The Top 10 Accounting Software for Small Businesses in 2021

If you have a business, you need accounting software to accurately manage the financial health of your business. Of course, the software that you choose needs to directly correlate with the size and scope of your business. There are more accounting software choices available than ever, all with a variety of price points to fit any budget. So, no more excuses. It's time to find the right product for you.

Top Rated

AccountEdge Pro

AccountEdge Pro has all the accounting features a growing business needs, combining the reliability of a desktop application with the flexibility of a mobile app for those needing on-the-go access.

Best for SMBs

Sage 50cloud Accounting

Sage 50cloud is a feature-rich accounting platform with tools for sales tracking, reporting, invoicing and payment processing and vendor, customer and employee management.

Easiest to Use

FreshBooks

FreshBooks offers invoicing, time and expense tracking, simple project management and a wide range of general accounting applications all in one easy-to-use desktop and mobile interface.

Best Value

Wave Accounting

Wave helps small businesses and freelancers manage double-entry accounting. It features a simple UI and applications for payroll and online payments and includes 2 months of free chat support.

Best Support

Kashoo

Kashoo is a small business accounting application that combines invoices, banking and credit accounts all into one inbox for simple, one-click invoicing and bill payment.

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If you’re looking for small business accounting software, you have no shortage of choices.

While that’s great, it can also be confusing. In order to cut down on the confusion and have a better idea about just what you’re looking for, it’s best to decide what features you absolutely must have and work from there.

Our top ten applications range from simple accounting software designed for sole practitioners to feature-laden applications that grow along with your business.

Our top picks for the best Accounting Software:

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Top Rated

1. AccountEdge Pro

   

AccountEdge Pro has the honor of being our top-rated accounting application and with good reason.

A good fit for small and growing businesses, AccountEdge Pro is an on-premise application that also offers the convenience of remote access, taking you easily through the entire accounting cycle.

Easy integration with Shopify and UPS Shipping makes AccountEdge Pro a particularly good fit for online retailers.

AccountEdge Pro offers solid invoicing capability, along with excellent time and billing functionality that can track both billable and non-billable hours. Self-service and full-service payroll is also available, and a solid inventory module lets you easily manage your stock. AccountEdge Pro recently added an automatic bank feed option, allowing you to connect both bank and credit card accounts to the application. A $5 subscription fee is required to use the bank feed option.

AccountEdge Pro invoice builder with standard fields for creating an invoice.

AccountEdge Pro offers top-notch invoicing capability for small and growing businesses.

As an added bonus, AccountEdge Pro also includes a Contacts feature for tracking customers, vendors, and employees using a single database.

Reporting options are excellent in AccountEdge Pro, including an audit trail report. A mobile app for both iOS and Android devices is also available.

Perhaps one of the biggest benefits of using AccountEdge Pro is its pricing structure. Scalable, with four plans available, the Basic plan has a one-time fee of $149, while the Pro plan is $399. Additional licenses are extra, as is the Payroll subscription. If you’re looking for complete online access to all features and functions, check out AccountEdge Pro Hosted. A subscription to AccountEdge Connect currently runs $25/month for up to five users, while AccountEdge Pro Hosted is available for $40/user per month.

If you wish to access the application remotely, AccountEdge Connect will run $25/month. You’ll also pay extra for phone support.

Another benefit to using AccountEdge Pro is the stability it brings as an on-premise application that also offers remote access. With plans suitable for a one-person operation to an enterprise-level business, you will never outgrow AccountEdge Pro.

Easiest to Use

2. FreshBooks

   

FreshBooks is an online accounting software application that works well for sole proprietors and freelancers.

The Retainers feature in FreshBooks also makes it ideal for attorneys, accountants, or any professional that charges their clients a retainer fee.

Offering a solo version and a team version, you can easily connect with other employees or contractors you work with.

One of the latest additions to FreshBooks is double-entry accounting, a must for a growing business. Other features found in FreshBooks include ACH payment acceptance, solid invoicing capability, the ability to track time, and the ability to create and manage projects.

