Accounting software helps you track how money moves in and out of your small business. The best accounting software makes it easy to keep a detailed financial record so that you’re ready come tax season. It also includes tools for streamlining accounting tasks, like the invoice process, and gaining insight into your business’s financial health.
To choose the right option for you, think about the present and future versions of your business — your accounting software should be able to support both. Right now, check that it’s within your budget and is compatible with your point-of-sale and/or payroll software, as well as your accountant’s system. Based on how much you expect your small business to grow, keep an eye on scalability, too.
NerdWallet independently reviewed accounting software products before determining our top picks. The best accounting software received top marks when evaluated across eight categories and more than 20 subcategories. We collect these data points from products’ public-facing websites and from company representatives. Information is gathered on a regular basis and reviewed by our editorial team for consistency and accuracy.
See our methodology for a more detailed rundown.
Here are NerdWallet’s picks for the best small-business accounting software and why we like each product, plus tips on how to choose the right software for your business’s specific needs.
Best Accounting Software for Small Businesses
Product | Promotion | Learn more | ||
|---|---|---|---|---|
QuickBooks Online Learn more on QuickBooks Online's secure website | 5.0/5 Best for Overall accounting software | $30/month Additional pricing tiers (per month): $60, $90, $200. | 50% off for first three months or free 30-day trial. | Learn more on QuickBooks Online's secure website |
Xero Learn more on Xero's secure website | 4.5/5 Best for Ease of use | $13/month Additional pricing tiers (per month): $37, $70. | 30-day free trial or monthly discount (terms vary). | Learn more on Xero's secure website |
Zoho Books Learn more on Zoho Books' secure website | 4.0/5 Best for Mobile-first features | $0 Additional pricing tiers (per month): $20, $50, $70, $150, $275. | 14-day free trial of the Premium plan. | Learn more on Zoho Books' secure website |
FreshBooks Learn more on FreshBooks' secure website | 3.5/5 Best for Freelancers | $17/month Additional pricing tiers (per month): $30, $55, custom. | 30-day free trial or monthly discount (terms vary). | Learn more on FreshBooks' secure website |
Wave Accounting | 3.5/5 Best for Free, unlimited invoicing | $0 Free (Wave makes money via paid money management products). | N/A | |
Sage Accounting Learn more on Sage Accounting's secure website | 3.5/5 Best for Affordable inventory tracking | $10/month Additional pricing tiers (per month): $25. | 70% off of the Sage Accounting plan for six months or free 30-day trial. | Learn more on Sage Accounting's secure website |
QuickBooks Enterprise | 4.0/5 Best for Large businesses with advanced inventory and reporting needs | $1,410/year Additional pricing tiers (per year): $1,830; $2,250; $4,400. Adding users or cloud access costs extra. | 30-day free trial | |
Striven | Best for Industry-specific features | $35/month Per user. Additional pricing tiers per user (per month): $70. | 7-day free trial | |
OneUp | Best for Automated bookkeeping | $9/month Additional pricing tiers (per month): $19, $29, $69, $169. | 30-day free trial |
Our pick for
Overall accounting software
To be selected for this category, the accounting solution needs to tick all the boxes: offer a range of features that are scalable and easy to use, comply with accounting standards, allow for easy sharing with accountants, integrate with popular payroll and bookkeeping software, offer live customer support and keep costs reasonable.
QuickBooks Online
Learn more
on QuickBooks Online's secure website
Starting at
$30/month
Additional pricing tiers (per month): $60, $90, $200.
Promotion
50% off
for first three months or free 30-day trial.
QuickBooks Online is an industry leader in the accounting field, thanks to its strong feature set and scalability. It has robust reporting and transaction tracking tools, invoicing capabilities, inventory management features and mobile app functionality.
In particular, entrepreneurs trying to measure performance in different segments of their business will like QuickBooks Online’s granular transaction tracking tools that let you group transactions by department or location, among other categories. Reporting capabilities increase with each plan, but even the least expensive Simple Start plan includes more than 50 reports. These features, along with QuickBooks Online’s ability to scale up and integrate with a wide range of products, make it valuable to self-employed entrepreneurs and larger small businesses alike. And with millions of users worldwide, your accountant will likely be familiar with it.
