The Impact of Information Technology on Small

Business
Small Business; Business Technology & Customer Support, Information Technology
By David Ingram
Technology provides a wide range of tools entrepreneurs can use to guide their new companies
through the startup and growth stages. Small-business accounting, marketing and communication
have been revolutionized by advances in computer, network and communications technology, and
businesses in a range of industries continually adapt to take full advantage of technological
developments.
1. Accounting
Setting up and managing a new accounting system can be a daunting task on your own. Modern
accounting software packages simplify the process of setting up accounts and posting daily
transactions. Managing accounts with a small-business accounting package such as Microsoft Money
or QuickBooks can eliminate the need to hire full-time or third-party accountants. Accounting software
also assists managers by creating informative reports and financial statements to increase decision-
making effectiveness.
2. The Internet
The Internet has all but leveled the playing field for small-business marketers competing against
established businesses. With advanced video and graphics editing software, small-business owners
can create professional marketing materials that reach thousands or millions of viewers online.
Entrepreneurs can take advantage of cost-efficient web marketing tools such as Google AdWords to
spread targeted marketing messages to a broad audience or a select niche. Several small
businesses can share expensive advertising space online through banner- and traffic-swaps.
3. Startup Costs
Despite the numerous advantages granted by modern technology, there are still drawbacks to
technology's inseparable relationship with the business world. One such drawback is the increase in
startup expenses for new businesses. Almost every new business requires computer workstations,
multiple telephone lines and network infrastructure before it can begin operations. Bootstrap
entrepreneurs can often get away with using their own PCs and cellphones during the startup phase,
but serious new ventures undertaken by experienced entrepreneurs usually involve large
infrastructure projects to accommodate rapid growth.
4. Time Management
Time management is crucial for any small-business owner. Freeing up time from administrative
minutiae can allow you to focus on more productive activities, such as drumming up new business
and making vital contacts with suppliers and potential strategic partners. Advances in computer and
cellular telephone technology allow business owners unprecedented access to in-depth scheduling
and customer relationship management software, enabling busy entrepreneurs to hold "face to face"
meetings online, from anywhere in the world.
What is Accounting Software?

Accounting software offers features for tracking the revenue and expenses of a business. The best
small business accounting software has a wide range of reports that allow you to analyze the
financial health of your business, as well as dashboards that provide an at-a-glance overview of key
financial aspects like accounts receivable, accounts payable, historical sales data and cash flow.
Small business accounting software is also useful for tax management, ensuring you’re accurately
estimating all your tax liabilities and saving money accordingly. The best accounting software
integrates with other key business systems like payroll software and HR software, eliminating the
need to enter the same data manually in multiple systems.

Best Accounting Software of 2023

 Xero:Best for Payments

 Intuit QuickBooks Online:Best for Small Businesses
 Oracle NetSuite Accounting Software:Best for Advanced Features
 FreshBooks Accounting Software:Best for Invoicing
 Zoho Books Accounting Software:Best for Microbusinesses
 Melio:Best Accounts Payable Tools
 ZarMoney:Best for Inventory Management
 Plooto:Best for Accounts Payable
 Wave Financial:Best Free Accounting Software
 Sage:Best for Basic Features
 Neat:Best for Receipt and Expense Tracking

 Small business accounting software is key to managing your finances, making smart spending
decisions, and complying with tax and accounting regulations.
 The best accounting software balances reconciliation, reporting, invoicing and bill pay features with
accessible pricing and intuitive user interfaces.
 Dozens of great small business accounting software options are available, but testing a few that could
fit your business will reveal the right one for your needs.
 This article is for small business owners searching for small business accounting software.

Small business accounting software offers features for tracking the revenue and expenses of a
business. The best accounting software for small business offers a wide range of reports that allow
you to analyze the financial health of your business, as well as dashboards that provide an at-a-
glance overview of key financial aspects like accounts receivable, accounts payable, historical sales
data and cash flow. Small business accounting software is also useful for tax management, ensuring
you’re accurately estimating all your tax liabilities and saving money accordingly.

