Updated: November 26, 2024
Published: November 12, 2021
To objectively assess the quality of the products we discuss, we developed an internal case study to evaluate the major accounting solutions on the market today, which aligns with our Editorial Policy. Our case study aims to not only evaluate each accounting program on a surface level but also provide you with a 360-degree view of each software’s core features. For example, by varying the weights assigned to features you require, we can provide a custom recommendation for the best small business accounting software.
Our accounting software case study evaluates general bookkeeping and accounting software across the following 13 categories:
- Value (5%)
- General (5%)
- Banking (10%)
- Accounts Receivable (10%)
- Accounts Payable (10%)
- Inventory Accounting (10%)
- Project Accounting (10%)
- Sales Tax Management (5%)
- Reporting (10%)
- Mobile App (5%)
- Integrations (5%)
- Usability (10%)
- User Reviews (5%)
Below, we explain how we evaluate the accounting software across each category.
Value is determined by the price of the software compared to how well the software scored on the rubric. Our theory is that cheaper software is not always better, nor does expensive software equate to quality software.
Given that, we award a high Value score to software that is low-priced but still scores well in our rubric, whereas we give a low Value score to expensive software that doesn’t deliver additional features compared with less expensive options.
Price
The Price portion of the value score is derived by considering the cost of the software for one, three, and five users. If multiple plans exist, we use the price for the plan with the lowest price, which delivers unlimited invoicing, bill tracking, inventory, and project accounting. We reward software that offers a free trial, monthly plans, and a discount for new customers.
General features are the backbone of good accounting software. For instance, the chart of accounts should be easily modified to suit any business. Users should be able to be added but with restricted access rights.
Here is our complete list of the general features we evaluated:
Fit Small Business Case Study General Features | |
|---|---|
Modify chart of accounts | Enter adjusted journal entries (AJE) |
Allow account numbers in chart of accounts | Classify transactions by class and location |
Add additional users and restrict their access | Add custom tags to transactions |
Provide access to an external accountant | Lock prior period transactions |
Banking was scored for both general banking and bank reconciliation features.
- For general banking features, we looked for the option to print paper checks and import transactions from either a live feed or by uploading bank statements, as well as a few others, detailed in the table below.
- The most important bank reconciliation feature we checked for was the ability to reconcile a bank account even when timing differences exist between the software’s check register and the bank statement. Beyond that basic feature, we wanted to see the option of manually performing a bank reconciliation without importing transactions from the bank.
Here is our complete list of banking features assessed:
Fit Small Business Case Study Banking and Cash Management | |
|---|---|
General Bank Features | Bank Reconciliation |
Print paper checks | Finalize reconciliation while timing differences exist between check register and bank statement |
Specify a bank account for income and expenses without importing transactions | Perform a bank reconciliation without importing transactions |
Have the option to establish a live bank feed | Perform an automatic bank reconciliation by using imported transactions |
Have the option to import transactions from a file | Print reconciliation report, including outstanding transactions |
Get software that recommends matches between imported and existing transactions | Combine checks and cash into a single bank deposit |
Manually match imported transactions to existing transactions | |
Our evaluation of A/R looked at basic features, advanced features, and invoice customization.
- For basic features, we wanted to see options such as printing or emailing invoices, accepting short payments from customers, and issuing credit memos.
- A few advanced A/R features we looked for were a customer portal, automated recurring invoices, and automatically added tracked time and expenses to invoices.
- While aesthetic factors were considered in invoice customization, we also looked beyond aesthetics to functionality. Particularly important was the ability to select which fields would appear on the invoice and to create custom fields to include.
Here are all the factors we considered in our evaluation of A/R:
Fit Small Business Case Study Accounts Receivable | ||
|---|---|---|
General A/R Features | Advanced A/R Features | Invoice Customization |
Save customers | Get a customer portal | Choose from multiple invoices |
Save items for repeated use on invoices | Deal with recurring invoices | Upload a logo |
Print invoices | Handle sales receipts for simultaneous sales and payment | Change invoice colors |
Email invoices | Set default sales price for invoice items | Create a personalized message on the invoice |
Accept short payments | Track and add labor and expenses to invoices | Choose fields to include on the invoice |
Issue credit memos | Refund customer credit balance | Create custom fields to include on the invoice |
Our A/P score is a combination of general, advanced, and receipt capture features.
- The most basic A/P feature evaluated was the ability to save vendors and input unpaid bills to track and later pay. Other general features include creating credit memos and applying them to future invoices from the same vendor.
