Best Accounting Software Programs for Small Businesses

ZohoBooks is the best accounting software program for small businesses. We found it to be highly intuitive to use, making it a great tool for small businesses without an in-house accounting expert. On top of that, ZohoBooks has solid tools for tracking inventory and sales, making it great for businesses that deal with products.

That said, small businesses looking for an accounting tool that can help them budget and keep an eye on their finances will prefer QuickBooks. Although not as easy to use as ZohoBooks, the extra time spent learning is worth it for access to QuickBooks’s custom reports and cash flow projections, which growing businesses will find invaluable.

That’s just a brief summary of our top two, but in total, we’ve tested and ranked seven accounting software programs. Read on to find the best solution for your business.

The Best Small Business Accounting Software: Overview

Here’s a quick overview of the best accounting software programs for small businesses:

1. ZohoBooks: Best for Managing Sales and Inventory

ZohoBooks has a free plan and comes with excellent tools for managing inventory, such as stock level tracking, making a great choice for small businesses with a focus on product sales.

What we like about ZohoBooks

ZohoBooks was the easiest to use of all the platforms we tested. We had no trouble creating quotes and invoices, largely due to its clear signposting and the intuitive design of the interface. This makes it particularly well-suited for small businesses that don’t necessarily have a lot of prior experience using accounting software. It also doesn’t hurt that ZohoBooks is the only provider besides FreeAgent to offer a free plan, making it highly accessible for sole traders or micro businesses on a small budget.

Features such as automatic mileage calculation for expenses, and dedicated reminder buttons for chasing clients made managing sales and expenses quick and easy. Not all accounting software programs come with these tools, with Sage missing a payment reminder button, and QuickBooks, among others, doesn’t calculate mileage.

It doesn’t hurt that most of these features can also be accessed on the go using ZohoBooks’ mobile app. Most competitors offer a mobile app, however, ZohoBooks’ app is by far the most comprehensive, allowing users to manage accounting much the same as they would from the desktop app.

ZohoBooks also performed very well when it came to reporting and analytics tools. For example, we were impressed by its inventory management capabilities. Not only does ZohoBooks track inventory levels in real time, but it can also calculate the depreciation of fixed assets. This last feature isn’t offered by competitors QuickBooks or FreshBooks.

What we don’t like about ZohoBooks

There were a few things we didn’t love about ZohoBooks. When testing, we found ZohoBooks’ timer a little frustrating, since it didn’t let us assign the time to a new project upon stopping the timer (this had to have been done before). We also didn’t love ZohoBooks’ search bar, since it required an exact match to yield results, making it a little useless.

On the technical side, we found ZohoBooks’ help and support resources a little lacklustre. The self-help guides didn’t cover key topics like tax returns, and live support is limited to 9 am to 6 pm on weekdays, which is less than ideal for small businesses conducting accounting outside of these hours. FreshBooks is a better option for support since lines are open until 12 am all days of the week.

Additionally, ZohoBooks doesn’t integrate with as many third-party software tools as competitors QuickBooks (750) or Xero (1,000). You will get access to Zoho’s network of business tools, such as its CRM platform, but for businesses that want to keep their existing software platforms, we recommend the above competitors.

2. QuickBooks: Best for Financial Forecasting and Analysis

QuickBooks is a great choice for small businesses that want to use accounting software for financial projection and budgeting to speed growth. It offers powerful cash flow projections and extensive reporting capabilities.

What we like about QuickBooks

Although QuickBooks wasn’t the easiest accounting platform we tested, we ranked it second due to its excellent financial planning tools and solid core accounting features.

We were particularly impressed by QuickBooks’ cash flow projection tool since besides providing clear estimates, it can also alert businesses about potential cash shortfalls or surpluses. Xero’s cash flow projector doesn’t do this, however, FreeAgent’s and ZohoBooks’ equivalents do.

That said, QuickBooks outstrips the competition when it comes to its reporting capabilities. Not only does it allow businesses to create custom reports from scratch, something FreeAgent and ZohoBooks don’t allow, but it also allows these reports to be exported into a wide variety of formats, including Excel, PDF, and Google Sheets, more than all competitors except Xero. This makes haring data easy for businesses.