The best accounting software integrates with other key business systems, like payroll software and
HR software, eliminating the need to enter the same data manually in multiple systems. We reviewed
dozens of the most popular accounting software platforms available today and narrowed it down to
the best 11 options. Cost, ease of use and setup, customizability, key features, and ideal use cases
were among our top considerations.
Tip

Small business accounting software can assess your company’s financial health, manage taxes,
review key financial aspects, and help you make sound financial decisions.

Accounting software is an essential ingredient for a successful business. Depending on the program,
it can help you create professional invoices, record incoming and outgoing payments, identify and
follow up on past-due receivables, streamline tax management, and run reports that analyze your
company’s financial health and project for the future.

To help you find the best accounting software for your small business, we examined some of the
most popular platforms on the market today. We looked for affordable, easy-to-use accounting
programs that included time-saving features, such as automated bank feeds, automatic payment
reminders, and online invoicing and payment acceptance. We also searched for software with
comprehensive, customizable, real-time financial reporting because that is crucial for monitoring and
understanding your business finances.
Compare Our Best Picks

Oracle
Intuit FreshBooks Zoho Books
NetSuite
Xero QuickBooks Accounting Accounting ZarMone Wave
Accounting
Online Software Software Melio Plooto Sage Neat
Software y Financial

Our
Top
Picks
for
2023

9.0/
Rating 9.5/10 9.0/10 9.0/10 8.5/10 8.0/10 9.0/10 9.0/10 8.0/10 9.0/10 7.5/10
10

Track
ing Automati
Small Free Inventory Basic Receipt
Use and ERP Microbus ng Free
businesse Invoicing accounts managem accountin managem
Case payin tools inesses accounts option
s payable ent g features ent
g payable
bills

$13 $16.66/m
Startin per $15 per $8.50/per $15/per $15 per $32 per $10 per onth
Custom Free Free
g Price mont month month month month month month (annual
h prorated)
Free
30
Trial 30 days 14 days 30 days 14 days N/A 15 days 30 days N/A 30 days 14 days
Period
days

Mobile
Applic Yes Yes Yes Yes Yes Yes No No Yes Yes Yes
ations

Integr
ation
Yes Yes Yes Yes Yes Limited Yes Limited Yes Yes Yes
Option
s

Bill
Pay Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No
Tools

Read Orac
Read Intui Read Fres Read Zoh
le
t hBooks o Books Read Wav
Read NetSuite Read Zar
Revie QuickBoo Accountin Accountin Read Ploo e Read Sage
Xero R Accountin Money Re
w Link ks g g to Review Financial Review
eview g view
Online Re Software Software Review
Software
view Review Review
Review

Scroll Table
Our Reviews
Xero: Best for Payments

Xero

 Xero offers thousands of app integrations with which to manage all aspects of your business.
 You can access Xero support services via email and live chat 24 hours per day.
 You must file a support ticket online to request a customer service phone call.

Editor's Rating:9/10

Visit Site
We chose Xero as the best accounting software for tracking and paying bills. Xero enables you to
maintain excellent relationships with your suppliers and creditors while avoiding costly late fees. With
Xero, you can be sure that your cash flow is positive so you don’t come up short when it’s time to
pay. On the user-friendly, customizable dashboard, you can see when each bill is due and review
your invoices. The spare interface gives an immediate picture of your business’s financial position.
You can view costs as they happen in real time, then make instant modifications.

Since Xero is cloud-based, you don’t need to download or install any programs. It offers professional
double-entry bookkeeping functionality, so your transactions will be entered as a debit as well as a
credit. This software also saves you time because you can schedule upcoming payments and batch
pay suppliers in advance, automating a process that is typically manual. The new Hubdoc service
allows you to capture data from bills and receipts. This further reduces your workload by eliminating
manual data entry.