FreshBooks project creation screen with prompts to get started.

FreshBooks lets you handle projects, track time, and create and monitor project budgets.

You can also create estimates and proposals in FreshBooks, and connect the application to your bank accounts for easy expense management.

Payroll is not offered in FreshBooks, though it does integrate with Gusto Payroll, if you have employees to pay. FreshBooks also offers a mobile app for both iOS and Android devices.

FreshBooks offers four plans: Lite, Plus, Premium, and Select. The Lite plan is suitable if you’re self-employed, while the Premium plan is a good fit for small businesses. FreshBooks Lite runs $13.50/month, Plus is $22.50/month, and Premium is $45/month. Select custom pricing is available from the company.

Perhaps the biggest benefit of using FreshBooks is that you’ll actually use it. A lot of freelancers and self-employed folks can remain stubbornly attached to using a spreadsheet to manage their business finances, but FreshBooks is so easy to use, that you’ll actually use it.

Offering just enough features for small businesses without saddling you with a bunch you’ll never use, but have to pay for, FreshBooks is worth the minimal investment.

Best for SMBs

3. Sage 50cloud Accounting

   

Previously known as Peachtree Software, Sage 50cloud Accounting is a hybrid solution that is installed on-premise, but also includes an option to connect to the application remotely if necessary.

Sage 50cloud Accounting is a good choice for small and growing businesses, with multiple plans available. Sage 50cloud Accounting includes a solid inventory module and offers integration with multiple point-of-sale (POS) applications, which makes it particularly suitable for retailers.

Sage 50cloud Accounting vendor management screen with shortcuts to start tasks and a list of vendors.

Sage 50cloud Accounting offers excellent vendor management capability.

Sage 50cloud Accounting allows you to connect your bank accounts or track your business expenses in a more traditional fashion. The application also includes excellent customer management and sales management, including the ability to accept online payments. You also have the option to pay your vendors electronically, or by printing checks for mailing.

The Inventory module in Sage 50cloud Accounting includes multiple pricing levels along with user-defined fields for tracking additional information. Two payroll options, Essentials and Full-Service, are available, and reporting options are top-notch.

Sage 50cloud Accounting also includes a mobile app for both iOS and Android devices.

Sage 50cloud Accounting offers three plans: Pro, Premium, and Quantum, with yearly pricing starting at $340 for the Pro plan. The Premium plan, which most small businesses would likely benefit from, costs $510/year, while Quantum pricing runs $842/year.

With three plans available, Sage 50cloud Accounting can be beneficial to growing businesses.

Integration with Microsoft 365 offers easy online accessibility, and access to POS and inventory features makes this application particularly useful for both brick-and-mortar retailers as well as those who sell products online.

4. QuickBooks Desktop

   

QuickBooks Desktop 2020 includes several new features that are designed to streamline various processes. These new features include:

  • Enhanced system navigation
  • Expanded help capability
  • Automatic payment reminders sent to past due customers
  • Ability to consolidate invoices into a single email

In addition, all QuickBooks editions offer the following features:

Invoicing

QuickBooks Desktop offers top notch invoicing software capability, allowing users to create a professional invoice for their customers. The Premier edition offers users a variety of industry-specific invoice templates including professional, product, and service invoice templates.

You also have the option to use QuickBooks Payments in order to get paid faster, including the ability to add a ”Pay Now” button to customer invoices for easy payment.

Inventory

Good inventory tracking capability is available in all QuickBooks Desktop editions, with the ability to track all products sold, cost of goods, and inventory management, including inventory adjustments.

QuickBooks Desktop screen to add an inventory item with form fields for sales and purchase information.

You can easily add inventory items to QuickBooks Desktop, with custom fields available for tracking additional details.

The Premier edition’s inventory module offers more advanced inventory features, including low stock alerts, the ability to track any product by manufacturer’s part number, the option to add product cost, and the ability to set reorder points. In addition, there are custom fields that can be used to track additional information for any inventory item.

Best Training

5. Zoho Books

   

If you’re a sole proprietor, freelancer, or starting a brand new business, Zoho Books is for you.

