The best bookkeeping tools for small businesses

Intuit's QuickBooks is the most recognizable name on this list, which is part of its appeal: Businesses looking to work with a CPA will have no problem finding someone who knows how to use it. 

"Many of my service-based clients rely on QuickBooks because accountants and bookkeepers are familiar with it, ensuring smooth collaboration," said John Rojas, a financial planner and the CEO of Tribox Private Wealth in Jupiter, Florida. By contrast, newer and shinier competitors are at risk of undergoing destabilizing overhauls or simply ceasing to exist: "I've seen businesses caught off guard when platforms like Bench Accounting suddenly shut down, leaving them stranded without access to key data," he added. That's not a risk with QuickBooks.

Aside from its ubiquity, though, QuickBooks is a genuinely great tool: It supports payroll, project tracking, and inventory tracking, is easy to use, and runs "the best reports in the business," according to our colleagues at PCMag. The only real downside is its price. The cost may be difficult to justify if you're a solopreneur or a freelancer with more straightforward accounting needs.

For businesses with complex finances who need lots of features, Xero is the option to beat. Crystal Stranger, an Enrolled Agent with the IRS and the CEO of OpticTax.com, is a big fan: "It has all the capabilities you could want, a lot of helpful automations, and isn't too hard to learn to navigate," she said. "Plus the bank feed connections normally work well, and this prevents a lot of errors that have to be manually fixed."

One caveat: Multiple small business owners reported that customer support could be slow at times, but that the quality of that support was excellent.

Wave is an ideal fit for freelancers and solopreneurs — especially ones who send a lot of invoices. There is a free "Starter" tier, but it's worth springing for the $16/month "Pro" option: You'll get access to time-saving features like automatic bank transaction imports.

However, Wave will likely fall short for more complex small businesses, especially those planning to scale. It does not offer time, project, or inventory tracking, and its automatic transaction data requires a bit of manual maintenance to keep it accurate. 

Several business owners told us that they used Wave in their business's early stages but pivoted to another program (usually QuickBooks) when their needs increased. Michael Kenins, the CEO of Vista Tree Management in Toronto, said that while Wave was ideal as a "simple, effective, and cheap" payroll solution, its bare-bones customer support and limited reporting power led to issues down the line. If you're running a one-person show, though — i.e., a wide variety of customizable reports is not a priority — this is likely the pick for you.

According to our colleagues at PCMag, FreshBooks is best for service-based businesses that don't need to deal with inventory. Where it excels is user experience: Rock the Rankings founder Justin Berg called it "snappy and intuitive," while boutique PR agency owner Antoinette Clay said she was particularly impressed by how it "walks [her] through topics" she needs to reacquaint herself with "in a simple-non-intimidating way."

Despite that ease, it still offers pretty much every core feature you might want: inventory and project tracking, payroll, very solid reporting tools, and more.

Zoho is a cloud software company that offers all kinds of tools — from CRM to project management software to email. It's a good choice for larger small businesses that want to streamline their suite of products. Zoho Books isn't a bad option on its own, either: It has tons of reports templates, advanced tools, and good customer service. 

"Zoho Books is leaner but still powerful," says Zarina Bahadur, the founder and CEO of subscription service 123 Baby Box. I can manage invoicing and expense tracking along with automation features for only $20/month without extra unnecessary features. Their AI-driven categorization saves hours every month. The company's customer service team answers phone calls when customers reach out. When you’re running a business, that matters."

However, like Xero and QuickBooks, Zoho might be too unwieldy for smaller businesses that plan to stay small.

When selecting the bookkeeping software that's right for your business's needs, keep these features and factors in mind:

• Inventory tracking: If your business involves the sale of goods, you'll want to make sure your bookkeeping tool supports inventory tracking — what you have in stock, where it is, and how much you need to sell.

• Project tracking: You may also want to track individual projects, including tasks, expenses, resourcing, etc. To do this, you'll need software that includes project tracking tools.

• Payroll support: Will you use your bookkeeping software to run payroll? If so, choose a platform that's up to the task. (Each of our picks offers payroll support, though it's worth noting that Xero's support is through an integration with Gusto, an HR and payroll platform.)

• CRM integration: If your business uses Customer Relationship Management (CRM) software like Salesforce, HubSpot, or Monday, you'll want to make sure your bookkeeping tool can play well with it.

• Reporting capabilities: Most bookkeeping tools can generate reports related to sales, expenses, accounts receivable and payable, and more. Make sure your pick is adept at the types of reports you'll use the most.

• Mobile capabilities: Do you plan to use your accounting tool on your phone? If so, it should have a mobile app.

• Budget: Every business's bookkeeping budget is different — and when it comes to software, some need more bells and whistles than others. Figure out which features you absolutely need and which ones you won't actually use. It could save you a lot of money in the long run.