Intuit QuickBooks Online: Best for Small Businesses

Intuit QuickBooks Online

 QuickBooks Online has accounting features to meet the needs of businesses of all sizes.
 QuickBooks’ live bookkeepers and Certified Pro Advisors provide professional help and guidance.
 Only the highest-priced QuickBooks plan allows for an unlimited number of users.

Editor's Rating:9.5/10

We found QuickBooks Online to be the best overall accounting software for small businesses. It
provides four plan options for small businesses, as well as a separate option for self-employed users.
Each offers features that are suitable for a range of small businesses, whether they’re startups or
established companies. Between the four options for small businesses, you’ll have access to all the
tools and reports you’ll need for accounting purposes, and you can seamlessly upgrade your plans as
your business scales.

The platform is also easy to set up and use, allowing you to do everything by yourself to get your
accounting software up and running. However, if you want extra assistance, Intuit offers access to
professional bookkeepers and accountants who can help you configure the software in a way that
makes sense for your business. Additionally, QuickBooks Online allows you to create custom
invoices and forms so your company’s branding is always at the forefront of client-facing
communications. For the features and services you get, the price is a bargain.

Oracle NetSuite Accounting Software: Best for Advanced Features

Oracle NetSuite Accounting Software

 NetSuite offers a variety of advanced features, including enterprise resource planning tools.
 The software focuses on automation, making it simple to send and collect invoices and complete other key
accounting tasks.
 The website isn’t clear about pricing, so you need to contact a sales representative to determine the cost.

Editor's Rating:9/10

We chose Oracle NetSuite as the best accounting software option for midsize and growing
businesses that are in search of advanced features. As part of its robust enterprise resource planning
(ERP) offering, Oracle NetSuite offers a cloud-based financial management solution that can track
your financial data and automate a variety of essential accounting functions. Like any highly rated
accounting software, it offers reporting, planning and billing capabilities. It also easily integrates with
other software, including Oracle’s comprehensive suite of business solutions. It can also be used with
multiple currencies, so it’s a great option for companies with a global customer base.

If your business needs to expedite its accounts receivable and payable, accelerate deal closings, and
keep up with more complex financial compliance obligations while taking advantage of a full suite of
powerful business management features, Oracle NetSuite is ideal. Moreover, it doesn’t limit the
number of users or rely on third-party apps for customization. However, it may be cost-prohibitive and
present a steep learning curve for small businesses that don’t need access to the advanced slate of
features it provides.

FreshBooks Accounting Software: Best for Invoicing

FreshBooks Accounting Software

 FreshBooks lets you easily craft invoices, accept payments through invoices, track expenses, and send
automatic reminders.
 You receive a full suite of accounting tools to take care of tasks like tracking time and expenses as well as
running financial reports.
 If you need to add several team members to the software, that can get expensive.

Editor's Rating:9/10

Visit Site

We recommend FreshBooks as the best software for invoicing. Not only can you develop
professional invoices that match your brand, but you can also track the status of invoices so you
know when customers received their bills and when their balances are due. It also facilitates online
invoice payments so customers can pay you directly from the invoice.

The FreshBooks dashboard is simple to navigate and includes time and expense tracking, project
management features, and tools to create proposals that you can send to prospective clients. The
double-entry accounting system makes sure you are organized and prepared for tax time. If you want
accountants to have access to your dashboard, reports, invoices and expenses, you can assign them
permission, as well as grant other users access to different features. If you have employees, you can
give them access to their projects and track their time and additional expenses. FreshBooks has over
100 partners, so you can add plenty of features and connect with other business programs.

Zoho Books Accounting Software: Best for Microbusinesses

Zoho Books Accounting Software

 Zoho Books has apps for popular operating systems and devices, including Apple, Android and Windows.
 Through Zoho Books, you can send invoices, reconcile accounts, track and manage bills and vendor credits,
and accept payments on the go.
 Zoho Books imposes a limit on your annual invoice volume, which may be challenging for some businesses.