Affordable for even the tightest budget, Zoho Books includes a solid inventory management feature and provides new users with step-by-step directions for everything from general setup to writing an invoice, making it easy to get your new business set up and running quickly.

Zoho Books offers a long list of features, though most are in the Professional plan. These features include automated workflows, good expense tracking, recurring transactions, project management, and the ability to create custom invoices.

Zoho Books getting started page with a tutorial video and set up prompts.

The Zoho Overview takes new users through the entire setup process step by step.

A client portal is available that allows you to share invoices with your customers, and an accountant version lets you share your business details with your CPA or accountant.

Zoho Books also offers easy online payment options for your customers, with a mobile app available for both iOS and Android devices.

Perhaps the biggest drawback to Zoho Books is its limited integration with third-party apps, along with the lack of a payroll option.

Pricing for Zoho Books starts at a reasonable $9/month for the Basic plan, though most users will probably need the Standard plan, which is $19/month, or the Professional plan, at $29/month.

One of the biggest benefits of Zoho Books is the amount of resources devoted to non-accountant users. Zoho Books takes the time to explain everything, providing a greater comfort level for new users.

6. AccountingSuite

   

AccountingSuite offers the features that small businesses have come to expect from any software application, including cloud accessibility and solid accounting capability. Bank connectivity is also offered in AccountingSuite, with the application able to connect to over 9,000 financial institutions.

You can manage your invoicing in the Sales module, and process and pay bills in the Purchases module. Both project and time tracking capability are offered in the application as well, so you can track projects and profitability, while the time-tracking feature allows you to record the time spent on each individual project.

But AccountingSuite also has some outstanding features not always available in small business accounting software.

Budgeting

Not all small businesses need a budget tool, but if you can get one with your software application, why not take advantage of it? AccountingSuite offers a surprisingly robust budget tool that lets you create budgets for each account in your general ledger.

The budget tool lets you create budgets for the current fiscal year or for any year in the future, and you can choose the account types you wish to include in the budget.

AccountingSuite screenshot with new budget creation option and chart of accounts displayed

AccountingSuite offers easy budget creation, with quick access to your chart of accounts. Source: AccountingSuite.

There is also a pre-fill option, which can be used to automatically pre-fill the budget with actual data from the application or from an imported file. If you want to see how close you come to budget, run the Budget Report, which calculates actual income and expenses and compares the actual to budgeted totals.

Be sure to read the full review for a full discussion of all of AccountingSuite's features.

7. OneUp

   

OneUp is the best small business accounting application you’ve probably never heard of. Ideal for sole proprietors and freelancers, with its robust inventory management module, OneUp is a great option for retail businesses.

OneUp is also suitable for growing businesses, with pricing based solely on number of users rather than features, with the Self plan, for a single user, including the same features as the Unlimited plan.

OneUp offers a good selection of features, including the option to connect your bank accounts or enter transactions manually.

Other features include the ability to process vendor and sales quotes, purchase orders, and credit memos, and the Opportunities feature lets you track and manage all potential sales directly to a product.

OneUp invoice tracker with pdf of invoice and button to request payment, email, print, download, or customize.

OneUp offers a terrific invoicing option, with the ability to request payment immediately.

OneUp does not offer the option to process checks for vendor payments, though you can pay your vendors electronically or enter payment information directly in the application. A mobile app is also available for both iOS and Android devices.

OneUp pricing starts at $9/month for the Self plan, and goes all the way up to $169/month for the Unlimited plan, with all plans including the same features, so you’ll only need to scale up if you add additional users, not to gain access to more powerful features. The biggest drawback to OneUp is the lack of a payroll option.

By far, the biggest benefit of using OneUp is having access to all of the application’s features and functions from day one, whichever plan you choose.

8. QuickBooks Online

   

QuickBooks Online is perhaps the most recognized of all of the small business accounting applications. Designed exclusively for small businesses, QuickBooks Online offers easy anytime/anywhere access that was lacking in their more robust desktop version.