- The two most important advanced features were initiating an electronic payment from within the software and tracking payments to independent contractors for 1099 reporting.
- The most important factor in receipt capture is that the captured receipt is actually read and converted into a transaction, not simply attached to the transaction as an image. We also like multiple ways to submit receipts, such as through a mobile app or forwarding receipts to a dedicated email account.
Here is our complete list of features included in our review of A/P:
Fit Small Business Case Study Accounts Payable | ||
|---|---|---|
General A/P Features | Advanced A/P Features | Receipt Capture |
Save vendors | Get a vendor portal | Receipt is read and transaction created |
Track unpaid bills | Initiate e-payment from within software | Attach copy of receipt to unpaid bills and expense transactions |
Record a vendor credit | Set up recurring expenses | Email receipt to dedicated address |
Apply vendor credit to a future invoice | Manage purchase orders | Upload receipt via mobile app |
Short-pay an invoice | Track payments to independent contractors | |
Save items to be included on future bills | ||
Set default cost of saved items | ||
To receive any points for inventory accounting, the software needed to provide perpetual inventory accounting where the cost of goods sold (COGS) is automatically calculated and recorded for every sale. Beyond that, we looked for basic features like viewing the total cost and quantity of inventory on hand. Finally, we awarded points if users can input a quantity adjustment for inventory shrinkage and if the software automatically records the loss transaction.
Here is the list of all features considered in our inventory accounting score:
Fit Small Business Case Study Inventory Accounting | |
|---|---|
General Inventory Features | Advanced Inventory Features |
Get software that automatically records COGS for each sale | Get software that automatically records shrinkage loss when inventory quantity is manually reduced |
View cost of inventory on hand | Choose between average cost and FIFO for COGS calculation |
View quantity of inventory on hand | View available inventory after adjusting for purchase and sales orders |
Project accounting includes some basic features like assigning income and expenses to projects and the ability to issue estimates to customers.
Here are all the factors considered in our assessment of project accounting:
Fit Small Business Case Study Project Accounting | |
|---|---|
General Project Features | Estimate Features |
Create multiple projects per customer | Create an estimate and send to customer |
Assign revenue and expenses to projects | Assign estimate to a project |
Record actual inventory used in projects | Add sales tax to estimate |
View income or loss per project | Compare actual with estimated net income per project |
At the very least, accounting software must add sales tax to invoices and track the amount collected while separating it by taxing jurisdiction. Ideally, the software will also provide an easy way to record the remittance and even assist in filing the sales tax return. Some software will even determine the applicable sales tax for an invoice based on the customer’s address.
Here is the list of factors we considered in sales tax management:
Fit Small Business Case Study Sales Tax Management | |
|---|---|
Basic Sales Tax Features | Advanced Sales Tax Features |
View sales tax liability | Indicate which invoice items are subject to sales tax by default |
Separately track sales tax from multiple jurisdictions | Include a sales tax adjustment on customer credit memos |
Designate which lines on an invoice are subject to sales tax | Apply correct sales tax based on customer address |
Record the remittance of sales tax | File sales tax returns |
We search for basic financial statements and reports to assist management in making key operating decisions, such as invoice collection and bill payment.
Here is the complete list of reports we looked for:
Fit Small Business Case Study Reporting | |
|---|---|
Comparative Balance Sheet | Accounts Receivable Aging |
Profit and Loss Statement | Accounts Payable Aging |
Statement of Cash Flows | Sales by Customer |
General Ledger | Income/Loss by Class or Location |
Trial Balance | Transaction List by Customer |
Income/Loss by Month | Transaction List by Vendor |
Ideally, the mobile app should allow the user to access all the same features as the computer interface. In addition to features, we included the average user ratings from both the App Store and Google Play.
Here are the mobile app features we looked for:
Fit Small Business Case Study Mobile App | |
|---|---|
Send invoices | Capture receipts |
Receive payments | Categorize expenses from the bank feed |
Enter unpaid bills | Record time worked |
Enter bill payments | View reports |
Rather than count the number of integrations available, we identified five crucial integrations that we believe every software should have to maximize efficiency within a company. Each software scored full points if we found at least one internal or third-party integration for each of the following five functions:
Fit Small Business Case Study Integrations |
|---|
Payroll |
Time tracking |
Payment processing |
Electronic bill pay |
Sales tax management |
We gauged the software’s usability based on four factors: customer service, bookkeeping assistance, ease of setup, and ease of use. Bookkeeping assistance was weighted the highest because we think it’s important that DIY business owners have somewhere to ask questions and get assistance with their accounting questions that can’t be answered by general technical support.
