The Best Accounting and Invoicing Generating Software

Accounting software is a critical need for every small business. Efficiently tracking your finances is important, as a business's financial health is vital to its long-term success. Affordable accounting software with an easy-to-use interface and detailed features can give businesses a leg up over the competition, whereas an outdated solution could have small businesses spending unnecessary hours trying to fix minor accounting woes.

Whether your business is new, just you, very small, growing or established, you need accounting software to keep track of your finances so you know exactly how much money you have coming in and going out of your accounts. But with hundreds of options, each with different plans and features, selecting the best accounting program can be a lengthy, frustrating process.

We want to help you find the right accounting and invoicing software for your business. We researched and tested many different programs. Most small businesses need accounts receivable, accounts payable, banking, reporting, and either inventory or time and project management tools, so these are the aspects we looked at, along with costs and limitations.

Read on to learn about the accounting and billing software we recommend for different types of businesses and for details on the features you should look for in accounting software.

Starter plans often cost $10 or less per month, and top-tier plans are usually less than $60 per month. If you're looking for low-cost accounting software, online options frequently offer either a promotional rate for your first few months using the system or a discount if you pay annually rather than monthly. 

You'll notice that most accounting software vendors offer several plans. Keep in mind that there are a lot of variables in accounting software costs, such as the feature mix and number of users. You'll want to consider these factors as you compare accounting software pricing for your business. For a detailed look at what each plan includes, check out our reviews. 

Best Accounting Software Overall: QuickBooks Online

• Self-Employed: $10 per month
• Simple Start: $20 per month
• Essentials: $40 per month
• Plus: $70 per month
• Advanced: $150 per month 
• The company offers a 50% discount on all plans for the first three months, or you can try 30 days free.

Best Invoicing Software for Small Businesses: FreshBooks

• Lite: $15 per month
• Plus: $25 per month
• Premium: $50 per month
• Select: By quote 
• The pricing is slightly lower per month if you pay on an annual basis.

Best Accounting Software for Mac: Xero

• Early: $9 per month
• Growing: $30 per month
• Established: $60 per month 

Best Accounting Software for Really Small Businesses: Zoho Books

• Basic: $9
• Standard: $19
• Professional: $29 
• Paying for a yearly plan gives you two months free.

Best Free Small Business Accounting Software: Wave Financial

• Free 
• Online payments and payroll features cost money to add on.

For most online accounting software, there are no additional fees for software updates. You get the new features and improvements as soon as they're released, and the cost is already included in your monthly fee, so you always have the latest version of the software. Mobile apps are usually available at no additional cost. 

Desktop software can be a cheaper option over the long term, since you pay for a software license upfront; this varies, though, as some programs are more expensive. In addition to the license, you'll pay for software updates, which may be an annual expense. Some companies charge extra for customer support, and others charge a monthly fee if you want to add a companion app to the system that gives you cloud access to your desktop data. 

Free accounting software programs are available online, and these can be terrific options for freelancers and very small businesses. These software companies make their money by providing ancillary paid services, such as credit card processing or payroll, or offering paid tiers that include more tools. If you need advanced accounting features, you'll want to use a paid program. For the smallest businesses, however, free software can get the job done while allowing you to use your funds elsewhere.

If several people will be using the software, or if you want to add more features or connect with other systems, you need to consider some factors specific to your business before you can run a head-to-head accounting software cost comparison. After you've narrowed your choices down to three or four options, gather some numbers: 

• How many people will use the accounting software? Keep in mind that some systems don't count an outside accountant toward your allotted number of users, but others do, so you'll want to ask the company if user number affects cost. 
• How many clients or contacts do you have? 
• How many invoices, bills and transactions do you generate each month? 

Next, you need to determine which programs include the features you need, and at which tier. If the features are only available as add-ons or integrations, you need to find out what they cost. 

Finally, you need to decide if you need to use ancillary services with the software. Does the software include features that you need and would otherwise pay extra for? Are there integrations for programs you already use? If so, is there an extra cost to connect them to the accounting software? Common integrations include payroll, PayPal or other credit card processors, time tracking, CRM, marketing, inventory management, POS and e-commerce solutions. 

By looking at the complete picture of how much the software costs and how it fits into your existing systems, you can determine which accounting application is the best value for your business. 

Here are a few more points to consider as you compare accounting software costs:  

• Is technical support included, or does it cost extra? 
• Do you need the software to support multiple businesses? Some programs allow you to set up several businesses under one account; others require you to create a separate account for each business.
• Before signing up for a free trial, check to see if doing so causes you to forfeit a promotional rate or discount. If so, get a feel for how the software works by trying out a demo or watching the company's how-to videos.

After asking experts and small business owners what they look for in accounting software, we searched online for the best small business accounting systems on the market, reading accounting software reviews and articles to find new programs. We added these to our existing list that included accounting software we were already familiar with and programs vendors had previously pitched to us. 

