Selecting the right accounting software for a small business is crucial for managing finances efficiently. Small businesses that leverage robust accounting software can automate bookkeeping tasks, track expenses, and streamline invoicinginvestopedia.com. In fact, a Statista survey found that about 64% of small business owners use accounting softwareacecloudhosting.com, reflecting how essential these tools have become. Cloud-based solutions like QuickBooks Online and Xero dominate the marketdocuclipper.cominvestopedia.com, each with millions of users worldwide. According to industry data, QuickBooks Online alone captures roughly 63% of the small business accounting software marketinvestopedia.com, and boasts over 5 million users globallydocuclipper.com. With features like bank reconciliation, payroll integration and financial reporting, the best accounting software empowers small businesses to save time and reduce errors.
Most small business accounting packages include the following core functionsinvestopedia.com:
- Income and expense tracking – automatically record and categorize transactions from bank accounts and receiptsinvestopedia.com.
- Bank reconciliation – match expenses and payments against bank feeds to ensure accuracyinvestopedia.com.
- Invoicing and billing – create, customize, and send invoices; track online payments and overdue notices.
- Financial reporting – generate profit & loss statements, balance sheets, cash flow reports and other analyticsinvestopedia.com accounting software.
- Payroll & tax management – handle payroll processing, tax calculations, and filings within the same system.
By automating these bookkeeping tasks, accounting software frees business owners to focus on growth rather than number-crunching. It also provides real-time visibility into cash flow and profitability, helping owners make informed decisions. For example, QuickBooks Online users benefit from built-in reports and a mobile app that can scan receipts and send invoices on the goinvestopedia.com. With cloud accounting software apps, your data is accessible anytime, on any device.
1. QuickBooks Online (Best Overall)
QuickBooks Online (by Intuit) is widely regarded as the best overall accounting software for small businessesinvestopedia.com. It dominates the market with a 63% shareinvestopedia.com, making it the industry standard. Its strengths include comprehensive features and scalability. QuickBooks Online offers tiered plans (Simple Start, Essentials, Plus, Advanced) to grow with your business, starting around $38/monthinvestopedia.com. Higher-tier plans add features like multiple users, inventory tracking, and advanced reporting. Notably, an InfoClutch study reported QuickBooks has claimed 63% of the small business accounting marketinvestopedia.com. It also supports an AI-powered assistant that can automate tasks such as payment remindersinvestopedia.com accounting software.
QuickBooks Online offers: invoice creation, expense tracking, bank feeds, mileage logging, payroll (optional add-on), robust financial reports, and a mobile app for iOS/Android. It integrates with popular business tools (Stripe, PayPal, Shopify, etc.) to sync transactions. For example, its dashboard and charts can help track account balances and cash flow (see figure below).
Image: Example cloud accounting interface showing a list of accounts and balances (common in software like QuickBooks Online or Xero).
Pros:
- Extremely feature-rich (invoicing, expenses, taxes, payroll) with many third-party integrations.
- Large user base (5+ million) and widespread accountant familiaritydocuclipper.com.
- Mobile app allows on-the-go bookkeeping (scan receipts, send invoices).
- Handles advanced tasks (job costing, inventory, multicurrency) at higher plans.
Cons:
- Can be expensive as users and features increase (plans up to $275/month)investopedia.com.
- Steeper learning curve for beginners.
- Some features (like payroll or enhanced reporting) require add-ons or higher tiers.
2. Xero
Xero is a popular cloud accounting app, especially outside the US. It appeals to growing small businesses with its user-friendly interface and app integrationsinvestopedia.com. Xero offers three subscription tiers (Early, Growing, Established) starting around $12/month for basic plansdiamondcareservice.com. Advanced plans include unlimited invoices/bills and inventory. Xero is known for having a generous free trial and often runs promotions (e.g. 90% off for 6 months) accounting software.
