Bookkeeping software for small business
Accounting is a complex but essential part of running a business. Without proper financial oversight, businesses risk serious issues, including problems with the IRS and state tax agencies. Errors in recording transactions can lead to financial instability and potential penalties. Accounting software simplifies bookkeeping, reduces mistakes, and helps you keep the records you need for invoicing, expenses, and tax filing.
An overview of bookkeeping software
Which accounting software is right for you? Our overview table compares all featured programs and their key features side by side. All information is up to date as of October 2026.
| Software | Price | CRM | Inventory | Payroll | Cloud | Mobile app |
|---|---|---|---|---|---|---|
| QuickBooks Online | $$ | – | (✓) | (✓) | ✓ | ✓ |
| Xero | $$ | – | (✓) | (✓) | ✓ | ✓ |
| FreshBooks | $ | ✓ | – | (✓) | ✓ | ✓ |
| Zoho Books | $ (free plan) | (✓) | (✓) | (✓) | ✓ | ✓ |
| Wave | $ (free plan) | – | – | (✓) | ✓ | ✓ |
| Kashoo | $$ | – | ✓ | – | ✓ | – |
| TrulySmall | $ | – | – | – | ✓ | – |
| Odoo | free plan (one app); paid plans per user | – | (✓) | – | ✓ | – |
| Sage 50 | – | – | ✓ | – | ✓ | – |
✓ = listed by the provider, (✓) = only in certain plans, as a paid add-on, through an integration, or as a separate app, – = not confirmed on the provider’s website. Prices refer to the cheapest paid plan per month (list price, excluding tax, without promotions): $ = up to USD 25, $$ = USD 25–60, $$$ = over USD 60. Odoo’s paid plans are priced in euros only, so no tier is given. Some providers also offer a free plan or a trial period. Prices and plan contents change, so check them on the provider’s website. The price tiers are only a rough guide: they are based on list prices at the time of writing and may differ depending on billing period, number of users or tax, so please check the provider’s current offer.
Legal basics for small businesses in the U.S.
Which rules apply to you depends on your state, your business structure, and whether you have employees. The following overview covers the points that matter most when choosing bookkeeping software.
- Sales tax: In South Dakota v. Wayfair, Inc. (2018), the Supreme Court ruled that a state may require out-of-state sellers to collect its sales tax even if they have no physical presence in the state. States now set “economic nexus” thresholds, which vary by state. Examples from the states’ tax agencies: Texas, total revenue of $500,000 or more in the preceding twelve calendar months; California, total sales for delivery in California of more than $500,000 in the preceding or current calendar year; New York, gross receipts of more than $500,000 from sales delivered in the state and more than 100 such sales in the preceding four sales tax quarters; South Dakota, gross revenue from sales into the state of more than $100,000. Check the rules of each state you sell to. In some states, for example California, marketplace facilitators collect and remit sales tax on behalf of marketplace sellers.
- Payroll and contractors: Employees receive Form W-2; for 2026, the IRS due date for furnishing W-2s to employees and filing them with the SSA is February 1, 2027. For independent contractors, you generally report payments of $2,000 or more made in 2026 on Form 1099-NEC (or 1099-MISC), and Form 1099-NEC is due January 31. Payment platforms report on Form 1099-K only if gross payments exceed $20,000 and there are more than 200 transactions.
- GAAP: U.S. GAAP is set by the Financial Accounting Standards Board (FASB), and the SEC recognizes FASB standards as generally accepted for public companies. Many private companies also prepare GAAP financial statements for their lenders and investors. Whether you need GAAP financial statements depends on who requires them, so ask your CPA.
- Accounting method: Small businesses commonly use the cash or the accrual method for tax purposes. According to the IRS (Rev. Proc. 2025-32), the cash method is generally available to a corporation or partnership whose average annual gross receipts for the prior three tax years do not exceed $32 million for tax years beginning in 2026.
- Record retention: The IRS recommends keeping records for 3 years in general, 6 years if you did not report income that is more than 25% of the gross income shown on your return, and 7 years if you claim a loss from worthless securities or a bad debt deduction. Keep employment tax records for at least 4 years.
This overview does not replace individual advice. Please consult a CPA or tax professional about your specific situation.
What to consider when choosing bookkeeping software
There are different types of accounting software. Some are available as downloads and installed locally, while others run as online accounting solutions in the cloud. Cloud-based software allows access from anywhere with just a browser and an internet connection.
To effectively support your business, accounting software should include these essential features:
- Expense and receipt management: The software should allow you to easily upload, scan, and categorize receipts for accurate expense tracking.
- Bank integration: To efficiently manage finances, the software should connect with your business bank account and support automatic bank feeds.
