Accounting software is an essential tool for managing business or personal finances. For businesses, accounting software can keep financial data organized and reduce the risk of human error, assist with budgeting, track inventory, and manage either accounts receivable or accounts payable tasks. For families, accounting software is helpful for household budgeting, tax return preparation, retirement planning, investment tracking, and bill payment management.
One of the most important features of accounting software for businesses and personal finances is expense tracking. By automating the process of tracking expenses, it is easier to collect and categorize tax-deductible expenses, which allows for major tax savings each year.
We examined 13 software companies before settling on the five best accounting software solutions. Key factors used in the consideration of the best accounting software included cost, ease of use, reputation, and functionality.
The 5 Best Accounting Software of 2020
Best Overall: QuickBooks Online
QuickBooks Online was chosen as the best overall because of its reputation, usability, and strong customer support options. Business owners can access their financial reports and collect payment from customers easily using the app or website.
User-friendly and customizable
Scalable for business growth
Full-service mobile app
ProAdvisor program for accountants and bookkeepers
Quickbooks Community forum for support
Monthly subscription required
Limitations on the number of users
QuickBooks Online, owned by Intuit, is the leader in accounting software for small businesses with over seven million customers and 28 years of experience. There are four levels of online cloud-based software available:
- Simple Start ($25 per month)
- Essentials ($40 per month)
- Plus ($70 per month)
- Advanced ($150 per month)
QuickBooks offers a 30-day free trial and 50% off for three months. Alternately, accountants who are registered with QuickBooks are able to offer their clients wholesale subscription pricing. All plans can be used online through a web browser and on the QuickBooks mobile app.
The Simple Start plan is a great entry point for basic small businesses. As a business grows and has more needs, it is easy to upgrade to the next level. The upgraded levels offer features like more users, bill management, time and project tracking, inventory, budgeting, more customizable reporting, and more automation for efficiency. QuickBooks Online offers a payroll add-on, which can be accessed on the same dashboard as the accounting software. Additionally, there are tons of third-party apps that can integrate with QuickBooks Online to share data seamlessly.
The ProAdvisor Program allows accountants and bookkeepers to participate in QuickBooks training courses and become a certified ProAdvisor. Customers can search the ProAdvisor Directory to find someone in their area for accounting assistance. There is also a QuickBooks Community forum where users can ask questions and find answers to common questions.
Best Solution for Individuals: Quicken
Quicken is the best solution for individuals because of its robust features. This software is scalable and can support a household’s financial needs as they grow more complex over time.
With Quicken, a household can manage and pay bills, track retirement and investment accounts, and design customized budgets. There is also a rental property management feature that allows individuals who own rental properties to track rental income and expenses.
Bill pay feature
Robust budgeting and investment-tracking tools
No fully cloud-based option
For over 30 years, Quicken has offered management and tracking tools that allow individuals and families to be financially organized and prepared. Quicken can be used for household budgeting and income/expense tracking, which can help individuals prepare for tax season. For those who use TurboTax, their Quicken data can even be imported directly into their tax return.
There are four levels of software plans available:
- Starter ($34.99 per year)
- Deluxe ($49.99 per year)
- Premier ($74.99 per year)
- Home & Business ($99.99 per year)
A 30-day free trial is available, as well as 40% off your subscription for the first year. The software is downloaded onto a computer and data is stored locally, however, most key features can also be accessed using a web browser or the Quicken mobile app.
The Starter plan allows users to track and categorize transactions, manage bills, and create budgets. The more advanced plans add features such as investment, loan, retirement tracking; bill pay; and even basic business invoicing and tracking. The business features can be accessed through the Home & Business plan and are primarily for Schedule C tax filers, as well as rental property management.
Best Free Solution for Home Use: Mint
Mint is a great place for households to start when it comes to budgeting and bill tracking and is the best in our review for home use. The software is intuitive and easily accessible. Since Mint is completely free, it is worth trying out before moving to the more robust and costly personal finance software.
Free credit score monitoring
Limited retirement tracking
Limited investment tracking
Some syncing limitations with smaller banks
Mint is a free personal finance tool that launched in 2007 and was purchased by Intuit in 2009. Mint can be used online or on the mobile app. The software’s primary use is for personal budgeting. The key features include monthly bill payment tracking, a customizable budget planner, credit score monitoring, and options for various spending alerts.
Mint is perfect for individuals and families who want to gain a better understanding of how they are spending their money and then use that information to set new spending or saving goals for the future. After creating an account online or on the mobile app, users can sync their bank accounts and credit cards with the Mint platform. From there, Mint will help to categorize transactions by type and summarize financial activity.
