Best Cloud Accounting Software for Small Businesses for 2023
Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.
Danielle is a writer for the Finance division of Fit Small Business. She has owned a bookkeeping and payroll service that specializes in small business, for over twenty years.
This article is part of a larger series on Accounting Software.
The best cloud accounting software has revolutionized the way businesses manage their finances—providing a secure and accessible platform for streamlining financial management and accounting processes. Choosing the right cloud accounting software will enable you to collaborate with team members and reduce your information technology (IT) costs. They offer access to bookkeeping assistance or an equally capable mobile app, or track locations and classes.
We have evaluated the best cloud-based accounting software solutions available and highlighted their unique features and benefits based on specific situations:
- QuickBooks Online: Best overall cloud accounting software for most small businesses
- FreshBooks: Best for sole proprietors and freelancers tracking time
- Wave: Best free cloud software for service-based companies needing very basic invoicing and expense tracking
- Zoho Books: Best mobile app in a cloud accounting software
- Xero: Best for those who need unlimited users at no additional cost
- Sage Business Cloud Accounting: Most affordable cloud accounting software with unlimited transactions
Comparison of Cloud-based Accounting Software
Software | Monthly Pricing | Number of Users | Track Locations & Classes | Compute Cost of Goods Sold (COGS) | Bookkeeping Assistance | Assign Costs to Projects | Accounts Receivable (A/R), Accounts Payable (A/P) & Banking | Mobile App |
|---|---|---|---|---|---|---|---|---|
 | $30 to $200 | 1 to 25 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
 | $17 to $55 | 1 | ✕ | ✕ | ✕ | ✓ | ✓ | ✓ |
 | Free | Unlimited | ✕ | ✕ | ✓ | ✕ | ✓ | ✓ |
 | $0 to $275 | 1 to 15 | ✓ | ✓ | ✕ | ✓ | ✓ | ✓ |
 | $13 to $70 | Unlimited | ✓ | ✓ | ✕ | ✓ | ✓ | ✓ |
 | $10 or $25 | 1 or unlimited | ✕ | ✕ | ✕ | ✓ | ✓ | ✓ |
QuickBooks Online: Best Overall Cloud Accounting Software
Overall Score:
4.40 / 5
Pros
- Multiple user access depending on your subscription
- Mobile app with many bookkeeping features
- Assisted bookkeeping is available
- Sales tax calculation is based on customer’s address
- Powerful inventory management features
Cons
- Can be more expensive than other comparable software
- Lacks industry-specific features
- Unable to record time worked on mobile app
- Lacks the ability to compare budgeted costs to actual time and expenses
Pricing
QuickBooks Online offers four plans which allow for a set number of users. A 30-day free trial or a discount of 50% off for three months is available with no credit card required:
- Simple Start: $30 per month for one user
- Essentials: $55 per month for up to three users
- Plus: $85 per month for up to five users
- Advanced: $200 per month for up to 25 users
We selected QuickBooks Online as the best overall cloud software for most small businesses because of its comprehensive feature set, flexibility, and customization options. Access to a local QuickBooks ProAdvisor, either via the referral network or QuickBooks Live, provides an extra layer of support. The ability to track profit and loss by class and location is a bonus because it lets you view the profitability of your business across different locations, offices, and properties.
FreshBooks: Best for Sole Proprietors & Freelancers Tracking Time
Overall Score:
3.20 / 5
Pros
- Time tracking with the ability to bill time to clients
- Able to compare estimated costs against actual costs
- All plans include unlimited invoices
- Mobile app proficient with invoicing and accounting
- Excellent customer service
Cons
- Unable to monitor income and expenses by class
- Requires an additional fee for an extra user
- Doesn’t calculate the COGS
- Can’t track and reconcile bank accounts without bank feeds
Pricing
FreshBooks offers a choice of four plans that are priced based on the number of billable clients. Each plan allows for one user; additional seats are $11 per person, per month:
- Lite: $17 per month for up to five billable clients
- Plus: $30 per month for up to 50 billable clients
- Premium: $55 per month for unlimited billable clients
- Select: Custom pricing for unlimited billable clients and specialized features.
FreshBooks is an ideal fit for sole proprietors and freelancers tracking their time because of its strong time tracking and invoicing features—plus its capable mobile app adds flexibility for businesses working remotely. It also allows you to track mileage and communicate with clients directly through the app.
