Top 5 Accounting Software for Small Business in 2017

FreshBooks: Top Accounting App

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Many accounting software solutions are more similar than different in terms of features. Standard modules include general ledger management, invoicing, and payment processing.

So aside from key features, when choosing the best accounting software for small business in 2017 consider these other aspects: ease of use; compatibility and integration; and security. More importantly, you should prefer a cloud based software SaaS model if you’re a small player.

SaaS accounting gives you flexibility like customizing processes, integrating third-party apps, and scaling pricing based on your current needs. As SaaS cloud based software solutions drive the whole cloud service industry to a $244 billion total value this year (Gartner), the features are getting more robust, sophisticated, yet easier to deploy and use more than ever.

In particular, SaaS accounting solutions are helpful to small businesses in times of regulatory upheavals. For instance, when the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) finalize a new standard on revenue from contracts with customers, many accounting systems have to be updated to match the new set of standards. If you’re using a cloud solution, the system upgrade is taken care by the vendor.

In this article, let’s compare five top accounting software that are most useful for small business, which includes freelancers, consultants, micro-enterprises, and fairly established small companies. We’ll also include reliable inexpensive and even free solutions for companies with a limited budget for their bookkeeping and accounting needs.

If you’re instead interested in solutions more suitable for large companies you may want to check out our list of top 5 accounting software for enterprises.

 

Best Accounting Software for Small Business

Here’s what our experts found to be the most reliable accounting solutions on the market:

  1. Freshbooks – overall best accounting software for small business with great scalability and freemium
  2. Xero – recommended for Mac users
  3. QuickBooks Online – most widely used but features are limited
  4. Zoho Books – with most complete basic features but which you can easily outgrow
  5. Wave – best freemium with a wide range of features

1. Freshbooks

FreshBooks won our Best Accounting Software Award for 2016

Freshbooks is our category leader ideal for freelancers and small business owners. It is well-balanced in terms of key features, inexpensive pricing, and support. For this, it is granted our Best Accounting Software Award for 2016 and the Supreme Software Award for 2016.

One of its main strengths is its scale depth. From an inexpensive basic plan to more complex feature suite including time tracking and expense management, the software can grow with your needs. Likewise, aside from its cloud invoicing, reporting, and payment processing, Freshbooks has a reliable API and tax management add-ons.

It also has the most responsive mobile app with a clean interface accessible to Android, iPhone, and mobile web users.

Freshbooks also offers great customer support. You can get in touch with the vendor via phone, online, knowledge base, and video tutorials. It is worth noting that the vendor responds to user reviews, which shows its proactive approach to ensuring customer satisfaction.

The accounting app features advanced security tools including HTTPS and multiple location data backup.

The vendor offers a great free trial plan that allows you to easily try out the software first. You can sign up for Freshbooks free trial here.

2. Xero

xero

Xero has almost similar interface and feel as QuickBooks Online, but with more features. It is perfect for QuickBooks users that are thinking of transferring to a more robust accounting solution.

Xero stands out among our top choices of accounting software for one thing: Mac integration. Unlike other solutions that only feature a plugin, Xero has a Mac module that natively connects to the Mac UI.

Other key features are integrated payroll module, balance sheet, bank reconciliation, expense claims, dashboard, financial reporting, inventory, and invoicing.

The software, however, doesn’t have direct relationship with US banks, but this should not be a major obstacle once you’ve set up the software with your bank.

The vendor offers a great free trial that you can use to test all the key features offered by this solution.

3. QuickBooks Online

Perhaps the most popular online accounting software that can cater to the needs of small and developing businesses as it does to the ones of large enterprises is QuickBooks Online.Thanks to its intuitive interface and large variety of scalable functions, the well-reputed system proved to be very useful for small and medium market players looking to manage accounting operations end-to-end. At the moment, QuickBooks Online is trusted by more than 2 million satisfied users.