Xero stands out for multi-currency support, project/job tracking, and seamless integration with payroll (via the Gusto add-on)investopedia.com. The payroll add-on (through Gusto) costs about $40/month plus $6 per employeeinvestopedia.com, covering tax filings and paychecks. According to Investopedia, Xero had roughly 4.2 million subscribers worldwide (as of 2025), and is rapidly growing in the USinvestopedia.com. Its mobile app and 800+ integrations (e.g. PayPal, Square, Hubdoc) make it easy to connect other business tools.
Pros:
- Intuitive, clean interface; easy invoicing and online payments.
- Built-in payroll via Gusto (U.S. only), and the option to try payroll add-on for free.
- Robust app ecosystem and over 800 integrations.
- Supports global small businesses with multi-currency and tax features.
Cons:
- Basic plan limits (only 20 invoices/bills/month in Early plan)investopedia.com.
- Customer support is sometimes reported as slow or limited in lower tiers.
- Lacks some specialized features (e.g. advanced inventory) found in QuickBooks or Sage.
3. FreshBooks
FreshBooks is an easy-to-use accounting solution built around invoicing and time trackinginvestopedia.com. It’s ideal for freelancers, consultants, and service-based businesses. FreshBooks has 30+ million users (as of 2025)investopedia.com and is renowned for its streamlined interface. Plans start at $19/month (Lite) up to $60/month (Premium)investopedia.com. Unlike full-service packages, FreshBooks focuses on client invoicing, proposals, and project tracking. It also automates payment reminders and supports ACH/bank transfers.
Key features include customizable invoices and estimates, recurring billing, late fees, and time tracking per project. FreshBooks also offers expense capture (via mobile app), mileage tracking, and basic reporting. Its roots are in invoicing: “FreshBooks makes invoicing easy, with many customization options”investopedia.com. Estimates and proposals can be converted into invoices with one click, which is very handy for freelancers accounting software.
Pros:
- Extremely user-friendly, especially for non-accountants.
- Advanced invoicing capabilities (automations, retainers, retainers).
- Built-in time tracking and project profitability reports for client work.
- Free client portal for approval and payments.
Cons:
- Limited financial reports compared to competitors (even “Lite” plan).
- Extra fee per additional user beyond a small client cap.
- Not suitable for product-based businesses (no inventory module).
4. Zoho Books
Zoho Books is part of Zoho’s integrated suite of business apps. It offers a powerful set of accounting features at an affordable price. Zoho’s free plan (for up to 15 customers) includes invoicing, expense tracking, and basic reportinginvestopedia.com. Paid plans ($9–$29/month) add more users, workflows, and GST/HST filing. Zoho Books stands out for its automation (bank rules, recurring transactions) and customization.
Important capabilities of Zoho Books include: invoice and estimates automation, expense & time tracking, inventory management, project management (with billable hours), and banking/credit card syncingdiamondcareservice.com. The free tier (for one user) covers invoicing, vendor bills, online payments, and up to 5 automated workflowsinvestopedia.com. Because Zoho Books integrates seamlessly with Zoho CRM, Zoho Invoice, and other Zoho tools, it’s ideal for companies already in the Zoho ecosystem accounting software.
Pros:
- Competitive pricing; the free plan includes basic needsinvestopedia.com.
- Strong automation and workflows to reduce manual work.
- Comprehensive feature set (even on Standard/Professional plans).
- Excellent mobile app and user-friendly interface.
Cons:
- Less direct accountant support (in some regions).
- Free tier limits (e.g. up to 1 user, 1,000 invoices/year)investopedia.com.
- Can be overwhelming with so many settings for new users.
5. Wave Accounting
Wave Accounting is 100% free for core bookkeeping and invoicing, making it a top choice for budget-conscious small businesses and freelancersdiamondcareservice.com. There is no monthly fee for the accounting, invoicing, or receipt scanning features. Wave generates income statements, balance sheets, and also supports receipt upload via mobile app. The only paid services are Wave’s payroll (U.S./Canada only) and credit card processing fees.
