Buyer's Guide to Accounting Software

Accounting Software Buyer’s Guide

CONTENTS

What is financial accounting?

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing

Managing business finances is critical, and it’s not always easy. Accounting software can help you keep sight of your financial picture.

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No package is right for everyone. Let’s take a look at what’s out there and find what makes sense for you.

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March 2017 | 1

Accounting Software Buyer’s Guide

CONTENTS

What is financial accounting?

What is financial accounting?

It’s the process of recording, summarizing, and reporting all types of transactions from business operations over a period of time.

Types of Financial Accounting Software

More specifically, it:

Full Financial Management

• Provides information to outside parties, like the IRS

Basic Accounting

• Tracks revenue and expenses (income statement)

Time-tracking and Invoicing

• Tracks assets, liabilities, and equity (balance sheet)

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• Keeps track of a company’s financial transactions • Uses standardized guidelines to present this information in a financial report or financial statement

What can financial accounting software do?

• Integrate data from day-to-day businesses operations so you can access data faster • Automatically generate key financial calculations, based on the data you input • Provide basic financial tools (income statements, balance statements, payroll) to help you track and manage the flow of money • Simplify the process of pulling together and generating financial reports

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CONTENTS

Types of Financial Accounting Software

What is financial accounting?

There are three main types of financial accounting software:

Types of Financial Accounting Software

1. Full-service financial management tools that do a little bit of everything

Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

2. Basic Accounting & Payroll for generating financial documents and tax reporting 3. Time-Tracking & Invoicing for tracking hours, generating reports and integrating with your bank to manage expenses.

All facets are important for businesses of virtually any type, although how much you need to invest in them varies greatly depending on the size and complexity of your business. Sole proprietors may find they only need time-tracking and invoicing tools. Larger businesses may need some combination of accounting and invoicing tools, or even a full-service financial management tool, which can streamline the time you spend with your accountant for tax reporting and beyond.

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Full Financial Management

What is financial accounting?

Overview

Types of Financial Accounting Software

QuickBooks is one of the most recognizable names in the game. More than 10 years old, it’s reported to have over 75% of the market share and nearly 29 million users (primarily small businesses). While Intuit still offers its desktop software, the online version offers far more features for better value.

Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

Within QuickBooks there are a variety of offerings for businesses of all sizes, from independent contractors to small businesses to enterprise. In this section, we focus on QuickBooks Online for small businesses (see below for self-employed). To be sure, QuickBooks is the software to beat. They offer easy-to-access customer service, a varied pricing scale to match different needs and the option to sync with a wide variety of third-party financial apps.

The one area where QuickBooks is lacking is GAAP (Generally Accepted Accounting Principles) compliance—not a major issue for most businesses, but it is potentially one for startups that need to regularly share financial info with investors and vendors. Note that QuickBooks does offer to support to satisfy GAAP. But in this arena, it’s unlikely to find any software solution that can be all things to all types of businesses.

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QuickBooks Features

What is financial accounting?

• Access your account anywhere from a computer or mobile device

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Online accounting and banking that lets you sync with 18,000 financial institutions (including Mint.com, Intuit’s web-based financial management service). You can even add your business checking account and corporate credit cards to have it automatically categorize transactions.

• Payroll, invoicing and billing documents are extremely easy to create, track and manage.

• Share with up to 5 users at no extra cost, so you can have key team members or your accountant see what you’re seeing.

• Point-of-Sale integration: software automatically integrates your sales data with QuickBooks online daily, including summary and category sales, employee hours, purchase orders, inventory and costs of goods sold.

• E-commerce: QuickBooks can integrate with Intuit’s ecommerce platform, as well as PayPal and Apple Pay, to sync payment and sales data in real-time.

• Standard financial reports (up to 20-40 reports at a time) that help you ensure your books are accurate, easily share info with accountants at tax time and save time along the way.

QuickBooks Pricing • $15/month: Customize and send invoices, track income and expenses, create and manage estimates and sync with bank accounts and apps • $30/month: Same as $15, except you can also manage and pay bills as well as generate instant sales and profit reports • $40/month: Same as $30, except you can track inventory and prepare 1099s

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Accounting Software Buyer’s Guide

Overview

CONTENTS

Xero targets small to mid-sized businesses with its design-centric, online accounting software designed to take on QuickBook’s long grip on the marketplace. Founded in 2006, this New Zealand-based company now has 700,000 users in over 180 countries and has become the primary accounting solution for over 16,000 acconting and

What is financial accounting?

