Best Bookkeeping Software for Small Business

Owning bookkeeping software plays a crucial role in ensuring small business efficiency. Automating the bookkeeping process spares your manual effort and time, which gives you more space to do more important business management tasks. In this article, we’ll guide you through the process of selecting a small business accounting software, starting with a few recommendations.

Software	Price	Rating	Verdict
QuickBooks Online	$24/mo (tiers: $54, $80, $160)	★★★★ 4.0 (3,000+)	Best for traditional businesses
Wave	$0/mo (tier: $21)	★★★★ 4.3 (200+)	Best for new businesses
FreshBooks	$22/mo (tiers: $35, $60, custom)	★★★★ 4.5 (700+)	Best for freelancers
Zoho Books	$0/mo (tiers: $8.85, $17.70, $25.60)	★★★★ 4.5 (200+)	Best for existing Zoho users
Xero	$20/mo (tiers: $48, $67)	★★★★ 4.3 (600+)	Best for reporting
Sage	$19/mo (tiers: $43, $62)	★★★★ 4.3 (3,000+)	Best for global businesses

QuickBooks Online: Best for traditional businesses

QuickBooks Online is one of the biggest names in the accounting landscape. Its full suite of accounting services, which includes invoicing, income and expense tracking, and reports, make it our top pick for traditional businesses. However, its lack of a free plan and moderate learning curve make it ill-suited to new businesses.

Pros	Cons
✓ Widely used among accountants and bookkeepers ✓ Cloud-based ✓ Over 450 integrations	✗ Pricey ✗ Limited customer support ✗ Limited customization

Basic Features

QuickBooks’ EasyStart plan costs $24 monthly and comes with the following features:

• Track income & expenses
• Track sales & sales tax
• Capture & organize receipts
• Track mileage automatically
• Run reports
• Invoice & accept payments
• Progress invoicing
• Maximize tax deductions
• Send estimates

Pricing Plans

EasyStart — $24/mo	Essentials — $50/mo	Plus — $80/mo	Advanced — $160/mo
Basic features	Basic features; Up to 3 users; Multi-currency support; Manage bills and payments	Basic + Essentials; Up to 5 users; Inventory tracking; Budget management	Basic + Plus; Up to 25 users; Premium support; Batch invoicing

Overview

QuickBooks Online is one of the most popular cloud-based bookkeeping software in the market. Its lowest tier package, which costs $24 monthly, covers all the features essential to bookkeeping: accounting, invoicing, and expense tracking. You need to upgrade if you want additional perks, such as additional users, multi-currency support, bill payment management, and inventory tracking.

While QuickBooks packages start at a steep $24, the company provides cost-efficient promotions for users who want to try the software. All packages offer 30-day free trials. New users get discounts on the monthly subscription fee for their first 6 months, with a 75% discount for the lower two tiers and an 80% discount for the higher two tiers.

One of QuickBooks Online’s biggest strengths is its popularity. If you outsource bookkeeping and accounting, most of the professionals you encounter will likely be familiar with QuickBooks. It is the best choice for businesses that want to onboard bookkeepers or accountants smoothly.

Wave: Best for new businesses

Wave is a simple bookkeeping software that offers basic bookkeeping features, including records, invoices, reports, and payment acceptance. It offers a free plan, a premium plan, and add-ons for receipt capture, payroll, and bookkeeping services. While it lacks a few advanced functions, its offerings are sufficient for businesses that are just starting out.

Pros	Cons
✓ Free plan available ✓ Supports multiple businesses under one account ✓ Add-ons for payroll and bookkeeping assistance	✗ Lacks inventory management ✗ Lacks time-tracking features ✗ Limited tax features

Basic Features

The Wave Starter plan is free and offers the following features:

• Unlimited bookkeeping records
• Create unlimited estimates, invoices, bills, and bookkeeping records
• Online payment acceptance
• Run reports

Pricing Plans

Starter Plan — $0	Pro Plan — $21
Basic features	Basic features; Auto-import bank transactions; Auto-merge and categorize transactions; Digital receipt capture

Overview

Choose Wave if you want simplicity at an affordable price. While it lacks advanced features, including inventory management, tax calculations, and time-tracking, its free plan covers most small business needs, including unlimited bookkeeping, invoicing, and financial reports (such as profit and loss, balance sheets, cash flow, and sales tax statements).

