5 Best Small Business Accounting & Bookkeeping Software In 2023

Having the right accounting software can be game-changing for small businesses. It streamlines financial management, saves valuable time, and gives more control over your financial data. In this article, we will explore the best accounting software for small business so you can choose one that fits your needs. Let’s dive in!

What is the 5 best Accounting Software for Small Businesses?

1. Finaloop

Finaloop stands tall as our first recommendation. Designed with small business owners in mind, Finaloop simplifies financial management. Whether it’s invoicing, balance sheets, or payroll, everything can be executed seamlessly with this software.

Finaloop is well-known for its ease of use. You don’t need a financial background to navigate the system effortlessly. Finaloop is a worthy option if you seek an all-in-one solution to your accounting needs.

Key Features

eCommerce-focused P&L: Easily track and analyze your income, cost of goods sold, and other expenses.

Cash Flow Vision: Get a comprehensive picture of your cash flow to ensure financial stability.

Tax Management: Finaloop helps you manage your tax payments with ease. You can rest assured your eCommerce business aligns with the tax regulations.

Automated Account Reconciliations: Automation helps scale up your financial processes, saving time and energy.

Inventory Tracker: You can track your inventory with ease. Finaloop helps you stay on top of your inventory. No more worries about inventory shortage.

Tax Optimization: Finaloop ensures you pay the least tax, which improves your profitability.

Accrual/Cash Basis Flexibility: With Finaloop, you can switch between different accounting bases based on your business needs.

Integrations: Finaloop integrates well with many banks and eCommerce platforms so that you can keep everything in one place.

Price

Finaloop offers different pricing packages depending on your gross revenue.

• Up to $100k: $65/month for the monthly subscription and $59/month for the annual subscription.

• Up to $500k: $155/month for the monthly subscription and $139/month for the annual subscription.

• Up to $1.5M: $245/month for the monthly subscription and $220/month for the annual subscription.

• Up to $3M: $395/month for the monthly subscription and $355/month for the annual subscription.

• Up to $6M: $745/month for the monthly subscription and $670/month for the annual subscription.

• Up to $10M: $995/month for the monthly subscription and $895/month for the annual subscription.

• $10M – $200M: They will have a custom plan for you. Contact them to learn more.

Pros

• A comprehensive accounting option for eCommerce businesses.

• Support various integrations.

• The pricing structure is transparent, depending on the size of the business.

Cons

• You can only use Finaloop for eCommerce businesses. It doesn’t suit other business models.

2. Xero

Xero is a globally recognized online accounting software designed specifically with small businesses in mind. It provides a robust and user-friendly platform to manage your finances efficiently.

Xero is versatile and caters to various business models. This cloud-based solution offers real-time access to your financial data, enabling you to make informed decisions.

It simplifies complex accounting tasks and makes them manageable even for non-accountants. With Xero, financial management becomes less of a chore and more of a seamless process.

Key Features

Pay bills: Xero helps you track and pay bills on time. You will have an overview of accounts payable and cash flow. No more worries about missing bill payments again.

Claim expenses: Xero allows you to manage your expenses easily. You can track your expenses and reimburse them through Xero’s expense management features.

Accept payments: The platform accepts online payments by credit card, debit card, or direct debit straight from your Xero invoice. Your customers have more options for their payments, increasing the chance of getting paid on time. Thus, you don’t have to waste your time chasing late payments.

Payroll with Gusto: You can use Gusto payroll software to calculate employee payments and deductions.

Bank reconciliation: Xero ensures your financials are up to date. You can easily confirm that the transactions in your bank accounts are recorded in your business financial records.

Manage Xero contacts: You can manage all your business contacts in one place, from suppliers to customers.

Files: You can use Xero for file storage. The software ensures all documents, contracts, bills, and receipts are recorded safely.

Inventory: Always stay on top of your stock levels with Xero’s inventory software. This feature is beneficial for eCommerce businesses.

Online invoicing: With Xero online accounting, you can send invoices, automate reminders and so much more from the comfort of your home.

Sales tax: Your sales tax is automatically calculated and you will receive detailed reports for preparing returns. This initial release of auto sales tax is not yet available for credit notes and repeating invoices.

Accounting dashboard: Keep track of your daily finances using the accounting dashboard. You can track bank balances, invoices, and more.

Integrations: Xero has an integration library for your business. Choose ones that fit your needs.

Price

Xero offers 3 pricing plans with 75% off for the first 3 months.

• Early: This plan costs $13/month and $3.25 for the first 3 months.

• Growing: This plan costs $37/month and $9.25 for the first 3 months.

