The Top 7 Business Accounting Software Tools for Startups

Find the Best Accounting Software in 2021

Smiling businesswoman with ribbon that says "Top 7 Accounting Software Tools."

Any small business accounting software you buy needs to be able to perform a host of everyday tasks, like track inventory, reconcile credit card and bank activity, account for taxes (e.g., sales tax), utilize double-entry accounting standards (i.e., simultaneous income and expense tracking), and everything else you need it to do. All of our picks on this list of the best accounting software for small businesses can do those things.

While not all business accounting software is suitable for small businesses, our top recommendation, FreshBooks, is recommended by top accounting firms, so you can make the most of your small business accounting software investment.

In this best accounting software for small business guide, we'll examine our 7 favorite small business options to help you decide which one’s right for you:

  1. FreshBooks
  2. QuickBooks Online
  3. Xero
  4. Wave Accounting
  5. Sage
  6. LessAccounting
  7. 1-800Accountant

Note that all of the small business accounting tools in this guide offer a free trial of up to 30 days. If you have two favorites but aren't sure which to choose, consider signing-up for both and deciding which you prefer. Feel free to dive into our reviews for more information or visit their websites directly. Enjoy!

Recommended: Hiring an accountant can save your company thousands of dollars in taxes each year. Get a free tax consultation with 1-800Accountant.

1. FreshBooks - $7.50 to $25/month

Why you should buy this:

FreshBooks is a leading small business accounting software firm that offers an assortment of invoicing and bookkeeping tools. FreshBooks' accounting software accounts for every business transaction, whether online or offline. Freshbooks offers four premium plans with monthly fees starting at just $15 per month.

With Freshbooks, you will have the tools needed to manage and control your time, finances, and transactions better. With its well-organized platform and visual dashboards, you can keep track of all of your money in real-time, all the time.

Freshbooks makes managing your cash flow easier than most other small business accounting software solutions we reviewed, mainly because they offer a dedicated support team that customizes FreshBooks to suit your business. You also get a free 30-day trial to try the software, which means no financial risk for you.

Who is it for:

When it comes to expenses, most small businesses are overwhelmed by the amount of information they need to keep track of. It's easy to end up duplicating your receipts, and manually entering your payments and other data causes even more confusion and frustration. FreshBooks business accounting software eliminates these problems instantly.

Freshbooks has a clean, user-friendly interface that allows users to easily enter their information and track multiple expense streams. Whether you're paying for employees, supplies, materials, equipment, or space, Freshbooks has you covered with professional and convenient tracking features. You can even use its advanced expense tracking functionality to set up recurring payments (e.g., retainer payments) and easily track your time, sales, and expenses throughout the year.

Basically, everything that an accountant would need to make sure you're getting the most deductions against your income, so you end up paying the least amount in taxes -- that's all tracked within the Freshbooks platform.

Why we picked it:

We picked FreshBooks as the best accounting software for small businesses for a few reasons. For one, they have a dedicated onboarding and support team that customizes and sets up the software for your specific business. And, they don't charge extra for this service.

We also picked this as the best overall small business accounting software because Freshbooks was intentionally developed to fit around your business instead of your business having to fit around the software. This means the software will adapt and scale with your business.

FreshBooks is also feature-rich and integrates seamlessly with Gusto's payroll service (and we love Gusto as a payroll service).

Price Breakdown:

Lite ($7.50 per month)

  • Unlimited customized invoices for five billable clients
  • Unlimited expenses tracking, estimates, and time-tracking
  • Sales tax and report tracking
  • Client profiles and account statements
  • Self-service portal for clients
  • Scheduled late fees and late payment reminders
  • Online credit card payments and ACH transfers
  • Business health reports, tax reports, and performance dashboards
  • Mobile mileage tracking
  • Project budget and billing management

Plus ($12.50 per month)

  • All features in the Lite package
  • Unlimited customized invoices for 50 billable clients
  • Ability to accept e-Signatures
  • Unlimited proposals
  • Client retainers
  • Double-entry accounting reports (including general ledger, trial balance, and chart of accounts)
  • Bank reconciliation
  • Accountant access features

