The Best Accounting Software for Small Businesses in 2024
Deeper Dive: Our Top Tested Picks
- In-depth contact records and transaction forms
- Excellent inventory management, time tracking
- Numerous customizable reports
- Supports projects, payroll, and many add-ons
- Useful mobile apps
- Expensive
- Mobile app hides some features
For many years, Intuit QuickBooks Online has been the small business accounting service to beat. It combines highly effective accounting tools with an exceptional user experience. The service stands out because it’s easily customizable, comes in multiple versions with hundreds of add-ons, and offers better mobile access than most rivals.
QuickBooks Online is expensive, so it’s most appropriate for small businesses with a technology budget. The software is easy enough to learn if you are an inexperienced bookkeeper but still gives you enough advanced features if your needs are more demanding. Because it’s so flexible and user-friendly, it appeals to a wide variety of business types.
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Intuit QuickBooks Online Review
Best for Multiple Users
Xero
- Thorough accounting features
- New inventory add-on
- Gusto integration for payroll
- Exceptional online help
- Good mobile apps
- Must link time entries to projects
- Transaction templates are difficult to modify
Xero supports every major financial element you expect in a double-entry small business accounting solution: bills and expenses, inventory, payroll, purchases, and sales. The site offers exceptional reports and advanced analytics and provides tools for tracking projects. It uses artificial intelligence to automate processes and improve connectivity with related financial websites. We also like its integration options and network of available advisors.
If your small business requires multiple people to have access to accounting software, Xero is worth a look. It’s also ideal for businesses that can take advantage of the lion’s share of its well-integrated features and need powerful reporting tools. Xero also lets you track fixed assets, which is unusual for the category.
Best for Service-Based Businesses
FreshBooks
- Excellent user experience
- Context-sensitive settings
- Some unusual yet helpful features, like retainers
- Projects and time tracking
- Great mobile apps
- Extra costs for team members, 1099s
- Weak inventory tracking
Don’t let its good looks and simplicity fool you: FreshBooks is a full-featured, double-entry accounting system that offers an exceptional user experience. The software is intuitive enough for novice bookkeepers to learn but supports all the elements that a larger business needs, including payroll.
We recommend FreshBooks primarily if you manage a service-based business, though it does basic inventory tracking, too. Very small businesses can use it for basic money management, such as accepting payments, monitoring financial accounts, sending invoices, and tracking income and expenses. More complex companies can add advanced tools such as mileage and time tracking, projects and proposals, and reports.
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FreshBooks Review
Best for Inventory Tracking
Sage 50 Accounting
- Great dashboard
- In-depth record and transaction forms
- Advanced inventory management tools
- Voluminous reports
- Microsoft 365 Business integration
- Available only on Windows
- Some UI elements look dated
- No mobile apps
Sage 50 Accounting is a massive small business accounting application for Windows. It’s the most comprehensive program we’ve reviewed, and it does more than what many small businesses need. It also costs more. The Remote Data Access feature makes remote work possible, and an integration with Microsoft 365 Business could be useful if you subscribe to that service. Overall, it’s very powerful, even if its interface could use an update.
Sage 50 Accounting is especially appropriate if your company needs robust inventory tracking. It’s also suitable for businesses that need advanced accounting capabilities and data capacity but can do without mobile access.
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Sage 50 Accounting Review
- Exceptionally easy to use
- Suitable selection of features for very small businesses
- Good invoice and transaction management
- Multicurrency support
- Improved mobile apps
- Formerly free features now cost money
- Sparse record templates
- No time tracking or projects
Wave now offers two subscription tiers. The free Wave Starter plan leaves out its most useful features (like bank transaction imports) and charges extra for scanning and uploading expense receipts. Wave Pro, which costs $16 per month, gives you full access to the software’s capabilities. We think the latter is worth it because of its smart selection of features for very small businesses: It’s especially good for invoicing and transaction management and supports multiple currencies.
Wave is best for sole proprietors and freelancers who want room to grow and have heavy invoicing needs. Its simple, understandable interface means even financial novices can use it. Integrated payroll and double-entry accounting support make it an option for small businesses with several employees, though others on this list are better for those purposes.
Best for Larger Small Businesses
Zoho Books
- Depth and flexibility in every module
- Comprehensive, customizable records and forms
- Generous multicurrency and language options
- More reports than competitors
- Great mobile apps
- Might be too complex for some smaller businesses
- Time tracking is locked to projects
- Several features require add-ons
Zoho Books is the small business accounting element of Zoho’s business software ecosystem. You can integrate your accounting data with numerous related apps and functions, like CRM, customer service, and email. Its depth, flexibility, and usability in standard bookkeeping areas (inventory management, sales and purchases, and time and project tracking) equals and sometimes surpasses that of competitors. It even has a free version.
