4 Best Accounting Software for Small Retail Businesses
This article is part of a larger series on Accounting Software.
Retail businesses need accounting tools to help them properly manage finances. The best retail accounting software include the ability to track inventory and sales tax, produce basic financial reports like profit and loss and balance sheet, and monitor all income and expenses.
We have identified four of the best accounting software for small retail businesses:
- QuickBooks Online: Best overall accounting software for small retail businesses (9.0 out of 10 points)
- Xero: Best low-cost software for retailers with more than $50,000 in revenue (8.7 out of 10 points)
- QuickBooks Desktop Retail Edition: Best for retailers with a single user (8.4 out of 10 points)
- Zoho Books Free: Best free software for retailers with less than $50,000 in revenue (7.0 out of 10 points)
Best Retail Accounting Software Compared
Inventory Method Supported
Track Sales Tax Collected
Number of Users
$30 to $200 per month
1 to 25
$12 to $65 per month
$549.99 to $1,340.99 per year
1 to 5
1 user + 1 accountant
QuickBooks Online: Best Overall Accounting Software for Small Retail Businesses
What We Like
- Strong inventory management features (available in Plus and Advanced)
- Sales tax rate automatically determined
- Wide selection of customizable financial reports
- Powerful mobile app
- More expensive than comparable products
- No customer service telephone number
- Add users by upgrading plan
- Doesn’t support the average cost method of inventory accounting
- 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 (most popular)
- Advanced: $200 per month for up to 25 users
New subscribers can choose between 50% off for the first three months or a 30-day free trial.
- Inventory management: Available for Plus and Advanced subscribers, the inventory accounting feature allows you to track stock items and quantities, update inventory quantities automatically, organize items by their taxable and nontaxable status, and set up alerts to see when it’s best to replenish your stock.
- Extensive reporting: QuickBooks Online generates basic financial statements by class and location and has more specialized reports like transactions by customer and aging schedules. You can also filter reports to retrieve the data you’re seeking.
- Sales tax tracking: You can add sales tax to your receipts, estimates, and invoices, and QuickBooks Online will calculate and track them for easy tax filing. It’ll even apply the correct sales tax rate automatically based on address for the transaction, which is an enormous time saver if you ship goods to multiple states.
- Ecommerce accounting: QuickBooks Online has direct integrations with Shopify and WooCommerce, but for an additional fee, you can sign up for QuickBooks Commerce, an inventory and order management platform. It allows you additional direct integrations.
- Accounts receivable (A/R) management: It calculates sales tax for every sale automatically, depending on the jurisdiction. You can also issue credit memos to customers and review the summary of customer transactions. Invoices can be modified by changing the template and colors.
Our Expert Opinion
QuickBooks Online is our top-recommended small business accounting software. It has all of the features you need for small business accounting, especially if you choose the Plus or Advanced tier because it grants access to inventory accounting features—ideal for ecommerce businesses. If you can afford the platform, you can’t go wrong with this flexible and powerful software.
Xero: Best Low-cost Software for Retailers With More Than $50,000 in Revenue
What We Like
- Unlimited users with all three plan options
- Cheaper plans than the competitors
- Customizable reports
- Robust integrations with third-party apps through the Xero App Store
- One subscription is only good for one organization; no option to add more
- No live customer support option
- Mobile app has limited features
- Entry-level plan restricts the number of bills and invoices
- Early: $12 per month for up to 20 invoices and five bills
- Growing: $34 per month for unlimited invoices and bills
- Established: $65 per month for unlimited invoices and bills plus project accounting
You can sign up for a 30-day free trial to help you decide which plan best suits your needs.
- Inventory tracking: Xero, one of our top e-commerce accounting software programs, has strong inventory tracking features that allow you to monitor customer orders and payments. You can also manage your inventory items, calculate cost of goods sold (COGS), view inventory costs, and determine ending inventory.
- Robust reporting: Xero offers a variety of financial reports that include a balance sheet, profit and loss (P&L) statement, A/R aging, accounts payable (A/P) aging, expenses by vendor, and general ledger.
- Fixed asset management: With its fixed asset manager module, you can record your fixed assets, calculate depreciation, and account for gain or loss on fixed asset disposal. This is beneficial for retail businesses that use special equipment for production and vehicles for delivery.
- Sales tax tracking: Xero allows you to create sales tax items, charge sales tax on sales, and adjust sales tax due to credit memos. If you integrate Xero with Avalara, a platform that automates tax compliance, you can also pay your sales tax liability.
- Integrations: Xero can connect with popular point-of-sale (POS) systems and ecommerce platforms such as Shopify, Square, BigCommerce, Lightspeed, and Magento.
Our Expert Opinion
Xero’s unlimited user access makes it a great option for retail businesses with a need for multiple users, especially because annual revenue isn’t limited to $50,000 like the Zoho Books Free plan. Its fixed asset manager is unique among accounting programs, and its inventory management features allow you to create and track inventory, monitor inventory levels, and track COGS. While Xero’s features are comparable to QuickBooks Online, it’s considerably less expensive, making it one of the best alternatives to QuickBooks.
QuickBooks Desktop Retail Edition: Best for Retailers Needing a Single User
What We Like
- Ability to track inventory up to 14,500 items
- Custom workflows and reports specifically for retailers
- More advanced reporting features than in QuickBooks Online
- Ability to manage an unlimited number of companies
- Not ideal for multiple stores or an online business because it is hosted locally
- Limited payment processing options
- Plans become pricey once you start adding additional users
- Steep learning curve
The Premier Plus and Enterprise tiers of QuickBooks Desktop include the industry-specific retail edition:
- Premier Plus*: Starting at $549.99 per year for one user
- Enterprise: $1,340 per year for one user
A free trial is unavailable with QuickBooks Desktop.
