Small business accounting software keeps your books: it records sales and expenses, reconciles bank accounts, tracks sales tax or VAT and produces the profit and loss statement and balance sheet your accountant needs at tax time. Most small businesses buy it as a monthly subscription, and that is where the comparison usually goes wrong. The price on the pricing page covers one company and a set number of users. Payroll, extra users and payment fees come on top, and for a business with a few employees they can double the bill.
This guide compares 11 small business accounting software tools with prices taken from each vendor’s own pricing page. For every tool you get who it suits, what it does differently, a limit worth knowing before you buy and the first thing you will miss. It also works out what four popular options cost in year one for a small team with payroll, and what happens to that number when the team grows.
- What small business accounting software does
- How we picked the tools
- Small business accounting software compared
- What it really costs in year one
- 11 best small business accounting software tools
- Users, payroll and the limits that change the bill
- Cloud, desktop or a one time license
- How to choose accounting software for a small business
- Where accounting software setups go wrong
- Best pick by situation
- FAQ
- Conclusion
What small business accounting software does
Small business accounting software is a program that records every financial transaction in a ledger and turns it into reports. A full accounting package uses double-entry bookkeeping, connects to your bank so transactions flow in automatically, and lets you match them against invoices and bills. On top of that core, most packages add invoicing, bill payment, receipt capture, sales tax tracking and, for an extra fee, payroll. In the UK the same products are usually called accounting packages, and the business accounting software sold to small firms there is built around VAT and Making Tax Digital.
Three things are easy to confuse with it:
- Bookkeeping apps cover the daily recording part. If that is all you need, see our list of bookkeeping programs for small businesses.
- Invoicing tools send bills and collect payments but keep no ledger. Our invoicing software roundup covers them.
- Time and billing software records billable hours and turns them into invoices. Accounting software then books those invoices. Service firms usually need both, which is why one entry in this list is a time tracker.
If you are looking for tools with a free version only, our separate list of free accounting software for small businesses goes deeper into free plans and open source options. This article focuses on what you pay for and what you get for it.
How we picked the tools
Every tool in this list had to meet four conditions: a published price on the vendor’s own site, a working product sold to small businesses today, a real ledger or a direct handoff into one, and a clear reason to choose it over the others. Prices are the regular list prices in US dollars (or pounds for QuickFile), without first months discounts, which most vendors run all the time and which expire.
We removed nine tools from the earlier version of this article. Melio and SumUp Invoices are payment tools rather than accounting software. Osome sells an accounting service for Singapore, Hong Kong and UK companies, not software you run yourself. Lendio is a lending marketplace and its accounting page could not be reached. Gekko, billfaster, Fiskl, HostBooks and ZipBooks are still online, but they serve narrow regional or invoicing needs that the tools below cover better, and ZipBooks is mostly chosen for its free tier, which our free accounting software list covers.
Small business accounting software compared
| Tool | Best for | Starting price (list) |
|---|---|---|
| actiTIME | Service businesses that bill clients for hours | Free for up to 3 users; from $5 per user per month |
| QuickBooks Online | US businesses that work with an accountant | $38 per month (Simple Start, 1 user) |
| Xero | Teams where several people need access | $27 per month (Early) |
| FreshBooks | Freelancers and service businesses that invoice a lot | $23 per month (Lite, 5 billable clients) |
| Zoho Books | Low monthly cost with room to grow | Free under $50,000 revenue; $20 per month (Standard) |
| Wave | Sole owners and very small teams | Free (Starter); $19 per month (Pro) |
| Sage 50 | Inventory heavy firms that want desktop software | $1,448 per year (Pro Accounting, 1 user) |
| Kashoo | Simple bookkeeping with unlimited users | $30 per month |
| ZarMoney | Product businesses that need orders and inventory | $20 per month (2 users included) |
| QuickFile | UK sole traders and limited companies | Free up to 1,000 ledger entries; £60 + VAT per year above that |
| LedgerLite | Owners who want no subscription and no cloud | US$149 one time per company |
What it really costs in year one
Starting prices hide two costs that grow with your team: users and payroll. Here is an illustrative example. A small agency has three people who work in the books (the owner, an office manager and a part time bookkeeper), an outside accountant, and five employees on payroll. All figures are list prices billed monthly, before sales tax and card processing fees.