A good fit for small and growing businesses, QuickBooks Online is often compared to FreshBooks. It integrates with hundreds of third-party applications, making the application suitable for all types of businesses.

QuickBooks Online features vary widely from plan to plan, with many of the more robust features found only in the more expensive plans.

Features available in all plans include online banking connectivity, receipt capture capability for preparing expense reports, as well as a good expense management feature

QuickBooks Online showing expense report detailing date, type, no., payee, etc.

QuickBooks Online offers easy expense management, including numerous bill payment options. Source: QuickBooks Online software.

Excellent sales tracking and inventory management capability are also available, and you can easily download the mobile app for both iOS and Android devices.

QuickBooks Online does not include payroll, but does include the option to add Intuit payroll services directly to their current plan.

In addition, QuickBooks also offers integration with other third-party payroll applications.

QuickBooks Online’s pricing can be confusing, with posted prices reflecting an initial discount, and regular pricing kicking in after the first three months. Pricing starts at $12.50/month for the Simple Start plan for a single user and rises to $25/month after three months.

Other plans include Plus, which is designed for five users and runs $35/month for the first three months and then doubles to $70, and go all the way to the Advanced plan, which can handle up to 25 users and starts at $75/month, rising to $150/month after three months.

One of the biggest benefits of using QuickBooks Online is its integration with hundreds of apps in a variety of categories which include payroll, inventory, HR, and project management.

9. Xero

   

Xero is an online accounting software that offers the convenience of running your business from anywhere. It’s designed for the small business owner who doesn't want to spend a lot of time learning accounting but wants to stay on top of business performance. Xero works great for a variety of niche markets, including retail, IT, legal, e-commerce, and startups, and its ability to deal with multiple currencies makes it a good fit if you conduct business globally.

Xero offers double-entry accounting, with a default chart of accounts that can be customized if needed included in the application. Recurring journal entries are available in the application, and you can easily connect your bank accounts to Xero for automatic import of all bank transactions.

Xero’s dashboard displaying account balances and related graphs.

Xero’s dashboard offers a summary view of your business finances. Source: Xero software.

Xero also offers enhanced invoicing, so you can create a more professional invoice. In addition, you can create invoices from a mobile device and email them directly to your customers.

Basic inventory management, bill payment, and enhanced reporting options are also available in Xero. And, if you’re dealing with multiple projects, Xero lets you manage them simultaneously, create multiple invoices, and track performance throughout the life of the project.

Xero is nicely scalable and has three plans available. If you're just starting out, you can subscribe to the Early plan, which runs $9/month, and scale up to the more robust Growing plan at $30/month, or the Established Plan, which runs $60/month.

While Xero does not offer payroll, it does offer integration with Gusto, starting at $39.95/month.

If you want an application that offers easy integration with hundreds of apps, Xero is for you. It integrates with more than 700 third-party applications in a variety of categories, including payroll, point-of-sale, practice management, time-tracking, CRM, and e-commerce.

10. Sage Business Cloud Accounting

   

Ideal for sole proprietors and freelancers, Sage Business Cloud Accounting also includes solid inventory management, making it a good option for retailers, particularly online sellers.

There is no payroll feature available in Sage Business Cloud Accounting, nor in the third-party apps the application integrates with, so it’s probably not the best choice for your business if you have employees to pay.

Sage Business Cloud Accounting includes numerous sales features such as quotes and estimate creation, credit notes, and the ability to customize invoices as needed.

Sage Business Accounting screen to create an item with fields to select information such as item type, item code, description, category, price, etc.

Sage Business Cloud Accounting offers good inventory management capability.

A built-in tracking feature lets you view invoice status, including invoices sent, invoices due, and those past due. You can connect Sage Business Cloud Accounting with your bank, and the products and services option lets you manage both stock and non-stock items in your inventory. A mobile app is also available for both iOS and Android devices.

Sage Business Cloud Accounting offers two plans: Accounting Start and Accounting. Accounting Start is $10/month, with the Accounting plan running $25/month. Accounting Start is really only suitable for freelancers and sole proprietors, while almost any other type of business will need the Accounting plan, which offers more robust features.