The bill payment and budgeting trackers are powerful tools that will remind users when payments are due and show how spending is aligning with the budget goals on a daily basis. The Mint interface is intuitive and easy to navigate.
While Mint is less robust when it comes to retirement and investment tracking, the website does have some resources for personal loans, retirement options, investing, and credit cards.
Best Solution for Businesses: Wave
For service-based businesses with simple business structures, Wave provides a free starting point for bookkeeping and invoicing needs. Businesses can always move to more comprehensive accounting software as they grow, but Wave is a great cost-saving option and is the best in our review for businesses.
Simple and easy to use
Invoicing and credit card processing
Payroll add-on available
Less comprehensive accounting features
Not as widely used by accountants as its competitors
Payment processing fees are slightly higher
No inventory feature
Launched in 2010, Wave began as a Toronto-based startup offering accounting software. By 2019, though, Wave’s workforce had grown to 250 employees, and the company was acquired by H&R Block. Entrepreneurs and freelancers are the company’s target audience. This free accounting software is available online and through its mobile app. The free features include income and expense tracking, financial reports, invoicing, and receipt scanning.
Wave offers credit card and bank transfer payment processing, which costs 2.9% plus 30¢ per transaction for Visa, Mastercard, Discover; 3.4% plus 30¢ per transaction for American Express; and 1% per transaction ($1 minimum fee) for bank transfers (ACH).
A monthly subscription for payroll services is also available but has some limitations.
For $35 per month plus $6 per employee or contractor, Wave offers full-service payroll in 14 states. Cost in all other states is $20 per month plus $6 per employee or contractor for limited-service payroll, which means that Wave will calculate the payroll tax cost, but the user is required to pay and file payroll taxes on their own.
Best for Micro-Businesses & Freelancers: QuickBooks Self-Employed
QuickBooks Self-Employed is perfect for independent contractors who use TurboTax to prepare their annual tax return but need an expense tracking and invoice sending solution throughout the year. This software is our top pick for micro-businesses and freelancers because it's easy to use and provides straightforward financial reporting.
Connects directly to TurboTax
Send basic invoices
Limited customizations & reporting
No inventory feature
Data cannot be migrated to higher-level QuickBooks Online plans when upgrading
QuickBooks Self-Employed, owned by Intuit, is a basic online and mobile app designed primarily for freelancers or independent contractors who file a Schedule C for tax purposes. Key features include sending and tracking simple invoices, tracking mileage, categorizing business expenses, excluding personal expenses, full integration into TurboTax, and estimated quarterly tax payment calculations.
There are three different types of plans available:
- Self-Employed ($15 per month)
- Self-Employed Tax Bundle ($25 per month)
- Self-Employed Live Tax Bundle ($35 per month)
For the first three months, a 50% off deal is available.
What Is Accounting Software?
Accounting software is an automation tool that reduces the need for manual data entry by syncing and categorizing transactions on a single financial reporting platform. Individuals can use accounting software in their homes for budgeting, bill tracking, retirement planning, investment tracking, and personal tax preparation. Businesses can use accounting software for income and expense tracking, invoicing, bill payment, financial reporting, inventory management, and corporate tax preparation.
What Does Accounting Software Do?
The key features that all accounting software offers are bank and credit card transaction syncing, transaction classification, and basic profit and loss statements. More advanced subscriptions add detailed customization options. Paid add-ons include payroll services, more comprehensive financial reporting, bill pay in addition to bill tracking, and invoice payment options.
How to Choose Accounting Software
The first step is determining whether you need accounting software for either business or personal purposes. Next, decide how complex of a financial situation you have.
If your activity is very simple, it’s best to start with free software and scale up as needed. For businesses, simple accounting primarily includes small service-based businesses without inventory. For individuals who do not own businesses and have minimal investments, free software provides basic bookkeeping options with reconciliation features.
If you have a more complex situation, it is important to make a list of the specific functionalities you will need so that you can inquire about those capabilities with an accounting software company prior to your purchase. For businesses, complex accounting could include inventory, payroll, and loans. For individuals, complex accounting could include investment accounts, business ownership, and rental properties.
What Does Accounting Software Cost?
Accounting software ranges from $0 to $100 per month, with many different options in between. The average cost of personal accounting software for comprehensive household budgeting is around $50 per year. The average cost of fully functioning business accounting software for a small business is around $50 per month. Payroll services are the most common add-on to business accounting software, which can range from $30 to $150 per month depending on the number of employees or contractors.
How We Chose Accounting Software Companies
After looking at 13 different accounting software companies, we used factors such as cost, usability, integration options, and reputation to narrow our list down to the five best software programs. We also specifically researched free software versus paid software and determined the best free software for personal use and for business use, as well as the best paid software for each.