QuickBooks Online combines power and usability in a compact, visually attractive package that functions equally well for beginners and experienced accountants.

The system automatically syncs your complete business finance profile to one single dashboard where multiple users can view in-depth reports and accounts of your company. Next, it creates trade, profit and loss sheets as well as billing and invoice solutions that are all mobile compatible and print friendly. QuickBooks Online also comes with over 40 reports including Profit-Loss Statement, Balance Sheet, and Cash Flow Statement, includes inventory management and budgeting capabilities, and integrates with  QuickBooks Online Payroll and Intuit GoPayment.

Mind that the software lacks full support. Instead, you may need to tap a third-party QuickBooks-certified accountant for a fee to fully optimize the solution.

4. Zoho Books

zoho books

Zoho Books is one of the top accounting software for small business. It is most ideal for micro-businesses as the app has the most extensive basic accounting tools among our five options, perhaps, in a close matchup with Freshbooks. The only difference is Freshbooks lacks customizable templates.

Key features include automatic bank feeds, automatic payment notifications, online collaboration with customers, invoice tracking, reconciliation, time tracking, API, inventory management, and automated workflows.

It is also noteworthy that the software comprises the Zoho productivity and business suite. For one, it can natively integrate with more than twenty-five Zoho apps.

Like Freshbooks, Zoho Books offers a comprehensive support network of phone, online, knowledge base, and video tutorials.

But the software has no freemium plan, which starts at $9 monthly fee.

5. Wave

wave

Wave is the most comprehensive freemium for basic accounting. This online accounting software for small businesses is ideal for freelancers, consultants, or small business with nine or fewer staff. Note that the app has display ads.

Day-to-day office processes and simple financial reporting are easily handled by Wave. These include balance sheet, profit-loss reports, invoicing, and receipts. It can also manage payroll and direct deposit. But cash management is difficult for lack of cash flow reporting or the ability to track bills and payments.

Likewise, Wave is so basic that should your cash transactions get complex, you may need to migrate to another accounting software. If you are prepared for this small inconvenience, Wave is a useful freemium for companies with tight budgets.

 

Comparison of Freshbooks, Zoho Books, Xero, Wave, and QuickBooks

Ease of use

All five accounting software are easy to use. They have clean interface that’s easy to navigate. Furthermore, even non-accountants can figure out at once the workflows and tools. All have quick onboarding process aided by intuitive tutorials.

Likewise, all solutions are accessible via Android, iOS, and web. Among the mobile apps, we find Freshbooks the most responsive.

Another important aspect of ease of use is, when the software is familiar to many users. This means new accounting hires or external users are likely familiar with the software.

On this note, QuickBooks Online is hands down a winner. The software is part of the QuickBooks ecosystem, the “standard” entry accounting system for small business. It is used by over one million accountants; one of whom may be your future staff or consultant. We also note Xero and QuickBooks Online have almost similar interface, so shifting from one to another poses little problem.

Takeaway: All our small business accounting solutions are easy to use, but Freshbooks has the better mobile app, while QuickBooks Online is most widely used.

Key Features

When it comes to range of features, Freshbooks and Zoho Books top their class. Both have a wide array of accounting tools that are not always present in most small business accounting software. These include API, expense management, and data import.

If features is a numbers game Zoho Books tops our list. Aside from the unique features it shares with Freshbooks, Zoho Books has purchase orders, custom fields, balance sheet, and timesheets. However, it lacks multi-currency support and receipt management which are offered by Freshbooks.

For general accounting use, Zoho Books appears a good choice with its full range of features. But if your accounting requires time tracking—maybe not now, but tomorrow—Freshbooks is the best choice. Having a time tracker lends to small businesses the option to beef up their manpower with freelancers or consultants who are paid by the hour.

On the other hand, where QuickBooks is the most popular, it has the least number of features. You will quickly outgrow its invoicing and balance sheet as your business grows.

Takeaway: Zoho Books has the most number of features, while QuickBooks Online has the least.

