Small businesses are key players in today’s economy. They make up 50% of global employment and account for around 40% of the gross domestic product (GDP) of developing countries (World Bank, n.d.). However, owning a small business can be difficult, with the various roles that managers need to undertake on a daily basis. Taking repetitive tasks off their plate will help them focus on more important things such as motivating employees for better performance or running the business hands-on. This is where small business accounting software can come in handy.
SaaS products created to streamline accounting and bookkeeping processes can accelerate finance management processes and eliminate data input errors, among others. This guide will explore the best small business accounting software, as well as its statistics and trends to offer small business owners a solution to their financial needs and to help boost productivity in the workplace.
There are around 332.99 million small and medium enterprises (SMEs) around the world (Statista, 2022), and they are one of the hardest-hit sectors at the height of the pandemic. Most of them had to transition their services online or halt operations, and many more were forced to shut down completely.
Looking at United States statistics alone, COVID-19 affected 32,540,953 small businesses due to the months-long lockdown. In 2020, 51.4% of those businesses were negatively impacted by the pandemic. Small companies providing accommodations and food services were the most affected and were closely followed by the arts and entertainment and educational services (Small Business Administration, 2021).
Despite this, small businesses still have a positive outlook on their performance and survival. In fact, the percentage of small businesses that were negatively affected by the pandemic dropped to 25.2% in July 2021 from April (Small Business Administration, 2021). It decreased even further to 21.6% in April 2022 (Statista, 2022). Furthermore, 85.4% of small businesses expect their operations to survive the pandemic (Guidant Financial, 2022).
Perhaps there is a reason why small businesses continue to endure and last even with colossal external factors affecting them. Small business owners are tenacious and versatile. They needed to adapt to the economical climate brought about by the pandemic, or they would risk going out of business. Worse, they would be left behind as another change steps in (Wired, n.d.).
With little to no time to have digital training, most businesses were forced to adapt to an online market during the pandemic while creating sustainable work-from-home policies. This meant that small business owners had to look for reliable and easy-to-use solutions to keep their businesses afloat (Wired, n.d.) while operating everything remotely. In fact, 42% of small businesses that were surveyed by the Society for Human Resource Management (SHRM) revealed that they needed to embrace new technologies during the peak of COVID-19 to stay open (SHRM, 2020).
Small Business Administration, Statista
Furthermore, this shift gave way to the rise of countless cloud-based solutions, including online small business accounting software, that lent a helping hand to business owners worldwide. These digital solutions once used at the height of the pandemic remain relevant as small businesses slowly get back on their feet.
This is the new normal for small business owners—looking for innovative and sustainable technology is not only a necessity but has become a requirement, so small businesses can continue to thrive in a competitive market. In fact, 14.4% of small businesses expressed their interest to invest in business services technology while 13.2% wish to expand their information services technology (Guidant Financial, 2022). Even in simple tasks such as naming a business or product line, they can use software solutions like a creative company name generator. This shows how some small businesses may need to continue relying on new software to keep up with the trends.
At a time when the economy is gradually kicking off again, returning to some pre-pandemic habits is always a safe option. However, running a business will not be the same as streamlined online solutions keep becoming available.
Zooming in on the small business accounting software statistics, the market is predicted to significantly expand as more businesses start and continue to invest in it. Consider the following forecasts:
These numbers indicate that the demand and need for small business accounting software will continue to climb as the future of digital technology expands in the years ahead. The linked growth of both technologies not only remedies the aftermath of the pandemic but also prepares business owners for a more digitalized world. Moreover, customers will expect small businesses to keep up the services they provide, not level them down.
Research and Markets, ReportLinker
Small business accounting software statistics give business owners a bird’s eye view of what the market will look like in the coming years. This gives them a chance to jump in and consider if acquiring one is worth the return on investment (ROI) it yields.
Moving forward, here are several small business accounting software trends that could sway small business owners to invest in this application:
Apart from these data on small business accounting software, some reports also projected other factors that could contribute to the growth of the accounting market. In terms of regional expansion, North America currently holds the biggest share of accounting software users. The growing number of accounting software contenders and the widespread understanding of analytics solutions account for the boost in the accounting software market in North America (ReportLinker, 2022).
Furthermore, government provisions on the use of accounting software also contribute to the increase in market sales in that area. This initiative from the government is also expected to be seen in Asia-Pacific, specifically in China, Japan, and India, as small and medium enterprises continue to proliferate in the region (Research and Markets, 2022).
Lastly, the collaboration between small businesses and ecommerce companies, and the use of small business accounting software in this partnership will help integrate invoices, bills, purchase orders, and payments altogether into one place seamlessly (Research and Markets, 2021), avoiding unnecessary purchases from third-party apps or extensions.
