The Best Small Business Accounting Software 2022

What is accounting software and how does it work?

Gerri Detweiler

Accounting software allows small business owners to record their business’ financial transactions for tax and accounting purposes. More importantly, it can help you produce financial statements, cash flow information, and other tools to help you understand the financial health of your business.

Most accounting software today allows you to import transactions from your business bank account and automate certain tasks. You will be able to create and track invoices, inventory, and accounts receivable or payable. Many will offer additional services such as payroll and the ability to accept online payments (ACH or credit cards) from customers.

If your accounting is up to date, you can produce financial statements to gain insight into financial performance or to help your business qualify for small business loans.

Note that even though we use the word “software” here, most of these programs are cloud accounting programs, which means that there is no software to install on your computer and you can access your accounts from anywhere. Mobile accounting apps can make it even easier to stay up to date on

Why does every small business need accounting software?

It is possible for a very small business with few expenses and little income to do without accounting software. Tax preparation software may be sufficient to report a company’s profits and losses on tax returns. And other tasks, like creating and tracking invoices, can be done manually.

But this creates extra work and you risk making mistakes.

For the vast majority of small businesses, accounting software will be essential to ensure income and expenses are tracked correctly. Tax time will also be much easier whether you do it yourself or hire an accounting professional. The sooner you set up your accounting software, the easier it will be for you to track your business performance.

You can hire a bookkeeper or accountant to set up accounting software for you, but it’s a good idea to keep control of the account so you can review the information and retain the ability to switch accountants if you wish.

6 Most Popular Small Business Accounting Software

There are many accounting software packages available, some of which specialize in specific industries. However, most small businesses will be able to find a good solution among the following 5 best accounting software. The best small business accounting software is ultimately the one you use.

Quickbooks

Intuit Quickbooks is popular accounting software and it comes in several flavors including Quickbooks Online, Quickbooks Self Employed, and Quickbooks Online Advanced. You can also purchase additional products such as payroll, payments, and time tracking.

Although the learning curve may be steeper, many accountants and bookkeepers use Quickbooks, and the company can refer you to certified professionals who can help you set up your chart of accounts, complete your bookkeeping, or provide additional information. other accounting services.

Xero

Popular with very small businesses, Xero is an affordable accounting program with a robust mobile app.

Sage Accounting

Sage is one of the original accounting software and offers plans for very small businesses as well as growing and medium-sized businesses. It is based in the UK, and although it has many users in the US, there are times when it can be somewhat confusing for those users. Your accountant, on the other hand, may know and love Sage.

fresh books

Freshbooks is known for its robust invoicing tools, but it’s also an affordable cloud-based double-entry bookkeeping solution that’s popular with freelancers and independent contractors. But it can also be used by businesses with employees, and it has added features like a customizable chart of accounts.

Vague

Offering free billing and accounting has helped Wave stand out from the competition. Wave earns money with optional paid products: payroll, payment processing and consulting. It’s easy to use and can be a solid option for startups and very small businesses.

Zoho Books

Zoho Books is an online accounting software focused on automation and workflow. It offers many pricing plans, including a free tier for businesses with annual revenue of $50,000 or less. The free tier is quite robust and includes tools like automated payment reminders, online payments, and bank reconciliation. Zoho Books can also integrate with Zoho CRM, a customer relationship management system.

Cheapest Small Business Accounting Software

The cheapest accounting software for small businesses is Wave or the free Zoho Books plan for businesses with annual revenue under $50,000. Both are free unless you need to add paid services (such as payroll) or upgrade to a paid plan (in the case of Zoho Books).

Of the two, Zoho Book’s free plan offers more accounting tools and app integrations, but Wave doesn’t cap the earnings of the free plan. While both are a good choice for some micro businesses and sole proprietors, growing businesses may find they need a more robust solution.

It will be easier to upgrade from Zoho Books free accounting plan to a paid version. If your company’s accounting needs become more sophisticated and you outgrow Wave, you may need to switch accounting software.

The Easiest Small Business Accounting Software

Freshbooks, Wave, and Zoho Books are all known for their ease of use. They have easy-to-use interfaces that make it easy for entrepreneurs (including new business owners) to get started.

If you’re going to hire an accountant or bookkeeping professional to help you with bookkeeping or taxes, they’ll need to be familiar with the bookkeeping software you’re using, so be sure to talk to them about the right solution for your business. . It is also possible to hire a professional to help you set up your accounting software and provide basic training if you prefer to do your own accounting.

The Most Complete Small Business Accounting Software

Quickbooks is probably the most complete and scalable accounting solution for small businesses. It offers a variety of upgrades to provide the business with the solutions it needs as it grows.

Can you use Excel for accounting?

If you have very simple and limited business income and expenses, know accounting principles, or work with an accountant who will enter your information into accounting software, you may be able to work from Excel. or Google Sheets.

For most small businesses, however, it’s wise to start with accounting software that will allow you to track your business’s financial activities and monitor your business’ financial health.