The Top 5 Cloud Accounting Solutions for Small Businesses

If you’re an entrepreneur, you know that strong accounting is a must for your business. You have to properly track all of your financial transactions, invoices, and taxes to get everything in order. And up until recently, you had no choice but to use complicated software in order if you wanted to do your own accounting.

But then cloud accounting solutions changed everything.

Ever since cloud accounting became popular, business owners were relieved to find that they can skip over outdated and confusing accounting software. Cloud accounting solutions are web-based, and they place heavy emphasis on simplifying workflows and being more user-friendly.

Benefits of using online accounting software

Most businesses today prefer to use cloud-based accounting tools because of their various benefits.

First of all, cloud solutions can be accessed anywhere. You don’t need to install a program separately on each of your devices. As long as you have an Internet connection and an updated web browser, you’ll be able to do your accounting work wherever and whenever you like.

Also, a lot of accounting apps have mobile versions. While they often have fewer features than their web app counterparts, they still let you manage your finances on the fly (though maybe not to the full extent you can on a desktop).

With cloud-based tools, all the information you need is stored in one secure place. You don’t need to worry about being unable to send invoices because someone in the team forgot to send copies to you. You can access the necessary files at any time and avoid inconveniences more easily.

Additionally, cloud accounting tools typically have flexible pricing plans. There are some apps that are free to use for solo freelancers and startups, and there are paid plans that scale with the size of your business. There’s always a tool ready for your specific needs.

Free accounting software vs. paid

People love free software. When you’re looking for accounting tools (or any type of software in general), you’ll naturally want to go for something that costs nothing to use. Since your goal is to minimize your expenses and increase your profits, using accounting software that’s free makes a lot of sense as long as it also does everything that you need.

In terms of features alone, a free plan will always be leaner that its paid counterpart. The real question is what is the best fit for your business and how do you figure that out.

Usually, the first thing you’d think about is the size of your business in terms of the number of people in it. However, not everyone in your team will be involved in accounting. You will likely have just one team focused on managing your accounting, plus a few people from the top level.

Another thing to keep in mind is your client base. If you’re a small business of under 25 people, it might make sense to settle for a free plan. But if you are working with five clients and your free accounting tool only allows you to create three invoices a month, that’s a pretty good sign that you need to start considering using a paid plan that can empower your business needs today.

There are several other factors you should keep in mind and a lot of them will be unique to your business. However, going for free plans is usually the best idea when you’re still in the first early growth stages and cost control is a big concern.

When you see your team growing and your number of clients increasing, that’s when you should reconsider and decide if it’s time to upgrade. Settling for a free plan even when it’s clearly not enough for your team’s accounting needs will hurt your business instead of helping it.

Pro tip: If you’re looking the best way to calculate payroll hours, check out our guide.

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A list of the best accounting software

Choosing the right accounting tool can get confusing with the few dozen options that are out there. How can you tell which one is best for your business?

The answer is simple: try them out and see which one suits your business best. A big part of learning what works for you will rely on your personal preferences, and there’s no substitute for testing software out before committing to it.

Here are some of the top cloud accounting software applications that currently dominate the market.

1) QuickBooks

QuickBooks is a cloud-based accounting solution that’s great for beginners thanks to how simple it is to use. Its main dashboard shows you your business’ primary financial metrics like sales and expenses, and its other features can be accessed easily through its friendly UI.

QuickBooks lets you create customized invoices and send them to your clients right from inside the app. Clients can pay you from the invoice itself after they’ve received it, meaning you don’t need to get a third-party payment platform and manually input the money you receive into your financial reports later on.

What’s more, QuickBooks supports recurring payments. If you and a client have agreed on a price for their monthly payments, you can set up the app to automatically transfer the money to a bank account once the client makes the payment.

QuickBooks has a 30-day free trial, during which you can access all of its features. Its paid plans start at $25/month.

2) Sage

The best thing about Sage is that you don’t need any accounting knowledge to use it. It features a very simple accounting system and is perfectly suited for small businesses or freelancers.