Payroll is half of the QuickBooks bill here, and first time buyers rarely see that coming. Now grow the agency to five people in the books and eight on payroll. QuickBooks has to move from Essentials (3 users) to Plus (5 users), so both lines go up at once. Xero charges nothing for the extra users, so only payroll moves.
| Tool and setup | Year one: 3 users, 5 on payroll | After growth: 5 users, 8 on payroll |
|---|---|---|
| QuickBooks Online + QuickBooks Payroll | $2,040 | $2,952 (Plus $1,680 + payroll $1,272), up 45% |
| FreshBooks Plus + team members + FreshBooks Payroll | $1,620 | $2,100 (Plus with 4 team members $1,044 + payroll $1,056), up 30% |
| Xero Growing + Xero Payroll by Gusto | $1,500 | $1,716 (Growing $708 + payroll $1,008), up 14% |
| Wave Pro + Wave Payroll | $1,068 | $1,284 (Pro $228 + payroll $1,056), up 20% |
Look at the second column. Adding two people to the books and three to payroll raises the QuickBooks bill by $912 a year, mostly because of the forced move to a higher plan. The same change costs $216 on Xero or Wave. If you expect to hire, price the plan you will need in 18 months, not the one you need today. FreshBooks sits in the middle because it charges $11 a month for each extra team member rather than moving you to a new plan.
11 best small business accounting software tools
1. actiTIME
Key features:
- Billable time tracking
- Billing rates
- PDF invoices
- QuickBooks export
actiTIME is project time tracking software built for billing, and it belongs in this list for one kind of small business: consultancies, agencies, accounting and engineering firms that sell hours. For them, the money is lost before it reaches the ledger, in hours nobody recorded or recorded against the wrong client. Your team logs time against customers, projects and tasks in a weekly timesheet, a calendar view, the mobile app or the Chrome extension. Each project then bills either by type of work rates or by individual user rates, and actiTIME calculates the billable amount and produces PDF invoices and a Billing Summary Report from the tracked hours.
Cost of work rates per person, including overtime and leave rates, feed the Cost of Work Report, and the Profit/Loss Report sets billable amounts against those costs by customer, project or task. Budgets for time, cost and billing turn red when exceeded. Managers approve timesheets and lock approved or invoiced periods so totals do not change after billing. The Integrator for QuickBooks exports timesheet data to QuickBooks with mapping rules and a preview before import.
Limitation: actiTIME is not a ledger. It does not reconcile bank accounts, run payroll tax or produce a balance sheet, so you still need one of the accounting packages below. QuickBooks is the only native accounting integration; anything else goes through Zapier or the API.
Pricing: Free for up to 3 users with limited features. Paid from $5 per user per month, with a 30-day free trial. The Self-Hosted version installs on your own server for a one time fee.
Time tracking became a breeze
With actiTIME’s mobile app, tracking time on the client’s side became a breeze. Now accountants simply switch on the timer on their phone as they start another task and get accurate time logs without taking notes.
2. QuickBooks Online
Key features:
- Bank feeds
- Accountant seats
- Project profitability
- Inventory
QuickBooks Online is Intuit’s cloud accounting software, used to record income and expenses, reconcile bank accounts, send invoices, pay bills, track sales tax and produce the reports an accountant needs at tax time. It is the default choice for US small businesses mostly because your accountant probably already knows it: every plan includes free seats for two accountants (three on Advanced), so your bookkeeper can work in your file without a paid user.
The plans are cut by users and by depth. Simple Start covers one user. Essentials adds three users and lets you add employee time to invoices. Plus brings five users, project profitability, budgets, inventory and up to 40 classes and locations, which is where most product businesses end up. Advanced supports 25 users with custom permissions and workflow automation. QuickBooks Payroll is a separate subscription starting at $50 a month plus $7 per employee.
Limitation: user ceilings are hard. The fourth person who needs access moves the whole company from Essentials to Plus, and there is no tier with unlimited users.