Editor's Rating:8.5/10
We selected Zoho Books as the best accounting software for people with microbusinesses. Not all
accounting software programs are appropriate for freelancers, independent contractors, sole
proprietors, consultants, home-based businesses, individuals operating e-commerce sites and
companies that employ fewer than 10 people. In those cases, the software may be too complicated,
unnecessarily powerful and overly expensive. Not so with Zoho Books. It works well for businesses
with straightforward invoicing and accounting needs, and the low price (including free options for low-
revenue businesses) is attractive for budget-conscious entrepreneurs.

Zoho Books is also scalable. As your small enterprise expands into a larger business, you can make
use of the options that allow you to upgrade and integrate with other business applications. An easy-
to-use, proprietary programming language called Deluge allows you to build custom functions. You
can also access a Zoho professional for help in designing your own functions. It also includes a
mobile app to ensure that you can keep up with accounting tasks while you’re on the go.

Melio: Best Accounts Payable Tools

Melio

 It’s free to make and accept payments from bank accounts with Melio.
 You can easily schedule and track payments and control who has access to your accounts payable and
receivable.
 Melio charges a 2.9 percent fee for credit and debit card payments, as well as $20 for expedited check delivery
and international USD transfers.

Editor's Rating:8/10

We recommend Melio for small businesses seeking user-friendly accounts payable tools that do not
need a lot of bells and whistles. It’s an excellent option for cloud-based software that will send
invoices and receive payments, as well as manage bills. Melio also integrates with QuickBooks for
free. There’s no charge to make payments through a bank transfer, but there is a 2.9 percent fee to
pay by credit or debit card. Two paper checks per month are free; after that, they are $1.50 each.

Melio is very easy to use, offering one of our favorite user experiences. Adding vendors is quick and
intuitive. Melio lets you enter a vendor’s information manually, upload a file with that date or snap a
photo of an invoice. You can invite both internal users and accountants to use the software and then
assign roles and permissions so you know who is accessing your information and what they are
doing with it. You can set approval controls for transactions, thus preventing you from overextending
yourself or having a cash flow issue because you paid a bill early.

ZarMoney: Best for Inventory Management

ZarMoney

 The ZarMoney website clearly lays out pricing, which starts at $15 per month for a single user.
 ZarMoney offers inventory management features typically only available in an ERP or a dedicated inventory
management platform.
 ZarMoney lacks a mobile app and tools for capturing expenses or receipt photos.

Editor's Rating:9/10
We chose ZarMoney as the best accounting software program for businesses seeking inventory
management features within their accounting tools. Organized by “entrepreneur,” “small business”
and “enterprise,” the pricing plans reflect each type of company’s needs. The cost is based on the
number of users, from one to more than 30. If you add or remove users, ZarMoney will automatically
update your account and charge you accordingly. Each additional user costs $10 per month.

In addition to the transparent pricing, ZarMoney’s powerful cloud-based software includes inventory
features unavailable with similarly priced competitors. You can manage inventory at multiple
locations, transfer inventory between locations in one click and manage barcodes. Plus, ZarMoney is
easy to use and is adaptable for small and larger businesses, with customization and dedicated
support and training for enterprise users. The software also offers a 15-day free trial so you can test it
out before you buy.

Plooto: Best for Accounts Payable

Plooto

 Plooto’s payment platform lets you manage payments, approvals and reconciliation from one central location.
 The software provides accounts payable and accounts receivable automation, which speedsup payments.
 International payment transactions are expensive.

Editor's Rating:9/10

Plooto is our software choice for automating accounts payable. With it, you can manage your
payments in one central location, providing you with a clear picture of your finances. Payments,
approvals and reconciliation are unified under one dashboard. The software includes smart approval
workflows and secure electronic payments, which reduce errors and speed up the accounts payable
process. Most notably, Plooto offers business accounts payable and accounts receivable automation,
which helps you collect on past-due bills.

