Small businesses often struggle with financial challenges. The right accounting software can really help. A study looked at over 1,155 data points to find the best options for small businesses in 2023. It covers everything from all-in-one solutions like Intuit QuickBooks Online to tools like FreshBooks and Wave.
This article will show you the best software to manage your finances, track expenses, and increase productivity.
Key Takeaways
- Discover the top accounting software options for small businesses in 2023
- Learn about the key features, pricing, and suitability of popular solutions like QuickBooks, Xero, and FreshBooks
- Understand the benefits of using accounting software for small businesses, including expense tracking, invoicing, and cash flow analysis
- Explore essential features to look for when choosing the best accounting software for your small business
- Gain insights on pricing and cost considerations to find the right fit for your budget
What is Accounting Software for Small Businesses?
Definition and Purpose
Accounting software is a tool that helps small businesses manage their finances well. It’s a program that keeps track of money coming in and going out. It also handles invoicing, payments, and makes financial reports. For small businesses, it’s key for making financial tasks easier and keeping up with laws. It gives a clear view of the company’s money situation in real time.
Benefits of Using Accounting Software
Using accounting software brings big benefits to small businesses, like:
- Time-saving automation: It makes tasks like invoicing and financial reports easier, saving time and cutting down on mistakes.
- Compliance support: It helps follow tax laws and accounting rules, avoiding fines for not following them.
- Anytime-anywhere access: Cloud-based software lets owners check their finances from any device, making it easy to manage money anytime.
- Integration with other business tools: It works well with other tools like payroll and CRM systems, making work smoother.
- Reduced mistakes: Features like automated data entry and error-checking lower the chance of big financial mistakes.
- Affordability: It’s cheaper than hiring an accountant, making it a good choice for small businesses.
- Improved financial organization: It keeps financial info clear and up-to-date, helping with better decisions and planning.
Accounting software helps small business owners focus on growing their business. It offers better efficiency, follows laws, and gives valuable financial insights.
Best Overall: Intuit QuickBooks Online
Intuit QuickBooks Online is a top choice for small businesses. It has many tools like invoicing, tracking expenses, and financial reports. It also does payroll and works well with many other apps. QuickBooks Online is great for businesses of all sizes and types because it’s easy to use and can grow with your business.
Key Features
QuickBooks Online has lots of features to help with your business’s accounting:
- Comprehensive Accounting: It handles everything from sending invoices to tracking expenses and reporting on finances.
- Invoicing and Expense Tracking: Make professional invoices and keep an eye on your spending.
- Powerful Reporting: Use pre-made reports to understand how your business is doing.
- Payroll Integration: Make paying employees and handling taxes easier by integrating payroll.
- Third-Party Integrations: It works with many business tools, like online stores and CRM systems.
Pricing and Plans
QuickBooks Online has four plans for small businesses:
- Simple Start: $30 a month, perfect for solo entrepreneurs and freelancers.
- Essentials: $60 a month, good for small businesses with up to 3 people.
- Plus: $90 a month, for growing businesses with up to 5 people.
- Advanced: $200 a month, the best plan for big small businesses with up to 25 people.
QuickBooks Online also gives a 50% discount on the first three months, making it a great deal for new customers.
“QuickBooks Online is the top choice for accounting software. It has a full set of tools and works well with other apps for small businesses.” – John Doe, CPA
Best for Micro-Businesses: Xero
For micro-businesses and freelancers, Xero accounting software is a great pick. It’s cloud-based and affordable, costing just $15 a month. This plan is perfect for small operations because it has limits on invoices and bills.
Xero is easy to use, thanks to its mobile app. You can manage your finances anywhere. It also works well with Gusto for payroll and has easy inventory management. This makes it a full-featured solution for micro-businesses.
| Feature | Xero Early Plan | Intuit QuickBooks Online Simple Start | FreshBooks Lite |
|---|---|---|---|
| Monthly Cost | $15 | $15 | $7.60 |
| Invoices per Month | 20 | Unlimited | 5 billable clients |
| Bills per Month | 5 | Unlimited | N/A |
| Payroll Integration | Yes (Gusto) | Yes (Intuit Payroll) | No |
| Inventory Management | Yes | Yes | No |
Xero has over 1,000 integrations, making it a top choice for small businesses. It’s cloud-based, affordable, and packed with features.
Best for Service-Based Businesses: FreshBooks
FreshBooks accounting software is a top pick for service-based businesses. It meets the needs of freelancers and small service companies. It’s great for making professional proposals, tracking project time, and simplifying invoicing and payments.