- Invoicing and payments: A good accounting tool lets you create professional invoices, send payment reminders, and integrate with payment processors such as PayPal, Stripe, or Square.
- Sales tax: Since sales tax varies by state and local jurisdiction, check whether the software calculates it automatically or works with a sales tax tool.
- Inventory management: If you sell physical products, look for software with inventory tracking features. Some providers include this only in higher-priced plans or through add-ons.
- Payroll and contractor payments: If you have employees or work with contractors, check whether the software supports payroll (often as a paid add-on) and whether it helps you prepare Forms W-2 and 1099.
- Reports and accountant access: Look for financial reports and the option to give your CPA access to your books.
If your accounting software includes these functions, it will help you manage your business finances efficiently.
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Here are eight bookkeeping software options for small businesses
With so many different offers available, it can be quite daunting trying to choose the right bookkeeping software for your company. We have narrowed it down to eight options to make your decision a little easier.
QuickBooks Online
QuickBooks Online is cloud-based accounting software from Intuit. It offers four plans: Simple Start, Essentials, Plus, and Advanced, with a limit of 1, 3, 5, and 25 users respectively. New customers can try it free for 30 days. According to the provider, inventory tracking is available in the Plus and Advanced plans, payroll can be added as an optional paid service, and a mobile app is available for Android and iOS. Because the number of users per plan is limited, growing teams may need to move to a higher plan.
| Advantages | Disadvantages |
|---|---|
| ✓ Free 30-day trial | ✗ Number of users limited per plan |
| ✓ Mobile app for Android and iOS | ✗ Inventory tracking only in higher plans |
| ✓ Payroll available as an add-on | ✗ Payroll costs extra |
| ✓ Cloud-based |
Xero
Xero offers cloud-based accounting software for small businesses. It has three plans, Early, Growing, and Established, which are billed monthly. The Early plan is limited to 20 invoices and 5 bills per month, so businesses with more transactions will need a higher plan. According to the provider, Xero includes invoicing, bank reconciliation, and a mobile app, and it offers an app store with integrations for third-party applications. Payroll is an optional add-on, and inventory management (Inventory Plus) is an add-on for the Growing and Established plans, not the Early plan.
| Advantages | Disadvantages |
|---|---|
| ✓ Three plans for different business sizes | ✗ Early plan limited to 20 invoices and 5 bills per month |
| ✓ Mobile app | ✗ Monthly billing only |
| ✓ Integrations via the Xero app store | |
| ✓ Cloud-based |
FreshBooks
FreshBooks is cloud-based accounting software designed for freelancers and small businesses, with features such as invoicing, expense tracking, time tracking, and client management. The Lite plan supports up to 5 billable clients, Plus up to 50, and Premium an unlimited number. You can try FreshBooks free for 30 days. Additional team members cost extra, and payroll is available as a paid add-on. FreshBooks also offers a mobile app for iOS and Android.
| Advantages | Disadvantages |
|---|---|
| ✓ 30-day free trial | ✗ Lite plan limited to 5 billable clients |
| ✓ Client management and time tracking | ✗ Extra cost for each additional team member |
| ✓ Mobile app for iOS and Android | ✗ Payroll costs extra |
| ✓ Cloud-based |
Zoho Books
Zoho Books is cloud-based accounting software from Zoho. There is a free plan for businesses with annual revenue under $50,000, as well as paid plans: Standard, Professional, Premium, Elite, and Ultimate. Paid plans can be tried free for 14 days. According to the provider, Zoho Books offers inventory management (from the Professional plan), an integration with Zoho CRM, and a mobile app for iOS and Android. Payroll is not part of Zoho Books itself but is offered as a separate product, Zoho Payroll.
| Advantages | Disadvantages |
|---|---|
| ✓ Free plan for revenue under $50,000 | ✗ Inventory management only from the Professional plan |
| ✓ Free 14-day trial for paid plans | ✗ Payroll only through the separate Zoho Payroll product |
| ✓ Mobile app for iOS and Android | ✗ Free plan limited to one user plus one accountant |
| ✓ Cloud-based |
Wave
Wave offers cloud-based accounting software for small businesses and freelancers. The Starter plan is free and includes unlimited invoices, estimates, bills, and bookkeeping records, plus access to the mobile app. The Pro plan adds features such as automatic import of bank transactions, receipt capture, and automated late payment reminders. Accepting card payments through Wave carries per-transaction fees (see provider). Payroll is a paid add-on offered in the U.S. and Canada. Inventory management and CRM were not found among the features Wave lists, so check whether it fits if you need them.