You can use the same system to pay all vendors, even those located outside the U.S., as well as add
payees in seconds, either by searching Plooto’s network of 120,000 suppliers and vendors or by
adding them manually. Once a customer pays, the payment is automatically reconciled. You can pay
electronically or via check with the integrations, as well as make batch payments, search records and
set payment approvals.

Wave Financial: Best Free Accounting Software

Wave Financial

 Wave links with bank accounts and credit cards so that you can track expenses automatically.
 Wave gives you standard bookkeeping services for free.
 Wave’s integrations are more limited than some competitors.

Editor's Rating:8/10

If you’re looking for effective, free accounting software, check out Wave Financial. It offers many
important, high-quality accounting features at no cost to you. There are no monthly or annual fees,
nor do you have to license software. Through the cloud-based accounting program, you can create
and schedule recurring invoices and payments, as well as set up automatic payment reminders and
automatic syncing with your bank and credit card accounts. It also gives you the ability to run
financial reports, and it provides you with unlimited accountant connections and transactions. If you
want to integrate popular business apps, you can do so at no extra charge.

The only fees you’ll experience with Wave will come from selecting optional add-ons — for example,
payroll features — or accepting invoice payments. Wave charges a flat rate of 2.9 percent plus $0.60
per credit card transaction, though for AMEX transactions, that 2.9 percent becomes 3.4 percent.
Bank payments are 1 percent per transaction, with a $1 minimum fee. The company also has
additional payroll and bookkeeping services that business owners can access for a fee.

Sage: Best for Freelancers and Self-Employed

Sage

 Sage Accounting lets you create and send invoices, track payments and automatically reconcile bank entries.
 Both Sage Accounting pricing plans are among the least expensive accounting software packages we
reviewed.
 The software lacks tax calculation, filing and payment tools.

Editor's Rating:9/10

It is essential for self-employed entrepreneurs and freelancers to quickly and easily send invoices
and track payments. For this reason, Sage Accounting is our top choice for these types of small
businesses. With Sage, you will have an affordable way to keep the cash flowing into your business
without unnecessary delays. This accounting software offers well-priced tiered plans with which to
create and send invoices and track payments.

The program is fast and easy to set up, and the system is simple to navigate. Sage’s software
automates a lot of the accounting processes that are typically manual, such as posting expenses and
payments and sending invoices and reminders about past-due bills. The software also automatically
reconciles bank entries, saving you time and energy. If you need extra assistance, Sage’s customer
service is very accessible, which is good news for freelancers and self-employed people who don’t
have accounting expertise. Setup is also easy, with ample resources for getting started and
continuing thereafter.

Neat: Best for Receipt and Expense Tracking

Neat

 Neat is ideal for small businesses that handle a large stream of receipts.
 The software is easy to install and can be used immediately without extra training.
 Neat lacks bill-paying functions, and there is no customer service phone number.

Editor's Rating:7.5/10

As a small business owner, all you may want your accounting software to do is help you manage
your receipts and expenses. If so, Neat may be your best bet. This cloud-based tool enables you to
upload all of your business receipts with the mobile app and starts at $200 per year, which equates to
$16.66 per month. Once done, you can categorize each, keeping you well organized and on top of
your costs.

With Neat, you’ll have a good understanding of your cash flow and the ability to access interactive
charts and run accounting reports that will analyze the financial health of your business. All this can
reduce errors often associated with handwritten recording. It also takes the stress out of making sure
that you get the right deductions come tax time.

Accounting Software Costs

Accounting software helps business owners streamline billing and accounting, and it doesn’t have to
cost a lot of money. Most programs offer several plans to accommodate your needs and budget.

There are typically two types of pricing models for accounting software: perpetual licensing or a
recurring subscription. With a perpetual licensing model, you make a one-time payment for unlimited
access to the software. With a subscription pricing model, you pay a monthly or annual fee for access
to the software.

