Best Accounting Software: Keeping Your Own Books Online in 2020
Cloud-based accounting software allows small businesses and non-accountants to manage their own books easily. It can save money — doing the books yourself means that you don’t have to pay a bookkeeper or accountant — and keeps your information up-to-date and accessible on the go. We cover those and other reasons to do your books in the cloud in the linked article.
Once you’ve decided that it’s the right choice for your business, you’ll still have to find the best accounting software to meet your needs. That will depend on your industry and how you want to use the program.
A service or project-based business needs to pass expenses on to clients and charge hourly rates for projects. If your business carries a lot of inventory, though, integrated tracking and management is a big plus. A feature needed by one company might never be touched by another.
We’ve broken out the most common features users look for in accounting software, and chosen the best program for each feature to help you make an informed decision.
After deciding on your priorities, you can choose the best the best accounting software option from our list. We want to make the process of picking it as easy as it is to use cloud-based accounting software.
Features
| Features: | QuickBooks Online | FreshBooks | Wave | Xero | Zoho Books | Free Agent | Sage | OneUp |
|---|---|---|---|---|---|---|---|---|
| Recurring Invoices | ||||||||
| Recurring Bills | ||||||||
| Integrated payment processing | ||||||||
| Mobile App | ||||||||
| Projects | ||||||||
| Time Tracking | ||||||||
| Payroll | (UK only) | |||||||
| Inventory | ||||||||
| Fixed Assets |
Best Invoicing Software
One of the primary purposes of accounting software is invoicing customers. Sending invoices through email, with a link to pay, saves you mailing costs. A program that tracks invoices helps you stay on top of past due receivables and collect on monies owed. Picking the right one for you will help your business stay profitable.
A good invoice has fields such as payment terms, a due date, the quantity of an item or hours billed, discounts or taxes and a place to leave notes for the customer. Not all standard invoices in the major accounting programs have those.
Xero’s invoices don’t include terms, such as Net 30, or discount options, Sage’s terms have to be put in manually and there’s no place to add notes to customers on Wave’s invoices. None of those are deal-breakers, but they should be taken into account, especially if you frequently offer terms to customers.
Customizing Invoices
Customizing invoices allows you to change the fonts, colors and fields, as well as add logos. Customization options vary. Some programs, such as FreshBooks and FreeAgent, let you pick from a selection of templates, then restrict you to making aesthetic changes. Others, such as Zoho Books, have you upload an invoice template and map it to their fields.
QuickBooks Online requires you to take several steps through the settings menu and “custom form styles” to make simple alterations, such as changing the color or font (read more in our QuickBooks Online review). Though you can modify data fields, the wide array of options might be confusing to first-time users of accounting software.
You’ll see the standard fields, as well as the option to email, on QuickBooks Online’s invoice form. Both QuickBooks Online and FreshBooks let you email the invoice to your customer directly. Our FreshBooks vs. QuickBooks Online comparison provides an in-depth look at the programs’ similarities and differences.
If you want to collect deposits on projects, FreshBooks’s invoices have that functionality.
OneUp gives you the standard payment terms, such as Net 10 or Net 30, as well as the option to split payments into installments.
FreshBooks, QuickBooks Online, Sage and Zoho Books allow you to pull hours worked on a project into a customer invoice. With Zoho Books, you can even send the time to a client for their approval before invoicing them.
Xero just rolled out projects, but you can’t bill for hours worked. That won’t be a deal-breaker for an inventory-based business, but could matter a lot to yours.
Recurring Invoices
Setting up recurring bills lets you automate billing customers who you charge regularly. Your accounting program will send the invoice at a specified interval. Many services will even send automatic payment reminders. For some businesses, that alone is reason enough to do their books in the cloud.
FreshBooks has one of the best recurring billing functions, as we detail in our FreshBooks review. The option to “make recurring” appears on every invoice you enter and as a screen after completing one. You can select the frequency and pause it if, for example, a customer temporarily suspends service.
Though Wave also has an easy-to-use recurring billing feature, it doesn’t add late fees automatically like FreshBooks does. You have to reopen the invoice and add them as a line item. For a complete comparison of the two programs, read our FreshBooks vs Wave article.
QuickBooks Online lets you set up recurring invoices, but it’s a laborious process. Instead of giving you the “make recurring” options after entering an invoice, as FreshBooks does, it makes you navigate to the bank register. Once there, you have to find the transaction that you want to make recurring and select “memorize.”
