How to Choose Accounting Software for Your Business
Co-Founder and Chief Data Scientist
It is high time for small business owners to adopt an accounting software solution. They simplify various accounting processes, from bookkeeping to tax preparation. Getting one does seem to give you a leg up on your competition since 51% of small businesses either do not use any software to manage their financials (21%) or simply use Excel or Google spreadsheets (30%) in 2022 (McCabe, 2022). A small advantage can go a long way in a very competitive economy.
However, choosing a small business accounting software can be very difficult, especially because there are many options. Each of them has different features, pricing, benefits, and disadvantages. Also, as software adoption is an investment, choosing one that would simplify accounting processes better and cover your software purchase or subscription fees is important.
This article serves as a guide to help you narrow down your choices by explaining some of the key functions of accounting software that you should look for. We will also give you some tips on comparing different products and finding the best value for your money. And lastly, the Research.com team—using publicly available market data, user reviews, and first-hand experience—has prepared a list of popular accounting software solutions available today. This way, you will better understand what each of them does and whether they are suitable for your needs.
Featured Accounting Software Products
Custom
No
regulatory compliance, automation, cloud access
Editor's Take
NetSuite ERP is a comprehensive cloud-based enterprise resource planning (ERP) software designed to streamline business processes for organizations of all sizes. Key features include financial management, order management, inventory control, and procurement. It also offers advanced analytics and real-time reporting, making it ideal for decision-making. Pros include scalability, extensive customization, and seamless integration with other NetSuite modules like CRM and eCommerce. However, it can have a steep learning curve, and pricing may be high for smaller businesses. NetSuite ERP is best suited for growing companies needing a robust, all-in-one platform to manage complex operations across multiple departments.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software's overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It's crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
$129 per month
Demo available
Automated invoice processing, global payments, tax compliance management
Editor's Take
Tipalti is an automation-focused financial management platform designed to streamline global payables for businesses. Its key features include automated invoice processing, global payments in multiple currencies, tax compliance management, and real-time payment reconciliation. The platform also integrates with accounting tools like NetSuite and QuickBooks, enhancing financial workflows. Pros include its ease of use, scalability for growing companies, and robust automation capabilities that reduce manual work. However, Tipalti’s complexity may be overkill for smaller businesses with simpler payables processes. Tipalti is ideal for medium to large enterprises managing high volumes of international payments and seeking to optimize financial operations.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
Editor's Take
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
$29 per month billed annually, free plan available
14 days
employee scheduling, time tracking, task management
Editor's Take
Connecteam is a mobile-first workforce management platform designed to help businesses streamline communication, scheduling, training, and operations for deskless and remote teams. Ideal for industries like retail, hospitality, construction, and healthcare, Connecteam offers an intuitive, all-in-one solution for managing employees from any location, ensuring that teams stay connected, engaged, and productive.
With features for employee scheduling, time tracking, task management, and real-time communication, Connecteam enables managers to coordinate tasks and monitor progress with ease. The platform also includes tools for onboarding and training, allowing businesses to standardize knowledge-sharing and compliance while tracking employee progress. Through customizable workflows, forms, and reporting, Connecteam provides valuable insights into team performance and operational efficiency. For organizations looking to improve team coordination, enhance communication, and empower deskless employees, Connecteam delivers a flexible and user-friendly solution that supports growth and efficiency.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
$21 per user per month
30 days
Customizable Invoices, Expense Tracking, Time Tracking
Editor's Take
FreshBooks is a cloud-based accounting and invoicing software designed for freelancers, small businesses, and self-employed professionals. It simplifies financial management with features like invoicing, expense tracking, time tracking, and automated payment reminders. FreshBooks also offers robust reporting tools to provide insights into cash flow and profitability. With its mobile app, users can manage finances, track billable hours, and collaborate with clients on the go. Integrating seamlessly with payment gateways and other business tools, FreshBooks helps businesses save time and stay organized.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
By quote
Demo available
Tax management, employee self-service, analytics
Editor's Take
ADP Workforce Now is a comprehensive human capital management (HCM) platform designed for medium to large businesses. It offers a suite of tools that streamline HR, payroll, talent management, time and attendance, and benefits administration. Known for its scalability and ease of use, ADP Workforce Now allows businesses to automate routine tasks, maintain compliance with changing regulations, and optimize workforce management.
Key features include robust payroll and tax management, employee self-service options, and integrated reporting and analytics. The platform also offers mobile access, allowing employees and managers to handle HR tasks on the go. ADP Workforce Now’s integration capabilities with third-party applications and its strong focus on data security make it a trusted solution for managing complex HR operations.
