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82% of companies fail due to poor cash flow management and subpar accounting practices. Yikes It's no secret that bookkeeping is difficult – and there's a reason people learn how to do it well all their lives.
But there is good news.
You can avoid becoming part of these statistic without going to university for a bachelor's (or master's) degree in accounting.
Enter … modern accounting software. It is designed to help even the smallest businesses improve their accounting processes, save time and make less costly mistakes.
Additionally, understanding your numbers can lead to smarter business decisions and an improvement in the overall health / performance of the company.
However, choosing the best accounting software is not easy thanks to the thousands of options on the market. Which one has everything you need without a ton of confusing features that you will never use?
If you're not sure how to answer this question, you've come to the right place. This article describes how to choose the right software, the different software types, and my top five recommendations.
The top 5 options for accounting software:
- FreshBooks – Best for freelancers and solo preneurs
- QuickBooks – Best Accounting Software for Small Businesses
- Zoho Books – Best for businesses with 50+ customers / vendors
- Sage50 Cloud – Best Desktop Accounting Solution
- Wave – Best Free Accounting Software
How to choose the best accounting software for you
There is not a single accounting solution for every company in every industry. The size and complexity of your company also play a role.
Because of this, it is important that you understand your budget and software requirements before making any decisions. To help you out, these are the criteria I considered in creating this list.
Feel free to use them as you go through the final selection process.
Number of clients, providers and users
It is important to consider the number of customers and vendors you manage as certain plans limit the number of customers and vendors you are allowed to have. So, pay close attention to the limitations of each plan before making your final decision.
In addition, you need to know how many user accounts you will also need. Some of the basic plans on this list limit the number of users to one or two.
Hence, if you need more, you may need to upgrade to an advanced plan to accommodate your needs.
Make sure the software you choose has a mobile app that you can use to manage payments, bills, and cash flow on the go. It might not seem like an important feature right now, but you never know when (and where) you'll need to access your accounts or send a bill.
The best accounting software has intuitive features to help you track invoices and a portal for your customers to use to pay you. With internal customer management tools, sales and accounting are centralized in one place to simplify the process.
It's also easier for your customers.
Billing and invoicing
Most accounting software includes billing functions, but with different capacities. Some offer highly customizable invoices, while others are easier to use with fewer customization options.
In addition, the software you choose should make paying bills as easy as possible for your customers. Some other billing and invoicing features to consider include:
- Automatic payment reminders
- Payment dates
- Late fees
- Recurring bills
- Ability to save customer information
- Payment processing options
- One click payments
Finally, consider the payment processing fees associated with each software. Most charge a set percentage plus a small fee for credit card transactions and 1% for ACH transfers.
Many modern accounting tools make it easy to categorize and store digital versions of your receipts. All you need to do is take a photo of your receipt and add it to the related expenses in your account.
However, this does not include all software. If this is your interest, be sure to choose accounting software with document management capabilities.
Linking your bank accounts and credit cards to your accounting software makes account reconciliation a breeze. It also reduces the likelihood of human error in manual input.
However, not all software offers this feature for basic plans (but all of my top recommendations do).
So make sure you choose software that includes this functionality.
It is important to consider the tools that you are already using to run your business. Why? Because the best accounting software for you can be seamlessly integrated into your tech stack with minimal effort.
Before you begin, make a list of everything you need and the tools you already use.
Then make sure that the top candidates on your list have your full requirements and the integrations needed.
You can even schedule a call with a sales rep for each accounting software to search your requirements list and make sure it can do whatever you're looking for.
The different types of accounting software
When it comes to accounting software, you have several options. Some of them are better than others, but the best choice for you will depend on your situation.
So let's go through your options before we get into my top recommendations.
Spreadsheets are a free DIY option when you are on a budget. They work just fine when you're just starting out with a limited number of business transactions.
However, they are not a long-term solution and leave a lot of room for human error.
If you're looking for a free option, I recommend Wave as an alternative.
Cloud based accounting software
Most modern accounting software is cloud based, making it easily accessible from anywhere with an internet connection.
Billing is usually monthly, is scalable, affordable, user-friendly and designed for small to medium-sized businesses.
Every option on this list falls under this category.
Database accounting software
This is a type of highly secure accounting software specially designed for corporate and large corporations.
