Best Small Business Accounting Software

One thing every small business needs is good accounting software.

There are definitely a variety of small business accounting software programs out there that can help you keep track of funds and expenditures.

Cloud vs. Desktop vs. Hosted Accounting Systems

When you’re first deciding on the best small business accounting software to use, you should probably figure out which type of software you want. Do you want cloud software? Would you prefer to work from your desktop? What about setting up hosted software?

Cloud computing is the wave of the future. You only have to load one application. You don’t need licenses for every end-user who will access the software. The user then logs into a web-based service where all the information is kept. The only thing you need to run the program in the cloud is the interface software, which can be as simple as a web browser.

The cloud’s network takes care of the rest. Cloud software is generally considered to be more efficient and effective, especially for small businesses. It is billed monthly and therefore, it’s easy to work into your budget.

Desktop software is more traditional. You load the application onto your machine and it runs. You will need a copy for each machine running the software so, as your business grows, so too may your software budget. Why? That’s because you have to pay for the software each time you add a computer to your accounting system as well as pay for updates and upgrades. To offset this cost, sometimes, you can set up remote sharing in which end users can “see” the updates of others. However, that is not always the case. If you have one dedicated person or computer for your accounting software, this may be a viable option for you.

Hosted software is ‘hosted’ by someone else. It’s like having the desktop software he backend for you so you don’t have to worry about the IT – think network issues. The host will take care of that. Hosted software can save a small business from the headaches of ongoing maintenance, time, and money in IT support and equipment costs. Hosted software programs are designed to work for large numbers of simultaneous users.

They also offer frequent upgrades and can be accessed from any web browser in the world. However, hosted software isn’t very pliable. What you see is what you get and it’s sometimes difficult to alter it to fit special business needs.

Now that you know a little bit about the different types of software, we’ll discuss different small business accounting software that you may want to use in your business.

Quickbooks Breakdown

QuickBooks Online starts as low as $12.95 per month
– QuickBooks desktop software is around $250 per license
QuickBooks is still the accounting software king and for good reason. QuickBooks offers business owners lots of help. For example, it lets you set up your company’s profile within the program.

You can put transactions (recurring or not) into place. QuickBooks’ user interface is friendly and provides graphics to guide you to the right place. The program does very well with forms such as invoices, utility bills and even tax documents. Their reports are varied and easy to run.

However, there are disadvantages to using QuickBooks. First and foremost, you need some bookkeeping knowledge if you’re going to use the program. A neophyte can’t just start using QuickBooks without some help. Fortunately, there is online help available. The online version does not provide inventory tracking or purchase order capability, among other things.

If your internet connection is down, QuickBooks online will not work. In general, QuickBooks has holes in its audit trail. This could leave room to “fix” the financial records or make it appear as if this has been done.

Intuit, the company that produces QuickBooks, offers annual updates and upgrades, all of which cost your business money. Although QuickBooks can be good for small businesses, many experts believe it’s best used for double-entry accounting which is common in larger businesses.

Freshbooks Breakdown

FreshBooks has a free option if you only have one client.
– To manage up to 25 clients, FreshBooks costs $19.95 per month
– For FreshBooks to manage unlimited clients, costs are as low as $29.95 per month
FreshBooks is a largely cloud-based software. It has an intuitive and simple user interface. FreshBooks is user-friendly. You don’t need to know much about billing and invoicing to work with it. FreshBooks offers paperless billing. It doesn’t take a long time to learn the software. It also allows for PayPal integration automatically.

The program is timekeeping and billing software that allows users to track time spent per project. You can also track it by hourly rate and expenses. Users can then send the tracked time to the client via email or snail mail. For recurring payments, FreshBooks makes it easy to set up a credit card merchant account.

Then, additional projects are automatically billed to the client’s card which makes it so much easier to collect payments.

It’s difficult to find disadvantages to using FreshBooks, which is good news for small business owners. You can have to pay for FreshBooks, which for a small business, could be problematic. Of course, if you’re a really small business and have only three clients, then you can utilize FreshBooks for free. An individual license, as was previously mentioned runs as low as $19.95, but if you have more than one user on the service, you will need to get a team license even though it’s on the cloud, and that costs $39.95, then about $10 additional dollars for any staff member who needs access, which may be out of range for some small businesses.

The only other disadvantage we can see is that the FreshBooks logo is on all of your invoices which may confuse some clients.