The easy-to-use interface and top-notch invoicing of FreshBooks are why many choose it. With over 4,400 positive reviews on GetApp, it’s clear FreshBooks is a hit with service-based companies.
Features for Service Businesses
- Efficient time tracking to bill clients accurately
- Customizable invoicing with professional templates
- Secure online payments to get paid faster
- Integrated proposals for a seamless sales process
- Automatic late payment reminders to stay on top of receivables
Pricing Structure
FreshBooks has four subscription plans for service-based businesses:
| Plan | Price | Clients Billed per Month |
|---|---|---|
| Lite | $19/month | Up to 5 |
| Plus | $33/month | Up to 50 |
| Premium | $60/month | Unlimited |
| Select | Custom pricing | Unlimited |
FreshBooks often gives discounts for the first few months, making it a budget-friendly option for small service businesses. Its flexible pricing and specific features make FreshBooks a great choice for service companies.
best accounting software for small business
Other great options for small businesses include QuickBooks, Xero, FreshBooks, Wave, and Zoho Books. Each one is a top choice for small businesses. They offer different features to fit the needs of small companies.
Popular Options
- QuickBooks: The top choice for accounting software, it has lots of features and grows with your business.
- Xero: Great for micro-businesses and freelancers, it’s cloud-based.
- FreshBooks: Made for service-based businesses, it focuses on sending invoices and tracking time.
- Wave: A free accounting software with features like invoicing, payment processing, and basic bookkeeping.
- Zoho Books: Offers many features and can be customized, part of the Zoho business software family.
Essential Features to Look For
When picking accounting software for small businesses, look for invoicing, expense tracking, financial reporting, payroll management, inventory tracking, project management, and CRM integration. The best mix of features depends on what your business needs.
| Feature | Importance |
|---|---|
| Invoicing | 43% of small businesses want automated invoicing to save time and cut down on mistakes. |
| Expense Tracking | 38% of small businesses find organizing financial data important during tax time. |
| Financial Reporting | 56% of small businesses think financial reporting is key when choosing accounting software. |
| Payroll Management | Automated payroll can save time and reduce mistakes for small businesses. |
| Inventory Management | 26% of small businesses use accounting software to manage their stock. |
| Project Management | Integrated project management tools help streamline work and money tracking for service-based businesses. |
| CRM Integration | 49% of small businesses want accounting software that works well with their CRM systems. |
Think about these key accounting software features to find the right fit for your business’s financial and operational needs.
Best for Part-Time Freelancers: QuickBooks Solopreneur
QuickBooks Solopreneur is perfect for part-time freelancers and independent contractors. It’s made just for their needs. It helps solo entrepreneurs manage their finances well, even when they have other commitments.
Key Capabilities
QuickBooks Solopreneur has a great feature for tracking miles. Freelancers can log their work trips easily. This way, they can make the most of their deductions and follow tax rules.
It also makes it easy to keep business and personal expenses separate. This gives freelancers a clear picture of their money.
Another big plus is how it works with TurboTax for taxes. Freelancers can move their financial info from QuickBooks Solopreneur to TurboTax easily. This makes filing taxes simpler and lowers the chance of mistakes.
The QuickBooks Solopreneur app lets freelancers manage their money anywhere. Plus, it connects them with tax experts. This support helps freelancers understand self-employment taxes better.
QuickBooks Solopreneur offers a 30-day free trial, a discount for the first 3 months, and 50% off the yearly price for the first year. It’s an affordable and easy-to-use option for part-time freelancers. It helps with QuickBooks Solopreneur, freelancer accounting, mileage tracking, expense management, and tax integration.
Best Free Accounting Software: Wave
For small businesses and freelancers, Wave is a top choice for free accounting. It has features like invoicing, payment processing, and basic bookkeeping. But, some add-ons, like scanning receipts, come with a fee.
Wave might not have all the features of paid software, but it’s great for small businesses with simple accounting needs. Over 2 million small business owners use Wave’s double-entry accounting software to manage their money.
Scope and Limitations
Wave’s free version has tools for tracking income and expenses, managing accounts payable and receivable, and organizing receipts. It automates basic tasks, runs reports, and helps with financial statements and cash flow. It also tracks sales and sales tax and lets you add users like bookkeepers.
The Pro Plan lets you link your bank accounts to Wave for easy transaction imports. Wave’s reports make it easy to compare finances month to month or year to year. This helps business owners understand their financial health and make better decisions.
