Best 6 Accounting Software for Small Businesses for 2023 (Reviewed and Ranked)

How to choose accounting software

The six finest accounting software options are shown below, but if these are the top options available, how can you choose which one will work best for your company? You should consult your accountant or other financial expert first to get their opinion. Then, with your accountant, assess software using the following standards:

Price.

The monthly cost of accounting software can range from practically nothing to several hundred dollars. We advise using free software primarily for freelancers, solopreneurs, and small firms because it typically has less features than expensive software. Larger companies should budget far more each month or perhaps consider outsourcing to a virtual accountant.

Accounting and bookkeeping features.

 Accounting software should, at the very least, integrate with your company’s bank accounts so you can keep track of every financial activity. Even the most basic financial software ought to have functions like mileage tracking, bank reconciliation, spending and income monitoring, and invoicing.

Automation.

Every time you accept money or make a bill payment, the majority of paid accounting systems will automatically create journal entries for your chart of accounts. Others automatically sync with your payroll software to keep your accounts in order. Some automatically reconcile your bank accounts. In theory, the more automation, the more time can be saved, but the cost of your program will also increase.

User-friendly interface.

The number of bookkeeping functions in your program is irrelevant if you can’t figure out how to use it. Sign up for a demo or free trial to get a feel for the program and determine whether the user interface makes your financial life simpler or more complicated before committing to a plan.

Number of users.

Finding software that allows you to add numerous users is probably not something you need to worry about if you’re a solo entrepreneur. (Normally, even the most affordable base plans should give you and an accountant free access.) However, if you aren’t the only person in charge of managing the finances of your company, you should look at software that enables you to add numerous users, possibly with varying permission levels.

Prior to reading our top reviews, you might want to understand a little bit more about accounting and bookkeeping. Our small-business accounting handbook is a good place to start.

This buyer’s guide will cover everything you should be concerned about during your search while looking at accounting software, from a tiny firm that may need an off-the-shelf choice to a huge enterprise that demands a great amount of financial management flexibility.

You will learn more about the following subjects from this guide:

Accounting software: What Is It?

• Key Elements
• Primary Advantages
• What Do You Need for Your Business?
• Should Your Accounting Be Outsourced?

What Is Accounting Software?

Accounting software, at the very least, keeps track of financial activities to record profit loss and enhance overall cash flow and firm finances. General ledger (GL), accounts payable (AP), and accounts receivable are among the fundamental functions (AR). Payroll services, purchase orders, payment reminders, and bank transactions are examples of typical supplementary functionalities.

Many industries have specific functionalities or criteria for financial management, such as DCAA compliance for government contractors, task costing for construction companies, or fund accounting for charities.

Additionally, there are several methods of accounting, such as single-entry and double-entry accounting.

Accounting software and ERP are frequently used interchangeably in larger enterprises. The appropriate software will give you the data management capabilities you’ll need for precise account balances and enable you to be prepared for tax season..

Features of Accounting Software

Basic categories of company accounting software features and applications include standard (usually present in all accounting software), industry-specific (present in just some types of accounting software), and advanced functionality (only used by mid-sized to larger businesses).

While there are numerous top accounting software features that can help your company, let’s concentrate on some of the fundamentals.

Core accounting:

Creates financial reports for your company and includes tracking of revenues and expenses. includes sections for a general ledger, accounts payable, and accounts receivable..

Payroll:

oversees the administration of employee compensation, including payroll, direct deposits, check printing, and tax reports on compensation.

Billing & invoicing:

Pay bills and monitor, prepare, and send outbound invoices to clients for work completed. Include the sales tax data. Online credit card or ACH bank transfers can be used to collect payments from customers.

Bank reconciliation:

attempts to automatically match bank and accounting records after importing bank records, frequently in real time..

Inventory management:

On the balance sheet, track inventory as current assets. Keep track of your cost of sales on your income statement..

Purchase Orders:

creates the accounting record that is given to suppliers when they purchase goods or services. includes details on the price, quantity, and kind of the goods.

the most frequently requested extras

Payroll, inventory management, and invoicing are the top three functions that clients want.

Payroll, inventory control, and invoicing were identified to be the most sought-after extra accounting capabilities that buyers hunt for in addition to the “core accounting” of accounts payable, accounts payable, and a general ledger in our recent analysis on buyer trends for accounting software.

Benefits of Accounting Software

You will undoubtedly discover both positive and negative aspects of employing any company software solution. The greatest accounting systems will reduce the drawbacks of manual processes, but you should be prepared for some technology drawbacks as well.

Numerous Integrations With Other Business Software Are Available

Businesses who lack an all-encompassing (all-in-one) software will attempt to integrate multiple software to satisfy all of their application demands. A typical illustration is having separate inventory tracking software and bookkeeping software.

There may not be any extra applications like payroll, sophisticated reporting, or more intricate inventory monitoring in commercially available software that performs fundamental accounting. When these accounting features are required, many customers might not have the resources to connect the programs until that time comes.

