The Best Accounting Software for Small Business Owners

I am a self-employed small business owner and I know how tricky it can be to figure out which accounting and bookkeeping software to use.

A cheap solution is a plus, but it also has to be functional. Lots of features are great, but if you do not use them and they just make things more complicated, they are pointless.

Here we will look at several top solutions and rate how well they fit the average small self-employed business owner’s accounting needs.

QuickBooks

Why it might not be the best accounting software option for small self-employed businesses/sole proprietors

For “larger” small businesses, QuickBooks is hard to beat. It contains all the basics, including the five main types of accounts (assets, liabilities, income, expenses, and equity); the ability to send invoices/receive payments; and the functionality to run payroll.

It also has lots of extras that can be added on, like inventory management and point-of-sale. For medium to large small businesses that work closely with accountants, QuickBooks is great because it has the largest accountant support network in the industry.

However, for very small businesses (1-2 employees) and sole proprietors who file their taxes themselves, QuickBooks may simply be overkill. When you start adding features such as time tracking, payroll, and other options in your package, it can add up close to $50-$75/month, which starts getting a little pricey for some small businesses.

Also, QuickBooks can be a bit more complicated to use than some of the other accounting/bookkeeping software available; this can be a problem, especially for small business owners who have little time and/or technological experience.

Wave

The small self-employed business owner's dream

Although Wave does not have quite the automatic transaction routing, reporting, or integration options of QuickBooks or Xero, it is a great solution for most small self-employed small businesses. For one, it is one of the easiest of the accounting/bookkeeping solutions to use and configure. For many one- to two-person small businesses, the owner is the product specialist, customer service rep, and accountant all in one. When you wear a lot of hats, anything that saves you time and effort is a godsend.

Also, Wave offers all of its features free of charge (except payroll, which costs extra). It's hard to beat a free service that can do everything you need it to. With it you can handle all five kinds of accounts, run a variety of reports, send invoices, accept payments, manage both personal and business accounts on completely separate tabs (still within the same account), and more. If you need to do payroll, you can add that on for as low as $9/month, which is a great deal. There is also an additional fee of $19/month if you want premium phone support.

Lastly, if you ever get in over your head and need the support of an accountant, Wave’s certified accountant network is the second best in the industry after QuickBooks. In many cases, you should be able to find a qualified Wave accountant located within 30 minutes to an hour of your business location.

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Specialized accounting solutions

Some small self-employed business owners may benefit from accounting solutions that fit their unique situations:

Xero

Good for businesses that deal with a variety of currencies or need complicated auto-categorizing features

If your business deals with a variety of different currencies (importer/exporter, international service provider, works remotely with international businesses), then Xero is a good solution. Although QuickBooks' international version and Wave offer limited multicurrency support, they do not have near the functionality that Xero does (i.e., create and accept invoices in multiple currencies, convert other currency values into your base currency of choice based on real-time market conversion value).

If you receive a lot of complicated recurring invoice payments or deal with many clients on a repeat basis, then Xero is a solid choice because of its auto-categorization features. Instead of having to categorize/verify each transaction, you can set up automated rules that send transactions into different categories automatically—by vendor name, amount of transaction, or date of transaction.

Zoho Books

Great for businesses that already use other Zoho products, or those that have lots of customer interaction

If you already use Zoho CRM or other Zoho products, Zoho Books seamlessly connects and integrates with other Zoho products by allowing you to manage different areas of your business from one central interface. Also, if you deal with lots of customers and are shopping for both an accounting solution and a CRM solution, then Zoho could be perfect.

Instead of having to configure two different solutions so that they place nice together, you can just use Zoho for both your CRM and accounting needs, meaning that you can seamlessly connect clients and accounts from your accounting to your CRM, and vice versa.

Conclusion

In special situations, other accounting solutions such as QuickBooks, Zoho Books, or Xero may be best, but for the average small self-employed business/sole-proprietor, Wave should have more than enough features and functionality. Wave provides all the accounting basics, performs tasks efficiently, and does it for free—that’s hard to beat.

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