Imagine navigating a ship without a compass, or building a skyscraper without a blueprint. Sounds challenging, right? That’s what running a business without proper accounting software feels like.
It’s a tool that not only keeps your financial house in order but also steers your business towards growth and profitability.
But with a sea of options out there, how do you find your true north? Fear not, we’ve done the heavy lifting for you, exploring over 20 programs and applications to bring you the crème de la crème of accounting software.
The Importance of Accounting Software
Accounting software is a vital tool for small businesses. It allows owners to track their accounts, expenses, and stay on top of their finances. For many, it’s a more cost-effective solution than hiring a large company to manage taxes and payroll. But with so many options available, choosing can be a challenge.
That’s why we’ve rounded up the best accounting software for small businesses to help you quickly find the right solution for you.
1. FreshBooks: A User-Friendly Solution
FreshBooks stands out for its user-friendly, cloud-based accounting and invoicing software.
Available on iPhone, Android, and iPad apps, it’s a top choice due to its ease of use. Even business owners with little to no accounting experience can benefit from its powerful features and helpful functions. It’s also reasonably priced and can be used on the go.
Key Features of FreshBooks
- Payment reminders
- Recurring invoices with customization options
- Online payment via credit card
- Settlements in multiple currencies and languages
- Automatic VAT calculation
- Tax-friendly categories of expenses
- Time tracking with a Chrome browser extension
- Bank integration, recurring payments, and auto payments
- Tax Help integration with tax filing, estimating, deduction, and reporting tools
- Easy integration with other products such as GSuite and Gusto
2. QuickBooks: A Comprehensive Tool
QuickBooks is another cloud-based accounting software that also offers a standalone desktop option. Aimed at small and medium-sized businesses, it’s used by over 7 million businesses. It’s another software that’s easy for business owners without accounting experience to use. It’s quick to set up, affordable, and offers tools and features to assist with small business accounting. It organizes everything in one place and keeps you VAT ready all year round.
Key Features of QuickBooks
- Integration with financial institutions
- Integration with PayPal, Square, Shopify, and more
- Guidance for users and export of tax data to assist in filing quarterly and annual tax returns
- VAT calculations, declarations, and registered VAT payments
- Automatic categorization of transactions and expenses into tax categories
- Track expenses in one place
- Scan receipts and attach them to invoices
- Share or export documents with your accountant
- Show cash flow tracking on your dashboard
- Track your miles using your phone’s GPS
3. Sage Business Cloud Accounting: For Multiple Users
Sage Business Cloud Accounting, formerly known as Sage One, is a cloud-based accounting software that lets you choose your industry, business size, and needs. It tailors specific accounting solutions for you and is used by over 6 million businesses. Sage is our pick for the best accounting software for multiple users because the program is designed for multiple users. If your business has its own account, it can use the software and access your books at no extra cost.
Key Features of Sage Business Cloud Accounting
- Manage the company’s finances and cash flows
- Accept and receive payments
- Create and send invoices
- Manage payroll
- Works on all devices so you can check your finances anytime, anywhere
- Integrate with your financial institution and other programs such as AutoEntry, Zync, and more
- Tax enforcement tools
- Inventory Management
- Cash Flow Forecasting
- Share real-time access with accountants on any device
- Add-ons such as HR Management and Appraisals
How to Choose the Best Accounting Software
When selecting the ideal accounting software for your business, several crucial factors warrant consideration. These encompass pricing, features, the specific type of software required, and aligning with your company’s unique needs.
Types of Accounting Software
Various types of accounting software are available, including:
- Cloud-based Accounting Software: This software is hosted on the vendor’s servers and accessed via the internet. It offers cost-effectiveness compared to on-premises software and provides the convenience of anytime, anywhere access.
- On-premises Accounting Software: With on-premises software, you install it on your company’s own servers. While it may be more expensive than cloud-based alternatives, it grants you greater control during setup and maintenance.
- Enterprise Accounting Software: Tailored for large businesses with complex accounting needs, this software tends to be more expensive but offers extensive features and customization options.
- Small Business Accounting Software: Designed for simple accounting needs of small businesses, this software is generally more affordable and provides a streamlined set of features.
- Open Source Accounting Software: Free and highly customizable, open-source accounting software can be a viable option. However, it may require more effort to set up and use.
- ERP Accounting Software: Built to integrate with other business applications like CRM and e-commerce platforms, ERP accounting software comes with added costs and complexity during setup and usage.
- Commercial Accounting Software: Suitable for businesses of all sizes, commercial accounting software can be cloud-based or on-premises, offering versatility.
- Industry-specific Accounting Software: Tailored for specific industries such as construction, manufacturing, or retail, this software provides features catered to the unique requirements of each sector.
Accounting software typically encompasses a range of essential features, including:
- Efficient creation and management of invoices
- Tracking expenses and revenues
- Preparation of accurate financial statements
Billing and Invoicing
- Streamlining invoice issuance
- Organizing customer information
- Monitoring payment status
- Tracking inventory levels
- Estimating inventory costs
- Generating purchase orders
- Some accounting software facilitates payroll processing
- Tracking employee hours
- Calculating payroll taxes and processing paychecks
- Creating and tracking project budgets
- Assigning tasks to team members
- Monitoring project progress
- Generating financial reports
- Tracking business performance
- Creating customized reports
Customer Relationship Management (CRM)
- Tracking customer contact information
- Managing customer interactions
- Monitoring sales opportunities
Limitations and Challenges
While accounting software undoubtedly enhances accounting processes for businesses, it also comes with certain limitations and challenges, including:
- Cost: Businesses with complex needs may find accounting software expensive.
- Implementation: Setting up and learning how to use accounting software may require time and effort.
- Integration: Integration with other business applications, such as CRM or e-commerce platforms, may be necessary.
- Support: Some accounting software can be challenging to use, necessitating expert assistance for troubleshooting.
- Security: Since accounting software may contain sensitive financial data, it’s vital to opt for systems with robust security features.
- Customization: Certain accounting software may lack the level of customization required by some businesses.
- Scalability: As businesses grow, they may need to upgrade to more sophisticated accounting systems.
- Data Entry: Accounting software typically involves manual data entry, which can be time-consuming and error-prone.
- Reporting: Generating reports, particularly for businesses with complex data, can present challenges.
- Training: Employees may need training to effectively utilize the accounting software.
Despite these challenges, accounting software can prove invaluable for businesses of all sizes. To make the best choice, carefully assess your business needs and compare features offered by different software options.
Choosing the right accounting software is a critical decision for any business. It can significantly impact your ability to manage your finances, track income and expenses, and prepare for tax season. With options like FreshBooks, QuickBooks, and Sage Business Cloud Accounting, you can find a solution that fits your needs and helps your business thrive.
- What is the best accounting software for small businesses? FreshBooks, QuickBooks, and Sage Business Cloud Accounting are all excellent options for small businesses. They offer a range of features tailored to small business needs.
- Is accounting software easy to use? Yes, most accounting software, like FreshBooks and QuickBooks, are designed to be user-friendly, even for those with little to no accounting experience.
- Can I use accounting software on my mobile device? Yes, many accounting software options offer mobile apps, allowing you to manage your finances on the go.
- Can multiple users access the same accounting software? Yes, some software like Sage Business Cloud Accounting allows multiple users to access the same account at no extra cost.
- Is accounting software a cost-effective solution for small businesses? Yes, for many small businesses, using accounting software is more cost-effective than hiring a large company to manage taxes and payroll.