The software’s biggest downside is its cost. You have to subscribe to the Plus plan or up to record billable expenses and access inventory tracking features, and time tracking software isn’t included. Make sure to factor this into your budget if any of these features are on your must-have list.
Pros
- Easy to share information with your accountant and to find QuickBooks experts and online resources if needed.
- More than 750 app integrations, including live, in-house bookkeeping.
- Robust feature set includes thorough record-keeping, comprehensive reporting, excellent invoicing and inventory management, plus a capable mobile app.
- Daily phone support and 24/7 chat support in all plans.
Cons
- Expensive compared to the competition.
- Limited account users with each plan.
Our pick for
Ease of use
Accounting itself can be complex, but that doesn’t mean the software should be. Xero stands out for its clean design, simple and intuitive user experience and automation capabilities.
Xero
Learn more
on Xero's secure website
Starting at
$13/month
Additional pricing tiers (per month): $37, $70.
Promotion
30-day free trial
or monthly discount (terms vary).
If you appreciate simplicity and don’t want to dedicate much time to learning how to navigate a product, Xero is a great choice. In terms of functionality and features, Xero is one of QuickBooks Online’s biggest competitors. Like QuickBooks Online, it has excellent reporting features and a capable mobile app — but with a more customizable dashboard that lets each user rearrange or hide panels according to their preferences. It offers more integrations than QuickBooks Online, too.
Xero also stands out for allowing unlimited users at every subscription tier, a valuable feature in situations where several users need some level of access to the system. And you can assign them different permission levels: For example, one user might only be able to create invoice drafts and submit time entries, while another can view reports but not edit transactions. Competitors’ plans limit how many users you can add, or they charge an additional monthly fee for each user. If you have a large team, those fees can add up quickly.
Just know that if you need mileage and time tracking, you’ll need to subscribe to the highest-tier Established plan.
Pros
- Unlimited users in all pricing plans.
- Integrates with more than 1,000 third-party apps.
- Feature set includes an excellent mobile app and suite of reports, capable invoicing features, plus automated bill and receipt capture through Hubdoc.
- Simple layout and easy to use.
Cons
- No phone number for customer support listed.
- Entry-level plan limits bills and invoices to five and 20 per month, respectively.
Our pick for
Mobile-first features
For business owners who are often on the go, Zoho Books has built out its mobile capabilities to keep you in the financial know from anywhere. Monitor your business finances from your Apple Watch, use your phone’s GPS to automatically convert miles to travel expenses, add Zoho Books accounting widgets to your phone’s home screen for quick and easy financial monitoring and more.
Zoho Books
Learn more
on Zoho Books' secure website
Starting at
$0
Additional pricing tiers (per month): $20, $50, $70, $150, $275.
Promotion
14-day free trial
of the Premium plan.
Zoho Books packs in an impressive collection of features and capabilities for an affordable price, and higher-tier plans let users automate workflows and track project profitability. Unlike some competitors, none of Zoho Books’ plans put a limit on billable clients, and even its free plan lets you send up to 1,000 invoices per year. On top of that, the free option offers a customer portal, automatic payment reminders, mileage tracking and the ability to schedule reports.
The software’s mobile-first features — such as the ability to send invoices by iMessage or add widgets to your phone’s home screen to easily access timers and overdue invoices — really help set it apart, though. There’s also an Apple Watch app that lets you track time, send payment reminders and review outstanding invoices.
The software is an especially good fit for entrepreneurs who already use other Zoho suite products (like Zoho CRM, Zoho Inventory or Zoho Commerce), since they directly integrate. Third-party integrations, however, are limited compared with the competition.
Pros
- Less expensive than some competitors; free plan available for businesses with less than $50k in annual revenue.
- Email support in free plan; phone and chat support in paid plans.
- Rich feature set includes excellent invoicing, inventory management, workflow rules and a capable mobile app.
- Add accounting widgets to your phone’s home screen; track time using your Apple Watch.
Cons
- Fewer third-party integrations and reports than some competitors.
