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Zoho Books Review: Best Accounting Software for Really Small Businesses

Zoho Books Review: Best Accounting Software for Really Small Businesses
Credit: Zoho

For this category, we looked for accounting software for very small businesses – or microbusinesses – such as freelancers, consultants, sole proprietors, and individuals operating e-commerce and home-based businesses. While price is always a consideration, we felt it was especially important for this use case, and we looked for software that was both inexpensive and highly capable. We wanted to find a scalable application that businesses can continue to use as they grow, with options for upgrading to higher plans and integrating with other business applications. We also wanted it to have a mobile app that helps busy business owners keep up with their accounting tasks when they’re on the go.

After much research and analysis of accounting software, we recommend Zoho Books as the best accounting software for really small businesses in 2019.

Really small businesses don't need complicated, pricey accounting software; rather, they need affordable software that can grow with their businesses. Zoho Books is a simple online accounting software application that syncs with your accounts and covers all the basics, allowing you to create and send invoices, track time and expenses, and generate reports.

Like many accounting software companies, Zoho Books offers three pricing plans. If you choose to pay annually rather than monthly, you receive a discounted rate.

  • The Basic plan costs $9 per month or $90 per year. It supports one user (and an accountant) and allows you to add 50 contacts to the system. With this plan, you can reconcile transactions, create invoices, track expenses, and manage projects and time sheets.
  • The Standard plan costs $19 per month or $190 per year. It supports two users (and an accountant) and allows you to add 500 contacts to the system. In addition to the Basic features, you can use the software to track bills and vendor credits, add reporting tags to your transactions and print checks.
  • The Professional plan costs $29 per month or $290 per year. It supports 10 users, up to 5,000 transactions and allows you to add an unlimited number of contacts to the system. In addition to the Standard features, you can use the software to create sales orders, purchase orders and manage inventory.
  • Additional users cost $2 per month or $20 per year. If you need to add extra users to your account, you can do so, no matter which plan you use.
  • Snail Mail credits cost $2 each. If your customers prefer hard copies of your estimates or invoices and you don’t want to print them out and mail them yourself, you can purchase Snail Mail credits and have Zoho send them for you. Mail sent to customers in the US costs one credit and takes five business days to arrive. Mail sent to international customers costs two credits and takes between 10 and 15 days to arrive.
  • Auto-scans costs $5 per month or $50 per year. This add-on feature scans the documents you upload – such as receipts or vendor invoices – and uses the data to create new transactions. It supports up to 50 scans per month.

Although other top accounting software providers offer similarly priced starter plans, you need to consider which software has the specific features your business needs in the lowest plan or at the best price. For example, consider the following three features to see how Zoho Books stacks up against other top accounting software:

  • Contacts: Zoho Books' $9 Basic plan allows you to add 50 contacts to the system. With FreshBooks' $15 Lite plan, you can only bill up to five active clients. Xero's $9 Early plan is even more restrictive, limiting you to five invoices and five bills per month. However, QuickBooks Online's $10 Self-Employed plan doesn't have a limit on this feature.
  • Tracking billable hours: You can track time and add billable hours to invoices using Zoho Books' Basic plan. FreshBooks' Lite plan can do this also, though it costs $6 more per month. QuickBooks Online's Essential plan, which costs $35 per month, offers this functionality. Xero’s Established plan has this feature, but it costs $60 per month.
  • Tracking inventory: Although you'll need Zoho Books' Professional plan to get its inventory management features, you'd need QuickBooks Online's Plus plan for this functionality, which costs $60 per month. Although Xero's Early plan has this feature and at $9 would be the best deal, you're limited to five invoices per month, so you'd probably need to upgrade to Xero's $30 Growing plan. FreshBooks doesn't support inventory at all.

Based on our research, many users find that Zoho Books is an easy-to-use accounting software application, even for the most accounting- and tech-challenged small business owners. To see for ourselves, we signed up for a business account.

Setting up an account is easy. Simply enter your business name, contact information and password, and you're good to go. Next, you select the modules you want and can opt to fill out tax information and connect your payment processing account.

Zoho Books' dashboard has absolutely no clutter, and we easily found our way around the system using the sidebar menu, which is separated by task in an intuitive, logical way; it also collapses into icons when not in use, giving you more screen real estate. It offers at-a-glance views of your business's financial performance, with widgets for receivables and payables with current and overdue amounts, top expenses, projects with billable hours and expenses, bank and credit card accounts, and a cash flow chart.