Premium ($25 per month)

  • All features in the Lite and Plus packages
  • Unlimited customized invoices for unlimited billable clients
  • Customized email templates and signatures
  • Automated dynamic client emails
  • Accounts payable management
  • Project profitability management

Select (Varies)

  • All features in the Lite, Plus, and Premium packages
  • Removal of FreshBooks branding in client emails
  • Lower credit card transaction fees
  • Capped ACH fees
  • Subscription-based payments - a combo of recurring billing and automation
  • Over-the-phone credit card payments
  • Secure Card Storage for client profiles
  • Ability to charge client credit cards
  • Includes two team member accounts
  • Account manager
  • Customized onboarding services
  • Data migration services
  • Advanced payment capabilities

Pros and Cons:

Pros:

  • Full service and support right out of the gate
  • Full customization to meet the needs of your business
  • Free migration from any other business accounting software
  • Thorough onboarding and training
  • Deep business analytics and insights (measure and track your success)
  • Real-time inventory tracking (unlimited inventory tracking and invoicing)
  • Easy data entry and journal entry updates
  • Time tracking (great for tracking retainer hours)
  • Multiple app integrations
  • Keep up with products and services
  • Cloud-based (manage your financials entirely online)
  • Useful add-ons (e.g., virtual terminal to collect payments from invoices)
  • Manage tax and other financial information effortlessly
  • Highly praised Android and iOS apps (great for checking financials on the go)

Cons:

  • FreshBooks requires talking with a support specialist first before purchasing because they want to help you even before you become a customer (no wonder they're the best overall accounting software).

Customer Service:

Aside from being the best invoicing software for your small business, Freshbooks offers the best customer service too. Freshbooks' customers rave about the quality service they receive. On GetApp, FreshBooks averages a 4.6 out of 5 stars. In fact, they have more users than any other small business accounting software, making them a strong contender in the industry.

FreshBooks logo

2. QuickBooks Online - $15 to $50/month

Why you should buy this:

The main reason you might consider buying QuickBooks Online is that it handles well, and most accountants are familiar with how it works. So using it makes sense if you're hiring an accountant to do your books.

QuickBooks has been around a long time, and the software has only gotten better over the years. The online version is easy enough to navigate intuitively, but it would behoove you to take advantage of the online support or, at the very least, watch some YouTube videos where users demo the software for you using screencasting software.

Who is it for:

QuickBooks Online is great for small business owners who need premium business accounting software. If you've already used QuickBooks in the past, say the desktop version of QuickBooks, you may want to upgrade to the online version. The online version gives you access from anywhere, plus you get access to the faster loading Android and iOS mobile apps.

Why we picked it:

We picked QuickBooks as our second choice for the best accounting software for small businesses because of its longevity in the marketplace and its accountant-friendly features.

Price Breakdown:

Each pricing tier is available for 50% off for three months if you purchase a plan without a 30-day trial.

Self-Employed ($7.50 to $15 per month)

  • Import and sort transactions
  • Ability to take photos of receipts with the mobile app
  • Quarterly tax estimation
  • Basic profit and loss, expense, and balance sheet reports
  • Mileage tracking with smartphone GPS

Simple Start ($12.50 to $25 per month)

  • Import and sort transactions
  • Custom invoices
  • Tracking for invoice statuses and payment reminders
  • Accountant access features
  • Profit and loss, expense, and balance sheet reports
  • Dashboard to track cash flow and reporting
  • Ability to take photos of receipts with the mobile app
  • Mileage tracking with smartphone GPS
  • Cash flow management up to 90 days in advance of transactions
  • Credit card payments with mobile card reader or other apps
  • Integration with ecommerce platforms like Shopify
  • Automatic tax calculations
  • Customized estimates
  • Mobile signatures
  • 1099 contractor management, including preparation and filing

Essentials ($20 to $40 per month)

  • All features in the Simple Start package
  • User-access levels and separate sign-ins for three users
  • Bill management and online payment options
  • Time-tracking for employee time and billable client hours
  • Integration with QuickBooks Time