Meanwhile, the Pro Plan streamlines the bookkeeping workflow with automated functions, such as automatic bank transaction imports and transaction categorization. It also provides additional customization options for invoices. If you’re content with doing work manually, the free plan is more than enough.

Another benefit of using Wave is that it allows you to run books for multiple businesses under one account. There are no extra fees, and the interface makes it easy to switch between businesses.

Wave also offers optional add-ons for receipt capture, payroll, and bookkeeping services. The digital receipt capture function is included in the Pro Plan, and costs $8 as a Free Plan add-on. Meanwhile, payroll functionality and bookkeeper for hire services cost $20 and $149 respectively.

FreshBooks: Best for freelancers

FreshBooks’ selection of features seems to be designed for freelancers and contractors. It offers built-in time-tracking for hourly payments and unlimited invoicing for up to 50 clients. With a fee of $13 per month per additional user, it is ill-suited for larger teams.

Pros	Cons
✓ Affordable time-tracking available ✓ Unlimited invoicing ✓ Business health reports	✗ $13 per additional user per month ✗ No inventory management ✗ Limited customization

Basic Features

The FreshBooks Lite plan costs $11 monthly and provides the following basic features:

• Send unlimited invoices to up to 50 clients
• Set up recurring estimates and client retainers
• Send unlimited estimates and proposals
• Get paid with credit cards and pre-authorized debit
• Automatically capture receipt data
• Unlimited time-tracking
• Run reports

Pricing Plans

EasyStart — $24/mo	Plus — $50/mo	Premium — $80/mo	Select — Custom
Basic features	Basic features; Double-entry accounting reports; Bank reconciliation; Receipt data capture	Basic + Plus; Project profitability; Accounts payable	Basic + Premium; Exclusive customer support; Data migration services

Overview

FreshBooks is an excellent fit for freelancers, contractors, and sole proprietors. The lowest tier plan provides all essential sole proprietor bookkeeping features, including invoicing and payment acceptance. It also offers time-tracking functionality, which is helpful for users who pay or get paid by the hour.

However, if you aren’t a freelancer, contractor, or sole proprietor, you might find FreshBooks lacking. The platform charges $13 per additional user per month and only allows invoices for up to 50 clients. Plus, FreshBooks keeps features like bank reconciliation and double-entry accounting reports exclusive to higher-tier plans, which are more expensive than competitors with the same offerings.

Zoho Books: Best for existing Zoho Office Suite users

Zoho is another bookkeeping software that offers a comprehensive free plan — a package comes with 1,000 free invoices a year, mileage tracking, bank reconciliation, and reporting. However, it might pose a steep learning curve for users unfamiliar with the Zoho interface.

Pros	Cons
✓ Multi-currency support ✓ Affordable pricing tiers, including free plan ✓ Highly-rated mobile app	✗ Steep learning curve for non-Zoho users ✗ Limited customer support for free plan ✗ Limited integrations

Basic Features

The Zoho Books free plan comes with the following features:

• 1,000 invoices per year
• Mileage tracking
• Bank reconciliation
• Online payment acceptance
• Run reports
• Generate tax summary reports

Pricing Plans

Free — $0	Standard — $8.85/mo	Professional — $17.70/mo	Premium — $25.60/mo
Basic features	Basic; 5,000 invoices/yr; Connect bank feeds; Custom reporting; Custom journal templates; Up to 3 users; Email, voice, chat support	Basic + Standard; 10,000 invoices/yr; Project profitability; Inventory tracking; Up to 5 users	Basic + Professional; Budget management; Cashflow forecasting

Overview

Zoho provides bookkeeping at an affordable cost. It is one of the few platforms that offers a free plan, which includes essential features like bookkeeping, invoicing, bank reconciliation, and reporting. You can even generate tax summary reports with the Free Plan alone.