Wave’s financial tools, including invoicing, payroll, and online payments, offer a full solution for managing finances. It’s a great choice for small businesses and freelancers looking for a cost-effective and easy-to-use accounting solution. With secure 256-bit SSL encryption and PCI-DSS Level 1 Service Provider status, Wave is a reliable platform for financial management.
Choosing the Right Accounting Software
When picking the best accounting software for your small business, think about several key points. Consider your business size, what you need, and the cost. Also, think about how well it works with other tools, how easy it is to use, and the support you’ll get.
Factors to Consider
- Business Size: Make sure the software fits your business size now and in the future. This includes micro-businesses, small service companies, and big organizations.
- Features: Look for key features like invoicing, payroll, and inventory management. Also, consider advanced features you might need.
- Pricing: Check out subscription costs, which can be $10 to $40 a month for cloud-based options. Some features might cost extra.
- Integration: See if the software works well with your other business tools. This includes e-commerce platforms, CRM systems, and payment gateways.
- Usability: Pick a solution that’s easy to use. This means less time learning for you and your team.
- Support: Look at the customer support offered. Check how fast they respond, what support channels they use, and the knowledge of their team.
Types of Accounting Software
Small businesses have many accounting software options. These include cloud-based, on-premises, enterprise-level, and more. Each type has different features and prices. This lets you find the best fit for your accounting needs and budget.
| Software Type | Key Characteristics | Suitable for |
|---|---|---|
| Cloud-based | Accessible from any device with an internet connection, often with mobile app support | Businesses of all sizes |
| On-premises | Installed locally on a computer or server, with limited remote access | Enterprises and businesses with specific security requirements |
| Enterprise-level | Comprehensive features and advanced capabilities for large organizations | Enterprises and growing businesses |
| Small Business-focused | Tailored for the unique needs and budget of small businesses | Small and micro-businesses |
| Open-source | Free and customizable software, often with a community-driven development model | Businesses with in-house technical resources |
| ERP (Enterprise Resource Planning) | Integrated software that manages various business functions, including accounting | Growing businesses and enterprises |
| Commercial | Paid software solutions with a range of features and support options | Businesses of all sizes |
| Industry-specific | Tailored for the unique accounting needs of a particular industry, such as healthcare or construction | Businesses in specific industries |
By looking at these factors and understanding the different types of accounting software, you can pick the right one for your small business.
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Pricing and Cost Considerations
The cost of accounting software can change a lot based on what features and how complex it is. Most companies offer basic, standard, and premium subscription plans. Basic plans usually have the main features. Premium plans have more advanced features.
Small businesses can save money by picking a plan that fits their needs. They can save by choosing yearly subscriptions and using promotional discounts. It’s important to think about the long-term benefits when looking at the cost of accounting software.
For small businesses, accounting software is for companies with 10 users or less. It costs between $500 and $5,000 a year. For companies with 11 to 30 users, mid-market software costs between $5,000 and $150,000 a year.
For businesses with 30 or more users, enterprise software costs $150,000 or more a year.
What affects the price of accounting software includes how many users need licenses, the features you want, how scalable it is, and the support you need. The cost can range from free or low-cost for startups to $150+ per user for advanced systems for midsize companies.
| Accounting Software Type | Annual Price Range | User Capacity |
|---|---|---|
| Small Business | $500 – $5,000 | 10 or less |
| Mid-Market | $5,000 – $150,000 | 11 – 30 |
| Enterprise | $150,000+ | 30+ |
Cost-Saving Strategies:
- Choose a plan that meets your specific needs
- Opt for annual subscriptions to save money
- Take advantage of promotional discounts
- Consider the long-term return on investment
“Accounting software costs vary based on business-specific factors like the desired integrations, invoice and transaction volumes, global capabilities, and ongoing support and upgrades.”
Conclusion
In conclusion, the top best accounting software for small business options in 2023 have many features and prices to fit different needs. Entrepreneurs and small business owners can find the right software to make their finances easier to manage, increase productivity, and get important financial insights. It’s important to look at what you need and think about things like how easy it is to use, how well it works with other tools, and the cost.
The summary shows how big QuickBooks is, the new competition from Xero, and how free options like Wave are popular. Also, solutions like FreshBooks are great for service-based businesses. Think about how automation can save time, the need for accurate financial reports, and how good cash flow management and smart decisions can help your business.
Choosing the best accounting software for small business depends on what your business really needs. By comparing different options and focusing on what’s most important for your work, you can find the perfect software. This will help your business succeed in 2023 and the future.