Oftentimes, small business owners ask if it is necessary to use accounting software. Leaving out adequate documentation for your business operations can be likened to trying to survive without blood.
The truth is, without proper accounting, the business cannot scale especially if it requires funding from investors to become a big brand like the ones you admire.
Accounting is not an act carried out by only big brands, small brands use it for proper evaluation of the numbers.
Accounting data should always be the first point of call when making important financial decisions. This is where you get an insight into where your money is going, how productive expenses are and what you can cut back on.
Below we will discuss the top 10 small business accounting software in 2022.
What Does Accounting Software for a Small Business Do?
Accounting software reduces the amount of time spent on data entry. It allows users to sync their business bank accounts and credit cards with the software.
By this, transactions will be automatically sent to the software where they can be categorized into different accounts.
Although most accounting software is easy to use, a general understanding of accounting principles is needed to ensure that financial reports are prepared correctly. As a result, once your business is middle-sized, you can hire an accountant to review the report.
These small business accounting software offer cloud-based/ online systems which make it convenient for both the business owner and accountant to access the tools simultaneously.
Therefore, the basic functions of accounting software for small businesses are:
- Creating an Invoice
- Bank and credit card syncing
- Accounts payable and receivable
- Online payment collection from customers
- User access for accountants or tax professionals
- Basic financial statement preparation, such as profit and loss statements, balance sheets, and statements of cash flow.
How Much Does Accounting Software Cost for Small Businesses?
The fundamental small business accounting software ranges from $0 to $150 per month.
When categorized, the basic plans are in the range of $0 to $40 per month. This is a great place for small businesses to start; they categorize income and expenses, send invoices, and prepare financial reports.
This software has upgradable plans which you can upgrade to when need be. For example, a more robust plan allows businesses to track inventory, prepare more customized financial reports, run payroll, and choose more options.
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How Does Accounting Software Work?
First, sync your business bank account and credit cards with accounting software. If this is done successfully, transactions will automatically appear on the software where you’ll be at liberty to classify them into categories.
After selecting the proper category, transactions will begin to form the business’ financial statements.
With this information, a business owner can run reports to view profitability, ascertain revenue and costs, check bank and loan balances, and predict tax liabilities. Learn How To Pay Fewer Taxes In 2022 | Insider Secret.
These can be used to make important financial decisions.
In addition, many accounting software allows third-party application integrations. For instance, if a business owner uses a POS system to capture sales transactions, the POS system could potentially integrate with the accounting software to record specific transactions, sales tax, sales by categories, and lots more.
Best 10 Small Business Accounting Software
QuickBooks is an accounting software from Intuit. It offers both a cloud and desktop-based option designed for small and medium-sized businesses.
With this software, your accounting is organized in one place and keeps your business tax-ready all year long.
Features of QuickBooks include:
- Integrates financial institution including PayPal, Square, Shopify, and lots more
- Tax returns are filed quarterly and annually with user guides and export data
- Sales tax calculations, returns, and recorded tax payments
- Automatically sort transactions and expenses into tax categories
- Create customized reports with cashflow tracking visible on your dashboard
- Track expenses in one place and miles with your smartphone’s GPS
- Scan receipts and attach them to invoices
- Share with your accountant or export documents
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This is a cloud and web-based accounting system that requires no prior accounting knowledge.
One of the most distinctive features of Xero is Hubdoc where you can capture bills, receipts, project tracking, and costs.
It is great accounting software for small businesses because there is a two-step authentication to keep your data secure, as well as plans for different business needs.
Xero’s features include:
- Expense claims can be created, invoices has a send feature
- Fast bank reconciliation and integration with the financial institution and other apps including HubSpot, Square, etc
- Up-to-date financial reports
- Business data protected
- Real-time cash position
- Collaborate with staff or your accountant
- Plans come with a free 30-day trial for unlimited users.
FreshBooks is a small business accounting software that caters to small business needs. It is a Canadian-based company that offers well-rounded accounting services. It uses cloud-based accounting and invoice software that can be accessed through phones.
This accounting software tops our chart as the best for small businesses because it is easy to use for business owners with little or no accounting experience.
