Best Accounting Software for Small Businesses 2023

FreshBooks Accounting Software: Best for Invoicing

FreshBooks Accounting Software

• FreshBooks lets you easily craft invoices, accept payments through invoices, track expenses, and send automatic reminders.
• You receive a full suite of accounting tools to take care of tasks like tracking time and expenses as well as running financial reports.
• If you need to add several team members to the software, that can get expensive.

Editor’s Rating:9/10

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We recommend FreshBooks as the best software for invoicing. Not only can you develop professional invoices that match your brand, but you can also track the status of invoices so you know when customers received their bills and when their balances are due. It also facilitates online invoice payments so customers can pay you directly from the invoice.

The FreshBooks dashboard is simple to navigate and includes time and expense tracking, project management features, and tools to create proposals that you can send to prospective clients. The double-entry accounting system makes sure you are organized and prepared for tax time. If you want accountants to have access to your dashboard, reports, invoices and expenses, you can assign them permission, as well as grant other users access to different features. If you have employees, you can give them access to their projects and track their time and additional expenses. FreshBooks has over 100 partners, so you can add plenty of features and connect with other business programs.

Zoho Books Accounting Software: Best for Microbusinesses

Zoho Books Accounting Software

• Zoho Books has apps for popular operating systems and devices, including Apple, Android and Windows.
• Through Zoho Books, you can send invoices, reconcile accounts, track and manage bills and vendor credits, and accept payments on the go.
• Zoho Books imposes a limit on your annual invoice volume, which may be challenging for some businesses.

Editor’s Rating:8.5/10

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We selected Zoho Books as the best accounting software for people with microbusinesses. Not all accounting software programs are appropriate for freelancers, independent contractors, sole proprietors, consultants, home-based businesses, individuals operating e-commerce sites and companies that employ fewer than 10 people. In those cases, the software may be too complicated, unnecessarily powerful and overly expensive. Not so with Zoho Books. It works well for businesses with straightforward invoicing and accounting needs, and the low price (including free options for low-revenue businesses) is attractive for budget-conscious entrepreneurs.

Zoho Books is also scalable. As your small enterprise expands into a larger business, you can make use of the options that allow you to upgrade and integrate with other business applications. An easy-to-use, proprietary programming language called Deluge allows you to build custom functions. You can also access a Zoho professional for help in designing your own functions. It also includes a mobile app to ensure that you can keep up with accounting tasks while you’re on the go.

Melio: Best Accounts Payable Tools

Melio

• It’s free to make and accept payments from bank accounts with Melio.
• You can easily schedule and track payments and control who has access to your accounts payable and receivable.
• Melio charges a 2.9 percent fee for credit and debit card payments, as well as $20 for expedited check delivery and international USD transfers.

Editor’s Rating:8/10

We recommend Melio for small businesses seeking user-friendly accounts payable tools that do not need a lot of bells and whistles. It’s an excellent option for cloud-based software that will send invoices and receive payments, as well as manage bills. Melio also integrates with QuickBooks for free. There’s no charge to make payments through a bank transfer, but there is a 2.9 percent fee to pay by credit or debit card. Two paper checks per month are free; after that, they are $1.50 each.

Melio is very easy to use, offering one of our favorite user experiences. Adding vendors is quick and intuitive. Melio lets you enter a vendor’s information manually, upload a file with that date or snap a photo of an invoice. You can invite both internal users and accountants to use the software and then assign roles and permissions so you know who is accessing your information and what they are doing with it. You can set approval controls for transactions, thus preventing you from overextending yourself or having a cash flow issue because you paid a bill early.

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ZarMoney: Best for Inventory Management

ZarMoney

• The ZarMoney website clearly lays out pricing, which starts at $15 per month for a single user.
• ZarMoney offers inventory management features typically only available in an ERP or a dedicated inventory management platform.
• ZarMoney lacks a mobile app and tools for capturing expenses or receipt photos.

