Accurate accounting and bookkeeping is a key factor in evaluating the health of any small business and identifying areas for growth. That’s why the small business accounting software that you choose is so important.
Small business accounting software could be as simple as an Excel spreadsheet and as advanced as software that can track your expenses, manage your inventory, create in-depth reports, and estimate your quarterly taxes. But features aren’t the only thing to consider. You’ll also want to compare small business accounting software on things like pricing and ease-of-use.
At Cloud Friday, accounting services are our area of expertise. There are many types of accounting software available to small business owners such as Quickbooks, Xero, Wave, and Sage. In this guide, we’ve taken a close look at the top seven small business accounting software companies to help you choose the best one for your business.
1. Quickbooks Online
QuickBooks Online is one of the most popular accounting software available today, and for good reason. It offers virtually every feature that a business could ask for and integrates well with other services.
We, here at Cloud Friday, exclusively use Quickbook Online or Xero when handling the accounting services for our clients. Let’s take a closer look at what Quickbooks Online has to offer.
Pricing
Quickbooks Online has four subscription tiers. Here are the prices of each:
- Simple Start–$25/month
- Essentials–$40/month
- Plus–$70/month
- Advanced–$150/month
Each of these plans comes with 50% off discounts for the first 30 days. Also, if you decide to hire the Cloud Friday team to help with your accounting services, we may be able to get you our wholesale discount!
Where Quickbooks Online Shines
Because of its various tiers, business owners of all shapes and sizes can get what they need from Quickbooks Online. The Simple Start plan can competently serve the independent contractor. And the Advanced plan can easily handle the accounting needs for a large retail business that needs inventory management and advanced reports.
Quickbooks Online can sync with all of your bank and credit card accounts, pulling in your transactions automatically. Also, accountants all across the country are familiar with Quickbooks. So if you decide to outsource your accounting to a company like Cloud Friday, your transition should be smooth and simple.
And since Quickbooks is owned by the same parent company that owns TurboTax (Intuit), they work well together. And that can make it dead simple to file your tax returns each year.
Where Quickbooks Online Could Improve
It’s really hard to come up with a legitimate weakness for Quickbooks Online. They truly are one of the gold standards when it comes to small business accounting software.
If anything, the sheer volume of features that they offer could make their learning curve a little steeper than with other small business accounting software. Also, they don’t offer any free version of their software.
Who Quickbooks Online Would Work Best For
Quickbooks Online could work well for any business owner, from freelancers to the owners of large corporations. But if you’re looking for small business accounting software that offers a free tier, you’ll want to look elsewhere.
Check out Quickbooks Online for yourself here.
Related: Why Accounting Is Important To Your Small Business
2. Xero
Although Quickbooks Online is the clear leader in the small business accounting software space, Xero isn’t far behind. They offer an extensive feature set and are easy to use.
As mentioned earlier, Xero is the only other accounting software besides Quickbooks Online that Cloud Friday uses for its accounting services. Let’s take a look at what Xero has to offer and why you may want to consider them.
Pricing
Xero has three pricing tiers–Early, Growing, and Established. Here are the monthly costs of each:
- Early–$9/month
- Growing–30/month
- Established–$60/month
If you subscribe to the Early plan, you’ll be limited to five invoices a month, five bills, and 20 bank transactions. With “Growing,” all three of those features become unlimited. And with “Established,” you get multi-currency support, the ability to capture and manage claims and to track project time and costs.
If you choose to work with Cloud Friday, we may be able to get you a wholesale discount on Xero as well.
Where Xero Shines
One of Xero’s biggest strengths is partnerships. First, over 100 banks globally work with Xero. Second, they’ve created some great programs to partner with accountants and bookkeepers. If you’re looking to hire someone to handle your accounting services, Xero makes that process simple for both of you.
Plus, Xero offers unlimited users on all three of its plans, while Quickbooks Online doesn’t offer unlimited users on any of its plans.
Xero is also really great on the education front.
- They have an entire “Small Business Guide” on their site that gives helpful tips and strategies for starting and growing a small business.
- On Xero TV, they create video content that explains how to use their software and presents case studies.
- Xero Central is their learning center for finding courses and live events.
- They have a blog and podcast too!
Finally, Xero’s user experience is simply fantastic. Their software is modern and beautifully designed. If we were judging on design and ease-of-use alone, Xero could come out on top.
Related: How To Prepare For A Small Business Audit (And How To Avoid One)
Where Xero Could Improve
While Quickbooks is strong on the tax software integration front, this is an area that Xero has always lagged. They did recently announce that customers can import their Xero data to a few “industry-leading” tax solutions. But you still won’t get the level of integration that you get with Quickbooks and TurboTax.
And while Xero does great on the education front, they’re not as strong on the customer support side. If you need help, you can raise a case in Xero Central or send their customer service team an email. But unlike Quickbooks Online, they don’t publish a customer service phone number.