- No plan includes more than 15 users (can add additional users for a fee).
Our pick for
Freelancers
With strong invoicing and project tracking features and a low-cost plan designed specifically for freelancers, FreshBooks’ accounting software makes great sense for those looking to efficiently manage finances for a business of one.
FreshBooks
Learn more
on FreshBooks' secure website
Starting at
$17/month
Additional pricing tiers (per month): $30, $55, custom.
Promotion
30-day free trial
or monthly discount (terms vary).
FreshBooks is especially useful for freelancers because it lets users view invoices, respond to clients’ questions and send payment reminders, all from its mobile app. Clients can also choose to create their own accounts. This lets them save and comment on invoices, save their payment information, invite others to access the account and collaborate on projects they’ve been invited to view.
Unlike some competitors that require you to pay extra for a time-tracking module, all FreshBooks plans come with unlimited time tracking. You can start a timer from within the mobile app to log hours spent on a particular project or sync data from tools like Asana and Trello.
FreshBooks is especially cost-effective for freelancers who can work within the confines of client limits in the lower-tier plans.
Pros
- Stay in touch with clients through the FreshBooks mobile app and get notified when invoices have been viewed or become overdue.
- Intuitive, customizable invoicing capabilities compete with those of more robust accounting solutions.
- Track time and add billable hours to invoices in all plans.
- Weekday phone support in all plans.
Cons
- Lacks features that quickly growing companies need, like audit trails for accountants to review.
- Highest-tier Select plan only comes with two users (additional users add $11 per month) and lower-tier plans put limits on billable clients.
- Least expensive plan lacks double-entry accounting reports, bank reconciliation and accountant access.
Our pick for
Free, unlimited invoicing
If invoicing is a primary factor in your business accounting, then you’ll likely want to choose a software provider that offers plans with unlimited invoicing. Even better if that feature is free. Unlike some accounting software solutions that limit the number of invoices you can send unless you pay for a more expensive plan, Wave offers free invoicing and free accounting.
Wave Accounting
Starting at
$0
Free (Wave makes money via paid money management products).
Promotion
N/A
Unlike some “freemium” software products, Wave doesn’t put out a bare-bones free product as bait, then load it down with costly upgrades. The free accounting software lets you add unlimited collaborators, along with unlimited bank and credit card connections. You can create and send invoices through the app, as well as set up recurring invoices and track client communication and payment history. The software also offers different invoice templates depending on the type of business you run: consulting, freelance, legal services, marketing or professional services.
Wave can be a sufficient solution for entrepreneurs with small, service-based businesses who need a simple way to invoice clients and separate business and personal expenses. However, if you need built-in mileage tracking, time tracking or a billable expense feature, it’s probably not the right choice.
Pros
- Free.
- Unlimited partners, collaborators and accountants.
- Intuitive, customizable invoicing capabilities compete with those of more robust accounting solutions.
Cons
- Lacks features that quickly growing companies need, like audit trails. There are no additional plans to increase functionality.
- Must subscribe to Wave’s paid services (payroll, payments, advisor, etc.) to receive customer support from a human.
- No third-party integrations, mileage tracking feature or ability to accept in-person card payments.
Our pick for
Affordable inventory tracking
Inventory tracking isn’t something all accounting software does well, or even at all. Sage Accounting offers a rather robust inventory tracking feature within a reasonably priced monthly plan, so it could make good sense for small businesses that move a lot of inventory.
Sage Accounting
Learn more
on Sage Accounting's secure website
Starting at
$10/month
Additional pricing tiers (per month): $25.
Promotion
70% off
of the Sage Accounting plan for six months or free 30-day trial.
Sage Accounting, also known as Sage Business Cloud Accounting, offers two affordably priced plans that cover the basics for small businesses with up to 10 employees. And unlike Wave Accounting, Sage includes audit trails and some third-party integrations. Its highest-tier plan, which costs less than many competitors’ mid-level plans, also comes with inventory tracking.
