Best accounting software for small businesses

A cleaner getting paid after each appointment has different needs from a shop ordering stock on credit. A consultant may spend hours chasing invoices. A therapist may already collect payments through practice software but still need to understand how much the practice earns after rent, insurance, and other costs.

Each might search for accounting software, but the most useful features will depend on how they earn money and run the business. This guide compares six options in enough detail to help you choose: the day-to-day work they support, the reports they produce, and the subscription that includes what you need.

Compare the software

Start with the features your business needs, then compare the prices of plans that include them. The table below shows who each app suits and what the relevant plan costs, so you can narrow down your options before reading the detailed reviews.

Regular US prices before tax, excluding introductory offers and optional services. We show monthly and annual options where offered; annual prices are the full year's charge. Important plan differences are explained below.

What does your business need?

Bookkeeping starts with a reliable record of money earned and spent. You identify each payment, put it in the right category, and keep the receipt or invoice that explains it. A profit and loss report, often shortened to P&L, summarizes income and business costs over a period so you can see the profit or loss.

Accounting software can take that further. It may track customer invoices that have not been paid, bills you still owe suppliers, equipment, loans, stock, and money invested in the business. A balance sheet brings together what the business owns, what it owes, and the owner's interest in it at a particular date.

You do not need to memorize accounting terms before comparing apps. Write down the decisions you need to make. Can you afford another chair in the salon? Which clients still owe you? Did this month's sales cover the cost of the products you sold? Each question points to a different requirement.

Six questions to answer before choosing

1. How do you get paid? Payments collected at the time of service create different bookkeeping needs from invoices payable a month later.
2. Who needs access? Working alone, sending occasional records to an accountant, and having a bookkeeper update the accounts every week are different arrangements.
3. What do you need to track beyond bank transactions? Unpaid bills, customer balances, stock quantities, payroll, and equipment may require additional tools.
4. Which reports do you actually use? Ask for the names and formats your accountant, lender, or business partner needs.
5. How will you check the records? Look for useful category corrections, receipt attachments, transfer handling, and reconciliation. Reconciliation means checking your records against a statement and resolving differences.
6. What can you afford for a full year? Include the plan that meets your requirements, extra users, payment fees, and any separate services.

For US tax records, the IRS emphasizes a system that shows income and expenses, with supporting documents. Software helps you build that record as you go. Automatic categorization handles much of the sorting, while your receipts and notes explain purchases whose purpose would otherwise be hard to remember.

With those needs in mind, let's look at each app in more detail. The reviews below explain who each one suits, how it helps with day-to-day bookkeeping, and what you get for your money.

Koody for Business: best for affordable sole-proprietor bookkeeping and tax preparation

Koody for Business is Koody's dedicated workspace for sole proprietors and small businesses. It brings automatic income and expense tracking, receipt storage, business reports, and tax preparation together in one affordable app. It is a strong choice for sole proprietors who manage their own books and want to spend less time sorting transactions. The records you build along the way help you see where the money goes, understand what the business earns after costs, and prepare for tax time.

When you import bank statements into Koody, it extracts and auto-categorizes the transactions, giving you an organized set of records to review. It identifies transfers, refunds, and recurring payments too. You review the results and change anything you want. Koody can remember those edits for later imports, saving you from repeatedly sorting the same suppliers, subscriptions, and customer payments.

Koody lets you split a purchase across several categories, whether it covers different business costs or includes personal spending. You can assign office supplies, equipment, and household shopping to their own categories while keeping the receipt with the original transaction. You can photograph receipts on mobile or attach existing files, and add notes explaining the business purpose. Transfers stay out of income and expense totals.

The profit and loss report shows income, expenses, and profit for the period you choose, with a comparison against the previous period. A hairdresser can see whether a busier month produced more profit or whether supplies and chair rental absorbed the extra income. You can inspect the transactions behind the totals to understand what changed.

For tax preparation, Koody brings your reviewed business income and expenses into a Schedule C worksheet. You can download it for your accountant alongside your P&L, or send a transaction export directly from the app when they need the individual payments behind the figures.

What the price includes

Koody's Plus Plan costs $4.99/month or $53.90/year. It includes bank statement imports, automatic categorization, profit and loss (P&L) reports, and a Schedule C worksheet. Receipt storage, unlimited categories, and personal budgeting are included too.

Transactions can be exported in CSV, Excel, or JSON, while P&L reports and Schedule C worksheets are available in CSV or Excel.