For businesses seeking a reliable, all-in-one HCM solution that enhances efficiency, ensures compliance, and scales with growth, ADP Workforce Now is an excellent choice.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
Custom
No
Accounts payable, receivable, general ledger, cash management
Editor's Take
Sage Intacct is a cloud-based financial management software designed to help businesses streamline their accounting processes. Key features include accounts payable and receivable, general ledger, cash management, and advanced reporting with real-time financial insights. It also offers multi-entity and global consolidations, making it suitable for businesses operating across multiple locations. Pros include its strong integration capabilities with other business tools, scalability, and in-depth reporting features. However, the software may require a learning curve and customization for optimal use. Sage Intacct is ideal for growing small to mid-sized companies looking for robust, scalable financial management and automation solutions.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
$39 per month plus $5 per employee per month
Yes
Yes
Editor's Take
Paychex is a comprehensive human capital management (HCM) solution that offers payroll, HR, benefits, and compliance services for businesses of all sizes. With its robust set of features, Paychex automates payroll processing, tax filing, and benefits administration, helping businesses save time and maintain compliance with federal, state, and local regulations. It also provides tools for managing employee benefits, time and attendance, and workforce analytics.
Key features include automated payroll, tax compliance, employee onboarding, benefits management, and a self-service portal for employees to access pay stubs, tax forms, and benefits information. Paychex integrates with various accounting and HR software, making it a versatile solution for businesses with complex needs. The platform is also scalable, catering to both small businesses and large enterprises with customizable features and services.
For businesses seeking a comprehensive solution to manage payroll, HR, and benefits efficiently, Paychex offers a trusted platform that enhances workforce management while ensuring compliance and reducing administrative burdens.
Expert Score
In evaluating SaaS software, a comprehensive and structured methodology ensures a fair and accurate comparison across key metrics. This approach focuses on the most critical aspects that affect user experience, functionality, and business value. The following metrics—general features, cost, customer service, integrations, and mobile support—are evaluated to provide a holistic view of each software solution’s strengths and weaknesses. These metrics are selected based on their direct impact on software usability, scalability, and long-term effectiveness for businesses.
1. General Features - scoring weight 40%
This metric evaluates the core functionalities and tools the software offers. It involves assessing the comprehensiveness of the features, their relevance to the target users, and the ease of use. This is important because robust and well-designed features determine the software’s overall utility and efficiency in solving user problems.
2. Cost - scoring weight 15%
Cost analysis focuses on pricing models, value for money, and scalability. It’s crucial to evaluate whether the software’s features justify its price, considering different plans for small and large organizations. This is vital for businesses to ensure they invest in cost-effective solutions that fit their budget.
3. Customer Service - scoring weight 15%
This evaluates the responsiveness, quality, and availability of customer support, including channels like chat, email, or phone. Good customer service is essential for troubleshooting and ensuring smooth software usage, which reduces downtime and frustration for users.
4. Integrations - scoring weight 15%
This examines how well the software integrates with third-party tools (e.g., CRM, payment systems, collaboration apps). Seamless integrations are key for creating a unified workflow and enhancing productivity by connecting multiple systems, which is crucial for operational efficiency.
5. Mobile Support - scoring weight 15%
Mobile support assesses the software’s functionality and performance on mobile devices, including apps and mobile web versions. With increasing remote work and on-the-go usage, strong mobile support is critical to ensure users can access and utilize the software effectively, regardless of location.
How to Choose Accounting Software for Your Business Table of Contents
- Why Adopt Accounting Software for Small Business
- Essential vs Specialist Features of Accounting Software
- Usability, Deployment, and Integration Features of Accounting Software
- Cost and Payment Scheme Considerations
- What Are the Industry-Specific Accounting Solutions Available?
- How does accounting software support compliance with tax regulations and financial reporting standards?
- The Role of Invoicing Software in Accounting Efficiency
- Best Accounting Software for Business in 2024
For absolute beginners asking, “What is accounting system for?" and “What are the features of accounting software?" it is a computer program that helps accounting professionals with different types of accounting degrees or business owners record, manage, and report financial transactions and data. They can vary in functionality and scope, but features of accounting software typically include fixed asset management, expense management, revenue management, accounts receivable, accounts payable, sub-ledger accounting, reporting and analytics, and general ledger. Accounting software can also be part of an enterprise resource planning (ERP) system that integrates other business functions. And larger enterprises usually build custom software solutions to properly customize them according to their needs, preferences, and branding.
