Evaluate small business accounting services to find the right solution for tracking money, analyzing profitability, and organizing financial transactions for tax time. The best accounting software offers affordable pricing tiers and has a clean, user-friendly layout. Additionally, several options provide free accounting apps for startups and freelancers with advanced versions available as your company grows.
This list of the best accounting software outlines each provider’s bookkeeping features, customer support, and cost. To help you compare solutions, our guide breaks down pricing structures, tools, and capabilities and outlines how to set up your accounting system.
Guide to accounting software
The best accounting software for small businesses can reduce errors, streamline taxes, and save time. According to the U.S. Chamber of Commerce's report, Empowering Small Business: The Impact of Technology on U.S. Small Business, finance management tools for accounting, payroll, and payment processing are the most widely adopted technology applications in small companies.
But choosing accounting services that meet your needs and budget can be challenging. This guide explores cloud-based accounting software costs and goes through what to look for, whether you’re a contractor with basic bookkeeping skills or an owner with several entities.
How much does accounting software cost?
The average cost of accounting software for small businesses ranges from $7 to $300 per month, with base plans running around $50 monthly. According to a Capterra pricing report, 47% of surveyed buyers “budgeted less than $210 per month.” You can find free accounting apps with limited features or enterprise versions with sophisticated capabilities for well over $300 monthly.
However, the price of accounting software depends on your business model and what you want to accomplish. High-end systems with enterprise resource management (ERP) and accounting cost more than bookkeeping software with invoicing and expense tracking.
Factors affecting the price of accounting software
The best affordable accounting software for small businesses offers tiered pricing with entry-level plans that include core bookkeeping features for recording income, expenses, sales, and purchases. Slight differences in how the vendor approaches usage limits, feature add-ons, and users can impact accounting software costs.
To narrow down your bookkeeping service options, create an accounting software price comparison list that looks at these factors:
- Payment frequency: Like many software-as-a-service (SaaS) subscriptions, you can save money by paying for one or more years. But not all accounting services offer refunds if you cancel early.
- Free trials vs. discounts: Some vendors provide steep introductory discounts, but you lose the sign-up discount if you choose a free trial.
- Number of users: Small business bookkeeping apps may limit the number of users per tier or allow unlimited access, including free logins for your accountant or bookkeeper.
- Usage limits: Some accounting subscriptions require an upgrade if you hit the billable client or invoice limits, even if you don’t need the features in the next tier.
- Integrations: If your accounting software lacks native integrations with payroll processing or other business systems, you may end up paying another monthly fee to connect these programs.
- Add-on modules: Cloud-based accounting solutions may offer add-ons for payroll, inventory management, or advanced analytics, which increase your costs.
In addition to the monthly or annual price of accounting software, consider any one-time or ongoing costs. For example, if you are switching software providers, you may pay a data migration fee to transfer accounting or payroll data. Also, factor in time and wages for backing up your files, training, and implementation.
Must-have accounting software features
The top accounting software solutions support accounts receivable and accounts payable processes: your company’s expenses, income, purchases, and sales. Most also facilitate standard business transactions like estimates and invoices. However, feature functionality varies widely between basic and advanced accounting software. Here’s what you need to know.
Core accounting software functions
All small business accounting software includes core features for bookkeeping. Journal entry forms record transactions like sales or purchases, a general ledger stores all financial activities and tracks balances, and a chart of accounts (COA) classifies income, liability, asset, and expense transactions.
Many platforms support cash and accrual basis accounting methods. Most use double-entry accounting, which complies with generally accepted accounting principles (GAAP). It’s less common to find systems that allow single-entry recording.
When comparing accounting solutions, consider the following:
- General ledger: Basic tools provide a general ledger suitable for most business types, whereas others can be customized to your business model. For example, you could set up classes for different income streams, like subscription fees and consulting sales.
- Chart of accounts: Many accounting apps provide a COA with predefined account categories. Others support advanced customization for sub-accounts or categories for stores, departments, or regions.
- Journal entries: All accounting software supports debit and credit journal entries, but some systems allow complex calculations for depreciating assets or allocating amortization expenses.
Online bank connections and reconciliation
Small business accounting apps may sync to your company bank account. Some offer limited bank integrations or require users to import CSV files. Others automatically import transactions from multiple bank accounts.
