5 Best Accounting Software Options For Small Businesses Recommended by a CPA

Accounting Software: The Rise of Finance Automation

In today’s digital age, accounting and invoicing software has brought about a revolution in financial management for businesses of all sizes. Thanks to the emergence of user-friendly business applications and cloud-based software, managing finances has become more accessible for many small businesses and accounting professionals alike.

With so many management software and advanced accounting services and tools available, it can be overwhelming to find the best one for your small business. That’s why we’re here to help. In this article, we’re recommending four top-rated programs and highlighting their benefits, features and services to provide a solution for small business owners who are having a hard time selecting the right accounting software. 

We will also answer your frequently asked questions about selecting the ideal software based on your company’s budget, requirements, and goals. Sounds good? Let’s dive right in.

Why Do You Need Accounting Software?

A critical part of running any business relies on keeping track of financial details, be it sales, cash flow, or inventory. And for most business owners, keeping accurate records is tedious, time-consuming, and prone to mistakes.

This is where accounting software can help and enter the picture. Tried and tested by accountants, these tools can automate some accounting tasks, speeding up workflows while reducing human error to ensure the financial health of your business.

If you are looking to smooth out the bottlenecks in your financial processes, accounting software offers may be a great help.

But how will you find the right accounting software for you? Here are some quick tips:

  • Look for a comprehensive list of top accounting platform options for small businesses, including those with exceptional automation and cloud-based capabilities, and flexible subscription plans that fit your budget.
  • Consider the best free accounting software for small businesses if you’re just starting out or want to keep costs low.

While you are in the process of choosing the right accounting software that can help you run your small business, you must determine the pain points or the bottlenecks in your business accounting system in order to identify which features of accounting application your business needs.

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A Full Suite of Accounting Features To Look For

Perhaps, one of the most important factors you should consider when choosing the best accounting software for small business is its features. After all, the features will determine whether or not the software is a good value for your money.

With the myriad of software options in the market, it can be challenging for you to pick the right tool. To help you with your options, here are the must-have features you should look for in accounting software:

  1. Banking

For small businesses, bank transactions like deposits, bill payments, and electronic transfers are a daily occurrence. That’s why the first thing you want to do is make sure that your accounting software that allows you to sync with your bank activity or at the very least, import your bank activity into your accounting software.

  1. Accounts receivable and accounts payable

If you have a business, you’re probably invoicing clients and paying suppliers regularly.  The challenge is to track who owes you money and whom you owe.

So if you have a high number of daily transactions, accounting software with automatic invoice processing and billing statements (printed and digital) can be a great help.

Meanwhile, the most functional accounts payable features you should look for are automated purchase orders, credit memos, and automatic bank payments and deposits.

  1. Payroll

Let’s face it, payroll calculations are complicated. If you have any employees on payroll or if you as a small business owner pay yourself, then you would benefit greatly from using cloud-based accounting software that can manage your payroll. Many automatic payroll systems allow you to schedule your payroll (daily, weekly, bi-weekly, monthly), handle salaried or hourly pay and accurately handle tax remittance calculations.

  1. Tax preparation

Accounting software helps simplify tax tasks for businesses. It keeps track of all money coming in and out automatically, making tax calculations and deductions easier. It can sort out expenses into categories the CRA uses, showing where you might save money on taxes. 

Accounting software can also store digital copies of receipts, which are important for correct tax filing and for checks by the CRA. Some versions can even fill out your tax forms using the financial info they’ve gathered throughout the year. 

Plus, they’re updated regularly, so they’re always in line with the latest tax laws. This means less time spent on taxes and lower costs since you might not need outside help.

  1. Automated record keeping

Accounting software helps keep track of all the money in your business, like sales, buying things, payments, and money you receive. For small business owners, keeping an eye on all these can be hard. It takes a lot of time, and it’s easy to make mistakes when you’re typing in all the details by hand. Plus, it can get messy when you’ve got to find everything for things like CRA checks.