Plus ($35 to $70 per month)

  • All features in the Simple Start and Essentials packages
  • User-access levels and separate sign-ins for five users
  • Inventory tracking, payments, and vendor management
  • Syncs with platforms like Amazon and Etsy
  • Project profitability tracking

Advanced ($75 to $150 per month)

  • All features in the Simple Start, Essentials, and Plus packages
  • User-access levels and separate sign-ins for 25 users
  • KPI tracking and analysis tools from Fathom
  • Ability to create presentation reports and track individual performances
  • Customized user access
  • Integration with LeanLaw, HubSpot, DocuSign, Bill.com, and Salesforce
  • 24/7 support integration with Priority Circle (separate membership)
  • Free online training courses and webinars
  • Workflow automation
  • Company data restoration
  • Task management

Pros and Cons:

Pros:

  • Perfect for those familiar with QuickBooks Desktop
  • Popular accounting software for small businesses (over 4 million customers)
  • Integrates with hundreds of third-party apps
  • Cloud-based so you can use it anywhere
  • Accountant-friendly software

Cons:

  • The online version is not as robust as the QuickBooks Desktop version
  • Customer support is lacking with long wait times
  • Necessary add-ons and integrations (e.g., payroll, etc.) are expensive, making the software seem overpriced when compared to other small business accounting software options

Customer Service:

Unfortunately, QuickBooks has a 1.4 out of 5 star Trustpilot rating, which raises some concerns. However, the Android mobile app has a 4 out of 5 star rating on Google. And, even better, the Apple iOS App rates QuickBooks 4.7 out of 5 stars.

QuickBooks Online logo

3. Xero - $11 to $62/month

Why you should buy this:

Xero is best if you need a complete small business accounting software solution to manage your books but prefer a more minimalistic and simplistic accounting software for small business. Xero handles income and expenses, inventory management, A/R and A/P, bank and credit card tracking, and other accounting tasks that small business owners need, but with fewer reports and other less necessary features.

Who is it for:

Xero is best suited for less complex businesses, more like your mom and pop shops, one-off restaurants, even Etsy stores, think self-employed individuals. It is great for small business owners needing fewer accounting features.

Why we picked it:

We like Xero as our third choice for the best accounting software for small business because of its simplicity and ease of use. Xero's cloud-based accounting software does what you would expect, like record transitions, calculate tax, and track both inventory and financial data. Plus, you can easily integrate with Gusto Payroll for an additional fee.

Price Breakdown:

Early ($11 per month)

  • Ability to send quotes and up to 20 invoices online
  • Tracking for up to five bills
  • Bank reconciliation
  • Data capture with Hubdoc
  • Connection with banks
  • Inventory management
  • Accounting reports
  • Online invoice payments
  • Purchase orders
  • File storage
  • Contact management
  • Sales tax management

Growing ($32 per month)

  • All features in the Early package
  • Ability to send unlimited quotes and invoices online
  • Unlimited bill tracking
  • Bulk transaction reconciliation

Established ($62 per month)

  • All features in the Early and Growing packages
  • Multi-currency capabilities
  • Project tracking
  • Ability to take photos of receipts
  • Expense monitoring

Pros and Cons:

Pros:

  • Easy to use bookkeeping software
  • Simple inventory management to run your business smoothly
  • Run basic reports and analytics to measure the health of your small business
  • Record products and services in the business ledger
  • Calculate tax and other miscellaneous expenses
  • Manage and make manual journal entries as needed
  • Lots of payment processing options through various app integrations
  • Good software for self-employed persons
  • Easy to use mobile app

Cons:

  • Business owners get fewer features than with other small business accounting software
  • Fewer reports than FreshBooks and Intuit QuickBooks
  • Less customer service and support options
  • Inventory management is quite basic
  • Xero charges for ACH transactions

Customer Service:

Xero also boasts excellent customer feedback, as they maintain a 4.4 average score out of 5 on GetApp. We love how they’re constantly evolving and improving their platform, which is a major reason Xero nears the top of our best for small businesses accounting tools review.

