Choosing the right accounting software is crucial for small businesses. The best choice depends on various factors such as features, industry requirements, and ease of use. This guide provides insights into the best accounting software options for different needs and industries.

What is Accounting Software?

Accounting software is a vital tool for businesses, aiding in managing financial transactions, expense tracking, report generation, and overall financial operations. Transitioning from Excel to online accounting software offers numerous advantages. Automation significantly reduces manual data entry, minimizing errors and saving time. 

Real-time access ensures up-to-date financial information is available from any location, enhancing decision-making and flexibility. The software's ability to seamlessly integrate with other business tools, such as CRM systems and payment processors, streamlines operations and improves efficiency. Additionally, advanced security measures protect sensitive financial data, providing peace of mind and safeguarding against potential breaches. Online accounting software can transform financial management, making processes more efficient, accurate, and secure.

Best Accounting Software for Small Business

 With many available options, finding the best accounting software tailored to your business needs can streamline operations, improve accuracy, and enhance financial decision-making. From tracking expenses and income to generating invoices and managing payroll, the right accounting software can significantly simplify the financial aspect of running a small business.

All-Rounder: QuickBooks

QuickBooks is regarded as the best overall accounting software for small businesses due to its comprehensive features and ease of use.

• Features: Invoicing, expense tracking, payroll management, and tax preparation.

• Ease of Use: Intuitive interface and extensive support resources.

• Scalability: Suitable for small to medium-sized businesses with various plans to accommodate growth.

QuickBooks Pricing: Basic plans start around $25 per month, with advanced plans costing $70 or more. (as of May 2024)

Freelancers: Xero

Xero is ideal for freelancers due to its flexibility and comprehensive features.

• Features: Invoicing, bank reconciliation, project tracking, and multi-currency support.

• Mobile App: Allows freelancers to manage their finances on the go.

• Integration: Integrates with over 800 third-party apps.

Xero Pricing: Offers monthly plans ranging from $12 to $25. (as of May 2024)

Features: FreshBooks

FreshBooks stands out for its robust set of features tailored to service-based businesses.

• Features: Time tracking, invoicing, expense management, and project management.

• Ease of Use: User-friendly interface designed for non-accountants.

• Customer Support: Excellent customer support with various resources for troubleshooting.

FreshBooks Pricing: Plans start around $12 to $25 per month. (as of May 2024)

Inventory Management: Zoho Books

Zoho Books excels in inventory management, making it perfect for businesses tracking stock levels.

• Features: Inventory tracking, purchase orders, sales orders, and detailed reporting.

• Integration: Integrates with Zoho CRM and other Zoho apps.

• Affordability: Competitive pricing with a range of features.

Zoho Books pricing: Plans start around $9 to $35 per month. (as of May 2024) 

Invoice Management: Wave

Wave is the best free accounting software for invoice management.

• Features: Free invoicing, receipt scanning, and expense tracking.

• Cost: Completely free with additional paid services like payroll.

• User-Friendly: Simple and intuitive interface.

Free Software: Wave

Wave offers essential accounting features at no cost.

• Features: Invoicing, accounting, receipt scanning, and reporting.

• Cost: Free to use with optional paid services.

• Ease of Use: Designed for small businesses and freelancers.

Desktop Software: QuickBooks Desktop

QuickBooks Desktop is the best choice for those who prefer a desktop solution.

• Features: Comprehensive accounting features, including payroll, inventory management, and job costing.

• Reliability: Local storage ensures data is accessible even without the internet.

• Industry-Specific Versions: Tailored versions for various industries.

Important: Move your QuickBooks Desktop data to QuickBooks Online without hassle. 

Reporting: Sage 50cloud

Sage 50cloud offers advanced reporting capabilities.

• Features: In-depth financial reporting, cash flow management, and customizable dashboards.

• Integration: Integrates with Microsoft Office 365.

• Security: Advanced security features to protect financial data.

Check out the Sage 50Cloud pricing plan

Startups: Kashoo

Kashoo is ideal for startups due to its simplicity and affordability.

• Features: Easy invoicing, expense tracking, and financial reporting.

• Ease of Use: Designed for entrepreneurs with minimal accounting knowledge.

• Cost: Affordable pricing plans suitable for startups.

