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Best Small Business Accounting Software for 2016

See our top picks for the best accounting software for small business

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Best Accounting Software for Small Business

If you're looking for the best accounting software, you're not alone. Dealing with finances is something that most of us have to do in either our personal lives, business affairs or both. Low and behold, it can be quite a daunting ordeal in either capacity, which is why many business owners turn to technology to expedite the process.

The various software applications on the market are designed to make financial management speedier, easier, and more accurate, which takes much of the strain off your personal workload. The challenge is choosing the best business accounting software for your specific needs. I've sorted through the options and compiled a list of the top 5 programs for keeping your company's finances in check.

Best Small Business Accounting Software: What to Consider

These days, you can choose from a wide variety of business accounting software providers and packages. However, it is important to work out what you want and need from your accounting software so that you can identify the most suitable option.

There are a number of different areas to consider before making a decision. Of course, cost is usually the first factor that comes to mind but there are also other significant aspects to mull over. Saving a few dollars on an inferior program could cost you much more in the long run in errors and additional man-hours.

My review of online accounting software is written with small businesses in mind so be aware of that point when analyzing the different features of each one. This focus is intentional; Forbes reports that 78% of small business in the U.S. will be utilizing cloud-based computing by the year 2020. With that being said, there are a number of factors that you should take into consideration in order to help you make a more informed choice.

Some of these areas include:

  • The features that are offered and how suitable they are for your business needs
  • How the software can increase efficiency and make time and financial management easier
  • What platforms the software can be used on, such as mobile device or desktop
  • The cost of the software
  • Ease of use

A Closer Look at the Best Small Business Accounting Software

My analysis showed that the best software performs a wide variety of functions and has the option to customize the platform based on the individual organization's needs. Select one that offers a minimum of the following capabilities.

1. Generate Business Reports

Business reports are the primary way organizations can keep a close eye on the details that otherwise might be overlooked. Choose accounting software that lets you view your finances at a glance, tie your bank account value into the summary reports and offers a range of report formats (balance sheets, categorized transactions, payments, etc.) QuickBooks, for example, has a feature called one-click reports. With one click you can get a Profit & Loss Sheet, a Balance Sheet, and a Company Snapshot, which you can take directly to your accountant or business partners.

Accounting software that allows multiple users access to the data is also great for file sharing, sending out company memos and reviewing feedback.

2. Roll through Payroll

If you feel like you're wasting precious time doing payroll the old fashioned way, then seriously consider investing in business accounting software. You can set up an automatic payroll on many accounting platforms like QuickBooks Intuit. Better yet, by setting it up this way, you'll save time later on down the road when it's time for taxes!

3. Monitor Projects and Tasks

Wondering what your team is up to? With accounting software, you can incorporate users and allow them to input their projects or tasks. Employees can document team activities, reviews, and log their operations. The information can then be transferred to a number of other reports to paint a comprehensive picture.

4. Share Files

File sharing has never been easier. Accounting software that allows multiple users access to the data is also great for file sharing, sending out company memos and reviewing feedback. Who needs email when this way is so much faster?

5. Manage Invoices/Send Alerts

Invoices have a direct correlation to the revenue coming in to a business, which should be an indication of their importance. With the right small business accounting software, you'll be able to manage your invoices with just the click of a mouse. Find a program which can track the status of invoices whether they're paid, sent or pending. Sage One, a leading accounting software that ranked on the MSP top five list even lets you set alerts and reminders to ensure that everything gets taken care of on time.

6. System Requirements

Make sure that the system platform you're using is compatible with whichever software you select. Generally, you'll need access to the internet on one of the four common browsers (Chrome, Internet Explorer, Firefox, and Safari).

Mobile devices should also be checked to ensure compatibility, as many business accounting tasks can now be performed on the go. Most supplementary mobile programs have some limitations when compared to their desktop counterparts, however you can still perform a range of functions. Record expenses so that you don't have to worry about lost receipts, send invoices before you even get back to the office from a job, and give your employees discreet access to tasks without showing them everything in the books.

These features are basic components of a bookkeeping/accounting software. They allow your business to operate at peak performance and make use of all the tools available. Now that you've pinpointed exactly what features sound appealing and relevant to your organization you'll be able to make a decision. Review my list of the top five accounting software programs for more details.

