Best Accounting Software for Small Businesses

Financial
18.06.2025
Hunter Blake

Running a small business is no small feat, and managing finances can often feel like a daunting task. Fortunately, accounting software has evolved to simplify bookkeeping, invoicing, expense tracking, and more, allowing business owners to focus on growth rather than number-crunching. With a plethora of options available, choosing the right accounting software can be overwhelming. In this comprehensive guide, we’ll explore the best accounting software for small businesses in 2025, diving into their features, pricing, pros, and cons to help you make an informed decision. Specifically, we’ll examine FreshBooks, Zoho Books, QuickBooks Online, Xero, and Wave, each tailored to different business needs.

Why Accounting Software Matters for Small Businesses

Before diving into the specifics, let’s understand why accounting software is a game-changer. Manual bookkeeping is time-consuming and prone to errors, which can lead to costly mistakes during tax season or financial reporting. Accounting software automates repetitive tasks, ensures compliance, and provides real-time insights into your business’s financial health. Moreover, cloud-based solutions allow access from anywhere, making them ideal for entrepreneurs on the go.

Whether you’re a freelancer, a small retail business, or a growing startup, the right software can streamline operations and save valuable time. Now, let’s explore the top contenders in the market.

Why Accounting Software Matters for Small Businesses

FreshBooks: Best for Freelancers and Service-Based Businesses

Overview

FreshBooks is a cloud-based accounting software designed with freelancers and small service-based businesses in mind. Known for its intuitive interface and robust invoicing features, it’s a favorite among solopreneurs who need a user-friendly solution without a steep learning curve.

Key Features

Invoicing: Create professional, customizable invoices in minutes with options for recurring invoices, automated payment reminders, and online payment integrations like Stripe and PayPal.
Expense Tracking: Automatically import expenses via bank connections or scan receipts using the mobile app for seamless categorization.
Time Tracking: Built-in time tracking allows you to bill clients for hours worked, perfect for consultants and freelancers.
Project Management: Collaborate with clients and team members on projects, tracking time and expenses within the platform.
Financial Reporting: Access basic reports like profit and loss, balance sheets, and tax summaries.

Pricing

FreshBooks offers a 30-day free trial and four pricing plans:

Lite: $19/month for up to 5 billable clients.
Plus: $33/month for up to 50 billable clients.
Premium: $60/month for unlimited billable clients.
Select: Custom pricing for businesses with advanced needs.

Pros

Extremely user-friendly, even for those without accounting experience.
Excellent customer support with phone, email, and live chat options.
Robust mobile app for managing finances on the go.
Seamless integrations with tools like HubSpot, G Suite, and Slack.

Cons

Limited to one user in most plans, with additional users costing extra.
No inventory tracking, making it less suitable for product-based businesses.
Lacks advanced reporting features compared to competitors like QuickBooks.

Who It’s For

FreshBooks is ideal for freelancers, consultants, and small service-based businesses that prioritize ease of use and invoicing. However, if you need multi-user access or inventory management, you may want to explore other options.

Zoho Books: Best for Micro Businesses and Scalability

Overview

Zoho Books, part of the Zoho ecosystem, is a cloud-based accounting solution tailored for small to medium-sized businesses. Its affordability, scalability, and integration with other Zoho apps make it a versatile choice for growing companies. Additionally, its free plan for businesses with less than $50,000 in annual revenue is a standout feature.

Key Features

Automation: Automate invoicing, payment reminders, and expense categorization to reduce manual work.
Inventory Management: Track stock levels, set reorder points, and generate barcodes, ideal for e-commerce businesses.
Multi-Currency Support: Send invoices in different languages and currencies, perfect for businesses with international clients.
Bank Reconciliation: Built-in bank feeds simplify transaction matching and cash flow tracking.
Mobile App: A robust mobile app supports invoicing, expense tracking, and real-time financial insights.

Pricing

Zoho Books offers a 14-day free trial and a free plan, with paid plans starting at:

Free: $0 for businesses with revenue under $50,000 (1 user, limited features).
Standard: $15/month for up to 3 users.
Professional: $40/month for up to 5 users.
Premium: $60/month for up to 10 users.
Elite and Ultimate: $120–$240/month for advanced features.