Key features include unlimited invoicing, receipt scanning, basic expense tracking, and multi-currency support. Wave automatically syncs bank transactions and categorizes them. For many sole proprietors and small startups, Wave’s free offering meets all essential needs with no software costdiamondcareservice.com. Its user interface is straightforward, although it lacks some advanced reporting and inventory tools accounting software.
Pros:
- Core accounting features are free foreverdiamondcareservice.com.
- No limits on invoices or number of business accounts.
- Allows multiple businesses/accounts from one login.
- Simple setup and ideal for freelancers/solopreneurs.
Cons:
- Customer support is only via online help (no live support on free plans).
- Payroll features are only available as paid add-ons (in Canada/US).
- Doesn’t offer complex features like full inventory or detailed project accounting.
6. Sage Accounting
Sage Business Cloud Accounting (formerly Sage 50cloud) is known for its strong inventory and invoicing capabilitiesdiamondcareservice.com. It’s suitable for small businesses that need advanced reporting – Sage offers 400+ built-in financial reportsdiamondcareservice.com. Sage’s plans start around $10/month for basic invoicing and expense tracking. Higher tiers ($25+) add quotes, unlimited users, cash flow forecasting, and purchase order management.
Among Sage Accounting’s highlights are invoicing/estimates, bank feed connections, robust inventory management (warehouse/bin tracking), and job costing/estimates for projectsdiamondcareservice.com. Its mobile apps let you invoice on the go and capture receipts. Sage also supports project/job tracking and has strong tax management features for certain industries.
Pros:
- Excellent for product businesses (powerful inventory control).
- Industry-specific solutions (e.g. Sage 100 Contractor) extend functionality.
- Scalable – can handle multiple users and companies with appropriate plan.
- Well-established brand with longstanding accounting pedigree.
Cons:
- Free plan is limited; more features in paid versions.
- Pricier than some competitors for similar features.
- Receipt scanning and some features cost extra (unlike all-inclusives such as Wave).
7. Kashoo
Kashoo is an easy accounting solution built for simplicity. It markets itself as the fastest-to-setup accounting app (“set up in 60 seconds”business.org). Kashoo offers a fully free invoice plan and a paid plan for $20/month. The free plan is unique in that it allows sending unlimited invoices and receiving payments, expense tracking, and basic reportingbusiness.org. This makes Kashoo a good entry point for someone new to accounting software.
On setup, Kashoo’s automation quickly categorizes expenses as you link bank accounts. It also synchronizes with SurePayroll (a payroll service). The paid version ($20) adds more robust accounting features and support.
Pros:
- Very easy and quick to get started.
- Free invoice plan ($0) includes expense tracking and estimatesbusiness.org.
- Good automation and user-friendly design.
- Syncs with payroll services.
Cons:
- Free plan is “invoice-centric” – it may not show full income/expense reports yetbusiness.org.
- Lacks some advanced features that larger businesses need.
- Less well-known community/support compared to giants like QuickBooks.
8. FreeAgent
FreeAgent is accounting software designed specifically for freelancers, contractors, and very small businesses (especially in the UK)diamondcareservice.com. It offers a unique feature set that caters to sole traders: built-in time tracking, VAT (tax) filing, and self-assessment tax supportdiamondcareservice.com. FreeAgent’s free plan covers 1 user, then paid plans range roughly £10–£60/month depending on user countdiamondcareservice.com.
Important FreeAgent features include invoicing and online payments, time tracking for projects, automated VAT and tax calculations, and multi-currency supportdiamondcareservice.com. It also includes expense tracking with receipt capture and a client portal. For UK freelancers, FreeAgent can automate quarterly VAT returns and generate self-assessment reports for HMRC.
Pros:
- Tailored to freelancers and microbusinesses (time tracking + tax tools).
- Includes UK VAT and tax calculations in one platform.
- Has built-in payroll for UK employee payments.
- Free for one user (sole trader).
Cons:
- Geared towards the UK/IRE tax system (VAT/GST); less relevant outside those markets.
