Small business owners are busy and need accounting software to pay their bills, collect money from customers, and track income and expenses. However, the best accounting software for small businesses is not a one-size-fits-all solution and will vary greatly by industry and your personal preferences. We’ve given you our top accounting software picks as well as a discussion of the industries in which they are best.
Best 6 Accounting Software for Small Business
- QuickBooks Online: Best overall small business accounting software with project, class, and location tracking that can be customized for any industry
- QuickBooks Desktop Pro: Best desktop accounting software for users without a constant internet connection and those who want to manage the books of multiple companies
- Zoho Books: Best for freelancers, gig workers, solopreneurs, sole proprietorships, and other self-employed business owners
- Sage 50Cloud Accounting: Best for consolidating financial statements of multiple companies
- FreshBooks: Best for small businesses needing professional-looking invoices and great invoicing features
- Wave: Best free accounting software for businesses needing only basic tracking of income and expenses
QuickBooks Online: Best Overall Small Business Accounting Software
QuickBooks Online is a superb choice for most small businesses. It is easy-to-use accounting software that you can share effortlessly with employees, certified public accountants (CPAs), and tax professionals. With tiered subscription levels, QuickBooks Online can scale as your business grows or your needs change. You can try QuickBooks Online for free with a 30-day trial with no credit card required.
Who QuickBooks Online Is Best For
QuickBooks Online earned our top ranking for each of the following industries and features:
- Construction: QuickBooks Online, when integrated with Buildertrend, provides excellent project accounting as well as construction management tools like employee time and location tracking, customer relationship management (CRM), and customer portal.
- Ecommerce retailers: QuickBooks Commerce can be added to QuickBooks Online to provide direct integrations with most ecommerce platforms, reducing the need for expensive third-party connectors.
- Real estate businesses: The ability to separate activity by both class and location makes QuickBooks Online a viable option for property management companies that need to track income and expenses for various segments and locations.
- Time tracking: QuickBooks Time, formerly TSheets, integrates with QuickBooks Online to provide outstanding time tracking for both billing and payroll purposes.
- Online bookkeeping assistance: Intuit provides an online bookkeeping service, QuickBooks Live, that pairs companies with a dedicated team of ProAdvisors to provide bookkeeping services tailored to your QuickBooks Online needs.
- Mobile app: QuickBooks Online has an incredible mobile app that allows you to perform nearly any accounting task on the go, including invoicing.
Our Expert Opinion
It’s hard to go wrong with QuickBooks Online if you can afford the price. It is very flexible and powerful software that can be customized for nearly any business. We offer 46 free QuickBooks Online tutorials to help you learn QuickBooks Online. If your business is in a niche with distinct needs, such as trucking or nonprofits, you might consider other accounting software that provides management features in addition to accounting.
QuickBooks Desktop Pro: Best Desktop Accounting Software
Pro and its upgrade, Premier, are desktop versions of QuickBooks that can be used to keep the books of an unlimited number of companies for a single price. This makes them much more affordable than cloud-based accounting software, which almost always charges for each individual company. QuickBooks Pro and Premier are the programs that built QuickBooks into the dominating leader in small business accounting software, and they are still terrific options for many companies.
Who QuickBooks Desktop is Best For
- Farmers & ranchers: QuickBooks Pro is a great option for farmers and ranchers that may not have continuous internet access. It allows users to track income and expenses by class like corn, wheat, or livestock.
- Bookkeeping for multiple companies: Users can keep track of an unlimited number of companies with the purchase of a single QuickBooks Pro license.
- Nonprofit organizations: By upgrading to QuickBooks Premier, users can select the Nonprofit Edition, which is designed specifically to be used by nonprofits and includes specialized workflows and reports. Read our full review of Quickbooks Premier, or visit QuickBooks Premier to try the software with a 60-day money-back guarantee.
Our Expert Opinion
QuickBooks Desktop Pro and Premier editions are very powerful accounting software, perhaps even more powerful than QuickBooks Online. However, they are more difficult to master and don’t provide the advantages of mobile accounting. Read our in-depth comparison of the platforms in QuickBooks Online vs Desktop to choose the best software for your business.
