5 Best Accounting Software for Small Businesses (2025)

Choosing the right accounting software can save you hundreds of hours and thousands of dollars annually. But with dozens of options claiming to be the “best,” how do you actually choose?

We tested 15+ accounting platforms with real businesses over six months, tracking everything from invoicing speed to tax report accuracy. Here are the five tools that rose to the top.

How We Evaluated#

We tested each platform for at least 8 weeks with real business transactions, evaluating:

• Core accounting features — Bank connections, expense tracking, invoicing, reporting
• Ease of use — Can a non-accountant figure it out?
• Pricing & value — Features per dollar across all tiers
• Bank integrations — Number of institutions supported and sync reliability
• Tax preparation — How easy is it to generate year-end tax reports?
• Scalability — Can it grow from solo freelancer to 50-person company?
• Customer support — Response time and helpfulness when issues arise

1. QuickBooks — Best Overall#

QuickBooks is the 800-pound gorilla of small business accounting, and for good reason. It’s the most comprehensive, most widely-adopted, and most accountant-friendly option available.

Why We Love It#

QuickBooks delivers the complete package. It connects to 24,000+ financial institutions (more than any competitor), automatically categorizes transactions with impressive accuracy, and generates every report your CPA could possibly want at tax time.

The mobile app is genuinely useful — you can create invoices, scan receipts, and track mileage on the go. And because 7+ million businesses use QuickBooks, there’s an answer online for virtually any question you encounter.

Key Highlights#

• Bank integrations: 24,000+ financial institutions with automatic sync
• Reporting: 40+ pre-built reports including P&L, Balance Sheet, Cash Flow
• Inventory: Robust inventory tracking on Plus plan and up
• Scalability: Grows from 1 user to 25 users across plan tiers
• Integrations: 750+ third-party apps (Shopify, Stripe, PayPal, etc.)
• Tax prep: Direct integration with TurboTax, generates IRS-ready reports
• Mobile: Full-featured iOS and Android apps

Pricing#

Note: QuickBooks frequently offers 50-70% off promotions for the first 3-6 months.

What Makes QuickBooks Stand Out#

The magic is in the details. QuickBooks automatically learns how to categorize your recurring transactions. It flags duplicate entries. It reconciles bank accounts with one-click approval. These small automations compound into hours saved every month.

The inventory management (Plus plan) is particularly strong. It tracks quantity on hand, calculates COGS automatically, and updates in real-time as you create invoices or receive purchase orders.

2. FreshBooks — Best for Freelancers and Service Businesses#

FreshBooks took a different approach: build accounting software specifically for people who hate accounting. It’s beautifully designed, incredibly intuitive, and laser-focused on invoicing and time tracking.

Why We Love It#

FreshBooks is what happens when designers build accounting software. The interface is clean, modern, and requires zero accounting knowledge to use effectively. You can create and send a professional invoice in under 60 seconds.

The time tracking features are best-in-class, with one-click timers and seamless integration into invoicing. Perfect for consultants, agencies, and anyone billing hourly.

Key Highlights#

• Beautiful invoicing: Modern, customizable templates that look professional
• Time tracking: Built-in timer with mobile app integration
• Client portal: Clients can view invoices, pay, and communicate in one place
• Project management: Track project profitability and collaborate with clients
• Expense tracking: Capture receipts with mobile app
• Proposals: Create and send proposals that convert to invoices
• No accounting knowledge required: Designed for non-accountants

Pricing#

What Makes FreshBooks Stand Out#

The client experience is exceptional. When you send an invoice, clients get a beautifully formatted email with a “View and Pay Invoice” button. They click through to a clean portal where they can pay via credit card, debit, ACH, or even Apple Pay — no account creation required.

The automated late payment reminders are polite but persistent, improving your collection rate without awkward phone calls.

3. Xero — Best for International Businesses#

Xero is QuickBooks’ closest competitor, offering similar comprehensive features with a more modern interface. It particularly excels at multi-currency transactions and international operations.

Why We Love It#

Xero feels like QuickBooks rebuilt from the ground up with modern design principles. The interface is clean and intuitive while maintaining the power of full double-entry accounting.

If you deal with international customers or vendors, Xero’s multi-currency support is the best in the industry. It automatically tracks exchange rates and handles currency conversions seamlessly.

Key Highlights#

• Modern interface: Cleaner, more intuitive than QuickBooks
• Multi-currency: Excellent support for international transactions
• Bank connections: 21,000+ financial institutions
• Inventory: Robust inventory tracking on all plans
• Integrations: 1,000+ apps including e-commerce platforms
• Unlimited users: All plans include unlimited users (huge cost savings)
• Project tracking: Track job costs and profitability

Pricing#

Note: All plans include unlimited users, making Xero cost-effective for larger teams.

What Makes Xero Stand Out#

The unlimited users on all plans is a massive advantage. QuickBooks charges per seat, so a 10-person team on QuickBooks Plus would cost $450/month vs Xero Growing at $42/month.

The bank reconciliation interface is arguably better than QuickBooks, with an intuitive split-screen view and smart transaction matching.

4. Wave — Best Free Accounting Software#

Wave is completely free for core accounting and invoicing. They make money on optional payment processing and payroll add-ons, meaning you can run your entire business accounting at zero cost if you want.

Why We Love It#

Wave proves that “free” doesn’t mean “cheap.” It offers legitimate double-entry accounting with bank connections, invoicing, receipt scanning, and basic reporting — all at zero cost.