Recurring invoices in FreshBooks and QuickBooks Online contain links that customers can click to pay their bills. FreshBooks also lets customers choose to keep a credit card on file and have their bill paid automatically.
Xero, Wave and Brightbook give users the ability to send recurring invoices, but aren’t as easy to use as FreshBooks and have fewer options. OneUp and Sage have no way to set up recurring invoices, so if your business is structured around monthly services and flat fees, they won’t be the best choice.
Collecting Aged Receivables
Monitoring past due receivables impacts your cash flow. Dashboards that present the amounts customers owe and how long it’s past due are a great tool for businesses that struggle with cash flow issues. Accounts aging reports break out amounts past due by the length of time you’ve been owed the money.
All the major accounting software programs present some version of your business’s past due receivables on their main dashboards. Some, such as FreshBooks and QuickBooks Online, show a bar which runs from left to right across the screen, moving further right as you’re owed more money. Wave also scores well with a nice clear dashboard.
Wave shows overdue invoices as a total dollar amount in a box on the screen’s left, while Sage displays the number further down the screen (read our Sage review). We prefer a dashboard that presents the total amounts past due as a graphic and as a numerical figure for people who take in information in different ways. QuickBooks Online accomplishes that.
FreshBooks, QuickBooks Online and Wave will send automatic payment reminders on past due invoices. There are different date options, from sending a reminder at one week to one month, but only FreshBooks customizes reminders by customer. If you pick “seven days” for a reminder in QuickBooks Online, all customers will be reminded to pay within seven days.
Up until this point, FreshBooks might have been the winner in this category. Unfortunately, though its designers paid great attention to streamlining and simplifying the invoicing process, its reports are lacking. It provides one report related to invoicing: accounts aging. It can’t be customized, nor can you drill in on the data. Wave’s reports are just as simple.
QuickBooks Online’s reports have the most customizable options. In addition to changing the date range, you can change account groupings, displays and drill down on data. It gives users seven reports related to invoices: accounts aging, collections, balances due by customer, a list of invoices and a list of statements, open invoices and invoices and received payments.
If you have customers who make partial payments, the invoices and received payments reports will be helpful. Tracking balances due by customer helps identify problem customers. The collections report summarizes the success of your efforts to collect on past due amounts.
Xero also calculates many invoice and customer reports for users and gives them a lot of customization options. Read more in our Xero review. QuickBooks Online almost has too many options, which could be overwhelming for smaller businesses that are new to doing their own books. Xero could be a good option if you want to monitor receivables closely.
For invoicing and invoice functions, FreshBooks is the winner. If reports are included in the analysis, QuickBooks Online wins.
Best for Paying Bills
After checking out invoicing and collecting on monies owed, many small business owners look into cloud-based accounting software to help them manage their bills. Staying on good terms with vendors and creditors is important to a business’s long-term success. Though there are fewer options when paying bills, there are differences between the programs.
It’s hard to find where to input a new bill in QuickBooks Online. After navigating to the “expenses” screen, you’ll find it under “new transactions.” User-friendliness, particularly for newcomers, is lacking in the software.
Paying Bills Via Accounting Software
Once you’ve input bills in QuickBooks Online, you can print them as a batch or pay them online in a batch. Paying multiple bills at once is a nice time-saving feature. Expenses are shown in a pie chart on the main dashboard next to revenues. Every time you log in, you’ll see a record of past payments.
FreshBooks bill payment lets you mark an expense as billable and add a markup, which is useful for businesses that frequently pass expenses to customers. If needed, you can also attach a receipt as proof. Bills display in a pie chart on the main dashboard, telling you where you’re spending your money.
Xero’s dashboard displays more information, with upcoming bills, bills waiting for approval, payments and overdue bills all shown when you log in. We like having a comprehensive view of bill payment activity. In addition, bills will add taxes and you can code multiple line items on one bill to different accounts.
Unfortunately, Xero’s bill payments have one significant drawback. All payments, whether by ACH, check or credit card, must be manually recorded. Unlike with QuickBooks Online, they won’t be matched automatically.
Zoho Books is one of the few programs that lets you record mileage in expenses. After you tell it whether to record in miles or kilometers, and provide a mileage rate, it will calculate totals owed. It also has the ability to bulk add expenses, which will save time if you’re paying many bills at once.
OneUp has the standard bill paying options and one unique feature. If your business is planning a big project, you can input multiple vendor quotes for comparison. They’ll be shown side by side, but there’s no way to filter or sort them.
