Best Accounting Software for Small Businesses

Intuit’s QuickBooks Online has been one of the most common accounting software programs used by small businesses and their bookkeeping and tax professionals. The cloud-based software can be accessed through a web browser or a mobile app.

After the 30-day free trial, the four options for monthly subscription plans are Simple Start ($25 per month), Essentials ($50), Plus ($80), and Advanced ($180). Typically there is a significant discount offered for the first few months. 

The monthly subscription for this software can be upgraded as a business grows. In addition, the mobile app has many customization options that can be used to receive payments, review reports, capture an image of a receipt, and track business mileage. For businesses looking for a payroll solution, QuickBooks Payroll fully integrates with QuickBooks Online.

Each plan offers more advanced features like inventory management, time tracking, additional users, and cash flow. Most service-based small businesses will find that Simple Start meets all of their needs. For product-based small businesses, Essentials or Plus will have more options for inventory and customizations.

The Advanced subscription is a new offering that provides robust financial reporting powered by Fathom, a popular online financial report analysis tool used by many large companies worldwide. All plans allow integration with third-party apps such as Stripe or PayPal. QuickBooks Online’s app store breaks down all of its apps by function and provides helpful examples of the benefits of each app.

Xero was founded in 2006 in New Zealand and now has over 3 million subscribers worldwide. This accounting software is popular in New Zealand, Australia, and the United Kingdom. Xero has over 4,000 employees and is growing rapidly in the U.S., as well.

Xero offers three monthly subscription options and a full-service payroll add-on: Early at $12 per month, Growing at $34 per month, and Established at $65 per month. The full-service payroll option is offered through Gusto and is an additional $39 per month, plus $6 per employee. The company offers a 30-day free trial. 

The Early plan limits usage and only allows entry for 20 invoices or quotes and five bills per month. This limited plan may be suitable for a micro-business with high-ticket transactions but only a few per month, such as a consulting or small service provider.

Both the Growing and Established plans offer unlimited invoices and bills. The only difference between the two is that the Established plan has additional features like multi-currency, expense management, and project costing. All three plans offer Hubdoc, a bill and receipt capture solution.

Founded in 2003 in Toronto, FreshBooks started as just an invoicing software. Over time, more features have been added, and as of 2023, FreshBooks has over 30 million users. There are four different plans, and businesses can get a 10% discount if they choose to pay yearly rather than monthly. Additionally, FreshBooks often offers discounts for your first months of membership.

The four plans are Lite ($17/monthly or $183.60/yearly), Plus ($30/monthly or $324/yearly), Premium ($55/monthly or $594/yearly), and Select, which is a custom service with custom pricing. These are the prices without discounts.

The main difference between the four plans is the number of different clients that can be billed per month. In the Lite plan, up to five clients can be billed per month. In the Plus plan, up to 50 clients can be billed per month. In the Premium plan, unlimited clients can be billed per month.

The Select plan also does not have a limitation on the number of clients that can be billed per month but adds unique features. It costs an additional $10 per month for multiple team members to use the accounting software, and it costs an additional $20 per month for the advanced payment feature, which allows users to charge a credit card in real-time or set up a recurring credit card charge for a client.

Many third-party app integrations are available, such as Gusto, G Suite, and more. A unique feature of FreshBooks is that invoices can be highly stylized and customized for a professional look and feel. FreshBooks is a great tool for budgeting out projects, sending estimates or proposals, and collecting customer payments.

QuickBooks Self-Employed is an Intuit product with a cloud-based online interface and a mobile app. This software was created to help freelancers stay organized each year for tax season. Features of QuickBooks Self-Employed include tracking mileage, sorting expenses, organizing receipts, and estimating and filing taxes seamlessly through TurboTax.

Users can choose between three plan options: Self-Employed at $15 per month, Self-Employed Tax Bundle at $25 per month, and Self-Employed Live Tax Bundle at $35 per month. There is a 50% discount for the first three months. The two tax bundles include a TurboTax subscription for income tax filing.

The Self-Employed Live Tax Bundle also gives you access to a CPA to answer questions throughout the year and during tax season. The CPA will also perform a final review of your tax return in TurboTax before filing. 

The mobile app makes it easy to track mileage while driving and capture photos of receipts for business expenses. Most accounting software is not designed to separate business transactions from personal transactions, but a special feature of QuickBooks Self-Employed provides an option to mark each transaction as business or personal. This is helpful for freelancers who don’t have a separate bank account for their business activity.

Wave was founded in 2010 and is based in Toronto. Nine years later, it was purchased by H&R Block and has over 250 employees. This free software includes the foundational accounting features that most small businesses need, such as income and expense tracking, financial reporting, invoicing, and scanning receipts. These features can be accessed online or via the mobile app.

Customer payment processing and payroll are considered premium services that cost extra, but all of the bookkeeping, invoicing and reporting features are entirely free.

Wave makes its money on its payment gateway. To process payment from a customer, Wave charges 2.9% plus 60¢ per transaction for Visa, Mastercard, and Discover and 3.4% plus 60¢ per transaction for American Express. These fees are slightly higher than other accounting software. Additionally, Wave charges 1% per transaction with a $1 minimum fee to process an ACH payment rather than a credit card.

Wave offers two payroll plans as an add-on service. The first plan is $20 per month plus $6 per employee or contractor. In this plan, Wave will process payroll and prepare payroll tax calculations, but the user is responsible for manually completing payroll tax forms and submitting tax payments. The second plan is $35 per month plus $6 per employee or contractor. In this plan, payroll is full-service, meaning that all tax filings and payments are managed by Wave. It is only available in 14 states.