One of the biggest benefits of using Sage Business Cloud Accounting is access to Sage Marketplace, which offers connectivity to more than 100 third-party apps, all designed to integrate with Sage applications.

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Who uses accounting software?

I'd like to say that anyone in business uses accounting software, but unfortunately, that's not the case. However, everyone in business should use accounting software. That includes the contractor you hired to write a press release, the property management company that you pay your rent to each month, your mortgage holder, your doctor, and your attorney. Everyone who is in business should be using some type of accounting software since it's impossible to measure their company’s financial health without it.


Why use accounting software?

Smart business owners use accounting software for a variety of reasons. Some use it because it simplifies the entire record-keeping process. Entering a customer into a software application and creating an invoice is much easier than entering that same information into a spreadsheet, and then having to create an invoice in another application. Others use it because they want to know how much money they're making, or in some cases, not making. Still others use it to keep a better handle on their business expense categories.

How will you know how healthy your business is if you have no idea who owes you money or how much money you've spent in the last six months? How will you convince a bank to give you a credit line if you can't show them that your business is financially healthy? Perhaps most important, how will you keep track of your various tax obligations if you're not adequately tracking sales tax, use tax, employment tax, and employee withholding tax?

Below are some of the benefits of using accounting software.

You'll always know the financial status of your business

Instead of consulting multiple files to see how much you're spending, how much you've been paid, or how much is still owed, you can view all this information from one central dashboard.

QuickBooks Dashboard Example

This dashboard view from QuickBooks Online (above) gives you the information you need in one convenient location, including paid and outstanding invoices, where you've spent your money, and even the current balances of your bank accounts. So, stop looking at multiple spreadsheets and start using accounting software.

It's a faster way to get paid

We all want to get paid, otherwise, there's really no reason to be in business. But one of the ways to get paid faster is to make it easy for your customers to pay you. Accounting software helps with everything from including payment links in invoices, accepting electronic payments through your bank, to accepting credit cards through a merchant account (see image below). Making it easier for them to pay a bill will likely mean that they'll pay you faster, or at the very least, on time.

Invoice Example Screenshot

Taxes, taxes, taxes

If you use accounting software for anything, use it to remain tax compliant. If you sell anything, you will owe taxes. If you pay employees, you will owe taxes. If you live in a large, metropolitan area, or sell in multiple states, you will owe taxes to several different agencies.

QuickBooks Sales Tax Example

As the QuickBooks Online screen (above) asks, how often do you file sales tax? Using the appropriate accounting software will enable you to remain compliant with all tax agencies. You’ll be able to charge your customers the correct tax rate while also running reports that show how much tax is owed to each tax agency.

If you have employees, you'll have payroll taxes that need to be paid on time such as federal withholding, state withholding, Social Security and Medicare taxes, and unemployment taxes. Let your accounting software do the heavy lifting and provide you with the tools you need to always be compliant.

Your reports are accurate

Transposition errors, extra decimals, decimals in the wrong place, extra zeros, not enough zeros; these are all things that can happen when you use spreadsheet programs to create reports manually. Professionally prepared reports give your business credibility. When you use accounting software, your reports are prepared using information you've already entered into the system. If that information is accurate, so are your reports (see image below).

Reporting Example

Microsoft Excel lovers shouldn't feel too bad. Most accounting software applications allow you to export your reports to Excel, where you can customize them if you wish; the difference being that you're starting with the correct numbers.


What are the different types of accounting software?

There are three types of accounting software applications that are typically used.