| Advantages | Disadvantages |
|---|---|
| ✓ Free Starter plan | ✗ Payments and payroll cost extra |
| ✓ Mobile app | ✗ Bank transaction import and receipt capture only in the Pro plan |
| ✓ Unlimited invoices in the free plan | ✗ Inventory management and CRM not listed |
| ✓ Cloud-based |
Kashoo / TrulySmall
Kashoo is cloud-based accounting software for small businesses and the self-employed. According to the provider, it includes bank transaction import, invoicing, payment collection, expense tracking, sales tax tracking, and inventory tracking. Kashoo has a single paid plan, and you can try it free for 14 days. The same company also offers a newer platform, TrulySmall, which focuses on automation, for example automatic transaction posting and receipt scanning. TrulySmall is a responsive web application, so it works in the browser on any device. According to the provider, it offers the plans Invoices, Solo, Growth and Pro, with a free trial on the plans from Solo upwards. In the overview table, Kashoo is shown at its monthly price and TrulySmall at the price of its accounting plan Solo (annual price converted to a monthly amount).
| Advantages | Disadvantages |
|---|---|
| ✓ 14-day free trial | ✗ No dedicated mobile app confirmed |
| ✓ Inventory tracking | ✗ No U.S. payroll option confirmed |
| ✓ Automation with TrulySmall | ✗ Two platforms from the same company can be confusing |
| ✓ Cloud-based |
Odoo
Odoo is a modular business software suite. It offers a free plan with one app, for example the accounting app, and paid Standard and Custom plans priced per user. The provider’s pricing page shows prices in euros only, so no price tier is given here. According to the provider, the accounting app supports automatic bank synchronization and AI-based invoice recognition, and other apps, such as inventory, can be added. Odoo is available as a cloud service (Odoo Online) or self-hosted. Because each additional app and user can increase the cost, check your total price before committing.
| Advantages | Disadvantages |
|---|---|
| ✓ Free plan with one app | ✗ Costs grow with additional apps and users |
| ✓ Modular: further apps such as inventory can be added | ✗ Costs depend on the apps and users you choose |
| ✓ Cloud or self-hosted |
Sage 50
Sage Business Cloud Accounting was retired in the U.S.: according to Sage, it was retired as of December 31, 2024, and support and access ended on January 31, 2025. For small businesses, Sage points to Sage 50, accounting software that Sage describes as cloud-based, offered by Sage. According to Sage, Sage 50 is cloud-based, includes inventory management and a free trial, and is offered in several plans (the entry plan, Pro Accounting, covers one user); it can be billed monthly or annually. Please check current plans and pricing with the provider.
Our article comparing accounting apps might also be of interest to you. For capturing and managing receipts and expense reports, apps such as Expensify can be a useful companion, but they are not bookkeeping software.
Frequently asked questions about bookkeeping software
The following answers summarize the key points of this comparison (as of October 2026).
What should I look for when choosing bookkeeping software?
Look at the features you really need, such as invoicing, bank feeds, sales tax, inventory, payroll, and accountant access, and at which plan includes them. Also check user limits and invoice limits. The overview table at the beginning of the article shows these points for all featured programs.
How much does bookkeeping software cost?
Prices range from free plans with limited features to well over USD 60 per month for larger plans. In this article, the price scale refers to the cheapest paid plan per month at list price, excluding tax. Prices and plan contents change regularly, so check them on the provider’s website.
Do I have to use GAAP as a small business?
GAAP is set by the FASB, and the SEC recognizes FASB standards as generally accepted for public companies. Many private companies also prepare GAAP financial statements for their lenders and investors. Whether you need them depends on who requires them, so ask your CPA.
Do I have to collect sales tax if I sell online to other states?
Possibly. In South Dakota v. Wayfair, Inc. (2018), the Supreme Court ruled that a state may require out-of-state sellers to collect its sales tax even without a physical presence in the state. Each state sets its own economic nexus threshold, for example $500,000 in Texas or $100,000 in South Dakota. If you sell through a marketplace such as Amazon or Etsy, the marketplace may collect and remit the tax in some states, for example California. Check the rules of each state you sell to.
When do I have to send a 1099 to contractors?
For payments made in 2026, the reporting threshold for Forms 1099-NEC and 1099-MISC is $2,000, and Form 1099-NEC is due January 31. For 2026, Forms W-2 are due to employees and the SSA on February 1, 2027. Form 1099-K is issued by payment platforms only if gross payments exceed $20,000 and there are more than 200 transactions.
How long should I keep my business records?
According to the IRS, 3 years in general, 6 years if you did not report income that is more than 25% of the gross income shown on your return, and 7 years if you claim a loss from worthless securities or a bad debt deduction. Employment tax records should be kept for at least 4 years.
Please note the legal disclaimer for this article.
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