Sage’s stock management feature is extremely useful for businesses in industries like retail. From the inventory menu, you can set and adjust item prices, easily view out-of-stock items, and see how much profit you have made from your products.

Its most basic platform, Sage Accounting, is a good choice for startups and small businesses, but doesn’t have the features a medium- or large-sized business will require. This is why Sage has several different platforms, each of which has its own set of features to match your specific business size.

Sage Accounting costs $25/month, but has a 30-day free trial with all its features included.

3) Xero

Xero is a great solution for small business owners that want to save time on accounting. Xero can give the support you need for general accounting tasks like invoicing, general ledgers, customer payments, and more.

Xero’s sleek interface helps you with tasks including letting you use multiple currencies and tax rates or integrating various business applications. It also records your bank account information regularly, so you don’t have to worry about outdated records.

Xero has mobile apps for iOS and Android, so you can continue managing your finances without having to be in your office. From there, you can view your current financial standing. Xero also lets you give your team limited permissions so they can send invoices themselves when they complete a project.

Xero has a 30-day free trial. It has three paid plans, starting at $20/month.

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4) FreshBooks

FreshBooks is a great small business accounting software since it can be used for managing expenditures, invoicing, and other basic accounting calculations. Its straightforward interface makes it easy for small business owners to jump in and take charge of accounting.

One of FreshBooks’ most powerful features is its online invoicing. The app lets you create well-designed invoices that you can customize based on your own business brand. FreshBooks can automatically send reminders to your clients if they forget to pay, as well as charge late fees.

FreshBooks has a reporting feature that shows you how well your business is doing financially. You can view and export different kinds of reports such as Profit and Loss reports, Client Account Statements, and Item Sales reports.

FreshBooks has a free trial for 30 days, and paid plans starting at $15/month.

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5) Wave

Wave is an online accounting solution that anyone can learn to use fairly quickly. Wave also saves you a lot of time when it comes to financial transactions since everything is automated.

Wave automatically updates and backs your financial data up, which means you can see changes in real time. The app also supports multi-currency transactions, which makes it easier for small businesses with clients outside the country.

Wave is a unique app in the sense that it’s totally free to use. Wave Accounting, Invoicing, and Receipts all cost $0. However, using its payment features costs at least $20/month, with additional charges for additional employees.

Using a small business management tool with your accounting solution

Using an accounting tool to manage your finances will save you a lot of time on its own. However, there’s a way for you to take your productivity to an even higher level: small business management software.

These are the types of software that can support the other aspects of your business outside of accounting, such as time management and performance monitoring. These apps are specifically designed to streamline workflows and help your team work better.

Hubstaff, a time tracking and productivity solution, goes well with accounting tools. It helps ensure that all aspects of your business are covered and your workflow is as smooth as possible.

While accounting software is meant to handle your business’ finances, Hubstaff is designed to help you and your team make the most out of your time. Hubstaff tracks the time you spend on each project, so you can see which tasks are consuming the most hours.

It also has an invoicing feature that lets you generate invoices straight from these timesheets. After a project has been completed, you can bill your clients based on the total hours tracked and the bill rate. You can also do this manually, or set up Hubstaff to do this on a recurring basis.

What’s more, Hubstaff integrates with QuickBooks and FreshBooks, making it a seamless fit if you’re using either of the two. The time you track will automatically be exported to your accounting tool, so you can easily transition from task management to accounting.

Making the final decision

Here are some questions you can ask to help determine which kind of software you need based on the type of business you run.

• Are your projects complex or simple?
• Will you need multi-currency facilities?
• Is it important for you to access accounting info on all of your devices?
• Will you need to track projects and collaborate with teams/customers?
• Do you need additional features like Freshbooks time tracking?
• Do you need to distribute payment across multiple invoices?
• What about credit card payments and payroll?

In order to make the final choice, you need to rank the importance of these various features so that you can see which application suits you best.

What cloud accounting tools do you use to manage your finances? Are you using any of the tools listed above, and are you using other kinds of apps to run your business? Let us hear in the comments below.

This post was originally published in May 2014. It was updated by the Hubstaff Blog Team in October 2019.