• Established: This plan costs $70/month and $17.5 for the first 3 months.

In addition, Xero offers a 30-day free trial. You can try all Xero features for a month and see which plans suit you.

Pros

• Xero offers a cost-effective accounting solution for small businesses.

• The software is highly scalable, adapting to your business needs over time.

• The platform is intuitive and easy to use.

Cons

• Xero requires a steep learning curve. It takes some time to master all the features.

• Some users have reported Xero to have a long response time.

3. FreshBooks

The next top-notch accounting software for small businesses in our round-up is FreshBooks.

Perfectly tailored for small enterprises and freelancers, FreshBooks is a powerhouse of features designed to streamline your financial processes and give you a clear picture of your business.

Known for its robust invoicing capabilities, expense tracking, and time tracking, this platform is a breeze to use.

Key Features

Accounting: FreshBooks Double-Entry Accounting provides everything you need to manage your finances, stay compliant with regulations, and be ready for tax time.

Expenses & Receipts: FreshBooks helps you keep track of your expenses with ease. At any time, you will know how much you are spending and how profitable you are.

Reports: FreshBooks provides detailed financial reports so you are always on top of your performance. The reports are straightforward to understand.

Mileage Tracking App: The platform helps you track your travel history and claims tax returns.

Bookkeeping: Bench online accounting services connect your business to real bookkeepers so that you don’t have to worry about your books anymore. This saves you a lot of time to focus on your main business.

Invoicing: FreshBooks makes invoicing intuitive and easy. You can create invoices for your business with ease.

Price

FreshBooks offers 4 pricing packages with a 30-day free trial.

• Lite: $8.5/month for the monthly subscription and $141.10/month for the annual subscription.

• Plus: $15/month for the monthly subscription and $249/month for the annual subscription.

• Premium: $27.5/month for the monthly subscription and $456.5/month for the annual subscription.

• Select: A custom plan. You can talk to a specialist to learn more (add a link here)

Pros

• FreshBooks offers flexible customer support hours (8 a.m. to 8 p.m.).

• The software provides Double Entry Accounting features.

• The platform is affordable and suitable for small businesses with tight budgets.

Cons

• The paid plans have limited users and clients, so you have to pay when you bring someone on board.

• The software offers fewer customizations compared to other platforms.

4. QuickBooks Online

QuickBooks Online is a comprehensive accounting solution, designed with small businesses in mind.

Its robust suite of features and user-friendly interface simplifies the nitty-gritty of financial management, allowing entrepreneurs to focus on driving their ventures forward.

From tracking income and expenses to managing payroll, QuickBooks has it all under one roof.

QuickBooks is a go-to solution that will take your business finances to the next level.

Key Features

Manage bills: Stay organized with your bills and payments so that you can always pay your bills on time.

Expenses: QuickBooks allows you to track your expenses easily and efficiently. This ensures you are always on top of your expenses.

Calculate tax deductions: QuickBooks tries to find all the taxes that you don’t know about to minimize your business’ tax prep.

Job costing: You can track each project’s cost so that you know which projects are making you money and which ones are costing you.

Inventory: QuickBooks helps you track inventory levels. No more worries about out-of-stock products and services.

Invoicing and payments: Manage your invoices efficiently. You can send out your invoices and get paid much faster.

Mileage tracking: You can record your business trips and organize them in one place.

1099s for contractors: QuickBooks creates and files 1099s for your independent contractors.

Bookkeeping: QuickBooks helps you organize your books stress-free. They have bookkeepers with 10 years of experience so you can trust their capabilities.

Price

The platform offers 4 pricing packages. The software also offers a 50% discount for the first 3 months.

• Simple Start: $30/month.

• Essentials: $60/month.

• Plus: $90/month.

• Advanced: $200/month.

Pros

• Easy to use and learn.

• QuickBooks is affordable for small businesses.

• The software provides detailed accounting reports.

Cons

• Data is not always backed up so you may lose some information.

• QuickBooks doesn’t provide some industry-specific features (such as eCommerce, barcode scanning, etc..)

5. Zoho Books

Zoho Books is a free accounting software for small businesses wanting a comprehensive and user-friendly accounting software. With small businesses in mind, it provides various features that streamline financial management, facilitate smoother operational workflows, and enhance financial transparency.

Its affordability and flexibility make it an ideal choice for businesses at various stages. From invoicing to expense tracking, Zoho Books covers all bases, making accounting less tedious and more efficient.

Key Features

Invoicing: You can create customized invoices and get paid faster with Zoho Books’ online payments.

Quotes: You can create professional quotes, and then convert them to invoices with a click.