Editor’s Rating:9/10

We chose ZarMoney as the best accounting software program for businesses seeking inventory management features within their accounting tools. Organized by “entrepreneur,” “small business” and “enterprise,” the pricing plans reflect each type of company’s needs. The cost is based on the number of users, from one to more than 30. If you add or remove users, ZarMoney will automatically update your account and charge you accordingly. Each additional user costs $10 per month.

In addition to the transparent pricing, ZarMoney’s powerful cloud-based software includes inventory features unavailable with similarly priced competitors. You can manage inventory at multiple locations, transfer inventory between locations in one click and manage barcodes. Plus, ZarMoney is easy to use and is adaptable for small and larger businesses, with customization and dedicated support and training for enterprise users. The software also offers a 15-day free trial so you can test it out before you buy.

Plooto: Best for Accounts Payable

Plooto

• Plooto’s payment platform lets you manage payments, approvals and reconciliation from one central location.
• The software provides accounts payable and accounts receivable automation, which speedsup payments.
• International payment transactions are expensive.

Editor’s Rating:9/10

Plooto is our software choice for automating accounts payable. With it, you can manage your payments in one central location, providing you with a clear picture of your finances. Payments, approvals and reconciliation are unified under one dashboard. The software includes smart approval workflows and secure electronic payments, which reduce errors and speed up the accounts payable process. Most notably, Plooto offers business accounts payable and accounts receivable automation, which helps you collect on past-due bills.

You can use the same system to pay all vendors, even those located outside the U.S., as well as add payees in seconds, either by searching Plooto’s network of 120,000 suppliers and vendors or by adding them manually. Once a customer pays, the payment is automatically reconciled. You can pay electronically or via check with the integrations, as well as make batch payments, search records and set payment approvals.

Wave Financial: Best Free Accounting Software

Wave Financial

• Wave links with bank accounts and credit cards so that you can track expenses automatically.
• Wave gives you standard bookkeeping services for free.
• Wave’s integrations are more limited than some competitors.

Editor’s Rating:8/10

If you’re looking for effective, free accounting software, check out Wave Financial. It offers many important, high-quality accounting features at no cost to you. There are no monthly or annual fees, nor do you have to license software. Through the cloud-based accounting program, you can create and schedule recurring invoices and payments, as well as set up automatic payment reminders and automatic syncing with your bank and credit card accounts. It also gives you the ability to run financial reports, and it provides you with unlimited accountant connections and transactions. If you want to integrate popular business apps, you can do so at no extra charge.

The only fees you’ll experience with Wave will come from selecting optional add-ons — for example, payroll features — or accepting invoice payments. Wave charges a flat rate of 2.9 percent plus $0.60 per credit card transaction, though for AMEX transactions, that 2.9 percent becomes 3.4 percent. Bank payments are 1 percent per transaction, with a $1 minimum fee. The company also has additional payroll and bookkeeping services that business owners can access for a fee.

Sage: Best for Freelancers and Self-Employed

Sage

• Sage Accounting lets you create and send invoices, track payments and automatically reconcile bank entries.
• Both Sage Accounting pricing plans are among the least expensive accounting software packages we reviewed.
• The software lacks tax calculation, filing and payment tools.

Editor’s Rating:9/10

It is essential for self-employed entrepreneurs and freelancers to quickly and easily send invoices and track payments. For this reason, Sage Accounting is our top choice for these types of small businesses. With Sage, you will have an affordable way to keep the cash flowing into your business without unnecessary delays. This accounting software offers well-priced tiered plans with which to create and send invoices and track payments.

The program is fast and easy to set up, and the system is simple to navigate. Sage’s software automates a lot of the accounting processes that are typically manual, such as posting expenses and payments and sending invoices and reminders about past-due bills. The software also automatically reconciles bank entries, saving you time and energy. If you need extra assistance, Sage’s customer service is very accessible, which is good news for freelancers and self-employed people who don’t have accounting expertise. Setup is also easy, with ample resources for getting started and continuing thereafter.