We then narrowed down the list based on different use cases and criteria such as price, features, and number of supported users. We scoured each company's website to learn about the software, checking out blogs, guides and knowledgebases to find product details. We watched how-to videos or feature demos (where available) and read user reviews. 

After that, we signed up for trial accounts and began our hands-on testing. We created customer and vendor profiles, entered inventory into the systems, and customized invoice templates. We created estimates, invoices and purchase orders. We tracked expenses and ran reports. Along the way, we noted how user-friendly the software is, how easy it is to find key features and how capable each program is at accomplishing basic tasks. 

As part of our testing, we contacted customer service teams, posing as small business owners looking for accounting software. We asked a variety of questions to measure the quality of customer support and clarify any issues or concerns we encountered in our research and testing. 

Our list started with over 100 accounting software products. These 11 products made it to our short list: Billy, FreeAgent, FreshBooks, Intuit QuickBooks Online, Kashoo, OneUp, Sage One, Wave Financial, Xero, ZipBooks and Zoho Books.

When you're choosing accounting and billing software for your business, you should take advantage of the free trial period so you can make sure the software is easy to use and has all the features you need. Spending time with the software upfront helps you feel confident that you've made the best choice and ensures you aren't stuck with a program that's confusing to use or doesn't have the functionality you need.

Here are some features to look for and compare as you choose accounting software. 

Bank Feed

This feature allows you to connect to your business bank and credit card accounts to receive a daily update of your transactions. This saves you the time it would take to manually upload statements into the system, and it gives you a daily, rather than monthly, overview of your accounts. This also assists with reconciliation, allowing you to make it a small daily task rather than a monthly ordeal. 

Dashboard

When you log in to your account, you'll be greeted by a dashboard that shows you an overview of your account activity and key metrics, such as cash flow, profit and loss, account balances, expenses, accounts payable and receivable, and sales. Some allow you to customize what you see first by rearranging the information. 

Online Invoicing

If your business sends invoices, being able to email them and accept online payments helps you get paid faster. Some accounting software vendors integrate with third-party payment processors; others require you to use their in-house processing services. It's a plus when accounting software can also serve as an invoice generator.

Recurring Invoices

With this feature, you can schedule the system to automatically generate and send invoices for recurring charges, such as subscriptions. You can choose how frequently the invoices are sent – daily, weekly, monthly or annually – and indicate whether there's an end date to the billing. We found that a solid chunk of accounting software providers don't include recurring invoice functionality.

Automatic Payment Reminders

This feature helps you remind customers about upcoming and past-due payments. Some have sample email text that you can use as is or customize. You can then choose when you want the reminders to be sent. Some programs also give you the option of sending thank-you emails to customers after you receive their payments. 

Bank Reconciliation

Smart reconciliation tools identify potential matches between your bank transactions and the bills and invoices that you've entered into the accounting software, saving you the hours it would take to sift through records for this information. You can then approve or deny the suggested matches. The best products we reviewed suggest potential matches as you reconcile your accounts, and a few also include a reconciliation feature on their mobile apps. 

Financial Reporting

Every accounting program can generate financial reports, but some are more basic than others, and some require you to subscribe to a higher plan for advanced reporting. If you need specific types of financial reports, you'll want to make sure they're included in the program and plan you choose. Detailed reports can help you better interpret your financial data to make informed business decisions.

Mobile Apps

Not every accounting and invoicing program has mobile apps, but the best ones do. There is, however, quite a bit of variance in app capabilities. Some can only capture receipts for expense tracking; several also allow you to create and send invoices, and others have almost every feature the web-based software does. As mobile-based work becomes increasingly convenient, it's worth noting if a company offers an accounting app with its software.

Integrations 

The ability to connect your accounting software to the other business programs you use saves you the time of manually transferring data from one system to another. Payroll, payment processing, POS systems and CRM software are some popular types of integrations you may want to look for. Integration with systems you already use also cuts down on training time for employees who need to use the new software.  

Tracking for Billable Hours 

If you're a consultant or your business is an agency that bills its clients by the hour, you want accounting software that allows you to track and bill your time or integrates with the time-tracking program you already use. This is an important feature for freelancers.

Inventory Management 

If you have a retail or distribution business, you want accounting software that tracks inventory and helps with purchase ordering. You may need to subscribe to a top-tier plan to get this feature. If you need more advanced inventory features, you'll want to look for software that integrates with a dedicated inventory management system. 

Project-Based Billing 

Firms, freelancers, and consultants that work with clients on projects or jobs should look for accounting software that helps them track the projects' tasks and budgets. The software should allow you to invoice customers for tracked time and rebill them for project expenses. 

Support for Multiple Businesses 

Several programs we reviewed allow you to add more than one business to your account, though some companies charge extra for this convenience.

The importance of different accounting tools varies by business. If you're running a small freelance business, project-based billing might be the most important feature on your list. If you like to work on your mobile device, a full-featured mobile app might be the focus of your search for the right accounting solution.  

Q: What is accounting software?