Pros

Affordable pricing, including a robust free plan.
Scalable with higher-tier plans and Zoho ecosystem integrations (e.g., Zoho CRM, Zoho Inventory).
Strong inventory and multi-currency features for e-commerce and global businesses.
Excellent customer support with 24/5 phone, email, and live chat availability.

Cons

Steeper learning curve compared to FreshBooks, especially for non-tech-savvy users.
Limited third-party integrations compared to FreshBooks or QuickBooks.
Free plan restricts users to one, which may not suit teams.

Who It’s For

Zoho Books is perfect for micro businesses, e-commerce companies, and growing SMBs that need scalable software with strong inventory and automation features. It’s also a great choice for businesses already using other Zoho products.

QuickBooks Online: Best for Comprehensive Accounting Needs

Overview

QuickBooks Online, developed by Intuit, is the gold standard for small to medium-sized businesses needing robust accounting capabilities. Its comprehensive feature set, scalability, and widespread accountant familiarity make it a top choice, though it comes with a steeper learning curve.

Key Features

Invoicing and Payments: Create customizable invoices, accept payments online, and set up recurring billing.
Advanced Reporting: Access over 80 reports, including cash flow, profit and loss, and balance sheets.
Payroll Integration: Seamlessly manage payroll with automatic tax calculations (additional cost).
Inventory Tracking: Track stock levels and costs, suitable for product-based businesses.
Third-Party Integrations: Connect with apps like Shopify, Square, and Gusto for enhanced functionality.

Pricing

QuickBooks offers a 30-day free trial or 50% off for three months, with plans starting at:

Solopreneur: $20/month for self-employed individuals.
Simple Start: $30/month for 1 user.
Essentials: $60/month for up to 3 users.
Plus: $90/month for up to 5 users.
Advanced: $200/month for up to 25 users.

Pros

Comprehensive features for businesses of all sizes.
Widely used by accountants, ensuring easy collaboration.
Strong reporting and inventory tracking capabilities.
Extensive third-party app integrations.

Cons

Higher pricing compared to FreshBooks or Zoho Books.
Steep learning curve for beginners due to its complex interface.
Additional costs for payroll and advanced features.

Who It’s For

QuickBooks Online is best for small to medium-sized businesses with complex accounting needs, such as inventory tracking, payroll, or advanced reporting. It’s also ideal for businesses that work closely with accountants.

Xero: Best for Collaboration and Unlimited Users

Overview

Xero is a cloud-based accounting platform known for its clean interface, unlimited user access, and strong collaboration tools. It’s a popular choice for businesses with multiple team members or those needing robust integrations with third-party apps.

Key Features

Unlimited Users: Invite team members and accountants without additional costs.
Bank Feeds: Real-time bank transaction imports for easy reconciliation.
Invoicing: Create and send professional invoices with online payment options.
Inventory Management: Track stock levels and costs for product-based businesses.
App Marketplace: Over 1,000 integrations with apps like HubSpot, Shopify, and Stripe.

Pricing

Xero offers a 30-day free trial and three pricing plans:

Early: $15/month for 20 invoices and 5 bills.
Growing: $42/month for unlimited invoices and bills.
Established: $78/month for advanced features like multi-currency and expense claims.

Pros

Unlimited users at no extra cost, ideal for teams.
Clean, intuitive interface with a short learning curve.
Extensive app marketplace for customization.
Strong inventory and multi-currency support.

Cons

Limited invoicing in the Early plan (20 invoices/month).
No built-in payroll in the U.S. (requires integration with Gusto).
Customer support can be slower compared to FreshBooks or Zoho.

Who It’s For

Xero is perfect for businesses with multiple users, such as retail or e-commerce companies, that value collaboration and integrations. It’s also a great fit for businesses with international clients due to its multi-currency support.

Wave: Best for Budget-Conscious Businesses

Overview

Wave is a free accounting software designed for freelancers and micro-businesses with limited budgets. While it lacks the advanced features of paid competitors, its core accounting and invoicing tools are robust for basic needs.

Key Features

Free Accounting: Unlimited invoicing, expense tracking, and basic reporting at no cost.
Online Payments: Accept payments via credit cards or ACH (transaction fees apply).
Receipt Scanning: Scan and categorize receipts using the mobile app.
Bank Connections: Import transactions for easy reconciliation.
Basic Reporting: Access profit and loss, balance sheets, and sales tax reports.