- Somewhat higher price point for multiple users (in GBP).
- Interface can feel cluttered with features rarely used by standard SMBs.
9. ZipBooks
ZipBooks is a free, user-friendly accounting alternative geared toward startups and small businessesbusiness.org. Its Core plan (free) offers unlimited invoicing, vendor/bill tracking, basic time tracking, and team collaboration for up to 3 usersdiamondcareservice.combusiness.org. The paid Plus plan (from $15/month) adds features like project costing, inventory, and advanced report packages.
Notably, even on the free plan ZipBooks lets you send unlimited invoices and bill clients without any capbusiness.org. It also includes expense management and one-click financial statements (P&L, A/R Aging, balance sheet). ZipBooks provides iOS/Android apps for on-the-go access. While its ecosystem is smaller than QuickBooks or Xero, it covers the basics well at no cost.
Pros:
- Completely free core accounting and unlimited invoicingbusiness.org.
- Simple interface with clear dashboards.
- Good choice for freelancers/consultants needing free billing tools.
- Includes time tracking and payment processing.
Cons:
- Fewer integrations and apps compared to bigger vendors.
- Limited support/documentation for advanced bookkeeping needs.
- Free plan lacks some automation and multi-currency options.
10. AccountingSuite
AccountingSuite is a newer cloud accounting solution that focuses on unifying accounting, invoicing, expense management, and e-commerce. It offers robust features including invoicing, expense tracking, financial statements, and even Mailchimp email syncdiamondcareservice.com. You can manage projects (tasks, time, and billing) and generate balance sheets, cash flow, and P&L reports at any time. AccountingSuite’s free plan supports up to 2 users with unlimited clients and vendors; paid plans ($12+/mo) add unlimited users and more featuresdiamondcareservice.com.
Major highlights: automated bank feeds, one-click report generation, and seamless sync with Mailchimp (for sending invoices via email campaigns)diamondcareservice.com. Its strength is combining accounting with a bit of CRM and e-commerce in one dashboard.
Pros:
- Good for small businesses that want integrated inventory, projects, and accounting.
- Free tier (2 users) includes invoicing, expense management, and mobile apps.
- Built-in reporting (P&L, cash flow, etc.) and Mailchimp integration.
Cons:
- Less brand recognition and smaller community than QuickBooks/Xero.
- User interface may not be as polished as market leaders.
- Advanced add-ons (like extra services) incur additional fees.
How to Choose the Right Accounting Software
With these options in mind, consider your business needs and accounting software features carefully. Key factors include price, ease of use, and required functionalitybusiness.org. Free software (Wave, Kashoo, ZipBooks) usually has limited features and is best for freelancers or new startupsbusiness.org. Small businesses with inventory or multi-user needs should consider robust paid solutions like QuickBooks Online, Xero, or Sage. Always look for:
- Features: Does it cover essential tasks? (invoicing, expense tracking, payroll, tax). For example, choose invoicing software for freelancers like FreshBooks if billing clients is your priority. Or pick expense tracking software like Zoho Books if you need strong receipt and mileage logs.
- Usability: Easy setup and a clean interface reduce training time. Tools labeled as easy accounting software (e.g. Kashoo, FreshBooks) can shorten the learning curve.
- Scalability: Can the system grow with you? If you plan to hire or expand, ensure unlimited users or users at a higher tier.
- Integrations: If you use other apps (CRM, e-commerce, payment gateways), choose software (like Zoho Books or AccountingSuite) that integrates well.
- Support and Security: Ensure the provider offers reliable support and uses strong data security (SSL encryption, backups).
Many of these platforms offer free trials. We recommend testing a couple – for example, free bookkeeping software online like Wave or ZipBooks can be used alongside a demo of QuickBooks or Xero to compare. Trying before buying ensures you pick the right fit for your small business.
FAQs
Q: Which accounting software is best for small businesses?