With all this, here is a list of accounting software considered the best for small businesses. These can help micro-business owners manage and keep their books in order.
NetSuite offers cloud accounting software and is one of the many web-based enterprise resource planning (ERP) applications. A powerful bookkeeping app, this software automatically consolidates general ledgers and inputs data and expenses to reduce time-consuming accounting processes. NetSuite yields instantaneous reports and analytics and allows users to customize reports to tailor to the company’s needs. It also offers other built-in solutions that seamlessly integrate with the accounting software so that it is easier for clients to operate everything all in one place as their business grows.
NetSuite Key Features:
Custom quote with a one-time implementation fee
Part of Intuit’s global technology platform, QuickBooks Online provides a range of solutions to help small business owners thrive. Its dashboard interface gets work going by immediately providing an overview of the business statistics and status. QuickBooks helps proprietors personalize invoices and embed a pay-now button to highlight branding and speed up payment processes. In addition, it also fast-tracks data processing by saving details from pictures of receipts and tagging them to match transaction records and bears some of the functionalities of the best scheduling software with payments and billing.
QuickBooks Online Key Features:
QuickBooks Simple Start is ideal for freelancers to small business owners for only $30/month and comes with a free 30-day trial. Its other plans–Essentials, Plus, and Advanced–start from $55/month to $200/month.
Sage Intacct is a cloud-based accounting software that focuses on advanced automated processes to help business owners expedite functions. Its AI streamlines data entry and automatically adjusts to updates and changes in allocations and transactions. Sage Intacct also provides smooth integration with other apps to easily connect bank records and transactions. Its one-of-a-kind Intelligent General Ledger™ helps to cut down the time it usually takes to record financial data so that you can ensure fast accounting processes.
Sage Intacct Key Features:
Xero, designed for small businesses, accountants, and bookkeepers, conveniently shows outstanding payments, bank records, and cash inflow in its dashboard, making it easier for users to track progress. It also reduces manual tasks by automatically replicating recurring bill information and suggesting quick bank reconciliation solutions. Their Hubdoc product also allows users to take and back up photos of receipts and use the details on these pictures to auto-fill forms.
Xero Key Features:
Xero offers a Starter Plan ($25/month) for startups and a Standard Plan ($40/month) for growing businesses.
FreshBooks provides a simple and quick solution to help freelancers and self-employed individuals get their businesses going. The small business accounting software offers a way to customize the chart of accounts (beta) to get a better view of the company’s growth. It also helps proprietors manage time tracking to ensure that all billable hours are accounted for. FreshBooks also automates data entry by uploading and importing pictures of receipts and bills and sorting them immediately.
FreshBooks Key Features:
Apart from a free 30-day trial, FreshBooks offers a Lite Plan ($16/month) and a Plus Plan ($30/month) for startups and small businesses.
Zoho Books is a one-stop accounting platform for budding businessmen to large enterprises. It speeds up mundane tasks by automatically converting approved estimates into editable invoices. With its smart auto scan, images of receipts are quickly imported to forms and statements. It also allows users to enable auto-charging for repeated transactions to make billing much faster. Zoho Books also tracks down suspicious activity in its activity logs and helps users stay on top of changes with advanced reports and analytics settings.
Zoho Books Key Features:
Zoho Books offers a free 14-day trial as well as a free plan for companies with revenues of less than $50,000 per annum. Five different paid plans are also available starting at $10/organization/month to $200/organization/month.
Wave helps small business owners by providing three basic accounting solutions that are simple to set up and use. It enables users to send invoices on the go with a single click. Users can easily switch between automatic and manual billing reminders to ensure payments are sent on time. Invoices and payments are also automatically recorded and synced with the accounting software for faster and error-free bookkeeping.
Wave Key Features:
Wave’s Invoicing, Accounting, and U.S.-only Banking software are all free. It also offers Payments (pay-per-use), Payroll, and Advisors Software starting at $0.60 to $379.
FreeAgent is an accounting software from the United Kingdom. It is designed for small trade, professional, technology, retail, and hospitality businesses, as well as the service industry and landlords. Its making tax digital (MTD) for VAT is easy to understand and lets users submit directly to HMRC. With its smart tools, proprietors can choose which tasks to automate so that they can focus more on running their operations. In addition, FreeAgent also provides instant profit snapshots without generating a report, making it quicker to see how well the business is going.
FreeAgent Key Features:
FreeAgent offers the software to sole traders for £8.50/month, limited companies for £14.50/month, and partnerships and LLPs for £12/month for the first six months. There is a free 30-day trial.
Ideal for owner-operators, contractors, and freelancers, TrulySmall Accounting provides quick solutions to reduce time-consuming tasks. For instance, automatic reminders are sent to clients to alert them of new or pending payments. The software also gathers months’ worth of reports and analytics in just under five minutes. Additionally, TrulySmall Accounting also helps owners add personalized touches to their invoices to help clients remember their brand.
