Best Bookkeeping Software for Your Small Business - Erin Armstrong

Best Bookkeeping Software for Your Small Business

by | Dec 31, 2019 | Accounting & Logistics

You’re wondering… what’s the best bookkeeping software for your small business?

And that’s a great question!

I’ve done a few of these side-by-side comparisons of U.S. accounting software systems for U.S. small businesses, and I decided it was about time for a new one! The last two posts still have some relevant information, and if you’re interested in learning more about the progression of the software discussed in this review then reading them can be super helpful. However, there are definitely some changes and upgrades, even from last year’s post as to what’s the best bookkeeping software for smaller businesses.

While I am an accounting professional, my focus in this article is from a user perspective.

I also am very concerned about fully covering a business owner in the bookkeeping and accounting records departments (because no one likes to find out they don’t have what they thought they had).

With this article, I want to try to show you what functions are possible, as well as how easy different functions are to use.

So without further ado, let’s compare the most popular bookkeeping software options of QuickBooks Online, QuickBooks Desktop, Xero and Freshbooks. If you just want to jump to the conclusion, click here.

QuickBooks Online Review (QBO)

QuickBooks Online is a cloud-based, online accounting software application. It was first launched in 2000 because of the exponential growth in cloud computing and to allow for 24/7 access to data online. After an initial rebuild by Intuit in 2013 (to make it more app and mobile friendly), it also had a revamp in 2015 to work through some of the more annoying deficiencies.

Since then it’s become way better for small businesses and much more reliable–enough to jump in front QuickBooks desktop versions for usability.

The Good:

If you’re looking for a well-rounded online account software system, then QuickBooks Online is definitely your best option!

No one feels like wasting time (me, included) and QBO can streamline your work flow and reduce the amount of time you need to complete regular tasks. Automatic input of data into QBO, automatic invoicing option, options for software to remember for repeat transaction, automated receipts, and the ability to generate automatic remembered reports are all features you can take advantage of for your accounting.

QBO is also great when it comes to accessibility; it works across a bunch of platforms without bugs or glitches. If you have a Mac and you need to share QuickBooks files with someone who has a PC, don’t even worry about it! You can share between computing platforms, between the home and the office, even on your smartphone and tablet. You can also send an invitation to an accountant or an outside financial professional to access and view your books.

QBO also has lots of cool, little features that can help with usability. For instance, do you like to use keyboard shortcuts over endless mouse clicking? QBO has lots of keyboard shortcuts for you to press away to your heart’s content. They’ve also done some serious work on their customization options for reports. If you’ve been using QBO for a while then you know customization features haven’t always been their thing, but I know I can run every report I need to, even really detailed ones. And they’ve worked on other usability features like you can automatically back up data or sync with a variety of apps.

QuickBooks Online has updated your ability to reconcile accounts. In QBO you can reconcile the account, but unlike other accounting software systems, it can also “undo” reconciliations as well as “exclude” other transactions. These two features are HUGELY helpful, and they can be super important because sometimes your accountant or bookkeeper may need to reassign a transaction to make your records accurate. The ability to have flexibility with reconciliation within the software not only meets GAAP expectations, but it makes it the “gold standard” of account systems.

The Bad:

Okay, here’s the thing about QuickBooks Online. For most people, it’s a bit intimidating. And it will definitely feel like you have a larger learning curve to conquer when you start using it. However, all accounting software has a learning cover. And honestly, I feel like some of the others just make you feel like you have the “hang of it” sooner, only to create problems later. My advice is that depending on your business accounting experience, you will most likely need to work with a QBO professional to either setup your books or provide you with some instruction within roughly the first year of using it.

If you’re a large business, QuickBooks Online is probably not for you. It can actually take you more time to process (rather than being a time saver) if you have large amount of monthly transactions (more than 3,000).

Your ability to use QBO can also be negatively affected if you use a bank with an outdated online system, which can create problems with syncing because of the bank’s personal infrastructure. If you’re concerned but want to go forward with QuickBooks Online, then go ask your bank to find out more or if they allow syncing with QBO.

QuickBooks Online Cost:

QuickBooks Online subscriptions start at $15/mth and go up to $50/mth. *Currently, you can get 30% off for the first six months here.