Koody for Business is our choice for affordable sole-proprietor bookkeeping and tax preparation. Automatic categorization, profit and loss reports, and a Schedule C worksheet give owners managing their own books a lot for the subscription price. You can use Business on its own or manage household finances alongside it in Personal, without paying for another app.

QuickBooks Online: best for broader accounting and accountant collaboration

QuickBooks Online is worth considering when your accounts need to serve several people and business functions. You may need to bill clients, track what they owe, work with an accountant throughout the year, and add more reporting as the business develops.

Its accounting tools bring transaction categorization, customer billing, and financial reporting together. Connecting invoices, customer payments, and accounting records helps a business owner see which customers have paid and which invoices are still outstanding.

The transaction review tools suggest categories and let you split one payment across several categories. That is useful when a single store receipt covers different business costs. Matching a downloaded payment to an existing invoice or expense keeps the bank activity connected to the record you already entered, so the accounts reflect the payment once.

That breadth is especially useful if someone else helps keep your books. Ask your accountant which tasks they would perform in QuickBooks: reviewing transactions, making adjustments, checking balances, or preparing year-end reports. Accountant access lets you both refer to the same records when discussing a transaction or reviewing a report.

Choose the plan for the work you need

Simple Start is $38/month at the regular US price, or $410.40/year with annual billing. It includes one user and access for two accountants. It is a more relevant starting point for that collaboration than the limited Free offering, which does not include accountant access.

A business needing inventory and project profitability should compare Plus, currently $140/month or $1,512/year with five users and two accountants. The annual figures apply Intuit's published 10% annual-billing discount to the regular monthly rates. Payroll is an additional service. The larger subscription is most useful when you need those extra functions as part of running the business.

Imagine a contractor who needs to know the profit on each job, not just across the business. Grouping costs by category answers how much was spent on materials. Tracking the job answers which customer project earned enough to justify the work. Those are different questions, and the subscription should support the one you need answered.

QuickBooks Online is our choice here for broader accounting and accountant collaboration. It suits a business that wants customer billing, bookkeeping, and regular accountant involvement in one system.

Xero: best for businesses needing several people in the books

Xero deserves a close look when a business partner, bookkeeper, and accountant all need access to the books. Its US subscriptions include multiple users without per-user license fees. That makes shared access a useful reason to choose Xero, particularly when several people contribute to the records throughout the month.

Its bank reconciliation tools support checking and matching bank activity against the accounts. Automatic reconciliation is included from Growing and is optional on Early. This is useful when your business has both bank deposits and existing invoices to match, rather than simply treating every deposit as a new sale.

Xero's financial reports include P&L, balance sheet, and reports on unpaid customer and supplier balances. Together, those help answer both whether the business earned a profit and whether money is still tied up in invoices awaiting payment.

For a purchase without a supplier bill, Xero provides a spend-money entry, including receipt upload through its mobile accounting app. You can record the purchase when it happens and reconcile it when the bank transaction arrives. Your bookkeeper can then work from an expense that already has its supporting document attached.

Plans for different invoice and bill volumes

The regular US prices are $27/month for Early, $59 for Growing, and $97 for Established. Early allows 20 invoices and five bills a month. A service business with few clients might fit; a shop buying from several suppliers could outgrow the bill allowance quickly.

Your billing pattern will help determine the suitable plan. A client billed once a month uses one invoice; a client billed weekly can use four or five. Businesses with frequent customer invoices and supplier bills have more reason to choose Growing, while a small service business with occasional invoices may be comfortable on Early.

Payroll through Gusto and Inventory Plus are optional additions with separate costs. They extend the system for businesses employing staff or managing stock. Include them in the budget when those services are part of the setup you need.

Xero is a strong choice for a business that wants shared accounting access and room to add more involved bookkeeping. A sole proprietor working alone should weigh those benefits against the price of the tier that handles their actual invoice and bill volume.

FreshBooks: best for service businesses focused on client invoicing

FreshBooks is a useful candidate when the difficult part of your finances is getting client work billed properly. A designer, consultant, or other service provider may need to account for time, invoice the client, and recover agreed expenses before the money ever appears in a bank account.

Its time-tracking tools can turn recorded billable hours into invoice items. Its invoicing tools then help you request payment for the work. The recorded hours also help you explain an invoice if a client asks how you calculated the charge.

Consider a consultant who finishes several short jobs in a week. Missing a few billable hours can cost more than the software subscription. For that person, the best accounting choice may begin with a dependable way to capture work and charge for it, followed by expense and profit reporting.