This is where automated record-keeping comes in handy. It keeps everything in order for you so you’re less likely to make a mistake and you’ll save time. You can also quickly find any transaction or report, making it easier to make decisions and to show the IRS your records if they ever ask. This means less worry for business owners and more time to focus on making their business bigger and better.

Guiding Questions For Small Business Owners

A. What is your budget range?

While you don’t want to overspend on features you won’t use, you also don’t want to choose software that doesn’t meet your needs and creates a lot of manual work for you later on. In many cases, what you might save on online accounting software and tools, you’ll end up spending on a manual bookkeeping or accounting process to prepare your records.

The key is to find the software that best meets your business needs at a price point that works for you.

Ask yourself questions like:

  1. What are my accounting needs right now?
  2. Will I be the only one using this software or do my employees need it too? If employees need it, how many?
  3. Do I prefer cloud accounting software or desktop-based?
  4. Do I know how to use it already or will I need training?
  5. If I have an accountant already, do they have access to partner discounts on the software that they can offer to me as a client?

When you take a moment to consider these questions, you can determine a realistic range that can fit the overall financial plan for your business without the risk of overspending.

READ MORE: The Ultimate Guide to Finding Accounting and Tax Services in Canada

B. What is the ROI?

Another important factor to consider is the return on investment (ROI) of the accounting solution. Automating financial procedures, such as accounting and bookkeeping, can save time and eliminate errors, allowing you to focus on expanding your business and building strong client relationships. Accurate financial data can also aid in decision-making and optimizing your operations, leading to higher profitability and business growth. The ROI of an accounting program can make it a smart investment for small business owners looking to maximize efficiency as they manage their business and achieve greater success.

C. Does it fit your accounting needs?

Most importantly, you should be confident that the accounting software you choose will address the needs of your small business accounting; otherwise you likely won’t realize its benefits to your business finances. The software should be flexible, easy to use, painless to integrate with other business applications, and have the functionality you require, while also being user-friendly.

Take the time to consider these factors when selecting the best accounting software for small business, and you’ll be able to easily manage your finances and focus on more important tasks like growing your business.

D. Can the software grow with your business?

Scalability in accounting software means it can handle more work as your business grows. As your business expands, you’ll have more financial transactions that need managing.

If your accounting software isn’t scalable, you could face issues like spending extra time on finances, system slowdowns, or missed details. Also, switching to a new system later might be expensive, time-consuming, and potentially prone to errors.

So, it’s usually better to pick a scalable solution from the start, making sure your accounting system can support your business as it grows.

E. How can you get help if you have problems with the software?

Customer support is a critical factor to consider when picking accounting software, as it ensures help is at hand when you face issues or have questions. Reliable customer support can help reduce interruptions to your business operations caused by software hurdles.

When assessing customer support, look for its availability, ensuring it aligns with your business hours. Consider the modes of support provided – it’s helpful if they offer a mix of email, phone, live chat, or even face-to-face support. Also, gauge their responsiveness as quick support translates to less disruption in your business.

Another consideration is the team’s knowledge and expertise—are they well-versed enough to help with both technical problems and practical use of the software? Check if the provider offers additional resources such as tutorials, guides, webinars, or forums for users to learn more about the software’s usage.

Take the time to consider these factors when selecting accounting software for your business, and you’ll be able to easily manage your finances and focus on more important tasks like growing your business.

5 of the Best Accounting Software For Small Businesses In 2024

A table that compares the monthly plan costs and features of the accounting software QuickBooks, Xero, Wave Accounting, FreshBooks, and Zoho.

A quick note to remember, these prices will change over time. This article was written in April 2024, so we highly recommend that you research each software package for any change in price and feature list.

Intuit QuickBooks Online

QuickBooks Online is a top pick for businesses of all sizes. It’s a mix of accounting and bookkeeping tools.