Neat: Best for Receipt and Expense Tracking

Neat

• Neat is ideal for small businesses that handle a large stream of receipts.
• The software is easy to install and can be used immediately without extra training.
• Neat lacks bill-paying functions, and there is no customer service phone number.

Editor’s Rating:7.5/10

As a small business owner, all you may want your accounting software to do is help you manage your receipts and expenses. If so, Neat may be your best bet. This cloud-based tool enables you to upload all of your business receipts with the mobile app and starts at $200 per year, which equates to $16.66 per month. Once done, you can categorize each, keeping you well organized and on top of your costs.

With Neat, you’ll have a good understanding of your cash flow and the ability to access interactive charts and run accounting reports that will analyze the financial health of your business. All this can reduce errors often associated with handwritten recording. It also takes the stress out of making sure that you get the right deductions come tax time.

Accounting Software Costs

Accounting software helps business owners streamline billing and accounting, and it doesn’t have to cost a lot of money. Most programs offer several plans to accommodate your needs and budget.

There are typically two types of pricing models for accounting software: perpetual licensing or a recurring subscription. With a perpetual licensing model, you make a one-time payment for unlimited access to the software. With a subscription pricing model, you pay a monthly or annual fee for access to the software.

For subscription pricing, expect to pay anywhere from $8.50 per month for a basic starter plan to as much as $350 per month for a more advanced service plan. Other factors, like the included features and number of users, affect the monthly cost as well.

Tip

Some accounting software platforms set maximums on the number of users allowed, whereas others impose no barriers. Depending on how many employees will use your software, no-limit plans may be more cost-effective.

Regardless of the pricing model you select, watch out for hidden fees, which can include charges for customization options, installation or setup services, integrations, and maintenance or support services.

If your business is on a tight budget, consider free accounting software. Wave, for instance, offers many of the accounting and invoicing features you would find in paid programs. Zoho Books also offers a free plan for businesses with under $50,000 in annual revenue.

When you’re choosing accounting and billing software for your business, we strongly encourage you to take advantage of any free trials to test out the solutions and see which one offers the features and tools you need. Plus, spending time with the software beforehand will help you feel more confident in your decision.

Accounting Software Features

Many aspects of accounting software make it a useful tool. If you’re a small business owner, it’s important to know which features to look for. Most online accounting software offers accounts receivable, accounts payable, banking and reporting features. Some programs include inventory management, project management, time tracking and payroll tools.

Here are some of the core features to look for in accounting software:

Bank feed	Accounting software connects with your bank so that all your banking transactions appear in your online ledger as well.
Dashboard	The best accounting software platforms feature organized, customizable dashboards with clear data visualization and organization features.
Online invoicing	You can create invoices and send them from entirely within most accounting software — no printing or mailing needed.
Recurring invoices	Often, accounting software platforms include automation features you can use to set the same invoice to send at the same time each month.
Automatic payment reminders	Many accounting software platforms regularly and automatically remind your customers or clients to pay outstanding invoices.
Bank reconciliation	All accounting software should have no problem matching your bank transactions to invoices, bills, purchase orders, expenses and the like.
Financial reporting	You can use accounting software to generate basic forms such as P&L statements or advanced business health reports.
Mobile apps	Almost all accounting software platforms offer iOS and Android mobile apps — some of which include nearly all features available via browser or desktop.
Integrations	The best accounting software platforms integrate with POS systems, payroll services, HR platforms, CRM software and more.
Tracking for billable hours	Many platforms include features for tracking your time spent per task or project, or they integrate with your third-party time-tracking platform.
Inventory management	Some accounting software includes tools for tracking your inventory, creating purchase orders and keeping your warehouses stocked.
Project-based billing	With this feature, you can bill your clients based on your time spent per project or task and your hourly rates.
Support for multiple businesses	Some accounting software platforms enable you to use the same set of tools for more than one business.