Sophistication levels vary among bank reconciliation tools. With simpler bookkeeping solutions, you may need to import bank data and manually match transactions. Conversely, automated reconciliation features match bank activities to general ledger entries and flag discrepancies.
Income and expense tracking
All accounting systems help businesses track income and expenses. However, some solutions offer additional automation features that are especially helpful for tax season prep.
Look for accounting software with capabilities such as:
- Email and mobile receipt uploads: When you use the best accounting software for tracking expenses, you scan receipts with your smartphone or send them through email. The platform extracts key details, matches them to an existing entry, or creates and categorizes a new one.
- Import and auto-categorize transactions: Accounting software can use customer or vendor profiles and historical data to categorize activities from bank and credit card accounts and third-party tools, like point-of-sale (POS), payroll, or e-commerce platforms.
- Set up recurring bills: Some bookkeeping tools for small businesses let you create recurring expenses for monthly subscriptions or bills and will automatically generate and record the entry on the correct date.
- Intelligent category recommendations: Some software will suggest account categories based on patterns. For example, if you begin receiving monthly payments from a customer, your accounting app might suggest classifying entries under recurring or subscription revenue.
Invoicing
Invoicing comes with almost all bookkeeping apps, including free accounting software for startups and freelancers. At a minimum, you can manage basic client profiles, upload your logo, see paid and unpaid invoices, and add standard net terms.
However, if the bulk of your income comes from billing clients, whether business-to-business (B2B) or subscriptions, check out features that the best accounting software for managing invoices offers:
- Customization: Vendors provide customizable templates, color options, and custom fields. But some software offers more design flexibility with highly visual, brandable creator tools.
- Status tracking: Manage B2B collections and cash flow with visibility into partial payments, overdue invoices, payment history, and draft, sent, viewed, paid, or overdue statuses.
- Discounts and promotions: This feature lets you apply bulk pricing, tiered, or early payment discounts. Advanced tools may support automation based on volume or payment method.
- Tax calculations: Automatically calculate taxes based on your client’s location or the services or products sold. Some accounting apps support multistate or international tax compliance.
- Recurring payments: Set up recurring payments with daily, weekly, monthly, quarterly, or annual frequencies. Some systems can automatically adjust based on dates or terms.
- Multiple payment options: Top accounting systems offer pay-now buttons, ACH transfers, credit card payments, PayPal, or direct bank transfers.
- Payment terms automation: Set payment terms and automate reminders to alert clients of upcoming due dates or past-due statements.
- Custom billing: Create invoices for installment, milestone, or stage-based payment terms, with options for custom, full, or partial billing. Invoices display the remaining balance and total paid.
Financial reports and advanced reporting tools
Accounting platforms typically provide standard financial reporting tools and templates with most subscriptions. Customization options, the level of detail, and report types vary. For example, you can view key financial metrics and run basic reports like profit and loss, cash flow statements, and balance sheets. However, simple reporting tools may lack advanced options for analyzing trends over time or filtering by project, account, or location.
The best accounting software for financial reporting pulls more information from your general ledger and uses additional financial metrics to provide deeper insights. These systems may offer accounts payable and accounts receivable aging, expense trend, profit margin analysis, and comparative reports. Some have tax-specific options and let you segment the data in ways that make the most sense for your business goals, model, and industry.
If you want small business accounting software for handling taxes, look for solutions that provide IRS tax forms and tax-specific reports.
Mobile access
Not all cloud-based accounting software offers mobile apps for iOS and Android devices, but you may be able to use it through a mobile browser. Functionality also varies, with some accounting services providing robust mobile features, whereas others have limited tools.
Service-based business owners and freelancers may want accounting apps that let them send estimates, quotes, and invoices. It’s also convenient to snap and send photos of receipts or other financial documents, view key financial metrics, and track time or miles.
Accountant access
Many small businesses handle day-to-day accounting tasks but may hire a business accountant for advisory purposes or need professional assistance when seeking external funding or dealing with the IRS. Most small business accounting software allows accountant access, but permission levels and collaboration features vary. Compare accountant options when reviewing bookkeeping solutions, or if you work with an accountant during tax season, ask if there’s anything you should consider.
Accounting integrations
Accounting software integrations can make a big difference as your business grows. Support for multiple payment gateways and credit card processors can help you get paid faster. Integration with customer relationship management (CRM) systems gives customer service teams real-time payment histories.