It is very expensive and requires an in-house team of engineers and / or financial specialists for installation and maintenance.
Because of this, I did not include this type of software in my research.
Now let's dive into my top accounting software recommendations based on the size of your business and your specific needs.
# 1 – FreshBooks Review – Best for Freelancers and Solo Preneurs
If you are a freelancer, solo preneur, or small business, FreshBooks is a great accounting software. To date, they serve more than 10 million companies around the world.
The software complies with dual accounting standards and gives you a deeper insight into your finances and business transactions.
FreshBooks specializes in invoicing. However, the tool also includes features for small businesses such as:
- Time and cost tracking
- Recurring bills
- Automatic payment reminders
- Automatic late fees
- Multiple currencies
- Project management
- Customer suggestions
- Tax calculations
- Reporting and analysis
In addition, your account dashboard provides a bird's eye view of your company's financial health. It shows pending bills, total profit, income by source, expenses and unbilled time in one place.
Plus, you can manage your books on the go with the robust mobile app.
The software can be integrated with over 200 business tools such as Shopify, G Suite, Stripe, Zoom, Squarespace and Gusto. So, you don't have to worry about incompatibility with most of the tools you are already using.
However, like most accounting software, FreshBooks charges a 2.9% transaction fee + $ 0.30 per transaction for credit cards and 1% for ACH transfers. However, these fees are industry standard and you don't have to worry about additional hidden costs.
Their paid plans start at $ 6 per month for up to five clients, which makes them very affordable for freelancers, solo premiers, and small business owners alike.
However, FreshBooks can scale with other plans besides your business, including:
- Plus – $ 10 per month for up to 50 customers
- Premium – $ 20 per month for up to 500 customers
- Choose – Custom Pricing for 500+ Customers
Sign up for a free trial today to take FreshBooks for a test drive! Alternatively, you can save 50% on your first three months. However, you have to choose one or the other offer.
# 2 – QuickBooks Review – The Best Small Business Accounting Software
If you're running a small business or starting a new business from scratch, QuickBooks is a popular choice – and for good reason. In fact, over 5.6 million users around the world trust them for their accounting needs.
From small businesses to the self-employed, QuickBooks has a number of great accounting solutions to suit your needs.
In addition, depending on the situation, you can choose between a cloud-based, desktop or POS system deployment. However, I recommend the cloud-based solution for most businesses.
In addition, the online software integrates with apps such as PayPal, Square and Shopify to simplify cash flow management in one central location.
With their online solution, you can access your account anywhere via an internet connection. Plus, the mobile app lets you take pictures of your bills and receipts instead of leaving a bunch of paper receipts in your office.
You also get access to features like:
- Customizable invoices
- Income and expense tracking
- GPS mileage tracking
- Automatic sales tax calculation
- Bank and credit card integration
- Expense categories
- Standard reporting
And you can easily upgrade to an advanced plan if you grow beyond the baseline or need advanced features. Some of their advanced features include 1099 management, inventory management, and time tracking.
Regardless of what you need, there is a plan that will suit your needs.
The cheapest plan starts at $ 25 per month. And you can add payroll services to your plan, starting at an additional $ 45 per month + $ 4 per employee per month with advanced options available.
Additionally, QuickBooks charges $ 0.25 + 2.9% for invoices, 2.4% for swipes, and 3.4% for encrypted payments per transaction. Alternatively, they charge 1% for ACH transfers. And you can save up to 40% on transaction fees when you charge more than $ 7,500 per month.
Like FreshBooks, QuickBooks offers a free 30-day trial OR 50% off your first three months.
Get started with QuickBooks today!
# 3 – Zoho Books Review – Best for Businesses with 50+ Customers / Vendors
If you manage a lot of customers and vendors, Zoho Books is one of the most affordable accounting software out there. Their cheapest plan is for up to 50 billable customers, and they also have packages for up to 500 billable customers.
So you don't have to worry about going over your monthly limits.
In addition, Zoho Books provides access to powerful features such as:
- Tax compliance tools
- Custom quotes and estimates
- Automatic payment reminders
- Supplier and cost tracking
- Inventory management
- Automatic bank feeds
- Time tracking
- Customizable invoices
- Role-based access
- Over 40 integrations
Zoho Books also offers an intuitive mobile app for managing your accounts on the go. With the app you can track your mileage, reach customers, track your time, create invoices and much more.