Here are the factors we considered in evaluating usability:
Fit Small Business Case Study Usability | |||
|---|---|---|---|
Customer Service | Bookkeeping Assistance | Ease of Set Up | Ease of Use |
Live help is available 24/7 | Online bookkeeping service directly from the software provider | New company wizard | Dashboard is customizable and easy to read |
Live help by phone | Formal independent advisor network | Input beginning balances (no AJE required) | Create new transactions with one click from the dashboard |
Help by chat (live person) | Independent advisors available in all 50 states | Import beginning balances | View important vendor, customer, and transaction information without running a report |
Help by Chat-bot | Import chart of accounts | Create required contacts when needed rather than exiting transactions and returning later | |
Help by email | Import customers | Cloud-based vs locally installed | |
User community | Import vendors | Mac-compatible | |
Self-help information available | Import service and product items for invoices | Subjective UI design score | |
Training and onboarding available | Live assisted onboarding support | Ease of use | |
Our user review score is the weighted average of two popular review websites: Capterra and G2. If one of these sites has insufficient reviews, other third-party user review sites, such as Trustpilot and TrustRadius, might be included.
Our accounting software case study evaluates small business accounting software in the following 15 categories:
- General Features
- Accounts Payable (A/P)
- Accounts Receivable (A/R)
- Banking and Cash Management
- Project Accounting
- Sales and Income Tax
- Inventory
- Reporting
- Customer Service
- Mobile Apps
- Integrations
- Ease of Setup
- Ease of Use
- Price
- User Reviews
Below, we explain how we evaluate the accounting software across each category and which features are the most heavily weighted criteria in our rubric.
At the very least, a developed accounting system should have an intuitive user interface to work with. This means you should be able to complete your setup by following an easy navigation pattern, with features arranged neatly and accessible easily from a single dashboard. More importantly, we looked into enhanced bookkeeping features, such as the ability to modify the chart of accounts and enter beginning balances, which are extremely important when you’re switching from an old program to new accounting software.
Other important features we consider include:
- Record fiscal year-end: It’s important that your accounting software records your financial activity accurately within the proper period prior to closing the accounts.
- Close the books for prior years: You should be able to close your books at year-end so no further changes can be made.
- Add additional users and restrict user access: This feature comes in handy if you have an employee or accountant who accesses your accounting data. You should be able to control how much access you can give to them.
Here’s the complete list of features considered in our evaluation of general features:
Fit Small Business Case Study General Features | |
|---|---|
Input basic company information | Close the books for prior periods |
Provide access to an external accountant | Add additional users and restrict their access |
Record fiscal-year end | Enter an adjusting journal entry (AJE) |
Import and modify chart of accounts | |
It’s very easy for a business to lose track of bills, so your new accounting software should help you track how much money you owe to your suppliers and vendors. The best accounting system allows you to record new bills and pay the money online with the click of a button to help you reduce the time spent on processing checks and making bank deposits.
Some programs take it a step further by allowing you to set up recurring payments, which is a useful feature for businesses that pay vendors on a regular basis. We also assessed how the software handles purchases, from creating simple purchase orders to processing quotes to purchase and payment.
Our criteria for evaluating A/P focus on the following features:
- Record an expense without paying: Good accounting software should allow you to record an expense when an invoice is received rather than having to wait until it’s paid.
- Record a credit from a vendor: There are some instances where a vendor owes you money, whether it’s a refund or return of items. Your accounting program should allow you to enter a vendor credit to record that refund or return.
- Ability to short-pay an invoice: If you don’t want to pay the entire amount due for any reason, such as for items that aren’t yet completely delivered by the vendor, you need to be able to make a partial payment of the invoice.
