By setting up your accounting system, you’re setting up your business for financial success and also ensuring that you keep your business and personal assets strictly separated.
Accounting is an important maintenance aspect of the corporate veil, which is the name given to the level of separation between the assets of a business and the personal assets of its owners. Without the corporate veil, any lawsuit against your company (or default on a contract, etc.) could result in your business creditors gaining access to your personal assets, meaning you could lose your house, car, personal bank accounts, investments, and more.
There are dozens of accounting software options out there, and because they often have such similar price points and feature sets, it can be difficult to figure out which one of them is the right pick for your business needs. That’s why we’ve dug through the details of each accounting software provider to identify the top six options for this guide.
We’re confident that one of these six companies will provide you with the top-quality service you need. Let’s take a look at the pros and cons of each one and see which of them might be the best choice for you.
Why Does Your Business Need Accounting Software?
In addition to maintaining the corporate veil, there are some other reasons why it’s a good idea to have reputable business accounting software. These programs can also make taxation and payroll significantly easier processes, as you’ll have all of the information you need ready to go whenever it’s time to tackle these tasks.
What can business accounting software do for your company? For starters, it helps you with expense tracking and tax season preparation. In addition, accounting software can assist you in setting reasonable expectations for the growth of your business. It can also provide custom reports that identify which parts of your business provide the best return on investment.
Last, but far from least, using accounting software can help you prepare reports for investors. When you have clear and concise financial data at your fingertips, it’s easy for potential investors to get a snapshot of your business activities and decide if they want to invest in your business or not.
But what makes an accounting software product worth using? How much should you expect to pay? We’ll answer these questions and many more as we dig into the details of these six companies.
The Best Accounting Software for Small Businesses
In this guide, we’ll take a cost-based approach to recommend our top options. There are vast differences in feature sets as you increase your budget for accounting software — some businesses can easily get by with one of the cheaper options, while others will need more advanced features. With that in mind, we designed this list so you can scroll through until you find a company that suits your needs and budget.
Zoho Books: Best for Small Businesses with Expansion Plans
- A truly free accounting solution
- Employee benefit tools
- Excellent user interface
- Automated workflows and custom fields in free version
- Not many integrations
- Limited users
Zoho Books is one of just a few companies offering fully featured accounting software at no charge, and it’s a great choice for startups that have expansion plans someday down the road. Zoho Books has one free tier and three paid tiers ($15, $40, or $60 per month), ensuring that this company can grow with your business and you won’t have to switch providers as your company expands.
One of the big claims to fame for Zoho Books is how easy-to-use its software is. There is not much of a learning curve involved with using Zoho Books for your accounting software. It offers automated workflows and custom fields, two welcome features for any accounting software solution.
While Zoho Books includes several integration options with its paid packages, there aren’t many integrations available in the free version, which is entirely understandable. However, we’re less understanding of the way Zoho Books limits businesses to so few users — even the $60/month plan only supports up to ten users.
Overall, if you’re looking for a free accounting software option that includes a robust paid platform to facilitate business growth, Zoho Books is an outstanding choice.
Wave: Best for Businesses with Limited Accounting Needs
- Accounting platform is free
- Unlimited users
- Sales tax tracking
- No upgrade options
- No live customer support
- Not many reports available
If you don’t have extensive needs for accounting and only need the basics here and there, Wave can be a great choice. That’s because this company actually provides its accounting software entirely free of charge!
With Wave, you’ll receive free income and expense tracking, sales tax tracking, and unlimited users. To be honest, there are paid accounting programs that don’t include all of these features, so Wave is off to an excellent start in this respect. If having multiple users is a big deal for you, Wave is a slam-dunk choice over Zoho Books due to the latter’s restriction of users.
However, there are some downsides as well. Wave isn’t a great choice for businesses with expansion plans, as it doesn’t offer paid tiers to upgrade to. That means you’re stuck with its less-desirable aspects, including foreign transaction fees and a limited supply of reporting capabilities. Furthermore, the lack of live customer support can be a real problem if you encounter any trouble.
Wave truly is free for people who don’t use the payment processing application. If you’re curious, here are the pricing breakdowns for that aspect of Wave:
- 2.9% + 30 cents for credit card transactions
- 3.4% + 30 cents for AmEx
- 1% for bank payments
Xero: Best for Collaborative Accounting
- Unlimited users
- Excellent reporting at all subscription levels
- Inventory management service
- Entry-level plan limited to 5 bills and 20 invoices per month
- Poor customer support
Our first accounting service without a free version in this guide is Xero, a company that’s an excellent option if you need multiple users. If Wave sounded a bit too basic to you, but you like the idea of unlimited users at no extra charge, Xero could be the perfect fit.