Zoho Books is best if your company uses other Zoho applications, but we also recommend it to owners of larger small businesses, growing businesses, and established businesses who want lots of customization options.
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Zoho Books Review
Most Affordable
Patriot Software Accounting
- Competitive price
- Easy-to-use and attractive interface
- Good mobile access
- Lots of support options
- No time tracking
- Can’t track inventory
- References some advanced accounting concepts
- Minimal fields in contact and product records
Patriot Software Accounting is affordable and provides robust support. Its attractive, intuitive UI and exceptional mobile access add to its appeal. Although it’s missing some features that competitors offer and includes some complex language and concepts that rivals keep in the background, it’s still a worthwhile choice for keeping costs down.
Patriot Software Accounting is best if you manage a small business that isn’t likely to grow exponentially. (It’s not scalable.) We appreciate its integration with Patriot Software Payroll and approachable design, though you should seek alternatives if you need beyond-basic tools.
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Patriot Software Accounting Review
Best for Solo Entrepreneurs
Intuit QuickBooks Solopreneur
- Excellent interface and dashboard
- Good invoicing capabilities
- Useful income tax tools
- Effective mobile apps
- Minimal reports
- No vendor or bill management
- Limited record templates
Intuit QuickBooks Solopreneur builds on the foundation of QuickBooks Self-Employed. It shares many features that sole proprietors need, including automatic mileage tracking, income and expense management, invoices and estimates, income tax planning, and mobile access. Its affordable price and usability add to its appeal.
If you are a sole proprietor, you should consider Solopreneur. Because it’s the entry-level offering in the QuickBooks family of accounting solutions, it’s a good choice for microbusinesses that plan to grow. It looks and works like more senior versions of QuickBooks, which makes for a smooth upgrade path.
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Intuit QuickBooks Solopreneur Review
Buying Guide: The Best Accounting Software for Small Businesses in 2024
How We Pick the Best Small Business Accounting Software
Eight small business accounting applications scored high enough to make this list. Solopreneur ($20 per month) targets sole proprietors like freelancers and independent contractors, while the more advanced Wave Pro ($16 per month) can handle a very small business with employees. The other six are more expensive ($30 to $99 per month), feature-rich, and customizable. They target larger small businesses that might have a few employees. Each has multiple tiers of service to meet the needs of companies that vary in size and complexity.
We rate these applications primarily based on how easy they are to use, how much they do, and their price. We also consider anything we encounter during our hands-on testing.
What Do Small Business Accounting Services Do?
Financial bookkeeping is complicated and time-consuming. Business owners find it challenging enough to cover the basics—paying the bills and tracking incoming revenue—let alone answering critical questions like, “Are we profitable, and why or why not?” Will we have enough money to make the required tax payments on time? Should we invest in new equipment? Do we need to explore financing? Can the appropriate staff access your accounting data if they have to work from home?
A good small business accounting service gives you information that helps you answer these questions based on the input you supply. Once you populate the service with details about your financial accounts, customers and vendors, and the products or services you buy and sell, you can use that data to create transactions that will invoice your customers, pay your bills, and track incoming payments. Instant search tools and customizable reports help you track down the smallest details and see overviews of how your business is performing. Mobile apps and websites give you access to your finances from wherever you are.
How Do You Set Up Accounting Software?
Depending on how long your business has been operating, getting started with a small business accounting service can take anywhere from five minutes to several hours after you sign up for an account. Most offer free trials or a demo account, only charging a monthly subscription fee once you’re ready to commit. Generally speaking, the more you need from an accounting service, the longer it takes to set it up and the higher the monthly payment.
Early setup involves creating an account and answering questions about your business type and fiscal year. Some applications encourage you to enter a record or create a transaction to get your feet wet. It’s also a good idea to browse the accounting software’s settings. For example, do you plan to use specific features such as inventory tracking and purchase orders? You can usually turn tools on or off, which can help you either simplify the user interface or maximize the functions.
Zoho Books (Credit: Zoho/PCMag)
Next, you have to decide whether you want access to the transactions from your online financial accounts (checking, credit cards, and so on). Once you enter your login credentials for that account, the software imports recent transactions (usually 90 days’ worth) and adds them to an online register. This process is not as simple as in the past. Banks have been tightening up their security (which is a good thing), so you may have to jump through a couple of hoops to get connected. Sometimes, the connections break, forcing you to set them up again.
Would you like to let customers pay with credit cards and bank withdrawals? If so, you need to sign up with a payment processor such as PayPal or Stripe. Of course, this service involves paying transaction fees that can differ slightly from app to app.