Compare client limits and accounting access

At regular US prices, Lite is $23/month or $248.40/year for up to five billable clients. Plus is $43/month or $464.40/year for up to 50. Plus includes receipt scanning, financial and accounting reports, and accountant access. Additional team members cost $11/month each; payment processing and payroll have separate charges.

FreshBooks also offers double-entry accounting, bank reconciliation, a chart of accounts, and financial reports, including P&L and balance sheet. Double-entry accounting keeps related entries together so the accounts reflect both sides of a transaction. For an owner who starts with invoicing, the accounting tools provide a way to follow the same business activity through to financial reports.

Expenses can be downloaded as CSV, uploaded receipts have their own export, and reports can be exported as CSV or PDF. Those options help you assemble a package for an accountant: the summary reports, the individual expenses behind them, and the receipts supporting the purchases.

FreshBooks is our choice for service businesses where client billing is central. Its strongest appeal is the connection between work completed, expenses incurred, and the amount billed to the client. A consultant or designer who handles that process every week has a clear reason to consider it.

Zoho Books: best for businesses using the Zoho ecosystem

Zoho Books is particularly worth comparing if customer information and project work already live in other Zoho products. Connecting those records can reduce repeated entry as a customer moves from an inquiry to a project and then an invoice.

Its integrations include Zoho CRM and Zoho Projects. CRM holds customer and sales information; Projects manages project work and time. Their connections to Books help carry relevant records into billing. The services have separate subscriptions, so the total cost depends on which products your team uses.

The reporting tools cover P&L, balance sheet, and cash flow. Those are useful when you want an overall view of the business alongside customer and supplier records, rather than tracking transactions alone.

Zoho's expense tools let you itemize a purchase across expense accounts and attach its receipt. You can also associate an expense with a customer and mark it as billable. For a consultant buying materials on a client's behalf, this connects the cost with the later invoice instead of relying on a separate reminder to recover the money.

Free eligibility and paid-plan allowances

The US Free plan is available while annual revenue does not exceed $50,000. It allows one user and one accountant, with annual limits of 1,000 invoices and 1,000 expenses. It can suit an eligible owner with a relatively small volume of activity who wants invoicing and accounting in one place.

Standard costs $20/month or $180/year, includes three users, and adds bank feeds. Professional costs $50/month or $480/year and includes inventory and purchase orders. Additional user charges and other add-ons can affect the final price.

For a team already using Zoho, the practical benefit is less repeated entry between customer management, project work, and accounting. During a trial, follow a familiar job from the customer record to the invoice. That will show you which parts of your existing process the connection can handle.

Zoho Books earns its place here through its combination of accounting tools and connections to other Zoho services. The integrations are particularly appealing to an existing Zoho customer. A business starting fresh can also assess Books on its invoicing, expense records, reports, and price.

Wave: best for free basic bookkeeping and invoicing

Wave is a credible option for an owner who needs to send invoices and keep basic business accounts without an ongoing software charge. Free software can be a sensible starting point when the business has a small volume of activity and someone has time to keep the records up to date.

Wave Starter includes unlimited invoices, estimates, bills, and bookkeeping records at no subscription cost. Pro is $19/month or $190/year and adds automatic bank transaction imports, categorization, and receipt capture. Payment processing is charged separately.

Wave uses double-entry bookkeeping and provides P&L, balance sheet, and cash-flow reporting. Those reports let an owner review the business beyond individual invoices: how much it earned, what it owns and owes, and how money moved during the period.

Wave's account-data download includes accounting records and a separate ZIP of uploaded receipt images. You can keep both when preparing records for your accountant or saving a backup, with the financial details and supporting documents available outside the app.

Decide how much manual upkeep is reasonable

Picture a new consultant with two clients and a handful of monthly expenses. A free invoicing and bookkeeping plan may cover a large part of the job. As purchases and payments increase, automatic imports and receipt capture may become worth paying for. That is a practical choice about time as well as price.

Starter suits an owner willing to maintain the records manually in exchange for free invoicing and bookkeeping. Pro brings more of the transaction collection and receipt handling into the app. Choosing between them comes down to how much activity you have and how much time the automation would save each month.

Wave is our pick for free basic bookkeeping and invoicing. It gives a new service business a way to bill customers and begin keeping accounts without a subscription. For owners whose priority is automatic categorization, receipts, and sole-proprietor tax preparation, Koody offers a lower-priced paid option than Wave Pro.

What will you actually pay?

Compare the cost of the plan you would keep after an introductory offer ends. A discounted first few months can help you try a product, but it does not tell you what maintaining the books will cost in the second year.