For subscription pricing, expect to pay anywhere from $8.50 per month for a basic starter plan to as
much as $350 per month for a more advanced service plan. Other factors, like the included features
and number of users, affect the monthly cost as well.

Tip

Some accounting software platforms set maximums on the number of users allowed, whereas others impose
no barriers. Depending on how many employees will use your software, no-limit plans may be more cost-
effective.

Regardless of the pricing model you select, watch out for hidden fees, which can include charges for
customization options, installation or setup services, integrations, and maintenance or support
services.

If your business is on a tight budget, consider free accounting software. Wave, for instance, offers
many of the accounting and invoicing features you would find in paid programs. Zoho Books also
offers a free plan for businesses with under $50,000 in annual revenue.

When you’re choosing accounting and billing software for your business, we strongly encourage you
to take advantage of any free trials to test out the solutions and see which one offers the features and
tools you need. Plus, spending time with the software beforehand will help you feel more confident in
your decision.

Accounting Software Features

Many aspects of accounting software make it a useful tool. If you’re a small business owner, it’s
important to know which features to look for. Most online accounting software offers accounts
receivable, accounts payable, banking and reporting features. Some programs include inventory
management, project management, time tracking and payroll tools.

Here are some of the core features to look for in accounting software:
Bank feed Accounting software connects with your bank so that all your banking transactions appear in your online ledger as well.

The best accounting software platforms feature organized, customizable dashboards with clear data visualization and organization
Dashboard
features.

Online invoicing You can create invoices and send them from entirely within most accounting software — no printing or mailing needed.

Often, accounting software platforms include automation features you can use to set the same invoice to send at the same time each
Recurring invoices
month.

Automatic payment
Many accounting software platforms regularly and automatically remind your customers or clients to pay outstanding invoices.
reminders

All accounting software should have no problem matching your bank transactions to invoices, bills, purchase orders, expenses and the
Bank reconciliation
like.

Financial reporting You can use accounting software to generate basic forms such as P&L statements or advanced business health reports.

Almost all accounting software platforms offer iOS and Android mobile apps — some of which include nearly all features available via
Mobile apps
browser or desktop.

Integrations The best accounting software platforms integrate with POS systems, payroll services, HR platforms, CRM software and more.

Many platforms include features for tracking your time spent per task or project, or they integrate with your third-party time-tracking
Tracking for billable hours
platform.

Inventory management Some accounting software includes tools for tracking your inventory, creating purchase orders and keeping your warehouses stocked.

Project-based billing With this feature, you can bill your clients based on your time spent per project or task and your hourly rates.

Support for multiple

Some accounting software platforms enable you to use the same set of tools for more than one business.
businesses
Bank Feed

This feature connects the software to your business bank and credit card accounts to receive a daily
update of your transactions. This saves time, as you will not have to upload transactions manually. It
also gives you a daily, rather than monthly, overview of your accounts. A real-time bank-feed feature
can assist with reconciliation, which allows you to make it a small daily task rather than a monthly
ordeal.

Dashboard

When you log in to your account, you’ll be greeted by a dashboard that shows you an overview of
your account activity and key metrics, such as cash flow, profit and loss, account balances,
expenses, accounts payable and receivable, and sales. Some accounting programs allow you to
customize what you see first by rearranging the information.

Online Invoicing

If your business sends invoices, the ability to email them and accept online payments helps you get
paid faster. Most accounting programs integrate with third-party payment processors; others require
you to use their in-house processing services. It’s a plus for accounting software to serve as an
invoice generator also.

Recurring Invoices

With this feature, you can schedule the system to automatically generate and send invoices for
recurring charges, such as subscriptions. You can choose how frequently invoices are sent — daily,
weekly, monthly or annually — and indicate whether there’s an end date to the billing.