Smaller firms, however, typically settle for “store-bought" desktop accounting software. Traditionally, these are one-size-fits-all platforms that do not have the same degree of customizability as enterprise-grade solutions. They are definitely functional and powerful. But they can also be quite expensive. And this is one of the reasons why, as mentioned, many small businesses, 30% in one survey, still use simple spreadsheet software to manage their financials (McCabe, 2022). It is not only the cost of acquisition that keeps small and medium-sized enterprise (SME) owners at bay. There are other costs, like software updates/upgrades and support. There is also the dreaded birthing pain of software adoption, taking into account the learning curve and employee willingness to cooperate. And why change something that is already working?
But there are many good reasons to upgrade to standalone accounting software. Firstly, great yet affordable web-based accounting software solutions that provide a reasonable degree of customization exist today. You can customize your workflows and branding. Secondly, they usually come with collaboration tools, allowing more cohesion among users. Secondly, they are scalable. This means that they can adapt to how your company grows. These platforms usually have a tiered pricing plan that allows you to upgrade and downgrade anytime. Once you need more features or user slots, you can purchase them instantly. Third, they are generally easy to use, even easier to use than spreadsheets considering they have more features. They have designs reminiscent of popular social media software and apps, giving them great out-of-the-box usability. Hence, it seems there is no good reason for not having one, even for small businesses.
Why Adopt Accounting Software for Small Business
The difference is light and day when it comes to having and not having a dedicated accounting software system. There are many benefits of accounting software use. It simplifies everything by keeping all your financial data and records in one place. You can manage your business’s finances, track income and expenses, and generate reports and invoices in just a few clicks. They also allow you to automate tasks such as payroll, tax filing, and bank reconciliation, saving time and reducing errors. Below is an overview of the general accounting software benefits:
- Improved accuracy and efficiency. An accounting software solution can help you eliminate manual data entry and calculations, reducing the risk of human errors and discrepancies. In fact, increased efficiency (48%) is the top benefit of using modern cloud solutions (Statista, 2023). Accounting software also syncs with bank accounts and other data sources, ensuring that the information is up-to-date and consistent.
- Enhanced visibility and control. The best cloud accounting software real-time insights into the financial performance and health of the business, allowing owners and managers to make informed decisions and plan ahead. They allow users to customize dashboards and reports according to their needs and preferences.
- Increased security and compliance. Using encryption, backups, and cloud storage, accounting software protects sensitive data from unauthorized access and loss. They also help small businesses comply with tax laws and regulations by generating accurate and timely tax returns and statements.
Essential vs Specialist Features of Accounting Software
Generally speaking, there are two categories of accounting software: a generalist solution and a specialist solution. The former comes with generic features of accounting software that can be used by virtually any firm in any industry. They carry essential features such as ledgers, bank reconciliation, billing, invoicing, and reporting. Below is a list of the essential features of accounting software that are usually included in generalist solutions. We will also explain the features of accounting tools.
Essential Features of Accounting Software
- Core accounting. This is a set of features that handle the basic functions of accounting, such as the general ledger, accounts payable, accounts receivable, and bank reconciliation. It is best to buy accounting software that has all the basics.
- Billing and invoicing. This feature allows businesses to create and send customer invoices, track payments, and follow up on overdue accounts.
- Payroll management. Calculates and pays employees’ salaries, deductions, benefits, and taxes. Some platforms even allow users to send payments.
- Budgeting and forecasting. Helps businesses plan and monitor their income and expenses and predict future financial outcomes.
- Inventory management. Tracks the quantity and value of the products or services that a business sells or purchases.
- Asset management. This allows users to record and track the fixed assets of a business, such as equipment, vehicles, and property.
- Reporting. This feature generates various financial reports, such as income statements, balance sheets, cash flow statements, and tax reports.
- Interoperability. This feature allows accounting software to integrate with other systems, such as online banking, CRM, ERP, and e-commerce.
Common Types of Specialist Accounting Software
On the other hand, specialist solutions offer essential tools but are geared toward use in specific business contexts, processes, and industries. There are also many software providers nowadays that you can write any one type of accounting software on the search box, and, likely, one is already designed to meet your specific needs. For instance, there are accounting tools specially designed for legal practice, medical practice, and construction. There are also school finance software tools designed for particular levels of education. Moreover, specialist platforms usually come with industry-specific tools for compliance and reporting. Below are the different types of specialist accounting solutions:
- Billing and invoicing accounting software. This software assists businesses in managing their billing and invoicing processes by allowing them to create and send invoices, track payments, and manage customer accounts.