Pricing: Simple Start $38, Essentials $85, Plus $140 and Advanced $340 per month, with a 30-day trial or a first months discount. QuickBooks Free exists for one user with basic features.
3. Xero
Key features:
- Unlimited users
- Bank reconciliation
- Cash flow forecast
- Multi-currency
Xero is cloud accounting software from New Zealand with a large base in the UK, Australia and the US. The difference you will feel first is pricing: all plans include unlimited users at no extra cost, so a business where the owner, an office manager, a bookkeeper and two project leads all need the books pays the same as a solo owner. Bank reconciliation, Smart Document Capture for receipts and bills, sales tax and W-9 and 1099 management are on every plan.
The three plans differ in volume and analysis. Early limits you to 20 invoices and 5 bills a month, which is fine for a consultant and too tight for almost anyone else. Growing removes those caps and adds dashboards, three budgets and auto reconciliation. Established adds multiple currencies, project time and cost tracking, employee expense claims and a 180 day cash flow forecast. Payroll runs through Gusto inside Xero at $36 a month plus $6 per employee or contractor. New customers also get free setup help from a product specialist.
Limitation: project tracking and multiple currencies only come with the most expensive plan, and US payroll depends on Gusto rather than a Xero built engine.
Pricing: Early $27, Growing $59, Established $97 per month, after an introductory discount for the first months.
4. FreshBooks
Key features:
- Invoicing
- Time tracking
- Estimates and proposals
- Client payments
FreshBooks started as an invoicing tool and still feels like one, which is why freelancers and small service businesses like it. Creating an estimate, turning it into an invoice, tracking time against a client and getting paid online all take fewer clicks than in QuickBooks or Xero. Card payments through FreshBooks Payments cost 2.9% plus $0.30 per transaction, and ACH bank transfers cost 1%.
The catch is in how the plans are cut. They are limited by billable clients: Lite lets you invoice 5 clients, Plus 50 and Premium an unlimited number. Double-entry accounting reports, bank reconciliation and accountant access start on Plus, so Lite is closer to an invoicing app than to accounting software. Each extra team member costs $11 a month, Advanced Payments $20 a month, and FreshBooks Payroll $40 a month plus $6 per person.
Limitation: inventory and product businesses will outgrow it quickly, and the client caps mean a growing practice can be pushed up a plan by its sixth or fifty first client rather than by its revenue.
Pricing: Lite $23, Plus $43, Premium $70 per month, with a 30-day free trial.
5. Zoho Books
Key features:
- Free tier
- Projects and timesheets
- Inventory
- Zoho apps
Zoho Books packs the most features per dollar of the cloud packages here. The free plan covers one user plus one accountant for businesses with annual revenue under $50,000. Standard includes three users, Professional five users with projects, purchase orders and inventory, Premium ten users, and the Elite and Ultimate tiers add full inventory management and business intelligence. Extra users cost $3 a month, or $2.50 billed yearly.
It makes the most sense if you already use other Zoho apps such as Zoho CRM or Zoho Inventory, because the data flows between them without a connector. Zoho Books runs in the browser, on mobile, and as a Windows app from the Microsoft Store for Windows 10 and later, handy if you would rather keep your books in a desktop window than in a browser tab.
Limitation: the number of plans and add-ons can be confusing, and annual limits on bills and expenses differ by plan, so check the limit table before you commit. Payroll is not listed on the Zoho Books pricing page.
Pricing: Free under $50,000 revenue. Standard $20, Professional $50, Premium $70, Elite $150 and Ultimate $275 per month, or $15, $40, $60, $120 and $240 billed yearly. 14-day free trial.
6. Wave
Key features:
- Unlimited invoices
- Receipt capture
- Bank imports
- Payroll add-on
Wave is built for sole owners and very small teams who want proper double-entry books without a large monthly fee. The free Starter plan already covers unlimited estimates, invoices, bills and bookkeeping records. Most people who stay with Wave end up on Pro, though, because that is where bank transactions import and categorize automatically, receipts are captured without limit and late payment reminders go out on their own. Without Pro you enter or upload bank data yourself.