Bank Feed

This feature connects the software to your business bank and credit card accounts to receive a daily update of your transactions. This saves time, as you will not have to upload transactions manually. It also gives you a daily, rather than monthly, overview of your accounts. A real-time bank-feed feature can assist with reconciliation, which allows you to make it a small daily task rather than a monthly ordeal.

Dashboard

When you log in to your account, you’ll be greeted by a dashboard that shows you an overview of your account activity and key metrics, such as cash flow, profit and loss, account balances, expenses, accounts payable and receivable, and sales. Some accounting programs allow you to customize what you see first by rearranging the information.

Online Invoicing

If your business sends invoices, the ability to email them and accept online payments helps you get paid faster. Most accounting programs integrate with third-party payment processors; others require you to use their in-house processing services. It’s a plus for accounting software to serve as an invoice generator also.

Recurring Invoices

With this feature, you can schedule the system to automatically generate and send invoices for recurring charges, such as subscriptions. You can choose how frequently invoices are sent — daily, weekly, monthly or annually — and indicate whether there’s an end date to the billing.

Automatic Payment Reminders

This feature helps you remind customers about upcoming and past-due payments. Some have sample email text that you can use as is or customize. You can then choose when you want the reminders to be sent. Some programs give you the option to send thank-you emails to customers after you receive their payments.

Bank Reconciliation

Smart reconciliation tools identify potential matches between your bank transactions and the bills and invoices you’ve entered into the accounting software, saving you the hours it would otherwise take to sift through your bank account for this information. You can then approve or deny the suggested matches. The best applications suggest potential matches as you reconcile your accounts, and a few include a reconciliation tool in their mobile apps.

Financial Reporting

Every accounting program can generate financial reports. But some are more basic than others, and some require you to subscribe to a pricier plan for advanced reporting. If you need specific types of financial reports, you’ll want to make sure they’re included in the software application and plan you choose. Detailed reports can help you interpret your financial data to make informed business decisions.

Mobile Apps

Not all accounting and invoicing programs have mobile apps, but the best ones do. There is, however, quite a range in the capabilities of mobile apps. Some can only capture receipts for expense tracking, some allow you to create and send invoices, and others have almost every feature the web-based software does. It’s worth checking if the software you’re considering offers a mobile app and, if so, what features are included in the app that will help you manage your business while you’re away from the office.

Tip

The best accounting software mobile apps include all the features of the browser version, essentially resembling this version scaled down to smartphone size.

Integrations

The ability to connect your accounting software to other business programs you use saves you valuable time because you don’t have to manually transfer data from one system to another. Payroll, payment processing, the best point-of-sale (POS) systems and the best customer relationship management (CRM) software are just a few of the popular types of integrations that are available with accounting software. Integration with systems you already use also cuts down on training time for employees who will use the software.

Tracking for Billable Hours

If you’re a consultant or your business bills clients by the hour, you need accounting software that allows you to track and bill your time or that integrates with the time-tracking program you already use. This is an important feature for freelancers.

Inventory Management

If you have a retail, e-commerce or distribution business, you need an application that helps with inventory tracking and purchase orders. You may need to subscribe to a top-tier plan to get this feature, unless you use ZarMoney. If you need more advanced inventory features, look for software that integrates with a dedicated inventory management system.

Project-Based Billing

Firms, freelancers and consultants who work with clients on projects or jobs should look for accounting software that helps them track their projects’ tasks and budgets. The software should allow you to invoice customers for tracked time and bill them for project expenses.

Support for Multiple Businesses

Several programs we evaluated let you add more than one business to your account, though some companies charge extra for this convenience. Also, the types of accounting tools that are important to you will depend on the specific needs of your business. For example, if you run a small freelance business, project-based billing might be the most important feature on your list. Or, if you plan to do some work on your mobile device, a full-featured mobile app might be at the top of your list.

