How to Find Free Tools to Optimize Your Small Business

PCMag editors select and review productsindependently. We may earn affiliate commissions from buying links, which help support our testing.Learn more.

The Best Small Business Accounting Software for 2020

If youre running a small business, then keeping a tight grip on finances is critical for success. Our reviews cover the best small business accounting tools to help keep your company in the black.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

FreshBooks offers a well-rounded, intuitive, and attractive double-entry accounting experience that supports invoices and estimates, expenses, time tracking, and projects. It anticipates the needs of freelancers and smaller businesses wellbetter than its competitors.

In-depth contact records and transaction forms.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

QuickBooks Online is still the best online accounting application for small businesses, thanks to its depth, flexibility, and extensibility. Its easy to use, well designed, and built to serve a wide variety of users, but its also pricey.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

691) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

Sage 50cloud is an exceptionally robust small business desktop accounting application, incorporating a comprehensive set of financial tools and generous customization options. New integration with Microsoft Office 365 makes it a hybrid solution: local, hard drive-based software that can share data with productivity applications via the cloud.

Superior depth in records and transaction forms, including numerous custom fields.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

Integrated payroll feature limited to California and Texas.

Zoho Books is an excellent choice for cloud-based small business accounting, with an exceptional interface, an attractive price, and a rich set of tools. Its limited payroll offering may cause some users to look elsewhere, however.

Free, though payments and payroll incur fees.

Smart selection of features for very small businesses.

Excellent invoice and transaction management.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

Wave is priced like a freelancer accounting application (its free), and its an excellent service for that market. But it also offers enough extras that a small business with employees could use itwith some caveats.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

Small business accounting website Xero has strengths in many areas, like account reconciliation, data imports, inventory management, and project tracking. Recent improvements in areas like reports, projects, and document management make it one of the top choices for todays small businesses.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

691) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

Kashoos strengths are income and expense management, usability, and support. Its a simple, speedy choice for smaller businesses that dont need product inventory tracking or robust time billing tools.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

691) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

Sunrises combination of tools and usability make it a good choice for freelancers and sole proprietors who need to track income, expenses, and invoice customers. It lacks some features that microbusinesses might use, though, like time tracking and full mobile access.

Can assign business transactions to Schedule C categories.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

No contact or product records, time tracking, project tracking, or recurring transactions.

691) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

QuickBooks Self-Employed will appeal to freelancers and independent contractors who want its automatic mileage tracking, quarterly tax estimating, and basic bookkeeping. Businesses that need features like time tracking, sales tax, robust invoices, and data records should consider QuickBooks Online.

Direct integration with Amazon, eBay, Etsy, and PayPal.

767) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

691) ? this.parentElement : this.parentElement.parentElement;el.querySelectorAll(.hide-three).forEach(function(item)item.classList.remove(hide-three));el.querySelectorAll(.view-more).forEach(function(item)item.classList.add(hidden));

GoDaddy Bookkeepings direct integration with Amazon, eBay, and Etsy make it a terrific tool for entrepreneurs who sell at those sites. Its overall bookkeeping depth and flexibility are good, and its easy to use. But it lacks much of FreshBooks functionality.

According the US Bureau of Labor Statistics, about 20 percent of small businesses fail before they complete their second year. Among the many potential culprits for this widespread demise is the lack of effective money management and bookkeeping. Small business accounting software can do a lot to prevent your business from falling into this trap, keeping you on the right side of that grim statistic.

Financial bookkeeping is complicated and time consuming. Business owners find it challenging enough to cover the basicspaying the bills and tracking incoming revenuelet alone answer critical questions such as: Are we profitable? Why or why not? Can we make required tax payments? Should we invest in new equipment? Do we need to explore financing? Will we hit our budget numbers? Where can we cutexpenses?

A good small business accounting tool can answer these questions in seconds, based on the input you provide. Once you have populated a tool with information about your financial accounts, your customers and vendors, and the products or services you sell, youll be able to use that data to create transactions. These feed into reports, which can provide critical insights.Instant search tools and customizable reports help you track down the smallest details and see an overview of how your business is performing.Android appsandiOS appsfor the tools give you access to your finances anywhere that you have wireless connectivity.

Intuit QuickBooks Onlines advanced implementation of technology, its skillful blend of features, its customizability, excellent mobile apps, and user experience (UX) have made it our Editors Choice again this year. Were not crazy about the recent price increase but Intuit services are often heavily discounted.

Depending on how long your business has been operating, getting started with a small business accounting tool can take anywhere from five minutes to several hours after signing up for an account. Small business accounting tools charge monthly subscription fees and usually offer free trial periods. The more you need the tool to do, the longer your setup tasks will take (and the higher the monthly payment).

