Best Accounting Tools for Small Businesses in 2024

Small business owners juggle countless responsibilities, from managing day-to-day operations to handling customer needs. However, one of the most crucial tasks is maintaining accurate and up-to-date financial records, which are essential for tracking performance and ensuring tax compliance. For many small business owners, traditional accounting methods are time-consuming, error-prone, and often challenging without professional help.

This is where accounting software comes into play. Using accounting tools for small businesses can streamline financial tasks, reduce manual errors, help track income and expenses in real-time, and provide additional tools for invoicing and payroll that can save hours every month. Studies show that small businesses using accounting software are more likely to stay on top of their finances, ultimately increasing their chances of growth and profitability.

In this article, we’ll explore the best accounting tools for 2024, each chosen for its affordability, user-friendly features, and ability to meet the unique needs of small businesses. By the end, you’ll have a solid understanding of the best accounting solutions on the market and how to pick one that aligns with your business goals.

Why Accounting Software is Necessary for a Small Business

For small businesses, financial management is often a major hurdle. Without a dedicated accountant or finance team, small business owners are left to manage accounts on their own, which can lead to costly mistakes or missed opportunities for financial growth. Accounting software offers an invaluable solution by simplifying and automating the most critical financial tasks. Here are a few reasons why it’s essential for a small business:

Saves Time: Accounting software automates many financial tasks, such as generating invoices, tracking expenses, and reconciling bank accounts. This frees up valuable time that business owners can spend on strategic areas like customer service, product development, and growth planning.
Reduces Errors: Manual accounting processes are prone to errors, which can lead to inaccuracies in financial reports or tax filings. Accounting software minimizes human error by automating calculations, which improves accuracy and keeps business finances on track.
Improves Financial Insight: Many accounting tools provide real-time financial reports that give small business owners an accurate picture of their financial health. This insight helps them make better decisions, identify trends, and spot areas for improvement.
Enhances Cash Flow Management: By tracking income, expenses, and accounts receivable/payable, accounting software allows business owners to stay on top of cash flow and ensure they have enough liquidity to cover operational expenses.
Streamlines Tax Compliance: Most accounting software includes tools for tax preparation, which simplifies compliance and helps small businesses avoid penalties. Many programs can automatically categorize expenses, track tax-deductible purchases, and generate reports that make filing taxes easier.

By adopting accounting software, small business owners can take control of their finances, make data-driven decisions, and build a foundation for sustainable growth.

Key Factors to Consider When Choosing an Accounting Tool

When evaluating accounting software, consider the following factors to ensure it will meet your business’s needs over time:

Pricing and Scalability: Many small businesses start with a basic plan, but as they grow, they need software that scales. For example, a retail business that expands might need multi-user access or inventory features, which means the ability to upgrade plans is key.
Usability and Accessibility: Software that is easy to navigate and provides mobile access allows business owners to check finances on the go. For instance, service-based businesses benefit from tools like FreshBooks with a simple, intuitive interface and mobile-friendly design.
Core Features: Essential features include invoicing, expense tracking, tax preparation, and financial reporting. Additional needs, like inventory management or payroll, depend on the business type. Retailers, for example, may prioritize inventory, while freelancers might prioritize invoicing.
Customer Support and Reliability: When financial issues arise, responsive support can be a lifesaver. Look for software with multiple support options and a reputation for stability. Some platforms, like Wave, offer free essential features but charge for enhanced customer support.

Top 10 Accounting Tools for Small Businesses in 2024

Each tool below has been evaluated based on its usability, feature set, price, and feedback from real users, making it easier for you to choose the best solution for your unique business needs.

1. QuickBooks Online

QuickBooks Online is one of the most popular accounting tools, especially among small businesses. It’s a cloud-based software by Intuit that covers nearly all aspects of accounting and is known for its scalability, offering options for small businesses as well as larger enterprises.