  1. Commercial accounting software: This ranges from simple applications that offer bare-bones features to full-service applications that offer complete accounting functionality. There are also a variety of add-on modules to choose from. Commercial software is usually available as a downloadable application. It used to be installed from a CD-ROM, but most commercial accounting software is now downloaded from the software vendor and installed on a desktop or workstation computer. It can also be delivered via subscription as SaaS (Software as a Service) or from the cloud.
  2. Enterprise resource planning (ERP) software: This is typically only used by the very largest companies. ERP software is notoriously expensive, and unless you're a billion-dollar company, it’s likely much more than you will ever need.
  3. Custom accounting software applications: These were popular about twenty years ago, but have mostly disappeared from offices simply because of the scope of features now found in commercial accounting software. Custom packages can also prove to be more trouble than they're worth and typically don't integrate with any other applications.

Key accounting software functionality

Accounting software applications should offer most, if not all, of the following features.

Core accounting features:

  • Double-entry accounting
  • Invoicing (A/R)
  • Bill payment (A/P)
  • Customer & vendor management
  • Banking
  • Budgeting
  • Management reporting

Additional modules:

  • Inventory management
  • Purchase orders
  • Payroll
  • Sales / point-of-sale

You may not get every module in every product, but you should get the modules that are necessary for you to run your business.


What to consider when buying accounting software

What features are most important for your business?

Is easy invoice creation important to you? Then you need an application that makes creating an invoice quick and painless. Do you offer a variety of products to your customers? If so, you need a way to manage your inventory properly. What about banking? Do you always forget to record your expenses when you use your credit card? If that's you, then you'll want an application that will import all of your banking transactions, and record them to the proper expense account.

If you have employees, you need a way to pay them, as well as a way to make sure that your tax obligations are taken care of. While most accounting software does many, if not all, of these things, you need to decide what features are a must-have, and look accordingly.

Your budget

While it's important to purchase the accounting software that will work best for you, your organization's budget considerations can also play a role in your final decision. If you're a sole proprietor or freelancer on a very strict budget, you may have to choose from the applications that are within your reach. But don’t panic, many of the best applications available today are under $25 per month.

Your business niche

The type of business you run may play as much of a role in your final decision as cost and features. If you sell hair products online, you will have different needs than a graphic artist that provides a design service. But what if you sell products and services? Simple. Just make sure that the product you purchase is suited to both.

Support

While most people don't think about support when comparing accounting applications, you may want to spend a few minutes looking at the available support options. I guarantee that nothing will be more frustrating that trying to figure out the answer to a problem without a good support structure in place. Knowledgebases are great, but they are no substitute for an actual human being.


Frequently Asked Questions

How much does accounting software cost?

Accounting software is available in a variety of price points. Some applications can run to hundreds of dollars per month, though most entry level accounting software will top off at around $100 per month.

There are also some good accounting applications available for free, or less than $10 per month. However, most of those are designed for sole proprietors or freelancers who only need limited features, like invoicing and expense management.

Keep in mind that most free or low-cost applications are not equipped to handle payroll or manage inventory.

What's wrong with using a spreadsheet to keep track of my business expenses?

Spreadsheets can be useful, and provide a good way to create custom reports and track simple data. However, spreadsheets have no checks and balances.

If your current bank balance is $1,000 and you just wrote a check for $500, you would have a balance of $500 in your account. But what happens if you leave off a zero when you enter that check amount on your spreadsheet?

You'll think you have $950 in your account instead of $500 and will likely overdraw the account purchasing things you don't have the funds to pay for.

If you've never transposed numbers, made a typo, or entered an incorrect formula in a spreadsheet program, then maybe you could get by with using spreadsheets for accounting. But for the rest of us mortals, accounting software is the way to go.

How will I know which application to purchase?

When you buy a car, you take it for a test drive. The same goes with buying software. Most software applications include a downloadable free trial, so you can take it for a test drive.

By trying out a variety of applications, you'll be able to see which products work best for you.

I don't know anything about accounting. How can I use accounting software?

You're in luck, because the majority of entry level accounting software products were created just for you! Instead of using accounting terms like debits and credits, many accounting applications use everyday terms like bills and payments.

If you've ever received a bill, paid a bill, or reconciled your bank statement at the end of the month, you'll be able to use accounting software.

The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned. Click here for more information.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Intuit and Microsoft. The Motley Fool owns shares of Xero. The Motley Fool has a disclosure policy.