Who Xero Would Work Best For
Xero could work well for a growing start-up that likes its design and ease-of-use. A business owner who plans to work with an accountant could be a good fit as well. However, once you grow to a certain size, tax preparation may be more of a hassle with Xero…especially if you won’t have the help of an accounting team.
3. Zoho Books
Although Zoho Books isn’t as large or widely used as Quickbooks Online or Xero, it has its fair share of fans. On Capterra, it has a 4.4-star rating out of 389 user reviews. Let’s take a look at what Zoho Books has to offer.
Pricing
Zoho Books has three pricing tiers–Basic, Standard, and Professional.
- Basic–$9/month
- Standard–19/month
- Professional–$29/month
The main difference in the plans comes down to how many organizations you’re allowed to send or receive payments from and the allowable number of users.
- Basic–50 contacts and two users
- Standard–500 contacts and three users
- Professional–unlimited contacts and ten users
Where Zoho Books Shines
Zoho Books is great if you’re looking to automate your business. Zoho can automatically send invoices for you, eliminate recurring tasks, and send automatic payment reminders to clients.
And the automation doesn’t end there. Zoho Books is just one of a suite of software products designed by Zoho. It integrates well with Zoho CRM which allows businesses to automatically assign tasks to users, create schedules, build automatic email notifications, and more.
Zoho Books also shines on price. Even their most expensive plan is cheaper than the middle tiers on some of the other top small business accounting software solutions.
Where Zoho Books Could Improve
While Zoho Books offers quite a few internal integrations, their external integrations aren’t as strong. While they have over 30 available integrations, Quickbooks offers over 600. They also don’t offer any budgeting features and currently only offer payroll services to India-based customers.
Who Zoho Books Would Work Best For
Freelancers or small business owners who aren’t looking for a budgeting solution and don’t need payroll integration. Also, Zoho Books could be great for any business owners who are looking to automate their business, especially those who plan to use Zoho CRM.
4. Wave
Wave is an interesting small business accounting software in that they have a unique pricing model. In fact, in many cases, they could be your most affordable choice. Let’s take a look at how Wave works.
Pricing
Wave has three pricing tiers–Free, Pay-Per-Use, and Monthly. Here’s what you get at each level:
- Free
- $0 unlimited accounting, invoices, and receipts
- Pay-Per-Use
- Credit card processing–2.9% + 30¢ per transaction
- Bank payments (ACH)–1%
- Payroll
- Tax service states–$35 monthly base fee
- + $4 per active employee
- + $4 per independent contractor paid
- Self-service states–$20 monthly base fee
- + $4 per active employee
- + $4 per independent contractor paid
- Tax service states–$35 monthly base fee
Where Wave Shines
What’s so great about Wave is that you don’t have to pay any monthly subscription fee to access their accounting software. And with their pay-per-use model, you simply pay Wave whenever you send or receive payments.
By the way, most of the other small business accounting software charge a transaction fee as well. The only difference is that with the others, you’ll pay that in addition to the monthly subscription fee. In essence, transaction fees are a “hidden” cost with some software solutions. But with the Wave pay-per-use model, the transaction fees are all you pay.
Finally, Wave makes it simple to separate personal transactions from business transactions.
Where Wave Could Improve
There’s not much to complain about with Wave. For most business owners, it should satisfy their needs. However, if you need budgeting, tax support, or class tracking, Quickbooks Online or Xero could be better choices.
It’s also important to point out that there are times when Quickbooks Online could still be more affordable than Wave. Here’s why. Quickbooks Online doesn’t charge any transaction fee for ACH transfers. So if you receive a lot of ACH transfers every month, Quickbooks Online could still be less expensive, even after taking the monthly subscription cost into account.
Who Wave Would Work Best For
Wave would work best for the small business owner who receives mostly credit card or debit card payments and who doesn’t need budgeting tools or tax support.
See if Wave is right for you here.
5. Sage Accounting
Sage is a company that designs software solutions for businesses. They say that they serve over three million customers by managing their accounting, finances, and operations.
Sage has two main accounting software platforms: Sage Business Cloud Accounting and Sage50Cloud. Let’s take a look at what each has to offer.
Pricing
Sage Business Cloud Accounting has two pricing tiers:
- Accounting Start–$10/month
- Accounting–$25/month
Sage50Cloud has three pricing tiers, all of which are more expensive than Sage Business Cloud Accounting.
- Pro Accounting–$55.58/month (1 user)
- Premium Accounting–Starting at $78.21/month (1-5 users)
- Quantum Accounting–Starting at $197.55/month (3-40 users)
Where Sage Accounting Shines
If you’re a freelancer or an independent contractor, Sage Business Cloud Accounting provides all the key accounting features that you need. And if you’re a medium to large-sized business, Sage50Cloud can handle manage vendors and inventory, customers and sites, and in-depth Profit and Loss and Cost of Goods Sold Reports. So as you scale your business, Sage’s feature set can scale with you.