Each plan also includes a private customer portal for accepting payments, unlimited phone and email customer support, free SSL encryption, and open REST APIs for connecting to third party applications.
In addition, Zoho offers a variety of other business tools that can be seamlessly integrated with one another. Run a subscription-based business? Or do you need an extended inventory management? You may need a comprehensive expense report for your team.
Chances are, Zoho has what you need. You can bundle tools to save money and build a custom business management system for your company.
I highly recommend starting with the basic plan ($ 9 per month) and upgrading to an advanced plan if necessary. The basic plan contains up to 50 contacts, two separate user accounts and five automated workflows to simplify your accounting processes.
Zoho's advanced plans include:
- Standard – $ 19 per month for up to 500 contacts
- Professional – $ 29 per month for 500+ contacts
All of this is very affordable for businesses of all sizes. Plus, you can add additional users and 50 automatic scans for $ 2 / month and $ 5 / month, respectively.
Sign up for a 14-day free trial to see if Zoho Books is right for you today!
# 4 – Sage 50Cloud Review – The Best Desktop Accounting Solution
Sage 50Cloud is a desktop accounting application that is seamlessly connected to the cloud. This gives you the speed and reliability of desktop software paired with the flexibility and remote access options of the cloud.
Additionally, Sage offers cloud-based accounting software so you are not limited to the desktop application if that is not your thing. However, they really shine in their desktop solution.
You can securely access your accounts anywhere, anytime, and work when and how you want. So, despite the advantages of using desktop software, you are not limited to your desktop computer.
As the best-rated small business accounting solution, it also includes features like:
- Cash flow management
- Flexible invoicing
- Recurring bills
- Pay Now functionality
- Accounts Payable + Banking
- Automatic voting
- Advanced inventory management
- Order and project cost accounting
As you can see, Sage 50Cloud includes a number of robust features that you usually have to pay extra for using the other options on this list (i.e., payroll).
And with these advanced features comes an expanded price.
So, if you are looking for basic accounting software, go for FreshBooks or QuickBooks. However, if you need these advanced features, it starts at $ 50.58 per user per month.
Their paid plans include:
- Pro Accounting – $ 50.58 per month for basic accounting
- Premium Accounting – $ 78.25 per month for advanced features
- Quantum Accounting – $ 131.66 per month for all features
However, you can save a little more by choosing an annual plan and paying in advance. Additionally, you can subscribe to Microsoft 365 for an additional $ 150 per year.
You can try Sage's cloud-based accounting software for free for 30 days with no installations or credit card required. After that, you can buy Sage 50Cloud if it is right for your business.
Get Started Today!
# 5 – Wave Review – The Best Free Accounting Software
If you are on a tight budget or need a simple accounting solution, Wave is an excellent choice. It is award-winning financial software for entrepreneurs and businesses of all sizes.
Plus… their accounting functions are completely free with no hidden fees or monthly payments. However, they do charge a standard transaction fee of 2.9% (3.4% for American Express) + $ 0.30 for credit cards and 1% for ACH transfers.
You can also add payroll services from $ 20 per month. But bookkeeping, invoicing, and receipt scanning are forever free.
This free accounting software includes features like:
- Unlimited income and expense tracking
- Unlimited employees and accountants
- Double entry accounting system
- Powerful reporting and analysis
- Bank + credit card details
- Tax categories
- Recurring bills
- Automatic payment reminders
- Unlimited receipt scanning
- Payouts within 2 working days
You will also receive unlimited email support. And if you're wondering how Wave stays in business, it's about transaction fees and payroll services. So yes. The software is truly free forever with no hidden fees.
Plus, you can download the Wave mobile app to access and manage your accounts anywhere with an internet connection on the go.
Open a Free Account Today!
I recommend FreshBooks (for freelancers and individuals) or QuickBooks (for small teams). These two solutions are suitable for most users. They are incredibly affordable, easy to use, and scalable. They also contain all the essential accounting functions.
And if you're on a tight budget, Wave is a great free alternative.
However, the best accounting software for you depends on what you need and what you can afford. So use the features we talked about while choosing the right software for your business.
What is your favorite accounting software?