What Does Accounting Software for a Small Business Do?
Accounting software benefits small business owners by allowing them to handle accounts receivable and payable, have a clear knowledge of their profitability, and prepare for tax season. A tiny firm, in the area of accounting software, is one that can utilise out-of-the-box software without major adaptations. As a company expands, its accounting requirements get more sophisticated, necessitating the use of a specialised enterprise resource planning (ERP) system.
Accounting software is a programme that keeps track of and reports on a company’s financial operations. Accounts payable and receivable, billing, and bookkeeping are all core accounting software elements. Debt collection, costs, timesheets, purchase reconciliation, payroll, and reporting for all of these are examples of non-core accounting software modules. Accounting software is available in two flavours: cloud-based and desktop-based. This list of the finest accounting software for small businesses is cloud-based.
Accounting software for small businesses comes in a variety of flavours, each with its own set of features and price tag. In general, the kind of industry and the number of employees are two aspects that might aid a small business owner in selecting proper accounting software.
How Does Accounting Software Work?
Accounting software keeps track of transactions and accounting parameters. You may set up the programme to get financial information from your bank automatically or use a more basic version that may require human data entry. To keep track of your business’s money, we recommend using software that automatically gets financial information from your bank and credit card issuer. Furthermore, most software solutions save data on the cloud, ensuring that your data is secure and safe even if your computer breaks or you have other technical difficulties.
List of Best Accounting Software for Small Business
QuickBooks is a popular choice among freelancers because of its simple accounting software, and not just because many of them package it with its tax software when doing their own taxes. Monitoring revenue and costs, invoicing, taking payments, optimising tax deductions, running reports, collecting and organising receipts, tracking mileage, managing cash flow, tracking sales and sales tax, providing estimates, and managing 1099 contractors are all available for $7.50 per month.
Get the Essentials plan for $25 per month and have up to three users, manage and pay bills, and monitor time. For $40 per month, you may manage inventory and forecast profitability with the Plus plan, which includes up to five users. The $90 per month Advanced plan includes more than five users, company analytics and insights, staff expenditure management, batch invoicing and expenses, personalised access by role, unique app connectors, and automated processes and activities.
|A mobile app that is cloud-based||Data cannot be easily transferred to other accounting software|
|Keep track of your miles||Limited reporting|
|Make a distinction between business and personal expenditures|
|It synchronises with TurboTax|
One of the most widely used accounting tools for small businesses is Xero. The $12 a month Early plan provides basic functions including bank account reconciliation, bill and receipt collecting, and short-term cash flow and business overview. Upgrade to higher plans as your small business expands. Add Payroll with Gusto to any plan for $39 per month. Get the Growing plan for $34 per month. The number of invoices and bids you may send, as well as the number of bills you can record, are not limited by this plan. This plan allows you to reconcile many transactions at once. Its Established plan includes everything in the Growing plan, plus the ability to monitor projects, work in several currencies, claim expenditures, and access detailed data.
|A mobile app that is cloud-based||Reporting is restricted.|
|Gusto’s payroll integration||Customer support is limited due to fees paid for ACH payments.|
|App store for third-parties|
|Inventory management that is simple|
FreshBooks is one of the most user-friendly accounting programmes available. Small company owners without accounting expertise will benefit from the programme. You can make and send invoices, keep track of spending, manage projects and clients, and look at reports. It also provides a bespoke plan with unique pricing for enterprises with specialised needs, in addition to its core plans. You may sign up for FreshBooks’ Lite subscription for $6 per month if you have less than six clients. Limitless spending monitoring, unlimited estimations, accepting credit cards and bank transfers, tracking sales, seeing data, and sending unlimited invoices to up to five clients are all included in the package.
FreshBooks is an excellent option for small business owners looking for simple accounting software. Service-based companies, such as consultants, web designers, and photographers, will benefit from the programme.
|User-friendly cloud-based interface||Being a mobile application, it has certain limitations|
|Integration with third-party apps|
|Features for advanced invoicing|
If you enjoy Zoho applications, you’ll enjoy Zoho Books as well. It’s one of the most feature-rich accounting programmes available. Zoho Books can handle all of your basic accounting needs, including sending invoices, reconciling accounts, tracking costs, and generating reports. The integrations are where Zoho Books really excels. Zoho Books allows you to link your bank account, payment processor, e-commerce platform, and more. This allows you to see your money in real-time. Advanced functions such as project accounting and time monitoring are also included in the programme.
