track stock levels through powerful inventory management features. Xero automatically divides the total cost of inventory into the cost of ending inventory and the COGS. You can also adjust the quantity of inventory for shrinkage and Xero will automatically calculate and report the loss.

Use Cases

• Businesses needing access to unlimited users at an affordable fee: Xero allows unlimited users with all of its plans. In comparison, the most expensive QuickBooks Online plan only allows for 25 seats.
• Ecommerce businesses seeking inventory tools: Xero’s inventory tracking functionality can prove indispensable. It can calculate your COGS automatically and keep a record of your customers as well as enable you to track their payments and orders.
• Businesses needing an alternative to QuickBooks: We named Xero one of the leading QuickBooks alternatives because it has features that are very similar to QuickBooks but is much less expensive and includes unlimited users. However, it will be more difficult to find a local bookkeeper proficient in Xero compared with QuickBooks.

Generally, Xero is easy to use, and you can set up your company information in no time. It scored well across all the categories I evaluated, especially sales tax, inventory, project management, and banking. However, it took a hit in the usability category because it doesn’t provide live chat support like QuickBooks, FreshBooks, and Zoho Books do.

While still pretty good, the Xero mobile app is missing a few features found in the Zoho Books app, like recording time worked and reviewing reports. Another minor weakness is its receipt capture feature. Unlike the other software on this list, Xero doesn’t read scanned receipts and automatically creates transactions.