Below is the complete list of features involved in our assessment of A/P:
Fit Small Business Case Study A/P | |
|---|---|
Create a vendor and view list of vendors | Create a bill for the purchase of inventory |
Record an expense without paying, enter expense due date, and create recurring expenses | Record and print checks |
Attach a receipt, send a copy through the app, and check if a transaction is created or just attached | Record a vendor credit and apply to an invoice |
Record purchase order and convert to bill | Record electronic payment of a bill |
View unpaid bills and filter by vendor | View transactions by vendor |
Create service item and set default cost | Short-pay an invoice |
Pay the independent contractor using the service item and assign the payment as a billable to a customer | |
In addition to tracking what you owe, your accounting software should also track who owes you money, how much they owe you, and when to expect payment. We evaluated the software across this category based on invoicing capability, from creating and customizing invoices to adding billable labor, inventory, and expenses. A robust accounting software program should also be capable of setting up and sending recurring invoices. We also examined the software’s ability to produce A/R reports, such as outstanding balances by customers.
We also scrutinized the following essential features:
- Create a new customer: You should be able to set up a customer in your accounting software so that you can streamline and track your transactions with them. One important feature is a “quick-create” option for creating new customer accounts when billing a customer for the first time.
- Add unbilled labor and expenses to an invoice: This feature is useful for ensuring you bill customers for all labor and expenses that have been paid and assigned to their accounts.
- Accept short payments from customers: There might be times when customers opt not to pay the full amount of an invoice. Your accounting software should have a streamlined procedure for managing short-paid invoices to keep your accounting records accurate.
We explored all the following features in our assessment of A/R:
Fit Small Business Case Study A/R | |
|---|---|
Choose an invoice template and customize the invoice | Set up sales tax and service contract items |
Set the invoice to recur monthly | Issue a check for credit balance refund |
Add unbilled labor and expenses to invoice | Create a new customer |
Email and print the invoice | View balance and transactions by customer |
View outstanding invoices with and without a report | Issue a credit memo to a customer and accept short payment |
Issue a sales receipt for a sale paid immediately | |
At the very least, your accounting system should provide an option to connect your bank account, allowing you to import real-time data from your bank into the system and make direct payments. Some software will also accept QuickBooks Online files, which enables you to download files without connecting the software to your bank. If you like to pay bills by check, your system needs to be able to print and process checks as well as provide options for voiding and deleting duplicate checks.
Other major features we evaluated include:
- Bank and credit card reconciliation: Reconciliation is one of the pillars of good accounting. A great accounting solution should be able to reconcile your check register to your bank statements even when there are timing differences like outstanding checks and deposits in transit.
- Group checks into a single deposit: You should be able to group checks into a single deposit amount so that your check register will match your bank statement.
Our assessment of banking and cash management covers all the following features:
Fit Small Business Case Study Banking and Cash Management | |
|---|---|
Connect to live bank feed or upload bank statements | Apply checks received to outstanding invoices |
Reconcile bank accounts when timing differences are present | Combine multiple checks received and cash into a single deposit |
Save bank reconciliations and return later and finalize reconciliation and print report | Print checks |
Record check numbers in register | |
Reconcile credit card statements | |
Most accounting programs don’t have full features adapted to project contracting businesses, but some programs have basic functionality for estimating and tracking project-related costs, including labor, materials, and equipment. After creating the project, you should also be able to assign costs and actual labor and add new transactions, such as inventory, expenses, and invoices. Project managers should be able to compare actual project costs with their budgets by period.
We assessed project accounting based on the following features:
Fit Small Business Case Study Project Accounting | |
|---|---|
Create an estimate, and add items, such as labor, inventory, and sales tax | Record actual inventory used in project |
Assign estimate and actual labor to a project | Generate report comparing actual to estimated labor and inventory |
Track income or loss by project | |
An accounting system doesn’t have to replace your tax software, but your accounting program should be able to track sales tax collected and submitted by tax jurisdiction. We consider the software’s ability to set up sales tax items with the correct requirements, depending on the tax rules in your region.
An all-inclusive accounting program also generates reports for tax liabilities and tracks taxes owed for different periods. The ability to pay sales tax liability and file tax returns are the strongest features we consider across this category. The most important income-tax-related feature is the ability to track payments that must be included on Form 1099 to subcontractors.
Here’s the complete list of features evaluated in this category:
Fit Small Business Case Study Sales and Income Tax | |
|---|---|
Create a sales tax item | Create an independent contractor and track for 1099 payments |
View sales tax liability details | File sales tax return |
Pay sales tax liability with a check and electronically | Experience ease of use |
Print report for Schedule C | Include sales tax adjustments on credit memos |
Inventory accounting varies from vendor to vendor. While most programs allow you to record inventory in an asset account, the ability to calculate the cost of goods sold (COGS) automatically is rarer but an essential function for retailers and wholesalers.
