The Top 5 Proven Best Accounting Software Tools for Small Businesses

If you own a business, surely there’s a lot on your plate. In addition to business finances, there are other aspects of the company you need to focus on. One of the greatest technological advances in business is the emergence of accounting software that makes managing finances more convenient, quicker, and less prone to errors—so you can shift your attention to other, more pressing needs.

accounting software

Since small business owners are less likely to outsource or hire someone to do certain jobs, getting an accounting software is the perfect solution to reduce your workload so you can give more time to other areas of your business. But which accounting software is ideal for your business?

Among the accounting software available today, five names stand out. Let us see what each software brings to the table so you can choose the best one for your needs.

Wave: Best Free Accounting Software

Wave Accounting Software is the perfect software for a business you run solo. This software is more focused on creating invoices and has no payroll features. Of course, you can buy the full version of the software, but the free version is enough for all the accounting needs of a small business.

You can even print out reports on the free version, which you can use as documents for tax preparation. The features that come with the free version are invoicing, receipt scanning, financial reporting, and income and expense tracking.

Pros of Wave Accounting Software

  • The free version can handle basic accounting features which some accounting software charge for.
  • There are no limits on transactions and billings you can run on the software.
  • You can add an unlimited number of users and manage various businesses from one account.
  • Wave Accounting has a mobile version so that you can check your financial data on the go.

Cons of Wave Accounting Software

  • The payroll service is only available on the full version and is limited to 14 states.
  • Application integrations are only through Zapier.
  • Wave charges more service fees on credit card and ACH payments than other software.

FreshBooks: Best for Service-Based Businesses

When your business is service-centered, your primary concern is sending invoices to your clients. FreshBooks software offers more customization for creating your invoices compared to other accounting software. FreshBooks’s primary features are sending, printing, and receiving invoices, so it’s easier for owners to track payments from their clients.

Moreover, FreshBooks can perform basic ecommerce bookkeeping tasks as well, so you can always keep your records in line.

Pros of FreshBooks Accounting Software

  • FreshBooks is a cloud-based accounting software that ensures your business data is safe and always backed up. You can easily access your records by simply logging in with a browser.
  • FreshBooks has an affordable starting price, and users who pay a yearly subscription are entitled to a 10% discount.
  • It has third-party application integrations and advanced invoicing features.

Cons of FreshBooks Account Software

  • The mobile version of this accounting software has limitations. According to some users, not all the functions on desktop mode work on the mobile application.

xero mobile app

Xero: Best Accounting Software for Micro-Businesses

Xero is perfect for micro-businesses looking for reliable accounting software at an affordable price. Xero has an easy-to-understand interface that is best for beginners to accounting software. It has third-party integrations to increase functionality (like for payroll features) as well.

Xero has an early plan that only costs $2, which allows 20 invoices per month. This budget accounting software is for businesses that don’t send many monthly invoices. The other versions open you to unlimited invoicing, billing, and multi-currency expense management.

Pros of Xero Accounting Software

  • The payroll feature is integrated with Gusto, and the software is compatible with other third-party applications.
  • Xero is cloud-based and also has an established mobile application.
  • It has a simple inventory management feature.

Cons of Xero Accounting Software

  • Xero has additional charges for ACH payments.
  • Xero has limited financial reporting features and slow customer service.

Zoho: Best Software for Automation

When you have a growing business, everything is fast-paced, and you should be able to keep up with it all. But, of course, as a business owner, there are several departments you should attend to. You can manage your funds more easily with Zoho’s accounting software.

Zoho Books has impressive accounting features and automation for your business bank transactions, creating invoices, and many more services. In addition, Zoho books are easy to understand, which makes this perfect for new users of accounting software.

Pros of Zoho Books

  • Zoho Books has over 40 different compatible app integrations.
  • Zoho offers automatic tax calculations; you can export 1099 and sales tax forms to the accounting software.
  • It is one of the most affordable software available. The free account allows two users with up to 1000 invoice creations. Other modes include automation features, unlimited invoices, and client portal creations.
  • All modes include email, voice, and chat support with experts.

Cons of Zoho Books

  • Zoho Books’s payroll feature is a paid add-on and doesn’t come included with any plan.

Neat: Best Accounting Software for New Businesses

Starting your business can be daunting, especially when you have little knowledge of running a business properly. Fortunately, many softwares are built to be beginner-friendly; Neat is one such software, with an easy-to-understand user interface that even non-professionals can understand.

Neat is an excellent accounting software for managing and organizing your finances. With Neat, you can enjoy three products in one software.

Pros of Neat Accounting Software

  • You can easily track your expenses by uploading all your receipts and keeping a copy via their mobile app. Just snap a picture to store them and even categorize them to see where your money is going.
  • Your files are stored in a cloud-based document management system with bank-level security to ensure your files won’t get breached.
  • You can send customized invoices to your clients, who can pay through credit cards, debit cards, and bank transfers through WePay.

Cons of Neat Accounting Software

    • You can’t make recurring invoices in Neat, and you’ll need to manually input invoices every time.
    • This accounting software does not include a time tracking feature. If you have employees that you pay by the hour, there are better alternatives out there.

business accounting

Why Do You Need Accounting Software for Your Business?

Accounting software options are everywhere and easily accessible. But is it really necessary?

If you’re still doubtful, here are some reasons why you should have accounting software for managing your business finances.

  • It improves your efficiency. Managing finances takes a bulk of your time. But with accounting software, creating financial reports, tracking your expenses and profit, and managing bookkeeping can be done in an instant.
  • It gives fewer errors. According to research, out of 500 business owners, over 50% report a significant decrease in financial errors since they started using financial software.
  • It makes tax filing easier. Most accounting software have tax calculation and filing features for easier tax management. In addition, the software ensures that all your statements are accurate and valid so that you won’t have problems with your tax collection agency.
  • It gives a clear picture of your overall business health. Accounting software can store the financial data of your business. You can use it to assess the health of your business in the past months and see how it is currently doing.
  • It’s cost-effective. When you have accounting software, your books, ledgers, and data recording become digital. You can significantly reduce the use of paper and other physical recording materials which saves on business expenses.
  • It reduces accounting fees. Accounting software can do bookkeeping, accounting, and even payroll services. Instead of outsourcing each job to third parties which will cost extra, subscribing to one accounting software will give significant savings.

Final Thoughts

Take advantage and grow your business with the help of accounting software. There are several options available for you, but these five are some of the best and most popular for business owners. Each accounting software has its merits, and you will surely find one suited for your business needs.

But if we were to pick the best, FreshBooks and Xero are the front runners. Both accounting software have basic accounting features perfect for small businesses, such as creating invoices and reports. Additionally, you can integrate payroll apps to both platforms to help you manage your employee pay.

It’s not necessary for business financing to be difficult. Test out the different accounting programs for free to discover which one best suit your company and experience the difference.

Author’s Bio:

Mike Pignatelli, CPA, is the CEO of Unloop Accounting, an agency built to meet the accounting needs of modern ecommerce businesses. As an experienced financial controller, Mike has worked with various seven-figure inventory businesses. Mike and his team are your go-to accountants if you need reliable data to make sound financial decisions.

Scroll to Top