The Best Business Accounting Software Services of 2023

What is Accounting Software?

Accounting software offer features for tracking the revenue and expenses of a business. The best accounting software for small businesses offer a wide range of reports that allow you to analyze the financial health of your business, as well as dashboards that provide an at-a-glance overview of key financial aspects like accounts receivable, accounts payable, historical sales data and cash flow. Accounting software is also useful for tax management, ensuring you’re accurately estimating all your tax liabilities and saving money accordingly. The best accounting software integrates with other key business systems like payroll software and HR software, eliminating the need to enter the same data manually in multiple systems.

Best Accounting Software of 2023

• Xero: Best for Growing Businesses
• QuickBooks: Best for Small Businesses
• Oracle NetSuite: Best for ERP Tools
• Freshbooks: Best for Invoicing
• Zoho Books: Best for Microbusinesses
• Melio: Best for Free Accounts Payable
• ZarMoney: Best for Transparent Pricing
• Plooto: Best for Automating Accounts Payable
• Wave Financial: Best for Free Option
• Sage Business: Best for Freelancers and Self-Employed
• Neat: Best for Receipt Management

• Accounting software is key to managing your business’s finances, making smart spending decisions, and complying with tax and accounting regulations.
• The best accounting software balances reconciliation, reporting, invoicing and bill pay features with accessible pricing and intuitive user interfaces.
• Dozens of accounting software options exist, and testing a few that could fit your business will reveal the right one for your needs.
• This article is for small business owners searching for accounting software.

Accounting software offers features for tracking the revenue and expenses of a business. The best accounting software for small business offers a wide range of reports that allow you to analyze the financial health of your business, as well as dashboards that provide an at-a-glance overview of key financial aspects like accounts receivable, accounts payable, historical sales data and cash flow. Accounting software is also useful for tax management, ensuring you’re accurately estimating all your tax liabilities and saving money accordingly.

The best accounting software integrates with other key business systems, like payroll software and HR software, eliminating the need to enter the same data manually in multiple systems. We reviewed dozens of the most popular accounting software platforms available today and narrowed it down to the best 11 options. Cost, ease of use and setup, customizability, key features, and ideal use cases were among our top considerations.

Accounting software is an essential ingredient for a successful business. Depending on the program, it can help you create professional invoices, record incoming and outgoing payments, identify and follow up on past-due receivables, streamline tax management, and run reports that analyze your company’s financial health and project for the future.

To help you find the best accounting software for your small business, we examined some of the most popular platforms on the market today. We looked for affordable, easy-to-use accounting programs that included time-saving features, such as automated bank feeds, automatic payment reminders, and online invoicing and payment acceptance. We also searched for software with comprehensive, customizable, real-time financial reporting because that is crucial for monitoring and understanding your business finances.

Accounting software helps business owners streamline billing and accounting, and it doesn’t have to cost a lot of money. Most programs offer several plans to accommodate your needs and budget.

There are typically two types of pricing models for accounting software: perpetual licensing or a recurring subscription. With a perpetual licensing model, you make a one-time payment for unlimited access to the software. With a subscription pricing model, you pay a monthly or annual fee for access to the software.

For subscription pricing, expect to pay anywhere from $8.50 per month for a basic starter plan to as much as $350 per month for a more advanced service plan. Other factors, like the included features and number of users, affect the monthly cost as well.

Regardless of the pricing model you select, watch out for hidden fees, which can include charges for customization options, installation or setup services, integrations, and maintenance or support services.

If your business is on a tight budget, consider free accounting software. Wave, for instance, offers many of the accounting and invoicing features you would find in paid programs. Zoho Books also offers a free plan for businesses with under $50,000 in annual revenue.

When you’re choosing accounting and billing software for your business, we strongly encourage you to take advantage of any free trials to test out the solutions and see which one offers the features and tools you need. Plus, spending time with the software beforehand will help you feel more confident in your decision.