Zoho plans are also more affordable than other brands in the market. However, unlike most bookkeeping software, Zoho does not offer unlimited invoicing, although the invoicing limits are generous enough to accommodate average small businesses.

One of the drawbacks of using Zoho is the steep learning curve, as the platform was designed for people who are already familiar with the Zoho Office suite. Additionally, the free plan offers limited customer support.

Xero: Best for reporting

Among the platforms in this list, Xero offers one of the most comprehensive reporting tools. It lets you measure business performance through built-in reports and customize how the data is displayed. However, Xero’s limited invoicing capacity and lack of a free plan make it a poor option for new businesses and freelancers.

Pros	Cons
✓ Unlimited users ✓ Online tutorials available ✓ Highly-rated mobile app	✗ Limited invoicing ✗ Limited customer support options ✗ Pricey

Basic Features

The Xero Starter plan comes with the following features:

• 20 invoices per month
• Bank reconciliation
• Receipt capture
• Run reports

Pricing Plans

Starter — $20	Standard — $48	Premium — $67
Basic features	Basic features; Unlimited invoicing; Bulk reconciliation	Basic + Standard; Multi-currency support; Advanced analytics

Overview

Xero is another standard bookkeeping software. While it provides all the bookkeeping functions small businesses need, it offers few standout features compared to other offers in the market. The Starter Plan, which already costs $20, only offers 20 invoices per month, or a total of 240 invoices in one year.

However, one major Xero selling point is its comprehensive reporting tool. The Xero reporting tool is highly comprehensive and customizable. The analytics function tracks key performance metrics, including gross profit, net profit on net sales, and debt to equity. You can customize how Xero presents your financial data, and even select favorite metrics to display within quick view on your dashboard.

With a Premium account, you also get access to advanced analytics, which provide AI-powered financial advice and deeper insights.

Sage: Best for global businesses

Sage Accounting’s highest tier is designed to accommodate businesses that deal with international transactions. Aside from multi-currency banking, it provides automatic currency updates and exchange rate gains and losses reports. It is also one of the few platforms that provide customer support in French.

Pros	Cons
✓ Unlimited invoices ✓ Customer support in English and French ✓ GST/HST calculation	✗ No free plan ✗ No time-tracking ✗ Limited customization for reports

Basic Features

• Unlimited invoicing
• Bank reconciliation
• Calculates Goods and Services Tax (GST) / Harmonized Sales Tax (HST)
• Customer support in English and French

Pricing Plans

Start — $19	Standard — $43	Plus — $62
Basic features	Basic features; Cashflow forecasting; Automated receipt capture	Basic + Standard; Multi-currency banking; Inventory management; Automatic currency updates; Exchange rate gains and losses report

Overview

The only two standout features low-tier Sage plans offer are French customer support and automated calculations for GST and HST. Other than that, Sage Start and Sage Standard offer the same features as their counterparts for a marginally lower price than QuickBooks, Xero, and FreshBooks.

However, upgrading to Sage Plus gives you access to global bookkeeping features. It offers multi-currency banking and automatic ledger updates for transactions in foreign currency. Additionally, it provides reports on exchange rate gains and losses.

The issue with Sage is that its main selling points are exclusive to the highest tier, which costs $67. If you don’t need support for global transactions, there are more affordable options elsewhere.

How to choose the best bookkeeping software for small business

The best small business accounting software depends on your individual needs. We enumerate the key features to note when selecting a business accounting software.

Cost

Bookkeeping software typically costs upwards of $20 per month. Some companies, like Wave and Zoho, offer free plans with limited features and customer support.

Luckily, most companies offer 30-day free trials for users who want to test the software without committing money. Companies also offer new user promotions, which lets new users subscribe to a package at a discounted rate for a limited time.