Zoho Books: Best for Self-employed Businesses
Zoho Books is an affordable accounting solution that is easy to use. It’s one of many Zoho apps, such as Zoho CRM, Zoho Inventory, and Zoho Projects, that can be integrated to give you a comprehensive solution to all your business needs. Zoho Books can be purchased separately, as part of the Zoho Finance bundle, or as part of Zoho One, which includes all of Zoho’s apps. You can evaluate Zoho Books with a 14-day free trial.
Who Zoho Books Is Best For
Zoho Books is our top pick for freelancer accounting software because it’s easy to use, very affordable, and has a great mobile app for business owners that are rarely in the office.
Our Expert Opinion
Zoho is unique in its approach to business management software. It offers a large selection of very narrowly focused business apps. You buy only the apps that fit your particular needs to arrive at a custom-made whole-business software solution. Most businesses will start with Zoho Books but might want to add Zoho Projects eventually for project management or Zoho Inventory to manage inventory better.
Sage 50Cloud Accounting: Best Accounting Software to Consolidate Financial Statements
Sage 50Cloud, generally referred to as simply Sage 50, is a unique bookkeeping software that is a desktop program but can store your data in the cloud to be accessed from anywhere. Formerly known as Peachtree, Sage has been in the accounting software industry since 1978 and is a reliable alternative to QuickBooks. Sage 50 is very powerful and allows you to produce consolidated financial statements for parent-subsidiary entities, a very rare feature for small business software.
Who Sage 50Cloud Accounting Is Best For
Sage 50Cloud Premium and Quantum editions are very affordable software that can consolidate the financial statements of multiple companies as required by Generally Accepted Accounting Principles (GAAP) when one entity owns 50% or more of another.
Our Expert Opinion
Sage 50Cloud is a good software that is easy to use but more expensive than other options. While popular, it will be harder to find support from third-party bookkeepers than the more popular QuickBooks products. If you need to produce consolidated financial statements, Sage 50 is one of your few choices in small business accounting software.
FreshBooks: Best for Professional-looking Invoices
FreshBooks was started as a way to produce great-looking, professional invoices. While still emphasizing its invoices, FreshBooks has grown into a complete bookkeeping system where you can track revenue and expense and print financial statements. There’s no credit card required to start a 30-day free trial.
Who FreshBooks Is Best For
FreshBooks is our top-rated invoicing software and is ideal for tracking employee time and expenses and adding them easily to great-looking invoices.
Our Expert Opinion
Beyond its professional-looking invoices, FreshBooks’ bookkeeping is solid and offers many advanced features like bank connections, receipt scanning, time tracking, and project budgeting and tracking. Because FreshBooks does not track unpaid bills, it cannot be used to calculate net income on an accrual basis.
Wave: Best Free Small Business Accounting Software
Wave is a good choice for service-based small businesses. Although Wave is free, its bookkeeping functions and features are useful and provide a solid solution for small businesses on a tight budget.
Who Wave Is Best For
Wave is terrific software for very small businesses that don’t have inventory and are willing to give up features to use free accounting software.
Our Expert Opinion
Wave is absolutely free yet offers some of the same features as paid software. It includes bank connections, receipt scanning, and invoicing. It makes money by users adding on payroll or merchant services to their account, but paid software providers also charge extra for these services. Wave falls short of paid software in several areas such as reports, inventory management, and mobile accounting.
Honorable Mentions for Best Small Business Accounting Software
While not rated as best for any particular industry or function, these accounting software programs provide quality options that should be considered.
No list of accounting software is complete without mentioning Xero. While we consistently rate QuickBooks Online better than Xero across all industries, Xero is still very good software with excellent inventory accounting. Xero is less expensive than QuickBooks Online and rated as our best alternative to QuickBooks.
Sunrise by Lendio offers free accounting software for do-it-yourself (DIY) bookkeeping or provides assisted bookkeeping for a fee. The main weakness of the DIY software is the inability to reconcile your bank accounts to your bank statements, which isn’t a major problem unless you issue a lot of paper checks.
Additional Accounting Software for Niche Industries
Some industries have specialized accounting needs that require specialized software. Here are our top picks for specialized industries:
Niche Accounting Software
Triple reconciliations between bank statements, client ledgers, and client trust accounts makes this the best law firm accounting software.
Our pick for best church accounting software, it combines great church management software with accounting software at a low price.
