Best Small Business Accounting Software 2020

You didn’t start a business to be an accountant – you’d have trained as an accountant if that were the case. Fortunately, there are now a range of services that can automate all the boring tasks you want to avoid.

Our pick for most small businesses would be FreshBooks. With prices starting from $4.50 per month, it’s extremely affordable. Plus, FreshBooks is remarkably simple to use.

Here at Tech.co, we take the guesswork out of choosing. We’ve independently reviewed every major accounting software to help make business owners’ lives easier.

Let’s take a closer look at each of the providers:

• FreshBooks – Best overall accounting software
• QuickBooks Online – Easiest to use
• Xero – Best for online businesses
• Zoho Books – Best automation
• Sage – Very user-friendly
• Wave Financial – Best free software
• Kashoo – Easiest setup
• GoDaddy Online Bookkeeping – Very cheap
• OneUp – Best for sales teams

We’ll also be answering some of the most commonly asked questions about accounting software, to help you find the right one:

• Why do Small Businesses Need Accounting Software?
• Choosing an Accounting Software Provider
• Accounting Software FAQs

FreshBooks – Best Overall Accounting Software

For small businesses, FreshBooks is the best accounting software out there. It has some stiff competition from QuickBooks and Xero, but FreshBooks combines excellent usability with an enticingly low price point.

Find out more – QuickBooks vs FreshBooks

FreshBooks’ software is based around a “Double-Entry Accounting” feature, which tracks revenue items against their related expenses. This makes understanding your profit and loss figures a breeze. FreshBooks will also automatically check that debit and credit amounts are all in order, and it’ll even pinpoint errors as soon as they arrive. You can even use FreshBooks to track your inventory.

FreshBooks also makes it easy to categorize transactions, with distinct sections for equity, transfers, or refunds. FreshBooks also generates invoices, with custom templates and email integration. You can even track how much time your employees have clocked, and it integrates with Asana, Basecamp, Trello, and Teamwork – meaning you can see what everyone is working on.

Want to know more? Check out our FreshBooks Pricing Guide

However, FreshBooks doesn’t have a native payroll processing feature. Instead, it integrates with Gusto or PaymentEvolution. It’s not a complete deal-breaker, but it is annoying that there’s no native feature.

QuickBooks Online – Easiest Accounting Software to Use

QuickBooks is, in our opinion, the easiest accounting software to use.

Like FreshBooks, QuickBooks is built around tracking all your expenses. It sorts all your transactions into tax categories, and links photos of receipts to the transactions they represent. QuickBooks offers personalizable invoice templates, with automatically added biddable hours, and automated reminders. It’ll also let you know when your invoices have been viewed or paid.

When it comes to expense tracking, QuickBooks has all the features you’d need. For example, it integrates with users’ accounts across platforms including bank accounts, credit cards, PayPal, Square, and more. Users can create custom categories to make expenses easier to understand, and can run reports for added visibility. The QuickBooks app will also let users track miles they have driven, which can be useful for tracking business trip deductions.

QuickBooks doesn’t offer time tracking as standard, but will sell you TSheets by QuickBooks for $8 per month. It’s packed with features including task and shift scheduling, real-time reports, time-off management, alerts, and even a time clock kiosk with facial recognition.

Learn more about QuickBooks with our in-depth pricing guide

QuickBooks does offer payroll processing for standard, and will auto-calculate your taxes and end-of-year forms. Employees can even access an online portal to view pay stubs, tax, data, and deductions, and can also download historical data reports.

Xero – Best for Online Businesses

Xero integrates with some of the biggest website builder platforms on the market, including Squarespace and Square Online. If your business relies on one of these platforms, there’s a good chance that Xero might be the best fit for your company.

Beyond that, however, Xero offers all the features you’d expect of an accounting platform. You can generate invoices quickly, and check whether recipients have seen them and paid them. It’ll also help you track your inventory, and syncs with Amazon, Shopify, Etsy, and more. Similarly, users can download the Xero Projects app on iOS and Android to record time and costs, with the data seamlessly integrating with invoices and reports.

How does Xero stack up to QuickBooks? Take a look at our in-depth comparison 

However, Xero doesn’t cover expenses on all of its plans, instead only offering the service on the $60 per month Established plan.

All told, Xero is a very competitive package, especially given its online-first attitude.

Zoho Books – Best Automation Features

Zoho would be a decent fit for most small businesses, but if you’re concerned about spending too much time carrying out boring tasks, it might be the best fit for you.

Zoho shines when it comes to its automation features. For example, it can send hard copies of invoices or estimates to customers for you. A domestic letter costs one credit, while an international letter costs two credits – credits themselves are $2 per go.

Zoho will also autoscan any documents you upload to its system. This means that you can save time manually re-creating or changing documents, as Zoho will already have all the details. Again, this costs $5 per month (or $50 per year when paid annually), but remember – time is money.

You can schedule payment reminders to be automatically emailed to customers, and even create a multitude of messages to be sent at different points during your chasing. Reports can be scheduled to generate weekly, monthly, quarterly, or annually in PDF, CSV, or XLS formats. Again, these features can help you concentrate on the fun side of your business.

Of course, Zoho still gives you all the features you’d need for accounting software, with inventory tracking tools, invoice payments, and transaction tracking features.

Sage – Very User-Friendly

Sage’s interface is brilliantly simple. It’s all built around customers and suppliers, which makes creating and paying invoices a piece of cake.