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

bookkeeping firms.

It currently seems like the strongest challenge to QuickBooks, particularly thanks to its virtually seamless support of unlimited users, multiple currencies, hundreds of third-party app integrations, and easy-to-access tutorials and customer service. Perhaps the biggest flaws with Xero are that its payroll function isn’t available in all 50 states yet, the reports can be difficult to customize, and setting up the tool to generate in-depth reports can require a heavy time investment up front (although ultimately, this makes managing your transactions a snap).

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Xero Features

What is financial accounting?

Xero’s offerings include a mobile app, invoicing, an easy-toread cash-flow interface, ecommerce integration, payroll, bank reconciliation, data conversion from Quickbooks, financial and tax reporting and multi-currency support. Most notably, it offers:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Integration with over 400 business apps—including payment apps, financial institutions and inventory trackers—for a broad range of services • Cash flow reporting to manage bills and expenses so that your cash flow is always up to date • Payroll processing (albeit not in every state), which is one of the most difficult parts of small business accounting • Security software to protect your financial data • Invoice tracking and communication to make it easy to follow up with clients • Multi-currency invoicing, which is key for doing international business • Tax reporting at both the state and federal level • A design-centric interface, customer support and tutorials that makes the site easy to use once you’re past the initial learning curve

Xero Pricing • Starter: $9/month for main accounting features excluding payroll (limited to 5 invoices, 5 bills and reconciliation of 20 bank transactions per month) • Standard: $30/month for unlimited invoices, bills and reconciliations, along with payroll for up to 5 employees • Premium: $70/month boosts that to payroll for 10 employees and includes multi-currency invoicing

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What is financial accounting?

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

Overview Zoho Books is online accounting software for managing invoices, bills, banking and even inventory. It’s geared towards businesses, from small to large, as well as merchants and sole proprietors. As a company, Zoho dates back to 1996 (when it was called AdventNet) and they’ve been launching products within the Zoho suite for over a decade. Zoho Books launched in 2011.

Zoho Books very much challenges the big names in the space with its ease of use, particularly its intuitive dashboard and simple customization. It also offers project tracking and supports multiple currencies (which some competitors do not). This makes it a great option for businesses with international customers and locations.

That being said, Zoho Books doesn’t offer two key things that its competitors do: Integrated payroll or compatibility with many third-party apps in the space.

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Accounting Software Buyer’s Guide

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Zoho Books Features

What is financial accounting?

• Integrates with the PayPal suite, among other online payment apps

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Features real-time reporting: Profit and loss, quotes and estimates, recurring invoices, automatic bank sync, tax reports, sales reports, accountant reports • Supports multiple countries so you can invoice your clients in their currency • Integrates with Zoho CRM, which is helpful for tracking your sales and finance teams’ projects (for larger businesses) • Access your account anywhere thanks to the web-based/ mobile app

Zoho Books Pricing • Basic: $9/month • Standard: $19/month • Professional: $29/month

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Basic Accounting

What is financial accounting?

Overview

Types of Financial Accounting Software

QuickBooks Self-Employed is ideal for managing tax reporting and business expenses for sole proprietors, the selfemployed, freelancers, contract workers, or anyone who’s part of the on-demand economy. People who use Schedule C (Form 1040) may also find it helpful in writing off business expenses when filing their personal taxes.

Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

Perhaps the main reason to use it is that the program separates business expenses from personal ones—especially important for protecting your assets in the event of a legal action against you or your business. It also offers invoicing, digital receipts—and automatic mileage tracking, although what really sets it apart is its integration with basic accounting tools.

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Accounting Software Buyer’s Guide

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QuickBooks Self-Employed Features

What is financial accounting?

QuickBooks Self-Employed offers a mobile app with basic accounting tools like a mileage tracker, integration with online banking, invoicing, transaction categorization, tax reports, receipt tracking, and syncing with TurboTax (it doesn’t address payroll).

Its main benefits are:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Separating business and personal expenses to protect your assets • Mileage tracking that uses the current IRS mileage rate to calculate an accurate tax deduction • Categorizing business income and expenses for easier tax reporting • Integration with Schedule C and TurboTax: After inputting expenses by category, you can either download a Schedule C breakdown of income and expenses or export to Turbo Tax. • Estimated tax payment: Tracks how much you should pay in quarterly taxes, warns you when to pay taxes and automatically syncs info into 1040-ES

QuickBooks Self-Employed Pricing • $10/month: Create and send invoices, separate business and personal expenses, track schedule C deductions, calculate quarterly estimated taxes automatically and track mileage • $17/month: Same as the $10 plan, except you can pay quarterly estimated taxes online, file faster by exporting Schedule C to TurboTax, and file one federal and one state tax return.