Key Features: Automated invoicing, real-time expense tracking, financial reporting, and bank reconciliation.
Pros: A comprehensive set of features makes it suitable for businesses of all sizes, and it integrates with numerous third-party apps. It’s highly scalable, with plans for sole proprietors, small businesses, and larger teams.
Cons: Some users find it pricey, especially if they need advanced features, and the initial setup can be time-intensive.
Pricing: Starts at $25/month, with four pricing tiers.
Best For: Small to medium businesses looking for scalability and advanced features.
User Review Insight: QuickBooks users appreciate the range of customization options and the ability to generate detailed financial reports. However, a common concern is the cost of higher-tier plans, especially for growing businesses.

2. Xero

Xero is a cloud-based accounting software ideal for businesses that need international features, like multi-currency support, as well as integration with a broad range of third-party applications. It is especially popular among eCommerce and retail businesses.

Key Features: Multi-currency support, inventory tracking, project management, and real-time bank feeds.
Pros: Xero’s intuitive dashboard and broad feature set make it ideal for eCommerce and retail businesses. Additionally, it integrates well with other platforms, such as Shopify, PayPal, and Square.
Cons: Limited customer support on the basic plan and additional charges for payroll features.
Pricing: Starts at $13/month, with several tiers based on features.
Best For: Growing businesses that require strong integration capabilities and global transactions.
User Review Insight: Users enjoy Xero’s modern interface and ease of navigation. However, some wish for more responsive customer support and find that its advanced features come at an extra cost.

3. FreshBooks

FreshBooks is a cloud-based accounting solution built with freelancers and service-based businesses in mind. It offers tools like time-tracking and project management in addition to standard accounting functions, making it popular among consultants, lawyers, and freelancers.

Key Features: Invoicing automation, time tracking, expense categorization, and project management.
Pros: FreshBooks is known for its straightforward invoicing and time-tracking tools, making it ideal for service-based businesses. It also offers a clean interface that is easy to navigate.
Cons: Limited reporting capabilities compared to QuickBooks, and it can get costly if you have a larger client base.
Pricing: Starts at $15/month.
Best For: Freelancers and small service businesses that prioritize invoicing.
User Review Insight: Users appreciate FreshBooks for simplifying billing and payment processes, but some feel it lacks advanced reporting. They also note that the platform becomes pricey as their client base expands.

4. Wave Accounting

Wave is a popular, user-friendly accounting software that’s entirely free, making it a go-to choice for small businesses on a tight budget. Despite its cost-free model, Wave still offers a robust set of features suitable for small business accounting needs.

Key Features: Invoicing, receipt scanning, double-entry accounting, and bank reconciliation.
Pros: Wave offers essential accounting functions at no cost, making it accessible to businesses with limited funds. Its user-friendly interface is intuitive and easy to navigate.
Cons: Customer support is limited, and it lacks payroll and inventory management unless you pay for add-ons.
Pricing: Free (with paid options for payroll).
Best For: Freelancers and small businesses seeking basic accounting without monthly fees.
User Review Insight: Users appreciate Wave’s free core accounting features but note that adding payroll services can increase costs, and support is limited compared to paid options.

5. Zoho Books

Zoho Books is part of the Zoho suite, which provides a range of integrated business solutions. This makes it ideal for small businesses that may want to add CRM or project management tools as they grow.

Key Features: Automated workflows, invoicing, expense tracking, client portal, and inventory management.
Pros: Zoho Books is feature-rich, offering advanced accounting features like client portals and automated workflows. Its integration with other Zoho apps makes it highly adaptable.
Cons: Limited third-party integrations outside of the Zoho ecosystem and lacks multi-currency support on lower-tier plans.
Pricing: Starts at $15/month.
Best For: Small businesses that may want to scale up and add additional tools like CRM and project management.
User Review Insight: Users appreciate Zoho’s integration with other business apps in its suite, though some feel constrained by limited third-party integrations if they don’t use Zoho’s ecosystem.

6. Kashoo

Kashoo is a straightforward, no-frills accounting software with an emphasis on ease of use. Its design makes it especially well-suited for freelancers and small businesses that prioritize simplicity over advanced features.