Sage’s more expensive plan offers the most value for your money. The inventory feature lets you set minimum reorder levels, see which products sell best, and organize items into categories and subcategories. In addition, it accommodates unlimited users, which isn’t typical, even in more expensive plans from competitors. You can also forecast cash flow, an important feature for businesses trying to stay within their budget or gauge whether they can afford certain expenses.
Pros
- Feature set includes strong inventory management, basic invoicing and a convenient mobile app.
- Plans are much less expensive than some competitors.
- Weekday phone support in all plans.
Cons
- Fewer third-party integrations and reports than some competitors.
- Least expensive plan doesn’t let you manage purchase invoices or send quotes and estimates.
- No mileage tracking feature.
Our pick for
Large businesses with advanced inventory and reporting needs
Businesses that fall on the larger end of the spectrum of small- to medium-size businesses may find they quickly outgrow some of the free and low-cost accounting software options on the market. They may find a worthy solution in QuickBooks Enterprise, desktop software with cloud-access add-on options. It’s costlier than any of the other options on this list, but it’s built to fulfill the more sophisticated accounting needs of larger businesses.
QuickBooks Enterprise
Starting at
$1,410/year
Additional pricing tiers (per year): $1,830; $2,250; $4,400. Adding users or cloud access costs extra.
Promotion
30-day free trial
As far as locally installed desktop accounting software goes, QuickBooks Enterprise is one of the most feature-rich. While QuickBooks Online and other cloud-based products are typically easier to use, QuickBooks Enterprise includes specialized reporting for construction companies, nonprofits, manufacturers, wholesalers and distributors. It has more complex inventory tracking and pricing capabilities built in, too.
Business owners can set up volume discounts and customize pricing rules according to sales rep, item category or customer in the Platinum plan and up. The same plans help speed up the inventory count process by allowing businesses to use mobile devices as barcode scanners. And unlike some competitors that only track single inventory items, QuickBooks Enterprise lets you track inventory parts plus assemblies. You can also track the cost of goods sold and adjust inventory for loss or shrinkage.
It is possible to purchase cloud hosting for QuickBooks Enterprise, but it can be expensive, starting at $171 per month for one user. If you operate multiple stores or an online business and want to be able to manage your finances from anywhere, a cloud-based accounting software might be a better fit.
Pros
- Strong feature set includes thorough record-keeping, invoicing and advanced inventory management and pricing rules.
- More than 200 reports, including industry-specific options for various industries.
- 24/7 phone and chat support.
Cons
- Outdated user interface.
- Limited direct, third-party integrations for payroll software and popular point-of-sale systems.
- Annual subscriptions are expensive; each additional user license costs extra.
Our pick for
Industry-specific features
Striven offers versions of its software that are tailored to particular industry needs. From manufacturing, legal and field services to consulting, retail education and others, Striven has designed the features your business most needs in its accounting, CRM and inventory software.
Striven
Starting at
$35/month
Per user. Additional pricing tiers per user (per month): $70.
Promotion
7-day free trial
Striven offers cloud accounting software that, like QuickBooks, is designed to be able to grow with your business. The robust software includes features for general ledger, accounts payable and receivable, automated invoicing and can handle multi-currency transactions. Pull reports on profit and loss, profitability, new opportunities, inventory and more. Striven’s accounting software will also help ensure your business is operating in a tax-compliant manner by automating tax calculations and giving you access to various tax reports.
In addition to these and other standard accounting software features, Striven has built versions of its software specific to the needs of a wide array of industries including IT services, legal services, retail and e-commerce, nonprofits, manufacturing and others. Its retail solution, for example, includes CRM, inventory management and marketing features to integrate with its accounting platform. But its nonprofit solution includes tools for managing records and scheduling events and even includes a donation portal. And because it’s a cloud-based system, you’ll be able to access your real-time accounting and other business data on the go from anywhere.
Pros
- Industry-specific features that seamlessly integrate with the accounting software.
- Can process multi-currency transactions.
- Tools to ensure tax compliance.
- Customer support available by phone and live chat.
Cons
- Monthly costs could add up quickly if you require multiple users.
Our pick for
Automated bookkeeping
How much time would you save if you didn’t have to manually enter, code and verify each business banking and credit card transaction to keep your books accurate and up to date? OneUp’s software takes much of the manual bookkeeping process off your plate so you can better spend your time on other business needs.