Check out the Kashoo pricing plan

Best Accounting Software by Industry

1. Best Accounting Software for Construction

• Paid Software: QuickBooks Contractor Edition

  • Reason: Tailored features for construction businesses, including job costing, project management, and contractor-specific reports.

• Free Software: Wave

  • Reason: Free to use with essential features, suitable for small construction businesses with basic accounting needs.

2. Best Accounting Software for Retail

• Paid Software: Lightspeed Retail

  • Reason: Integrates POS with inventory management, customer management, and sales analytics tailored for retail businesses.

• Free Software: Square

  • Reason: Offers free POS and basic accounting features, ideal for small retail shops.

3. Best Accounting Software for Healthcare

• Paid Software: Kareo

  • Reason: Specializes in medical billing, patient management, and integration with EHR systems.

• Free Software: ZipBooks

  • Reason: Provides basic accounting functions with an easy-to-use interface, suitable for small healthcare practices.

4. Best Accounting Software for Nonprofit

• Paid Software: QuickBooks Nonprofit

  • Reason: Offers features like fund accounting, donor management, and grant tracking.

• Free Software: Wave

  • Reason: Provides essential accounting tools without cost, fitting the budget constraints of small nonprofits.

5. Best Accounting Software for Manufacturing

• Paid Software: Fishbowl Manufacturing

  • Reason: Offers inventory control, manufacturing process management, and integration with QuickBooks.

• Free Software: Odoo

  • Reason: Open-source software with basic manufacturing modules, suitable for small manufacturing units.

6. Best Accounting Software for Professional Services

• Paid Software: FreshBooks

  • Reason: Time tracking, invoicing, and expense management tailored for service-based businesses.

• Free Software: Wave

  • Reason: Free invoicing and expense tracking, ideal for freelancers and small service providers.

7. Best Accounting Software for E-commerce

• Paid Software: Shopify

  • Reason: Integrates e-commerce platform with accounting, inventory management, and sales analytics.

• Free Software: Wave

  • Reason: Basic accounting features compatible with e-commerce needs, suitable for small online stores.

8. Best Accounting Software for Real Estate

• Paid Software: Buildium

  • Reason: Property management, tenant tracking, and financial reporting for real estate businesses.

• Free Software: ZipBooks

  • Reason: Offers basic accounting and expense tracking, suitable for small property managers and real estate agents.

How to Choose an Accounting Software for Your Business?

When selecting accounting software, consider the following factors:

1. Business Size and Scalability

Select software that can grow with your business. Small businesses may need basic features, while larger enterprises require more robust solutions.

2. Essential Features

Ensure the software includes necessary features like invoicing, expense tracking, payroll, tax preparation, and industry-specific capabilities.

3. Ease of Use

Opt for user-friendly software with intuitive interfaces and easy navigation, mainly if you have limited accounting knowledge.

4. Integration Capabilities

Check if the software integrates seamlessly with your existing tools, such as CRM, e-commerce platforms, and payment processors.

5. Cost and Value

Consider your budget and compare pricing plans. Look for software that offers the best balance of affordability and functionality.

If you want to learn more about finding marginal cost, check out this guide how to find marginal cost.

FAQs

What is the best accounting software for small business? 

QuickBooks is often recommended for its comprehensive features and ease of use. It offers plans to fit different needs, from basic bookkeeping to advanced financial management.

What is the simplest accounting software? 

Wave is known for its simplicity and user-friendly interface, ideal for small business owners needing straightforward accounting solutions.

What is the cheapest accounting software? 

Wave offers free accounting software with essential features, making it a cost-effective choice for small businesses.

Can your business use free accounting software? 

Yes, free accounting software like Wave or ZipBooks can be sufficient for basic accounting needs, providing core functionalities at no cost.

What is basic accounting software? 

Basic accounting software includes invoicing, expense tracking, and financial reporting features to manage day-to-day financial tasks.

How can accounting software benefit your business? 

Accounting software streamlines financial management, reduces errors, automates tasks, generates real-time reports, and assists with tax preparation.

Do you need a small business accountant? 

While accounting software simplifies tasks, a small-business accountant can provide expert advice and handle complex financial issues. Combining both ensures thorough financial management.

How much does accounting software cost per month? 

The cost varies widely. QuickBooks's basic plans start at around $25 per month, while advanced plans can cost $70 or more. Xero and FreshBooks offer plans from $12 to $25 per month. Free options like Wave are also available but may charge for additional features.