It’s possible to do a minimal setup and then jump into accepting payments, creating invoices, and paying bills. All the accounting services we reviewed let you add customers, products, and vendors during the process of completing transactions. You need to do this anyway as you grow and add to your contact and product/service databases. You have to decide whether you want to spend the time up front building your records or take time out when you’re in the middle of purchase or sales forms.
Xero (Credit: Xero/PCMag)
Most small business accounting services also offer the option to import existing lists from CSV and XLS files, but your lists’ configurations aren’t likely to exactly match those of your application. You should still be able to modify the fields your lists include, however.
Once you start entering records and transactions, your app’s dashboard will show your data. These pages display a real-time overview of the financial information you need to see frequently, including account balances, charts comparing income and expenses, and invoices and bills that need immediate attention. They’re interactive, meaning there are many links to related pages where you can get more information and take action.
What’s the Best Free Accounting App for Small Businesses?
Wave (which H&R Block owns) used to be the best free accounting solution. The company has split the app into two versions. Wave Starter is free but doesn’t include some of the most useful features, like the ability to import transactions from your financial institutions. It also charges $8 per month if you want the ability to scan and upload expense receipts, a feature other small business accounting apps offer for free. Wave Pro is $16 per month, and it contains all of the app’s tools (including uploading scanned receipts). If you need payment services and payroll software, those cost extra, like they always have with Wave.
Wave (Credit: Wave/PCMag)
Zoho Books has a surprisingly robust free version. It’s an excellent choice if you already use other Zoho software or your business is set for growth since it easily scales. Features of the free version include client management, expense and mileage tracking, multilingual and recurring invoicing, online payments and automatic payment reminders, and reports. You can import bank and credit card statements but can’t set up direct connections to your financial institutions.
The IRS continues to expand its Direct File program, which allows you to file your federal return free if you live in one of the 24 states it currently supports. Visit this page to see whether your state is on the list for the 2024 tax year and to learn about the income, deductions, and credits it supports. You can also subscribe to the Direct File newsletter here. We have been unable to test this free option.
Direct File is different from the IRS Free File program, which is a partnership between the IRS and trusted commercial software partners. This program has been around for years. If you meet certain eligibility requirements like AGI, you might be able to file federal and state returns for free using one of the partner websites. Stay tuned for more information about the Free File program for the 2024 tax year.
Which Accounting Software Is Easiest to Use?
Accounting can be complicated, and your work must always be accurate to avoid problems with customers and vendors, income taxes, and reports. The companies that make small business accounting software have worked hard to make it as simple and pleasant as possible. FreshBooks, Solopreneur, and Wave are among the easiest accounting programs to use.
Accounting professionals love to use terms like “accounts receivable” and “accounts payable” to describe the primary elements of accounting: recording and tracking expenses, income, purchases, and sales. FreshBooks and QuickBooks Online are still understandable if you don’t use that terminology because they rarely use it.
How Can Accounting Software Help With Creating Records?
Creating records can be tedious work, but you’ll thank yourself later when you don’t have to pause in the middle of a transaction to add one. Some applications let you include more than basic contact details in their contact records (“customer since” date, birthday, and other similar fields), which can be helpful as you develop and maintain relationships with them. You do the same thing for the products and services you buy and sell, so you can add them easily to transactions.
FreshBooks (Credit: Freshbooks/PCMag)
One of the great things about using small business accounting software is that it reduces repetitive data entry. Once you fill in the blanks to create a customer record, for example, you never have to look up that ZIP code again. Sites provide drop-down lists of customers wherever they’re necessary, primarily in transactions. The same goes for employees, items, services, and vendors. Completed records get dedicated pages where you can access related information like historical activity.
Record templates vary in complexity, so you need to understand the differences before you go with one accounting service or another. Some, such as Patriot Software Accounting, support simple, descriptive product records. Others, such as QuickBooks Online, do more, such as asking how many of each product you have in inventory when you create a record and at what point it should alert you to reorder. They actively track inventory levels, which provides insights into selling patterns and keeps you from running low.
QuickBooks Online (Credit: Intuit/PCMag)
Which Transactions Do Accounting Services Support?
Bills, estimates, and invoices are the most common types of transactions that small businesses need; most of the services we review support them. Xero and Zoho Books go further by letting you create more advanced forms, like credit notes, purchase orders, sales receipts, and statements. They also provide templates for them. All you have to do is fill in the blanks and select from lists of variables like customers and items.
How Do Accounting Apps Handle Completed Transactions?
