Last Updated on by
Payroll, invoicing, taxes… I don’t think I’ve ever met a small business owner who actually enjoys them.
You’d rather focus on growing your business.
Luckily for you, there are some amazing tools out there developed specifically for your situation.
Typically, these focus on features like:
- Creating and sending invoices
- Accepting payment
- Paying employees (payroll)
- Inventory management
- Reporting overall profit and loss.
I’ve tested out many of these over the past few years and wanted to share a list of the best tools out there.
These tools are not in any particular order. They all have their own strengths and weaknesses.
The best one will depend on your specific situation, but I’ll guide you through the accounting tools that are likely the best for you.
QuickBooks Online is separate from the desktop version of the tool, and it has different pricing.
I opted to focus on the online version because you can use it on any operating system or browser.
The Simple Start plan gives you a lot of the essentials for a small business:
- Creating and sending invoices
- Income and expense tracking
- Creating and managing estimates.
One negative, compared to most other tools, is that it can get expensive if you need to pay a lot of employees.
You’ll have to pay extra for the payroll component. The base fee is $25.00 or $80.00 per month, plus a $5 fee for each additional employee. You can pay staff through printable checks or direct deposit.
If you pay the higher amount, all your tax work is done for you. I still think that’s a great price to pay, but there are other software options if the price is an obstacle for you.
Overall, the positive is that the tool is incredibly easy to use, which means you won’t spend hours trying to figure out accounting terms and what they mean. You just customize some basic settings and it does most of the work for you.
You can quickly create invoices and assign them to customers:
The software keeps track of whether or not they’ve been paid.
Finally, I mentioned that there’s also a desktop version. Here are the differences:
It’s more expensive, less accessible, and only has 2 minor extra features compared to the cloud version. However, some people prefer the desktop version as internet access is not needed to use it.
FreshBooks is one of the simplest accounting software applications that focuses on small business accounting.
It’s also web-based, so you can use it on any operating system or browser.
Besides the simplicity, FreshBooks has most of the things you’ll need most.
Creating invoices takes minutes, and let you collect payment online:
It also has time tracking built-in, which can be useful if you charge clients based on the time you spend working.
Finally, it lets you invite team members and clients to join Projects:
Projects are essentially message boards tied to specific clients, which is nice if you don’t want to have to use an additional tool like Trello or Slack.
What about the negatives?
There’s one big one to me: FreshBooks does not support payroll. It suggests using a third party service for that.
Depending on your business this may or may not be a big deal, but if you need payroll options, try a different tool.
Xero has an uncommon approach to small business accounting.
With any of Xero’s 3 plans, you get just the essentials, but tons of flexibility with integrations of other services (I’ll come back to that).
On the basic plan, you’re very limited. You can only send up to 5 invoices or quotes, and reconcile just 20 bank transactions.
In most cases, you’ll have to upgrade to at least the $30.00 per month plan.
The good news is that the features offered are implemented well. Invoices are again easy to make and send:
One aspect that could a be a negative or positive to you is the 500+ integrations.
You can integrate a wide variety of apps into Xero. For example, Insightly’s CRM, Harvest for time tracking, and Shopify for E-commerce.
Some work perfectly, others will give you hassle — and then you’ll have to wait for support. That’s always the drawback of integrating other apps; Xero cannot control how they function always (and they can change at any time).
It’s great if you have a unique setup of multiple apps that you want to tie together, but I personally would rather have all the features I’m looking for built-in already.
Zoho takes a unique approach to accounting software, which is why I included them here.
To start with, the pricing is cheaper than most. Even on the Basic plan, you can add up to 50 Contacts, which are your customers. You can create and send invoices to them.
On top of being web-based, there are also mobile applications for IOS, Android, and Windows.
There are two big unique features that Zoho offers:
- The ability to add accountants. They can use Zoho’s features to make their life easier and give you a simple way to keep track of what’s going on.
- A really big feature – automation.
In Zoho, you can automate things like classifying bank transactions or sending emails based on if you’ve sent a proposal to a client.
There are thousands of combinations you could come up with. For example, you could create a workflow automation that sends you an email alert a day after a proposal was sent, telling you to follow-up.
The big downside with Zoho is that if you need more than basic invoicing, but don’t want to dedicate time to learning about automation, you won’t get much out of the tool. There’s no payroll functionality built-in, and the time-tracking isn’t very comprehensive.
Pricing: $0.00 (not a typo)
Wave is truly the modern small business accounting option.
It has a unique business model that lets it offer a tremendous amount of value for free.
Wave Accounting is free because it tries to connect businesses (like yours) with services that they would like. For example, good insurance deals or mobile services. It’s just a simple tab in the tool, not an intrusive pop-up or anything like that.
This is in line with the other tools, and actually a small amount cheaper.
As far as the features, all the essentials are built-in. You can:
- connect your bank accounts and credit cards
- create invoices
- accept payments
- generate reports and balance sheets.
That being said, Wave focuses on simplicity. There aren’t as many advanced features or depth as in the other tools we’ve looked at. For example, you can’t edit reports or automate tasks like in Zoho.
If all you’re looking for is a simplistic, low-cost accounting tool, start with Wave. If you find that you need more power, try another option.
Pricing: 10.00/mo for the Sage Accounting Start plan
Sage is focused on simplicity. It doesn’t require any prior knowledge of accounting.
- They provide full compliance
- You’ll have access to 24/7 web chat for support
- iOS and Android mobile apps enable you to manage cash flow, invoicing, and banking on the go. (Requires the $25/month plan)
Video: Denise Zannu, owner of Black Mermaid’s Bath and Body, explains how Sage has benefited her small business.
The $25/month plan enables you to:
- Generate quotes and invoices
- Record bills you’ve received from vendors and see what you owe
- Track and manage inventory
Sage also provides a large marketplace of apps that can integrate with its software. These are organized conveniently into categories like data integration, expenses and receipt capture, reporting and forecasting, and payroll and HR.
Sage is very easy to use and it will scale with your business.
I know it can be daunting to try and choose from the variety of accounting tools available.
But look at it this way. Spending another 10-20 minutes looking at your favorite tools will save you several hours every single month.
Get through it now, and you won’t have to worry about accounting for a long time.