5 Best Startup Accounting Software
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 startup accounting software depends on the user’s industry, stage of business, and personal preferences, which we’ll cover in this guide. Startups need software that’s affordable in the beginning, can scale as the business grows, and can convert to an enterprise resource platform (ERP) system like NetSuite.
Our experts developed an internal case study to evaluate each application and compare them head-to-head. Based on it, we have identified the five best accounting software for startups:
- QuickBooks Online: Best overall accounting software for startups with plans to become midsize to large enterprises (8.6 of 10 points)
- Zoho Books: Best mobile accounting software app for startup companies (8.2 of 10 points)
- Xero: Best inexpensive accounting software for startups that don’t need external support (7.7 of 10 points)
- Wave: Best free software with unlimited users for startups during their organizational stage (6.8 of 10 points)
- FreshBooks: Best accounting software for service-based startups that intend to stay small (6.41 of 10 points)
Best Startup Accounting Software Compared
Monthly Pricing | Inventory Tracking | Assisted Bookkeeping Available | Mobile App | Number of Users | |
|---|---|---|---|---|---|
 | $30 to $200 | ✓ | ✓ | ✓ | One to 25 |
 | $12 to $65 | ✓ | N/A | ✓ | One to 15 |
 | $12 to $65 | ✓ | N/A | ✓ | Unlimited |
 | $0 for accounting, invoicing, and receipt scanning | N/A | ✓ | ✓ | Unlimited |
 | $17 to $55 | N/A | N/A | ✓ | One only ($10 per additional user) |
QuickBooks Online: Best Overall Accounting Software for Startups With Plans to Become Midsize to Large Enterprises
Overall Score:
8.60 / 5
What We Like
- Powerful mobile app
- Strong inventory management features
- Ability to track income and expense by class, location, or project
- Provides efficient bank reconciliation
What's Missing
- More expensive than comparable products
- No customer service telephone number
- Cannot add additional users beyond those included in each plan
- Cannot compare estimated to actual project costs
Pricing
- 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.
Standout Features
- Financial reports: QuickBooks Online is one of the best accounting software programs for reporting. It can generate more than 100 reports, depending on your subscription. QuickBooks Online offers standard reports, such as profit and loss (P&L) statements, balance sheets, and sales reports by customer, location, and class. Reports are customizable easily, and you can filter them for the exact information you need.
- Mobile app: QuickBooks Online’s mobile app has many useful features, which made it one of our picks for the best mobile accounting apps. With it, you can create and send invoices on the go, view financial reports, receive payments from customers, and assign expenses to customers or projects. You can also upload receipts and enable GPS mileage tracking.
- Assisted bookkeeping option: In addition to its independent QuickBooks ProAdvisors, QuickBooks Online also offers an assisted bookkeeping service calledQuickBooks Live. Prices start at $200 per month, and you’ll have access to a certified bookkeeper who will categorize your transactions, reconcile accounts, generate reports, and review them with you monthly. For more information, read our QuickBooks Live review.
- Invoicing: The invoice customization options available with QuickBooks Online makes it a great option for freelancers and small businesses that rely heavily on invoicing customers. You can choose from different templates, change colors, add a logo, and add personalized messages. You have the option to set up recurring invoices as well, and it’ll calculate sales tax in any jurisdiction based on the address of the customer.
- Banking and cash management: Unlike FreshBooks and Xero, QuickBooks allows you to reconcile your bank and credit card accounts, even if you choose to record all activity manually vs importing bank transactions. You can also use its powerful bank reconciliation features and generate reconciliation reports to view cleared and uncleared transactions.
Our Expert Opinion
QuickBooks Online provides best-in-class reporting for the detailed analysis required by startups, and we selected it as the best overall small business accounting software. It’s easy to find support for converting to an ERP like NetSuite once your business outgrows QuickBooks Enterprise, making it an excellent solution if you’re looking for software that’s both scalable and user-friendly.
Zoho Books: Best Mobile Accounting Software App for Startup Companies
Overall Score:
8.20 / 5
What We Like
- Less expensive than other similar accounting software
- Robust mobile app that can handle almost any accounting task
- All paid plans include access to phone support and live chat
- Competitive free plan
What's Missing
- Cannot track fixed assets
- Project accounting and inventory management are only available in the higher plans
- Limitation on the number of invoices you can send in lower plans
- Requires subscription to Professional or higher plan to manage and track unpaid bills
Pricing
- Free: $0 per month for businesses with less than $50K annual revenue (one user plus one accountant)
- Standard: $20 per month for up to three users
- Professional: $50 per month for up to five users
- Premium: $70 per month for up to 10 users
- Elite: $150 per month for up to 10 users and advanced inventory control features
- Ultimate: $275 per month for up to 15 users, advanced analytics and inventory control features
The prices above reflect the monthly price. There is a discounted rate if you pay on an annual basis. If you need to add additional users, the fee is $3 per user, per month.
Standout Features
- Invoicing: Zoho Books scores high with accounts receivable (A/R) features. The invoicing feature allows you to customize the background color, upload your logo, and add a personalized message for your customers. You can also send your invoice in multiple languages and choose the appropriate currency based on the particular location of your business or customer.