Xero logo

4. Wave Accounting - Free, with à la carte extras

Why you should buy this:

You don't have to buy Wave Accounting as it's a free accounting and invoicing software platform. However, you'll likely want to buy the à la carte extras, including Wave's payroll processing ($35 per month) and Wave's payments (2.9%-3.4% plus $0.30 credit card processing; 1% ACH fees).

If you operate a small service company, Wave Accounting will probably work for your business needs.

Who is it for:

Wave Accounting is best suited for small service businesses, more like home cleaning businesses, window washing, etc. It is great for small business owners needing very few features.

Why we picked it:

We like Wave Accounting because it's free while letting you track your income and expenses and lets you do other very basic finance functions.

Obviously, being a truly free, 100% cloud-based product has its limitations. Still, for those who don’t need a large variety of advanced features, there’s no sense in paying for functions you won’t use.

Features:

  • Unlimited income and expense tracking
  • Sales tax tracking
  • Ability to add unlimited partners, collaborators, or accountants
  • Double-entry system
  • Reports for overdue invoices and bills, profit and loss, and cash flow
  • Unlimited bank account and credit card connections
  • Tax categories for income and expenses
  • Ability to run multiple businesses on a single account
  • Dashboard performance features
  • Unlimited invoices
  • Recurring billing with automated reminders
  • Credit card and ACH payments (additional processing fees)
  • Payroll services (additional monthly fee)

Pros and Cons:

Pros:

  • Free software for small businesses
  • Send unlimited free invoices
  • Great for a small service business for income and expense tracking

Cons:

  • Unlikely to scale with your business
  • Very basic features
  • Extras are more costly than other options

Customer Service:

Wave Accounting does not offer phone support, which is understandable since the software is free. Even so, the website chat feature uses a bot. No real person there either!

If you want a real answer, you have to email the company and wait for someone to research your query and then get back to you. We sent a test email and never got a response back.

TrustRadius rates Wave Accounting 7.3 out of 10, which is roughly 3.5 out of 5 stars.

Wave Accounting logo

5. Sage - $10/month to $842/year

Why you should buy this:

Sage is a world-leading business applications and enterprise resource planning (ERP) software development company. The applications are designed to meet all your business accounting needs. Some of Sage's comprehensive features consist of balanced scorecards, manufacturing modules, front-line control, project accounting, and lots more.

Sage also offers small business solutions, which consist of accounting, invoicing, and payment processing through various integration partners offers a variety of other endless possibilities for helping you manage and track your business's financials with complete accuracy.

Who is it for:

Sage is suitable for any size and any type of business. For small businesses, though, Sage offers two cloud-based programs, namely, the basic Sage Accounting software and the more robust cloud-based desktop hybrid accounting Sage 50cloud software.

The advanced accounting tools in Sage provide financial and accounting information and insights to management and executives. Besides businesses, Sage's software solutions are used widely by financial service firms and global manufacturing companies.

Why we picked it:

Sage made our small business accounting list mainly because it offers several great accounting solutions for small businesses. The pricing for these solutions starts low and runs higher depending on the solution you choose.

Sage Accounting Price Breakdown:

Sage Accounting is really good for startups, small businesses, solopreneurs, retail service spaces, where you aren't really doing a lot of in-depth inventory management.

Sage Accounting Start ($10 per month)

  • Invoice creation and delivery
  • Finance tracking
  • Automatic bank reconciliation

Sage Accounting ($25 per month)

  • All features in the Start package
  • Unlimited user support
  • Estimate creation and delivery
  • Cash flow forecasts
  • Purchase invoice management
  • Three-month trial of AutoEntry

Sage Pros and Cons:

Pros:

  • Completely cloud-based to easily manage income and expenses
  • Real-time banking integration
  • Accountant friendly reports

Cons:

  • Not so great for nonprofits, doesn't handle grant management
  • Doesn't currently have a payroll integration (not even an integration partner)
  • Only for a single company, so no consolidated reporting
  • Does not have a true budgeting module
  • Doesn't do well for job costing or project management

Sage 50cloud Price Breakdown:

Sage 50cloud is desktop-based with a cloud-based hybrid functionality. Sage 50cloud used to be called Peach Tree. It is truly a desktop application, but you use the cloud to back it up to store and save your data.