Because FreshBooks lacks inventory management features, it is a better fit for small service-based businesses seeking a strong project management solution. It is also easy to set up and use, with a clean user interface and intuitive navigation.
Wave: Best Free Cloud Accounting Software for Service-based Companies That Need Very Basic Invoicing & Expense Tracking
Overall Score:
2.60 / 5
Pros
- Forever free for unlimited users
- Easy to set up and use
- Generates different types of accounting reports
- Receipt scanning features
- Bookkeeping support available with Wave Advisors
Cons
- Limited customer support
- Not able to reconcile bank statements when timing differences exist
- Software isn’t scalable
- Doesn’t separate income and expense by class or location
Pricing
Wave is free for accounting, invoicing, and receipt scanning. However, you will be charged transaction fees when processing payments within the app.
Wave is a good choice for service-based businesses with limited bookkeeping needs, and its basic features are free. If you prefer to only track invoices and expenses, then it could be a good fit for you.
Although it lacks advanced functions like inventory management and project accounting, it does offer recurring invoices and billing, which are often only available with premium plans of paid software. Also, its receipt scanning feature allows you to upload receipts for proper categorization.
Zoho Books: Best Mobile App in a Cloud Accounting Software
Overall Score:
4.40 / 5
Pros
- Offers a free plan
- All paid subscriptions include access to phone support and live chat
- Able to track project profitability
- Robust mobile app
- Can manage sales tax collections
Cons
- Free plans limit the number of monthly invoices
- Can’t calculate quarterly estimated tax payments
- Additional charge for receipt capture
- Unable to track fixed assets
Pricing
Zoho Books offers a choice of six plans, with the free plan available for businesses that make $50,000 or less in annual revenue. There is an extra charge of $3 per user monthly:
- Free: Includes one user plus one accountant and up to 1,000 invoices per year
- Standard: $20 per month for up to three users and 5,000 invoices
- Professional: $50 per month for up to five users and unlimited invoices
- Premium: $70 per month for up to 10 users and unlimited invoices
- Elite: $150 per month for up to 10 users; includes advanced inventory
- Ultimate: $275 per month for up to 15 users
We selected Zoho Books as the best mobile app in cloud accounting software because of its outstanding features. These include sending invoices, receiving payments, entering and paying bills, capturing receipts, and recording time worked and then assigning it to a customer or project.
Not only that, but the software has strong inventory management and project accounting features. It is a great fit for freelancers and self-employed individuals because it allows them to streamline their business, ultimately saving time and money.
Xero: Best Cloud Accounting Software With Unlimited Users at No Additional Cost
Overall Score:
3.95 / 5
Pros
- Easy-to-understand bank reconciliation
- Unlimited users for all plan
- Wide variety of integration options within the Xero App Store
- More affordable than QuickBooks Online
- Excellent inventory accounting features
Cons
- One subscription is good for one organization (with no option to add more)
- Requires third-party integration via Gusto for payroll
- Lowest plan is limited to 20 invoices and five bills
- No annual billing option for plans
Pricing
Xero has three pricing plans that include unlimited users:
- Early: $13 per month for 20 invoices and five bills
- Growing: $37 per month for unlimited invoices and bills
- Established: $70 per month for unlimited invoices and bills, plus multicurrency, receipt capture, and project tracking
Xero is a great option for budget-conscious businesses seeking software that can accommodate unlimited users. Its affordable price points and features that you’ll only see in higher-priced plans of other accounting software—combined with strong inventory tracking and project accounting features—make it suitable for many types of businesses. We recommend it for project- and product-based companies because of its flexible functionalities.
Sage Business Cloud: Most Affordable Cloud Accounting Software With Unlimited Transactions
Overall Score:
3.60 / 5
Pros
- Supports unlimited transactions
- Free trial available
- Extremely easy to set up
- Department, cost code, and project tracking
- Strong full-featured mobile app
Cons
- Unable to create recurring purchase invoices
- Starter plan only allows for one bank connection
- Doesn’t calculate COGS automatically when inventory is sold
- Requires an additional fee to use multiple currencies
- No built-in payroll
Pricing
Sage Business Cloud offers a choice of two subscriptions that differ in the features that are available and the number of users it can accommodate:
- Accounting Start: $10 per month for one user
- Accounting: $25 per month for unlimited users
While Sage Business Cloud may not be as powerful as other cloud accounting software, it offers a selection of helpful features that allow you to handle basic accounting tasks. It is both affordable and easy to use, making it an ideal fit for users with simple bookkeeping needs. It also has a capable mobile app that can manage bookkeeping while working remotely.