- Mobile app: Zoho Books’ mobile app contains all the essential features that businesses need when they’re on the go. You can send invoices, receive payments, capture expense receipts, record time worked and assign it to a customer or project, and categorize expenses from your bank feed.
- Project accounting: You can create an estimate and associate a project to it with Zoho Books, using the Project module found on the Time Tracking menu. When creating an estimate, you can add items like inventory, labor, and sales taxes. Once approved, it can be converted to an invoice easily, and you can also assign actual labor to a project and record the actual inventory used in the project.
- Inventory management: With complete inventory tracking features for tracking stock levels, Zoho Books allows you to track the cost of goods available for sale and allocate that cost between ending inventory and the cost of goods sold (COGS). You can adjust the quantity and cost of inventory, and sort out items based on product details, vendor details, and stock keeping unit (SKU).
- Reporting: Zoho Books has powerful reporting capabilities, with an excellent selection of financial and accounting reports. This includes a general business overview, balance sheets, cash flow statements, P&L statements, general ledger (GL), trial balance, A/R and accounts payable (A/P), sales and payments received, taxes, and inventory. However, there’s no way to view unbilled time by customer, which is something that QuickBooks can do.
Our Expert Opinion
Zoho Books offers a better mobile app than QuickBooks Online. However, it may be difficult to find support when you eventually convert to an ERP, which will probably be required sooner than with QuickBooks Online. The price of the Ultimate plan is more expensive at $275 per month for 15 users, especially when compared to QuickBooks Online, whose Advanced plan is only $200 per month for 25 users. But its robust mobile app, project accounting, and inventory management features make it a strong contender if these features suit your business’s needs.
Xero: Best Inexpensive Accounting Software for Startups That Don’t Need External Support
Overall Score:
7.70 / 5
What We Like
- Unlimited users included with all plans
- Strong inventory tracking features
- Fixed asset manager calculates depreciation expenses automatically
- Easy-to-understand bank reconciliation
What's Missing
- Limited customer support in the United States
- No annual billing option for plans
- Limited mobile app
- No option to add multiple organizations to same plan
Pricing
- 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
Standout Features
- Project accounting: Xero excels in project accounting, with features like project estimate assignment, labor cost assignment, and the recording of inventory used in projects. You can prepare quotes based on your estimates quickly and use the app timer or location-based tracking. Xero also allows you to monitor profit margins on a user-friendly dashboard.
- Fixed assets manager: Xero’s dedicated fixed assets manager page allows you to keep track of your fixed assets and work with your accountant to manage them, keeping your books up to date. You can manage depreciation and disposals as well as run reports to show fixed assets and their value. This is the only software in this guide that includes a fixed asset manager.
- Inventory management: Not only does Xero have features like the ability to create inventory items, view inventory levels, add inventory to invoices, and allocate COGS, but it also has minor features that can help inventory management, such as viewing purchase orders (POs) and inventory cost information.
- Financial reporting: Xero has most of the reports that you would expect to find in solid accounting software, from basic financial statements, such as a P&L and balance sheet, to specialized reports. However, it’s missing two special reports: unbilled time and income/loss by customer.
- Accounts payable: Xero has an outstanding PO system to convert POs into bills, track unpaid bills, apply vendor credits, and record e-payments. However, the one thing that Xero cannot do is record recurring expenses automatically. Overall though, the A/P management system in Xero is easy to use and comprehensive.
Our Expert Opinion
Xero is solid accounting software with unlimited users for only $65 per month. Its many features include project accounting, inventory management, a fixed asset manager, and a strong PO system. However, it could be difficult to find an outside bookkeeper for support in the United States, and it’s also likely harder to find support to convert to an ERP system down the road. If your startup doesn’t require external support and is looking for inexpensive accounting software, Xero is a good solution.
Wave: Best Free Accounting Software With Unlimited Users for Startups During Their Organizational Stage
Overall Score:
6.80 / 5
What We Like
- Easy to set up and use
- Unlimited users and companies
- Accounting, invoicing, and receipt scanning services are free
- Generate different types of financial reports
What's Missing
- Poor customer support
- Can’t reconcile bank statements when timing differences exist
- Wave uses two separate mobile apps with limited features
- Can’t set up separate income and expenses by classes or locations
Pricing
- Accounting, invoicing, and receipt scanning: $0
- Credit card processing: 2.9% plus 60 cents per transaction (for most cards), 3.4% plus 60 cents (for American Express)
- Bank payments: 1% per transaction
- Wave Advisors: Starting at $149 per month
Standout Features
- Financial reporting: Wave has a robust reporting capability, and it can generate the following: balance sheet, income statement, A/P and A/R aging, general ledger, trial balance, transaction list by customer, and expense by vendor. Although you’re not able to customize your reports, you can export them to Excel or as a comma-separated values (CSV) file. Reports can also be saved as a PDF.
- Wave ProAdvisors: Wave offers an assisted bookkeeping service in the form of Wave ProAdvisors, who are trained, in-house financial professionals that provide one-on-one accounting, bookkeeping, and tax coaching services for Wave users. Your dedicated advisor will manage your bookkeeping tasks, including categorizing transactions, bank reconciliation, and tax planning.