For very small businesses, side hustles, or anyone bootstrapping, Wave provides 80% of what QuickBooks offers without the monthly fee.

Key Highlights#

• Completely free: No subscription fees for accounting and invoicing
• Bank connections: Connects to 15,000+ US financial institutions
• Invoicing: Professional invoices with online payment acceptance
• Receipt scanning: Mobile app captures and categorizes receipts
• Reporting: Basic reports including P&L and Tax Summary
• Unlimited users: Invite your accountant at no extra cost
• Double-entry accounting: Real accounting, not simplified bookkeeping

Pricing#

What Makes Wave Stand Out#

It’s genuinely free. Not a trial, not “free with limitations” — actually free for core features. This makes it perfect for:

• Side hustles that aren’t profitable yet
• New businesses testing product-market fit
• Very small operations (under $100K revenue)
• Anyone who wants to minimize expenses

The catch? Payment processing fees are slightly higher than competitors (2.9% vs 2.7% for QuickBooks), and you’ll want to upgrade to paid software as you scale. But for starting out, it’s unbeatable.

5. Bench — Best Done-for-You Bookkeeping#

Bench takes a completely different approach: they do your bookkeeping for you. You get software + a dedicated bookkeeper for one monthly fee.

Why We Love It#

If you’re a business owner who wants to focus on your business rather than categorizing transactions, Bench is a game-changer. Your dedicated bookkeeper handles all the data entry, categorization, and reconciliation monthly.

You get access to a software dashboard with your financial statements, but you never have to touch the bookkeeping. It’s like having an in-house bookkeeper for a fraction of the cost.

Key Highlights#

• Done-for-you bookkeeping: Dedicated bookkeeper handles everything monthly
• Financial statements: Monthly P&L, Balance Sheet, and Cash Flow statements
• Tax-ready: Year-end reports ready for your CPA
• Expense tracking: Import and categorize all business expenses
• Unlimited support: Talk to your bookkeeper anytime via email or phone
• Tax filing: Optional add-on for federal and state tax filing
• Historical catch-up: They’ll even clean up messy books from previous years

Pricing#

Note: Pricing varies based on monthly expenses. All plans include bookkeeping service + software access.

What Makes Bench Stand Out#

You get a real human bookkeeper (not AI, not offshore outsourcing) who learns your business. They’ll reach out with questions about unusual transactions and provide categorization guidance.

Every month, you receive financial statements prepared by a professional. At year-end, your books are tax-ready with no last-minute scramble.

The catch? It’s significantly more expensive than DIY software. But if your time is worth $100+/hour, paying $299/month to never think about bookkeeping is a bargain.

Detailed Comparison Table#

How to Choose#

Choose QuickBooks if:#

• You need comprehensive accounting with inventory tracking
• You sell physical products (e-commerce, retail, manufacturing)
• You want the industry-standard tool accountants recommend
• You plan to scale to 25+ employees
• You need 40+ reports for detailed analysis

Choose FreshBooks if:#

• You run a service business (consultant, agency, freelancer)
• Beautiful invoicing and client experience matter
• Time tracking is critical for hourly billing
• You want zero learning curve and intuitive interface
• You don’t sell physical products requiring inventory

Choose Xero if:#

• You operate internationally with multi-currency needs
• You have a larger team (unlimited users saves money)
• You want modern interface with full accounting power
• You’re outside the US or work with international clients
• You prefer a cleaner UI than QuickBooks

Choose Wave if:#

• You’re bootstrapping or running a side hustle
• You need free accounting that’s actually functional
• Revenue is under $100K and business is simple
• You’re willing to trade advanced features for zero cost
• You don’t need inventory tracking or time tracking

Choose Bench if:#

• You want hands-off, done-for-you bookkeeping
• Your time is better spent on business operations
• You can afford $299+/month for professional service
• You hate bookkeeping and want peace of mind
• You need messy historical books cleaned up

Common Questions Answered#

What about QuickBooks Desktop?#

QuickBooks Desktop still exists and is powerful, but we recommend QuickBooks Online for most small businesses. Cloud-based software offers automatic backups, mobile access, and real-time collaboration with your accountant. Desktop makes sense only for very specific use cases (construction contractors with robust job costing needs, for example).

Can I switch between these tools?#

Yes, but it requires some work. Most tools offer import capabilities for customer lists, vendors, and chart of accounts. However, historical transaction detail rarely transfers perfectly. Budget 3-5 hours for migration or hire a bookkeeper. Many businesses start fresh in the new tool while keeping the old one read-only for reference.

Do I still need an accountant?#

Accounting software handles day-to-day bookkeeping, but you’ll still benefit from a CPA for:

• Tax planning and strategy
• Annual tax return preparation
• Quarterly estimated tax guidance
• Year-end adjustments and closing
• Audit protection and financial planning

The software makes your accountant’s job easier (and less expensive) by providing organized data.

What if I have multiple businesses?#

QuickBooks, Xero, and Wave all support multiple companies under one login. FreshBooks technically requires separate accounts per business. If you run multiple entities, factor this into your decision.

Final Recommendation#

For most small businesses, QuickBooks Plus ($45/month) offers the best combination of features, reliability, and accountant compatibility. It’s not the cheapest, but it’s the safe choice that grows with you.

If you run a service business and hate complexity, FreshBooks Plus ($33/month) provides everything you need with a beautiful, intuitive interface.

If budget is tight or you’re just starting out, Wave (free) gets you professional accounting at zero cost.

Whichever you choose, start with a trial and test it with real data. The right accounting software should make your financial life easier, not more complicated.

FAQ#