- Payroll accounting software. This software assists businesses in managing their payroll processes, including calculating employee pay, withholding taxes, and generating paychecks or direct deposits.
- Small business accounting software. This software is specifically designed for small businesses and includes bookkeeping, invoicing, expense tracking, and financial reporting features.
- ERP accounting software. This software is part of an enterprise resource planning (ERP) system that integrates various business functions such as accounting, inventory management, and human resources.
- Spreadsheet software for accounting. This software uses spreadsheets to manage financial data and perform calculations and is often used by small businesses with low transaction volumes.
- Custom accounting software. This software is custom developed for an organization to meet its specific needs and preferences.
Choosing Between Generalist and Specialist Accounting Software Solutions
One of the most critical decisions that small and medium-sized businesses (SMBs) face regarding their accounting needs is whether to use a generalist software or a specialist focus accounting software tool. Both types of software have their pros and cons, and the best choice depends on several factors, such as the size and complexity of the business, the level of customization and integration required, the budget and resources available, and the future growth plans of the business.
One must also consider the level of expertise and support needed and the users’ expectations and preferences. So, it is essential to research and compare different options before mulling over accounting pros and cons. Here are some aspects that you need to consider:
- The scope and complexity of your accounting needs. A generalist tool can handle various aspects of accounting, such as bookkeeping, invoicing, payroll, tax compliance, etc. A specialist accounting software can offer tailored services for a specific area of expertise, such as inventory management, project accounting, nonprofit accounting, etc. Depending on your business size, industry, and goals, you may prefer a software solution that can cover a broad spectrum of accounting functions or provide in-depth features for a particular niche.
- The compatibility and integration of your accounting software with other systems and applications. A generalist accounting software may have more options and flexibility to integrate with different platforms and tools you use for your business operations, such as CRM, e-commerce, payment gateways, etc. A specialist platform may have fewer integrations but more focused and customized ones that suit your specific needs and workflows.
- The cost and value of your accounting software. A generalist accounting software may have a lower upfront cost and a simpler pricing structure than a specialist platform. However, a generalist tool may also have more limitations and hidden fees that can increase your total cost of ownership over time. A specialist accounting software solution may have a higher initial investment and a more complex pricing model than its generalist counterpart. However, it may also have more benefits and advantages that can improve your efficiency and profitability in the long run. Do also note that there are open-source software options for accounting with no licensing price; however, they usually have lower usability ratings (Zhou & Choudhary, 2021).
Usability, Deployment, and Integration Features of Accounting Software
Once you are set on what type of accounting software you want. It is best to start with a shortlist of products that have the features of accounting software you need and make a comparison. Usually, they are pretty similar in terms of feature sets and pricing. As such, you need other considerations to help you determine which ones would fit your needs best. Three important considerations are usability, deployment, and integration.
- Usability. This refers to how easy and intuitive the software is for your employees and customers. A user-friendly software can reduce errors, save time, and improve customer satisfaction. You should look for a simple software with a clear interface, helpful features such as automation, reporting, and analytics, and adequate training and support. Another consideration is the number of users that a product supports. You would want to find a software solution with collaboration features, allowing complete visibility for accountants, bookkeepers, and the management staff involved in accounting processes.
- Deployment. This is how the software is installed and accessed by your users. There are two main options: cloud-based or on-premise. Cloud-based software is hosted on the Internet and can be accessed from any device with an Internet connection. On-premise software is installed on your servers and requires more maintenance and security. You should weigh the pros and cons of each option based on your budget, IT resources, and data protection needs.
- Integration. This refers to the ability of a software solution to connect and communicate with other systems and applications you use in your business. A well-integrated software can streamline workflows, eliminate data duplication, and enhance collaboration. You should look for software that can easily integrate with your existing accounting systems, such as your bank accounts, invoicing platforms, payroll services, tax software, etc.
By considering these aspects of usability, deployment, and integration, you can choose similar accounting software that suits your needs, preferences, core competencies, employee skills, and business goals. Moreover, considering that most owners of small businesses manage their financials (McCabe, 2022) at 70%, they must acquire an intuitive solution.
Mobile App Capability
Moreover, another critical factor that small business owners should consider when selecting an accounting software solution is its mobile app capability and usability. This allows users to access most if not all, of the features of accounting software you have on the go. Moreover, A mobile app can offer many benefits for small business users, such as:
- Accessing financial data anytime and anywhere. This can help users with decision-making and real-time cash flow management. At 66%, many accountants feel that real-time financial insights are very important to business success. So, gaining real-time insights can be crucial for on-the-go decision-making (Brown, 2023).