Compatibility and Integration

Xero has the most number of integrations among our five accounting apps. It integrates with around 252 apps including important and popular apps as G Suite, MailChimp, and PayPal. Not only that, if you’re a Mac user you’ll love Xero.

While other accounting solutions provide Mac integration plugins, Xero has a built-in Mac module. It is designed to work with the Apple interface. Its native integration is superior to clunky plugins of Windows-based accounting software like Zoho Books and Wave.

Even as QuickBooks has a Mac app or Wave has a plugin compatible with Mac OS X Sierra, they cannot match Xero’s Mac architecture, which maximizes Mac cool features like fast boot-up and clean graphics.

Meanwhile, all accounting software have Zapier integration except Wave. Zapier connects to over 750 apps; as such, Wave has greatly limited its extensibility.

Takeaway: For sheer number of integrations Xero is the winner, while Wave is the biggest loser in this area.

Price

When it comes to pricing, Wave is the most cost-effective. In fact, it doesn’t cost a dime. But unlike many free apps, Wave has a good set of features like invoicing and receipt scanning on top of core accounting.

If you only need the basic invoicing, credit and debit card transactions and profit/loss reporting, Wave offers these for free. The only drawback is there’s no cash flow management and payment processing. Plus, the app has display ads.

On the other hand, Freshbooks has a very useful basic plan that may be a better fit. It has limited features, but good enough to manage three clients. Moreover, as your business grows you can easily scale its features, too, to accommodate more cash transactions and generate reporting. With Wave, you definitely need to migrate to another app as your company demands more sophisticated accounting features.

The rest of the accounting solutions don’t offer freemium plans. QuickBooks has the highest price point entry at $10 per month, followed by Zoho at $9 per month and Xero at $7 per month.

Takeaway: Wave is the most complete freemium, while Freshbooks has a freemium scalable to your needs.

Support

No matter how intuitive the software is, one way or another you’ll need support. Generally, the more support channels the vendor offers, the better the service. In short, the vendor makes support accessible to different sets of customers.

The more support options you have the better. That’s why Freshbooks and Zoho Books ace this spec. Both have phone and web hotlines, plus they have robust knowledge base and intuitive video tutorials. Their onboarding is also smooth and quick.

Moreover, browsing through review sites, we note that Freshbooks is the most consistent in replying to user reviews both positive and negative. This signals to potential buyers the vendor’s sincerity in building relationships with customers.

Meantime, Xero and Wave have no phone support, while QuickBooks has only knowledge base. QuickBooks’ case is unique when it comes to support: it has over 20,000 QuickBooks certified third-party consultants who can help you for a fee.

Takeaway: Freshbooks and Zoho Books have the best support network.

Security

Security is paramount in accounting. Sensitive financial data must be kept secure at all times. On this note, Zoho Books and Xero excel. Both have payment certifications, data encryption, data backup, and authentication control.

On the other hand, Freshbooks lack complex authentication for access control and payment process validation, such as, Payment Card Industry (PCI), Data Security Standards (DSS), and SOC 2. These limitations may not necessarily compromise your business barring highly classified records. For instance, access control is only critical to small business with third-party users, while PCI is only optimized for companies with client-supplier network that heavily depends on credit card transactions.

Takeaway: For complete security blanket, Xero and Zoho Books are good options.

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9 Comments »

  • Sarina Mandal says:

    I enjoy using Wave Accounting. I started with them and then moved to QB Online and then went back to Wave Accounting. It has improved a lot over 5 years, I highly recommend it!

  • Ginny West says:

    As a freelance accountant I’d say it is not as easy to take advantage of SMB tools as their vendors like to put it. As a matter of fact, I’ve tried several of those myself, but still had to work around them to make sense of my data, and they didn’t get much further than spreadsheets, to be honest. Does any of these systems actually fit sole accountants?