How to Evaluate the Cost of the Best Accounting Software for Small Business

One thing you want to think critically about before making a final decision on your business accounting software is the real cost of its use. The price is one thing, the cost is a separate issue altogether. According to a survey by Capterra, a web-based business software resource, 52% of respondents noticed a decrease in accounting errors simply by implementing software use for the task. You want to hold on to as much of this savings as possible.

It's important to have a clear picture of your company's goals in order to make an accurate estimate of future costs for functions like payroll and tax filing.

Even with the many user-friendly out-of-the-box and cloud-based accounting programs available, there can still be some unexpected expenses that may arise. Aside from the actual initial or monthly investment, also investigate the following so you can make a good long-term choice:

  • Additional Features: Low-tier pricing generally means limited features. What other functions might you need as you grow your business, and how much extra will they add to your bill?
  • Expansion Capacity: Some programs cap out at a limited number of employees, for example. It's important to have a clear picture of your company's goals in order to make an accurate estimate of future costs for functions like payroll and tax filing.
  • Updates: Does your choice of the best small business accounting software charge for updates? Some do, and some provide them automatically at no charge.
  • Downtime: Cloud-based (or SaaS - Software as a Service) accounting requires the internet to be working. What will the financial impact be on your company if there's a lengthy outage?

Each one of the top accounting software programs in my review meets slightly different business needs. Evaluate which one will be best for your bottom line over the long haul - not just at the moment you click "subscribe".

The Best Small Business Accounting Software

Intuit Quickbooks Accouting Software Review

  • Pros
  • Established and well-known name
  • Easy to use and ideal for businesses
  • A range of packages to choose from
  • Ability to add on a range of valuable features
  • Software saves you time and makes financial management easier
  • Cons
  • If you purchase the most basic package you may need to pay for additional modules or upgrade your package

Intuit QuickBooks is a very well- known name in the world of accounting. It's a popular choice among business users who require top accounting software that is efficient, simple to use, and offers an array of features. You can look forward to all sorts of capabilities from this software, such as invoicing, tracking expenses, payments, reporting, and more. It can also be used effectively across device platforms including tablets and smartphones.

If you opt for the most basic version of this software, you will be able to perform a wide range of functions but won't have access to more advanced features unless you add on additional modules. This is something that you should take into consideration when selecting your software, as you may find that the basic version doesn't offer all the features that you need.

There are three versions of QuickBooks Online available, from which that you can select based on your needs. This includes the Simple Start version, the Essentials software package, and the Plus version. Each one of these become progressively more advanced in terms of features so you can select the one that is best suited to your requirements.

Using this software has many benefits. From saving you valuable time when it comes to sorting out your finances to making all aspects of your financial management easier. There are many additional services available for business users, such as payroll and payment processing. You can add these on to your package if and when you feel you want them.

The many benefits that come with this accounting software make it the perfect choice for business of all sizes. In addition to being a solid and reputable name in the world of software, Intuit has also earned an impressive A+ rating with the Better Business Bureau. However, before deciding whether this is the right accounting software for you, it is important to consider the pros and cons.

Freshbooks Accouting Software Review

  • Pros
  • Designed to be simple and easy to use
  • Offers a range of valuable features
  • A choice of packages to suit different needs
  • Cloud based, which means easy access from other devices
  • Excellent customer service that has won awards
  • Cons
  • The software isn't designed to handle inventory in large volumes

Simplicity, ease of use, and a range of valuable features are just some of the great benefits that come with using FreshBooks cloud accounting software. When you use this software you can also select from a variety of optional add-ons, which means that you can effectively customise it to suit your business needs. While FreshBooks is not suitable for handling large volumes when it comes to inventory, it can prove invaluable when it comes to invoice management and timesheet management.

You can also use this software from your mobile devices, which means greater flexibility and ease for those on the move. There are several account options that cater to different needs, including the Seedling account for the management of up to 25 clients, the Evergreen account for unlimited clients, and the Mighty Oak account.

When you choose FreshBooks you will be able to look forward to excellent levels of customer service, as this is something for which the small business accounting software maker has actually earned several awards. FreshBooks really simplifies account and financial management, which means less time being tied to your desk and more time to focus on other areas of your business.

When it comes to consumer reviews this software has scored an impressive 5 out of 5 on Knoji.com as well as earning an excellent A+ rating from the Better Business Bureau.

If simplicity, easy access, and a wide range of packages is what you are looking for, give FreshBooks accounting software a chance.