- Recording transactions on the go. Users can take pictures of purchase receipts, sales, and other details on the go. This can help businesses save time and reduce errors.
- Sending invoices and receiving payments faster. Mobile apps can help users send and receive payments faster. Typically, accounting solutions work with payment gateways, allowing you to make financial transactions within the app. Faster transactions can improve customer and employee satisfaction and cash flow.
Therefore, small business owners should evaluate the mobile app features and functionality of different accounting software options before making a final decision. As mentioned, there are many good platforms around with similar features of accounting software and ease of use. Sometimes the quality and functionality of their mobile apps make the difference.
Cost and Payment Scheme Considerations
After trimming down your initial shortlist of products with your preferred features for usability, deployment, and integrations, you can further rank your list according to cost and payment scheme. These are important considerations, as you cannot get a platform that does not fit your budget and revenue cycle, especially with subscription-based products. You do not want to get locked out of your financial management tool because you have not paid.
Common Pricing Structure
The cost of accounting software can vary depending on the provider, the plan, and the number of users. Some software solutions offer a free trial or a free version with limited features, while others require a monthly or annual subscription fee. Some also charge extra for add-ons, such as payroll, inventory management, or tax preparation.
Common Payment Schemes
The payment scheme of accounting software can also affect your cash flow and budgeting. Some software platforms offer flexible payment options, such as monthly, quarterly, or yearly payments. Others offer discounts for paying upfront or for longer-term contracts. Others offer different payment methods, such as via credit card, bank transfer, or PayPal.
When choosing accounting software for your small business, you should compare the cost and payment schemes of different options and find the one that suits your needs and business schedules. You should also consider the software’s value and return on investment, as well as the quality and reliability of the service.
Mind the ROI and Support Services
One of the main benefits of investing in accounting software is the return on investment (ROI) that it can provide. While accounting software can help businesses save time, money, and resources by automating and streamlining various accounting processes, acquiring accounting software today is not a one-time purchase.
Regular maintenance, updates, and support are required to ensure optimal performance and security. That’s why it’s important to consider the added value of support services when choosing an accounting software vendor. Support services include technical assistance, training, troubleshooting, customization, integration, and more. These services can help businesses get the most out of their accounting software and resolve any issues.
Therefore, when evaluating the ROI of accounting software, businesses should look at the initial cost and benefits and the ongoing cost and benefits of support services. Businesses can maximize their accounting software ROI and enhance their financial operations by choosing a vendor that offers high-quality and affordable support services.
The Role of Invoicing Software in Accounting Efficiency
Efficient invoicing is a cornerstone of effective financial management, making invoicing software a critical component of modern accounting ecosystems. A dedicated invoicing tool automates the creation, distribution, and tracking of invoices while integrating seamlessly with accounting platforms. This integration simplifies generating accurate financial data, which is essential for maintaining consistency across financial records and avoiding discrepancies during audits or tax filing.
One of the key advantages of using invoicing software is its ability to customize invoices according to the company's branding and unique client requirements. Moreover, it automates payment reminders, reducing overdue accounts receivable and improving cash flow. By streamlining these repetitive tasks, businesses free up valuable time to focus on strategic financial planning.
For businesses looking to improve their invoicing systems, exploring some of the best invoicing software options on the market can provide significant added value. Many of these tools offer cutting-edge features such as multi-currency support, integration with payment gateways, and real-time tracking of invoice statuses—features that align well with the needs of both small startups and established enterprises.
Combining robust invoicing solutions with accounting software not only improves operational efficiency but also ensures a higher level of accuracy in financial reporting. This synergy minimizes errors, ensures compliance with regulatory standards, and provides business owners with clear insights into their financial health.
What Are the Industry-Specific Accounting Solutions Available?
Different industries have unique accounting needs, and there are various industry-specific accounting solutions available to cater to these needs. For instance, construction accounting software is designed to meet the specific requirements of the construction industry, including project management, job costing, and compliance with industry regulations. Similarly, there are accounting solutions tailored for other industries, such as healthcare, hospitality, and e-commerce. When choosing an accounting software, it's essential to consider the industry-specific features and functionalities that can help streamline accounting processes and improve compliance with industry regulations.
How does accounting software support compliance with tax regulations and financial reporting standards?
Accounting software plays a crucial role in helping businesses stay compliant with tax regulations and financial reporting standards. Here’s how it supports compliance:
- Automated Tax Calculations: Accounting software can automatically calculate taxes on transactions, invoices, and payroll. It applies the latest tax rates, reducing the risk of errors and ensuring accurate tax amounts in line with local and federal regulations.