OneUp
Starting at
$9/month
Additional pricing tiers (per month): $19, $29, $69, $169.
Promotion
30-day free trial
OneUp brings a competitively priced solution to the accounting software mix that includes invoicing, inventory and CRM features along with its accounting product. The highlight of OneUp’s accounting solution is its automated bookkeeping capability. While many accounting software tools offer some form of automated expense tracking by connecting your software to your business bank and credit card accounts, OneUp’s tool takes this capability one step further. With a bit of upfront time, you train the software to recognize and auto-categorize your expenses. Once the software is up to speed on your business spending habits (the company indicates hitting this milestone by Day 30), you’ll begin receiving prompts to simply review and validate all bank transactions, including invoices and vendor bills. You can check in daily on profit and cash flow reporting. And at the end of the year, simply give your accountant log-in access to perform an audit or export your financials.
Pros
- Automates a lot of manual bookkeeping work.
- Includes features for inventory management, invoicing and CRM.
- Reasonably priced plans with multiple tiers to fit any small-business setup.
Cons
- Customer support limited to online contact form and intermittently available live chat.
Maximum users | Invoicing | Time tracking | Inventory tracking | Phone support | |
|---|---|---|---|---|---|
 5.0 NerdWallet rating | Up to 25 in Advanced plan. | Unlimited. | Can manually enter time in Essentials plan and higher; automatic time tracking costs extra. | Yes, but only in Plus plan and higher. | Yes, available seven days a week. |
 4.5 NerdWallet rating | Unlimited. | 20/month in Early plan; unlimited in higher-tier plans. | Yes, but only in Established plan. | Yes. | Does not provide a phone number, but a rep will call if necessary. |
 4.0 NerdWallet rating | Up to 15 in Ultimate plan. Additional users cost extra. | 1,000/year in free plan; up to 100,000/year in paid plans. | Yes, in paid plans. | Yes, Zoho Inventory offers free, integrated plans. | Yes, available weekdays in paid plans. |
 3.5 NerdWallet rating | Up to two in Select plan. Additional users cost extra. | Unlimited, but Lite and Plus plans cap number of billable clients. | Yes. | Yes. | Yes, available weekdays. |
 3.5 NerdWallet rating | Unlimited. | Unlimited. | No. | No. | No live support available unless you subscribe to a paid Wave product. |
 3.5 NerdWallet rating | Unlimited in Sage Accounting plan. | Unlimited. | No. | Yes, but only in Sage Accounting plan. | Yes, available weekdays. |
4.0 NerdWallet rating | Up to 40, but each user license costs extra. | Unlimited. | Yes, but only in Diamond plan and fees apply. | Yes. | Yes, available 24/7. |
 | Unlimited, but each user license costs extra. | Unlimited. | Yes. | Yes. | Yes, available weekdays. |
 | Unlimited in the Unlimited plan. | Unlimited. | No. | Yes. | No. |
Accounting software is like a database for all of your business’s financial transactions. It helps you follow basic accounting principles so that you can keep your books up to date and in order, which is especially important come tax season. Most software uses double-entry accounting, meaning it factors in assets, liabilities and equity, in addition to revenue and expenses.
You can use accounting software to do the following:
- Enter and organize financial transactions.
- Record income and expenses.
- Reconcile accounts.
- Generate financial statements and reports.
- Keep track of how much money you’re owed and vice versa.
Most accounting software goes beyond these tasks with additional built-in modules for invoicing, bill-pay and inventory management, among other functions. The more your accounting software becomes a one-stop shop for these financial chores, the fewer integrations you need to consider.
With so many accounting software products on the market, it’s important to know how to differentiate between them all. Options are generally tailored to specific types of businesses and working preferences. Here’s a rundown of the different types of accounting software to help you narrow down your choices.
Small-business accounting software vs. ERP systems
Small-business accounting software is built with smaller operations, freelancers and the self-employed in mind as opposed to large, global or high-growth-potential companies. Enterprise resource planning software, like NetSuite and Sage X3, is better suited to the latter. Unlike small-business accounting software, ERP systems centralize accounting tasks on top of a variety of other business operations, like human resources and manufacturing.