QuickBooks also makes it easy to view core data since has a dashboard that highlights overdue payments and other key metrics in the form of graphs. It’s not the only provider to do this, ZohoBooks does it too, but we found QuickBooks’ version the nicest to look at.

On the practical side, we loved how QuickBooks improved efficiency reducing manual effort thanks to pre-populated fields and email previews streamlining. Converting quotes into invoices was also very smooth thanks to a button on each quote, and sending payment reminders was quick since we could do this directly from the overdue payments section.

What we don’t like about QuickBooks

Although QuickBooks wasn’t the most difficult to use of all the platforms we tested, we found the initial learning curve quite steep. This is mainly because we found the interface quite cluttered, and signposting vague. We felt that key processes like creating expenses, setting tax rates, and sending payment reminders were overly complicated since they required far more steps than with competitors.

For this reason, QuickBooks isn’t an accounting software program we’d recommend to small businesses that are strapped for time and need to get up and running quickly or novice users. ZohoBooks, FreshBooks or FreeAgent are more user-friendly alternatives.

Additionally, QuickBooks was the only software we tested, besides Sage, that doesn’t have a time tracker tool. Once again, this males it less than ideal for small businesses focused on time management, or who want to create billable hours.

3. Xero: Best for Businesses with Complex Needs and Long-term Clients

Xero is best for established small businesses that have long-term term clients and complex financial needs. Its got an excellent client portal for financial transparency, great forecasting and reporting tools, and allows for high levels of detail when creating quotes and invoices.

What we like about Xero

Although Xero was challenging to use, we thought this was balanced out by the high amount of detail it allowed businesses to input for quotes and invoices, including unique IDs and a wide variety of tax codes. For example, when testing Xero, we were impressed by the fact that it let us assign expenses to a specific client, something competitors don’t offer.

This makes Xero perfect for businesses that have large portfolios to keep track of and rely on detailed reports to keep things running.

Like QuickBooks, Xero is a great platform for businesses looking for financial insights. Its cashflow tool is a close second to QuickBooks’s, just missing alerts for shortfalls and surpluses, but, unlike QuickBooks, Xero also lets businesses track fixed assets and their depreciation and/or amortisation over time, allowing for better financial oversight.

Part of what makes Xero a good option for small businesses with long-term clients is the Xero Portal. It’s one of the few providers besides ZohoBooks to include a portal that lets clients securely view or interact with their financial data, which is great for maintaining trust.

It’s also the platform with the highest number of integrations. Xero integrates with 1,000 third-party apps, making it a great choice for small businesses that love their software.

What we don’t like about Xero

Xero was the least easy to use of all the accounting software programs we tested, making it unsuitable for small businesses with limited accounting experience. Factors that contributed to this include Xero’s overcrowded dashboard with very vague names for menu tabs, and the fact that extraneous fields came before core details when creating quotes and invoices, which led to a lot of scrolling.

Our experience wasn’t helped by the fact that the design of Xero’s interface looked quite dated overall, especially compared to top competitors ZohoBooks and QuickBooks.

Xero also has the highest starting price of any accounting system on this list, at £16 per month, and with no free plan. For business owners that need a low starting price, we recommend FreeAgent or ZohoBooks, which both start at £10 per month and have free plans.

4. FreeAgent: Best Value for Money

FreeAgent is the best value-for-money small business accounting software. Besides its free plan, it has a low average monthly cost of £22.25 per month, while still having more advanced financial planning tools than some of its pricier counterparts.

What we like about FreeAgent

Contributing to FreeAgent’s affordability is the fact that it has the lowest maximum price, at £33 per month for its most expensive plan. By comparison, ZohoBooks’ most expensive plan costs £165, and QuickBooks’ costs £115. The price jumps between FreeAgent’s plans are also less than £10, as opposed to most competitors, making scaling up easier.

On top of its low price point, FreeAgent is also a highly functional software. During testing, we found it to be very user-friendly, especially for beginners. For example, FreeAgent’s invoicing tool included a timeline feature, guiding us through the process. Other tools FreeAgent has to help small businesses navigate the accounting landscape include tax reminders and pre-built end-of-year reports.