Once you complete an invoice, you have several options. You can save it as a draft or a final version and either print it or email it. If you do the latter and have established a relationship with a payment processor, then your invoice can contain a stub explaining how the customer can return payment via credit card or bank withdrawal. You can sometimes create a PDF version of the invoice, copy it, record a payment on it, and set it up to recur on a regular schedule.
Can You Manage Expenses and Bills With Accounting Software?
Accounting services pay special attention to your company’s expenses—not bills that you enter and pay (though most support this), but rather other purchases you make. This is an area of your finances that can easily get out of control if you don’t monitor it.
If you have expenses on the road, you can usually take pictures of receipts with your smartphone and upload them to your accounting app. Some accounting services attach these receipts to an expense form. Others, such as QuickBooks Online and Xero, read the receipts and extract some of their data (such as amount, date, and vendor) to an expense form using optical character recognition (OCR) technology.
Why You Should Import Transactions and Bank Balances
Daily accounting work typically involves paying bills, recording payments, and sending invoices. But you also need to closely monitor your bank and credit card activity. If you have connected your financial accounts to your accounting site, then it’s easy to do. Balances usually appear on the app’s dashboard. You can also view each account’s online register, which contains transactions that have cleared your bank and arrived in your accounting app (along with those you’ve entered manually).
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You can do a lot with these transactions once they appear in a register. First, you should assign them a category, such as office expenses, travel, and utilities. That way, you know where your money is coming from and where it’s going. Every accounting solution tries to automatically categorize at least some transactions. You can change them if they’re incorrect. Diligent categorization gives you more accurate reports and income tax returns.
Intuit Solopreneur (Credit: Intuit/PCMag)
You can also match related transactions, such as an invoice and a corresponding payment. Again, some accounting services make educated guesses here. You can also make notes, split transactions that should be assigned to multiple categories, and reconcile your accounts with your bank and credit card statements.
How Can You Use Reports to Improve Your Business?
Reports are your reward for keeping up with your daily accounting and doing it correctly. Every small business accounting service has templates for numerous types of insightful output. You select one, customize it with the filter and display options, and let the software pour your company data into it. It takes only a few seconds to generate a report.
There are two kinds of reports. Most are the type that any small business owner could customize, generate, and understand. They tell you, for example, how much you owe in sales tax, whether you’re making money, which customers are buying the most, which expenses and services haven’t been billed yet, which of your products and services are selling well, and who owes you money.
Other reports aren’t as easy to understand. Standard financial reports—such as Balance Sheet, Profit and Loss, Statement of Cash Flows, and Trial Balance—are the kind of documents you need if you ever want to get a loan from a bank or attract investors. Small business accounting software can generate them, but you might need an accounting professional to analyze them and tell you in concrete terms what they mean for your company.
Can You Use Accounting Software on Your Phone?
Accounting doesn’t exactly lend itself well to mobile access because it often involves data-heavy records, reports, and transactions. However, some accounting solution providers have still managed to build useful and intuitive mobile versions. Most are standalone apps, but Patriot Software Accounting allows you to access the software through a mobile browser, which makes it quite comprehensive.
Can you run your business from your smartphone? Obviously, it wouldn’t be as easy as doing so on your desktop or laptop. But there’s a lot you can do, including creating, editing, and viewing forms, records, and transactions. As mentioned, you can accept payments and snap photos of expense receipts. Dashboards are very important here. Most of them are good at providing a quick overview of your finances, though they’re understandably not great at displaying reports.
Patriot Software Accounting (Credit: Patriot Software/PCMag)
What Kinds of Help Do Accounting Services Offer?
All online accounting services simplify the accounting process, but you are still likely to have questions sometimes. You can often get help via chat, email, and phone. Some apps provide context-sensitive help along the way and a searchable database of support articles.
Intuit has an option called QuickBooks Live that adds bookkeeping support to QuickBooks Online. You communicate with a dedicated accounting expert through one-way video chat (they can’t see you) or email. This individual and their team work with you on customizing your setup and monitoring your transactions so they’re accurate and use the proper category for tax purposes. They reconcile your accounts and close your books at month’s end to prevent errors. They’re also available for questions during regular business hours. Finally, they generate the reports you need so you’re ready to prepare your taxes or hand them off to your accountant. Wave also offers fee-based bookkeeping and coaching services.
What Is the Best Accounting Software for Small Businesses?
Choosing a small business accounting application is challenging. The best one for you depends on your business needs. You want a product that allows room for your business to grow but not one that charges a lot of extra money for features you might never need. Most of the accounting services we review are available in multiple versions, so you can start at the low end and upgrade to a more powerful edition that looks and works similarly.
While you’re thinking about your money, you should also consider our reviews of online payroll services and personal finance apps.
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