Card processing is where Wave makes its money. On Starter, card payments cost 2.9% plus $0.60 per transaction; on Pro the fixed $0.60 drops to zero, which pays for the plan at roughly 32 card payments a month. Wave Payroll costs $40 a month plus $6 per active employee and $6 per contractor paid, and its tax service, which files and pays payroll taxes for you, now covers all 50 states.
Limitation: bank imports and receipt capture are Pro only, and Wave is built for simple books. If you need purchase orders, inventory or project accounting, Zoho Books, QuickBooks or Xero fit better.
Pricing: Starter free; Pro $19 per month.
7. Sage 50
Key features:
- Inventory
- Job management
- Purchase orders
- Desktop option
Sage 50 is the most traditional package in this list and the only big name here that still offers a locally installed version, Sage 50 Desktop, next to its newer Sage 50 Cloud. It suits established firms with inventory, purchase orders and job costing that want deep features and are used to desktop accounting, such as distributors, light manufacturers and trades.
Pro Accounting covers one user with invoice and bill tracking, purchase orders and approvals, expense management, automated bank reconciliation, inventory and job management. Premium adds advanced budgeting, more inventory options and multi-company consolidation for up to five users. Quantum is the full version for larger teams with role based permissions and workflow management. A payroll subscription is sold separately.
Limitation: it is the most expensive option here for a single user, a minimum one year commitment applies, and the learning curve is steeper than in the cloud first tools.
Pricing: Pro Accounting $1,448 per year (or $132.17 per month), Premium Accounting from $1,947 per year for one user, Quantum Accounting from $271.17 per month. Free trial available.
8. Kashoo
Key features:
- One plan
- Unlimited users
- Double-entry ledger
- Square sync
Kashoo is for owners who want accounting with no plan decisions at all. There is one plan, and it includes everything Kashoo does: unlimited invoices, online payments, expenses and bills, sales tax, bank feeds through Plaid, project tracking, item tracking for basic inventory, multi-currency, a double-entry ledger and unlimited users. You choose what each person can do, from full access with billing to view only, which makes it easy to bring in a bookkeeper without paying for a seat.
Payroll comes through an integration with PaymentEvolution, and Square users can sync sales. Kashoo can import about a year of bank transactions through Plaid or from CSV and OFX files, but contacts, invoices and bills from QuickBooks or Xero cannot be imported yet, so switching takes some manual work. Each extra business needs its own subscription. The company now also sells TrulySmall Accounting, a newer app that sorts bank transactions automatically.
Limitation: fewer integrations and reports than the large packages, and migration from another tool is partly manual.
Pricing: $30 per month or $324 per year, with a 14-day free trial and no credit card required.
9. ZarMoney
Key features:
- Inventory
- Order management
- Invoicing
- US support
ZarMoney is cloud accounting software aimed at product businesses: wholesale, retail and ecommerce sellers who need order management and inventory tracking next to their books. It covers accounts receivable, invoicing, estimates, billing, payment processing and bookkeeping, and it lets you import customers, vendors and items with their opening balances and quantities, which shortens setup if you are coming from spreadsheets.
The Small Business plan includes two users and unlimited transactions, with each additional user at $10 a month, and support from a US based team by phone on weekdays and by chat around the clock. ZarMoney Expert Assist, a setup service, is free for the first 30 days. Enterprise starts at 30 users and adds custom features, specialized training and a dedicated account rep. ZarMoney runs only in the cloud, so there is nothing to install.
Limitation: payroll is not part of the product listing, and the user fee adds up faster than Xero’s or Kashoo’s unlimited users once you pass four or five people.
Pricing: Small Business $20 per month with 2 users ($10 per additional user); Enterprise from $350 per month. 15-day free trial with no credit card.
10. QuickFile
Key features:
- MTD VAT returns
- Client portal
- Multi-currency
- Unlimited users
QuickFile is UK accounting software, and for small UK businesses searching for accounting packages it is one of the cheapest full ledgers available. It is priced by volume rather than by plan: accounts with up to 1,000 ledger entries use it free, and larger ones pay a flat yearly fee. Every account gets unlimited users, two factor authentication, automated backups, API access, multi-currency support and Making Tax Digital compatible VAT returns.