Syncing accounting software to your POS system, e-commerce platform, and inventory management tools reduces manual data entry and errors while providing insights that help you respond quickly to market, economic, or customer changes. Likewise, small business accounting software with payroll integration boosts operational efficiency and improves reporting accuracy.
Advanced and industry-specific accounting features
All-in-one accounting solutions offer advanced features on step-up plans or add-on modules, allowing small businesses to manage many accounting tasks from a single app. According to Capterra, 68% of software buyers “prefer integrated accounting suites instead of standalone bookkeeping solutions.”
When comparing accounting services, consider options such as:
- Tax management: If you want small business accounting software for handling taxes, look for solutions that provide IRS tax forms and tax-specific reports.
- Inventory accounting: Choose accounting software with inventory management tools to track the costs of goods, stock levels, purchase orders, and suppliers from one app.
- Project tracking: Consider project accounting features that help you track billable time, improve estimates, and monitor budgets.
- Bill management: If you need help managing accounts payable, some accounting platforms offer bill management features, including payment reminders, automatic payments, and detailed reports.
- Budgeting and forecasting: Use AI-powered accounting software to set detailed budgets and forecast future performance for cash flow, revenue, and more.
- Asset management: Accounting systems with asset management features help small businesses maintain cost records and calculate depreciation for property and capital investments.
- Multi-location: Businesses with multiple locations or branches need accounting software for tracking financials separately while providing consolidated views.
- Payroll management: Accounting services with integrated payroll features allow companies to run payroll, manage employment taxes, and maintain records.
What to look for in accounting software for a small business
When looking for the best accounting software for your small business, aim for affordable tools to solve your current challenges and support your company as it grows. Many accounting services offer several pricing tiers; some have add-ons or app marketplaces, allowing upgrades as needs change.
To understand what features and functionalities you need, consider the financial tasks and workflows that you spend the most time on, like those prone to errors or involving repetitive data entry.
In addition to accounting features, consider the following factors:
- Simple setup: Look for onboarding wizards, step-by-step guides, templates, and tutorials that help you and your team configure your accounting software and learn the layout.
- User-friendly: Accounting platforms for small businesses should be easy to navigate with clean, uncluttered user interfaces, easy-to-read reports, and customizable dashboards.
- Customer support: See if accounting services offer in-app support and in-depth knowledge bases with videos, tutorials, and community forums. Check for support hours and channels like email, live chat, and phone.
- Automatic backup and security: Review the data security measures and automatic data backup options to ensure cloud-based accounting systems use encryption and two-factor authentication.
- Compliance and audit support: Some bookkeeping apps provide up-to-date tax compliance information and track every change made in the general ledger.
- User roles and permissions: This administrative option ensures employees can access data to do their jobs without risking sensitive information. It’s also helpful if you outsource accounting tasks in the future.
- Industry-specific needs: Consider how well the accounting software, including add-ons and integrations, aligns with your business sector or model. For example, retailers may prioritize accounting tools with inventory management, whereas construction businesses may prefer software with project tracking and job costing.
- Customization and scalability: Assess higher-tier plans to see if you can adjust tax settings, personalize invoices, add new income streams, automate workflows, and generate detailed financial reports.
- User reviews and reputation: Review testimonials and reviews from business owners in similar industries to see how they rate customer support, system reliability, and ease of use.
How to set up accounting software
Many small business accounting services provide onboarding guides or in-app wizards that help new users set up their bookkeeping software. Startups with minimal records can get started quickly. However, if you’re tracking inventory, adding payment processing, or customizing settings, prepare to spend several hours.
Here’s the general setup process:
- Create your company profile. Provide your business name, address, and employer identification number.
- Select your accounting method and fiscal year. Most vendors offer cash or accrual, but some provide a modified cash option. The fiscal year is the 12 months for tracking finances. It can start on January 1 or any date you choose.
- Set up a chart of accounts. Most accounting apps provide a template with common categories based on your accounting method. You can add accounts and, in some cases, sub-accounts.
- Enter opening balances. Choose the beginning balance date and input the current trial balances for all accounts. Next, add all outstanding customer invoices and unpaid bills you owe to vendors. You will also need to enter or import the debits and credits related to the opening balance.
- Connect bank accounts. Follow the accounting software instructions to link your bank accounts for automatic transaction updates.
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