A: Accounting software is a program that helps with accounting procedures. We looked for accounting software solutions that can track things like accounts receivable and accounts payable while also analyzing data.  

We also stress the importance of finding a solution that can generate reports, which makes it easier for small businesses to analyze accounting data. Some solutions only track expenses; we consider those options to be closer to bookkeeping solutions than standard accounting software.

The exact definition of accounting software varies by the website you're reading or who you're talking to. For our part, we focused on the most comprehensive solutions available. We noted companies with the key features, competitive prices and reporting abilities.

Q: Is online accounting software secure?

A: The best online accounting software uses bank-grade data encryption to protect your account. Further, it should either require or allow you to opt in to two-factor authentication, giving you another layer of security. Because the software is in the cloud, your data is safe even if your computer is stolen or destroyed. 

If you have employees or an accountant accessing your accounting program, you can control what information they see by setting user permissions. The best accounting programs also include a detailed history, or audit log, that shows what changes were made to your records, on what date, and at what time by which user, giving you additional insight and control over any changes or entries made in your accounting program. 

Q: What is the easiest accounting software to learn when just starting out?

A: All of our best picks – QuickBooks Online, Xero, FreshBooks, Zoho Books and Wave – are easy to use and have tips and hints within the software, plus online support resources designed for new business owners who don't necessarily have accounting experience, such as getting-started guides, video tutorials, webinars and how-to articles with step-by-step instructions. 

The best part of these accounting solutions is that many companies offer free trials. You shouldn't buy an accounting solution without first testing it to see how it works. Some companies even include hypothetical data for testing, which makes it easier to play with the program and see all the different features. We recommend spending a few minutes exploring each platform to get a feel for how it works.

Q: Should I get accounting and payroll software?

A: Integrating payroll with your accounting software can save you time, but you don't necessarily have to get both systems from the same company. Many accounting software applications offer integrations with a variety of payroll services. If you prefer to use the same company for both, check out QuickBooks Online and Wave, which offer payroll as an add-on service to their accounting software. 

Q: Should accounting software also serve as invoice generator software?

A: It's not necessarily a deal-breaker if your accounting software doesn't generate invoices, but it's a critical feature for some companies. If you're a freelancer or a small business that expects to send invoices to clients on a regular basis, it's a good idea to look for accounting software that includes an invoice generator. The ability to quickly create invoices and automatically send them to clients can save your business important time.

Q: Do you need online bookkeeping software instead of accounting software?

A: The term "online bookkeeping software" is frequently used interchangeably with "online accounting software" in the small business market. The best online accounting software applications have features for keeping the books and analyzing your business's financial health. There is a difference, however, between a bookkeeper and an accountant.

For our reviews, we focused on solutions that offer the ability to analyze financial data, rather than the solutions with just the basic bookkeeping options.

Accounting software is a competitive market. Companies seek to add value to their products by taking them to the cloud to give you on-demand access to your financial data, automating repetitive tasks, and reducing redundant data entry by integrating with other business programs. 

Although desktop accounting software is still available and its proponents tout richer features, this distinction is disappearing as more companies move their programs online and improve them. In addition to the convenience of accessing your financial data from just about any device with a browser, many accounting systems offer mobile apps. Some even have apps for smartwatches. 

Automated features that eliminate or simplify repetitive tasks are increasingly popular in accounting software. For example, many systems allow you to schedule recurring invoices, automatically send payment reminders as a due date approaches or when an invoice is past due, and send thank-you emails to acknowledge received payments. Having an invoice generator as part of your accounting software can be convenient for businesses.

Some systems offer smart bank reconciliation tools that suggest transaction matches for you to approve, and they increase in accuracy the more you use the software. Others can be set up to automatically send purchase orders when your inventory falls below a threshold you set.

In addition to syncing with your business bank accounts, many accounting systems offer integrations with other business programs that use or generate the data you need in your accounting program, saving you the time of manually entering or transferring information from sales and other activities. Some accounting applications natively include ancillary features such as time tracking and project management.

In 2019, small business accounting software continues the march to software as a service and away from desktop-based systems. Web-based accounting is on the rise. Research firm Gartner predicts that 80% of all software vendors will offer subscription-based services by 2020. 

Small business accounting software is increasingly easy to use. Software companies are using machine learning and artificial intelligence to simplify and automate tedious tasks such as bank reconciliation and expense categorization, as well as to reduce the need to manually enter data into the system. We can also expect to see more advanced reporting capabilities. 

Even as accounting software continues to become easier for small business owners and other non-accountants to use, industry experts don't expect the demand for accountants to decrease. Rather, small business owners will turn to accountants for business analysis and strategic advice that can help their businesses grow. There's value in accounting analysis, and businesses need tools and employees that can help them make sense of accounting data. Without context, those accounting measurements are merely numbers. Good accountants and accounting software that produces detailed reports are two resources that can help a business thrive by understanding its financial metrics.

Additional reporting by Bennett Conlin.