There are numerous features with a fair price that offers solutions anytime. The pricing is stated below:
- Lite: $6 per month for the self-employed business owner with five billable clients
- Plus: $10 per month for small businesses with 50 billable clients
- Premium: $20 per month for growing businesses with up to 500 billable clients
- Select: Custom features and pricing for businesses with more than 500 billable clients
The key features are:
- Payment reminders
- Online card payments
- Can be used in multiple currencies
- Automatic tax calculations for sales tax
- Vendors are remembered
- Recurring invoices with customizable options including due dates and discounts
- Bank deposits, recurring payments, and auto bills with bank integration
- Tax help integrations with tax apps, estimates, deductions, and filing tools
Wave Accounting provides software solutions and financial services for small businesses. Its accounting and accounting services are free to use.
Bear in mind that the payroll services and credit card processing have charges associated with them. Therefore, not all of the features are free.
It has an invoice, credit card processing, and payroll services. Similarly, it is easy to use and can be used by business owners who have no accounting experience. All data is backed up for extra security, and you can connect bank accounts to sync your expenses at any time from anywhere.
Wave Accounting has these features:
- Multiple users
- Unlimited income and expense tracking
- Track sales tax on income and expenses
- Reports including profit and loss statements and cashflow
- Dashboard with easy-to-read financials
- Organize income and expenses into tax categories
Sage is a small business desktop accounting application/software that has comprehensive financial tools and options to customize features.
Its integration with Microsoft 365 makes it a hybrid solution. It has become a local, hard-drive-based software that can share data with applications via the cloud.
Basically, your accountant can use the software to access your books for no additional fee.
The features include:
Sage Business Cloud Accounting’s features include:
- Manage business finances, cash flow, and payroll
- Accept and receive payments, Create and send invoices
- Available on all devices so you can check your financials on the go
- Integrate with your financial institution and other apps including AutoEntry, Zync, etc
- Has Tax compliance tools
- Dashboard view with easy-to-read financial reports and analysis
- Inventory control, Forecast cash flow
- Share access with your accountant in real-time on any device
- Add-ons such as human resources management and estimating
#6. Zoho Books
This small business accounting software is an online system that lets you track finances, create invoices, collaborate with an accountant, and has multiple products.
Additional features are accounting software, customer relationship management (CRM), inventory control, and human resource management software.
Zoho Books’ features include:
- Tax compliance and audit reports
- Creation of Sales orders and Invoice
- End-to-end accounting
- Reconcile bank transactions
- Includes a Client portal
- Reports and schedules
- Automatic tax calculations
- 1099 forms and sales tax reports that can be exported
GoDaddy is a household name in web hosting and web creation, but it also offers a small business accounting software system.
This software is designed for e-commerce businesses. It syncs with Amazon, Etsy, eBay, and PayPal.
Bear in mind that it may not provide a comprehensive accounting solution for a normal business especially those who want automation, tax forms, and payroll.
Its features are:
- Sync with online retailers
- Online payment processing
- Track sales and expenses, Create and send invoices
- Recurring invoices
- View business reports including profit and loss
Sunrise is an accounting software fit for freelancers and sole proprietors who need to track their income, expenses, and invoice.
Small businesses need double-entry accounting and don’t need full reports and mobile access.
Some other features are:
- Supports both quotes and estimates
- Sales tax
- Good user experience and dashboard
- Double-entry accounting
The strength of this small business accounting software is income and expense management, and support. The software is also easy to use, simple, and a great choice for businesses that don’t need inventory tracking.
Kashoo’s features include:
- Simple, clean user interface
- Good income and expense management
- Project cost tracking
- Free email, phone, and chat support
- Integrates with SurePayroll
#10. AccountEdge Pro
AccountEdge is a desktop accounting software for small businesses. If you need to access your finances on the go, you can use their cloud-based platform.
It has robust features and reporting capability, therefore, it is our pick for experienced accountants.
AccountEdge Pro’s features include:
- Bank feeds with integration
- Direct deposit
- Inventory management
- Payment processing
- Turn quotes into invoices
- Customer and vendor management
- Full-service payroll
- Free accountant copy
- Data sync with company files
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Your business does not have to be big before you start accounting. A business is being set up for failure if you scale it without proper accounting.
The best time to start is now. And the good news is that there is free accounting software for small businesses.
All our top picks require minimal accounting experience, provide desktop and cloud-based backup options.
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