Sage’s bill form doesn’t let you put taxes paid on a separate line item to track it for accurate expense reporting. Bills can’t be paid through it, nor will it send a reminder when a bill is due. For those reasons, we can’t recommend it for paying bills.
For a free program, Wave does a good job keeping up with the features offered by competitors. Though you can’t add taxes to bills, the filtering and sorting of past transactions in order to analyze cash outflows is better than it is with QuickBooks Online. It will also pull in expenses from synced bank accounts. Read our Wave review for more information.
Recurring Bills
Every online accounting program will give you the ability to pay bills, but not all of them include recurring billing. A recurring bill is one that comes on an established time frame, usually monthly, and is always the same amount. Common examples are rent and utilities.
It saves time to set up recurring payments on those bills. Recurring billing also ensures that important bills get paid, even if your bookkeeper calls in sick or someone forgets to put the check in the mail.
OneUp, Sage and Wave don’t offer recurring billing.
In FreeAgent, the process to set up a recurring bill is there, but it’s only possible at the end of inputting a bill. You can’t indicate that you want a bill to recur at the beginning, nor can you go back and make a previously entered bill recurring after it has been saved. We cover that in more detail in our FreeAgent review.
Setting up recurring bills in QuickBooks Online follows similar steps to setting up recurring invoices. You have to go to the main register, click a previous payment to a vendor and select “memorize.” The process is less than ideal, mainly because the only way to set up a recurring bill is if you’ve already made a payment to someone.
Zoho Books’s process is also laborious. You can select the “make recurring” option after inputting an expense, but if you haven’t paid a bill to that vendor yet, you will have to go to “settings” and set up an automated workflow. For those reasons, neither QuickBooks Online nor Zoho Books came out on top in this category.
It’s easy to find and set up a recurring bill in Xero. Under “new” on the dashboard, you’ll see “recurring bill.” It’s also an option after you’ve entered a new bill. We appreciate the straightforwardness after QuickBooks Online’s unintuitive process.
When you begin inputting a new expense in FreshBooks, “make recurring” appears to the right. Our FreshBooks vs. Xero review dives deeper into a comparison of the two software programs.
Overall, we prefer how easy it is to find and input recurring bills in Xero, as well as its ability to track mileage and more detailed dashboard.
Though recurring billing is unlikely to be the deciding factor in selecting a cloud-based accounting service for your business if you’re having a hard time choosing between programs, it could tip you in favor of one.
That said, if you insist on being able to pay bills through the accounting software, FreshBooks and QuickBooks Online are tied for first here.
Best Integrated Payment Processing
The easier it is for customers to pay your invoice, the less difficulty you’ll have collecting. Several of the cloud-based accounting software providers have integrated payment processing. That means customers can click on a link in your invoice and pay or keep a credit card on file and set up auto-payments.
Businesses that also struggle with collecting on invoices should consider making it as easy as possible for customers to pay. You will want to estimate the cost of payment processing fees and assess how they will impact your business before selecting an accounting program, though.
QuickBooks Online and FreshBooks have integrated payment processing. Though they take a percentage of each transaction, plus a per-transaction fee, customers typically appreciate the convenience of paying through an embedded link in your invoice. FreshBooks charges 2.9 percent plus 30 cents and QuickBooks Online charges 2.4 or 2.9 percent plus 25 cents.
FreshBooks is the only program that offers the ability to store customer credit cards on file. It gives customers the option to sign up for auto-billing, too. If your business charges regular fees for its services, that would be a great feature to have.
For payment processing in Xero, OneUp, Sage and Zoho Books, you have to sign up for a third-party app. Wave works with billpay.com, which requires customers to set up another account or go to another website to pay. If you have a lot of customers who like to pay their invoices by credit card, you might want to stick with a program that integrates payment.
FreshBooks wins in this category if you need to bill regularly and want to keep credit cards on file. That said, it charges a much higher percentage for American Express payments than QuickBooks Online does. If you don’t need to auto-bill customers, we recommend QuickBooks Online.
Best Integrated Project Management
Business owners looking for accounting software might not know that some programs include projects capabilities. Though they usually don’t offer the full features of the best project management software, it can help to have accounting as part of the package. If you’re looking for a task management program that has accounting features, check out our Mavenlink review.