Pricing

Wave’s core accounting and invoicing features are free, with optional paid services:

Payments: 2.9% + $0.60 per credit card transaction; 1% for ACH.
Payroll: Starts at $20/month plus $6 per employee/contractor.
Advisors: Bookkeeping and tax services start at $149/month.

Pros

Completely free for basic accounting and invoicing.
Easy to use with a clean interface.
Ideal for freelancers and micro-businesses with simple needs.
No subscription costs for core features.

Cons

Limited features compared to paid competitors (e.g., no inventory tracking).
Transaction fees for payments can add up.
Customer support is limited to email and self-help resources for free users.

Who It’s For

Wave is best for freelancers, solopreneurs, and micro-businesses with basic accounting needs and tight budgets. However, growing businesses may outgrow its limited feature set.

How to Choose the Right Accounting Software

With so many options, selecting the best accounting software depends on your business’s unique needs. Here are key factors to consider:

1. Business Size and Type

Freelancers/Solopreneurs: FreshBooks or Wave for simplicity and invoicing.
Service-Based Businesses: FreshBooks or QuickBooks for project tracking and client management.
Product-Based Businesses: Zoho Books, QuickBooks, or Xero for inventory management.
Growing SMBs: Zoho Books or QuickBooks for scalability.

2. Budget

If cost is a concern, Wave’s free plan or Zoho Books’ free tier for businesses under $50,000 in revenue are excellent choices.
For premium features, QuickBooks and Xero are pricier but offer more functionality.

3. Ease of Use

FreshBooks and Wave are the most beginner-friendly.
QuickBooks and Zoho Books have steeper learning curves but offer more advanced tools.

4. Integrations

QuickBooks and Xero lead in third-party integrations.
Zoho Books excels for businesses using other Zoho apps.

5. Collaboration

Xero’s unlimited users make it ideal for teams.
FreshBooks and Wave are better for solo users or small teams.

6. Customer Support

FreshBooks and Zoho Books offer robust support with phone and live chat.
Wave’s support is limited for free users, and Xero’s response times can vary.

Comparing the Top Accounting Software

To help you decide, here’s a quick comparison table:

Software	Software	Starting Price	Free Plan	Users	Key Features
FreshBooks	Freelancers, service-based	$19/month	No	1 (extra cost)	Invoicing, time tracking
Zoho Books	Micro businesses, scalability	$15/month	Yes	1–10	Inventory, automation
QuickBooks	Comprehensive accounting	$20/month	No	1–25	Reporting, payroll, inventory
Xero	Collaboration, unlimited users	$15/month	No	Unlimited	Integrations, multi-currency
Wave	Budget-conscious businesses	Free	Yes	Unlimited	Free invoicing, basic reporting

Trends in Accounting Software for 2025

As technology evolves, accounting software continues to adapt. Here are some trends shaping the industry in 2025:

AI and Automation: Tools like Zoho Books and QuickBooks are leveraging AI to automate expense categorization, invoicing, and forecasting.
Mobile Accessibility: Robust mobile apps, as seen in Zoho Books and FreshBooks, allow business owners to manage finances on the go.
Integration Ecosystems: Software like Xero and QuickBooks offers extensive app marketplaces for seamless workflows.
Free Plans: Zoho Books and Wave cater to micro-businesses with free tiers, making accounting accessible to startups.

Final Thoughts

Choosing the best accounting software for your small business in 2025 depends on your specific needs, budget, and growth plans. For freelancers and service-based businesses, FreshBooks offers unmatched ease of use and invoicing capabilities. Zoho Books is a scalable, affordable option for micro-businesses and e-commerce companies. QuickBooks Online is the go-to for comprehensive accounting and accountant collaboration. Xero shines for teams needing unlimited users and integrations, while Wave is perfect for budget-conscious solopreneurs.

To make the right choice, take advantage of free trials offered by FreshBooks, Zoho Books, QuickBooks, and Xero, or start with Wave’s free plan. Evaluate each platform’s features against your business requirements, and you’ll find the perfect fit to streamline your finances and fuel your growth.

By investing in the right accounting software, you’re not just saving time—you’re empowering your business to thrive in a competitive landscape. Which software will you choose to take control of your finances in 2025?

If you want to know more about Accounting Software Exploring Accounting Software: A Comprehensive Guide

Prev Next