Key Features: Invoicing, income and expense tracking, tax calculation, and receipt scanning.
Pros: Kashoo is easy to set up and navigate, making it accessible for those without an accounting background. It offers excellent value for solo entrepreneurs and freelancers.
Cons: Limited feature set, especially when compared to tools like QuickBooks and Xero, and no multi-user functionality.
Pricing: $20/month.
Best For: Freelancers and sole proprietors who want a simple, no-frills accounting tool.
User Review Insight: Users appreciate Kashoo’s simple, user-friendly design, though it may not have enough features for growing businesses with complex accounting needs.

7. Sage Business Cloud Accounting

Sage Business Cloud Accounting is designed for small businesses that need basic accounting features with the option to scale as the business grows. Sage’s long-standing reputation in the accounting industry gives it credibility and reliability.

Key Features: Invoicing, cash flow forecasting, bank reconciliation, and multi-user functionality.
Pros: Sage’s cloud-based software is reliable and offers scalable plans, making it ideal for growing businesses. It also offers a mobile app for on-the-go access.
Cons: Lacks some advanced features in the basic plans, and its pricing can be high for smaller businesses that need more robust functionality.
Pricing: Starts at $10/month.
Best For: Small businesses that anticipate growth and want scalable features.
User Review Insight: Users find Sage reliable and enjoy the mobile access but feel some features should be included in lower-tier plans for greater value.

8. ZipBooks

ZipBooks is a cloud-based accounting tool that offers a solid set of features for free, with paid options available for businesses needing more. Known for its simple and intuitive interface, ZipBooks is great for small business owners who want hassle-free accounting.

Key Features: Invoicing, expense tracking, online payments, and financial reporting.
Pros: Offers a free tier with essential features and a clean, user-friendly interface that’s easy for beginners.
Cons: Limited integration options compared to competitors and fewer advanced features in the free plan.
Pricing: Free, with paid plans starting at $15/month.
Best For: Small businesses and freelancers who need free accounting software with an option to upgrade.
User Review Insight: Users like the free plan’s value but mention that advanced features are limited unless you upgrade to a paid plan.

9. OneUp

OneUp is an accounting tool designed for small businesses that want to incorporate inventory and CRM functions. It’s particularly beneficial for retail businesses that need to manage inventory alongside their accounting.

Key Features: Inventory management, CRM, invoicing, bank reconciliation, and financial reporting.
Pros: OneUp offers comprehensive inventory features and is highly customizable, making it ideal for businesses that need more than basic accounting.
Cons: Limited third-party integrations, and the interface can be complex for new users.
Pricing: Starts at $9/month.
Best For: Retail businesses needing inventory and accounting features in one platform.
User Review Insight: Users appreciate OneUp’s inventory management but note a learning curve with its interface and fewer integrations compared to mainstream accounting tools.

10. Gusto

While primarily a payroll tool, Gusto offers integrated accounting features that make it useful for small businesses needing payroll and accounting in one. It’s particularly well-suited for businesses with employees that need streamlined payroll and tax filing features.

Key Features: Payroll management, benefits administration, tax filing, and accounting integration.
Pros: Gusto’s payroll features are highly rated, and it integrates well with many accounting platforms. It simplifies tax and benefits administration for small businesses.
Cons: Limited accounting functionality beyond payroll, and it can be costly if you only need basic accounting features.
Pricing: Starts at $40/month + $6 per person.
Best For: Small businesses with employees that need integrated payroll and accounting solutions.
User Review Insight: Users love Gusto for payroll but mention that it’s not a standalone accounting solution, as it lacks robust accounting features without integration.

