Looking to reduce your data entry and benefit from financial reporting? This article will help you compare the best small business accounting software. From the fully featured options currently available, we recommend Xero, QuickBooks Online and Wave depending on your small business needs and budget.
Xero: Best Small Business Accounting Software Overall
If you’re looking for the best full featured small business accounting software, it’s difficult to dispute that Xero has taken over top spot from Quickbooks Online. This is because it’s easier to setup, it has a more intuitive user-experience and payroll is included in the standard price package.
Best Small Business Accounting Software Summary Table
|Recommended Price package||$30/month||$25/month||$0 Free/month|
|Additional costs||Everything you need is already included||Payroll $19/month |
+ $2 per employee/month
+ $4 per employee/month
Credit card processing at 2.9% + 30¢ per transaction
|Customer service||Good - Email and Phone Call-back||Good - Phone, Email and Live Chat||Adequate - Email|
|Visit Xero||Visit QuickBooks||Visit Wave|
Xero: Best Small Business Accounting Software Overall
Xero used to be considered the plucker challenger to QuickBooks Online. But Xero has grown its user base very quickly to over 1 million customers and 16,000 advisors/accountants. So why are users converting to Xero so fast? There are many good reasons for this. Here are our top three:
1. Xero is Beautifully Designed
Accounting is complex enough and so it helps to have the most simple and intuitive user-experience. With Xero, all the main accounting tasks are integrated and automated (as far as possible) to save you time. Whereas the QuickBooks user-experience is based on the original product launched in 2004. Thereafter, this has gone through many good updates bring it up to date as far as the limits of the original design make possible.
2. Xero Provides Better Value for Money
If you need a full featured service, including the ability to pay five staff, Xero will cost you $30/month for unlimited users.
To get the same package from QuickBooks, you will have to pay $25 + $19 + $10 ($2 per employee x 5) = $54/month for 5 users. (Note: In year two, QuickBooks will be more expensive without the discounts.
To get the same package from Wave, you will have to pay $15 + $20 ($4 per employee x 5 employees) = $35/month for 5 users. This makes the free option more expensive to use than Xero if you have to pay a small team.
3. Xero works without limits on Macs and iOS
If you are looking for the best fully featured accounting package for Apple Macs and iOS, Xero is the only option worth considering. This is because QuickBooks had to significantly reduce its feature set so that it can work on a Mac.
When Not to Choose Xero
If you want to be able to work online with your accountant, check to make sure your accountant is comfortable working in Xero. 16,000 accountants are now using Xero, but if your accountant isn’t, it may make sense to choose QuickBooks if they advise you well.
QuickBooks Online: Most Popular Small Business Accounting Software
QuickBooks was first designed in 2004 and now has over 2 million users. It also has the largest support network of accountants and bookkeepers trained in how to use QuickBooks. There are still lots of good reasons to choose QuickBooks, not least:
1. QuickBooks Online for Freelancers
If you are self-employed, QuickBooks has an excellent $5/month price package for freelancers who just need the basics like the ability to: track income and expenses, estimate quarterly taxes, run basic reports (e.g. forecast cash flow), send invoices and accept payments.
2. QuickBooks has the Biggest Support Network
If you want a wealth of support from an active user community, QuickBooks still has the largest network and the best customer support. If you are totally unfamiliar with accounting, you may find this helpful. It will also help you to come to grips with all of the QuickBooks features you need to learn.
When Not to Choose QuickBooks
If you have to pay your team, QuickBooks online is not a cost-effective option. Once the cost of payroll has been added in, it will still cost $24/month more than Xero to pay a team of five. This is even with a year one discount applied. And in year two (without the discounts) it will cost up to $34/month more than Xero if you need payroll.
Wave: Best Free Small Business Accounting Software
Wave delivers much more that you might expect from free small business accounting software. So much so that it rivals paid systems like Zoho Books and FreshBooks. There are many good reasons to use Wave, here are two:
1. You Can’t Afford Accounting Software
If you do not pay staff and you’re willing to settle invoices via electronic bank transfer, Wave is probably the best free option currently available. It comes with all the other basic features you need like invoicing, raising estimates, expense tracking, contact management and basic reports.
2. You’re a Freelancer with Basic Needs
If you’re self-employed, why pay anything when Wave can meet your requirements for free?
When not to use Wave
If you have lots of transactions and cash flow management is a high-priority, you’d be better off paying $5/month for QuickBooks. This is because Wave does not allow you to run cash flow statements or track your payments and bills. In addition, you have to manually add payments if you want to make them via bank transfer.
The Juice Press
This article acknowledges that Xero is growing faster than QuickBooks Online because it’s designed better, easier to use and much less expensive when have employees to pay. However, if you want to be part of the largest support ecosystem, QuickBooks may still be the right option for you. Or if you have no budget at all, Wave is in our view the best free small business accounting software currently available.