A straightforward, low-cost program might do for your accounting requirements in the short term, but if you anticipate needing later-on extra features (like payroll service, client portals, or a better user interface), you might be better off going with more sophisticated software right now.

Different products can communicate with one another using integrations or APIs. For instance, your payroll system may notify your HR team of any processing difficulties using a chat software (like Slack). Your accounting system may get fresh receivable entries automatically from your payment processor. Financial resources could be shared with BI systems via your accounting software.

Expect the majority of products to have improved inter-software communication capabilities. While some accounting software may aim to be a “all-in-one” solution, others will concentrate on excelling in a small number of key areas and offer integrations to additional tools that they believe complete their program.

Software developers are doing everything they can to make consumers’ desires for functionality that is more in line with industrial requirements a reality.

Despite the fact that a super-niche business might not have a software solution created just for them, keep an eye out for specialized vendors. These businesses take great delight in integrating particular software solutions into particular surroundings and will provide adaptations or add-ons for a generic product to get it closer to what the business needs on a daily basis.

High Level of Customizations Are Available

Many businesses will attempt to compromise functionality in favor of a more affordable solution. Sage 50c, Zoho Books, and Quickbooks Online are excellent low-cost solutions for young enterprises, but they lack the ability to tailor the program to your operation.

Frequently used accounting software alterations include:

• Customized reports
• dashboards based on roles
• individual data fields

Record Information in the Field With Mobile Apps

In terms of user numbers, mobile web browsing won out in 2016. Naturally, utilization has resulted in increased commercial requirements.

Accounting software producers have reciprocated, particularly in industries like construction and field service that call for on-site analysis. Additionally, this makes it simpler than ever to accept credit card payments in the field.

Utilize Business Intelligence Features to Access Comprehensive Financial Performance Statistics

There has been a staggering 42 percent growth in end customers wanting to examine business intelligence software during the previous five years (2012–2017). Almost every industry uses business intelligence software.

The productivity of consultants must be tracked by project and company. Retailers must monitor profitability for each SKU. New account objectives are set by financial institutions for personal bankers.

Lease Accounting Standards Update

The Financial Accounting Standards Board (FASB) recently released a new standard on lease accounting in an effort to enhance financial reporting.

Every asset having a lease duration of 12 months or more needs to be listed on a balance sheet. This applies to the tools, structures, cars, and other assets that your business leases.

The revised standard is now in force for fiscal years and interim periods commencing after December 15, 2018, for public firms, and after December 15, 2019, and after December 15, 2019, and intermediate periods within fiscal years, for private companies.

Read more on our lease accounting software guide.

What Accounting Software Does Your Business Need?

Finding a new solution is driven primarily by the need to create financial management reports with your data, use mobile apps, locate new support vendors, or choose the least expensive cloud-based accounting option.

From project to project, different purchasers will have different wants and motives. There are many different kinds of buyers, but the most fall into the groups listed below.

New Buyers and Small Businesses

New purchasers will probably want a simple solution that will help them manage their finances and pay their bills quickly and automatically. 37% of the businesses we surveyed are making their first purchase of accounting software. Many small business software customers wanted more features than their current options, which may be anything from a manual bookkeeping method (pen and paper) to a well-liked entry-level solution like Zoho Books or Sage 50c (Peachtree).

In terms of user numbers, mobile web browsing won out in 2016. Naturally, utilization has resulted in increased commercial requirements.

Existing Users Looking for Features Outside of Core Accounting

More than 20% of consumers claimed they require more software for invoicing, inventory management, and payroll. Enterprise business accounting software frequently has these features. A growing organization also has more users in the system, which means that if your team isn’t adequately trained, vendor assistance may be required more frequently.

Growing Companies

Businesses that need a sizable number of users or that oversee many organizations are more likely to look for small business ERP software that offers a full range of functionalities in addition to accounting.

In a survey of larger firms, business intelligence (BI) packages or software that handles sophisticated budgeting and forecasting were sought by more than 70% of respondents. Additionally, larger organizations stated a desire for fund accounting tools and a procurement management system.

Additional feature importance for large companies

than 50 employees needed budgeting and fixed asset management as part of their accounting software.

Outsourced Accounting Services vs. Using a Software In-House

get by without even using accounting software and can instead outsource its accounting needs to a nearby CPA or accountant. Owning your own software internally almost always leads to demonstrating a larger ROI, even though the services provided by these professionals are typically of a higher quality.

There are situations in which using an outsourced service is the greatest choice, and there are situations in which having software will be more effective in the long run. Three crucial angles determine the best course of action.:

Your staff’s skillset: Do you have the technical resources to deploy the software? Can you handle integrating with any other solutions?

Your risk tolerance: Are you comfortable managing the financial records of your business, or would you rather use outsourced services to worry about that?

The cost: Does the combined cost of software and cost of time spent using the software outweigh the cost of paying for a firm’s services to do the work for you?