Xero Breakdown

A starter package for Xero without payroll runs for $9 per month
– A standard package with one employee for payroll is $30 per month.
– The most popular package allows for payment of ten employees and runs $100 per month.
Xero is web-based accounting software. You can use any browser you want with it and it can run on any interface including Linux. You have daily access to bank accounts and immediate access to exchange rates. It can be accessed anywhere, at any time, by anyone so long as they have the username and password.

Xero offers accounting and payroll at one transparent price. The standard price for Xero is $30 per month. Xero requires a basic understanding of accounting if you want to use it. This may not be a problem for you, but not everyone understands accounting basics and other software programs don’t require it.

The developers are in New Zealand and this may create a problem for trying to reach them if there are problems running the program. Xero does not directly handle stock (as in inventory) but interacts with systems like Unleashed, which do.

Sometimes, when internet traffic is high, it can be difficult or take a long time to log in and do tasks on Xero.

Outright Breakdown

Pricing is linked to Go-Daddy and is free for banking, credit cards, PayPal and a variety of services
– Outright costs $9.99 per month if you want all functionality including taxation and data importing
Outright is specifically designed for small businesses. Outright will record your income and expenses automatically. It’s very useful even if you don’t know accounting well. It’s great for freelancers and very small businesses. There’s no downloading or installing. Outright categorizes your transactions to maximize your deductions at tax time.

It even helps you prepare your estimated taxes and year-end taxes with a special focus on small business tax deductions. Outright is completely online; it’s safe and secure. Their pages are encrypted and password protected. Outright has a simple tabbed interface.

It has tabs for income, expenses, taxes and reports and each is broken down for you. It’s very easy to work with and very organized. Outright, like each of the other accounting software programs mentioned in this article, offers a free trial. After which, you pay $9.95 per month.

Outright does not guarantee the accuracy of your estimated taxes so you’ll want to have an accountant look at them before you send them to the IRS. Currently, Outright is just geared towards the US tax system so if you’re doing business in another country and are subject to taxation there, then Outright may not be the accounting software for you.

Outright is linked to GoDaddy so if you have a GoDaddy website it’s relatively cheap and easy to add.

Wave Breakdown

-Fully featured and fully free for basic accounting
– Payroll costs around $5 per employee per month
– If you want tax deposits and tax filing handled, the cost is $25 per month

Wave software, based out of Toronto, Ontario, is completely free and ad-supported unless you’d like to run payroll from it. If you do run payroll, it’s $5 or less per employee per month. There’s no charge until the first payroll is completed and there is no charge for employees not paid in a given month.

In January 2013, Wave also implemented a service to handle tax deposits and tax filings for a flat fee of $25 per month. Invoicing is simple and you don’t have to switch back and forth between screens to get it done.

It allows for the integration of bank and credit card accounts, which, after the initial setup, automatically import transactions on an ongoing basis. You can also invite collaborators, giving your accountant or a business partner the opportunity to access your accounting. Its usability shows that it makes it easy for any end user regardless of their accounting expertise.

Wave software is geared towards businesses with nine employees or less. Their interface is not as intuitive as some of the other software programs mentioned. It also changes depending on what you’re doing or what kind of data you’ve imported, giving you less control to manage what you see. Customization of invoices is limited, but improving. Wave also does not have a time-tracking function, thus not allowing you to bill based on time.

Formatting of reports is basic so you may need to export them to Excel to work with them before sending them off. Reporting is rather simple and there is no budgeting or forecasting capability nor is there any inventory functionality.

As you can see, accounting software is important to have. However, accounting starts with a financial structure and internal processes.

We can help you!

Idea Labs Consulting is an Austin-based team of coaches and consultants helping small businesses solve a wide range of business problems since 2011. Our team is composed of experienced entrepreneurs and technical experts.

We offer three distinct ways to work with you based on your current needs.

  1. Unlimited business coaching and consulting for a full year [$100 per month or less]
  2. Access to the resource platform of our products and services [pay for what you need]
  3. Business products and tools we recommend [free]

While there are plenty of sources for start-ups and small businesses to receive help, funding, and mentorship, Idea Labs operates like a marketplace by meeting the needs of your business’ ecosystem. As opposed to the common consulting and business coaching trope of increasing billable hours or project scope in order to maximize revenue, we prefer to be a place you can depend on during crucial stages of your business journey. We can help connect where you are now and where you want to be.

Idea Labs Consulting
(512) 348-6344