Read the billing period beside each price. Koody, QuickBooks Online, FreshBooks, Zoho Books, and Wave Pro offer monthly and annual billing. Xero's US subscriptions renew monthly. The table shows both options where available, with the full annual charge rather than a monthly equivalent that requires a year's payment upfront.

For example, Koody costs $4.99 if you pay monthly or $53.90 if you pay for the year. Twelve monthly payments total $59.88, so annual billing saves $5.98. Both options include the same imports and business reports; the choice is whether you prefer a smaller monthly payment or the lower annual total.

The costs beyond the headline price

Four costs can change an apparently inexpensive choice:

1. A required upgrade. Inventory, accountant access, more invoices, or a particular report may move you to another tier.
2. Additional people. Check the user allowance and whether an accountant occupies a paid seat. Employee services may have separate per-person charges.
3. Payment processing and payroll. The accounting subscription is not necessarily the full cost of collecting client payments or paying staff.
4. Your own time and outside help. Re-entering records, correcting imports, or paying a bookkeeper to reconstruct missing information has a cost too.

Koody's value is strongest when the business needs automatic categorization, receipts, P&L, and Schedule C preparation at a low subscription cost. A free plan may cover a smaller set of needs. Paying more can be justified when another product handles invoicing, inventory, or team accounting your business relies on.

Compare the cost of the complete setup you will use. If a booking or practice system already handles payments, you may need only categorization, receipts, and business reports alongside it. If you want one system to manage customer invoices, stock, and the accounts, a broader package may justify the higher subscription.

Choose for your business

A therapist or solo doctor

If practice software already handles appointments and patient billing, Koody can organize the business income and costs around it: office rent, professional insurance, subscriptions, equipment purchases, and other expenses. You can review profit and prepare records for your accountant without rebuilding the practice's billing system.

A monthly review can show whether rent, insurance, and other costs are increasing faster than practice income. With those expenses categorized and their supporting documents attached, the same records are ready for your accountant. If they also maintain your balance sheet and make accounting adjustments throughout the year, QuickBooks Online or Xero may suit that shared working arrangement.

A cleaner or hairdresser

A solo owner paid at each appointment may get more value from organized purchases and visible profit than from an extensive invoicing system. Koody can help distinguish personal spending from products, supplies, rent, and other business costs, with the receipt available when a purchase needs explaining.

As the business grows, the software you need may change too. Wave can support basic invoicing, FreshBooks can help with regular service billing, and QuickBooks Online or Xero can support broader accounting with payroll services. Choose for the jobs you do today and the next change you are actually planning, such as taking on an employee or billing commercial clients monthly.

A consultant who sends invoices

Compare FreshBooks first when your problem is turning hours and client work into paid invoices. Test a typical job, including an expense you have agreed to charge back to the client. Check whether the invoice is understandable and whether you can follow it through to payment.

If client billing is already handled elsewhere, Koody may be the more focused purchase for categorization, profit, and tax-preparation records. If your team uses Zoho CRM and Projects, include Zoho Books on the shortlist and check whether those connections remove repeated entry.

A seller who holds stock

Start with stock requirements before comparing subscription prices. Do you need quantities on hand, purchase orders, product costs, returns, or several sales channels? Tracking the bank payout alone cannot tell you how many items remain or how much the sold items cost.

Compare QuickBooks Online Plus, Zoho Books Professional, and Xero with the relevant inventory tools when stock control is part of the accounting system you need. If your store or marketplace already manages inventory, Koody can organize the income, fees, purchases, and receipts for your bookkeeping and tax preparation. The two needs are different: tracking the products you hold and understanding the money the business earns and spends.

Before you move your records

Test one representative month before moving a year of history. Choose a month with an ordinary customer payment, a receipt, a mixed purchase, a refund, and a transfer. If you invoice clients or hold stock, include those activities as well.

Here is a small illustrative check you can use when evaluating transaction-based reports. Suppose a service business receives $6,100, pays $1,900 of business costs, and makes a $240 purchase split into $180 business and $60 personal. A supplier refunds $60 of the business costs. Moving $900 to the owner's personal account does not create another expense.

In this example, business expenses after the refund are $2,020, and profit is $4,080 before tax or other adjustments. The personal share and the owner's transfer stay outside business expenses. Following a small set of records like this makes it easier to see how an app handles each transaction and how the final report is built.