FreshBooks and OneUp have two of the best projects options. FreshBooks creates a collaborative environment in which you can invite employees, outside contacts and clients to contribute and share folders. Within a project, you can manage tasks, assign due dates and bill different hourly rates for different tasks.
In OneUp, the “projects” function is hidden in the “sales” menu, but, once you find it, you get many of the same features as you do in FreshBooks. After creating a project, you can assign tasks with due dates, which service account to bill and a customer contact for questions. Invoices and expenses can be linked to a project for better tracking.
OneUp also has what it calls “opportunity tasks” for a project and a log of phone calls made, which are automatically categorized as non-billable. That is a helpful feature if you don’t want to bother classifying tasks as billable or non-billable after they’ve been input. Read our full OneUp review for the details.
FreeAgent’s doesn’t differentiate itself in its projects offerings from FreshBooks or OneUp. Accounting-related activity and tasks can be pulled into a project. It is possible to set projects up as fixed price or hourly billing. You can also add generic notes.
As usual with QuickBooks Online, enabling the “projects” function requires unnecessary steps through the settings menu instead of just having it turned on when you log in. The service is less user-friendly than others, particularly for users new to online accounting.
Unlike those in FreshBooks and OneUp, QuickBooks Online’s projects only lets you track and assign accounting-related items to a project. It can’t share files, invite other users to contribute or set up project tasks, due dates or milestones. For that reason, we don’t consider QuickBooks Online’s implementation a true “projects” function.
FreshBooks and FreeAgent don’t have reports related to projects, such as profitability or billable hours. OneUp tracks “current tasks to-do” in a report and keeps a limited list of current projects.. In QuickBooks Online, projects-related reports calculate a project’s profitability and display non-billable time and unbilled time and expenses.
Though QuickBooks Online does give better reports for projects, it doesn’t have as many features as other options. FreshBooks and OneUp are similar, but OneUp has a slight edge in its ability to differentiate between tasks when setting them up and a few projects-related tasks. It is the winner in this category.
Best Time Tracking App
Businesses that perform project-based work, whether for an ad campaign or a new office design, often need their employees to track the hours they’ve worked on the projects. Hours might be passed on to the client. Even if the business charges a flat fee, tracking hours helps when calculating profitability.
Sage and OneUp have excellent projects functions in their software, but oddly don’t include time tracking or have a built-in stopwatches. “Hours” is an option on Sage’s invoices, but your employees or contractors would have to track their hours elsewhere. Wave doesn’t have time tracking options, either.
Though you can turn time tracking on in QuickBooks Online’s settings, entering time is a long process. Employees have to complete a weekly timesheet offline, which you then have to manually enter as a vendor and pass on to a customer. Time tracking online isn’t supported unless you download and pay for an add-on.
Zoho Books has time tracking, which can be logged daily or weekly, and associated with both a project and task in a project. A timer widget keeps track of time if you want to have it running in the background. If you only want a contractor to see their timesheet, it’s easy to restrict access to the timesheet module. Its mobile app also supports time tracking.
FreshBooks provides the most options for time tracking. You can select “time tracking” from the main menu, pick your client or project and start a stopwatch. It also has a Chrome extension that you can install. As with Zoho Books, time can be tracked on the app and hours are linked to services provided so the client knows what you’re billing them for.
FreeAgent’s time tracking capabilities are similar to those of FreshBooks and Zoho Books. It, too, has manual or stopwatch time entry. Hours can also be pulled into invoices. One differentiating feature is that progress reports and hours worked can be emailed to clients. Its app tracks time, too.
FreshBooks makes no reports related to time tracking available to users. As noted, it is severely lacking in reports. FreeAgent doesn’t, either. Zoho Books doesn’t have projects reports unless you integrate it with Zoho Projects, but that program is free for up to five users and two projects.
Once you’ve enabled the integration, you get planned versus actual hours reports, task and issues reports and timesheet reports. With little else to differentiate the services, that is enough for us to pick Zoho Books as the winner in the time tracking category. For more information, read our in-depth Zoho Books review.
Best Inventory Management
Inventory that integrates with accounting software gives small business owners more options to streamline their business operations. It allows them to pull from quantities on-hand when creating invoices, maintain accurate counts in their systems and set reorder minimums and alerts.
QuickBooks Online only offers inventory management and tracking at its highest price tier, Plus. You can add images to inventory items on hand and automatically calculate cost using the FIFO method. It’s possible to set reorder minimums, too, but it will not order them for you.