A: The “best” software depends on your needs. Many experts rate QuickBooks Online as the top overall choiceinvestopedia.com due to its comprehensive features. If cost is a concern, Zoho Books or Wave (free) are excellent. FreshBooks is highly regarded for service businesses (freelancers/consultants)investopedia.com. Xero is a great all-rounder especially for growing firms with multi-currency needs. Evaluate features versus price to find the right match for your business.
Q: Are there free accounting software options for small businesses?
A: Yes. Wave Accounting and ZipBooks are fully free for core bookkeeping and invoicingdiamondcareservice.combusiness.org. Zoho Books has a free tier for very small usersinvestopedia.com, and Kashoo offers a free invoice plan (with expense tracking)business.org. These free tools cover basic needs; keep in mind paid plans will unlock more features as you grow.
Q: What features should I look for in small business accounting software?
A: Essential features include invoicing, expense tracking, bank reconciliation, and financial reportinginvestopedia.com. If you have employees, built-in payroll management is important (QuickBooks, Gusto add-on for Xero, etc. provide this). Other useful tools are time tracking (for billing hours), tax calculation/filing modules (like QuickBooks Self-Employed or FreeAgent), and multi-currency support for international transactions. Modern software often includes mobile apps for on-the-go accounting. Review features like automated workflows and customizable dashboards to save time.
Q: How do I choose the right accounting software?
A: Start by listing your “must-have” features (e.g. invoicing, inventory, payroll). Consider your industry (some tools are niche-tailored), and evaluate ease of use. Compare pricing: free options suit freelancers or tiny startupsbusiness.org, while growing companies may need a paid solution. Check if the software integrates with other tools you use (e.g. payment processors or tax apps). Lastly, read reviews and use free trials. This process will help you pick the best software for your small company’s workflow.
Q: Do small businesses need payroll software?
A: If you have employees or contractors, yes. Many accounting platforms offer payroll modules or integrations. For example, QuickBooks Online has its own payroll service, and Xero integrates with Gusto for U.S. payrollinvestopedia.com. These payroll management software features handle wage calculations, taxes, and direct deposit, saving you from manual payroll entry. If you’re a sole proprietor with no employees, you can skip this or use simple pay-as-you-go services.
Q: What is invoicing software for freelancers?
A: Invoicing software helps freelancers and consultants send professional invoices and get paid faster. Top examples include FreshBooks and Wave, which specialize in easy invoice creation and online payment collectioninvestopedia.comdiamondcareservice.com. These tools often include client portals, recurring billing for ongoing clients, and tracking of hours billed. Essentially, they combine billing and basic accounting into one simple app.
Q: What are expense tracking software tools?
A: Expense tracking tools automate logging receipts and categorizing spending. Apps like Zoho Books, Wave, and QuickBooks include this feature – you can snap photos of receipts on your phone and the software attaches them to expenses. They also sync with bank feeds so purchases are captured automatically. Many free plans include basic expense logging (e.g. Wave, Kashoo) or mileage tracking (QuickBooks Self-Employed) for tax deductions.
Q: How do online billing software free options compare?
A: Free billing/invoicing software like Wave and ZipBooks let you send unlimited invoices at no costdiamondcareservice.combusiness.org. The trade-off is advanced accounting/reporting features are limited. Such tools are great for independent contractors or new businesses with straightforward needs. For more integrated features (like built-in expense management or payroll), you may choose a paid app like QuickBooks or FreshBooks after testing the free version.
In conclusion, choosing the right accounting software small business owners use can transform bookkeeping from a chore into a few clicks. Each of the tools above offers genuine value: QuickBooks Online for robustness, Xero for global flexibility, FreshBooks for easy invoicing, Wave/ZipBooks for free bookkeeping, and so on. We encourage you to try the free trials or versions of these software. Find the one that fits your workflow, and you’ll save time on invoices, taxes, and financial reporting.
If you found this guide helpful, share it on social media or leave a comment with your favorite accounting tool! Your feedback helps us keep this list up-to-date.