- Sales and income tax: You can add sales tax to invoices, estimates, bills, and expense and income transactions with Wave. The software will record any transaction automatically with sales tax in the sales tax liability account. However, while you can use Wave to track your sales tax, there’s no way to pay your tax liability or file your returns.
- Invoicing: Wave offers different ways to customize your invoice, including the ability to select from different templates, change colors, add your logo, and include a personalized message. You can add a new customer when creating an invoice and add inventory to the invoice before emailing it to your customer. You can also set up recurring invoices and view outstanding ones without generating a report.
- Accounts payable: Wave manages unpaid bills very well, which is critical in the accounting process. Use the Purchases menu to manage your A/P transactions, and you can either record a new bill or enter an expense without paying. You can also snap a photo of your expense receipt and upload it to Wave with the mobile app. We selected Wave as one of the best receipt scanner apps, especially because it’s free.
Our Expert Opinion
Wave is an adequate software for making the required journal entries and recording the expenses involved in starting a business. The fact that it’s free for accounting, invoicing, and receipt scanning make it a good option if you’re looking to save money during your startup’s organizational stage. However, once you begin operations you’ll likely outgrow it and want to upgrade to more powerful small business software.
FreshBooks: Best Accounting Software for Service-based Startups That Intend to Stay Small
Overall Score:
6.41 / 5
What We Like
- Integrates with Gusto for an additional fee to support your payroll needs
- All plans include unlimited invoices
- Can track time and bill clients for hours
- Includes a mobile app for accounting on the go
What's Missing
- Additional users are charged a fee of $10 per month
- Not able to calculate COGS automatically
- Cannot track and reconcile bank accounts without a live connection
- Not able to track income or expenses by class
Pricing
- 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 a dedicated account manager
All plans include one user with additional users available for $10 per month.
Standout Features
- Customer support: FreshBooks excels in its customer service offerings, which include phone and email support. You can speak with a customer service representative over the phone, which is a rarity among accounting service providers. Its vast knowledgebase is also a great resource, which includes how-to articles and answers to frequently asked questions.
- Invoicing: We ranked FreshBooks as one of the best invoicing software applications because of its powerful invoicing capabilities. You can customize your invoices with a logo and add a personalized message, add items like inventory and labor, and apply sales tax. You can also issue invoices in your preferred currency and create recurring invoices for customers you bill on a regular basis.
- Project accounting: FreshBooks has collaborative tools that allow you to connect with your team members. It also allows you to track employees’ time easily and add it to your invoices. You can also compare your budget costs to actual time and expenses to help you better manage your operations.
- Mobile app: FreshBooks’ mobile app can perform almost all of the same functions as the desktop interface. You can send invoices, enter and pay bills, accept payments, upload receipts, track your mileage and categorize business trips, and record time worked. You can also respond to your clients’ questions right from the app, with all of your correspondence in one place. Your data is synced across all devices.
- Financial reporting: Although the reports that FreshBooks generates aren’t as detailed as QuickBooks Online, there is a wide range of reports available. Reports include balance sheets, P&L statements, A/R and A/P aging, income or loss by month or by customer, trial balance, and general ledgers.
Our Expert Opinion
Despite its low score, FreshBooks is a good choice because of its ease of use for non-accountants and its outstanding customer support. However, growing businesses will outgrow FreshBooks quickly as it’s generally best for very small businesses and sole proprietors. It becomes very expensive at $10 per month for additional users—at 15 users, it’s more expensive than either Zoho Books or QuickBooks Online and isn’t nearly as powerful.
How We Evaluated the Best Startup Accounting Software
We considered a variety of accounting software that’s beneficial for startups. We evaluated these programs in terms of general features that we’d expect to find in startup accounting software and also assessed them based on whether they had the basic features we’d take for granted, such as accessible customer service and access to financial reports. Finally, we took into account ease of use, pricing, and our own expert evaluation.
30%
General Features
20%
Pricing
10%
Inventory
30%
Ease of Use
10%
Mobile App
30% of Overall Score
We considered the software’s general accounting features, banking, A/R, A/P, sales tax, and reporting features. We also evaluated whether they contained at least the basic features needed in small business accounting.
20% 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.
10% of Overall Score
Inventory is often missing or considered a premium feature in accounting software. We evaluated the software’s ability to track inventory costs and stock levels and also considered whether the software could automatically track COGS and compute the cost of ending inventory.
30% of Overall Score
We evaluated the user’s ability to learn the software quickly and gave higher marks for 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 review reports, track mileage, upload receipts, and record time worked.
*Percentages of overall score
Bottom Line
There are many excellent accounting software applications for startups, depending on the particular needs of your business. QuickBooks Online is a scalable solution if your company plans to become a mid to large enterprise. If you often work remotely and need a strong mobile app, consider Zoho Books. Xero is inexpensive and especially good for startups that don’t need external support. If you’re a service-based startup that intends to stay small, FreshBooks is worth taking a look at. If your company is in its organizational state and you’re looking to save money while also having access to unlimited users, Wave is a strong choice.
