The U.S. is experiencing a post-pandemic boom — not the expected baby boom but rather the birth of new businesses. As panic around the pandemic recedes and people reshuffle their positions within the U.S. workforce, thousands of new small businesses have popped up. In fact, according to the National Bureau of Economic Research, the number of new business applications is the highest on record.
These new businesses are growing up during an evolution in everyday sales transactions. From personal services to eCommerce operations, and from restaurants to retailers, changes in payment preferences have begun to affect all sectors. The fast-growing trend is digital transactions. This form of payment grew significantly during the pandemic in terms of both use and variety. For instance, businesses have seen dramatic increases in contactless payments, online ordering and the use of mobile wallets. In fact, digital payments made through smartphone wallets in the U.S., alone, are projected to reach $220.03 billion by 2023.
To stay on top of these trends, all businesses — new and old — will need cost-effective small business software (or “smb software”). This is especially true for accounting, payroll, invoicing, payment processing and other financial tracking processes. To keep track of your transaction and financial data, take a fresh look at the best software for small business. There may even be accounting and financial management programs tailored to your type of business.
Best Small Business Accounting Software
Over the past few years, several new accounting software options have entered the arena. Some long-standing programs like QuickBooks have also made updates to better serve small businesses’ evolving needs. Other noteworthy players have reduced subscription costs or revamped their offerings. Plus, there are even several no-frills free accounting services. Keep in mind, though, that most bare-bones free offerings do find ways to generate income. Some charge for additional options like payroll service or payment processing, for instance.
Whatever you choose, make sure you plan time to implement and train for your new business software. You’ll likely be the one using it, at least at first. For many small business owners, it’s not practical to hire a part-time bookkeeper, much less a fully trained accountant. That’s why small business accounting software is often one of the first programs a small business owner may use. Even independent contractors, freelancers and gig workers need an effective way to track their income and expenses. This helps them maximize deductions and avoid paying more taxes than is necessary. Depending on your specific needs, accounting software can take the place of hiring a CPA or manually tracking your income and expenses.
What Is the Best Accounting Software for Small Businesses?
All businesses have different needs. So, there’s no one-size-fits-all solution to label as the best accounting software for small business. Instead, let’s take a look at several business accounting software options. Based on factors like company size, key sectors and financial tracking goals, we’ll cover which type of business each one best supports. The sections below will help you choose the right accounting software for your business, whether you are looking to find the least expensive option, the most user-friendly tool or the most robust reporting capabilities.
Best All-Around Accounting Software for Small Businesses — Intuit Quickbooks
Many small businesses choose QuickBooks thanks to its intuitive interface and easy data entry. It also offers live help to answer customer questions about the software. Among its strong points are easy installation and the fact that many financial professionals are familiar with it, making it simple to get local assistance if needed. Below are some notable QuickBooks pros and cons to review as you consider this option.
Pros and Cons of QuickBooks
| Pros | Cons |
| Easy to set up and customize from the first time you begin to use it | Owners of multiple businesses must purchase separate subscriptions for each business |
| Provides templated reporting and includes a mobile app for easy data input on the go | The number of individuals who can simultaneously log in to QuickBooks from any single company is limited |
| Financial “dashboard” displays essential data like profits and losses in a digestible format for simple tracking and planning | Without a promotion, QuickBooks is often higher priced than many competitors |
Best Accounting Software for Service Businesses — FreshBooks
FreshBooks works particularly well to accommodate special circumstances that can arise for service-based businesses. The FreshBooks system is particularly helpful to independent business owners who offer personal services, such as:
- Personal trainers
- Event planners
- Personal assistants
- Doulas (midwives or birth coaches)
- Pet sitters
- Eldercare companions
- IT consultants
- Handyman service operators
- Rental property managers
- Personal shoppers
FreshBooks makes service business owners’ lives easier by offering advanced invoicing and payment tracking capabilities. Despite these features, there are some aspects of FreshBooks that might make it less than ideal for other business types. Keep these pros and cons in mind when considering this accounting package for your small business needs.