Free vs. paid accounting software
Narrowing down your small-business accounting software options according to cost is a practical way to stay within budget. The picks listed here include both free and paid products, and most options have multiple plans at different price points. Free options typically offer fewer features or limited functionality compared to paid products but can be a viable option for some businesses.
Automated options vs. spreadsheets
Small-business accounting software and ERP software incorporate a higher degree of automation than spreadsheet software, like Excel and Google Sheets, that can be used to maintain books manually. Spreadsheets might work for very small businesses, but they are more prone to error and often require a greater time commitment than automated software.
Cloud-based vs. desktop accounting software
Most of the options above are cloud-based and can be accessed from multiple computers or mobile devices with an internet connection. This makes it easy to collaborate with other users and your accountant. Desktop, or on-premise, accounting software must be locally installed on a specific computer, which can make collaboration difficult.
If you’d like to shop by accounting software type, check out NerdWallet’s picks for:
Ideally, your accounting software will make your day-to-day routine easier through automation. Here are some tips to help ensure that’s the case for your small business:
Accessibility
Most accounting products today are cloud-based, meaning you can access them through any device with an internet connection. This generally allows for easier collaboration with accountants and seamless integration with other business software. However, some accounting products, like QuickBooks Enterprise, are still desktop-run and can only be accessed from a single computer. You need to buy an additional license for each user, which can be expensive.
Sharing with your accountant
If you’re working with an outside accountant, find out which accounting software they work with. QuickBooks is almost ubiquitous, but other companies, such as Xero, are making inroads as well. Your accountant can also tell you why they like or dislike certain products, based on their own experience and their clients’ experiences.
Scalability
You want accounting software that can grow with your business. If you're planning to scale, consider accounting software for medium-sized businesses that comes with enough users and can be upgraded to serve a larger organization with more complicated financials. Even if you don’t expect your business to grow exponentially, take a look at products’ plan offerings to make sure you can upgrade to a more robust version of the software should your business’s needs change down the road. Take into account how many employees and users the software can support, too.
Your business’s budget
Determine how much your business can afford to spend monthly on accounting software in conjunction with other recurring costs, like utilities, rent and additional software subscriptions for a POS system or payroll, for example. Some accounting software subscriptions offer first-year discounts — don’t forget to factor in the higher costs you might incur after that introductory period.
See NerdWallet’s picks for best free accounting software if you run a micro business or are self-employed and want to keep costs down.
Integrations
Before you decide on accounting software, think about the other types of software you plan on using and check to see if direct integrations are available between them. If not, you may need to pay for an indirect integration or manually transfer data from one product to another. Your accounting software should include built-in integrations with your payroll software and POS software, at the very least.
Ease of use
Ease of use shouldn’t be underestimated. If your accounting software isn’t intuitive and easy to work with, it could take up an unnecessary amount of your time, or discourage you from using it as often as you should to keep your finances in order. Test out free trials of accounting software products to get a feel for their user interfaces, and don’t hesitate to reach out to companies for demos. Watching tutorial videos to see how users navigate a product and its dashboard can be helpful, too.
User interface aside, features like online bank feeds and bank rules also contribute to ease of use. Bank feeds automatically pull in your bank and credit card transactions so you don’t have to manually import them, and bank rules can help automate transaction categorization.
Customer support
Think about what time of the day you’re most likely to reach out for assistance and how you’d like to communicate with customer service representatives. Most accounting software products come with phone support, chat support or both, and availability varies. Free accounting software options typically offer less robust customer support solutions. While customer reviews can be hit or miss, they can give you an idea of how easy it is to reach a support representative.
Accounting software subscription fees start anywhere from free to under $20 per month, but add-ons can quickly increase the price. In other words, the monthly cost you see upfront doesn’t always tell the whole story. Here are a handful of factors that could impact how much you’re paying for accounting software:
- Sign-up discounts. As a new customer, you can sometimes choose between a monthly discount or a free trial. If you go with the monthly discount, understand exactly how much more you’ll be paying when the introductory period is up.
