Managing finances and tracking payments can often be a challenge for small businesses. Research from SME loans shows that 38% of small business owners that have suffered cash flow problems have been unable to pay debts.
The reality is that not every small business owner is an accounting expert and it can be difficult to handle such a large part whilst growing your business.
However, account management ranks as one of the most important parts of running a business. It is important to prioritise the financial aspect in order to avoid falling short of funds or running into debt.
For small business owners that may not know much about accounting, finding the best software tool to help manage that is another task to tackle.
If you are in search of a full-featured accounting suite or just a tool with the basic accounting features, there are several free and inexpensive tools out there to choose from.
Below are some of the best accounting software for small businesses.
Additional reporting by Hannah Williams
Sighted provides a free online invoicing software, with added expense tracking designed for startups and freelancers.
The features are convenient and user-friendly offering the ability to integrate card and PayPal payments, PDF invoices and cash receipts that can easily be sent to clients.
Sighted is available on desktop, and can also be accessed on iOS and Android Smartphone and tablets- a feature that best suits remote and freelance workers.
Users can sign up for free access to all features.
Sage Business Cloud Accounting
No accounting software roundup would be complete without Sage, this Newcastle-based powerhouse services businesses from the smallest micro-business to massive enterprises.
And while Sage hosts a wide range of account management platforms, for startups, we recommend Sage Business Cloud Accounting.
Typically designed for micro to small businesses, this accounting software can create sales invoices, track payments and balances, generate profit and loss, balance sheet and trial balance reports and calculate and submit VAT returns to HMRC.
Sage One Accounts also allows for multi-logins and can produce quotes, estimates, cashflow forecasts and statements and record purchasing invoices from suppliers.
Pricing starts at £6 a month for its accounting plan, with a 30-day free trial included.
FreeAgent is an accounting app that offers standout invoicing and expense tracking for small businesses.
It is built to help manage the finances of freelancers and startup owners that may not have accounting experience. The software includes self-assessment, time tracking, VAT and Corporation Tax bill features.
FreeAgent also provides integration with user bank accounts, with a dashboard to monitor cash flow and payment schedules.
For limited companies, pricing starts at £14.50 a month for six months then £29 a month after. Partnerships are charged £12 a month for six months, then £24 a month and sole trader pricing is £9.50 a month for six months and £19 a month thereafter.
There is a free 30-day trial for all users.
Kashoo offers cloud-based accounting software for startups and small businesses, allowing them to do their accounting online.
Its features include financial reports, invoices, bank fees, payments and more. Users are able to send invoices, track expenses and also receive and transfer payments quickly.
Kashoo also offers integration with existing payroll systems such as Freshbooks, while claiming to be the best solution to eliminate the frustration of rival QuickBooks.
It is available on Apple iPad and iPhone, providing real-time dashboards in the app. Pricing starts at $16.65 (£12.54) a month, with a 14-day free trial.
Tipalti offers an automated invoice management and bill processing system, supporting small businesses to reduce workload and increase payment accuracy.
The features include OCR (Optical Character Recognition) scanning, which is built to eliminate tedious invoice data entry with intelligent recognition of any override charges to improve performance.
Other features such as real-time reconciliation and ERP integration, enabling all payments processes to be automatically sent after payments are made in a faster and secure way.
Tilpati provides a free product tour and pricing is available on request.
LessAccounting is easy-to-use accounting software suited for startups that dislike bookkeeping.
The software is built to help users do the daunting bookkeeping tasks, with added features to help to track invoices and payments.
It includes accounting workflows, proposals, mileage and more. LessAccounting also supports third-party apps for other services like automation.
The software also describes itself as the best alternative to QuickBooks. It offers a 14-day free trial and pricing starts at $20 (£15.04) a month.
KashFlow provides accounting software which delivers automated account handling for startups and small businesses.
The software is built including invoicing, cashflow management, VAT reports and more. It is a simple platform to use, that can be accessed around the world by multiple users at a time.