- Accurate Recordkeeping: The software systematically organizes and stores all financial records, such as income, expenses, payroll, and invoices, in a digital format. This accurate recordkeeping simplifies the tax filing process and supports compliance during audits or financial reviews.
- Real-Time Compliance Updates: Many accounting software platforms update tax regulations and financial standards regularly, helping businesses stay compliant with the latest rules. This feature ensures that changes in tax rates or reporting requirements are automatically reflected in calculations and reports.
- Automated Financial Statements: Accounting software generates financial statements such as income statements, balance sheets, and cash flow statements in line with Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), aiding compliance with industry standards.
- Audit Trail Creation: An audit trail feature records each transaction’s history, including edits or adjustments made by users. This trail is essential for compliance, as it provides transparency and traceability, making it easier to pass audits and identify discrepancies.
- Simplified Tax Filing and Reporting: Many platforms include built-in tools for preparing and filing tax returns. These tools compile relevant tax data, generate tax forms, and guide users through the filing process, making tax compliance more manageable and less time-consuming.
- Built-In Data Encryption and Security Protocols: Data encryption and access controls protect sensitive financial information. Ensuring data integrity and confidentiality aligns with privacy regulations, such as GDPR or HIPAA, if applicable.
- Seamless Integration with Tax Software: Some accounting software can integrate with dedicated tax software, streamlining data transfer for tax reporting and simplifying compliance workflows for businesses that require specialized tax reporting.
Best Accounting Software for Business in 2024
Below are the most popular and effective solutions for accounting for small business owners use to streamline their processes. They are scalable, meaning they can grow and adapt to your business. These products are available in tiered plans, each with different feature sets—getting more advanced as the price increases.
Our research team has gathered publicly available data about these software tools, including user reviews, to determine the ranking. These platforms are ranked according to the comprehensiveness of their feature set, user satisfaction, ease of use, integrations, and mobile app capability, among others.
1. QuickBooks Online Comprehensive Scalable Accounting Software for Business
QuickBooks Online is a cloud-based accounting software that helps you manage your finances, invoices, payments, taxes, and more. It also offers unique features like integrations with other apps and platforms, live bookkeeping services, inventory tracking, and project profitability reports. You can choose from different plans and add-ons to suit your business needs and budget. Its Simple Start and Essentials Plans are designed to make accounting simple and efficient for small businesses. The former supports one user per month and an accountant. The latter supports three users with another slot for the accountant. It also has a self-employed solution that costs $5 per month for small businesses with one to five employees with a small volume of transactions.
Key Small Business Features
- It is web-based and can be accessed via Windows, Mac, and mobile.
- Core accounting features such as income and expense tracking.
- Invoicing and payment processing.
- Sales and sales tax tracking with tax deduction calculations.
- Receipt capture and time tracking.
2. NetSuite ERP ERP-based Accounting Software for Growing Businesses
NetSuite ERP is a popular business solution for businesses of all sizes across different industries. It is highly scalable and has roll-out options for small businesses. While it is an ERP suite, you can get a customized standalone solution with the features of accounting software you need. NetSuite offers customized software according to your needs. So, you can pick and choose the exact features you want. As such, it is only made available via quote-based plans—the same for both large enterprises and small businesses.
Key Small Business Features
- Cost, fulfillment, and inventory management.
- Flexible billing scheduling and payroll services.
- Financial planning and demand planning engine.
- Flexible depreciation management and workflow management.
- Core accounting and tax management tools.
3. FreshBooks Easy-to-Use and Scalable Accounting Software for Small Businesses
FreshBooks is a popular comprehensive accounting solution designed especially for small businesses. FreshBooks is designed to make small business accounting simple, fast, and secure. You can access your account from any device, anywhere and anytime. And you can also invite your team members, accountants, and clients to collaborate with you on the platform. It is packed with standard features of accounting software. These include core accounting, online invoicing, expense tracking, tax management, and reporting. All of these features are available for all plans. Plans, however, have constraints on the active number of clients you can have.
Key Small Business Features
- Online invoicing with sales tax management and offline payment tracking capabilities.
- Expense tracking with automated recurring expenses entry.
- Time tracking and project management tools.
- Allows users to send payments right within the platform.
- Comprehensive reporting features for small business accounting.
4. Sage Accounting Small Business Accounting Software
Sage Accounting is a cloud-based accounting software designed for small businesses. It offers invoicing, expense tracking, cash flow management, tax compliance, and reporting features. The platform is easy to use and has one of the most comprehensive features of accounting software for small businesses around. Pricing, too, is very small-business-friendly. Its Sage Accounting Start plan is only priced at $10 per month—ideal for self-employed professionals and micro-businesses. The Sage Accounting plan is offered at $25 per month, supporting unlimited users.
