The Best Online Accounting Software for Small Businesses

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Updated on Thursday, January 10, 2019

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Fees are accurate as of the date of publishing.

The common denominator between the tiniest startup and a Fortune 500 company is that they both want to make money.

Money plays one of the most important roles in every stage of business ownership. You need money to start a business and run a business. And, if you plan to eventually sell that business, you hope to recoup your investment.

So, it’s no surprise that proper financial management is one of the most important aspects of having a successful business. Easy-to-use high-tech accounting tools and online resources help business owners, bookkeepers and accountants keep track of every aspect of financial management.

Here’s a list of five accounting resources to consider as you explore options for your small business.

QuickBooks Online

Summary: QuickBooks Online is a cloud-based accounting software tool for small businesses.

Features: With 5.6 million customers, QuickBooks is arguably the most popular accounting software for businesses worldwide. Although there are plenty of desktop users, QuickBooks Online allows for extras, including the ability to schedule and send invoices and, of course, the ability to work away from your computer. You can log on at any time to see the financial health of your business in easy-to-read dashboards and graphs.

QuickBooks is easy to use and a great solution for small business owners. From the most complex accounting requirements to simple expenses, you can manage every aspect of your businesses financials from the website or app.

Kelly Melick, chief operating officer of Melick Consulting, has used QuickBooks since she and her husband opened their own media production company two years ago.

“I like being able to manage my cash flow and view statuses of invoices in real time,” Melick said. “I can easily print checks and track expenses through our business’s bank account that is linked to QuickBooks.”

If you’re just starting your business, QuickBooks Online can grow with the business as its needs change. If you need more complex accounting services down the road, you can upgrade your membership at any time.

In fact, QuickBooks isn’t just for business owners. The QuickBooks ProAdvisor program is for professional accountants.

For small businesses, some of the most popular features of QuickBooks Online are:

  • Automation
  • Paperless receipt tracking
  • Invoicing
  • Payroll
  • Customized reports
  • Profit and loss insight
  • Automated sales tax calculations
  • Tax preparation

The Small Business Center is a free resource center that offers an abundance of information relevant to business owners.

Pricing: There are no contracts or long-term commitments. Plus, QuickBooks Online comes with a 60-day money back guarantee.

There are three QuickBooks Online subscription-based plans for small businesses:

  1. Simple Start – $20 per month after a 50% discount for the first three months
  2. Essentials – $35 per month after a 50% discount for the first three months
  3. Plus – $60 per month after a 50% discount for the first three months

You can add on services such as enhanced payroll and full-service payroll for an additional fee each month.

Self-employed freelancers who file a Schedule-C can sign up for $10 per month. The service is discounted to $5 per month, for the first three months.

If you want to give it a try before you commit, you can sign up for a free 30-day trial.

Wave Accounting

Summary: Wave is a free, easy-to-use web-based accounting software for small and micro businesses. This tech startup disrupted the accounting industry when it stormed the market in 2010, offering free innovative accounting services for small and micro businesses, something none of its competitors were doing.

Features: The accounting software helps small and micro business owners in addition to freelancers, entrepreneurs and contractors, manage the day-to-day financial aspects of the business, such as:

  • Accounting
  • Invoicing
  • Expenses
  • Payments
  • Receipt management
  • Estimates
  • Sales tax

As an added bonus, you can even manage your personal finances in Wave, free of charge.

If you don’t need accounting software, you can still take advantage of free insights, tools and expert guides on Bravely Go, Wave’s online lifestyle magazine for small business owners.

Pricing: All of the above services are absolutely free.
So, what’s the catch? Wave charges for its credit card processing and payroll services. For credit card processing, Wave charges 2.9% of each transaction, plus 30 cents. Bank payment processing costs 1% per transaction, and payroll services start at $20.

FreshBooks

Summary: FreshBooks is a web-based accounting tool for small businesses.

Features: The accounting tools are designed for small service-based businesses, such as designers, lawyers or writers.

The company was started like so many small businesses – out of frustration. Founder and CEO Mike McDerment needed accounting services, but couldn’t find anything that fit his needs, so he started FreshBooks in his parents’ basement.

Having grown from one employee to over 200, FreshBooks helps owners run their businesses more efficiently by saving them time and money. Since most service-based businesses are paid per hour or per service, the more time someone spends on administrative tasks like accounting, the less money they make.

The company estimates that the average small business owner saves 192 hours per year by switching to FreshBooks. It is constantly adding new features, as detailed in its FreshBooks Monthly Product Update, found on its FreshBooks blog. As of June 2018, FreshBooks offers features such as:

  • Invoicing
  • Expense reporting
  • Automated tasks
  • Job estimating
  • Time tracking
  • Online payments
  • Project collaboration

Pricing: You can try FreshBooks for 30 days and cancel anytime. After the trial is up, you can choose from one of three memberships, paid monthly or yearly. The price per month and the plan features are based on the number of business clients.

  1. Lite. For businesses with five or fewer clients, the fee is $15 per month.
  2. Plus. The most popular subscription, businesses with 5 to 50 clients pay $25 per month.
  3. Premium. Businesses with 50 to 500 clients are charged $50 per month.

You can get 10% off the total yearly cost if you pay for the year in advance.
The above costs only allow for one person to have access to the account. For $10 per person per month, you can add additional people to the account.

Xero

Summary: The New Zealand-based company allows small business owners to send invoices and reconcile bank statements through its app or website.

Features: Xero connects with third-party payment apps such as Apple Pay, Stripe and PayPal, making it easier for your customers to pay invoices. You could also make refunds through Xero, or adjust individual invoices.

A drawback is that project tracking is only included with the top subscription tier. Xero is rolling its payroll service into Gusto, a partner whose services also require an extra fee.

Features available with all subscriptions include:

  • Financial performance reports
  • Integration with third-party apps, including payment apps
  • Connection to your bank accounts
  • Creating quotes and invoices
  • Tracking inventory

Pricing: Xero has three subscription tiers:

  1. Early: $9 per month
  2. Growing: $30 per month
  3. Established: $60 per month

There are no long-term contracts, but Xero does require a month’s notice to cancel. A free 30-day trial is available and doesn’t require a credit card.

Sage Business Cloud Accounting

Summary: Formerly Sage One, the company offers automatic bank reconciliation and other accounting functions starting at $10 per month. Though the basic plan covers a single user, unlimited users are available through the $25 per month plan.

Small business owners looking for extra services, such as payroll or inventory management, will have to pay extra for those.

Features available with both accounting subscriptions include:

  • Creating invoices
  • Bank reconciliation
  • Creating reports
  • Cash flow statements

Pricing: Sage Business Cloud Accounting is available at two tier levels:

  1. Accounting Start: $10 per month
  2. Accounting: $25 per month

The bottom line

As a business owner, you want to find your best online accounting software to save time and money.

As you search around, it’s worth signing up for the free trials to poke and prod around. Whether you want to be hands-on or hands-off, you’ll still need to familiarize yourself with the tools, charts and capabilities.

All in all, managing your hard-earned money is just as important as making it.

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