You would never fly a plane without knowing the amount of fuel on board, would you?
So why are you running your side hustle or small business without knowing how much money is coming in and going out each month?
Small business accounting software helps entrepreneurs track their money efficiently, and the good news is that tracking expenses is easier than ever. Online accounting software can help you get organized and keep tabs on the financial health of your business, and there are plenty of options to choose from to keep track of income and expenses.
“There is no better accounting software,” says Dr. Tim Yoder, Certified Public Accountant (CPA) and accounting expert. “Every business should assess their needs and budget to choose the best software for them.”
Finding the best accounting software for your small business can be overwhelming, as many services now offer additional features such as time tracking, accounts payable services, recurring invoices, and financial reporting tools. Which features suit you best?
We asked several financial experts to comment on which small business accounting software they recommend and why. Here’s what they had to say.
Best accounting software for beginners: QuickBooks Online
“[QuickBooks Online] is my top choice of accounting software for beginners because it has a great selection of QuickBooks ProAdvisors to help you out,” says Yoder. “It offers a very basic simple start that doesn’t overwhelm you with features. As you get more familiar, you can upgrade to QuickBooks Online Advanced, which can be used for fairly large businesses with up to 25 users.
QuickBooks lets you give your accountant direct access to your account with their own username and password, and that username doesn’t count toward your allotted user count. Very small and medium-sized businesses use QuickBooks Online for their day-to-day accounting and bookkeeping.
Best accounting software for freelancers: FreshBooks
“FreshBooks is known for its ease of use, with a simple interface that makes it easy to track expenses and bills,” says Bryan Sharpe, senior accountant at Solar Panels Network USA, a company that offers solar panel installation services. home. “FreshBooks also offers a number of handy features, such as the ability to track time spent on projects, send automatic payment reminders, and generate detailed reports.” It’s important to stay on top of accounts payable and accounts receivable when you’re a freelancer; FreshBooks simplifies the process.
Best Accounting Software on a Budget: Wave
“Wave’s significant benefit is its free accounting, invoicing, and receipt scanning services,” says Mark Stewart, in-house CPA for Step By Step Business, an education platform for small businesses. “This program meets the accounting needs of freelancers. Stewart also notes that with Wave, you can manage multiple businesses on one account.
Best accounting software on your phone: Zoho Books
“For small business owners who want to do 100% of their accounting with their mobile device, Zoho Books is the best choice,” Yoder says. “Although there is an online desktop interface, you can perform all accounting functions through the mobile app.” The option to have both small business accounting and purchase invoice management in one place makes Zoho Books a popular choice, especially for entrepreneurs who are also responsible for tracking inventory.
Best accounting software for ease of use: Xero
“The [Xero] The app has a very clean and easy to understand interface,” says Stewart. “It can also help your business administer payroll and labor tax obligations. Xero is cloud-based, provides a secure space to store your information, and has a mobile app for easy access. Small businesses that also need to tackle payroll may want more comprehensive accounting software to better see everything in one place.
What to Look for in Accounting Software
The most comprehensive accounting software for you will be one that you find easy to use and has the extra features you want. Small businesses are unique; if you mainly send personalized proposals, invoicing tools might be more useful to you than some other companies that mainly sell physical products in an online store.
“A lot of accounting software has great features that businesses can take advantage of,” says Nathan Watson, CEO of Lion Locs, a vegan hair products company. Watson says relying on his small business accounting tools has helped his company dramatically improve work processes, especially during tax season.
Do I even need accounting software for a sole proprietorship?
The benefit of having accounting software is that you can focus on what you do best in your business rather than tracking and crunching numbers all day. Once you’ve connected your accounts and set everything up in your accounting software, you shouldn’t need to spend more than a few minutes each month managing transactions. Skip the advanced features, but don’t give up tracking your money altogether.
The benefit of having good accounting software is that you can log into your account at any time and get a good idea of how money is flowing in and out of your business, which can inform your future accounting decisions. ‘investment.
Tracking your expenses as an entrepreneur builds financial discipline and helps ensure you don’t get yourself into trouble when it comes to cash flow.
Do I need accounting software if I don’t have an LLC?
If you have a side hustle or small business, but have not yet registered an LLC or C corporation, you will be classified as a sole proprietor when you file your taxes. In a sole proprietorship, you are taxed on income minus expenses, and you must show that you had expenses by showing receipts.
Related: LLC or S Corp? The Tax Decision New Business Owners Must Make
You’re certainly welcome to manually track your secondary expenses or small business expenses, but when tax time arrives, having all of your transactions already filed and filed in online accounting software will make it easier to report tax. your taxes. You’re also less likely to miss out on potential tax deduction opportunities that help you keep more of your side hustle or small business income in your pocket.
Accounting software can seem like a splurge when you’re just starting out with a side hustle or a small business. However, having an overview of your numbers can help you see what’s working and make informed decisions. Be clear on your numbers and you’ll have a roadmap to scale your business as far as you want.