    • Alex Hillsberg says:

      You are right to assume that accounting technology designed for freelance and corporate use is rarely the same, and without knowing this, it is more than likely to end up paying for features one doesn’t need. The good news is that You, as a sole accountant, are not excluded from the best-in-breed accounting landscape!

      Many of the systems we’ve reviewed are just cut for freelancers, with configurable billing & invoicing, automated tax calculations, integration with all major banks, and of course – reports and metrics that comply with your needs. A large portion of them are also extremely affordable, but so that you stay on the safe side, we recommend you to look exclusively at online and cloud-hosted technology. Pick natively integrated systems instead of hiring a developer to build software connections from scratch, and pay attention to scalability so that your prospective system can handle sudden workload spikes.

      At this point, you shouldn’t exclude any of the products discussed in this list, but rather compare their features in detail to determine which one works the best for you. We’d probably hit off with FreshBooks or Wave, as they both offer a no-commitment freemium plan, and you can check whether they fit without investing in them.

  • Malcolm Fariz says:

    We are running a local gardening service business, and weren’t exactly lucky picking up a standalone billing service. We looked mostly at tools with multiple levels of service, but we couldn’t find an SMB-friendly plan that automates accounts payable. Pay-as-you-go was not an option either, as we’re working more or less with the same clients. Which system would you suggest?

    • Alex Hillsberg says:

      It is exactly SMB-friendly accounting systems that invest the most in efficient billing & invoicing technology, as larger companies are usually looking at tools they can integrate with their bank service providers, and handle payments from their original accounts. The challenge is, as you noticed, to get a standalone and restrictions-free product, or at least one where you don’t have to pay recurring fees each time you cross a predetermined limit.

      Looking up the list, we’d probably begin with Wave – their billing & invoicing services may not have the bells & whistles QuickBooks does, and you may not be able to infuse that much branding material in your docs, but they’ll get the job done for free. Zoho Books is the next-to-the-best service, as it lets you bill 25 clients for as much as $9 a month. FreshBooks, QuickBooks, and Xero are slightly more expensive (pricing starts at $15) and restrict their low-tier package to a smaller number of billed clients, but they will suit you perfectly if you want to customize and categorize invoices, and to report on your billing activity.

      Note that all five providers on this list offer a free trial of their product, and you can test them in advance to pick the right solution for your needs.

  • Rudy Ramirez says:

    Frankly, I’d think twice before entrusting financial data to a free-to-use service, probably even the freemium ones you mentioned. To make my point clear, I have nothing against cloud-based technology, in fact I could not imagine doing business without my smartphone, but when it comes to financials I still vote for local hosting. No bad experience with these solutions though, the choice’s up on you!

    • Alex Hillsberg says:

      You are absolutely right to believe that sensitive information must only be entrusted to reputed and premium providers. However, the affordability of a system and the safeguarding of customer data are not mutually exclusive, as this is how all vendors turn first time users into loyal clients.

      Security matters are among our prioritized criteria when comparing and listing suggestions, and they played a role when picking the 5 products above. They all use bank-grade data encryption technology and comply with leading safety regulations, and will assume full responsibility on eventual safety breaches as soon as you become their client. With data being hosted in cloud, and accessible only with valid credentials, you won’t risk losing it even if something happens to your device. With locally hosted solutions, however, you will need a dedicated team to work around your security network, and to keep an eye 24/7 to prevent a crash or an intruder.

      Plus, most of these systems offer additional security layers to be managed on your behalf, including 2-factor authentication, role-based access, audit logs, and a historical overview on all changes being made to your data.

      • Amanda says:

        I am using Xero for three years already, and I never encountered a security issue. I’ve logged in from several devices, and each time I got a unique code sent to my mobile phone to access the account, there is no way to get around that. From what I know, they are also backing up data on several locations, so I see no reason for you not to consider it.

  • Ferrin L Harker says:

    Which of the five systems analyzed supports a manufacturing environment best?

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