The Best Business Accounting Software Services of 2024

Make Xero your own by connecting other apps to the Xero accounting software. Each province in Canada has a different threshold for when a business owner is required to pay taxes by quarterly instalments, instead of as a lump sum at the end of the year. Like Xero and QuickBooks, Sage Business Accounting’s reports are user friendly and very easy to read. Its business trend reports are particularly useful—they compare your business’s current health with its past growth and future goals so you can keep your business on track for success. And while Zoho Books does a great job of tackling all things invoice, you’ll get an even better deal by adding Zoho Invoice to your Zoho Books plan. Zoho Invoice is completely free for life, so whether you end up trying Zoho Books or not, we definitely recommend giving Zoho Invoice a look.

Accounts receivable

Centuries ago, businesses would record their financial transactions in a physical book called the general ledger (GL). Smart reconciliation tools identify potential matches between your bank transactions and the invoices you’ve entered into the accounting software. This saves you the time it would otherwise take to sift through your bank account for this information. The best applications suggest potential matches as you reconcile your accounts, and a few include a reconciliation tool in their mobile apps. I still love my clunky, manual, self-designed spreadsheets for tracking my small business finances, and maybe you do, too. But this year, I’m going to think seriously about signing up for accounting software.

How Do You Keep Books for a Small Business?

With a cash account system, you’ll record transactions anytime cash changes hands. An accrual accounting system records transactions, like sales, immediately, even if money isn’t exchanged until later. As your company grows, you’ll probably want to move towards accrual accounting, but it’s not a necessity when starting a business.

The LIFO Accounting Method

• A disadvantage is that you may not always know what funds you have on hand, and you might not have the necessary funds if you have many outstanding invoices.
• For full-time bookkeepers, the average annual salary sits around $77,000, according to Glassdoor.
• Bookkeeping programs that incorporate graphs, charts, and other visual aids make it easier to increase data precision and improve communication when you’re wooing investors.
• The tips below are industry standards that will help any small business excel at bookkeeping.
• Bookkeepers will usually prepare relevant records and tax documents, and then forward this information to an accountant, who will then prepare the actual tax return.

Not all accounting and invoicing programs have mobile apps, but the best ones do. 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 will help you manage your business while you’re away from the office. This feature connects the software to your business bank and credit card accounts to provide 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.

Bookkeeping vs. Accounting

• The single-entry bookkeeping method is often preferred for sole proprietors, small startups, and companies with unfussy or minimal transaction activity.
• And the only way to know that for sure is to have accurate, up-to-date books.
• Accrual accounting provides a more accurate picture of a business’s financial health than cash accounting, as it considers all of the financial transactions for a given period.
• These days, you’ve got three options when it comes to bookkeeping tools.

For example, if you run a small freelance business, project-based billing might be the most important feature. 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. Our favorite features in our test of Xero included its tools for bill pay management, its customizable dashboard and its bookkeeping features. The best accounting software makes managing your books easy, with precision accuracy and efficient automation. Transactions will appear in your bookkeeping automatically, and you’ll say goodbye to manual receipt entry.

Should I do bookkeeping myself or hire a bookkeeper?

Online bookkeeping services typically give you a dedicated bookkeeper or team of financial experts to help you with basic bookkeeping tasks. A bookkeeper’s main responsibility is maintaining accurate financial records. Scrambling at the last second to gather documents for tax season is stressful, and rushing bookkeeping-related tasks can make you vulnerable to compliance issues and missed growth opportunities. Thankfully, online bookkeeping services have lowered the financial barrier to getting bookkeeping and tax-related help. It will be even easier to keep your records organized, stay on top of time management, send out invoices and more in a cloud-based accounting software like QuickBooks Online.

Have an eye on the big picture so you can make better business decisions. Our robust small business accounting reports are easy to use and show month-to-month or year-to-year comparisons so you can easily identify cash flow trends. You want the product to allow room for your business to grow, but you don’t want to spend a small business bookkeeping lot of extra money on features you may never need. Most of the accounting services we reviewed are available in multiple versions, so you can start at the low end and upgrade to a more powerful edition that looks and works similarly. Reports are your reward for keeping up with your daily accounting and doing it correctly.

That way, you know where your money is coming from and where it’s going. Every accounting solution guesses how at least some transactions should be categorized. Diligent categorization gives you more accurate reports and income tax returns. At the end of the day, only you can determine which of these services, if any, will meet your bookkeeping needs. Additionally, Merritt includes automatic bank statement retrieval, issues 1099 forms, and provides financial reports. Merritt will also work directly with your certified public accountant (CPA) to get the reports they require during tax season.

Keep a separate bank account for your personal and your business expenses. If you’re a solopreneur or independent contractor, chances are you’re responsible for everything, including the accounting. To avoid confusion during tax season, set up a separate bank account for your business. By tracking your business expenses, you can increase profit margins and optimize your income tax return. Instead of calculating expenses every two weeks for payroll processing, you can keep records of the everyday business expenses. Bookkeeping is the process of tracking your business’s financial transactions—including income and expenses—on a regular basis.