Automatic Payment Reminders

This feature helps you remind customers about upcoming and past-due payments. Some have
sample email text that you can use as is or customize. You can then choose when you want the
reminders to be sent. Some programs give you the option to send thank-you emails to customers
after you receive their payments.

Bank Reconciliation

Smart reconciliation tools identify potential matches between your bank transactions and the bills and
invoices you’ve entered into the accounting software, saving you the hours it would otherwise take to
sift through your bank account for this information. You can then approve or deny the suggested
matches. The best applications suggest potential matches as you reconcile your accounts, and a few
include a reconciliation tool in their mobile apps.

Financial Reporting

Every accounting program can generate financial reports. But some are more basic than others, and
some require you to subscribe to a pricier plan for advanced reporting. If you need specific types of
financial reports, you’ll want to make sure they’re included in the software application and plan you
choose. Detailed reports can help you interpret your financial data to make informed business
decisions.

Mobile Apps

Not all accounting and invoicing programs have mobile apps, but the best ones do. There is,
however, quite a range in the capabilities of mobile apps. Some can only capture receipts for
expense tracking, some allow you to create and send invoices, and others have almost every feature
the web-based software does. It’s worth checking if the software you’re considering offers a mobile
app and, if so, what features are included in the app that will help you manage your business while
you’re away from the office.

Tip

The best accounting software mobile apps include all the features of the browser version, essentially
resembling this version scaled down to smartphone size.

Integrations

The ability to connect your accounting software to other business programs you use saves you
valuable time because you don’t have to manually transfer data from one system to another. Payroll,
payment processing, the best point-of-sale (POS) systems and the best customer relationship
management (CRM) software are just a few of the popular types of integrations that are available
with accounting software. Integration with systems you already use also cuts down on training time
for employees who will use the software.

Tracking for Billable Hours

If you’re a consultant or your business bills clients by the hour, you need accounting software that
allows you to track and bill your time or that integrates with the time-tracking program you already
use. This is an important feature for freelancers.

Inventory Management

If you have a retail, e-commerce or distribution business, you need an application that helps with
inventory tracking and purchase orders. You may need to subscribe to a top-tier plan to get this
feature, unless you use ZarMoney. If you need more advanced inventory features, look for software
that integrates with a dedicated inventory management system.

Project-Based Billing

Firms, freelancers and consultants who work with clients on projects or jobs should look for
accounting software that helps them track their projects’ tasks and budgets. The software should
allow you to invoice customers for tracked time and bill them for project expenses.

Support for Multiple Businesses

Several programs we evaluated let you add more than one business to your account, though some
companies charge extra for this convenience. Also, the types of accounting tools that are important to
you will depend on the specific needs of your business. For example, if you run a small freelance
business, project-based billing might be the most important feature on your list. Or, if you plan to do
some work on your mobile device, a full-featured mobile app might be at the top of your list.

Advantages of Business Accounting Software

Managing your finances is vital to the success of your business, and choosing the right accounting
software can make that much easier. You’ll reap a lot of benefits when you swap out pen and paper
or an Excel spreadsheet for accounting software. Here’s a look at a few of them:

Reduces Mistakes

Human error is by far the biggest cause of accounting and bookkeeping errors. Many accounting
professionals cite common mistakes such as spreadsheet errors and incorrect manual entries.
Accounting software can help cut down on these costly blunders by eliminating clunky spreadsheet
inputs and pulling data directly from third-party business apps.

Improves Organization

Small businesses can’t afford not to have their finances in order. Whether it’s time to pay the tax bill
or forecast for the next year, it can be difficult to get the information you need if you are not
organized. Accounting software helps you stay on top of your financial data. It organizes financial
information, stores it in one location and automates many time-consuming accounting processes,
which frees you up to focus on running your business.

Bolsters Internal Controls

Internal controls refer to the rules and procedures established by a company to ensure the integrity of
accounting and bookkeeping processes. Accounting software increases the reliability of your
measures to help prevent and detect fraud. This can significantly reduce the risk of loss and theft
from your business.