Sage One Accounting Software Review

  • Pros
  • Cost effective software with a range of features
  • Cloud-based software that can be accessed from any device with browser access
  • Perfect solution for freelancers and start-up businesses
  • Simple to use
  • Impressive consumer reviews and an excellent A+ BBB rating
  • Cons
  • This software is not designed for larger businesses, as its features cater to start-ups and freelancers

Those who are keen to find accounting software that is both easy to use and extremely efficient will find that Sage One is the ideal solution. This accounting software offers a range of different features including payment processing, task management, invoice creation and project tracking amongst others.

It is worth noting that this software is designed for individuals like freelance professionals or start-up enterprises rather than larger businesses. This does limit its reach somewhat. However, if you do fit into the freelance or start-up categories this could be a very effective accounting software solution.

Created by Sage Accounting, this program gives you the type of assurance that you can only get from an established and reputable provider. Invoice customization, payment status tracking, and payment processing services are amongst the other features that are offered by this software. Data is all fully encrypted and secure, and it can be accessed from any web connection for greater flexibility. This is a cloud-based system, which means that getting access to your data is quick and easy from a variety of devices.

As the software is designed for start-ups and freelancers, you don't have to worry about being bogged down with features that you will never need, which helps to increase simplicity and ease of use. The software has an impressive 4 out of 5 from consumers on Knoji.com and an excellent A+ rating from the Better Business Bureau.

As a small business or a freelance professional you will find that this software could be perfect for your needs, as it offers a range of valuable capabilities coupled with simplicity and ease of use.

Zoho Books Review

  • Pros
  • Affordable solution for very small businesses
  • Choice of pricing plans
  • Simple to use
  • Some compatibility with other Zoho products
  • Wide range of features
  • Cons
  • No payroll capability
  • Limited certified advisors
  • No middle-range option for contacts

Zoho Books isn't the most famous small business accounting software, however the company has actually been around since 1996. In that time, Zoho has created a suite of other products like Zoho Invoice, Zoho Reports, and Zoho CRM, plus many more business management programs. Zoho Books was introduced in 2011.

When it first began, this online accounting software offered one price point - $24/month - which included access to all its features. Since then, the company has created three tiers, priced at $9, $19, and $29, following in the footsteps of the industry standard by customizing the tiers to the level of service you need.

At the $9/month Basic level you get 50 contacts, two users (which Zoho specifies as one use and one accountant, although you can designate any level of access you choose), and five automated workflows. Standard is next, and allows 500 contacts and three users, plus 10 workflows. The top tier offers unlimited contacts and users, and 10 workflows.

In my observations, I deduced that the true beauty of Zoho Books lies in the fact that it's one of the few small business accounting software programs that gives sole proprietors, freelancers, and micro-business owners just what they need. This fills a market void because many entrepreneurs end up overpaying for complex features they simply don't need and won't use.

Consumer reaction indicates that the larger the business, the greater the likelihood of encountering some situations requiring a workaround - such as not being able to move products between accounts. But unless you're subscribing to the top tier, which includes inventory capability, you're unlikely to encounter these issues. Larger businesses may want to choose a different online accounting software solution anyway, since there is no integrated payroll in Zoho Books.

Features that do receive huge accolades from users are the extensively customizable invoicing options as well as tools that make managing recurring clients a breeze. Customers are also happy that they don't need an accounting degree to use the software - setup is simple. In addition, mobile access makes it easy to do business on the go.

With affordable pricing, 24/5 phone, chat, and email support, and a laser focus on features that genuinely small businesses actually need rather than overkill, Zoho Books easily made my list of the top 5 best accounting software programs for small business.

Xero Review

  • Pros
  • Multiple price tiers available
  • Comprehensive record organization
  • Over 500 add-ons
  • Unlimited users
  • Superior inventory tracking
  • Cons
  • Lowest price tier not sufficient for most people
  • Better choice for those with some accounting software experience
  • No phone support

Xero, released in the U.S. in 2011, is a young hotshot in the world of business accounting software reviews. That hasn't stopped this stylish, complex program from a quick ascension into the elite category of top accounting software programs. With a deeply organizable interface, 24/7 support, and a world of third-party add-ons, Xero is taking the task of financial management for small- and medium-sized business very seriously.

One of the best, and most unique, features of this program is that every pricing level includes unlimited users. This is due to the fact that it's a cloud-based system - so you can give anyone the login without having to pay for extra licenses. This alone sets Xero apart from many of its popular competitors. Another attractive feature of Xero is that it excels in inventory tracking. In fact this element has been so lauded that Sleeter Group (a network of accounting professionals) has an in-depth breakdown of just the inventory function on its own.