The paid tier unlocks power user features such as segmented profit and loss, custom trading styles, invoice revision history and MTD bridging, and QuickFile describes it as ready for Making Tax Digital for Income Tax. Automated bank feeds cost an extra £15 plus VAT a year, and extra file storage £9.99 per GB a year. Clients get a branded area where they can view and pay invoices. Accountants and bookkeepers can host all their clients on one portal through QuickFile Affinity.
Limitation: it is built around UK tax rules, so US and other businesses should look elsewhere, and the interface is functional rather than polished.
Pricing: Free up to 1,000 ledger entries; £60 plus VAT per year above that. Bank feeds £15 plus VAT per year.
11. LedgerLite
Key features:
- One time license
- No internet needed
- Double-entry ledger
- Asset register
LedgerLite answers a question many owners type into a search box: is there accounting software you pay for once? It is a Windows program from New Zealand that runs from a single file, even from a USB stick, needs no installation or internet connection, and keeps all data in one database file you can copy for backup. You pay for a registration once per company and it keeps working with no further fees.
It is a proper double-entry system with an unlimited chart of accounts and cashbooks, CSV import, bank statement reconciliation, recurring entries, budgets, balance sheets, income statements, trial balances, cash flow statements and financial ratios. It also keeps an asset register with automatic depreciation, supports subentities for projects or divisions, handles trust accounts for client funds, and can switch to client and server mode for several users.
Limitation: there are no bank feeds, online invoice payments or payroll, it runs on Windows only, and you handle backups yourself. It suits owners who already understand debits and credits.
Pricing: US$149 per company, one time, with a 30-day free trial. Registration codes cannot be refunded once issued.
Users, payroll and the limits that change the bill
This table compares what decides the real price once you have a team: how many people can use the books and what payroll or other extras cost. It is built from each vendor’s pricing page.
| Tool | Users included | Payroll and other extras |
|---|---|---|
| actiTIME | Priced per user; free for up to 3 users | No payroll; exports time data to QuickBooks |
| QuickBooks Online | 1, 3, 5 or 25 users by plan, plus 2 or 3 free accountant seats | Payroll from $50 per month + $7 per employee |
| Xero | Unlimited on every plan | Payroll by Gusto $36 per month + $6 per person; auto reconciliation $5 per month on Early |
| FreshBooks | Owner only; $11 per month per team member | Payroll $40 per month + $6 per person; Advanced Payments $20 per month |
| Zoho Books | 1 (free) to 15 users by plan; $3 per extra user per month | Payroll not listed on the Zoho Books pricing page |
| Wave | Not priced per user on the pricing page | Payroll $40 per month + $6 per employee and per contractor |
| Sage 50 | Priced by number of users (1 on Pro, up to 5 on Premium) | Payroll subscription sold separately |
| Kashoo | Unlimited | Payroll through PaymentEvolution, priced by that provider |
| ZarMoney | 2 included; $10 per extra user per month | No payroll listed |
| QuickFile | Unlimited | Bank feeds £15 + VAT per year |
| LedgerLite | Several users in client and server mode, one license per company | No payroll, no bank feeds |
Cloud, desktop or a one time license
Most small business accounting software is now cloud based and sold as a subscription, but you still have three real choices:
- Cloud subscription (QuickBooks Online, Xero, FreshBooks, Zoho Books, Wave, Kashoo, ZarMoney, QuickFile). You get bank feeds, access from anywhere and an accountant who can log in. You also pay forever, and prices change when the vendor decides.
- Desktop with a subscription (Sage 50 Desktop). The software runs on your computer, but the license is still annual, so it is not cheaper over time. Choose it for features and familiarity, not to avoid subscriptions.
- One time license (LedgerLite). You pay once and your data never leaves your computer. You give up bank feeds and online payments and take on backups yourself.
Over five years, a $27 per month cloud plan costs $1,620, while a $149 one time license costs $149. The gap is real, but so is the time a bank feed saves: if automatic bank imports save the owner an hour a month, the cloud plan pays for itself at any hourly value above $27.
How to choose accounting software for a small business
Run through these criteria before you look at feature lists. Each one rules tools in or out faster than a demo does.
-
Ask your accountant first.
If an outside accountant prepares your taxes, use the package they work in. A file they can open with a free accountant seat saves billable hours every year.
