Updated February 9, 2015

Study: Best Small Business Accounting Software

QuickBooks vs FreshBooks vs Wave
Read more about Business

Whether you're working on sending out invoices, paying taxes, or managing cash flow, there's more than enough to do on any given day of running a small business. All those minutes of doing non-essential tasks can really add up, taking you away from making progress in moving your business forward.

What’s holding you back? Manual processes and the old way of doing things. Excel spreadsheets are for the small-business newbies, those people who are not yet sure their companies will go anywhere. You are past that point. You are ready for the next step – cloud-based small business accounting software. This may sound scary to non-accountants, but it will actually make your life easier by smoothing over how you send invoices and track and report your income.

The three obvious front-runners? Intuit’s QuickBooks Plus, Wave, and FreshBooks. They have excellent design aesthetics, mobile versions, and an easy set-up process. The comparable versions are also within $5 of each other’s monthly subscription costs. But which is best for your business? CreditDonkey helps you figure that out by ranking the priorities for small business owners.

Study Methodology

Here are the main factors we considered for the daily and quarterly management of a small business:

  1. Invoicing and Payment System
  2. Tracking Time
  3. Monitoring Your Small Business Reports

You won’t be in business long if you don’t bill for your work and get paid for it. The right software helps you quickly create and send professional invoices and provide convenient options for clients to pay those invoices. And since your invoice is an extension of your company, you want the option to make your invoice match your branding.

Here’s where these tools can take you to the next efficiency level outside of Excel. Forget tracking your hours on Post-it notes or separate spreadsheets compiled by your employees. The time-tracking aspects of small-business accounting software should be easy to use and be tied directly to the invoice function.

All of these data points can tie into your small business reports. At the very least you’ll need easy access – at anytime, whether you’re in the office or at home – to profit and loss reporting, time sheets, invoices, and expenses.

Intuit QuickBooks Plus

BEST ACCOUNTING SOFTWARE FOR WORKING WITH EMPLOYEES AND BILLING HOURLY

  • Sending Invoices and Getting Paid: With easy on and off buttons for accepting credit cards, this program makes it very easy for customers to pay you; however, it’s not so easy to avoid the common fees that come with online transactions, 4/5
  • Tracking Time: The time-tracking worksheet makes entering your time and creating and monitoring your employees’ timesheets so easy, 5/5
  • Monitoring Your Small Business Reports: All the forms you’ll need are there, but the report that is delivered isn’t as visually easy on the eyes as other programs, 3/5
  • CreditDonkey Score: 4/5

Intuit’s QuickBooks Plus is a well-known and award-winning small business accounting software with millions of users. And it includes eyebrow-raising customization features that automatically configure your QuickBooks setup for your specific type of business, by creating industry-related defaults and reporting before you even get started.

Why We Like Intuit QuickBooks Plus
QuickBooks Plus is a thorough small business accounting program. From the clean login dashboard to the extensive sidebar list of Customers, Vendors, Employees, and Transactions, you won’t be able to think of anything you can’t track or report on. It provides especially detailed information for working with employees and tracking your payroll.

The Downsides
With all of these pros comes a logical downside: this program has a lot of bells and whistles that work well for a multi-person organization but might confuse a soloprenuer. If you’re a one-person business, you might spend more time trying to figure out what to do than doing what you need to do.

Who Intuit QuickBooks Plus Works Best For
PC Magazine reported that “Intuit beats the competition when it comes to its integrated payroll application,” and we agree. This program works best for small companies that have employees that they track and pay hourly. The time-tracking feature is the easiest of all of these programs to update, submit, and track, and you have access to payroll functions you might not have otherwise realized could be beneficial.

Wave

BEST ACCOUNTING SOFTWARE FOR ACTIVELY BUILDING A BUSINESS

  • Creating, Sending Invoices and Getting Paid: Simple, from-the-dashboard invoice creation and popular payment option integration, but a heavy-handed fill-out process, 4/5
  • Tracking Time: Difficult to get started with tracking time, expensive to integrate employees, 3/5
  • Monitoring Your Small Business Reports: Clear navigation to find and create reports, accountant-friendly results, 4/5
  • CreditDonkey Score: 3.66/5

Wave is an up-and-coming small business accounting software that launched in 2009 to rave reviews. It offers a suite of financial products that provide a thorough financial management system for growing businesses and entrepreneurs.

Why We Like Wave
The standout approach Wave brings to small business accounting is its well roundedness. As reported by CPA Practice Advisor, “the application has the capability of working with both business and personal accounts, and different reports are available for the two different groups of accounts.” Not only does it have features that help you manage and track your business assets to grow your business over time, it also has a built-in sister site that helps you create and monitor your personal budget within the same account.

The Downsides
Once you sign up, extra features like payroll and live support cost extra. We like to see all the features wrapped up in one fee, rather than wondering what you’ll get (and what else you’ll need) once you sign up.

Who Wave Works Best For
With a focus on your personal finance and business growth, Wave is clearly for business owners intent on building an empire (especially if it’s a solo empire). If you want to have all of your financial data collected under one roof, Wave is a flexible program to help you do so.

FreshBooks

BEST ACCOUNTING SOFTWARE FOR SIMPLE BUSINESS ACCOUNTING

  • Creating, Sending Invoices and Getting Paid: Invoices are a click away, and arrangements with popular payment programs like PayPal make for low fees, 5/5
  • Tracking Time: The feature is accessible and mobile-friendly, but the tagging and tracking for projects and tasks gets a little complicated, 4/5
  • Monitoring Your Small Business Reports: Popular and customized forms are a click away and easy to read, download, and send to your accountant, 5/5
  • CreditDonkey Score: 4.66/5

FreshBooks is a plucky Canadian application that’s five million users strong and growing, with a formidable goal of making business painless. It offers creative features like letting you take a photo of your receipt from your phone and loading the info into your system, as well as free, award-winning one-on-one customer support by phone and email (some software providers will charge you for service calls).

Why We Like FreshBooks
By our math, FreshBooks is the best overall accounting software. The company is guided by a mission to simplify the basics of business as much as possible: invoice, get paid, report. And the fact that it has an ever-growing list of integrated applications to make it even easier to customize how you run your business? Even better.

The Downsides
Being a new and creative business, FreshBooks is frequently updating its services and offering new products (like its freshly minted partnership with Fundbox, which provides cash flow loans to small businesses). While each of these products may be useful and helpful, it can feel like there’s a lot to catch up on as you go. Fortunately, all of these features are free to use or try.

Who FreshBooks Works Best For
FreshBooks is hands-down the best application for simple businesses like sole proprietors. Kathy Yakal at PC Magazine zeroed in on the big plus of this software by saying that “FreshBooks' focus… is on invoices. And it handles this task with more flexibility and functionality than its online competitors.” It has the bells and whistles if you need them, but if you don’t, you won’t be distracted (or disappointed) doing what you need to do.

OTHER BUSINESS ACCOUNTING SOFTWARE TO CONSIDER

Not entirely sold on these options? For simple income and expense businesses, you might still feel tied to that tried-and-true Excel spreadsheet. For more cloud-based options, you could also try Less Accounting or Kashoo, both of which offer free trial versions.

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