Customer Portal: Zoho Books keeps track of all transactions in one place.

Expenses: Zoho allows you to track your expenses with ease. Upload your receipts and you will always know where your money is going.

Bills: You can generate bills and track the payments you owe to your vendors.

Projects: You can track every billable minute and turn them into money.

Inventory: Stay on top of your inventory level. This feature is especially useful for eCommerce stores. No more worries about your inventory goes out of stock.

Sales Orders: Manage sales orders before you ship goods to your customers.

Purchase Orders: You can communicate your requirements to your vendors with clarity.

Sales Tax: Keep track of your Sales Tax liability and stay tax season-ready at all times.

Online Payments: Zoho accepts simple, swift, and secure online payments. Your customers will have more options while they pay for you.

Reporting: Zoho gives you detailed reports so you can stay up-to-date with your finances and make decisions for your business.

Price

The software provides 6 plans for you.

• Free: a free accounting plan for your business.

• Standard: $20 per organization/month for the monthly subscription or $15 per organization/month for the annual subscription.

• Professional: $50 per organization/month for the monthly subscription or $40 per organization/month for the annual subscription.

• Premium: $70 per organization/month for the monthly subscription or $60 per organization/month for the annual subscription.

• Elite: $150 per organization/month for the monthly subscription or $120 per organization/month for the annual subscription.

• Ultimate: $275 per organization/month for the monthly subscription or $240 per organization/month for the annual subscription.

Pros

• Zoho Books offers a free plan. You can try and upgrade to a paid version if you like.

• The software is feature-rich.

• Zoho has impressive support options for small businesses.

Cons

• The platform only allows up to 10 users.

• You must invest in high-tiered plans for advanced features.

What is Accounting Software?

Accounting software is a computer program that helps businesses record, store, and manage their financial data. It enables you to monitor cash flow, track expenses, generate invoices, and review financials. By automating the accounting process, businesses can save time and increase accuracy in their financial reporting.

4 types of Accounting Software

Automated systems vs. spreadsheets

Businesses often start with spreadsheets due to their accessibility and familiarity. Spreadsheets can be a cost-effective solution for small businesses with straightforward financial management needs. They provide a platform for basic data entry and budgeting.

However, as your business grows, so do its financial complexities. This is where automated accounting systems come in. Unlike spreadsheets which require manual data entry and can be prone to errors, automated systems streamline and automate financial tasks. They can effortlessly handle invoicing, payrolls, and tax reports, providing real-time insights into your financial health.

The choice between an automated system and spreadsheets usually comes down to the size and requirements of your business. If you value your time efficiency, data accuracy and want a comprehensive financial view, an automated accounting system might be the best choice.

Free vs. paid accounting software

Another factor to consider is whether to opt for free or paid accounting software. Free software can be an attractive option for small businesses operating on a minimal budget. They offer fundamental features such as invoicing, expense tracking, and simple reporting, which may be sufficient for a small operation.

However, as your business expands, you might find that free software lacks the advanced functionalities needed to manage a growing company’s finances.

You will need paid accounting software in these cases. These platforms typically offer more robust features, including inventory management, sales tracking, and more detailed financial statements. Moreover, paid software often comes with superior customer support and regular software updates, ensuring your tools remain up-to-date and your queries are addressed.

Small business accounting software vs. ERP systems

While small business accounting software may work well for a local mom-and-pop shop or a solo entrepreneur, larger organizations with complex operations often require more robust solutions.

Small business accounting software tends to focus on the essentials: tracking revenue, costs, invoicing, and generating financial reports. It’s typically user-friendly and budget-friendly, designed for business owners who need straightforward financial tracking without a lot of frills.

On the other hand, ERP systems go beyond basic financial management. They integrate various business processes into a unified system. This can greatly enhance data visibility and operational efficiency but comes with a steeper learning curve and a higher price tag.

Cloud-based accounting software vs. desktop platforms

The decision between cloud-based accounting software and a traditional desktop platform hinges on various factors, like the nature of your business, your budget, and your technical comfort level.

Cloud-based solutions offer great flexibility as you can access your financial data from anywhere, anytime. They are suitable for businesses with remote teams or for those who travel frequently. They come with monthly or yearly subscription fees, but the cost often includes regular updates and data backups.

Contrastingly, desktop platforms are installed directly onto your computer. They might appeal to those who prefer a one-time purchase and the security of keeping financial data within their premises.

However, they typically lack the convenience of remote access and data backup offered by cloud-based solutions. Your decision should ultimately align with your business’s unique needs and growth plans.

How much does Accounting Software cost?