Comparison Table of the Top 10 Accounting Tools for Small Businesses

Tool	Key Features	Pros	Cons	Pricing	Best For
QuickBooks Online	Invoicing, expense tracking, bank reconciliation	Comprehensive features, scalable	Expensive at higher tiers, setup time	Starts at $25/month	Businesses needing scalability and flexibility
Xero	Multi-currency, inventory, project management	Intuitive UI, global compatibility	Limited support on lower tiers	Starts at $13/month	eCommerce and retail businesses
FreshBooks	Invoicing, time tracking, project management	Great for service-based businesses	Limited reporting, can get pricey	Starts at $15/month	Freelancers and consultants
Wave	Invoicing, expense tracking, double-entry accounting	Free core features, user-friendly	Limited customer support and features	Free	Freelancers and small businesses on a budget
Zoho Books	Automated workflows, client portal, inventory	Integrates with Zoho suite	Limited third-party integrations	Starts at $15/month	Businesses planning to scale with Zoho tools
Kashoo	Tax calculation, invoicing, expense tracking	Simple to use, affordable	Limited features, no multi-user access	$20/month	Freelancers and solo entrepreneurs
Sage Business Cloud	Invoicing, multi-user, cash flow forecasting	Reliable, scalable	Lacks advanced features on basic plans	Starts at $10/month	Growing businesses needing basic accounting
ZipBooks	Invoicing, online payments, expense tracking	Free plan, beginner-friendly	Limited integrations, fewer features	Free, paid starts at $15/month	Freelancers and small businesses with low budgets
OneUp	Inventory management, CRM, invoicing	Comprehensive inventory features	Learning curve, limited integrations	Starts at $9/month	Retail businesses needing inventory management
Gusto	Payroll, benefits, tax filing	Streamlined payroll and tax filing	Primarily for payroll, costly for small needs	Starts at $40/month + $6/person	Businesses with employees needing payroll management

Conclusion

Choosing the right accounting software is essential for the financial health and growth of a small business. In 2024, small businesses have access to a variety of tools that offer specialized features, scalability, and affordability. Here’s a quick decision-making guide to help you choose the right tool for your needs:

If scalability is a priority: QuickBooks Online and Xero are top choices.
For affordability: Wave and Zoho Books are budget-friendly.
For specialized features like inventory management: Look into OneUp or Xero.

With the right accounting software, you’ll gain valuable insights into your finances, reduce manual work, and position your business for growth in 2024.

Frequently Asked Questions (FAQs)

1. What is the best accounting software for a small business with a limited budget?

Wave Accounting is an excellent choice for small businesses with limited budgets because it offers essential features like invoicing, bank reconciliation, and expense tracking for free. For businesses needing advanced options, Zoho Books and ZipBooks also provide affordable paid plans with robust features.

2. Can accounting software handle taxes for my small business?

Yes, most accounting software can simplify tax management by categorizing expenses, tracking tax-deductible purchases, and generating tax-ready reports. Tools like QuickBooks Online, Xero, and FreshBooks offer features specifically designed to assist with tax preparation, making it easier for business owners to file taxes accurately and on time.

3. What type of accounting software is best for freelancers?

Freelancers benefit from accounting tools with strong invoicing and expense-tracking features, as well as project management capabilities. FreshBooks and Wave Accounting are both well-suited for freelancers, providing user-friendly invoicing and time-tracking functionalities.

4. Do I need accounting software with payroll features?

It depends on your business needs. If you have employees, accounting software with payroll capabilities (like QuickBooks Online and Xero) can simplify payroll processing, tax calculations, and employee management. For businesses without payroll needs, simpler tools like Wave or Zoho Books may be sufficient.

5. Is it difficult to switch to new accounting software if my business grows?

Most modern accounting software is designed to scale with your business. Tools like QuickBooks Online and Xero offer flexible pricing plans that allow you to upgrade as your business grows. They also have import/export options to help you transfer data if you ever need to switch platforms.

6. How do I choose between cloud-based and desktop accounting software?

Cloud-based software is accessible from any device with an internet connection, making it ideal for businesses on the go or with remote employees. Desktop software can be beneficial for companies that prefer on-premises solutions but lacks the flexibility of online access. In 2024, most businesses opt for cloud-based solutions like QuickBooks Online or Xero due to their convenience and accessibility.

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