Many aspects of accounting software make it a useful tool. If you’re a small business owner, it’s important to know which features to look for. Most online accounting software offers accounts receivable, accounts payable, banking and reporting features. Some programs include inventory management, project management, time tracking and payroll tools.

Here are some of the core features to look for in accounting software:

Bank Feed

This feature connects the software to your business bank and credit card accounts to receive a daily update of your transactions. This saves time, as you will not have to upload transactions manually. It also gives you a daily, rather than monthly, overview of your accounts. A real-time bank-feed feature can assist with reconciliation, which allows you to make it a small daily task rather than a monthly ordeal.

Dashboard

When you log in to your account, you’ll be greeted by a dashboard that shows you an overview of your account activity and key metrics, such as cash flow, profit and loss, account balances, expenses, accounts payable and receivable, and sales. Some accounting programs allow you to customize what you see first by rearranging the information.

Online Invoicing

If your business sends invoices, the ability to email them and accept online payments helps you get paid faster. Most accounting programs integrate with third-party payment processors; others require you to use their in-house processing services. It’s a plus for accounting software to serve as an invoice generator also.

Recurring Invoices

With this feature, you can schedule the system to automatically generate and send invoices for recurring charges, such as subscriptions. You can choose how frequently invoices are sent — daily, weekly, monthly or annually — and indicate whether there’s an end date to the billing.

Automatic Payment Reminders

This feature helps you remind customers about upcoming and past-due payments. Some have sample email text that you can use as is or customize. You can then choose when you want the reminders to be sent. Some programs give you the option to send thank-you emails to customers after you receive their payments.

Bank Reconciliation

Smart reconciliation tools identify potential matches between your bank transactions and the bills and invoices you’ve entered into the accounting software, saving you the hours it would otherwise take to sift through your bank account for this information. You can then approve or deny the suggested matches. The best applications suggest potential matches as you reconcile your accounts, and a few include a reconciliation tool in their mobile apps.

Financial Reporting

Every accounting program can generate financial reports. But some are more basic than others, and some require you to subscribe to a pricier plan for advanced reporting. If you need specific types of financial reports, you’ll want to make sure they’re included in the software application and plan you choose. Detailed reports can help you interpret your financial data to make informed business decisions.

Mobile Apps

Not all accounting and invoicing programs have mobile apps, but the best ones do. There is, however, quite a range in the capabilities of mobile apps. Some can only capture receipts for expense tracking, some allow you to create and send invoices, and others have almost every feature the web-based software does. It’s worth checking if the software you’re considering offers a mobile app and, if so, what features are included in the app that will help you manage your business while you’re away from the office.

Integrations

The ability to connect your accounting software to other business programs you use saves you valuable time because you don’t have to manually transfer data from one system to another. Payroll, payment processing, the best point-of-sale (POS) systems and the best customer relationship management (CRM) software are just a few of the popular types of integrations that are available with accounting software. Integration with systems you already use also cuts down on training time for employees who will use the software.

Tracking for Billable Hours

If you’re a consultant or your business bills clients by the hour, you need accounting software that allows you to track and bill your time or that integrates with the time-tracking program you already use. This is an important feature for freelancers.

Inventory Management

If you have a retail, e-commerce or distribution business, you need an application that helps with inventory tracking and purchase orders. You may need to subscribe to a top-tier plan to get this feature, unless you use ZarMoney. If you need more advanced inventory features, look for software that integrates with a dedicated inventory management system.

Project-Based Billing

Firms, freelancers and consultants who work with clients on projects or jobs should look for accounting software that helps them track their projects’ tasks and budgets. The software should allow you to invoice customers for tracked time and bill them for project expenses.

Support for Multiple Businesses

Several programs we evaluated let you add more than one business to your account, though some companies charge extra for this convenience. Also, the types of accounting tools that are important to you will depend on the specific needs of your business. For example, if you run a small freelance business, project-based billing might be the most important feature on your list. Or, if you plan to do some work on your mobile device, a full-featured mobile app might be at the top of your list.