Advantages of Cloud Accounting Software
Some advantages of using cloud accounting software include:
- Remote access to your financial data from anywhere with an internet connection
- Automatic software updates
- Improved collaboration between team members
- Reduced IT costs
- Enhanced security of data
How We Evaluated Cloud Accounting Software
We evaluated the best cloud-based accounting software based on using our case study framework, which was created to assess objectively the products that we recommend. There are 13 categories in this case study:
5%
Pricing
7%
General Features
7%
Banking
7%
A/P
7%
A/R
10%
Inventory
10%
Project Accounting
4%
Tax
4%
Reporting
30%
Ease of Use
5%
Mobile App
4%
User Reviews
5% of Overall Score
In evaluating pricing, we considered the billing cycle (monthly or annual) and number of users.
7% of Overall Score
This section focuses more on first-time setup and software settings. The software must be quick and easy to set up for new users. Even after initial setup, the software must also let users modify information like company name, address, entity type, fiscal year-end, and other company information.
7% of Overall Score
The banking section of this case study focuses on cash management, bank reconciliation, and bank feed connections. The software must have bank integrations to automatically feed bank or card transactions. The bank reconciliation module must also let users reconcile accounts with or without bank feeds for optimal ease of use. Lastly, the software must generate useful reports related to cash.
7% of Overall Score
The A/P section focuses on vendor management, bill management, bill payments, and other payable-related transactions. A/P features include creating vendors and bills, recording purchase orders and converting them to bills, creating service items, and recording full or partial bill payments.
7% of Overall Score
This takes into account customer management, revenue recognition, invoice management, and collections. The software must have A/R features that make it easy for users to collect payments from customers, remind customers of upcoming or overdue invoices, and manage customer obligations through analytic dashboards or reports.
10% of Overall Score
Businesses with inventory items should choose accounting software that can track inventory costs, manage COGS, and monitor inventory units.
10% of Overall Score
Service or project-based businesses should choose accounting software that can track project costs, revenues, and profits. The software must have tools to track time, record billable hours or expenses, send invoices for progress billings, or monitor project progress and performance.
4% of Overall Score
In this section, we’re looking at sales tax features. The software must have features that allow users to set sales tax rates, apply them to invoices, and enable users to pay sales tax liability.
4% of Overall Score
Reports are important for managers, owners, and decision-makers. The software must have enough reports that can be generated with a few clicks. Moreover, we’d also like to see customization options to enable users to generate reports based on what they want to see.
30% of Overall Score
Ease of use gets the highest weight in this case study because we want to give more credit to easy accounting software. For this section, we considered customer service, support network, and a subjective expert opinion score. Users must have easy access to customer service channels in case of problems, questions, or assistance.
Support network refers to a community of software users that can extend professional help to businesses. Having an independent software expert perform the bookkeeping is good for overall ease of use. Lastly, our expert opinion score is our subjective rating based on our experience in trying the software.
5% of Overall Score
The software must also have a mobile app to enable users to perform accounting tasks even when away from their laptops or desktops.
4% of Overall Score
We went to user review websites to read first-hand reviews from actual software users. This user review score helps us give more credit to software products that deliver a consistent service to their customers.
*Percentages of overall score
Frequently Asked Questions (FAQs)
Cloud accounting software is accessed and used through the internet, rather than being installed and run by a local computer. The software and its data are stored on remote servers that are maintained by the software provider.
Cloud software providers take security seriously and use a variety of measures to protect users’ data. This may include encryption, firewalls, intrusion detection, and regular data backups. Also, cloud accounting software is more secure compared to desktop software because your data lives online on secure servers—as opposed to your hard drive which is more vulnerable to hackers. However, you should still take your own precautions, such as using strong passwords and enabling two-factor authentication.
Yes, cloud accounting software can be suitable for businesses of all sizes and industries, from freelancers and sole proprietors to large enterprises with complex accounting needs. However, you should evaluate the specific features and functionality of the software to ensure it meets your needs.
Bottom Line
By choosing the best cloud-based accounting software for your business, you can gain greater control over your finances, streamline accounting tasks, and save time. If you’re a small business owner seeking a scalable solution, then you may want to consider QuickBooks Online. Small businesses on a budget with basic bookkeeping needs may find Sage Business Cloud a good match. Businesses that want a fully functional mobile app will want to look into Zoho Books.
