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Choosing the Right Small Business Accounting Software

A Business News Daily Buyer's Guide

Product and service reviews are conducted independently by our editorial team, but we sometimes make money when you click on links. Learn more.
  • Accounting software helps you track your accounts payable and expenses in one place.
  • Accounting software varies in size, capabilities, integrations and more.
  • While selecting accounting software, be sure to evaluate all offerings, including compliance, reporting, tracking and available add-ons.
  • This article is for small business owners or their financial officers who are looking to incorporate accounting software into their operations for the first time.

One of your top priorities as a small business owner is keeping a close eye on the money you bring in and pay out, which is why it's critical to have the right accounting software. You need a program that helps you accomplish your daily accounting tasks – recording payments, tracking expenses, invoicing customers and reconciling transactions – and gives you insight into your business's financial health, allowing you to generate reports that help you analyze your business's performance from multiple angles.

Our Best Picks
To help you find the right accounting software, we researched and analyzed dozens of options. Here is a roundup of our 2020 best picks for accounting software and explanations of how we chose them.
Best Overall
Best Overall for Small Businesses
Pricing: Starts at $10 per month
Best for Invoicing
Best for Invoicing
Pricing: Starts at $15 per month
Featured Sponsor
Featured Sponsor
Free 30-day trial
Best for Really Small Businesses
Best for Really Small Businesses
Pricing: Starts at $9 per month
Best for Mac Users
Best for Mac Users
Pricing: Starts at $9 per month
Best Free Option
Best Free Option
Base Fee: Free

But choosing the best accounting software for your business is challenging. Each program includes a different set of features, and most offer multiple pricing plans to choose from, which also vary in features, number of users and other factors. Here are three items to keep in mind when selecting accounting software for your business:

  • Costs: Would you prefer inexpensive, basic accounting software or an application that costs more but includes extra features?

  • Usability: How many users need to access the software? Do you prefer a cloud-based system that you can access anywhere or desktop software? Do you need it to have a mobile app? What capabilities do you need the app to have?

  • Features: What do you need the accounting software to do? Do you need both accounts receivable and accounts payable tools? Which reports do you need it to generate? Do you need it to track inventory? Do you need it to include ancillary services, like time tracking, project management and payroll?

If you already know what you need and only want to see our recommendations for the best accounting software, visit our best picks page.

 

Editor's note: Looking for the right accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

If you're reviewing your accounting software options, chances are you've thought about the possibility of hiring an accounting professional to handle your financial tasks. However, hiring a new staff member or a firm is not always in the budget, and if your business is still small, you may be able to handle the accounting yourself with the right accounting software. Here are some of the advantages accounting software offers over hiring an accounting professional:

  • Affordability: Working with accounting software costs significantly less than hiring an accountant or accounting firm. The right software with the appropriate add-ons can ensure that your business is fully compliant in all its tracking and reporting.

  • Time savings: You won't have to wait for someone else to complete the accounting tasks you need done. With accounting software, you can do it yourself, with all the tools you'll need close at hand.

  • Higher accuracy: Accounting software reduces the chances of human error. This is because software can connect directly with your bank accounts, pulling transactions and other data without the risk of typos or copy-and-paste errors.

  • One place for all financial tasks: Many accounting software vendors offer additional services, such as payroll and tax compliance, that can be conducted, tracked and monitored from the same platform.

Key takeaway: Accounting software makes it easy to handle your own financial tasks and is less expensive than hiring an accountant or accounting firm.

Accounting software varies in cost, depending on the features it includes, the number of users it supports and other such factors. Many of the best accounting software companies offer cloud-based software as a service rather than software licenses, so they charge a monthly subscription fee.

You can usually choose from multiple plans, with paid packages typically ranging from $10 to $60 per month, though high-end programs can cost much more. Discounted rates are often available if you're willing to pay for the software annually rather than monthly.

More expensive plans often include advanced features such as expense and sales tracking, recurring invoices, project tracking and billing, automatic past-due reminders, team functions, advanced reporting capabilities, inventory tracking, and purchase ordering. Many accounting software companies offer integrations to augment the software's capabilities or to connect it to other business programs, sometimes at an additional cost.

Several companies offer a free version of their accounting software, though these usually either have basic features or limit the number of users, clients, or transactions. Some free accounting software providers make their money from the paid add-on services they offer. These programs are useful if your business is very small or you want to take the software for a longer test run than the trial period allows.

Key takeaway: Accounting software costs vary by the level of service you choose, the capabilities you need, and whether you choose cloud-based or desktop software.

To find the best accounting software for your business, you need to decide how and where you want to use it and if anyone else will be using the system. Here are some factors to consider:

Most accounting programs allow you to invite other users to the system and control the data they can see and the tasks they can access. For instance, you may wish to give your business partner and accountant full access, while only allowing your employees to use the system to track their time and invoice customers. Some systems allow you to invite multiple users at no additional cost; others provide free accountant access but require you to subscribe to a higher pricing plan or pay extra if you want to add other users to the system.