Managing your finances is vital to the success of your business, and choosing the right accounting software can make that much easier. You’ll reap a lot of benefits when you swap out pen and paper or an Excel spreadsheet for accounting software. Here’s a look at a few of them:

Reduces Mistakes

Human error is by far the biggest cause of accounting and bookkeeping errors. Many accounting professionals cite common mistakes such as spreadsheet errors and incorrect manual entries. Accounting software can help cut down on these costly blunders by eliminating clunky spreadsheet inputs and pulling data directly from third-party business apps.

Improves Organization

Small businesses can’t afford not to have their finances in order. Whether it’s time to pay the tax bill or forecast for the next year, it can be difficult to get the information you need if you are not organized. Accounting software helps you stay on top of your financial data. It organizes financial information, stores it in one location and automates many time-consuming accounting processes, which frees you up to focus on running your business.

Bolsters Internal Controls

Internal controls refer to the rules and procedures established by a company to ensure the integrity of accounting and bookkeeping processes. Accounting software increases the reliability of your measures to help prevent and detect fraud. This can significantly reduce the risk of loss and theft from your business.

Doesn’t Break the Bank

Thanks to cloud-based offerings, the price of accounting software has come down a lot over the years. Today, small business owners have a lot of choice: Accounting software costs range from free to $350 per month. The size of your business and your accounting needs dictate how much you pay. But if that monthly cost means you’ll optimize cash flow, meet tax obligations and identify growth opportunities, it’s probably worthwhile.

Ensures Tax Compliance

Calculating and paying taxes is an essential part of running a business, but it is also complex and often involves a lot of tedious paperwork. Accounting software can help you manage this task. Many accounting software providers have designed programs that calculate sales tax, prepare tax forms, and even file taxes with no intervention on your part, which can save you time and hassle. Reporting features can also keep you compliant with tax authorities, which increasingly require real-time reporting. AI technology increasingly enables businesses to upload their profits and losses in real time. This is especially important in an era when businesses deal with tax requirements not only in their own countries, but around the world. Fines and punishments for non-compliance can be incredibly burdensome for business owners.

How does accounting software work?

Accounting software records transactions and tracks different accounting metrics. You can set up the software to automatically receive financial information from your bank or use an extremely basic version that might require manually inputting the data. We encourage you to use software that automatically receives financial information from your bank and credit card provider to track your business’s finances. Further, most software solutions store the information in the cloud, so your data will be secure and safe if your computer crashes or you experience other technical issues.

Which small business accounting system is best?

Based on our research, QuickBooks Online is the best small business accounting system. But, depending on the specific needs of your business, another system may be a better fit or better value. For example, if your business provides a service and sends a lot of invoices, FreshBooks might be the best choice for you because of its robust invoicing features. See our best picks above for our specific recommendations for different business sizes and needs.

What do you need from your accounting software?

You need accounting software that tracks the money moving in and out of your business, with both accounts payable and accounts receivable features. Some software solutions don’t include both accounts payable and accounts receivable information. Also, accounting software should connect to your bank and credit card accounts and automatically download your transactions. If your business is service-based, you may need project management tools. If your business sells products, you may want an accounting solution that has inventory management features. Last, look for software solutions that offer greater advantages by connecting to other business applications you already use, such as your POS system, CRM system or the best email marketing software.

Do you need online bookkeeping software instead of accounting software?

For small businesses, the term “online bookkeeping software” is usually interchangeable with “online accounting software.” (However, there is a difference between bookkeepers and accountants.) The best online accounting programs for small businesses have bookkeeping capabilities that allow you to record debit and credit transactions, as well as accounting features that let you run reports and analyze your business’s financial performance. Look for more than just a bookkeeping solution; accounting software should include more detail and let you generate invoices and detailed reports.

Should your accounting software also act as an invoice generator?