Sage 50cloud is more robust than Sage Accounting, meaning it has more features.

Pro ($340 per year)

  • Expense and revenue management
  • Instant bill pay
  • Simple customer invoicing
  • Automatic bank reconciliation
  • Inventory tracking and management
  • Integration with Microsoft 365
  • Sage Security Shield protection
  • Basic job costing management
  • Automatic updates
  • Unlimited phone and online chat support

Premium ($510 per year)

  • All features in the Pro package
  • Detailed job costing management
  • Audit trails
  • Advanced budgeting tools
  • Role-based security

Quantum ($842 per year)

  • All features in the Pro and Premium packages
  • Ability to manage multiple companies at once

Sage 50cloud Pros and Cons:

Pros:

  • More robust and feature-rich than Sage Accounting
  • Run loads of insightful reports

Cons:

  • Expensive compared to other better solutions
  • No automatic or real-time updates are possible when linking a business bank account

Customer Service:

Trustpilot gives Sage 4.6 stars out of 5. And 85% of customer reviews are rated excellent!

Sage logo

6. LessAccounting - $24 to $36/month

Why you should buy this:

If you don't need fancy apps or complex software to manage your business, LessAccounting could be what you're looking for. With LessAccounting, you log in to your account through their website and record your business transactions. It is that simple!

Who is it for:

LessAccounting is an excellent choice for freelancers and sole proprietors. LessAccounting applies the “less is more” philosophy to small business accounting. If you do not have complex business needs, then you may want to check into LessAccounting.

Important Note: LessAccounting is a "hands-on" accounting software where you must manually manage your books using their online platform.

Why we picked it:

We like LessAccounting because it is so simple to use. There are no apps to download or software to learn. You simply plug your financials into the LessAccounting website and generate the reports you need.

LessAccounting also offers a four-tier bookkeeping service option as well. They'll keep the books for you. You pay based on your monthly expenses, and come tax time, you're ready to pass them off to your accountant.

Price Breakdown:

Invoice Only (Free)

  • Up to three active customers
  • Basic invoices
  • Unlimited team members
  • Customer management
  • Payment integration with Stripe, PayPal, and Square

Lite ($24 per month)

  • Unlimited customer invoices, expense entries, estimates, and team members
  • Automated bank imports
  • Mileage tracking
  • Payment acceptance
  • Budget creation
  • Tax reports
  • CPA integration

Team ($36 per month)

  • All features in the Lite package
  • Unlimited proposals
  • Recurring invoices
  • Late payment reminders
  • Time tracking
  • Basic bookkeeping help
  • Bank reconciliation
  • Advanced tax reports
  • Multiple businesses

Pros and Cons:

Pros:

  • Simple accounting solution for the solopreneur or freelancer
  • Great for business owners with basic accounting needs

Cons:

  • Can't handle complex accounting situations
  • Expensive compared to other options

Customer Service:

LessAccounting has a chat feature on its website that is powered by a bot. When we reached out for support, we were asked to enter our email so that someone from the team could get back in touch with us. That being said, TrustRadius gives LessAccounting 5 out of 5 stars. It doesn't get better than that!

LessAccounting logo

7. 1-800Accountant - $115 to $349/month (paid annually)

Why you should buy this:

We reccommend 1-800Accountant if the idea of doing your own accounting threatens your peace of mind, let alone your way of life. They are a virtual bookkeeping and accounting firm that handles your accounting for you.

Who is it for:

1-800Accountant is for small businesses that don't want to take on the responsibility of managing their own accounting.

Why we picked it:

We like 1-800Accountant because they are a reputable company with very good customer service and customer reviews and they are much less expensive than hiring a traditional accounting firm. They are a great low-cost solution for small businesses owners who don't wish to do their own accounting.