If you own more than one business, you may want accounting software that supports multiple small businesses under one account at no additional cost. Otherwise, you'll pay extra to set up separate accounts for each entity.

Most of the top accounting systems are cloud-based, so you can access your account anytime, anywhere from any computer with internet access, helping you run your business remotely, whether you're home or on vacation.

Many also offer mobile apps to help you monitor key information and accomplish core tasks on the go. Some offer separate apps for employees that have basic features, such as tracking time and submitting expense receipts.

Mobile app capabilities vary, so if mobile access an important feature for you, you'll want to make sure the app has the functionality you need. You'll also want to ensure it works on your preferred platform, as some are compatible only with iOS and others can be used with smartwatches in addition to phones and tablets.

Key takeaway: Usability and access go beyond number of users; you should also consider how you can access the software, such as via mobile apps and remote access through cloud software.

While you may assume that the cloud-based and desktop versions of your chosen accounting software perform the same functions, the two platforms can have significant differences.  

The desktop version of the accounting software is typically a one-time purchase, unlike cloud-based software, which usually runs on a subscription model. Oftentimes, desktop accounting software can only access data saved to that computer. Unlike cloud software, though, desktop accounting software is not dependent on an internet connection for you to access it.

Cloud-based software not only syncs directly with your bank accounts, but it can be accessed from anywhere by the number of authorized users your plan allows, which is ideal for professionals who travel frequently or work from home. Additionally, cloud-based data storage offers top-level security, so you can rest assured that your sensitive financial information is well protected.

Key takeaway: There are multiple differences between desktop and cloud software, but accessibility is a key one: Desktop software is only accessible from the computer on which it's installed, while cloud-based software can be accessed from anywhere you have the internet.

Accounting software offers many features and tools to help you manage your finances. It should cater to your business's needs, making it easy to accomplish routine accounting tasks. It should also help you see the big picture of how your business is performing.

Many business owners we spoke with said that ease of use and timesaving features are the top two things they look for in a program. Here are some of the features accounting software should have to help you save time and better manage your finances:

Most small businesses can make do with basic accounting functions like invoicing (both by email and snail mail), income and expense tracking, financial report generation, and customer management. However, if your business sells more than just a few products, you'll also want the software to track your inventory, manage vendors and assist you with purchase ordering. If your business provides services, you want a program that makes it easy to track time and invoice billable hours.

Some accounting software can be set up to automatically send recurring invoices and past-due notifications, saving you time on your invoicing and accounts receivable tasks. Others can save you time reconciling your accounts by suggesting transaction matches. If your business provides customers with quotes or estimates, look for a program that converts these documents to invoices in just a few clicks. If you carry inventory, look for a system that reorders products by automatically creating purchase orders when items drop below a set threshold.

Make your life (and your accountant's life) easier with accounting software that has features like automatic tax calculations, multiple tax rates and tax reporting. You should also be able to give your accountant access to relevant data within the system or easily email all necessary data and files to them.

Certain accounting software add-ons, such as payment processing and payroll services, make it easy to accept invoice payments online and pay employees. Although these services usually cost extra, they're convenient to use, and the costs may be comparable to what you'd pay for these services elsewhere.

Accounting software can make it easier to run your business by integrating with the programs and services you already use, automatically sharing data between systems in real time. Popular integrations include POS systems, payment processing, advanced inventory management, e-commerce, ERP, CRM, email marketing and Google apps.

Key takeaway: As you evaluate accounting software, review the program's features, add-on services and third-party integrations – looking particularly for integration with your bank. You may also want to determine if the software can help you easily calculate and pay taxes.

When you've narrowed down your choices to your top two or three options, sign up for the free trials so you can see for yourself whether the accounting software has the features you need, is easy to use and saves you time. Call the software companies, gauging the quality of their customer service, so you can be confident that you'll receive the support you need if you experience an issue with the program.

Here's a list of questions you can ask when you call to help you select the right accounting software for your business:

  • Is your software a good fit for my industry?
  • Do you offer customized solutions to fit my business's needs?
  • How many employees and clients can your software accommodate?
  • How can your software help me comply with GAAP, tax laws and financial regulations?
  • How is my data backed up? Can access be restored immediately after an outage?
  • What security measures do you have in place to keep both my business's and my customers' data secure?
  • What is the total cost? Are there any setup or cloud storage fees?
  • What types of tech support and customer service do you provide? (For instance, does the provider offer your preferred form of contact, such as phone or live chat?)

Key takeaway: Don't just select the first accounting software you see. Call different software providers to ask any questions you have and get a feel for their customer service while making your decision.

Stella Morrison contributed to the writing and research in this article.

 

Editor's note: Looking for information on accounting software for your business? Use the questionnaire below, and our vendor partners will contact you to provide you with the information and quotes you need.

Lori Fairbanks

Lori Fairbanks has years of experience writing and editing for both print and online publications. After graduating from Brigham Young University with a Bachelor of Arts in English, she worked as a magazine editor and then as a freelance writer and editor for a variety of companies, including marketing firms and a medical university. She now writes about small business finance, including accounting software, credit card processing and point-of-sale systems for business.com and Business News Daily.