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Time-tracking and Invoicing

What is financial accounting?

Overview

Types of Financial Accounting Software

Founded in 2003, FreshBooks has become one of the best-known tools for online invoicing, time-tracking and billing. With 5 million users, FreshBooks helps service-based consultants and small businesses track their time and expenses, send professional-looking invoices, and collect online payments.

Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

While it doesn’t offer double entry accounting or detailed reporting, FreshBooks integrates easily with a large range of apps, offers an easy-to-navigate dashboard and simplifies the accounting process for businesses and freelancers who may not need some of the pricier (and potentially distracting) bells and whistles that fullservice sites like QuickBooks might offer. This is potentially an issue for businesses that see large growth in their future, but ideal for smaller firms or individuals who bill based on time for their services.

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FreshBooks Features

What is financial accounting?

FreshBooks’ main services include time-tracking, invoicing, client collaboration, payment and expense tracking and basic financial reporting. Its primary benefits include:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Simple billing, invoicing and tracking that’s easy to customize for a professional presentation and equally easy to track (you can set automatic reminders to go out to late-paying clients) • Project collaboration/management with clients: FreshBooks recently redesigned its product to include client collaboration and feedback, as well as the ability to seamlessly manage multiple clients • Google G-suite integration: Invoice Google contacts and view invoicing updates and Gmail correspondence relating to an invoice/project • A redesigned mobile app that makes it easier to access your info anywhere

FreshBooks Pricing • Seedling: $20/month for 1 user, invoice up to 25 clients • Evergreen: $30/month, invoice an unlimited number of clients, add an additional user and access timesheets and team expense reporting • Mighty Oak: $40/month, same as Evergreen but you can add 5 additional users

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Accounting Software Buyer’s Guide

Overview

CONTENTS

Harvest was founded in 2006 by two entrepreneurs running a design studio who were looking for a better way to track time and invoice for services provided by their team. Today, its online tool and mobile app are used by over 40,000 businesses spread across 100 countries.

What is financial accounting?

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

Harvest is primarily a time-tracking tool, although it does offer invoicing, budget tracking, expense logging, invoicing, timesheet approval and even a time planning tool. While there are a variety of free time-tracking tools out there, Harvest’s edge comes from its integration with 80+ other business apps and its ability to simultaneously track budgets and expenses. The tool is ideal for teams within small companies (it could get pricey for larger teams), and freelancers and solo business owners will likely find the pricing very competitive.

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March 2017 | 14

Accounting Software Buyer’s Guide

CONTENTS

Harvest Features

What is financial accounting?

Harvest’s main services include time tracking, invoicing, budget tracking, expense logging, invoicing and timesheet approval. It also offers a time planning tool for an additional cost. Its primary benefits include:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Simple, on-the-go time tracking that’s easy to access from a variety of devices, making time-tracking an afterthought. It also includes timesheet approval and reminder features.

• Built-in reporting that analyzes your data: You can run reports on billable and non-billable time for a variety of staff, tasks and clients. This helps you manage budgets and resources for current and future projects.

• Quick expense logging: Just take a picture of your receipt and enter the info through a mobile app to have it automatically pulled into invoices • Professional invoicing that automatically pulls your tracked time and logged expenses into a customized invoice. No manual entry required.

Harvest Pricing You can try Harvest for free for 30 days. After that, your options include: • Free: If you’re just a single user with up to two active projects, you can use Harvest for free.

• $12 per person/month: This gets you everything Harvest has to offer. There are also special discounts for teams of 50+.

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Accounting Software Buyer’s Guide

Overview

CONTENTS

BillQuick Online (founded in 1995) is online accounting software specifically targeting professional service firms like architects, accountants, CPAs, IT consultants, marketing consultants and legal firms.

What is financial accounting?

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

Because of its targeted audience, BillQuick is pared-down in comparison to a full-service site like QuickBooks or Xero. It primarily handles dayto-day time tracking, billing and project management, although it does also offer basic expense tracking, bank reconciliation and reporting. It offers both a cloud-based and on-site option, making it easy to customize depending on a specific industry or firm’s needs. For professional service firms, BillQuick has something unique to offer—but for other small businesses and sole proprietors, FreshBooks may offer more bang for your buck.