Overall, the best accounting software must include features for tracking inventory on hand, creating inventory items, and making adjustments to increase or decrease the quantity and cost of stocks. It should also be able to add inventory to invoices and bills easily while adjusting stock levels for the sale or purchase automatically.
Our assessment of inventory accounting includes the following features:
Fit Small Business Case Study Inventory | |
|---|---|
Create an inventory item and view inventory available | Record COGS automatically |
View inventory on purchase order and total cost of inventory on hand | Select between average cost, last in, first out (LIFO), and first in, first out (FIFO) for COGS calculation |
Create bill for purchase of inventory | Decrease inventory for units returned to vendor |
Add inventory to an invoice | Record inventory returned by customer |
At the very least, the best accounting software generates fundamental reports, including profit and loss (P&L) statements, cash flow statements, and balance sheets. Besides the number of features available, we also looked into the software’s flexibility in terms of creating report categories. Some programs offer basic reports while more advanced solutions can run reports by category, such as class and location.
We attempted to generate the following types of reports:
Fit Small Business Case Study Reporting | |
|---|---|
Balance sheet | Income/loss by month |
P&L statement | Income/loss by customer |
Statement of cash flows | Income/loss by class |
A/R & A/P aging reports | Income/loss by location |
General ledger & trial balance | Unbilled charges and time |
Expenses by vendor | Transaction list by customer |
Most accounting software claims to have responsive support, but we wouldn’t know how efficient they are without actually testing them. We tested each software’s support options and placed our highest scores on phone and live chat support. The most reliable customer support allows you to initiate the call and is quick to pick up the phone. If phone support isn’t available, then you should be able to seek assistance at least through email or a chatbot. Accounting programs, including free software, should also provide self-help resources that users can browse at their own pace.
We tested if the software provider offers the following types of customer service:
Fit Small Business Case Study Customer Service | |
|---|---|
Phone support (you call or they call) | Self-help information available |
Email support | Chatbot and live chat person |
24-hour support | User community |
Training and onboarding | Availability of independent bookkeepers with software expertise |
Each mobile app provides different levels of functionality depending on the vendor. We evaluated each app based on its ability to perform important accounting functions, such as sending invoices and recording bills on the go. A powerful mobile app doesn’t need to have all the features of the desktop interface, but you should essentially be able to enter and receive payments, capture expense receipts, and view financial reports.
The best mobile app should be able to perform the following features:
Fit Small Business Case Study Mobile App | |
|---|---|
Enter bills and bill payments | Capture receipt |
Send invoices and receive payments | Record time worked and assign to customer or project |
Assign expenses to customer/projects | View reports |
Categorize expenses from bank feed | |
Accounting software should serve as the central hub for all of your business information. Integrations allow all of your business programs to communicate with your accounting software seamlessly with minimal effort from you. We focused our evaluation on whether the accounting software provided the following four vital integrations:
- Payroll
- Time tracking
- Receive e-payments from customers
- Make e-payments to vendors
Moving to a new accounting software is usually a painful process. We evaluate ease of setup based on the tools and resources available to new users for making this one-time adjustment to the new system. In addition to the specific items listed below, we did a subjective evaluation of the ease of use and looked for user reviews specifically targeting ease of use.
Specifically, we look to see if new users can:
- Import a chart of accounts and beginning account balances
- Import customers and vendors
- Import service items to use on invoices
- Access live onboarding support
Ease of use is the difficulty of using the program daily once the original onboarding is complete. Our ease of use score is subjective, but we look for key features that generally tend to make software easier to use:
- Easy-to-read, customizable dashboard
- Cloud-based software versus desktop
- General user interface design
- One-click transaction creation
We evaluate price based on the monthly cost for one, three, or five users. Some accounting software is very affordable for one seat but becomes expensive when additional users are needed. To receive full points, the software must be below a certain cost for the given number of users:
- Less than $30 per month for one user
- Less than $45 per month for three users
- Less than $75 per month for five users
We also awarded additional pricing points for software that provided a free trial, offered monthly plans, and gave new customers a deep discount.
We evaluate user reviews by referencing websites dedicated to collecting user reviews, such as G2, Software Advice, and Capterra. More weight is given to the websites that collect the largest number of reviews.
Bottom Line
Our accounting software case study was developed to provide first-hand information and useful insights to help you choose the right accounting software for your business. It shines a light on the holistic performance of each software we review and provides a multifaceted understanding of the specific features to help you gauge how suitable they are for your specific accounting needs.