To try Zoho Books yourself, consider signing up for a free 14-day trial – no credit card is required. You can also learn more about using this accounting software by watching the company's webinars and tutorial videos.

Accounting can be one of the most time-consuming aspects of running a business. It was no surprise, then, that the small business owners we spoke with said the most important thing they look for in accounting software are features that help them save time. Zoho Books' automation and online payment features meet this requirement.

Automations. Zoho Books saves you time by automating your workflow. You can set up the software to automatically perform tasks like sending recurring invoices and payment reminders, tracking expenses and notifying you when your bills are due. You can set up bank rules to automatically categorize transactions when they're imported each day from your bank feed and when you're reconciling your accounts, the software identifies possible matches.

Invoicing. You can convert sales orders or estimates to invoices with a couple of clicks, edit the invoice as needed and drag and drop lines to rearrange them. You can send them immediately or schedule them to be sent at a later time. The software keeps an audit trail, so you can see which transactions are linked and the date, time, and username of when they were created or changed.

Online payments. You can connect your account with popular payment gateways like Authorize.net, Braintree, PayPal, Square, Stripe, WePay, Worldpay, and 2Checkout, so your customers can instantly pay their invoices online. This is an efficient way for you to receive funds and keep track of paid and unpaid invoices. Plus, it provides your customers with a convenient, hassle-free way to pay for products and services.

Mobile app. Like many accounting software, Zoho Books has a mobile app, so you can do your accounting on the go. What makes Zoho Books' app different is that it's available on more devices than most, running on the iPhone, iPad, iMessage, Apple Watch, Android phones, tablets and smartwatches, and Windows Phones. With the app, you can manage invoices and estimates, track payments and expenses, upload receipts, run reports, and view your dashboard for at-a-glance insights. It supports multiple users and you can control the data they're able to access.

Time-tracking and project-management tools. These features are included with all Zoho Books plans and allow you to create tasks and track billable hours. You can bill based on project hours, task hours, staff hours or at a fixed cost. You can also budget hours per project, task or staff.

Keyboard shortcuts. If you prefer to type a quick shortcut rather than navigate through the menu or use the quick create menu, you can do so with this software.

Zoho Books offers email, live chat and 24-hour phone support five days a week in the U.S., the U.K. Australia, India and several other countries. You can also find help online using Zoho Books' searchable knowledgebase and customer forums.

When you call Zoho, you're greeted with menu options to reach different parts of the company – sales, tech support, billing and payment, or corporate – so you know you're actually contacting representatives in the right department.

The sales rep we chatted with was friendly and eager to answer all of our questions about the software. There was no pressure to sign up for the service, though the rep mentioned the 14-day trial if we wanted to give Zoho Books a test run before purchasing a paid plan.

Zoho Books has a client portal that your customers can use to accept, decline, and discuss estimates; view and pay invoices; and download account statements. If your work is project-based, you can share project details such as tasks and logged hours. This may be a particularly helpful feature for businesses that work closely with their clients on projects. If you want feedback from your customers, you can set up the portal to allow them to review your services.

Invoice customization is easy. Sixteen templates are available and each allows you to choose from multiple fonts and select any color for several elements. You can add a logo and background image, select which fields are included, and edit field text. The templates allow you to choose a different display language, which is a useful feature if you have international customers. Templates for other documents such as estimates, credit notes and payment receipts are also available.

Zoho has its own suite of business apps that you can connect to this accounting software, though some cost extra. It has customer relationship management (CRM) software, email marketing and social media marketing solutions, spreadsheet editors, and other productivity tools.

Like its competitors, Zoho Books integrates with third-party productivity apps and business solutions, including Google Apps, Square point-of-sale (POS) system, several credit card processors, and tax services Tax1099.com, and Avalara. It also has a Zapier integration, which allows you to connect to more than 1,000 third-party apps.

Although Zoho Books is packed with features and is easy to use, it has some drawbacks. For instance, it doesn't include payroll services. This may not be a big deal for really small businesses, but it may become an important consideration if your business is growing and you plan to hire employees. Currently, the only payroll task you can perform on Zoho Books is preparing and printing 1099s for independent contractors using the tax services mentioned above.

Ready to choose your accounting software? Here's a breakdown of our complete coverage:

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 for Business.com and Business News Daily about financial systems and services for small businesses, such as accounting software, credit card processing and point-of-sale systems.