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Accounting Software Buyer’s Guide

CONTENTS

BillQuick Online Features

What is financial accounting?

BillQuick’s main offerings are project management, time tracking, expense tracking, billing (accounts receivable/payable), automatic reporting, bank reconciliation and 24/7 access. Is benefits include:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• 24/7 customer service based in the U.S. • Accounting integration with QuickBooks and other accounting software so you don’t have to enter your data twice • Customizable reports and invoices with over 500+ templates specific to accounting and bookkeeping firms • Automates repetitive tasks to streamline the billing process and reduce administrative costs

BillQuickOnline Pricing • Professional: $19.95 per user/month, billed annually, for up to 20 users • Enterprise: $24.95 per user/month for unlimited use • 15-day free trial available

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Free Options

What is financial accounting?

For cash-strapped or boot-strapped small businesses and freelancers, there are two noteworthy free invoicing/time-tracking tools available:

Types of Financial Accounting Software Full Financial Management

Overview

Basic Accounting

Founded in 2015, Utah-based ZipBooks was created by CEO Tim Chaves with the goal of going beyond just credits and debits to help small business owners work smarter and get paid faster. The primarily free online software targets freelancers, consultants and small businesses.

Time-tracking and Invoicing ‣ Free Options

The site has a three-pronged approach. It offers: 1) free accounting software, including bookkeeping, invoicing and expense-tracking; 2) fee-based invoice financing where financial institutions take over accounts payable, offering cash advances to business owners; and 3) Several professional accounting services for monthly fees. If cash flow is a major problem for your business, then ZipBooks is for you.

If not, keep in mind that it doesn’t yet offer customer relationship management tools, batch editing tools or the ability to handle POs.

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Accounting Software Buyer’s Guide

CONTENTS

ZipBooks Features

What is financial accounting?

ZipBooks offers free online accounting software with standard services as well as fee-based invoice financing and professional accounting services for a monthly fee. Its primary benefits include:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Credit card processing that integrates with WePay and Stripe (services chosen by ZipBooks because of their low fees) • Online accounting software (accessible via mobile devices) that includes invoicing, recurring billing, time tracking, expense tracking and reports • For a monthly fee, access to accounting experts who advise on bookkeeping, tax preparation, and payroll management • Invoice financing that pairs small businesses with financial institutions that can provide cash advances for a small fee

ZipBooks Pricing ZipBooks’ online software is free.

They make money two ways: offering the option to facilitate payments and by offering additional services. If you choose to use the Invoice Instant Payments feature, ZipBooks gives you an instant advance on an invoice when you send it out. You pay them back the advance later along with a stated fee.

It also offers professional accounting services with dedicated experts for a fee: • Bookkeeping: $100/month • Bookkeeping + Tax Preparation: $170/month • Bookkeeping + Tax Preparation + Payroll Management: $245/month

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Accounting Software Buyer’s Guide

Overview

CONTENTS

Founded in Canada in 2009, Wave is an online accounting software and services site for micro businesses (10 employees or less) and sole proprietors, offering primarily free resources and a dashboard that makes it easy to customize the various tools to your business’s needs.

What is financial accounting?

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

Like ZipBooks, Wave offers online software for things like invoicing, payments, bookkeeping and receipt tracking. It also partnered with OnDeck to offer a lending platform for businesses with over $75K in annual revenue. In terms of services, Wave also offers payroll processing and credit card payments for a monthly fee. Be aware that Wave generates revenue through ads that display in the app and can create a sometimes frustrating experience. It’s also still lacking in customer support. That being said, for solopreneurs, Wave is a contender.

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March 2017 | 20

Accounting Software Buyer’s Guide

CONTENTS

Wave Features

What is financial accounting?

Wave is online accounting software designed specifically for sole proprietors and small businesses. Here’s what sets it apart from its competitors for this target audience:

Types of Financial Accounting Software Full Financial Management Basic Accounting Time-tracking and Invoicing ‣ Free Options

• Easy to use dashboard that offers clear and quick access to transactions, invoices, bills, receipts, and reports • Customizable tools (especially invoices) that let you represent your business with your own branding • Time-saving features, for automatic billing, invoicing and data syncing with financial institutions • Affordable access to business services including lending, payroll management and credit card processing

Wave Pricing The online accounting software, including bookkeeping, invoicing, payments and receipt tracking, is free.

Its services—credit card processing and payroll management—run $15/month.

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