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This category introduces some common accounting and bookkeeping applications used by big and small businesses and also by accountants themselves. Many times these vendors offer other business features that tie into the financial aspects of a business; invoicing, payments and payroll being very common, so we’ve included them in the same category. There are a lot of nice free options here for people just starting out.
Most people will outsource these functions while they are small companies, or do the accounting themselves. At the bottom we’ve included some outsourcing companies, but it is much more common to go local for this, since accounting and taxes are the sort of thing you discuss in person.
Lingo alert: bookkeepers keep a company’s books, meaning they track payments in and out of the business. You can do it yourself or hire an employee or part-time freelancer to do it for you. It is very common for small businesses to share bookkeepers. The software below is suitable for doing it yourself, or for the person doing your bookkeeping to use.
Accountants can also be your bookkeeper (but usually not the other way around). They commonly take the data from the bookkeeper and organize it into reports and useful information about your business. Accounts receivable, profit and loss, balance sheets, that sort of thing. Software can do this for you if you are your own accountant, but only a human can explain it to you and answer questions about how you can use it to make your business better. Accountants usually use the software below on behalf of a business, so don’t think they’re off using something special you don’t have access to. They also commonly handle other tasks for business, like payroll, tax preparation and audits, and they’re the person to go to when you want to see how your business has been doing year over year.
Most solos won’t be hiring an accountant or bookkeeper and will likely do everything themselves. A small business with employees might hire someone to collect on invoices, enter data into the software and keep track of money entering and exiting the business by using the software below and also hire an accountant at the end of each year. Most vendors offer plans for teams, so if you have a few employees in your back office who will be using this they can all enter data. For people running online stores, much of this data collection is done automatically by the e-commerce solution you use, and you can download that data into accounting software to keep track of it over the years, should you decide to switch to a different store solution later. Check to see what integrations your e-commerce software offers before you pick some accounting software.
A word about ecosystems: some of these vendors offer a lot of other products. If you’re a good-sized business with a lot of employees, you might want to buy into that ecosystem to run other parts of your business and make everything run together smoothly. Be sure to check out the pricing on all their products before you commit. If you’re a solo with a small business, you probably don’t need much more than accounting or invoicing.
Who doesn’t need accounting software? A freelancer or small business who doesn’t have many expenses or payments. Just keep track of them in a note book or in Excel or it’s free equivalent. Things like academic editing, writing and other side gigs, or even a consultant that only bills a few clients a month. If someone wants to pay you by credit card, check out our Invoicing Section in the payments category for solutions that let you send invoices and get paid, sometimes without even having a website. A big problem for newbie entrepreneurs is that they think they have to set up things like accounting before they’re needed and spend energy doing it. Skip this section or pick a free option until someone actually pays you more than a few dollars.
If you do have a small team or even a large business, look at the prices below and do the math for how many users you will need, what percentage cut they take off invoices you send, how they might do your payroll and then pick an option.
- Quickbooks Online: the industry leader, they have an advantage in that a lot of bookkeepers and accountants use it and are familiar with it, so if you have an outside accountant they probably have used this. A ton of e-commerce stores integrate with this. They also have a downloadable desktop version.
- Freshbooks: A viable competitor, they focus more on solos and very small businesses and have very strong integrations across the e-commerce and CRM worlds, meaning all of your software talks together. They have expanded into invoicing, billing, time tracking, and other financial parts of the business that are included in most plans, which can make life easier for a small business owner. No free plan, but the lowest-priced plan is a nice fit for some businesses. Pricing page. Note: this is a different company from Freshworks, which is an excellent CRM vendor. Current Deal: 50% off the first 3 months.
- Wave: An online-only accounting vendor. They appeal to start-ups and solos by offering a free plan (actually, it’s their only plan), which would be a very good fit for someone just starting out, someone starting a side gig or an uncertain business where they don’t want an upfront cost. They make their money back when you send an invoice and they take a cut to process it, or if you sign up for their payroll service. They offer some very nice free expense tracking, receipt tracking, and mobile invoicing tools. You can also hire them to do your actual bookkeeping (like paying an employee).
- Zoho Books: Part of the Zoho ecosystem, they have some nice pricing plans. While there is no free plan for Zoho Books, almost all the other Zoho products have a free option, making it a nice fit for a small business owner who wants to dive into their (very nice) suite of products.
- Sage: a well-known accounting vendor, they have a large ecosystem of other products. While they offer a plan for small businesses, this might be better suited to bigger businesses. Pricing.
- Account Edge: this is the only one on this list that is a desktop application, meaning the pricing is pay once, not monthly or yearly. It might appeal to people that don’t like subscription software or who are not connected to the internet often.
- Xero: Accounting software with inventory management, invoicing, billing, and other tools built-in, they offer a lot for the price. It can also integrate with Amazon Seller Central which might appeal to Amazon sellers. How it works.
- GNUCash: an old-school (we mean really old-school) free accounting and bookkeeping tool for coding nerds, but used enjoyably among said nerds.
Accountant & Bookkeeping Outsourcing
These services actually do your accounting and bookkeeping for you. Most entrepreneurs or small businesses will just hire a local accountant or bookkeeper using a referral from another owner because it’s nice to talk about these things in person and oftentimes you do things on paper and that person needs to come to your office and work through the paperwork. It’s also very common for small business to share bookkeepers with other companies, and then hire a certified accountant for end-of-year analysis and taxes. However, if you’re a digital company and want to outsource your bookkeeping, check out the options below. A few of them start in the sub-$200 range for companies with few expenses, which works out to about $2,400 a year and then goes up from there.
- Bench.co: they have a lot of integrations, so they might be a good fit for a start-up, Shopify store, or other tech company. You can add tax services. They use their own accounting software, unlike some of the other options here who can use the software your businesses uses. How it works.
- InDinero: A Y-Combinator-backed company, they offer accounting and you can add on taxes. They use their own software. How it works.
- Pilot.com: They do your bookkeeping or accounting, and you can add on services like taxes. They can also integrate with what you currently use for other services to get your data. How it works.
- KPMG Spark: owned by the giant KPMG, you can add on a lot of services.
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