A guide on how to choose the right accounting software for your business.
The market for accounting software is growing. There is a lot of demand and offer, so committing to any software is going to require research and analysis of the things you need from such a system. It will help you if you decide from early on whether you will need to process payroll, accept payments using your accounting software, and maintain an inventory. Answering these questions will help you finalize the top contender list and choose the best software for your particular business.
In this article you will find details about the following popular software options:
- QuickBooks Online
- QuickBooks Desktop
Probably the most well-known accounting software, QuickBooks can automate a lot in your business. Recurring invoices, intuitive banking feeds that are finding matches automatically, sophisticated and easy reconciliation, built-in reports: QuickBooks seems to have it all and that makes it one of the best accounting software for small businesses.
QuickBooks also has the largest app store of any software, allowing you to automate many other tasks based on your QuickBooks data (use TSheets for time tracking or Flowless for inventory auto-ordering and more).
QuickBooks offers a variety of pricing options, starting with a $15/month Self-Employed plan. It is designed for independent contractors, which will allow you to track your expenses and sales and will give you an option to invite an accountant to prepare your tax reports for you based on the gathered data (at no additional cost).
The next tier Simple Start unlocks unlimited estimates, invoices, and sales receipts as well as phone support and many other features that will be appreciated by sole proprietors, LLCs, partnerships, and other types of small businesses for $25/month.
Bill management, time tracking, accepting payments, inventory, and project management are all available either in higher tiers or at an additional cost.
Pro-tip: For even further automation use Synder designed to automate your bookkeeping even more (learn how to automatically synchronize transactions into accounting software, as well as invoice customers, all from one place).
Wave is famous for being the accounting software that a lot of new service-based business owners are opting for. The reason behind this is that you can do quite a lot of accounting for free. It is truly the ultimate free accounting software for many users.
With Wave, you pay for financial services (2.9% + 30¢ fee to process credit cards, and 1% for processing bank payments where available). If you process your payments somewhere else, this might be a good option, since accounting and receipt scanning is free. If you need to run a payroll or your business is inventory-based, consider comparing this software with other options: Wave payroll costs $20 to $35 per month plus $4 per employee per month. It does not track inventory or allow you to create Purchase Orders.
Pro-tip: scroll down to learn about a free desktop-based accounting software. Want more options? Learn about 8 best free solutions you can utilize for your business, especially when you are just starting out.
Most people in the tech world would say that only cloud applications are the future, but QuickBooks Desktop has been proving that there is a place for it in the accounting world so far. It is not cheap if you don’t have a good cash flow (paying $299.95 at once does seem more than even paying $35 a month, which turns out more if you do your math), but it has many advantages.
QuickBooks Pro, which is available for an annual one-time payment of $299.95 (as with any software, discounts are often available) once installed on your PC will allow you to track your income and expenses, send invoices and estimates, manage reports, inventory tracking, manage and pay bills and work with budgets. Other features are available at extra cost (payroll, tech support, backups, annual upgrades, hosting).
This software might be overwhelming if your business is very small, but if you are looking for a stable solution and do not need high mobility of having your data in the cloud, QuickBooks Desktop might be for you. It also offers higher tiers for mid and large-sized businesses.
Another provider of great online account software is Xero. Among some of the best things about Xero are its user-friendly UI and the ability to add an unlimited number of users for free. It is nice that they don’t charge you for growing your business and your team.
In terms of pricing and functionality, another interesting feature is that unlike other software, Xero makes most features available to all its users (except for multi-currency, expenses, and projects that are available only in the top-tier plan).
The $9-a-month early plan is, however, quite limited, and is only suitable for businesses that are just starting out and are not ready to commit to anything more substantial. It is limited to five invoices and quotes, five bills, and twenty bank transactions. The $30 growing plan unlocks those limits, while the $60 established option allows you to work with those extra features mentioned above.
Xero is great for inventory management, allowing you to track your items in real-time. It does not provide its own payroll service but recommends their partner Gusto, which can do the job for $39/month base + $6/month per person (free trial provided). We like the fact that Xero is mobile integrated and allows you to keep track of Gusto as well as invoicing and your banking feed from your phone and even your iWatch.
Freshbooks is a popular solution, chosen mostly by service-based companies. Similarly to Wave, it does not provide inventory management nor an ability to create purchase orders.
It has a customizable invoicing routine, which isn’t surprising — FreshBooks has been built by someone who went to accounting school. He was disappointed when he realized that other services did not fit everyone’s invoicing needs. Adding your logo, choosing a font or color will be easy.
Turning proposals and estimates into invoices can be done in seconds. You can also track whether the invoice has been seen, which, we think, is a great feature.
Its mobile app allows you to scan receipts, record expenses, work with invoices, and payments. Their third party partner Yodlee provides a banking feed connection, allowing you to automatically export your bank and PayPal expenses, saying goodbye to manual work. The reconciliation service, available to higher tier users, is not completely intuitive, which you might consider if you don’t have an accountant working with you and want to see if you can succeed in managing your books by yourself.
FreshBooks plans start from $15 a month. FreshBooks Lite comes in with 5 billable clients, unlimited and customized invoices, and unlimited expense entries among other features. Its highest (besides custom plans) tier Premium allows you to have up to 500 billable clients plus all the features of the lower tier plans. Premium subscription costs $50 a month.
Manager is a very peculiar, desktop-based, free accounting software for those preferring to work offline. You only might be asked to pay in case you would like to create a cloud backup (which is easily avoidable by saving your files on something like Google Drive). It will fit many small businesses who are more comfortable working offline and don’t run inventory-based businesses. It’s one of the most respectable completely free options for desktop users and is also very easy to use, simple, albeit with the somewhat spartan interface.
Among its great features are easy-to-process reporting, a flexible chart of accounts, and a great support community.
How to decide which accounting software is the best one for your business?
As you can see, there are many different accounting software options, some of them free, and some of them only available by purchasing an annual subscription.
You can ask yourself: would you like to keep your information in the cloud, or is desktop-based service better for your specific security requirements? Will you be recording inventory? Is it important for you to automate various workflows or would you like to manually perform those repetitive processes? What kind of subscription would you prefer: monthly or annual?
Pro-tip to summarize
You or a member of your staff will be spending a lot of time with this software so a crucial thing to consider is the quality of the support available. Ask questions and see which database and live support provides the most efficient support to help yourself decide.
We hope that you have found some answers on choosing the best accounting software for your business!