Compare and choose the accounting software best suited to your needs. Find out how to choose the best accounting software with our step-by-step guide.
The best Accounting Software for SMB’s and entrepreneurs
Quickbooks is a 100% online accounting and invoicing software developed by the California business software firm Intuit. Today Quickbooks has over 4.5 million users worldwide. Read our review of Quickbooks.
- Comprehensive record-keeping software
- Easy to share information with your accountant
- Easy to find QuickBooks experts and online resources if required
Sage is a multinational enterprise software company which develops accounting and invoicing management tools for entrepreneurs. Read our opinion on Sage Business Cloud Accounting.
- Double-entry accounting
- 100% online
- Affordable monthly costs
Wave Accounting is free accounting software for freelancers and SMB’s The product has limited features however with no project management features and limited time tracking. Read our opinion of Wave Accounting.
- Easy to use for freelancers and small businesses
- Unlimited income and expense tracking
Xero is a technology company that provides cloud-based accounting software for small and medium sized businesses. More than just accounting software, it also provides automatic bank feeds, invoicing and more. Read our review of Xero.
- Reasonably-priced plans
- Unlimited number of users and clients
- Integrates with more than 700 third-party applications
Plooto is a Canadian firm founded in 2017 to develop accounting and financial tools for SMBs. They offer an automated accounts payable & receivable software solution that helps businesses quickly collect payments. Read our review of Plooto.
- Unlimited users, customers, approvers, and bank accounts
- Easy it is to set up clients and send payments
- Process both bank or credit card payments for receivables
Kashoo is simple cloud accounting for small business owners who want the control and simplicity of doing their own books. Formed in 2009 in Canada, Kashoo has over 150,000 subscribers across 180 countries. Read our opinion of Kashoo.
- Easy to use for freelancers and small businesses
- Unlimited income and expense tracking
Accounting software: Your guide to choosing the right one
Accounting software: Definition and useful reminders
Accounting software is a computer program that assists bookkeepers and accountants in recording and reporting a firm’s financial transactions.
It allows businesses to automate part of their accounting tasks and maintain your company’s accounts, whether this involves estimates and invoices, supplier management or all general accounting operations.
It is a solution not only to help companies meet their obligations in terms of business accounting, but also a management tool as it can save time in your daily operations, monitors company’s cash flow and finances thanks to the various reporting tools available.
Accounting or pre-accounting software: What are the differences?
When we refer to accounting software for many of the products in our comparison, we’re actually referring to pre-accounting software.
The method of preparing your data for accounting is the primary focus of pre-accounting. It is basically the painstaking process of sifting over bills or invoices, arranging them, and inputting all of the information into a worksheet or software program. This may be a very time-consuming task. The minute a purchase is made, it will get underway.
Good to know: Many products below are pre-accounting software that allow businesses to manage most of your accounting but stop short of creating the balance sheet and income statement.
This is the case, for example, of Quickbooks, which allows users to very simply manage all of your pre-accounting needs and collaborate with your accountant. Other products allow users to proceed fully through the accounting process.
Accounting software is a term that used to refer to software dedicated only to software used by accountants. However, since most accounting software today is used by both entrepreneurs and their accountant, there isn’t much difference these days.
In summary, the term “accounting software” encompasses all of these solutions.
Is accounting software required?
Accounting software is not mandatory, but it is strongly recommended for companies to save time, avoid errors and facilitate administration requirements.
Micro-enterprises will be able to survive without such software, however there are many affordable accounting software options for these firms.
Some firms are tempted to use Excel but the use of Excel may not be compliant for some businesses, fraud is easier to conduct and mistakes are more likely to happen.
How does accounting software work?
Accounting software works quite simply using an online interface or a downloaded product, in which businesses will use different modules to keep the accounts up-to-date.
Common modules include quotes, invoices and cash flow. The processing of the latter is facilitated by bank connections, which facilitate the management of customer and supplier invoices and expense reports in particular.
In your accounting software, you can import or create your chart of accounts, which lists all of the company’s accounts.
From the accounting entries (automatic or manual) and the chart of accounts, the software can then produce the elements necessary to keeping your accounts in good standing.
This includes the journals, general ledger, balance sheet, income statement and the appendix for the companies, book of receipts and expenses for entrepreneurs.
To comply with legal obligations, the accounting software is also capable of producing accounting files in the event of an audit by the tax authorities, a document which lists all the accounting records including the:
- Journal code and description
- Account code and description
- Title and number of the accounting entry
- Debit or credit amount
- Accounting entry number
- Posting date
- Date and reference of the supporting document
Types of accounting software
Apart from the functional differences noted above (pre-accounting versus full accounting), there are two main types of accounting software:
- Online accounting software (SaaS)
- Accounting software downloads
The common trend today is the movement away from the purchase of a license and the single workstation to more and more online accounting software tools due to the various benefits including:
- Accessibility from anywhere
- Data security
- Collaboration with your accountant
- Up-to-date legislation software
- Annual or monthly cost lower than purchased software
- Lower contract commitments
The benefits of accounting software
There are the 4 main advantages of using accounting software:
- Efficiency and time savings: The automation of accounting entry and receipt collection tasks but also the management of sales tax or invoices will save you and your accountant a lot of time.
