Accounting software is critical to virtually every business. These 10 bookkeeping tools are recommended by small business owners for their ease of use, versatility and effectiveness.
Accounting is of the utmost importance to every business. As an entrepreneur, you need to develop basic accounting skills in order to run a successful business. Luckily, these days you don't have to crunch numbers by hand. There are accounting tools out there for small businesses that make accounting simple and quick, so you can focus on running your business.
Deciding on the right bookkeeping software or systems for your business is all about knowing what your organization needs and what each program offers.
There's a lot of bells and whistles out there, though, with each approach offering its own advantages. Some firms focus on scalability, for instance, while others want quick access via the cloud. Others prefer a system that embraces elements like inventory management or website integrations.
Before we dive into these 10 great options for small businesses, it's important to have a firm understanding of bookkeeping and what options are available for small business owners.
What is bookkeeping?
At its core, bookkeeping is the recording of financial transactions associated with accounting. This means keeping track of business income and expenses so you have a realistic idea of how much money is flowing in and out of your business at any given time. Bookkeeping includes activities like logging income, tallying expenses, calculating payroll costs, determining fixed and variable costs, and noting other business income developments.
The key to bookkeeping is organization and accuracy. You need to have all of your financial information organized in one place, and it needs to be accurate down to the cent. This will give you the opportunity to create accurate, usable books.
While there are accounting systems for small businesses, the nature of bookkeeping has remained the same for hundreds of years. Whether through an automated system or by hand, typical bookkeeping activities include handling the following:
- Records of sale of your good or service
- Receipts from customers
- Invoices from suppliers
- Employee payroll and governmental reporting
- Individual accounts receivable
- Depreciation and other adjusting entries
What are my options for tracking my business's finances?
Accounting and bookkeeping practices have been around since before Roman times. The modern business owner has several options for a sound accounting strategy. If you have a background in mathematics or business systems, you may want to handle your accounting yourself. If this area isn't your strong suit, you can do like most small business owners and use a software solution, like QuickBooks, or work with an accountant who directly oversees your business finances.
There are pros and cons to either system. Software solutions, for example, are less expensive and more hands-on – you'll have direct control over your business's accounting strategy. Working with an accountant, on the other hand, can give you more flexibility with your business; you won't have to worry about the books. The professionalism and experience of some accountants may give you opportunities to better organize your business's financial systems and, when the time comes, save some money on taxes.
With either method, it's important to understand what choices you have at your disposal. We compiled 10 of the best small business bookkeeping systems for this year. By reviewing this list and other options, you can make a more informed decision about turning to a software solution or partnering with an accountant or bookkeeper.
Here are some bookkeeping tools to consider when looking for good ways to track your finances, as chosen by trusted business experts from the business.com community.
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"Bonsai is a great tool for small businesses just starting out and not wanting to invest in expensive bookkeeping software. It integrates seamlessly with your website, allowing you to create different packages on your site and tying it directly with your bookkeeping software in the back end. They also have an iPhone app so you can access your financial documents from anywhere." – Syed Balkhi, WPBeginner
"FreshBooks is a great cloud-based accounting software for small business. It's affordable, so it's a good option for businesses that are just starting out. You can send invoices, track time, accept credit cards, and manage receipts and expenses. Plus, it's super easy to use, and since it's cloud-based, you can access it on the go." – Chris Christoff, MonsterInsights
"QuickBooks may not be the sexiest or latest-and-greatest option, but it is tried and true. In addition, it's the easiest to scale. Being able to pass off something to an in-house or outsourced accountant that they know well makes life so much easier, as opposed to having them learn a new software." – Ryan O'Connell, Boomn
4. Sage 50cloud
"Sage 50cloud is a great online accounting solution for small businesses. It's designed for small businesses in mind: The pricing is affordable, and it's easy to use. You don't need to be a bookkeeping pro to use this software easily and efficiently. It has everything you need to manage your finances, plus some extra features such as HR and payroll, credit card processing, and more." – Blair Williams, MemberPress
"I'm a huge fan of automation in business – but even more so in accounting! I currently use Wave, which has very capable free versions as well as paid versions. Wave actually imports all of our financial data automatically and makes accounting much faster and easier. For automated invoicing, I'm a big fan of Invoice Ninja, whose capability is great for client invoicing, and also has free features." – Ali Mahvan, Sharebert
"Bookkeeping has long been discussed as an industry ripe for automation and disruption by AI. A VC-backed company called ZipBooks is leading the pack in this space. Our business uses ZipBooks, and each month our transactions are auto-categorized and a confidence interval is displayed so that we know which entries to manually verify. This saves us hours of work every month." – Colton Gardner, Neighbor
7. QuickBooks Online
"While QuickBooks has been the staple for many small businesses, the desktop version had limited integration capabilities. The updated QuickBooks Online solves many of these shortcomings. With multiple 'apps' that can be bolted on to the main software, it allows owners to customize the software to their needs. Additionally, the integrations can happen seamlessly while you sleep instead of manually." – Matthew Boersen, Straight Path Wealth Management
8. Zoho Books
"Zoho Books is a great option for small businesses. It's online accounting software that's easy to use and accessible from your desktop, tablet or mobile. Pricing is very affordable, so it's a great solution to help grow your business on a budget while staying on top of your finances." – John Turner, SeedProd LLC
9. What the client knows
"It depends on what the client and accountant agree upon. As a CPA, I think most software is similar, and although we do like QuickBooks and Xero, I tend to side with whatever the client is currently using unless we are not familiar with it at all. I always feel that the bookkeeper is responsible for learning the books while the client runs the business, so I don't want to burden the client with change." – Vincenzo Villamena, Online Taxman
10. The one that fits your business needs
"There is no 'best' bookkeeping software for all small business owners. Every business is different. Some businesses need inventory management, while others need professional time tracking and invoicing. Cloud software is nice, but it often lacks advanced features that desktop versions have. Identify your business's needs and find a solution with the features and automation to make your job easier." – Shaun Conrad, My Accounting Course
Matt D'Angelo contributed to the writing in this article.