*Each additional seat costs $300 per year for up to five users.
- Inventory management: QuickBooks Desktop has more robust inventory tracking and costing features than QuickBooks Online. For example, you can create an inventory assembly to combine the cost of supplies, existing inventory, and labor into the cost of newly-manufactured inventory. You can also make an adjustment easily to account for theft, loss, and shrinkage.
- Unlimited customer support: The Premier Plus plan offers unlimited support and access to QuickBooks experts. If you sign up for the Enterprise plan, you’ll receive access to the Priority Circle loyalty program, which includes a dedicated account team and free on-demand training.
- Sales tax tracking: You can track sales tax throughout the month automatically and define which products and customers are taxable. You also have access to sales tax liability reports so you know exactly what you owe at any given time.
- Customized reporting: QuickBooks Desktop gives you access to more than 100 reports. It even allows you to create your own custom reports from any data set and consolidate reports for multiple companies. You can also schedule automatic reporting, including P&L statements and balance sheets.
- Unlimited companies: Unlike QuickBooks Online, the Desktop version gives access to an unlimited number of companies without paying an additional fee.
Our Expert Opinion
If you prefer locally installed software over a cloud-based program like QuickBooks Online or Xero, then QuickBooks Desktop is a good option. It can track sales tax automatically and is ideal for users seeking powerful inventory tracking and costing features. Its Premier Plus and Enterprise editions are very powerful, although they may be more difficult to master and don’t provide the advantages of mobile accounting.
Zoho Books Free: Best Free Software for Retailers With Less Than $50,000 in Revenue
What We Like
- Free plan is loaded with features
- Robust mobile app can handle almost any accounting task
- Add multiple bank and credit card accounts
- Integrates with other Zoho apps
- Payment gateways are limited to Stripe and PayPal for free version
- Limitation on the number of invoices you can send
- Free version doesn’t include inventory accounting
- Cannot file sales tax returns
- Only paid plans include access to phone support and live chat
Zoho Books offers a free version for businesses with less than $50,000 in revenue. This includes one user and one accountant.
There are also five paid subscriptions. Inventory accounting is included in all tiers, save for Standard:
- Standard: $15 per organization, per month, for up to three users
- Professional: $40 per organization, per month, for up to five users
- Premium: $60 per organization, per month, for up to 10 users
- Elite: $120 per organization, per month, for up to 10 users
- Ultimate: $240 per organization, per month, for up to 15 users
- Accessible customer support: Zoho has a variety of customer support options, which include a chatbot that provides easy access to information and the ability to chat with a live representative for personalized assistance. You can also call them or ask them to call you. Zoho’s self-help resources are also extensive, with articles, frequently asked questions (FAQs), and tutorial videos.
- Integrated management software: Zoho Books integrates with other Zoho products, like Zoho Inventory and Zoho Commerce. This helps automate the different aspects of your business, like sales and marketing, inventory, and accounting.
- Mobile app: Zoho Books’ mobile app contains all essential features that businesses may need, such as the ability to send invoices and receive payments, view reports, and capture expense receipts.
- Customer and vendor management: Customer and vendor records are extremely detailed, with the ability to create up to 46 custom fields. Each record shows key contact information and numbers and graphs for A/R and A/P. There’s also a timeline, which is similar to an audit trail.
Our Expert Opinion
Zoho Books is a feature-packed accounting software that comes at a fraction of the cost of QuickBooks. The free plan is suitable for small businesses with less than $50,000 in revenue. While it does have a few limitations, including being limited to a single user, there are many other features that make it an attractive option, such as a client portal, contact management, sales tax tracking, and an easy-to-use interface.
How We Evaluated the Best Retail Accounting Software for Small Businesses
We considered a variety of accounting software that is beneficial for small retail businesses. We evaluated these programs in terms of general features that we’d expect to find in retail accounting software but also assessed them based on whether they had the basic features we’d take for granted, such as inventory tracking and accessible customer service. Finally, we took into account ease of use, pricing, and our own expert evaluation.
20% of Overall Score
We considered the software’s general accounting features, banking, A/R, A/P, sales tax, and reporting features. Since we were evaluating retail accounting software, we awarded more points to software products that offered premium accounting features. We also evaluated whether they contained at least the basic features needed in small business accounting.
10% of Overall Score
Pricing is an important factor when determining the best software product for your business. Often, the features that are most needed are excluded from the free or lower-priced plans, so it is important to ensure what is covered with each price level.
50% of Overall Score
Inventory received a heavier weight in our scores because it is a feature that is often missing or considered a premium feature in accounting software. We evaluated the software’s ability to track inventory costs and stock levels. We also considered whether the software could automatically track COGS and compute cost of ending inventory.
10% of Overall Score
We evaluated the user’s ability to learn the software quickly and gave higher scores to software products that are easy for non-accountants to use. We also considered accessible customer service and support networks.
10% of Overall Score
A mobile app should be a useful tool for users on the go, assisting them with the organization of their books. The app should allow users to send invoices, receive and send payments, and enter bills. Advanced features are also a plus, such as the ability to view reports and record time worked.
QuickBooks Online is the overall best accounting software for small retail businesses because of its strong inventory tracking features combined with extensive reporting. If you need more in-depth features such as the ability to track inventory assemblies, we recommend QuickBooks Desktop. Zoho Books Free has even better features than Xero but can only be used by companies with less than $50,000 in annual revenue.