Even though it’s widely used and feature-packed, it’s surprisingly user-friendly, even for business owners without accounting backgrounds in Canada.

But, small business owners should be aware – QuickBooks Online has many advanced features that might not be necessary yet, and could make it more costly than needed.

Xero

Xero makes accounting and bookkeeping easier for small businesses. It’s highly recommended for business owners without accounting experience due to its user-friendly and intuitive layout, making it great for beginners.

However, compared to QuickBooks, Xero doesn’t have as many advanced features. But still, it’s one of the most practical and easy-to-use accounting software options available for small businesses.

Wave Accounting

If budget-friendly accounting software is what you’re after, consider Wave Accounting. Owned by H&R Block, it provides a range of handy features like tracking, invoicing, and online payments, all for free.

That’s why it’s a favorite among freelancers and small businesses. The only hitch is, unlike our first two picks, Wave isn’t as expandable as your business grows.

FreshBooks

If you run a service-based business, FreshBooks could be a good fit for your accounting needs. Besides the usual accounting and bookkeeping tools like billing and expense tracking, FreshBooks stands out with its time tracking feature designed for projects.

This makes it attractive to freelancers and small service businesses. However, if you’re looking for a complete package of accounting and bookkeeping tools, FreshBooks may fall short as it lacks some advanced features.

Zoho Books

If you want accounting software that can grow with your business, consider Zoho. It offers flexible plans that cater to businesses at every stage, from start-ups to established enterprises.

Zoho’s unique feature is its integrated ecosystem, letting you manage and combine other Zoho apps all in one place. Plus, it offers extras like a CRM system and marketing tools, providing added value for your business.

Frequently Asked Questions:

  1. How much should a small business expect to pay for accounting software?

There’s no shortage of accounting software options on the market today, each with a unique pricing structure and feature set. As a small business, you can generally expect to pay anywhere from $15 to $50 per month for basic accounting and business services and management capabilities. However, if you require more specialized accounting features, you may need to shell out anywhere from $50 to $500 per month depending on the software and plan.

While investing in accounting software is a smart financial decision, it’s important to thoroughly evaluate the potential time and money savings it can offer. Fortunately, many accounting software programs offer free trials, allowing you to test the waters before making a purchase. This way, you can make an informed decision about whether the software is the right fit for your business. Also, you must remember that the set of features you should get depends on your business needs and the size of your business.

  1. If I already have accounting software, do I still need an accountant?

Short answer: Generally, yes.

Long answer: Deciding when you need professional accounting services can be tricky. Even if you have a relatively good grasp of accounting and finance in your business, business taxes are not an area we would ever recommend that you face on your own. While accounting software helps manage your finances, it’s important to keep in mind that the best small business accounting software does not replace a qualified accountant, particularly in the area of tax.

If you’re not confident in your abilities, it’s easy to make mistakes that could put your business at risk of disallowed deductions, interest, or penalties. That’s why it’s always a good idea to consult with an accountant who can help guide you and help ensure that you’re complying with tax laws and regulations.

If you’re not sure what to do, it never hurts to book a consultation with a local accountant. They can help you make the best decision for the needs of your business, giving you peace of mind and confidence in your financial management.

RELATED: 10 Questions to Ask Your Accountant Before You Hire Them

What Is The Best Accounting Software For You?

As you choose the right accounting software for your small business, there are several key factors to keep in mind. These include functionality, integration capabilities, and price range. Additionally, it’s important to determine which features are essential for your business and the level of support you require. It’s worth noting that what works for one business might not be the best fit for another. Each business has its own unique needs and priorities and taking the time to evaluate the pros and cons can help you make the best choice and ultimately lead to greater efficiency that gets reflected as additional profit in your business bank account.

Are you looking for a Canadian accountant to help you grow and run your business?

We are CPA Guide and we’ve done the research for you. Let us help you find a great CPA and accounting services and see your business grow!