The cost of accounting software varies depending on the size of your business. For the sake of this article, I will focus on the small businesses.

A small business typically pays around $500 – $5000 per month for accounting software programs. The cost usually includes core features like invoicing, expense tracking, and payroll processing. More advanced solutions with additional features may come with a higher price tag.

If you’re on a tight budget, it might be worth considering open-source accounting software or low-cost recurring subscription plans. You should also research the security measures to protect your financial data.

Accounting Software Features

Accounting software offers various features to streamline financial management and boost operational efficiency. Here are some accounting features you can look for in an accounting solution.

• Invoicing: This feature allows you to create, send, and track invoices easily.

• Income and Expense Tracking: Another key feature that enables businesses to monitor and manage their income and expenses systematically.

• Payroll Processing: A feature simplifying the payroll process, ensuring employees are paid accurately and on time.

• Inventory Management: Some accounting software solutions may also offer this feature for businesses to monitor their inventory levels and avoid stock-outs or excessive stock.

• Tax Preparation: Tax prep can assist in automating tax calculations and filing, ensuring compliance with tax regulations.

• Reporting and Analytics: Some tools provide insights into your financial health, including revenue, expenses, cash flow, and profitability so that you can make the best financial decision for your business.

How can accounting software benefit your business?

There are many tremendous benefits to implementing accounting software for your business. Integrating accounting software into your operations can enhace accuracy and significantly boost productivity.

It automates confusing accounting tasks, saving you time and bringing down the possibility of errors. It offers real-time insights into your financial health, aiding you in making informed decisions.

It also simplifies tax preparation and ensures you follow regulatory compliance. Moreover, it can improve cash flow by facilitating prompt invoicing and payment tracking.

Most importantly, using accounting solutions is a fraction of the cost of hiring an accountant. You can automate a lot of tasks without breaking the bank.

How to Choose the Best Accounting Software for Small Businesses

While choosing the best accounting software, it’s crucial to consider the unique needs and scale of your small business. Always opt for a solution that is easy to use, scalable, and provides the features necessary to streamline your accounting processes.

1. Understand Your Business Needs

Every business has unique accounting needs. Take time to understand your business’s specific needs. The right accounting software should address your current financial management requirements and be capable of scaling your business as it grows.

2. Consider the software’s usability

The best accounting software is one that is intuitive and easy to use. It should have a user-friendly interface that allows you to navigate its features with ease, even if you’re not an expert in accounting.

3. Check the software’s features

Look for features that are essential for your business. This could be inventory management, payroll processing, invoice generation, or tax preparation. Ensure the software supports all the necessary features you need for your business.

4. Look for integration capabilities

Your accounting software should seamlessly integrate with other applications you use in your business. This could be your CRM, HRM, or POS system. Integration enhances data sharing across various facets of your business, ensuring you have a comprehensive picture of your financial status.

5. Ensure Excellent Customer Support

While using accounting software, you may encounter issues that require assistance. Ensure the software provider offers excellent customer support, available when you need it.

6. Consider the Cost

The cost of accounting software varies depending on the features it offers and the number of users it supports. Ensure you choose software that fits within your budget but doesn’t compromise on offering the essential features. Remember, the cheapest option might not always be the best one.

7. Check Reviews and Testimonials

Lastly, before making the final decision, check reviews and testimonials from other users. Their experiences can give you insights into the software’s reliability, performance, and customer service.

Conclusion

Choosing the right accounting software is a crucial step in streamlining your financial tasks. Remember, the best software is one that fits your budget, meets your business needs, and offers excellent customer support. It should be easy to use and integrate well with other systems in your business.

By considering these factors and the accounting software options that we have provided, you are on the right path to finding an ideal accounting software for your business.

FAQs

Can I use Excel instead of QuickBooks?

No, you cannot use Excel to replace QuickBooks completely. Excel is a program for analyzing data while QuickBooks is a software used to track financial data.

Is Excel good for small business accounting?

Yes, Excel is a good choice for small businesses with straightforward accounting practices. You can track your expenses and revenues by organizing your spreadsheets.

What are the disadvantages of using Excel for accounting?

I saw two main downsides of using Excel for accounting:

• Manual data entry: With Excel, you have to manually do everything yourself. You have to enter the data, and write functions to calculate costs and revenues. On the other hand, accounting software can do all of this for you automatically.

• Data accuracy: With manual data entry, you are more likely to make mistakes. An accounting software can ensure your data is calculated correctly every time.

Does accounting software keep your data secure?

Yes, accounting software has many features such as encryption, password protection, user permissions, etc.. You can utilize these features to protect your financial data.

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