Accounting software helps small business owners track their financial accounts, income and expenses, prep for tax season and keep tabs on financials easily. For many small businesses, software is the more affordable alternative to hiring an accountant or a large firm to manage their accounting, tax prep and payroll. However, with so many options on the market today, choosing the right solution can be a challenge. To help, we’ve narrowed in on the best options for a wide variety of small businesses.
The Best Accounting Software of 2024
- Intuit QuickBooks: Best for Comprehensive Features
- Zoho Books: Best free accounting software
- Sage Business Cloud Accounting: Best for microbusinesses
- FreshBooks: Best for ease of use
- Xero: Best for advanced features
- AccountEdge Pro: Best for Inventory Management
- NetSuite: Best for automation
- OneUp: Best for Scaling
- ZarMoney: Best for Customization
- Neat: Best for self-employed
What Is Accounting Software?
Accounting software is a computer program that helps businesses track income and expenses. The software can also be used to generate reports, such as profit and loss statements and balance sheets. Most accounting software programs include features for invoicing, tracking payments and managing inventory.
Benefits of Accounting Software
There are many benefits of using accounting software, including:
- Time-saving: Automation features can save you time on tasks such as creating journal entries and reconciling statements.
- Compliance: Many accounting software programs offer features to help businesses with compliance, such as tax preparation and reporting.
- Anytime, anywhere access: With cloud-based accounting software, you can access your account from anywhere, at any time.
- Integration: Many accounting software programs integrate with other business applications, such as CRM and e-commerce platforms.
- Mistake reduction: By automating repetitive tasks and providing real-time insights, accounting software can help reduce mistakes.
- It’s affordable: Accounting software is much more affordable compared to hiring an accountant.
- Keeps you organized: Accounting software can help you organize your financial records and transactions in one place.
How To Choose the Best Accounting Software
When choosing the best accounting software for your business, there are several factors you should consider, including price, features, the type of software you need and what your company’s specific needs are.
Types of Accounting Software
There are several different types of accounting software, including:
- Cloud-based accounting software: This software is hosted on the vendor’s servers and accessed via the internet. Cloud-based accounting software is typically more affordable than on-premises software and offers anytime, anywhere access.
- On-premises accounting software: With on-premises software, you’re installing it on your company’s own servers. On-premises accounting software is typically more expensive than cloud-based software and can be more difficult to set up and maintain.
- Enterprise accounting software: This type of software is designed for large businesses with complex accounting needs. Enterprise accounting software is typically more expensive than other types of software and offers more features and customization options.
- Small business accounting software: This type of software is designed for small businesses with simple accounting needs. Small business accounting software is typically less expensive than other types of software and offers fewer features.
- Open source accounting software: Free software such as this is typically more customizable than other types of paid software. However, open source accounting software can be more difficult to set up and use.
- ERP accounting software: This type of software is designed to integrate with other business applications, such as CRM and e-commerce platforms. ERP accounting software can be more expensive than other types of software and can be more difficult to set up and use.
- Commercial accounting software: This type of software is designed for businesses of all sizes. Commercial accounting software can be either cloud-based or on-premises.
- Industry-specific accounting software: This type of software is designed for businesses in specific industries, such as construction, manufacturing or retail. Industry-specific accounting software typically offers features tailored to the needs of that industry.
Essential Features
Accounting software typically offers a range of features, including:
- Accounting: This includes features such as creating and managing invoices, tracking expenses and revenues, and preparing financial statements.
- Billing and invoicing: With this system, you can streamline the process of issuing invoices, keeping tabs on payments and organizing customer information.
- Inventory management: This includes features such as tracking inventory levels, estimating inventory costs and creating purchase orders.
- Payroll: Though not all accounting software can process payroll, some offer features such as tracking employee hours, calculating payroll taxes and processing paychecks.
- Project management: This includes features such as creating and tracking project budgets, assigning tasks to team members and monitoring project progress.
- Reporting: This includes features such as generating financial reports, tracking business performance and creating custom reports.
- Customer relationship management (CRM): This includes features such as tracking customer contact information, managing customer interactions and tracking sales opportunities.
Limitations and Challenges
Accounting software can help businesses automate and streamline their accounting processes. However, there are some limitations and challenges to using accounting software, including:
- Cost: Accounting software can be expensive for businesses with complex needs.
- Implementation: It can take time and effort to set up and learn how to use accounting software.
- Integration: Accounting software may need to be integrated with other business applications, such as CRM or e-commerce platforms.
- Support: Some accounting software can be difficult to use and may require expert help to troubleshoot problems.
- Security: Accounting software may contain sensitive financial data, so it’s important to choose a system with strong security features.
- Customization: Some accounting software may not offer the level of customization that businesses need.
- Scalability: As businesses grow, they may need to upgrade to a more complex accounting system.
- Data entry: Accounting software typically requires manual data entry, which can be time-consuming and prone to errors.
- Reporting: Generating reports can be challenging, especially for businesses with complex data.
- Training: Employees may need training on how to use the accounting software.
Despite these challenges, accounting software can be a valuable tool for businesses of all sizes. When choosing accounting software, it’s important to consider the needs of your business and compare different features to find the best fit.
How Much Does Accounting Software Cost?
The cost of accounting software can vary depending on the features and complexity of the system. Generally, there are three types of pricing plans: basic, standard and premium. Basic plans typically offer the most essential features, while premium plans include more advanced features. For example, a basic accounting software plan might include features such as invoicing, expense tracking and financial reporting. A premium plan might include features such as inventory management, project management and CRM.
Your cost can also vary depending on the size of your business. Small businesses may be able to find a less expensive basic plan, while larger businesses may need to upgrade to a more expensive standard or premium plan.
It’s important to note that the cost of accounting software can vary greatly, so it’s important to compare different systems and plans to find the best fit for your business. You can choose a basic system and add à la carte options such as project management or CRM, or you can choose an all-in-one system that includes everything you need.
If you’re on a budget, you can reduce costs by opting for a less expensive plan, choosing à la carte options or only paying for the features you need. You can also save money by signing up for an annual subscription.
Compare Costs for Popular Accounting Software:
- OneUp: $9 per month
- Sage Business Cloud Accounting: $10 per month
- Xero: $13 per month
- Zoho Books: $15 per month
- FreshBooks: $15 per month for up to five clients
- AccountEdge Pro: $15 per month
- ZarMoney: $15 per month
- Neat: $200 per year
- Intuit QuickBooks: $15 per month (for the first three months, then $30 per month)