Price Breakdown:

Starter ($115 per month)

  • Membership for 1-800Accountant portal
  • Dedicated accountant for your business
  • 24/7 advice
  • Tax planning
  • Quarterly reviews

Growth ($219 per month)

  • All features in the Starter package
  • Personal and business tax preparation

Executive ($349 per month)

  • All features in the Starter and Growth packages
  • Bookkeeping capabilities
  • Priority support
  • Financial reports

Enterprise (Varies)

  • Customized accounting package for experienced businesses

Pros and Cons:

Pros:

  • You don't have to do your own bookkeeping and accounting
  • Trusted and certified accountants manage all your business finances

Cons:

  • Less hands-on account management

Customer Service:

1-800Accountant gets 4.7 out of 5 stars on Trustpilot. Our experience talking with their customer support was fantastic. 1-800Accountant's customer service is helpful and responsive.

Business Accounting Software Pros and Cons

Business Accounting Software Pros

  • With accounting software, the chance of human error is less likely. All accounting software tools are extremely accurate (provided you enter the right information).
  • By using business accounting software, you’ll be able to save countless hours over the lifetime of your business. Your financial reports are totally automated.
  • If your business needs to invoice customers, you can customize and send them out with your accounting software. This’ll help you get paid faster!
  • No more calculating on your own because most accounting software automatically calculates your financials for you.
  • With the built-in expense tracking, accounting software is extremely useful for keeping an eye on where your money’s going.

Business Accounting Software Cons

  • Since many of the accounting software tools are web-based, an internet connection is required. Even the ones that aren’t cloud-based need web access from time to time for syncing purposes.
  • Accounting software most likely won’t be the ‘end-all’ for keeping finances in check. It’s likely that you’ll still need an accountant depending on the nature of your business.

Which is the Best Accounting Software?

There are a lot of different accounting software options in the marketplace. The best accounting software is the one that serves your business needs best. Based on our hundreds of hours of research reviewing all of these companies, this list we've put together for you above should give you a good idea of which small business accounting software will be best for your particular business. If you want to get a more complete picture of the tools that interest you, read our full reviews or sign up for free trials to the ones that interest you.

In general, we prefer FreshBooks due to their easy to use software and great customer support. They’re one of the best accounting software tools available for entrepreneurs in most fields. It's flexible, powerful and affordable.

Frequently Asked Questions

What is the best accounting software for small business?

The best accounting software for small business offers you the most features, the best price, and is one that scales with your business. Do not purchase based on promotional offers. Purchase software you can learn easily that you'll use for years.

Is Zoho accounting software free?

Zoho accounting software, called Zoho Books, is free with revenues less than $50,000 per year. Then prices rise to $15 per month for a Zoho Books Standard Account, $40 per month for a Zoho Books Professional Account, and $60 per month for a Zoho Books Premium Account. Zoho Books is free.

What is the best small business accounting app?

Here are the best small business accounting apps:

  • FreshBooks Accounting Mobile App: Best Overall
  • QuickBooks Accounting Mobile App: Best for Accountants
  • Xero Accounting Mobile App: Best for Simplicity
  • Wave Accounting Mobile App: Best for Service Businesses
  • Sage Accounting Mobile App: Best for Freelancers
  • 1-800Accountant Mobile App: Best for Self Employed

What is the best accounting software for self-employed?

The best accounting software for self-employed professionals is 1-800Accountant. 1-800Accountant handles all bookkeeping and accounting for busy on-the-go self-employed professionals. With 1-800Accountant, you don't have to worry about the stress of keeping your own books.

Is free accounting software really free?

Yes, there is free accounting software that is really free. Free accounting software is basic at best, and not everything free is worth using, especially when it comes to business bookkeeping. Also, a free trial for online accounting software is something different than free accounting software.

Does FreshBooks track mileage?

Yes, track mileage by opening the FreshBooks app on your smartphone and it will automatically track all the miles (or kilometers) that you drive and automatically import this data into your FreshBooks account. 2021 standard mileage deduction is $0.56 per mile that you can write off on your taxes.