Advantages of Business Accounting Software

Managing your finances is vital to the success of your business, and choosing the right accounting software can make that much easier. You’ll reap a lot of benefits when you swap out pen and paper or an Excel spreadsheet for accounting software. Here’s a look at a few of them:

Reduces Mistakes

Human error is by far the biggest cause of accounting and bookkeeping errors. Many accounting professionals cite common mistakes such as spreadsheet errors and incorrect manual entries. Accounting software can help cut down on these costly blunders by eliminating clunky spreadsheet inputs and pulling data directly from third-party business apps.

Improves Organization

Small businesses can’t afford not to have their finances in order. Whether it’s time to pay the tax bill or forecast for the next year, it can be difficult to get the information you need if you are not organized. Accounting software helps you stay on top of your financial data. It organizes financial information, stores it in one location and automates many time-consuming accounting processes, which frees you up to focus on running your business.

Bolsters Internal Controls

Internal controls refer to the rules and procedures established by a company to ensure the integrity of accounting and bookkeeping processes. Accounting software increases the reliability of your measures to help prevent and detect fraud. This can significantly reduce the risk of loss and theft from your business.

Doesn’t Break the Bank

Thanks to cloud-based offerings, the price of accounting software has come down a lot over the years. Today, small business owners have a lot of choice: Accounting software costs range from free to $350 per month. The size of your business and your accounting needs dictate how much you pay. But if that monthly cost means you’ll optimize cash flow, meet tax obligations and identify growth opportunities, it’s probably worthwhile.

Ensures Tax Compliance

Calculating and paying taxes is an essential part of running a business, but it is also complex and often involves a lot of tedious paperwork. Accounting software can help you manage this task. Many accounting software providers have designed programs that calculate sales tax, prepare tax forms, and even file taxes with no intervention on your part, which can save you time and hassle. Reporting features can also keep you compliant with tax authorities, which increasingly require real-time reporting. AI technology increasingly enables businesses to upload their profits and losses in real time. This is especially important in an era when businesses deal with tax requirements not only in their own countries, but around the world. Fines and punishments for non-compliance can be incredibly burdensome for business owners.

Tip

There are many tax deductions your business can and can’t take. Accounting software can help you navigate this tricky maze.

Business Accounting Software FAQs

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Accounting Software Trends in 2023

In 2020, the global accounting software market reached a value of $11.9 billion, according to data from Allied Market Research. This figure reflects the sector’s steady growth throughout the 21st century. By 2030, the market is expected to reach a value of $70.2 billion, a compound annual growth rate of 19.6 percent across the decade.

The gradual — and nearly complete — shift away from desktop software toward cloud-based platforms likely explains this change. Prior to the growth of cloud-based technology, accounting software existed solely on one’s computer, with few to no connections with other technologies. This imposed limitations on bank connections and 24/7 access, two major issues that cloud-based technology has solved. Plus, cloud-based technology has fueled the growth of accounting software mobile apps, which are a major asset for any small business.

Artificial intelligence is also set to drive continued growth in the accounting software sector. This technology is powering automation tools that streamline key accounting processes, minimizing tedious work among finance teams. It’s also behind the early stages of obtaining support from a live chat tool, making customer service easier to provide for vendors as well.

Accounting software is also expected to change based on new GAAP updates that the Financial Accounting Standards Board (FASB) regularly issues. The FASB issues roughly a dozen updates per year, and though only some of those affect small business accounting, it’s still smart to track them. If you see any that affect small businesses, expect your accounting software vendor to update the platform accordingly. If not, you can contact the vendor and request a change or seek new vendors that more strongly prioritize GAAP compliance.

Acquisitions and mergers within the accounting sector may also shape the software field. Accounting software companies, though, rarely merge or acquire one another — instead, accounting firm acquisitions can drive trends in the space.

For example, in September 2021, the prominent tax advisory firm Baker Tilly acquired a company called AcctTwo Shared Services. The latter was known for its focus on proprietary cloud-based accounting solutions built from Sage software, and Baker Tilly now offers this service instead. Baker Tilly clients may therefore be more likely to choose Sage accounting software, driving usage trends in the accounting software sector.