How Fit Small Business Evaluates Accounting Software: A Case Study

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 original case study was developed in November 2021 and has been updated annually since then, with the November 2024 update being the most important thus far.

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.

How We Evaluated Value

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.

How We Evaluated General Features

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

How We Evaluated Banking

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

How We Evaluated Accounts Receivable

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

How We Evaluated Accounts Payable

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

How We Evaluated Inventory Accounting

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

How We Evaluated Project Accounting

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

How We Evaluated Sales Tax Management

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

How We Evaluated Reporting

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

How We Evaluated the Mobile App

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

How We Evaluated Integrations

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

How We Evaluated Usability

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

How We Evaluated User Reviews

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.

Prior Case Study Updated November 2023

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.

How We Evaluate General Features

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

How We Evaluate A/P

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

How We Evaluate A/R

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

How We Evaluate Banking and Cash Management Features

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

How We Evaluate Project Accounting

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

How We Evaluate Sales and Income Tax

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

How We Evaluate Inventory

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

How We Evaluate Reporting

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

How We Evaluate Customer Service

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

How We Evaluate Mobile Apps

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

How We Evaluate Integrations

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

How We Evaluate Ease of Setup

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

How We Evaluate Ease of Use

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

How We Evaluate Price

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.

How We Evaluate User Reviews

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.