Doesn’t Break the Bank

Thanks to cloud-based offerings, the price of accounting software has come down a lot over the
years. Today, small business owners have a lot of choice: Accounting software costs range from free
to $350 per month. The size of your business and your accounting needs dictate how much you pay.
But if that monthly cost means you’ll optimize cash flow, meet tax obligations and identify growth
opportunities, it’s probably worthwhile.

Ensures Tax Compliance

Calculating and paying taxes is an essential part of running a business, but it is also complex and
often involves a lot of tedious paperwork. Accounting software can help you manage this task. Many
accounting software providers have designed programs that calculate sales tax, prepare tax forms,
and even file taxes with no intervention on your part, which can save you time and hassle. Reporting
features can also keep you compliant with tax authorities, which increasingly require real-time
reporting. AI technology increasingly enables businesses to upload their profits and losses in real
time. This is especially important in an era when businesses deal with tax requirements not only in
their own countries, but around the world. Fines and punishments for non-compliance can be
incredibly burdensome for business owners.

Tip

There are many tax deductions your business can and can’t take. Accounting software can help you navigate
this tricky maze.
Business Accounting Software FAQs
How does accounting software work?
Which small business accounting system is best?
What do you need from your accounting software?
Do you need online bookkeeping software instead of accounting software?
Should your accounting software also act as an invoice generator?
What does an online accounting service do?
How much should a small business plan expect to pay for accounting software?
Should small businesses look for certain accounting software attributes?
Why should my business consider changing accounting software vendors?
What business processes have been automated with accounting software?
Accounting Software Trends in 2023

In 2020, the global accounting software market reached a value of $11.9 billion, according to data
from Allied Market Research. This figure reflects the sector’s steady growth throughout the 21st
century. By 2030, the market is expected to reach a value of $70.2 billion, a compound annual growth
rate of 19.6 percent across the decade.

The gradual — and nearly complete — shift away from desktop software toward cloud-based
platforms likely explains this change. Prior to the growth of cloud-based technology, accounting
software existed solely on one’s computer, with few to no connections with other technologies. This
imposed limitations on bank connections and 24/7 access, two major issues that cloud-based
technology has solved. Plus, cloud-based technology has fueled the growth of accounting software
mobile apps, which are a major asset for any small business.

Artificial intelligence is also set to drive continued growth in the accounting software sector. This
technology is powering automation tools that streamline key accounting processes, minimizing
tedious work among finance teams. It’s also behind the early stages of obtaining support from a live
chat tool, making customer service easier to provide for vendors as well.

Accounting software is also expected to change based on new GAAP updates that the Financial
Accounting Standards Board (FASB) regularly issues. The FASB issues roughly a dozen updates per
year, and though only some of those affect small business accounting, it’s still smart to track them. If
you see any that affect small businesses, expect your accounting software vendor to update the
platform accordingly. If not, you can contact the vendor and request a change or seek new vendors
that more strongly prioritize GAAP compliance.

Acquisitions and mergers within the accounting sector may also shape the software field. Accounting
software companies, though, rarely merge or acquire one another — instead, accounting firm
acquisitions can drive trends in the space.

For example, in September 2021, the prominent tax advisory firm Baker Tilly acquired a company
called AcctTwo Shared Services. The latter was known for its focus on proprietary cloud-based
accounting solutions built from Sage software, and Baker Tilly now offers this service instead. Baker
Tilly clients may therefore be more likely to choose Sage accounting software, driving usage trends in
the accounting software sector.

Max Freedman
Contributing Writer at businessnewsdaily.com
Max Freedman is a content writer who has written hundreds of articles about small business strategy and
operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding,
and content marketing. In addition to covering these business fundamentals, Max also writes about improving
company culture, optimizing business social media pages, and choosing appropriate organizational structures for
small businesses.