It’s a choice between paying more for extra features or paying less for limited features. If you are a new business, go for affordable plans, then figure out what additions you need as your business grows.

Features

Below are essential bookkeeping software features every small business owner should look out for:

• Recording and categorizing transactions
• Tracking revenue, expenses, and cashflow
• Creating bookkeeping journals
• Reconciling accounts
• Billing and invoicing
• Reporting and analytics

And while it isn’t necessary, here are some nice-to-haves:

• Tax management
• Payroll
• Budgeting and forecasting

User Permissions

Not all bookkeeping software supports multi-user accounts. Some will allow one user and a single bookkeeper. Others allow you to add new users for an extra monthly fee per user. Consider how many users you want on your bookkeeping team before selecting a bookkeeping software.

Cloud vs desktop bookkeeping software

Many companies now offer cloud-based accounting solutions. These programs are typically cheaper and more accessible but have limited customization options. A few benefits of cloud-based software include:

• Cost-effectiveness: Companies typically charge more for desktop applications. Cloud-based software also helps you save on hardware since some desktop applications can’t run on lower-powered computers.
• Accessibility: You can access data from the cloud using any computer with internet connection. Sometimes, companies also offer mobile apps for added convenience.
• Real-time collaboration: Since the information is stored in the cloud, multiple users can access and work on the same books concurrently. This promotes time efficiency and collaboration.

Traditionally, bookkeepers used desktop applications. These applications protect your data and allow increased customization at the cost of accessibility. We discuss its benefits in detail:

• Offline access: You can work on desktop books without internet access.
• Increased customization options: Desktop applications typically offer a wider range of customization settings. This makes it easier for you to tailor your workflow to your specific business needs.

For small businesses, cloud-based applications are the only thing you’re going to need. However, if you’re eventually looking to scale, desktop applications offer increased customization for extra costs.

Summary

Bookkeeping can be an extremely time-consuming process, especially when you rely on manual books or spreadsheets. The most efficient of today’s small businesses invest in bookkeeping software to streamline the process.

The best small business bookkeeping software depends on your specific needs. Most companies offer tiered pricing plans, allowing you to pay only for the tools you need. Cheaper software has all the functionality bookkeepers need but lacks extras. Meanwhile, if you need ancillary services, higher-tier pricing plans are typically available.

Begin with free trials to test which software your business needs. Then, take advantage of promotional periods to dip your toes into a platform with little time investment. Our guide above aligns platforms with use cases that fit them best.

Software is useful for speeding up bookkeeping, but outsourcing bookkeeping services can streamline the process further. EpicBooks takes the manual load of financial management to empower your business growth. Read the EpicBooks services page for more information.

Frequently Asked Questions

Should I use spreadsheets for bookkeeping?

Spreadsheets like Microsoft Excel and Google Sheets are decent alternatives to bookkeeping software. They provide excellent flexibility, allowing you to customize your books according to your business-specific needs.

However, digital bookkeeping tools simply have more power than spreadsheets. When using spreadsheets, you need to set aside time to write these templates and formulas yourself. Meanwhile, bookkeeping software would likely provide built-in journal templates.

Bookkeeping software is automated, while spreadsheets force you to do work manually. Some also connect directly with your bank and payment apps, allowing you to log, organize, and categorize transactions automatically. These tools will also use your data to generate reports, such as balance sheets and profit and loss statements.

Can bookkeeping software replace an accountant?

While bookkeeping software can use your financial records to generate insights and reports, you still need an accountant to interpret the data. An accountant can also provide financial advice tailored to your specific business and industry needs.

Do you need to be a bookkeeper to use bookkeeping software?

Small business owners can use bookkeeping software without the aid of a bookkeeper. However, learning and using the software will occupy time you could have otherwise used to manage your business and nurture customer relationships. It is ultimately the wisest choice to outsource bookkeeping to professionals.

Reach out to our team and we’ll be happy to help with our bookkeeping services in Toronto, Mississauga, Vaughan, and other areas of GTA.