Of course, as with virtually all small business accounting software reviews there are a few downsides. The first thing I noticed is that the pricing is a bit confusing. While the much-advertised monthly fee for the lowest tier is touted as $6.30, this is only for the first six months, as is the case with all of Xero's pricing levels. Each one offers a 30% discount for this time period, then you'll pay full price.

The second issue is that the lowest tier, which after the first six months runs $9/month, is scarcely sufficient for anyone except some freelancers. This level is called the Starter Plan and it only comes with five invoices, five bills, and 20 bank transactions per month. The gap between Starter and Standard is large. Standard ($21/month for the first six months and $30 thereafter) comes with unlimited invoices, bills, and banking transactions, as well as payroll for five employees, direct deposit, and much more. From Standard on up the features only become more bountiful, as do the prices, topping out at $126/$180 for the Premium Plan 100.

Xero is a great choice for the business owner with a little bit of software knowledge. The setup can be long and intricate due to the comprehensive records entry, but once everything is up and running this is a solid cloud-based accounting solution with a lot to offer.

Best Online Accounting Software - Cloud-Based Security

You probably also have questions regarding the safety of sensitive company data, which is a valid concern in today's global world. But as accountant Daniel Rissen points out in The Guardian on the issue of cloud-based computing, any system - even a locally hosted one - can be vulnerable. Therefore, proper precautions should be used no matter what type of data storage you choose.

What about the Best Free Accounting Software?

While there are some options for free accounting software for small business, these programs have limited application in the context of growing your company. Most business owners are interested in progress, growth, and expansion rather than sitting stagnant.

The challenge with free accounting software is that you will very likely outgrow its capabilities too quickly to make it worth the effort. If you plan to increase your revenue, add employees, and/or utilize more complex functions over time, it's better (and affordable!) to choose from one of my top picks of the best online accounting software.

Best Accounting Software for Small Business Recap

The needs of every business vary when it comes to accounting software. By working out exactly what you do and do not need from your software you can more easily determine which of these options is going to be best suited to your specific needs.

In order to keep client relations healthy, you'll also want to use the best CRM software. Once you've got your system in place, learn how to obtain capital with the best small business loans.

Best Small Business Accounting Software FAQs

What if I lose my internet connection?

If you lose your internet connection, then you won't be able to access any web-based accounting software like Sage and QuickBooks. The bright-side is that if you're using cloud-based accounting software, you can access your information and data from another computer that has an internet connection. So in last minute scenarios, that might mean going to a coffee shop for Wifi or anywhere a signal can be reached. What's more, the great thing about cloud-based software is that it automatically upgrades the version when a new one is released and all the data backup is taken care of for you by the host server.

Will my information be private?

The data and private information you input into any of the accounting software programs on our list is not guaranteed to be private because that is solely in the control of the companies. With that being said, they do go to extensive measures to provide top of the line security features. QuickBooks, for example, uses the same technology that online banks and brokerages use to submit personal data via the internet. In addition to those measures, they create two copies of your data which is backed up on their internal servers which have firewall protection and antivirus tools. To learn more about the specific safety features of another company, refer to their support page.

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In order for MoneySavingPro to remain a consumer free service, many of the companies covered in our industry reviews compensate MoneySavingPro for new sign ups.

However, the results of our comparison tools, the rankings of the providers and the information presented is not affected by compensation. Indeed, many of these companies approach us for an advertising partnership after we have already written a published their reviews.

While we try to research and review as many providers as possible in the 100+ industries we cover, we have not reviewed every company available.

Our rating system is independent of compensation and reflects our true understanding of the industry and the company based on a variety of factors. The companies that receive the highest rating will always be the providers that we believe offer the best value to the consumer.

Advertiser Disclosure

In order for MoneySavingPro to remain a consumer free service, many of the companies covered in our industry reviews compensate MoneySavingPro for new sign ups.

However, the results of our comparison tools, the rankings of the providers and the information presented is not affected by compensation. Indeed, many of these companies approach us for an advertising partnership after we have already written a published their reviews.

While we try to research and review as many providers as possible in the 100+ industries we cover, we have not reviewed every company available.

Our rating system is independent of compensation and reflects our true understanding of the industry and the company based on a variety of factors. The companies that receive the highest rating will always be the providers that we believe offer the best value to the consumer.