First, youll need to supply your contact details. If you want your logo to appear on sales and purchase forms, then you can upload a file containing it. Some small business accounting tools ask whether or not you plan to use specific features such as purchase orders and inventory tracking, so they can turn them on or off. You may also be asked when your fiscal year starts, for example, and whether you use account numbers.

Do you want access to the transactions you have stored in online financial accounts (checking, credit cards, and so on)? Enter the user name and password you use to log on, and the small business accounting tool will import recent transactions (usually 90 days worth) and add them to an online register. Would you like to let customers pay with credit cards and bank withdrawals? Youll need to sign up with a payment processor such asPayPal(extra charges will apply) or Stripe.

One of the really great things about using a small business accounting tool is that it reduces repetitive data entry. Once you fill in the blanks to create a customer record, for example, youll never have to look up that ZIP code again. When you need to use a customer in a transaction, it will appear in a list. The same goes for vendors, items or services, and employees. No more filling out card files or messy spreadsheets.

Once you have completed a customer record and started creating invoices, sending statements, and recording billable expenses, all of those actions will appear in a history within the record itself. Some tools, such as Zoho Books, display a map of the individual or companys location, and let you create your own fields so you can track additional information thats important to you (customer since, birthday, and other things like that).

If you have employees that you have been paying by using another method, then payroll setup can take some time and effort since youll have to enter payroll history information. Even when youre starting fresh with employee compensation, theres a lot of ground to cover. The tool needs precise details about things like your payroll tax requirements, benefits provided, and pay cycles. Many small business accounting tools offer personal assistance with this task, and they all make it clear exactly what needs to be done before you run your first payroll. (Note, however, that some of the tools here dont offer payroll capability.)

Itispossible to do minimal setup and then jump into creating invoices, paying bills, and accepting payments. All of the services included here let you add customers, vendors, and products as youre in the process of completing transactions (youll need to do so anyway as you grow and add to your contact and inventory databases). You just have to decide whether you want to spend the time upfront building your records or take time out when youre in the middle of sales or purchase forms.

Most small business accounting tools offer the option to import existing lists in formats such as CSV and XLS. They provide mapping tools to make sure everything comes in correctly. This procedure works better in some tools than in others.

Accountants love to use phrases likeaccounts receivableandaccounts payableto describe the primary elements of accounting: recording and tracking income and expenses, or tracking sales and purchases. Small business accounting tools are designed to appeal to people who dont use the same kind of language as accounting professionals, avoiding such terminology.

The tools let you easily create any transaction that a small business is likely to need. The most common of these are invoices and bills, and all of the services we reviewed support them. Tools such as Xero and Zoho Books go further, allowing you to produce more advanced forms such as purchase orders, sales receipts, credit notes, and statements. They provide templates for these online forms that resemble their paper counterparts. All you have to do is fill in the blanks and select from lists of customers and items.

Once you have completed an invoice, for example, you have several options. You can save it as a draft or a final version and either print it or email it. If you do the latter and you have established a relationship with a payment processor, then your invoice can contain a stub explaining how the customer can return payment via credit card or bank withdrawal. You can create a PDF version of the invoice, copy it, record a payment on it, or set it up to recur on a regular schedule.

All forms in these tools work similarly. These tools also pay special attention to your companys expensesnot bills that you enter and pay but other purchases you make. This is an area of your finances that can easily get out of control if its not monitored. So, small business accounting tools monitor them, dividing them into expense types and comparing them with your income using totals and colorful charts.

If youre traveling and have numerous related expenses on the road, for example, then you can take pictures of receipts with your smartphone. Some tools just attach these receipts to a manually entered expense form. Others, such as Intuit QuickBooks Online, actually read the receipts and transfer some of their data (date, vendor, amount) to an expense form.

As we mentioned earlier, one of your setup tasks involves creating records that contain information about the products and services you sell so you can use them in transactions. These vary in complexity, so you need to understand the differences before you go with one tool or another. Some, such as Kashoo, simply let you maintain descriptive records. Others, such as Intuit QuickBooks Online, go further. They ask how many of each product you have in inventory when you create a record and at what point you should be alerted to re-order. Then they actually track inventory levels, which provides insights on selling patterns and keeps you from running low.

While much of your daily accounting work probably involves paying bills, sending invoices, and recording payments, you also need to keep a close eye on your bank and credit card activity. If you have connected your financial accounts to your accounting tool, then this is easy to accomplish. For one thing, their balances will often appear on the tools dashboard or homepage. Youll also be able to view each accounts online register, which contains transactions that have cleared your bank and been imported into your accounting solution (along with those you have entered manually).

You can do a lot with these transactions once they appear in a register. For one thing, they should be categorized (office expense, payroll taxes, travel and meal costs are some examples) so you know where your money is coming from and where its going. Every tool guesses at how at least some transactions might be categorized; you can change these if theyre incorrect and add your own. Conscientious categorization will result in more accurate reports and incometax returns.