- Payment frequency. You might be able to save money by committing to a yearly subscription — instead of a monthly one — and paying the total annual cost upfront. However, there’s a chance you won’t be reimbursed if you pay upfront and decide to cancel before the year is up. If you’re considering an annual subscription, make sure to read the fine print. The prices listed above apply to month-to-month subscriptions.
- Number of users. In some cases, you’ll need to pay a monthly fee per additional user. Factor in how many users an accounting software product includes, how much it costs to add additional users and how many people in your business need to have access to the software.
- Integrations. Make a list of the integrations you’ll require and check to see if they’re built into your accounting software already. If not, you might need to pay a monthly subscription fee to connect one program to another.
Some accounting software features are universal across most products, while others may be unique to certain products. Determining which you require will depend on your business type, size and industry, among other factors. Here are some accounting software features to keep top of mind as you compare options.
- Double-entry accounting: This means your accounting software enters a balancing debit or credit for each transaction, so that you don’t have to do it manually.
- A chart of accounts: Most accounting software comes with a built-in chart of accounts you can use to categorize transactions. You should be able to add or remove accounts as needed.
- Income and expense tracking: Tracking money-in and money-out transactions is central to bookkeeping.
- Online bank connections: As opposed to having to manually enter transactions, you may have the option to automatically pull them in from your business’s bank and credit card accounts. This saves time and ensures your records are updated as soon as transactions are posted to your bank and credit card accounts.
- Reconciliation tools: It’s important to cross reference your bank and credit card statements with the transactions in your accounting software to make sure they match. Some accounting software products will match these up for you automatically, meaning you only have to look them over and approve.
- Accountant access: Cloud-based accounting software makes it easy to invite your accountant to look over your books remotely. Ideally, adding them won’t count against your plan’s user limit either.
- Basic, customizable reporting: Look for report templates — think a profit and loss statement, balance sheet and cash flow statement — along with reports on aged receivables and sales tax. You should be able to customize them by date so that you can compare time periods.
- Invoicing: The ability to invoice clients from your accounting software is key for service-based businesses. You want to be able to customize invoices with your logo, easily turn estimates into invoices, add terms and due dates, and accept online payments. And watch out for billable client limits. While it might not be as convenient, third-party invoicing software is also available.
- Mobile app: Accounting software for freelancers, for example, often includes mobile apps that let you track time and miles. Accounting apps are also convenient for sending invoices on the go and snapping photos of receipts and other documents.
- Customer support: Whether it’s through email, phone or live chat, there should be a way for you to get help when you need it. Pay attention to hours of availability, too.
- Integrations: To minimize manual data entry, you’ll want to integrate your accounting software with the rest of your business software ecosystem so they can exchange information automatically. This may include your point-of-sale software, payroll software, inventory software and third-party time or mileage tracking tools.
- Inventory tracking: This can be helpful for businesses that need to keep their shelves stocked and use a variety of sales channels. It’s not uncommon for accounting software to include basic inventory tracking in lower-tier plans, though you might have to pay extra or integrate with a third-party app to sync in-store and online sales. NerdWallet’s list of the best inventory management software options can help you find a more robust inventory solution.
- Bill management: Just like you keep track of how much money your business is owed, you may need to keep tabs on what your business owes. Bill management features can help you schedule payments so you don’t risk late fees.
- Project tracking: Service-based businesses may want insight into each job’s profitability, so they know how to best spend their time.
- Transaction tracking tags: More granular transaction tracking can be useful for small businesses that need to track and compare performance across different departments or locations.
- Industry-specific reporting: Certain industries may need unique reports. For example, construction accounting software can cost out different jobs and nonprofit accounting software logs donor details.
- Billable expense automation: This feature lets you mark expenses as “billable,” associate them with particular customers or projects and add markups. Chances are, you can still invoice clients for expenses without this feature, but it may involve more work on your end.
- Additional users: If you need to give access to more people, check to see if you can purchase additional users or upgrade plans. Some accounting software, like Xero, supports an unlimited number of users.