- Collaboration: Whether your accounting is conducted internally or outsourced, accounting software allows you to centralize data and the distribution of tasks and collaboration amongst staff members is facilitated.
- Less risk of error: The use of software greatly reduces the risk of errors (duplicates, incorrect entries) and the loss of data, allowing your business to comply with the regulatory authorities.
- Management of your activity: Monitoring tools and reminder and alert systems allow you to better manage your activity in real time and are a valuable help in the daily management of your activity.
What types of companies use accounting software?
All types of businesses use accounting software including freelancers, professionals and SMB’s who can save precious time and don’t have the expertise to conduct this in-house.
Large enterprises use accounting software also, either through their internal teams or via their accountants.
Lastly, it should be noted that there are different types of accounting software, with tools and features specialized per requirements of the business.
Accounting software features
The list of functions of each software can vary significantly however there are some features that are common to most of these software including:
- Creation or import of the chart of accounts
- Document creation
- Cash monitoring (manual entry, via import of statements or automatic)
- Allocation of banking operations
- Quotes and sales invoices
- Purchase invoices
- Management of expense reports (and receipts)
- Accounting entry
- Sales tax management
- Alerts and reminders
- Export of files
- Access for the accountant
Users can also edit the balance sheet and income statement as well as mandatory accounting books (journal and general ledger) directly, which are primarily of interest to companies that manage their accounting internally.
How to choose accounting software?
The following are the essential selection criteria:
- Legal status, size and sector of your company activity
- Type of software, ease of use and features
- Value for money
- Data storage and security
- Ecosystem and integrations
Your legal company status can have a direct impact on your accounting obligations, and especially the difficulty you will have in keeping your accounts yourself.
Certain professions including pharmacists, doctors, dentists do not have the same accounting obligations as large enterprises and the accounting software functions should cater for these obligations.
Company size and industry
The size of your business will influence your choice of accounting software in two ways:
- Maintaining your bookkeeping will easier or more complex
- You’ll have different levels of resources dedicated to your accounting requirements (i.e. a dedicated chartered accountant or only internal staff members).
Your company revenues, the management of expense reports, employees, the number of suppliers or customers will also influence the complexity of your accounting, and sometimes the price of your software.
Good to know: A large company may require custom-made accounting software whilst small small businesses will find it easier to find suitable software.
Finally, the sector of your business activity will also have ramifications for your choice. Do you manage an online store and have a lot of product feeds? If so, it will be necessary to choose accounting software with a bank connection and connection to your third-party tools ( CRM software, payment systems).
Do you run a business or a restaurant? You will need software connected to your cash register software. Construction businesses may need to consider software with certain business features including time tracking, site tracking and materials tracking.
Type of software
Choosing the right accounting software also means choosing software that users won’t hesitate to use. It’s up to you to choose according to your preferences including:
- Online or download (and on Mac or Windows)
- Mobile or not
We have a preference for online accounting software which is often simpler, updates automatically and can be used from anywhere. However, some users prefer downloading their accounting software.
If you opt for a solution to download, do your research as accounting software for Mac computers is not as common as Windows PC’s.
With regard to Mobile, if you like to edit your quotes and invoices or manage your accounting on mobile, this will be impossible with downloaded software.
Features and needs
Having many functional features is often a major criteria when selecting the best accounting software for your business.
The accounting software features that can make a difference to what can make a difference in your choice include:
- Management of fixed assets and stocks
- Cash management
- Levels of customization
- Multilingual functionality and currencies
- Integrations with ERP, CRM or payroll software
- Multi-site management (subsidiaries and branches)
Businesses will have to think carefully about the extent of their current and future needs before choosing the solution that will work best for them.
Good to know: Most accounting software companies offer free trials (30 days in general) and a product demonstration.
User friendly interface
Many businesses are looking for simple accounting software. It is recommended to test the accounting software and see if you can use the interface without the need for support or training (which may have a cost with some products).
Value for money
The budget is often considered the main criteria for choosing accounting software for many businesses however there are a number of factors to think about when reviewing the price.
The question to ask yourself is to know how much is my time worth? i.e. As an entrepreneur, freelancer or business owner, if you find free accounting software but you have to spend 2 days a month on it, how much would you be ready to pay to spend only 2 hours per month?
Similarly, the question remains the same if you hesitate between software at $40 per month and software at $15 per month.
When comparing accounting software, don’t just compare the price, also remember:
- Free accounting software is not necessarily the best long-term solution (updates may be required)
- ‘Free software’ is not 100% free (with limited functions on the most basic package)
- Is free software capable of supporting your business growth?