Key Small Business Features
- Easy-to-use core accounting tools.
- Get paid quickly using payment gateways
- Automate accounting workflows and focus on your business.
- Automatically send and track invoices.
- Simple setup and maintenance.
5. Xero Powerful Online Accounting Software for Small Businesses
Xero is a robust and comprehensive accounting solution with different roll-out options for small businesses. You can get Xero features of accounting software by different business types or by industry. This makes it one of the most flexible accounting solutions around. Key features include bank reconciliation, expense tracking, and in-depth analytics. Also, it works seamlessly with other tools such as Gusto, Vend, and Evernote, among many others.
Key Small Business Features
- Quick and in-depth financial reporting.
- Easy tax management
- Easy-to-use mobile apps
- Core accounting tools with multi-currency support
- Customize according to business type and industry
Choosing the Best Accounting Software for Your Business
The need for accounting software is increasing as economic transactions become more fast-paced. However, as discussed, choosing an accounting software entails many serious considerations. These include the right features of accounting software that fit your needs, usability, integrations, pricing, and many others. Below is a more structured summary and a step-wise rendition of the discussion.
- Assess your accounting needs and goals. What kind of features do you need from your accounting software? Do you need to track inventory, manage payroll, create invoices, or generate reports? How often do you need to update your financial data? What are your short-term and long-term goals for your business accounting?
- Research different accounting software options. There are many accounting software products available to small and medium-sized businesses, ranging from generalist to specialist solutions. You can compare different products online, read reviews, ask for recommendations, or consult with an accountant or a software expert.
- Evaluate the software based on your criteria. Once you have narrowed down your options, you should evaluate each software based on how well it meets your needs and goals. You should consider factors such as: Functionality and Usability. Does the software have all the features and tools you need? Is it easy to use and customize? Does it integrate with other software or systems you use? Would it support the right amount of users you need?Compatibility. Does the software work well with your hardware and operating system? Does it support multiple users, devices, or locations?Security. How secure is the software and your data? Does it have encryption, backup, and recovery options? Does it comply with relevant laws and regulations?Cost. How much does the software cost upfront and in the long run? Are there any hidden fees or additional charges?Support. How reliable and accessible is the software provider’s customer service and technical support? Do they offer training, updates, or maintenance?
- Functionality and Usability. Does the software have all the features and tools you need? Is it easy to use and customize? Does it integrate with other software or systems you use? Would it support the right amount of users you need?
- Compatibility. Does the software work well with your hardware and operating system? Does it support multiple users, devices, or locations?
- Security. How secure is the software and your data? Does it have encryption, backup, and recovery options? Does it comply with relevant laws and regulations?
- Cost. How much does the software cost upfront and in the long run? Are there any hidden fees or additional charges?
- Support. How reliable and accessible is the software provider’s customer service and technical support? Do they offer training, updates, or maintenance?
- Test the software before buying. Most accounting software providers offer free trials or demos that allow you to test the software before buying it. This is a great way to see how the software works in practice and whether it suits your business needs and preferences. You should also ask for feedback from your employees or other users who will be using the software.
- Make a final decision and implement the software. After testing and evaluating different software options, you should decide based on your research and experience. You should also plan how to implement the software in your business, such as setting up accounts, importing data, training users, and monitoring performance.
You Cannot Live with Just Software Alone
Many small business owners are not really accountants by trade. Some may not even exactly know what do accounting majors do. And many of them even see doing accounting as a thorn in their sides. In fact, as mentioned, many outsource bookkeeping and accounting processes to a third-party provider. The more they are detached from it, the better. They feel that other critical business functions must receive more attention, and they may be right.
But accounting knowledge and skills is important. They can guard you against fraud and non-compliance. Luckily, modern software makes learning on the job very easy. They are very intuitive enough to ease users in. Moreover, software providers often have knowledge bases for users to learn about fundamental accounting principles and perform crucial tasks.
Should small business owners, however, want to get more in-depth knowledge of accounting processes, they can always take courses from the most affordable online accounting degree programs. This will allow them to get instruction in a more structured learning environment and access academic and industry insights into how accounting is done today and for their specific business type and industries.
Having software alone does not guarantee success. One must have the right skills and knowledge to be successful. So, as you invest in an accounting software tool, you might as well invest in learning opportunities about accounting.
