The 5 best accounting software options for startups

When starting a business, being able to control costs and manage cashflow is crucial. Even better if it can be done on any device, at any time, via one easy-to-use interface. That’s why in this article about the best accounting software options for startups, we’ve focused on cloud-based products.

Accounting demands varies by country, but the best accounting software makers cater for that with their products. Which is why we’ve also focused on international products — with one notable and free exception.

It’s a mistake to focus too much on price, however. Few startups have the budget to hire a full-time accountant, nor the background in accounting to avoid costly mistakes. High-quality accounting software is one of the best investments you can make.

It can also provide crucial signposts to the health of your fledgling company, flagging cashflow issues well before they become obvious.

Here, we compare five of the best accountancy packages for startups. We will compare their features, their pricing and how they can genuinely help your company grow.

1. Intuit QuickBooks Online
2. Sage Accounting
3. Wave Accounting
4. FreshBooks
5. Xero

We may receive a commission when you click on our links. This, however, has no bearing on our reviews and comparisons. 

Intuit QuickBooks Online

Intuit’s QuickBooks Online is an obvious choice when selecting accounting software for a startup. It’s both intuitive and powerful, while the software’s APIs can integrate with payroll software such as Rippling to manage employee salaries or Bill.com to help with bill payments as needed. 

In addition, most accountants are already familiar with some form of QuickBooks or another; Intuit’s offering is one of the best-established brands of accounting software on the market. While some companies opt to use QuickBooks Desktop (now only available in the US), QuickBooks Online allows accountants and business owners unfettered access to the software from a mobile device. An increasingly useful ability.

The software’s business-friendly features make it one of the best pieces of accounting software for both VC-backed startups and solo entrepreneurs looking to get a leg up on their expenses.

QuickBooks Online price

Intuit offers a free trial of QuickBooks Online for one month, or an introductory offer to lure you in. In the US, you save 50% for three months, while UK customers save 75%. Australians get away with $1 per month for six months. However, we are going to focus on the pricing you will pay longer term.

Sage Accounting

Sage is a UK company that has made a global impact on accounting software. Its small business solutions offer accounting, payment processing and invoicing capabilities. And we say “solutions” because it offers two products of interest to startups: Sage 50 and Sage Accounting.

The former is a hybrid mix of desktop software and cloud services. It’s a powerful tool, complete with inventory management and job management, and can be used as a central hub for all your financial needs. Sage offers prospective US customers a live demo here while UK prospects are offered a product tour.

Sage 50 also requires a year’s up-front commitment rather than a monthly subscription fee, so it may be overkill for many new companies. Here, we focus on Sage Accounting, which is entirely cloud-based and one of the best accounting choices for startups.

Sage Accounting integrates with other software packages to make expense or bill tracking simpler. It also offers UK customers a simple payroll add-on for a monthly fee per user of £8 exc VAT.

The package is a popular choice in both the US and the UK, where it can be bought directly from Sage, but in Australia Sage Accounting on subscription is only available from third parties such as Access.

Sage Accounting price

Sage Accounting starts at $10 per month/£14 exc VAT per month for its entry-level accounting software, called Sage Accounting Start. This includes invoicing and bank reconciliation in the US, plus VAT submission in the UK.

However, if you want to forecast cashflow, send quotes/estimates and manage purchase invoices then you’ll need the next step up. That’s £28 per month in the UK, $25 per month in the States.

UK businesses with more ambitious aims and upgrade to Plus (£36 per month), which adds support for multiple currencies and inventory management.

Wave Accounting

Wave Accounting is the first accounting software on this list that offers a free option to users. It’s a great choice if you’re simply looking to send invoices and keep a log of expenses, and turn them into actionable business statements.

It’s arguably the easiest to set up and use for beginners in accounting, with features such as expense accounting, invoicing and receipt scanning services all being offered for free.

Wave does offer some integration with third parties, but not to the level of QuickBooks or Sage Accounting. And Wave actually pulled out of Europe and Australia a few years ago, so think of this as North American software. (It serves the US and Canada only.)