- Paid software is often more technically advanced, and saves more time on your accounting
Data storage and security
The security and storage of data, including yours and those of your customers is very important and businesses should choose software that respects the rules of confidentiality of their data, whilst allowing for the recovery of said data, if necessary.
In general, online accounting software is obliged to respect demanding standards in terms of data protection, confidentiality and security. Some accounting software firms offer a page dedicated to the security of the software, in order to reassure their customers.
Customers can also inquire about the availability of your data and their backup (the more regular, the better) with customer service. Finally, check that all the information you send is encrypted.
Ecosystem and integrations
This relates to resellers, partners and integrations. Depending on the type of solution you will require, this may be of interest to you or not.
For open source accounting software, the ecosystem of developers that are relevant to some customers whilst for others who download and install software, the main ecosystem of interest will be access to trainers to coach your staff on the software use.
Finally, for all software, there is one partner who shouldn’t be forgotten: your accountant. Your accountants will also use accounting software and in an ideal world, businesses should aim to use the same software, or even the same license, in order to facilitate collaboration.
How much does accounting software cost?
Free accounting software is often limited and generally saves less time than paid software.
Paid account software pricing can vary. On average, businesses can assume about $15 per month to begin with a solution such as Quickbooks with an entry-level offer for businesses.
This amount increases depending on the options you choose. As a general rule, accounting solutions offer several scalable offers: the more features you choose, the more expensive your subscription will be.
Prices can then climb up to $35 per month to manage billing, accounting, or even commercial elements. Prices can increase depending on your turnover and if you include payroll.
For downloadable software, businesses will buy a license, hence the price may be much higher. Finally, for micro-entrepreneurs, software starts at prices that can start from $10 per month.
What is the best accounting software by category?
There is no one solution that perfectly fits all businesses as there are many tools and each one with its other particular functions and features.
Best online accounting software
Online accounting software is more modern and suitable for the vast majority of entrepreneurs, freelancers and companies.
Here are a number of stand out players:
- Quickbooks is an online accounting software suitable for the self-employed and SMB’s. It is a complete software available on mobile, which allows you to manage invoicing (quotes, invoices, follow-up and reminders of unpaid bills), expense reports and to have a detailed overview of your cash flow.
- Sage Compta & Invoicing (formerly Sage One), is an accounting software for SMBs and entrepreneurs that is 100% online. Like Quickbooks, it is a complete and ideal software to manage your pre-accounting and collaborate effectively with your accountant.
- FreshBooks is accounting software that is great for entrepreneurs, small businesses, and freelancers. It’s cheap, has a lot of invoicing options, and is straightforward to use, so company owners that issue a large number of invoices will love it.
- Wave Accounting is free accounting software, however there are no project management features and limited time tracking, which may rule out many businesses. Great for Etsy shop owners and other eCommerce businesses using Wix or Squarespace
Best accounting software to download
Some businesses will still want to download accounting software (for Mac or PC). Often, these offer more features, but they are sometimes more expensive and require training for optimal use.
Here are a number of options:
- Sage 50cloud
- Express Accounts
Best free accounting software
Readers should remember that price is not everything and that the time saved must also be taken into account.
It is often this argument that will result in businesses paying a few dollars or tens of dollars per month for a paid solution, instead of a “free” solution.
Here are a number of options:
- Wave Accounting
Alternatives to accounting software?
If accounting software is not for you, there are several alternatives.
Firstly, you can manage invoicing by hand or by using estimate-invoice software and prepare your accounts by hand. By proceeding manually, the risk of errors (typing errors, calculation errors) increases however.
In addition, you must also be up-to-date with the latest legal and regulatory provisions in force as no one is going to do it for you and you will have to dedicate time for this.
The only real alternative to accounting software is to call on experts in the field: a local accountant or an online accountant.
Most accountants use common accounting software with their clients. Doing some of the tasks yourself that come with the software will simplify this collaboration and allow you to save on the price of the accountant .
The role of the accountant is to:
- Prepare the company’s annual accounts
- Analyze management, the budget process, cash flow and taxation
- Ensuring compliance with new tax instructions
- Monitor the company’s general compliance with the laws in force
- Ensure a supervisory role in the preparation of payroll
The chartered accountant also has an advisory mission and is also able to support you in creating your business.
Is it mandatory to use accounting software?
Using accounting software is recommended, but not mandatory. Micro entrepreneurs may be able to survive without it but there are many affordable tools available..
What is the best accounting software?
There is no one best software solution that works for everyone. Firms should analyze their needs prior to purchase. Quickbooks and Sage online accounting software are often cited as best suited for SMB’s.
What is the best free accounting software?
There is no complete and free accounting software. Wave Accounting and ZipBooks are free (but you will have to pay to add modules necessary for the complete management of your business).