-
Count the people who need access in 18 months.
User caps drive the price more than features. If the answer is more than three, compare unlimited user plans (Xero, Kashoo, QuickFile) with per seat plans.
-
Price payroll at the same time.
Payroll fees are monthly base plus per employee, and they can match the accounting subscription itself. Decide whether you want payroll inside the accounting tool or a separate provider.
-
Check volume caps.
Invoice, bill, client and ledger entry limits sit on the cheapest plans: 20 invoices on Xero Early, 5 billable clients on FreshBooks Lite, 1,000 ledger entries on free QuickFile.
-
Match your tax rules.
US businesses need sales tax and 1099 handling; UK businesses need VAT and Making Tax Digital compatible filing. A package built for another country creates work at every filing.
-
Decide where billable hours live.
If you bill by the hour, the accounting package only sees the invoice. Hours, rates, budgets and unbilled time need a time and billing tool that hands totals to the ledger.
-
Test the exit.
During the trial, export your chart of accounts, contacts and transactions. If you cannot get your data out cleanly, switching later will be expensive.
Where accounting software setups go wrong
The software itself rarely breaks. The setup around it does, usually in the first three months.
- Buying on the promotional price. Five vendors in this list advertise 50% to 80% off for the first months. Budget on the list price from the start, or month four becomes a surprise.
- Building the chart of accounts alone. A chart of accounts set up without your accountant often has to be rebuilt at year end, which means recategorizing every transaction.
- Trusting bank feeds blindly. Automatic categorization learns from your first choices. If those are wrong, it repeats the mistake on every similar transaction until someone reviews the reconciliation.
- Hitting a cap mid year. An invoice cap, client cap or user cap forces an upgrade at a bad moment. Check them against your busiest month, not an average one.
- Billing from memory. Service firms that keep hours in spreadsheets invoice late and miss time. The invoice in the ledger is correct, but it is smaller than the work delivered.
- Giving everyone full access. Small teams often share one admin login. Use per person permissions so you can see who changed a transaction and lock closed periods where the tool allows it.
Best pick by situation
- You work with a US accountant and want the safest choice: QuickBooks Online Essentials or Plus.
- Four or more people need access to the books: Xero Growing, because users are unlimited.
- You are a freelancer or small service business that lives on invoices: FreshBooks Plus.
- You want the lowest monthly cost with room to grow: Zoho Books Standard, or the free tier under $50,000 revenue.
- You run alone and get paid by card: Wave Pro.
- You hold stock and want desktop software: Sage 50, or ZarMoney if you prefer the cloud.
- You run a UK limited company on a small budget: QuickFile.
- You never want another subscription: LedgerLite.
- You sell hours to clients: actiTIME for time, rates and invoices, together with QuickBooks Online for the ledger.
FAQ
What is the best accounting software for a small limited company?
For a UK limited company, Xero is the best all round choice because it handles Making Tax Digital VAT returns, has strong UK bank feeds and includes unlimited users. If cost matters most and your volume is low, QuickFile does the same core job and is free up to 1,000 ledger entries. Ask your accountant which one they support before you sign up.
Why do some accountants dislike QuickBooks Online?
The complaints are rarely about the ledger itself. Accountants point to hard user caps that push clients into more expensive plans, payroll and advanced features sold as extras, and owners who categorize bank transactions without guidance and leave a cleanup at year end. Most still use it daily because so many of their clients do.
Can I download Zoho Books for Windows?
Yes. Zoho Books offers a Windows app in the Microsoft Store for Windows 10 and later. It works on the same cloud data as the browser version and the mobile apps, so you still need an internet connection and a Zoho Books subscription or free plan.
Conclusion
The best small business accounting software is the one your accountant can work in and your team can afford once payroll and users are added. Price the setup you will have in 18 months, not the starting plan. If your business sells time, keep hours and billing rates in a dedicated tool so every billable hour makes it onto an invoice before it reaches the books.
Start a free trial of actiTIME with full features for 30 days. After the trial, teams of up to 3 users can keep using it for free. See all options on the pricing page, or read how the QuickBooks integration moves your timesheet data into your books.