Pros and Cons of FreshBooks
| Pros | Cons |
| Makes it easy to deal with multiple ongoing invoices and billing processes | Doesn’t accommodate inventory tracking (making it unsuitable for retail operators) |
| Client-based pricing (companies with fewer clients pay less) and a free trial are available | No purchase order functionality is offered |
| Easy to set up discount offers, payment plans and deposit tracking | Licensing cost for additional users within the same company is $10 per person |
Easiest Accounting Software to Set Up — Kashoo
When it comes to accessibility, Kashoo is our top pick for novice small business owners who want to hit the ground running. While Kashoo doesn’t offer a strict step-by-step setup process, it’s a simple accounting platform, which makes it easy for people with no accounting experience. Below are a few more key advantages of Kashoo, along with some potential pitfalls that may make it less useful for some types of businesses.
Pros and Cons of Kashoo
| Pros | Cons |
| Simple, easy-to-use input of transactional data in a cloud-based interface | Customer service is not available 24/7 (though the company promises respond to customer questions within 24 hours) |
| Lack of complex analytical features streamlines and simplifies income/expense tracking | Records of item entry lack a high level of detail |
| Affordable cost, with a discount offered for small businesses that choose an annual subscription | Doesn’t have an Android app, inventory tracking functionality, or a standard financial dashboard |
Best Free Accounting Software — Wave
Unlike most other accounting programs, Wave doesn’t cost anything upfront. While use of its software is free, Wave charges transaction fees are charged if you choose to use it to process payments. Plus, when H&R Block acquired Wave a couple of years ago, it added significant tax preparation expertise to its offering. Here are some other positive aspects of Wave, along with a few drawbacks that could limit its appeal to specific types of businesses.
Pros and Cons of Wave
| Pros | Cons |
| No up-front costs | No inventory tracking ability |
| No limit on the number of users in your company | Lacks time tracking functionality |
| Supports multiple businesses with a single account | Full-service payroll tax integration is currently limited to 14 states (the remaining states require you to file paperwork manually) |
| Includes invoicing and receipt scanning capabilities | No estimated quarterly estimated tax facility is included |
Best Accounting Software for Freelancers — Quickbooks Simple Start
As noted, QuickBooks is our top pick for small business accounting software. Its basic Simple Start offering is also our recommendation for freelancers, independent contractors and others in gig-based employment. Simple Start limits access to a single individual, making it useful for sole proprietors and start-up businesses. Here are several aspects of Simple Start that can help you decide if this entry-level option could work for your small business.
Pros and Cons of Quickbooks Simple Start
| Pros | Cons |
| Full-featured accounting functionality in an affordable package (with a 50% discount for the first three months) | Limited to a single user (other QuickBooks subscription plans accommodate up to 25) |
| Helps maximize tax deductions | Lacks accounts receivable/payable, inventory tracking, cash flow, and other reports |
| Includes mileage tracking feature | No standard time-tracking or bill payment features (but these are available with upgraded QuickBooks plans) |
| Runs general accounting and bookkeeping reports |
Accounting and expense software for small business doesn’t have to be expensive
Depending on the type and size of your business, your accounting needs, and what you can afford, there’s an accounting software solution for you. And simple accounting software systems for small businesses are just one type of digital tool you can use to improve and streamline your operations. Many small business owners also use tools to schedule and manage their social media accounts, send out automated email marketing campaigns, and track customer sales and interactions. When you find the right tools to track and automate your work, you can better concentrate on what inspired you to start your business in the first place.
As you can see, small business owners have a wide variety of choices to consider when it comes to business software solutions. Likewise, we know you have a number of options when you seek answers to your small business insurance needs. We hope you found something helpful in this article and encourage you to share your own experience. We especially welcome your thoughts on the business accounting software programs we’ve mentioned — and any others you may have tried. Feel free to share in the comments below.
Next Steps: Want to learn more? Sign up for the Small Biz Ahead newsletter to receive a weekly roundup of the latest tools, trends, and resources.
Are any of these compliant with federal government accounting standards for contractors?
Some are. But you would have to ask the vendors directly.