Free vs. Paid Accounting Software: Pros, Cons and How to Choose
Free accounting software offers fewer features, integrations and automation tools than paid options.
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One of the hardest parts of owning a business is figuring out where it is and isn't worth cutting costs. That’s especially true if you’re debating free versus paid accounting software.
We think most businesses should opt for a paid program. The time these tools can save you outpaces their cost. But many free options are available — and some are good (for the cost).
Free accounting software doesn’t come with the bells and whistles that paid options have. But for solopreneurs and freelancers, it can be enough.
Those businesses typically have simple accounting needs. Free options can check those boxes, letting you:
Track income and expenses.
Create and send invoices.
Run basic reports, like profit and loss statements and balance sheets.
If you’re deciding whether free business software is right for you, also consider how often you work with an accountant. If it’s only during tax season, free accounting software could be a good fit. If your books are complex enough that you plan to collaborate monthly, however, you should probably opt for a paid program.
One last consideration: integrations. Free accounting software typically has fewer options than paid solutions. If you use additional software (for payroll, inventory, project management, etc.), free accounting software likely isn’t for you.
Pros
No monetary investment required.
Fewer capabilities means less of a learning curve.
Often has competitive invoicing tools.
Cons
Often doesn’t include features like bank feeds, inventory tracking, and advanced reporting.
Zoho Books: Best set of features. Zoho Books’ free plan is the most feature rich around. It includes up to 1,000 invoices per year, a customer portal, reconciliation tools and much more. You can also invite your accountant to access it. However, you’ll need to upgrade to a paid plan to automatically import your bank transactions.
Compared to other free accounting software products, Zoho Books is more scalable. It has five additional paid plans available.
Wave: Best for simple invoicing. Wave’s free invoicing tools compete with paid alternatives. You can send unlimited invoices and estimates, customize invoices and send clients automated payment reminders. However, there are no audit trails. You’ll also need to upgrade to the paid plan to automatically import bank transactions and invite your accountant.
GnuCash: Best step-up from spreadsheets. GnuCash is more manual than the alternatives, but if you’re a very meticulous person, that’s not always a bad thing. It’s a good middle ground if you’re ready to graduate from spreadsheets and don’t want to jump right into automated accounting software.
What to expect from paid accounting software
Compared to free options, paid accounting software products usually have more time-saving features. For example, most help automate tasks like transaction categorization and reconciliation.
These products’ detailed reporting and audit trail logs also let you keep a more in-depth record of money in and money out. This can be crucial to avoiding tax-filing errors.
For lots of small businesses, these benefits — as well as peace of mind that your financial records are as accurate as possible — are well worth the monthly subscription costs.
Pros
Typically makes it easier to collaborate with accountants.
Better equipped to grow with your business.
Usually comes with more features (e.g., bank feeds, audit trails, detailed transaction tagging, variety of integrations).
Has more live customer support options.
Cons
Must budget for monthly subscription payments.
Pricing often increases over time.
Our best paid accounting software picks
This isn’t an exhaustive list, but here are some of our top paid accounting software recommendations.
QuickBooks Online: Best for collaborating with an accountant. QuickBooks Online is the industry standard among accountants and small businesses. That means most accountants are familiar with how to navigate it. Similarly, it’s easy to find online resources and help articles if you’re stuck. Other highlights include in-depth reporting, transaction tracking and in-house payroll software add-ons. Pricing ranges from $35 to $235 per month.
Xero: Best for adding users. Unlike with competitors, you can add unlimited users in all of Xero’s plan tiers. This makes it a good fit for businesses that need to give multiple employees or managers access to their books. It’s also QuickBooks Online’s closest competitor when it comes to the number of features available. Pricing ranges from $20 to $80 per month.
FreshBooks: Best for freelance tools. FreshBooks is a solid option for freelancers that need more than free accounting software has to offer. It alerts you each time a client views or comments on an invoice, offers project profitability tools and includes built-in time tracking. Pricing ranges from $21 to $65 and up per month.
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