TrulySmall Accounting Key Features:
TrulySmall Accounting costs $20/month and has a free 14-day trial.
Odoo Accounting is part of the open-source business apps that Odoo offers. It focuses on bookkeeping solutions but integrates with other Odoo apps, such as Inventory, Expenses, and Sales, to make business operations run smoothly. Its AI technology accomplishes data entry for business owners. It also generates invoices instantly from existing sales orders and timesheets, templating them for the future.
Odoo Accounting Key Features:
Odoo lets users experience its accounting app (or any other single app) for free. It also offers a Standard Plan ($9.10/user/month) and a Custom Plan ($13.60/user/month).
A U.K.-based small business accounting software, ClearBooks acts as a partner of business owners in success by providing time-saving tools. Apart from it generating invoices straight from timesheets, ClearBooks also sends auto-reminders to late payers to ensure that services are paid on time. Choose from its ready-made templates of forms and tailor-fit them to make your company’s brand look more professional. Bank transactions are also immediately reflected on the dashboards, making it easy to track cash flow and expenses.
ClearBooks Key Features:
ClearBooks offers a small plan with access to its core accounting features for £12/month with a 50% discount for the first three months and a free 30-day trial.
BUSY is an India-based on-premise ERP and accounting software that has been helping grocery, pharmacy, and other small business owners manage their operations since 1997. It helps owners become goods and services tax (GST) compliant by automatically processing the paperwork for them, error-free. Apart from that, it ensures that taxes are paid promptly and correctly since invoices are prepared prior to a transaction. BUSY also reduces stock issues since its inventory management shows complete details of each item, from expiration dates down to the color and sizes.
BUSY Accounting Software Key Features:
Busy Accounting Software has a free trial Express version. It also offers a Basic plan for around ₹9,000-₹22,500 for micro and small businesses in India, Nepal, and Bhutan, as well as a Standard plan from ₹13,500-₹33,750 for small to medium businesses outside South Asia.
QuickFile is a U.K.-based small business accounting software that is MTD-ready for easier compliance with HMRC. its simple interface makes it quick to generate summative balance sheets or submitted VAT returns to help small business owners plan out their operations or analyze trends. The customizable invoices are automatically linked to bank accounts to help streamline payment. QuickFile also organizes receipts and sales contracts in one place and keeps them secure using a two-factor authentication system. In addition, the platform provides cloud backup solutions for security and convenience.
QuickFile Key Features:
QuickFile offers free access to the accounting software for extra small to medium-sized businesses (up to 1,000 ledger entries).
Vyapar provides accounting, invoicing, billing, and inventory solutions to small businesses. It helps users to organize and categorize bills, payments, and invoices to make tax filing much easier. Its self-payment reminders allow business owners and clients to track due dates and pay as soon as possible. Vyapar also includes a point-of-sale (POS) software that is easy to use since it registers payments into the system as soon as they are made.
Vyapar Key Features:
Vyapar’s mobile-only basic plan is free and can be upgraded to premium starting at $19 to $42.99. Its desktop version has a free 15-day trial, and paid versions range from $49.99 to $144.99.
Accounting Seed helps small business owners integrate all transactions on the Salesforce app and automate financial tasks seamlessly. Its smart general ledger system supports multiple currencies, enabling users to view stats and analytics in one report with updated currency gains and losses. The drag-and-drop tools also make it easy for users to customize what they see on their dashboards without the pain of going through the entire history. Moreover, it integrates with customer management software for easier coordination.
Accounting Seed Key Features:
The immense and rapid rise of small business accounting software provides owners with a chance to step back and rethink how they can innovate their daily operations. To recall, while the pandemic pushed small business owners to immediately acquire online solutions, global technology trends also influenced them to continue supporting these services. Apart from that, the developing ecommerce market and the growing niche for online accounting services also create a more distinctive way to help owners manage their businesses.
The best small business accounting software listed above are specifically designed to fast-track tasks for owners to help them foster better relationships with their partners and clients. Furthermore, advanced features of some software allow proprietors to quickly comply with tax requirements and tailor their accounting processes according to their needs. Lastly, the featured software are user-friendly and do not require owners to have extensive knowledge of accounting. However, there are several one-year online master’s programs available for owners who might want to take up business administration or finance and accounting lessons to further enhance their skills.
Whichever way small business owners go, it is important to remember that by acquiring an online accounting software, they then can buckle down to doing more significant things. Whether it is to improve products and services, up their marketing game or online presence, or simply reduce repetitive labor, digitized solutions such as an accounting software can automatically take the load off small business owners’ shoulders and make their lives easier.