This software is our best restaurant accounting software with great restaurant management tools in addition to solid accounting.
Our best trucking accounting software manages accounting, dispatch, fuel, inventory, mileage, employees, and vehicles, all in one program.
Why You Need Small Business Accounting Software
Researchers from Griffith University found that 82% of experts believe a small business owner’s financial literacy, including their knowledge of accounting software, is an important factor in the survival of their business. You need to take an active interest in the financial aspect of your business to avoid being a part of the 50% of small businesses that fail within their first five years. Financial literacy starts with using bookkeeping software to compile the information you need to make informed decisions. You can read my nine bookkeeping tips to help simplify your bookkeeping and use it effectively.
In addition to helping you understand and manage your business’s finances, good accounting software can save you time.
How Small Business Accounting Software Works
All businesses should have accounting software that can bill customers and track their payments, help manage and track your bills, and provide reports to see how your business is performing. Beyond that, the features you need in accounting software will vary by your industry and your personal preferences.
Invoicing and Tracking Customer Payments
Your accounting software should be able to issue invoices and track them until they are paid by your customer. It’s also helpful if your software will print an accounts receivable (A/R) aging report, which shows all of your outstanding invoices grouped by how long they are past their due date. Finally, the best accounting software will track inventory, time, and expenses and allow you to easily add them to your invoices without much manual data entry.
Managing Bills and Tracking Expenses
Ideally, your accounting software should allow you to input bills when you receive them, including their due date. You can receive reminders of upcoming due dates and print an accounts payable (A/P) aging report grouping bills by how long they are overdue.
At the very least, your accounting software should print a statement of profit and loss and a balance sheet that can be used to prepare your tax returns. It’s helpful if software prints comparative financial statements that show both current and prior year numbers side-by-side.
The best accounting software will print many more reports than just basic financial statements. For instance, if your business deals with inventory, a report summarizing the quantity and cost of current inventory on hand is essential. If your company works on large projects, such as a construction company, you’ll want reports that track the profitability of individual projects and compare the actual results to the estimated costs.
Fulfilling Industry-specific Needs
Many industries have specific requirements for their accounting software that might not apply to other industries. For example, restaurants and brick-and-mortar retail stores need a strong point-of-sale (POS) system. For these businesses, it’s important to choose an accounting system that will integrate with a POS system to transfer the data automatically without manual entries, which can cost time and create mistakes.
Other industry-specific needs include time and location tracking of employees, ecommerce platforms, CRM, and subcontractor management.
How We Evaluated Accounting Software
All the software we evaluate provides the basic functions of categorizing revenue and expenses and tracking account balances. We looked at features that vary between programs that you should consider when choosing what’s best for your business.
- Value: The cost of software naturally increases with the number of features available, so we evaluated the cost of the software relative to the features and functionality offered. We also favored software with a free trial period that doesn’t require a credit card.
- User-friendly: Most small business accounting software is designed for nonaccountant users, but we evaluated whether the software is user-friendly compared to its competitors.
- Invoices: We placed importance on the invoicing function of accounting software as this feature is important to the vast majority of businesses.
- Online customer payments: Customers pay much quicker if they can do so online rather than mail a check, so we favored software that allows online payments to be integrated with the accounting system.
- Bill tracking and payment: Most, but not all, accounting software will track unpaid bills (A/P) and even allow you to initiate an online payment from within the software. We considered the lack of an A/P function a serious shortcoming.
- Payroll: Payroll is a headache and should be outsourced whenever possible. We favored software that can integrate with payroll providers to automate the accounting entries required after each payday.
- Financial statements: While most software will provide a balance sheet and statement of profit and loss, some of the free programs fail to provide statements that compare current period figures to prior-period figures, which makes interpretation of the reports more difficult.
- Advanced features: Beyond the basics, some software provides advanced features that can make your life easier, such as receipt scanning, GPS mileage tracking, and time tracking.
There are many terrific small business accounting software available, but none of them are as versatile and comprehensive as QuickBooks Online. However, QuickBooks Online is not always the best solution, especially if you only have very basic needs and wish to save money. Also, if your business operates in a very specialized industry, you may be able to find industry-specific software that won’t require as much customization as QuickBooks Online.