If your annual income is less than $50,000, you may join up for the Zoho Books Free plan. It includes one user or accountant and allows you to handle clients and invoices, as well as set recurring bills, import bank and credit card statements, and track costs and travel.
Wave is a great accounting software platform for a service-based small firm that doesn’t need to operate payroll and only sends simple invoices. Wave’s free features will handle all of a freelancer’s or service-based company’s accounting needs, making it the top free software in our assessment. Accountants may use Wave to pull the reports they need to compile a company’s tax return at the end of the year.
|Accounting, invoicing, and receipt scanning are all free||Only Zapier is used for integrations.|
|There are no transaction or billing limitations||Credit card and ACH payments have higher costs.|
|Multiple companies can be run from a single account||Only 14 states offer full-service payroll.|
|The number of users is unrestricted|
|App for mobile devices|
Benefits and key features of accounting software
- Bank Feed: This function connects the programme to your corporate bank and credit card accounts, allowing you to receive daily transaction updates. You will save time since you will not have to manually upload transactions. It also shows you a daily, rather than a monthly, account summary. Reconciliation may be made easier with a real-time bank-feed capability, making it a daily activity rather than a monthly nightmare.
- Online Invoicing: If your company issues invoices, being able to email them and take online payments speeds up the payment process. Some accounting packages work with third-party payment processors, while others require you to utilise their in-house payment processing. Accounting software that can also act as an invoice generator is a plus.
- Recurring Invoices: You may use this functionality to have the system produce and send invoices for recurring costs like subscriptions automatically. You may choose how often invoices are delivered – daily, weekly, monthly, or yearly – as well as if the billing has an end date.
- Automatic Payment Reminders: You may use this tool to inform clients about future and past-due payments. Some offer pre-written email wording that you may use or modify. You may then specify when the reminders should be emailed. After you receive a customer’s payment, several solutions allow you to send thank-you letters to them.
- Bank Reconciliation: Smart reconciliation solutions find probable matches between your bank transactions and the bills and invoices you’ve placed into your accounting software, saving you the time it would take to go through your bank account. After that, you can accept or reject the proposed matches. As you reconcile your accounts, the finest programmes indicate probable matches, and a few even feature a reconciliation function in their mobile apps.
- Financial Reporting: Financial reports can be generated by any accounting application. However, some are more basic than others, and some need you to upgrade to a more expensive plan in order to get extensive reports. If you require certain sorts of financial reports, check to see if they are included in the programme and package you select. Detailed reports can aid in the interpretation of financial data so that you can make educated business decisions.
- Mobile Apps: Although not every accounting and invoicing software has a mobile app, the better ones do. Mobile applications, on the other hand, have a wide variety of features. Some can merely collect receipts for expenditure monitoring, while others can make and send invoices and have nearly all of the features available in web-based software. Check to see whether the software you’re considering has a mobile app and, if so, what capabilities are included in the app that will help you run your business while you’re not at your desk.
- Integrations: Because you don’t have to manually move data from one system to another, the ability to link your accounting software to other business tools saves you time. Payroll, payment processing, point-of-sale systems, and CRM software are just a few of the common types of accounting software interfaces. Integration with existing systems reduces training time for staff who will be using the product.
- Tracking for Billable Hours: If you’re a consultant or your company charges customers by the hour, you’ll need software that allows you to monitor and bill your time or that interfaces with the time-tracking software you currently have. For freelancers, this is a critical feature.
- Inventory Management: If you own a retail, e-commerce, or distribution company, you’ll need a tool to keep track of inventory and purchase orders. To use this function, you may need to upgrade to a higher-tier plan. Look for software that interacts with a specialist inventory management software or system if you want more comprehensive inventory functionality.
- Project-Based Billing: Accounting software that helps firms, freelancers, and consultants monitor project assignments and budgets should be sought by firms, freelancers, and consultants that deal with clients on projects or jobs. Customers should be able to be invoiced for tracked time and project expenditures using the programme.
- Support for Multiple Businesses: Several of the tools we looked at allow you to add several businesses to your account, however, some firms charge a fee for this service. Also, the sorts of accounting tools that are crucial to you will be determined by your company’s unique demands. Project-based billing, for example, can be the most crucial item on your list if you run a small freelancing firm. A full-featured mobile app could be at the top of your list if you plan to perform some work on your mobile device.