1. Preserve the old records. Download reports, transactions, and supporting documents before canceling the old service. Keep the originals somewhere you can find again.
2. Plan what to bring across. Import transaction records and arrange separately for invoices, attachments, and any opening balances. Keep the documents you need from the old system.
3. Correct and review. Change a category, split a mixed purchase, attach a receipt, and check a transfer. Look at the resulting totals, not just whether the upload completed.
4. Open the exports. Confirm that you can read the date, description, amount, category, and supporting detail you need. Check the report format with your accountant.
5. Agree on a changeover date. Decide which system holds each period so you do not maintain conflicting versions of the same month.

Our QuickBooks Self-Employed and Solopreneur alternatives guide explains the specific migration questions for those products.

FAQs

1. What is the best accounting software for a small business?

Koody for Business is our pick for affordable sole-proprietor bookkeeping and tax preparation, combining automatic categorization, receipts, P&L, and Schedule C records. QuickBooks Online suits broader accounting and accountant collaboration; Xero suits shared access; FreshBooks suits client invoicing; Zoho Books suits businesses using other Zoho products; and Wave offers free basic bookkeeping and invoicing.

2. What bookkeeping software should a sole proprietor use?

A sole proprietor should be able to organize income and expenses, keep receipts, separate personal purchases, review profit, and export records. Koody for Business brings those tasks together with automatic transaction categorization and Schedule C preparation. If you also need customer invoices, inventory, payroll, or a balance sheet, include those requirements when comparing software.

3. Is there free accounting software for small businesses?

Yes. Wave Starter offers free basic bookkeeping and invoicing. Zoho Books and QuickBooks also offer free plans with eligibility rules or limits. Free plans can suit a new business with straightforward records. Paid plans add capabilities such as automatic imports, receipt capture, more users, or larger invoice allowances, depending on the product.

4. Which software automatically categorizes business transactions?

Koody for Business auto-categorizes transactions imported from PDF or CSV bank statements and can remember your edits for later imports. It also identifies transfers and refunds. You can review categories, split mixed purchases, and attach receipts, then use the business records in your P&L and tax preparation. The other products in this comparison also offer categorization tools, with features depending on the plan.

5. What is the difference between bookkeeping and accounting software?

Bookkeeping software helps maintain the income, expense, and supporting records behind your business finances. Accounting software can add broader tools such as unpaid invoice and bill tracking, balance sheets, journal entries, and formal reconciliation. The labels overlap. Compare the actual tasks and reports on the plan you will buy.

6. Can accounting software prepare Schedule C records?

Yes. Koody for Business prepares a Schedule C worksheet from reviewed business income and expenses for US sole proprietors. You can review the figures and download the worksheet for your accountant, along with your P&L and transaction records. Schedule C is the US tax form used to report profit or loss from a sole-proprietor business.

7. Should my accountant help me choose accounting software?

Yes, especially if they will maintain your books throughout the year. Agree on the reports and file formats you will share and whether they need direct access to the accounts. Koody lets you download business reports and send transaction exports to your accountant. QuickBooks Online and Xero also provide access for an accountant to work within the books.

8. Can I change accounting software without losing my history?

Yes, with a plan for your transactions and supporting documents. Download reports, transactions, receipts, and invoices before canceling the old service. Import a representative month into the new app, compare the totals, and then bring across the rest. Keep copies of documents and settings that are separate from the transaction import.

Choose the software you will use throughout the year

For a sole proprietor who wants less manual bookkeeping, Koody for Business is a strong place to start. Automatic categorization saves time on the recurring work, receipts stay beside the purchases they explain, and your P&L shows how much the business earns after costs. Those same records help you prepare your Schedule C worksheet and share useful information with your accountant.

Start with one month's bank statements and follow the transactions through to your business reports. Review the categories, split any mixed purchases, and let Koody remember your category edits for later imports. You have a practical way to keep the books up to date, at a price that leaves more of your income in the business.

Sources and how we compared

We publish Koody, which is included in this guide. Sources accessed October 20, 2026. We compared official US product documentation and regular subscription prices, checked Koody's current features, and assessed transaction entry, categorization, receipts, reports, billing, access, and cost.

Recommendations reflect different business needs; they are not an independent ranking. Plan terms and prices can change. This guide covers software selection and general record preparation, not individual tax advice. Review tax treatment and filing requirements for your circumstances.

• QuickBooks Online plans and pricing
• Xero US plans and pricing
• FreshBooks US pricing and plan features
• Zoho Books US plans and pricing
• Wave plans and pricing
• IRS recordkeeping guidance
• IRS: About Schedule C