Best Accounting Software for Small Business of 2024

What Is Accounting Software for Small Business?

Accounting software packages are specialized computer programs that help businesses, track invoices, generate reports, and record and report financial transactions. Large firms may choose complex, customized accounting software packages that track inventory, manage payables and receivables, and handles payroll. For smaller businesses, off-the-shelf packages like those highlighted here can accomplish most or all of the firm’s accounting needs.

Accounting software reduces the amount of time spent on manual data entry by allowing users to sync their business bank accounts and credit cards with the software. Once synced, transactions will flow into the accounting software, which can be categorized into various accounts. While most accounting software is easy to use, a general understanding of accounting principles is needed to ensure that financial reports are prepared correctly.

For this reason, many businesses hire bookkeepers or accountants to maintain or review their books. Cloud-based online accounting software makes it convenient for businesses to share their accounting data with their bookkeepers or accountants.

Additionally, many accounting software packages allow third-party application integrations. For example, if a business owner uses a point of sale (POS) system to capture sales transactions, the POS system could potentially integrate with the accounting software to record specific transactions, sales tax liabilities, sales by subcategories, and more. In a service-based business, a time-tracking application could integrate with the accounting software to add labor to a client invoice.

How to Choose the Best Accounting Software for Small Business

Start your search by understanding your business and what it needs from accounting software.

• Your budget: Free business accounting software is available and the subscription packages reviewed here cost a few dollars per month. Can your budget support a paid option?
• Business-specific needs: Do you need specialized software such as for a restaurant or retail store or will a basic software system work for your business?
• Accounting needs: Do you need more than the basics (income and expense tracking, basic reports, budgeting, tax reporting and filing)? What about later, as your business grows?
• Usability: How easy is the software to use? Will you or someone on your staff be able to use it efficiently?
• Integration and Collaboration: Does the software sync with your existing or planned systems (such as payroll, or inventory, or point-of-sale). Is it easy to share details and reports with your accountant or bookkeeper?
• Customer support: Does the vendor provide adequate resources to help you understand the software, and the underlying accounting and bookkeeping practices?

Essential Features of Accounting Software for Small Business

Depending on the accounting software you choose, you may have access to some of the following features: 

• Income and Expense Tracking: Most accounting software allows you to track and categorize your income and expenses, sometimes through third-party app integrations. You can typically also take photos of your receipts for digital storage. 
• Invoicing: Accounting software allows you to customize and create invoices. The best accounting software also allows for automation of recurring invoices and payment reminders and enables payments directly from the invoice. 
• Receiving Payments: Accounting software can make it easy to accept credit card payments and ACH transfers. Some allow for app payments as well. 
• Paying Bills: Accounting software lets you organize your bills so you don’t miss your due date. You can often pay multiple contractors at once with the right software. 
• Project Estimates: With the right software, you can customize project estimates and even collect mobile signatures. 
• Time and Mileage Tracking: Some accounting software allows you to enter time for your employees and independent contractors or provide them with access to clock in and out from their phones. You can often use your phone’s GPS to automatically track mileage as well. 
• Financial Reporting: Financial reporting helps you get a clear picture of your business finances, from cash flow planning to estimating project profitability to providing profit and loss reports to stakeholders. 
• Payroll: Some accounting software includes payroll features, which may allow you to automate paying your employees with direct deposit.
• Inventory: Businesses that stock products need accounting software to keep track of when inventory is low. You may also use software to create purchase orders and manage vendors. 

Alternatives to Small Business Accounting Software

• Hiring an Accountant: Freelancers and micro-business owners may not need accounting software if they outsource accounting tasks to a CPA. But in many cases, it’s still helpful to have a platform that keeps your income and expenses organized. 
• Using Free Software: You can rely on free software, like Wave, to handle your accounting and invoicing needs. There may be other types of free software for other business needs as well, but you’ll lose the benefit of having everything in one place. 
• Relying on Spreadsheets: You can manage your business accounting the old-fashioned way, with spreadsheets that track every aspect of your business.

Why You Should Trust Us

Investopedia collected and analyzed scores of key data points from 19 companies to identify the most important factors for readers choosing accounting software for small business. We used this data to review each company based on cost, scalability, reputation, accounting features, and other factors to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best accounting software for small business since 2020.

How We Picked the Best Accounting Software for Small Business

We looked at 19 accounting software companies with specialized products for small businesses before choosing our top five software options. We considered cost, scalability, ease of use, reputation, and accounting features.

Reputation was a key consideration because the longer a company has been around, the more likely that any technological glitches have been resolved, which ensures that a company’s important financial information will be reported accurately. Scalability was the next most important consideration because as a company grows, its accounting needs grow as well, and transferring financial information to new software can be tedious.

Finally, ease of use and collaboration for business owners, employees, and accountants was considered because it’s important for all users to be able to access and review the financials at the same time.

Learn More About Small Business Accounting