We were also impressed by the financial planning features FreeAgent offers. Despite its low price, it’s the only accounting platform on this list to offer built-in tools for tax forecasting and planning. On top of this, FreeAgent provides businesses with alerts on potential cash shortfalls or surpluses and lets them run “what-if” scenarios to evaluate future financial outcomes. These are both features that aren’t available with competitors Xero, FreshBooks, or Sage to name a few, and are paid add-ons with QuickBooks.

What we don’t like about FreeAgent

Although we found FreeAgent generally quite easy to use, the platform isn’t quite as intuitive as ZohoBooks. We had trouble finding certain features such as payment reminders, and customisation options for invoices due to vague menu signposting. Additionally, when we tested, FreeAgent’s search bar didn’t produce any results to help us find tools, which isn’t great for businesses that need to locate tools quickly.

In general, FreeAgent might not be the best platform for speed and efficiency, since it was one of the few platforms we tested that wasn’t able to suggest frequently used entries when we were typing in data. This is something competitor Xero did very well, and it saved us a lot of time.

It’s also not possible to assign multiple shipping addresses to clients in FreeAgent. This could be very limiting for businesses with clients who operate in multiple locations, so we recommend QuickBooks or ZohoBooks if you need this feature.

5. Sage: Best for Customisation

Sage is the best accounting software program for small businesses that need a high level of customisation to create unique reports and design branded invoices. Plus, on top of accounting, Sage also offers payroll and HR software, making it a one-stop-shop for small businesses.

What we like about Sage

Sage was one of the most visually appealing and modern-looking accounting platforms we tested. We particularly enjoyed the process of managing quotes and invoices, since Sage allows a high level of customisation regarding layout and logo positioning. Sage also offers separate templates for products and services. All these features make Sage a good option for businesses looking to maintain a strong brand identity with customers.

Customisation extends to reporting tools. Sage lets businesses create custom reports and has a dedicated menu tab for profit and loss reporting. Although Sage’s analytics tools aren’t as advanced as Xero’s or QuickBooks’s, it still comes with an attractive dashboard that summarises key metrics and has a cashflow projection tool.

Besides accounting software, Sage offers a range of other small business tools, including payroll and HR. It’s not alone in doing this, QuickBooks offers a payroll add-on, but what makes Sage’s offering unique is that it offers tiered payroll software plans, with increasingly advanced tools, making it a better option for businesses that plan on growing their team.

What we don’t like about Sage

Although we like Sage’s quote and invoicing tools, we struggled to find other core accounting features like payment reminders, currency settings, and expense reporting. This was mainly due to vague menu signposting, and very unclear self-help resources.

Sage is also missing a few core accounting tools. Besides QuickBooks, it’s the only accounting software we tested to not have a time-tracking tool, and journal entries don’t automatically integrate with the general ledger. We recommend most other competitors if you need these tools.

Another tool missing from Sage is automatic client payment reminders, and it’s the only software we tested to not have this tool. For this reason, we don’t recommend Sage to businesses that are anxious about their cashflow or have a large portfolio of clients to chase.

6. FreshBooks: Best for New Businesses

We recommend FreshBooks to new businesses since it has solid customer support, is easy to use, and is affordable, with an average price of £25 per month.

What we like about FreshBooks

FreshBooks is one of the most affordable accounting systems, so most new businesses will have the budget to use. It’s got the second lowest average monthly price, after FreeAgent, at £25 per month, with plans ranging from £15 to £35. Plus, there’s only a £10 increase between tiers, again, the second smallest increase after FreeAgent. This makes upgrading achievable for new businesses that don’t yet have a big budget for software.

After ZohoBooks, FreshBooks was the second easiest accounting platform to use during our testing. Paired with better support tools than ZohoBooks, and FreshBooks is the best option for new businesses using accounting software for the first time.

Part of what made the platform easy to use was the clear menu, and the fact that quotes and invoice settings could be edited directly on the page we were working on, so there was no need to go to a separate tab. Finally, in general, buttons for key actions, such as converting quotes into invoices were placed in highly visible spots, so there was very little scrolling through pages.

When it comes to customer support, FreshBooks has a phone line that’s open until 12 am even on weekends and a 24/7 chatbot. This means it’s easy to get help, even outside of traditional working hours. We were also impressed by FreshBooks’ knowledge centre. Its self-help guides covered a wide range of topics and were clear and up to date, a stark contrast to competitors such as Xero.