Accounting software is key to keeping a finger on the pulse of your business’s financial health. It makes sense of all of your business’s money-in and money-out transactions, reveals historical trends and gives you the granular insight you need to make informed, data-driven decisions.
Here are several other ways you can use accounting software to make your day-to-day routine easier.
- Quickly generate reports: For example, you can easily pull up built-in reports to make sure you’re within your budget and dig into which products or services have the best margins.
- Centralize business operations: You can complete other tasks — like creating invoices, sending them and accepting payments — from within the program, as opposed to having to hop from a spreadsheet to an invoice generator and back.
- Collaborate with your accountant: Grant your accountant remote access to your account via email, so that they can look over your books, provide expert feedback and make necessary adjustments in real time.
- Tax preparation: When tax season comes, you’ll need organized and current financial information, which accounting software helps maintain year round.
- More accurate financial records: Accounting software makes it easy to record transactions as you go, because it automatically pulls in your business’s bank and credit card transactions. You can use it to reconcile accounts and calculate things like sales tax, too.
- Automate processes: Accounting software is often more accurate than spreadsheets because it minimizes manual accounting tasks, like balancing debits and credits. In the long run, this can save you both time and money.
If you have concerns about whether accounting software keeps your data secure, know that it’s standard practice for the software to encrypt your financial data, require a password and let you choose who else can access your account, if anyone. Cloud accounting software, which is becoming the norm, stores your information online using remote servers, whereas desktop accounting software saves it to your local hard drive. There are data security risks associated with both, but cloud accounting software is typically more convenient because it lets you access your data from any device with internet access. Cloud accounting companies also use firewalls to protect data and scan servers regularly for breaches.
» MORE: Best apps for small businesses
Last updated on September 26, 2023
Methodology
NerdWallet’s accounting software ratings favor products that are easy to use, have a robust feature set and can grow with your business. Ratings are based on weighted averages of scores in several categories, including range of features, ease of use, scalability, accounting standards compliance, ease of sharing with accountants, integrations, customer support and cost. Learn more about how we rate small-business accounting software.
These ratings are meant to provide clarity in the decision-making process, but what’s best for your business will depend on its size, growth trajectory and which features you need most. We encourage you to research and compare multiple accounting software products before choosing one.
NerdWallet does not receive compensation for any reviews. Read our editorial guidelines.
Frequently Asked Questions
In most cases, yes. While you can try using spreadsheets to keep track of your business’s finances, they can become messy and time-consuming. Accounting software is less susceptible to human error and makes it easy to quickly run crucial financial reports, like a profit and loss statement or balance sheet.
On top of that, double-entry accounting software enters debits and credits for you so you don’t have to worry about manually balancing your books. Ultimately, investing in accounting software will save you time and help make sure your books are accurate.
QuickBooks Online is NerdWallet’s pick for best overall accounting software, but that doesn’t mean it’s the right fit for every business. Various QuickBooks alternatives — like FreshBooks, Xero and Sage Accounting — may make sense for your small business depending on which features matter most to you, and which user interfaces are easiest for you to navigate.
NerdWallet likes Xero for its simplicity and ease of use. Its clean layout, global search function and customizable dashboard are a plus, especially for accounting novices.
Chances are, there will be some sort of learning curve no matter what software you select. Testing out free demos and free trials can help you get a feel for these products’ usability before committing to them.
Accounting software for small businesses can cost anywhere from $0 for the basics to $200 or more per month for the most advanced plans. Providers with more than one offering typically make it easy to upgrade to a higher-tier plan if your needs change. That way, you can try out the less expensive plan first. Sometimes, you can also save money by committing to an annual subscription, instead of paying month-to-month. In certain cases, adding extra users and integrations can make subscriptions more costly.
Free accounting software can be a great solution for micro businesses that don’t have a large volume of transactions and only need income and expense tracking, basic reporting and invoicing. But even if the basics are sufficient for your business, remember that free products have their downsides.
For example, Wave’s free accounting plan lacks audit trails, third-party integrations and live customer support. It also doesn’t offer additional plans if your business grows in the future, which means you could eventually have to transfer your data to another provider.