QuickBooks Online only offers inventory management and tracking at its highest price tier, Plus. You can add images to inventory items on hand and automatically calculate cost using the FIFO method. It’s possible to set reorder minimums, too, but it will not order them for you.
In OneUp’s app, you can reorder low inventory items. Once an order is placed and you’ve generated a packing list, the inventory updates automatically. In Xero, you can assign unit codes to track inventory, but you can go even further in OneUp and track unit type and the inventory’s physical location. You can also set reorder minimums and print inventory count worksheets.
FreshBooks’s inventory system lets you add items and pull them into invoices, but you have to add each item manually. With Xero and QuickBooks Online, you can upload spreadsheets of inventory items. Quantities on hand update automatically when sold through an invoice and it’s easy to set reorder minimums.
Though Sage and Zoho Books are other options for inventory, we find their features to be inferior to what OneUp offers. If you’re curious about the former, you can read more in our comprehensive Sage review.
Oddly, given all its inventory options, OneUp doesn’t include inventory reports. Otherwise, it might have won this category. FreshBooks doesn’t have them, either. Xero excels at reports in general, and its inventory reports are no different. They identify which inventory items sell the most, summarize activity and list all items in your inventory. Xero is the winner here.
Best Payroll Processing App
Payroll processing is one of the most common add-ons for cloud-based accounting software. Companies typically charge a monthly fee in addition to their regular subscription fees. Many charge a per-employee fee, too. The monthly payroll processing fee varies depending on whether you need full-service payroll tax and state tax filing.
QuickBooks Online offers payroll processing at every level for a flat monthly rate plus a per-employee fee. Wave charges users for payroll services and claims that the revenue generated allows it to offer its other services for free. Xero gives users payroll processing for up to five employees on its mid-tier pricing plan.
If you use FreshBooks, you will have to sign up and pay for a separate app to get payroll processing functions. Zoho Books and OneUp don’t offer payroll processing, and there are no add-ons or apps to use with them.
FreeAgent includes payroll, but only for companies based in the U.K. Though Sage offers a separate service, the details and pricing are unclear.
It’s difficult to pick a winner in this category because none of the services offer a free trial of their payroll processing. What we can tell you is fees add up quickly, particularly with QuickBooks Online, and you would be wise to carefully calculate the monthly fees you’d pay before choosing a service.
Best for Tracking Fixed Assets
Fixed assets are large physical items, such as vehicles, equipment or buildings, that can be carried on a balance sheet. Businesses that have them will need to calculate depreciation and account for disposals.
The list of programs without fixed assets functions built in is longer than the two with them. QuickBooks Online, FreshBooks, Zoho Books, Wave and Sage do not have fixed assets functionality. There are workarounds, though, such as manual journal entries in QuickBooks Online or add-ons for which you will have to pay more money.
Given Xero’s strong focus on inventory, it’s not a surprise that it’s also strong in fixed assets. Its target market appears to be product-based businesses, rather than service-based ones. Fixed assets in Xero can be added manually or uploaded in bulk from a spreadsheet. The software calculates depreciation automatically.
It provides fixed assets reports, too. A depreciation schedule, disposals schedule and fixed assets reconciliation can be found in its reports section.
OneUp is the other program that offers fixed assets capabilities. Fixed assets can be added, one at a time, through “new fixed assets.” It will display a list of fixed assets on your books and calculate depreciation but has no reports related to them.
Xero is the winner in a category that doesn’t offer much competition.
Final Thoughts
The winner, and the company that gets your business, will be the best fit for your individual needs. Companies are not one size fits all, and neither is accounting software. We recommend making a list of your top requirements and picking the program that wins the most in those categories. If you’re still stuck, read our in-depth reviews for each program.
Newer users should look closest at user-friendliness when making a decision. The most comprehensive program out there, QuickBooks Online, is also known for having difficult processes and overly complicated steps to perform tasks. Newer users and small businesses would be much happier with a program that has fewer features but is easier to use, like Xero or FreshBooks.
Which of these software programs have you used? Have you tried more than one and , if so, do you have a preference? Let us know in the comments and thank you for reading.
Dena Landon has an MBA from Capella University and has been working as an accountant for over fifteen years. As tallying numbers all day can numb the mind a little, she has taken to writing in her spare time to indulge in flights of fancy (well, not too fancy). Her work has appeared in Good Housekeeping, Salon, The Washington Post and several other publications even more illustrious, though she feels right at home at CommQueR.com.