Key Insights
- Adoption of Accounting Software: A significant number of small businesses (51%) either do not use any accounting software (21%) or rely on basic spreadsheet tools like Excel or Google Sheets (30%), highlighting an opportunity for adopting more advanced solutions.
- Improved Accuracy and Efficiency: Modern accounting software can enhance accuracy and efficiency by automating data entry and calculations, reducing errors, and syncing with bank accounts for up-to-date financial information.
- Enhanced Visibility and Control: These software solutions offer real-time insights into financial performance, customizable dashboards, and reports, aiding in informed decision-making and planning.
- Increased Security and Compliance: Accounting software provides data encryption, backups, and cloud storage, protecting sensitive information and ensuring compliance with tax laws and regulations.
- Essential vs. Specialist Features: Generalist accounting software includes core functionalities such as ledgers, bank reconciliation, billing, and invoicing, while specialist solutions offer features tailored to specific industries or business functions.
- Usability, Deployment, and Integration: Key considerations when selecting accounting software include ease of use, deployment options (cloud-based or on-premise), and integration capabilities with other business systems.
- Mobile App Capability: Mobile apps for accounting software enable real-time access to financial data, on-the-go transaction recording, and faster invoicing and payment processing, which are crucial for modern business operations.
- Cost and Payment Schemes: Accounting software pricing varies, with options for free trials, subscription fees, and flexible payment schemes. It's essential to assess the total cost of ownership, including support services and potential ROI.
- Support and Training: Reliable customer service, technical support, and training are crucial for maximizing the benefits of accounting software and ensuring smooth implementation and usage.
- ROI and Added Value: Investing in accounting software can yield significant ROI by streamlining processes, reducing labor costs, and improving financial management, especially when paired with high-quality support services.
FAQ
What are the key benefits of using accounting software for small businesses?
Accounting software streamlines financial management by automating tasks, reducing errors, providing real-time financial insights, ensuring data security, and helping with tax compliance. It enhances efficiency, accuracy, and visibility, aiding better decision-making.
How do I choose between generalist and specialist accounting software?
The choice depends on your business needs. Generalist software offers broad functionality suitable for various industries, while specialist software provides tailored features for specific sectors or business functions. Consider your accounting requirements, integration needs, and budget.
What should I look for in terms of usability, deployment, and integration when selecting accounting software?
Look for user-friendly interfaces, cloud-based or on-premise deployment options, and robust integration capabilities with existing business systems. Ensure the software supports collaboration and is easy for your team to adopt and use.
Why is mobile app capability important for accounting software?
Mobile apps provide real-time access to financial data, enable on-the-go transaction recording, and facilitate faster invoicing and payment processing. They enhance flexibility and responsiveness, crucial for modern business operations.
How does accounting software improve accuracy and efficiency?
By automating data entry, calculations, and syncing with bank accounts, accounting software reduces human errors, ensures data consistency, and saves time. Features like payroll management, expense tracking, and automated reporting further enhance efficiency.
What are the typical costs associated with accounting software, and how should I evaluate them?
Costs vary based on features, the number of users, and subscription plans. Consider initial costs, ongoing subscription fees, and additional charges for add-ons. Evaluate the total cost of ownership, including support services, and compare them with the expected ROI.
How important are support and training services when choosing accounting software?
High-quality support and training services are crucial for smooth implementation, troubleshooting, and maximizing the software's benefits. They ensure users can effectively utilize the software and resolve issues promptly.
Can accounting software integrate with other business systems?
Yes, many accounting software solutions offer integration capabilities with other business systems like CRM, ERP, payroll services, and tax software. Integration streamlines workflows, eliminates data duplication, and enhances collaboration.
What are some essential features to look for in accounting software?
Essential features include core accounting (general ledger, accounts payable/receivable, bank reconciliation), billing and invoicing, payroll management, budgeting and forecasting, inventory management, asset management, reporting, and interoperability.
How do I evaluate the ROI of accounting software?
Consider the initial and ongoing costs, time savings, efficiency gains, reduced labor costs, and improved financial management. High-quality support services add value by ensuring optimal performance and resolving issues. Assess how these benefits compare to the investment.
References:
- Brown, J. (2023, May 9). Accountants are using technology to level up their businesses. QuickBooks.
- McCabe, L. (2022, August 7). Why small businesses don’t use accounting software—and why they should. SMB Group.
- Statista. (2021, April 13). Cloud computing benefits worldwide 2020. Statista.
- Zhou, Z. Z., & Choudhary, V. (2021). Impact of competition from open source software on proprietary software. Production and Operations Management, 31(2), 731-742. Wiley.