KashFlow offers a range of integrations such as PayPal and DropBox and also offers payroll, payments and HR services.
It offers three price plans starting at £8 a month for the starter plan, £15 a month for business and £21 a month for business and payroll. There is also a free 14-day trial included.
Once it is connected to your business bank accounts QuickBooks can perform invoicing, inventory management, expense tracking, purchase ordering and reporting.
It is easy to use and importantly scalable, so it can keep up with even the fastest growing business.
QuickBook's real-time dashboard is available on both desktop and mobiles and is competitively priced, coming in at around £3 per month for the Self-employed plan, £7 per month for its Essentials package and £11 a month for its Plus package.
The biggest difference between packages is that the Essentials plan comes with VAT, payroll and employee time management capabilities, while the Self-employed plan offers a complete HMRC self-assessment.
You could also opt for the Plus package which is a full account management suite for £25 per month, although, for some startups, this might house unnecessary features.
You might already use Zoho for other aspects of your business, such as email, marketing or other business processes, but Zoho Books is its online account management software, and it's extremely good.
You can either use Zoho Books as a standalone service or integrate it with one of the aforementioned platforms.
Available on three different pricing plans, users can track expenses, inventory and clients across mobile, tablet, laptop and PCs.
Its 'basic' plan - which costs £6 per month - is ideal for freelancers and micro-businesses. It provides 50 contacts, two users, five automated workflows, as well as custom invoices, expense tracking, timesheets and recurring transactions
Or for £12 per month, you could opt for the 'standard' plan and receive 500 contacts, three users, 10 automated workflows and on top of everything in the basic plan, you'll get billing, vendor credits and reporting tags.
There is also a 'pro' version available, although that might be better for small businesses rather than startups and micro-businesses. (Find out more here)
Another great option is Xero. This accounting software lets users create custom invoices, manage payroll and generate expense reports.
You'll also be able to manage a tracked inventory, create purchase orders and connect to well over 500 third-party apps.
For a reasonable £10 per month, a startup will be able to send five invoices and quotes, enter five bills and reconcile 20 bank transaction, as well as being able to manage and submit VAT easily online.
Xero is available on both PC and Mac, offering a full-featured Mac version, which is great, as sometimes Mac users do get overlooked. If you are a Mac user, this might be the one for you and your startup.
FreshBooks is another well-known organisation offering comprehensive cloud-based accounting software, specifically aimed at startups and small businesses.
You'll be able to take advantage of invoicing, expenses, time tracking, payments and detailed personalised financial reports over an online dashboard.
FreshBooks provides three packages, all coming with unlimited invoices, expenses, time tracking, PayPal, MailChimp and Basecamp integration (plus many more add-ons), credit card payments and branded customisable invoices.
Its cheapest plan is $15 (£11) per month and is ideal for startups with up to five clients, the next step up is $25 (£18.60) and allows for 50 clients.
Aimed at micro-businesses, freelancers and entrepreneurs, Wave Accounting is an excellent choice for people starting out.
The first positive is that it's free, and for the most part, very easy to use, offering a no-frills but efficient approach to online accounting.
Via its handy dashboard, you'll be able to manage automatic billing and invoicing, automatic data sync and receipt scanning. Wave also supports PayPal integration and generates snappy graphics detailing expenses, bank accounts, payables, receivables and all recent activity.
Like with most free software, you will have to deal with a few ads here and there. Not ideal. But for free software, it's not going to impact you that much.
Through its simple and easy to use accounting software, you'll be able to manage banking, invoicing, purchasing, expenses and tax management, as well as integrate multiple online payment systems such as PayPal.
With ClearBooks you'll also be able to set recurring bills, create purchase orders and produce branded invoices, all for as little as £5 per month for the first three months or £10.75 a month for the large package. This price includes unlimited users, which is pretty unique compared with others listed. It also provides a 30-day free trial.
It also supports integration with MailChimp, which is an excellent email marketing tool.
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