Related: The Key Small Business Accounting Terms You Need to Know
Where Sage Accounting Could Improve
If you’re a medium-to-large retail business that needs to use Sage50Cloud, you’re going to be paying a ton of money every month. Their Quantum Accounting level costs $50 more than Quickbooks “Advanced” tier at the very least. And if you have ten users, the price jumps up to $329.31 a month–$180 more than Quickbooks Online Advanced.
Who Sage Accounting Would Work Best For
Sage would work best for a small business that can get by with using the Sage Business Cloud Accounting software. But if you’re someone who would need Sage50Cloud, you’d probably be better off picking a different small business software that’s more affordable.
6. Freshbooks
Freshbooks made a name for themselves by creating simple invoicing solutions for freelancers and solopreneurs. But as Freshbooks has grown, they’ve begun to add accounting services as well. Here’s what they currently offer their customers.
Pricing
Freshbooks has three pricing plans:
- Lite–$15/month (15 billable clients)
- Plus–$25/month (50 billable clients)
- Premium–50/months (500 billable clients)
If you have more than 500 billable clients, you can talk to a Freshbooks representative for a custom quote.
Where Freshbooks Shines
As would be expected, Freshbook is strong in the invoicing department. Their templates are easy-to-use and replicate each month. Freshbooks can send automatic payment reminders to clients if they’re late on payments and add late fees as well. And Freshbooks is great for tracking the time that you’ve spent on projects too.
Recently, Freshbook launched its industry-standard double-entry accounting service. Now, Freshbooks members can set up their General Ledger and create the same kinds of reports that they expect from full-fledged accounting software. This was an area that Freshbooks lagged behind, so it’s good to see that they’re continuing to expand their offerings.
Freshbooks was founded on the idea that most accounting software that was currently available was too complicating and confusing. For this reason, everything that Freshbooks does tends to be strong in the ease-of-use department. If simplicity and a quick learning curve are important to you, Freshbooks is hard to beat.
Where Freshbooks Could Improve
Freshbooks isn’t currently set up to handle Accounts Payable (except for payroll through their integration with Gusto). So if you’re looking to manage and pay a lot of monthly bills for your business, Freshbooks isn’t the right choice for you. And other tools like Quickbooks Online are better at automatically pulling and sorting your bank account transactions.
Who Freshbooks Would Work Best For
Freelances and solopreneurs who are looking for simple invoicing and expense tracking. Whether you have any experience with small business accounting software or not, it’s easy to get up to speed with Freshbooks. But larger businesses will probably need a more complete accounting tool.
Related: How To Accept Credit Card Payments: The Ultimate Guide
Learn more about Freshbooks here.
7. Quickbooks Self-Employed
While Quickbooks Self-Employed and Quickbooks Online are owned by the same company, they have a different target user and feature sets. As its name indicates, Quickbooks Self-Employed is designed specifically for freelancers and independent contractors. Here’s what Quickbooks Self-Employed has to offer and how it differs from Quickbooks Online.
Pricing
Quickbooks Self-Employed has three pricing tiers.
- Self-Employed–$7/month
- Tax Bundle–$12/month
- Live Tax Bundle–$17/month
With the Tax Bundle, you can automatically import your Quickbooks data into TurboTax and pay quarterly taxes directly from Quickbooks. With the Live Tax Bundle, you get everything that’s included in the first two tiers and you also get unlimited access to real CPAs when you need advice.
Where Quickbooks Self-Employed Shines
As should be clear from the section above, Quickbooks Self-Employed is incredibly strong in the tax support department. Quickbooks knows that their connection with TurboTax is one of their major strengths, and Quickbooks Self-Employed leverages that strength well.
If you’re a new business owner and just want to make sure that you don’t get into any trouble with the IRS, Quickbooks Self-Employed could be a very valuable service.
Where Quickbooks Self-Employed Could Improve
If you have any employees whatsoever, Quickbooks Self-Employed isn’t going to work for you. Unlike Quickbooks Online, it doesn’t offer payroll services or 1099 preparation.
You also can’t use Quickbooks Self-Employed to track inventory, pay vendors, or create budgets. Finally, you can’t add users to Quickbooks Self-Employed. So if you want to work with an accountant, you’ll need to pick a different software solution.
Who Quickbooks Self-Employed Would Work Best For
Quickbooks Self-Employed would work best for those who are…self-employed.
If you’re currently using Freshbooks, Quickbooks Self-Employed could be an upgrade (especially when it comes to tax support) at a lower monthly cost. But Quickbooks Self-Employed isn’t meant to be compared with full-fledged solutions like Xero or Wave.
That’s what Quickbooks Online is for.
Check out Quickbooks Self-Employed here.
The Bottom Line
Your small business accounting software is too important to choose haphazardly. Think through your business’s specific accounting needs before picking the tool that offers the best bang for your buck.
