The best bookkeeping tools for small businesses

For businesses with complex finances who need lots of features, Xero is the option to beat. Crystal Stranger, an Enrolled Agent with the IRS and the CEO of OpticTax.com, is a big fan: "It has all the capabilities you could want, a lot of helpful automations, and isn't too hard to learn to navigate," she said. "Plus the bank feed connections normally work well, and this prevents a lot of errors that have to be manually fixed."

One caveat: Multiple small business owners reported that customer support could be slow at times, but that the quality of that support was excellent.

Wave is an ideal fit for freelancers and solopreneurs — especially ones who send a lot of invoices. There is a free "Starter" tier, but it's worth springing for the $16/month "Pro" option: You'll get access to time-saving features like automatic bank transaction imports.

However, Wave will likely fall short for more complex small businesses, especially those planning to scale. It does not offer time, project, or inventory tracking, and its automatic transaction data requires a bit of manual maintenance to keep it accurate. 

Several business owners told us that they used Wave in their business's early stages but pivoted to another program (usually QuickBooks) when their needs increased. Michael Kenins, the CEO of Vista Tree Management in Toronto, said that while Wave was ideal as a "simple, effective, and cheap" payroll solution, its bare-bones customer support and limited reporting power led to issues down the line. If you're running a one-person show, though — i.e., a wide variety of customizable reports is not a priority — this is likely the pick for you.

According to our colleagues at PCMag, FreshBooks is best for service-based businesses that don't need to deal with inventory. Where it excels is user experience: Rock the Rankings founder Justin Berg called it "snappy and intuitive," while boutique PR agency owner Antoinette Clay said she was particularly impressed by how it "walks [her] through topics" she needs to reacquaint herself with "in a simple-non-intimidating way."

Despite that ease, it still offers pretty much every core feature you might want: inventory and project tracking, payroll, very solid reporting tools, and more.

Zoho is a cloud software company that offers all kinds of tools — from CRM to project management software to email. It's a good choice for larger small businesses that want to streamline their suite of products. Zoho Books isn't a bad option on its own, either: It has tons of reports templates, advanced tools, and good customer service. 

"Zoho Books is leaner but still powerful," says Zarina Bahadur, the founder and CEO of subscription service 123 Baby Box. I can manage invoicing and expense tracking along with automation features for only $20/month without extra unnecessary features. Their AI-driven categorization saves hours every month. The company's customer service team answers phone calls when customers reach out. When you’re running a business, that matters."

However, like Xero and QuickBooks, Zoho might be too unwieldy for smaller businesses that plan to stay small.