With Xero, you’ll get access to a comprehensive inventory management tool and thorough reporting capabilities — for all subscribers, not just those to its upper-tier plans. In addition, Xero provides automated bill and receipt capture for all users.
Where do the negatives come into the equation? One befuddling aspect of Xero is the fact that you cannot ever call them for any reason. Xero has no phone number and requires you to schedule support in advance via four-hour windows, which could be a dealbreaker if that’s your preferred support method. Additionally, Xero’s $12 per month base plan limits users to five bills and 20 invoices per month, well below the levels needed by even many small businesses.
If you don’t have many invoicing needs, or you’re willing to upgrade to Xero’s $34 monthly plan, we think their accounting software is a rock-solid choice.
QuickBooks Self-Employed: Best for Freelancers
- Tracks both personal and business expenses
- Mileage tracker included
- TurboTax and other Intuit integrations
- Limited reporting and invoicing
- Not many other integrations
- Can’t scale with growing businesses
At this point, the prices are going up, but you’ll also notice that all remaining software products in this guide have generous sign-up bonus offers. As for QuickBooks Self-Employed, that offer is 50% off for your first three months, which is a significant discount, especially if you purchase one of the higher-priced plans.
QuickBooks Self-Employed includes an excellent mileage tracker that significantly simplifies this aspect of a freelancer’s expenses. You’ll also find that this product allows you to track both personal and business expenses, a rare find in business accounting software.
Seeing as they’re both Intuit products, QuickBooks Self-Employed integrates seamlessly with TurboTax. However, there aren’t very many other non-Intuit integrations available. Additionally, QuickBooks Self-Employed has limited reporting and invoicing functions.
All told, QuickBooks Self-Employed is an outstanding option for freelancers, contractors, and single-person LLCs. If you need more robust features but everything else about QuickBooks Self-Employed sounds good, you might want to check out one of their other products (more on this shortly…).
FreshBooks: Best for Well-Rounded Service
- Unlimited estimates
- Payment processing available
- Generous welcome bonus
- Intuitive interface
- No double-entry accounting in entry-level plan
- Entry-level plan limited to 5 invoices/month
- No tax support
FreshBooks has the best sign-up bonus in the industry today, as they’re currently offering 60% off for a whopping six months, if you’re willing to make a 12-month commitment! We also think that FreshBooks is arguably the easiest-to-use option in this entire guide, as there is hardly any learning curve at all to using it, even when it comes to some of the more advanced features.
FreshBooks includes unlimited estimates at all subscription levels, although the entry-level plan is limited to a prohibitive five invoices per month. Another significant limitation of that $15/month level is the fact that it doesn’t offer double-entry accounting, a feature so basic we hadn’t found the need to mention it yet in this guide.
However, no matter the limitations, we feel the need to reiterate how incredibly simple the FreshBooks interface is. When some competitors offer products that can take some time to learn and much knowledge to master, FreshBooks’ ease of use is truly a breath of fresh air. And that welcome bonus is pretty impressive too!
QuickBooks Online: Best for Advanced Features
- More experience and customers than any competitor
- Hundreds of integrations available
- Advanced reporting functions
- Mileage tracker
- Interface can be confusing/overwhelming for new users
- Can get highly expensive
QuickBooks Online is the biggest name in the accounting software industry, and for good reason. QuickBooks has been around for longer and served more customers than the competition, and it also offers excellent, fully featured accounting software.
While QuickBooks certainly can get expensive, the long-term costs are mitigated a bit in the short term by a generous sign-up bonus offering your choice of 50% off for three months or an entirely free trial for 30 days. One of the biggest calling cards of QuickBooks Online is its hundreds of integrations with popular apps.
Additionally, QuickBooks Online also delivers a wide variety of data reports, more than any other service we’ve discussed in this guide. It also includes a mileage tracker at all subscription levels and a time tracker in the $50 per month plan and above.
QuickBooks’ ease of use leaves a bit to be desired, and its pricing is admittedly pretty high. But if you actually need its advanced features, it’s still your best bet.
We hope we accomplished our goal of providing a wide range of accounting software solutions that can suit any entrepreneur’s needs. No matter the size, type, or size of your business, we strongly recommend acquiring reputable accounting software to keep your records in order. It can be just as helpful to your day to day as a registered agent service.
Even for single-person businesses, accounting software has significant value because it helps develop the separation of business and personal assets that’s so vital to maintaining the corporate veil. For multi-member businesses with employees, an accounting system is something you simply cannot operate without.
We wholeheartedly believe in each one of these companies to provide reliable and time-saving accounting software for businesses, and we’re confident that your chosen company will deliver outstanding service.
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