Wave’s accounting software offering can generate things like balance sheets and income statements based on information inputted by the user. And you can then export these to a CSV file (so, compatible with Excel) if necessary.

So, aside from its focus on North America, what are its drawbacks? One is its mobile offerings, which aren’t as intuitive or easy to use as its counterparts. You also need to realise where it makes its money: the upsell.

Wave Accounting price

Invoicing and accounting are both “100% free”, to quote Wave’s website, but if you take advantage of its payments service then you will be hit with a 1% charge. Mobile receipts costs $8 per month ($6 if you pay for a year upfront), and Wave also hopes you will take advantage of its payroll services.

Those with big ambitions will find Wave’s lack of third-party integrations and list of chargeable extras limiting in the long run. But if your North American startup is more Mom-and-Pop than Zuck-and-Musk, Wave is a great way to take control of your accounts for free.

FreshBooks

FreshBooks is another piece of accounting software that startups may be recommended and for good reason. In particular, it ranks as one of the very best when it comes to invoicing. Using FreshBooks, accountants or business owners can customise invoices with company logos. They can apply sales tax in numerous different currencies. And they can create recurring invoices for repeat customers.

Then there’s payroll integration. FreshBooks integrates with Gusto, giving businesses a simpler option to track workforce expenses. Naturally, there’s an additional fee for this on top of what you give FreshBooks each month, but it’s in line with the industry standards (in the US, prices start at $40 per month, plus $6 per month per person).

FreshBooks is web-based, but also available on both Android and iPhones. Again, ease of use is key here, with the apps earning praise for their intuitiveness.

FreshBooks price

One downside of using FreshBooks is the fee for adding additional users to the platform. In the UK, this costs £8 per person. The US, $10 per person. And in Australia, $16 per person. For startups looking to add multiple users to the accounting software, this may be a deterrent.

Still, if you can get away with the “Lite” version — which restricts you to five billable clients — then it’s a cheap way to start your business. Especially as FreshBooks discounts all the prices in the table below by 50% for the first six months.

FreshBooks is one of the best options for startups needing more flexibility than offered with Wave but who want to keep tight control of initial costs. And as you grow, it’s easy to step up to the higher ranks of Plus and Premium.

Why upgrade? Along with more clients, Plus allows you to send out unlimited proposals, accept e-signatures and adds bank reconciliation. Premium brings greater customisation to the FreshBooks-generated emails for extra professionalism, plus “accounts payable”. This handily summarises how much vendors owe you.

Xero

The fact Xero is last on our list has nothing to do with its abilities. This is a complete small business accounting software solution, all offered within a simplistic interface. Minimalists will love it. Those who like flashy graphics, less so.

As with its competitors, Xero can handle calculations for income and expenses, and even inventory management. And Xero can integrate with a payroll platform to track employee expenses in an easy-to-use interface (for an additional fee). It partners with Gusto in the US, Wise in the UK.

Where the Xero software really shines is in its accounts payable, however. Here, users can convert purchase orders into bills, help track any unpaid expenses and record electronic payments by customers.

Xero is typically used by small businesses requiring less powerful accounting tools. And it’s priced competitively, too. One downside is that by using Xero, startup owners must be sure they know what they’re doing, as Xero offers limited customer support — particularly in the United States, where startups may need a bit more guidance in understanding and managing their books.

Xero price

Xero’s naming strategy varies across countries. In the US, it’s highly descriptive: Xero Early for new businesses or sole traders, Xero Growing for small businesses on the up. Then there’s Xero Established, which again says what it needs to say. Globally, those packages are called Starter, Standard and Premium.

Startups that only need to submit 20 invoices per month will be well served by the Starter/Early offering. This also limits you to five bills that need paying, however. What’s great is that it includes bank reconciliation within the price. And, in the UK, you can use it submit VAT returns directly from the software.

Xero Standard/Growing removes the limits on bills and invoices, and also adds the ability to group and code transactions in bulk. Both Starter and Standard offer a snapshot into your financial future — projecting cash flow for 30 days, for instance — but you will need Premium to add more in-depth analytics.

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