What we don’t like about FreshBooks

Although we found FreshBooks very easy to use, we didn’t like its emailing tool. There was no obvious way to send personal messages to clients via FreshBooks, and very little warning before an email was sent, which meant it was easy to send items by accident.

FreshBooks also has the poorest selection of financial planning tools of any provider on this list. For example, it’s missing any type of cash flow projection or budget-setting tools. That’s why we recommend it to new businesses with a small list of clients. Established small businesses should look at QuickBooks or Xero for robust financial planning tools.

7. Clear Books: Best for Robust Tax Support

Although Clear Books scored the lowest in our testing, it stood out in one key area, tax support. Clear Books can help small businesses better manage tax, since the platform supports all forms of tax, not just VAT, offers a tax projection tool, and makes submitting tax returns easy with its portal.

What we like about Clear Books

Clear Books’ overall features weren’t as advanced as most competitors, however, we were very impressed by its tax management tools.

Not only Clear Books automatically calculate and deduct tax on products or services, as most accounting software does, but it also automatically updates as tax regulations change. This isn’t something most competitors do. They’ll notify users of changes but require a manual settings change.

Clear Books also supports a wide variety of different tax types, including VAT, income, sales, and GST. Most competitors only support two types, with VAT being one of them. This makes Clear Books a great choice for businesses that deal with diverse goods or operate internationally, where different tax codes are used.

Clear Books also has a “Tax Projection” tool that gives guidance on upcoming tax payments, which can help small businesses stay compliant. It’s also easy to submit VAT returns with Clear Books since it’s part of the Making Tax Digital (MTD) initiative, so it integrates with HMRC’s portal. Most competitors do offer this as well, but Clear Books is still a champion when it comes to tax management.

What we don’t like about Clear Books

When we tested it, we found that Clear Books wasn’t the easiest accounting program to use. The navigation bar had a few naming inconsistencies, which made it confusing, and the overall layout made the dashboard quite cluttered, making it difficult to locate tools.

Clear Books’ selection of financial planning tools is also a little thin. For example, it’s missing cash flow projections and a tool for setting budgets. If you’re a small business that’s eager to use accounting software to help you map out your finances, we recommend QuickBooks or Xero over Clear Books.

Buying Guide: How to Choose a Small Business Accounting Program

When choosing a small business accounting software program, it’s important to weigh your needs against cost, features, and ease of use, among other factors.

Here’s what we recommend you consider:

Features

How the features match up against your small business’s needs is probably the most important aspect of choosing accounting software. You should ask yourself what you want to use the software for. Is it for simple bookkeeping (i.e. tracking outgoings and incomings) and tax returns? Or do you want a system that can generate financial projections to help you plan for the future?

Costs

Cost is always going to be a factor when choosing software. Luckily most accounting software providers have plans that start in the £10 to £15 per month range and don’t charge per user, making them accessible for businesses on a budget. That said, always evaluate features against price since you might find the same tools for slightly less with a competitor.

We also recommend looking at the price of upgrading, to make sure the accounting software you choose is one you can afford to have grow with you.

Ease of use

Ease of use is an important factor when choosing a small business accounting software. Most small business owners/operators aren’t professional accountants, so we recommend prioritising software that’s easy to use, especially if it’s your first time using accounting software.

If you do have prior experience and are looking to switch accounting software, then ease of use won’t count as much, especially if you’re focused on gaining access to more advanced features.

Mobility and accessibility

This probably isn’t the first factor to come to mind, but it’s important to consider how and where you work, and whether your accounting software adapts to you. If you’re busy and on the go, we recommend choosing software with a solid mobile app that has virtually all the features the desktop app has, so you can manage accounting from anywhere.

You should also think about your clients. Do you want/need to be transparent about your finances with them? If so, we recommend choosing accounting software with a client portal, where clients can view and interact with data.

Integrations

Accounting software probably isn’t the only type of business software you’ll be using. It’s not necessary for all your business software to integrate, but if you use technology such as payroll software, or an online store, choosing an accounting platform that can integrate with other systems will make sure no data gets lost.

Methodology: How We Test Small Business Accounting Software