This layout makes tracking and collecting information about your expenses really straightforward. You can also connect Sage to your business bank to make sure that everything runs smoothly.

However, Sage isn’t the most advanced platform on the market. It covers the basics of bookkeeping well, but doesn’t offer much beyond that. For example, it doesn’t offer a payroll option, nor does it allow employees to track their time.

Sage is good for small businesses but can it match QuickBooks?

Instead, Sage is best suited to small businesses that need the bare minimum to get their accounting done.

Wave Financial – Best Free Software

That’s right – you don’t need to pay a penny to get started with Wave. In fact, you don’t even need a credit card to sign up to its accounting, receipt-scanning, and invoicing apps – they’re all free and ready to use.

With its free selection of apps, you can track your business’ income and expenses (as well as any associated sales tax), generate financial statements, as well as report on cash flow or profit and loss. You can invoice in any currency, as well as send quick estimates before turning them into full invoices.

Wave even offers an affordable payroll add-on to help make its service a bit more complete.

So what’s the catch? Well, there’s no built-in inventory tracking, for a start. This means that you’ll have to make sure you stay on top of all that paperwork. Plus, it only has one plan available, meaning you can’t really scale with the platform as your business grows.

Still, Wave would make a brilliant choice for small companies that are just starting out.

Kashoo – Easiest Setup

Kashoo is designed to make getting started as easy as possible. Its interface is straightforward and, while it isn’t as complex as some of the other providers on our list, it still has everything you need to get going. In fact, Kashoo claims that you can get set up with full double-entry accounting in less than a minute.

Kashoo offers automated features such as receipt copying and contact generation through its smart inbox, which collates all the vendors you normally do business with.

Paying invoices is straightforward, and users can choose from KashooPay – Kashoo’s own payment processor – or Stripe. Kashoo also claims that it will automatically connect any incoming transactions with the right invoice to make tracking even easier.

Kashoo lets you create reports in moments, covering everything from profit and loss to income, expenses and cash flow.

Kashoo costs $19.95 per month, which is more expensive than some competitors, but Kashoo does give you more features at this price point.

GoDaddy Online Bookkeeping – Cheap but Basic

GoDaddy’s service isn’t as complete as most other providers on our page. In fact, it only offers the basics of accounting.

It’ll help you process debit and credit card payments, send invoices, and track your finances. You won’t be able to analyze the findings but, then again, GoDaddy’s service only costs $4.99 per month.

You’ll be able to connect the service to your merchant account, and it'll help you calculate your tax at year-end. But, that’s really about it.

Still, if you need an easy, affordable service to do the basics, there aren’t many better options than GoDaddy’s platform.

OneUp – Best for Sales Teams

OneUp is a great fit for small businesses that are regularly in contact with customers and suppliers. It has a built-in CRM system that makes chasing down customers incredibly easy.

It also has an impressive inventory management feature with plenty of detail, while remaining easy to update.

OneUp’s pricing starts at $9 per month, making it very affordable. However, it only works for one user, and you won’t get access to the company’s support teams. OneUp also eschews time tracking and billing functions, nor does it offer any add-ons or app integrations.

All told, OneUp is a decent solution if your business is heavily reliant on a sales team, and has other systems in place for time tracking and billing. If you don’t, we’d still recommend FreshBooks.

Why do Small Businesses Need Accounting Software?

Every business, not just the small ones, needs to keep an eye on what is coming in, and out, of their account.

For big companies, this normally means bringing actual accountants on the payroll. However, small companies often don’t have the means to get real, trained accountants on board permanently. Fortunately, accounting software platforms provide a great alternative, helping you keep track of your cash flow and stay in the black.

How does Accounting Software Work?

Most accounting software platforms function as big, cloud-based databases. You input the information about your sales and purchases, then the software (typically) keeps on top of all this information, and serves it up to you in small, digestible chunks.

Some platforms allow for more advanced tasks, such as FreshBooks’ error detection, while others – such as GoDaddy Online Bookkeeping – opt to keep it simple.

Core Features of Accounting Software

All accounting software platforms will let you input and track any invoices or money coming in, as well as tracking outgoings. This, really, is the core function of an accountant – keeping track of what goes in and what goes out.

However, accounting software platforms will also connect with your business’ merchant account, which can help automate accounting features and recognize when invoices have been paid by your customers.

Beyond that, accounting software platforms often offer lots of extras, such as payroll management. But, at its heart, accounting software is pretty straightforward (at least on the surface).

Accounting Software for Your Business Needs

Not all businesses have the same needs, and as a result, some accounting software will be more suited to some companies than others.

If your business makes a lot of online, direct-to-customer sales, for example, we’d recommend Xero. It’s perfectly integrated with Squarespace and Square Online – helpful if your business uses either of these website platforms.

Similarly, if you just want to get set up as quickly and as easily as possible, we would recommend QuickBooks or Kashoo. QuickBooks has more features than Kashoo, though, so it might be a better fit for more companies.

Choosing an Accounting Software Provider

In our view, the best accounting software provider for small businesses is FreshBooks. It’s brilliantly simple to use, and has an impressive range of powerful features.

Of course, it might not be the best fit for your company. You might want something a bit more focused, such as Zoho with its automation prowess, or QuickBooks, which prides usability above all else.

But the best way to find out which service is right for you is by using our quick and easy comparison page. It’ll help you work out which service is the best for your business, and help you get started.

Best Accounting Software for Small Businesses FAQs

Let’s take a quick look at the internet’s most asked questions about accounting software.