You can also match related transactions, such as an invoice that was entered into the system and a corresponding payment that came through. Again, some tools make educated guesses here. You can split transactions that should be assigned to multiple categories, make notes, and reconcile your accounts with your bank and credit card statements.

Reports are your reward for keeping up with your daily work and completing it correctly. Every small accounting tool comes with templates for numerous types of insightful output. You select one, customize it by using the filter and display options provided, and let the tool pour your own company data into it. It only takes a few seconds to generate a report after you have defined it.

There are really two types of reports. The bulk of them are the type that any small businessperson could customize, generate, and understand. They tell you who owes you money, which of your products and services are selling well, whether or not youre making money, which expenses and services havent yet been billed, which customers are buying the most, and how much you owe in sales tax.

There are other reports, though, that arent so easy to view and understand. These are considered standard financial reports and theyre the kind of documents youll need if you ever want to get a loan from a bank or attract investors. They have names such as Balance Sheet, Statement of Cash Flows, Trial Balance, and Profit & Loss. Small business accounting tools can generate them, but you really need an accounting professional to analyze them to tell you in concrete terms what they mean for your company.

Accounting probably doesnt make the list of things you like to do as a business owner; it can be complicated and it needs to be done correctly. So, the makers of small business accounting tools have worked hard to present this discipline as simply and, well, pleasantly as possible. Someincluding Intuit QuickBooks Online and Zoho Bookshave been more successful at this than others.

If you have ever used aproductivity apponline, you shouldnt have any trouble understanding these tools structure. They all divide their content into logical modules by providing toolbars and other navigation guides. Sales tasks are grouped together as are purchase, inventory, reporting, and payroll activities. Theres always a Settings link that takes you to screens where you can specify preferences for the entire tool. These include your setup chores and settings you may need to modify at times, such as restricting additional users to specific areas.

A tools dashboard homepage provides a real-time overview of the financial information you need to see frequently, including charts comparing income and expenses, account balances, and invoices and bills that need immediate attention. There are often links to areas of the tool where you can take action.

You use standard web conventions to navigate around each tool and enter data. Along the way, youll encounter a lot of buttons and arrows, drop-down lists, and menus. Color is sometimes used to signify related information, while graphics and fonts are well chosen to make the tools as aesthetically pleasing as possible.

If youre a sole proprietor or freelancer, then you probably dont need all of the features offered by full-featured small business accounting tools. You might want to track your online bank and credit card accounts and record income and expenses, and maybe send invoices and track time worked (if youre service-based). Maybe you need to track mileage. You might need help estimating your quarterly income tax obligation, and you certainly want mobile access to your financial data.

There are numerous tools that can do a combination of these things. Theyre easy to use, inexpensive (totally free in the case of Wave), but they can overwhelm you with functionality you dont need.

Our Editors Choice this year in this category goes to FreshBooks. This beautifully designed tool started life as a simple onlineinvoicing app. Since then, its added more functionality, including basic time tracking, project tracking, expense management, estimate and proposal creation, and reporting.

FreshBooks lacks some features that other tools offer, though. It doesnt help with quarterly estimated taxes while GoDaddy Bookkeeping and Intuit QuickBooks Self-Employed do. It doesnt have its own integrated payroll processing app like Wave does, and its not a true double-entry accounting like Sunrise is. Wave also lacks Intuit QuickBooks Self-Employeds real-time mileage tracker, and it doesnt automate as many processes as other tools do.

Whether you need one of these entry-level financial management tools or your business is complex enough that you need to start with one of the small business accounting tools, we think youll find that this batch of tools offers enough variety that you can find the right fit for your business.

While youre thinking about your money, you might also like to consider our reviews ofonline payroll servicesandtax software.

Cisco Webex Gains Voice Assistant Tech Through Voicea Acquisition

Salesforce Trailhead Makes the Paper Resume Obsolete

What to Do When Your Computer Screen Wont Show a Picture

5 Important Considerations To Help You Choose a Point-Of-Sale (POS) Solution

Kathy Yakal has been writing about PC applications since 1983, when she joined the editorial staff of COMPUTE! Publications. She began specializing in financial solutions in 1989, writing a newsletter for CPAs who were exploring the use of personal computers in their firms. Since then, she has contributed to numerous print and web-based publications, including Barrons and Kiplingers Personal Finance Magazine. She also ghostwrites client content for accountants.

Cryptocurrency and Taxes: What You Need to Know

© 1996-2020 Ziff Davis, LLC. PCMag Digital Group

PCMag, m and PC Magazine are among the federally registered trademarks of Ziff Davis, LLC and may not be used by third parties without explicit permission. The display of third-party trademarks and trade names on this site does not necessarily indicate any affiliation or the endorsement of PCMag. If you click an affiliate link and buy a product or service, we may be paid a fee by that merchant.