It depends on your business. If you generate (or expect to generate) a lot of invoices to send to clients and customers, we recommend that you find a comprehensive accounting application with invoice-generating features. Freelancers should consider using accounting software that can generate invoices.

What does an online accounting service do?

Online accounting services can perform a wide range of tasks for busy business owners. Some focus on bookkeeping duties, such as entering and categorizing transactions, reconciling accounts, and generating financial statements and reports that you can take to your CPA at tax time. Others provide payroll and tax preparation services. Some — such as virtual controllers, chief financial officers and CPAs — provide high-level accounting services, like internal audits and financial planning and analysis.

How much should a small business plan expect to pay for accounting software?

For some small business owners, an accounting platform that tracks expenses and sends invoices is all that’s needed. For others, advanced reporting, inventory management and e-commerce are more important. The camp you fall into will dictate how much you pay for accounting software. Some accounting software options are free, while paid versions can cost as much as $350 per month. The total cost will be determined by the complexity of the software you choose and how many employees you want to have access to it.

Should small businesses look for certain accounting software attributes?

Small business owners should look for accounting software that is easy to install, simple to use, easily integrates with third-party apps, and provides a bevy of features and functionality, including invoicing and inventory management. The best accounting software enables easy collaboration between you and your accountant.

Why should my business consider changing accounting software vendors?

In regard to accounting software, changing is easier said than done. After all, you already uploaded all your data to the platform and learned how to operate it. Nonetheless, there are reasons to consider a switch:

1. In the same way you shop for your insurance, you should check out what accounting competitors are offering from time to time. If you find a more affordable vendor that offers the features you need, that may be a reason to consider switching.
2. If your business grows and your accounting software can no longer support operations, you may be due for an upgrade.
3. A surefire reason to switch accounting software is if your staff hates it. If they find it difficult to use, you may want to pay attention.

What business processes have been automated with accounting software?

Accounting software is used to extract data from large tax documents, create new journal entries, track payments, send invoices, and eliminate manual data entry. These tasks are both time-consuming and prone to human error. Automation can provide enormous time savings for finance departments that total thousands of hours annually, which is another reason to consider implementing accounting software.

In 2020, the global accounting software market reached a value of $11.9 billion, according to data from Allied Market Research. This figure reflects the sector’s steady growth throughout the 21st century. By 2030, the market is expected to reach a value of $70.2 billion, a compound annual growth rate of 19.6 percent across the decade.

The gradual — and nearly complete — shift away from desktop software toward cloud-based platforms likely explains this change. Prior to the growth of cloud-based technology, accounting software existed solely on one’s computer, with few to no connections with other technologies. This imposed limitations on bank connections and 24/7 access, two major issues that cloud-based technology has solved. Plus, cloud-based technology has fueled the growth of accounting software mobile apps, which are a major asset for any small business.

Artificial intelligence is also set to drive continued growth in the accounting software sector. This technology is powering automation tools that streamline key accounting processes, minimizing tedious work among finance teams. It’s also behind the early stages of obtaining support from a live chat tool, making customer service easier to provide for vendors as well.

Accounting software is also expected to change based on new GAAP updates that the Financial Accounting Standards Board (FASB) regularly issues. The FASB issues roughly a dozen updates per year, and though only some of those affect small business accounting, it’s still smart to track them. If you see any that affect small businesses, expect your accounting software vendor to update the platform accordingly. If not, you can contact the vendor and request a change or seek new vendors that more strongly prioritize GAAP compliance.

Acquisitions and mergers within the accounting sector may also shape the software field. Accounting software companies, though, rarely merge or acquire one another — instead, accounting firm acquisitions can drive trends in the space.

For example, in September 2021, the prominent tax advisory firm Baker Tilly acquired a company called AcctTwo Shared Services. The latter was known for its focus on proprietary cloud-based accounting solutions built from Sage software, and Baker Tilly now offers this service instead. Baker Tilly clients may therefore be more likely to choose Sage accounting software, driving usage trends in the accounting software sector.