The Bottom Line:

You should consider using QuickBooks Online if:

  • You want to save time.
  • You want your business bookkeeping records to be compliant with legal expectations in the United States.
  • Your business needs the flexibility and security of a cloud-based accounting system.
  • You want to share easy access to parts or all of your accounting with team members.
  • You would like to use QuickBooks, and use both Mac and Windows operation systems with your team members.
  • Your business does not have thousands of transactions per month.

You should probably NOT use QuickBooks Online, and instead, stick with an on premise QuickBooks system if:

  • Your business has over 3,000 transactions per month (more than that and it makes it difficult to reconcile, though you can certainly reconcile with thousands).

QuickBooks Desktop Review (Enterprise)

Up until the major revamp of QuickBooks Online in 2015, QuickBook Pro and Premiere versions were the industry gold standard. However, with all business evolving QBO saves you the most time and give you the most benefits. Also, if you’ve been paying attention to rumors in recent years, desktop versions will soon not be supported or sold (so you want to get ahead of those rumors!)

For these purposes, I’m going to talk more about Enterprise of the Quickbooks desktop options as Enterprise is the only one that really makes sense to choose over QuickBooks Online (for reasons detailed further below).

The Good:

Basically, QuickBooks Enterprise is a great system. It still offers a significant amount of options for customizations than other accounting applications, and because it has been the industry standard for such a long time, most accountants are really familiar with it. If you run a larger business (over 3,000 transactions a month), you’ll most likely need to use desktop Enterprise.

The Bad:

There is an obvious issue with the desktop version of QuickBooks: it isn’t accessible from different places. If you’re using a desktop version, you will basically have to keep your QuickBooks file on a single computer. If you’re a larger company, you may have the resources to store QuickBooks files on local servers, but that’s not an option (or worth the time and effort) for small businesses. This means it is also not easily accessible to those outside your business location, such as your accountant or professional advisors.

It doesn’t automatically back up and this system doesn’t auto-synch with online banks or credit card accounts. This can be a problem for businesses because it will take longer time to classify and reconcile transactions.

The interface is also not as intuitive; unless you’re an accounting professional, then this software is going to be extra difficult for you to work with. It’s generally expected that someone operating this system is the business’ CFO or a full-time in-house accountant.

QuickBooks Enterprise Costs:

QuickBooks Enterprise is subscription based, and has three levels of subscription ranging from $84/mth to $134/mth.

The Bottom Line:

You should use QuickBooks Enterprise software for your business if:

  • Your business has more than 3,000 transactions per month (easier to reconcile than the QuickBooks Online and a faster load time).
  • You have a LOT of employees, customers & vendors you’re managing in this system (over 10,000+).
  • You use a more complex inventory tracking.
  • You want the most reporting options.
  • You don’t want to roll with the times and move to cloud-based system. 🙂

You should consider moving to an online accounting system (like QuickBooks Online) if:

  • Your business has fewer than 3,000 transactions per month.
  • You want to save time.
  • You want an accounting software that is intuitive and easy to learn.
  • You need to access your file from different computers or devices.

Xero Review:

Even though I became certified in Xero software a few years ago, I’m not much of a fan. I don’t love it because while the interface (and marketing) makes sense for small business owners, it’s very misleading in terminology and meeting accounting professionals’ needs – let alone keeping your books accurate.

The Good:

Similar to QuickBooks Online, Xero provides the same advantages that most cloud-based accounting applications share: automatic backups, easy access from different devices, able to sync with over 400 different apps, and automated invoicing.

The Bad:

Xero is designed as more of a bare-bones application that can sync with 3rd party apps for additional functions. This means that it’s lacking in quite the long list of features. Some big ones? Job costing, time tracking for contractors, and a handful of automated functions. Of course, you can find 3rd party applications to compensate for the missing features, but that isn’t as streamlined. The software is also limited in basic data organization and reporting functions.

There are also fewer options for customized reports than both QuickBooks Online or QuickBooks Enterprise. Xero provides a handful of basic options for running things like an income statement, balance sheet, aged payables, aged receivables, etc. However, you can only manipulate a few factors on any of these reports. Xero doesn’t give users the options to organize their Chart of Accounts with sub-accounts and it doesn’t allow users to hide or delete most of its default categories.

It’s also majorly misleading in the way it uses the term “reconcile,” which is a serious problem. In accounting, reconciling means comparing and matching your accounting records with your official monthly statements from your bank or credit card company. It also involves making occasional adjustments to your accounting records to ensure that they are 100% accurate and in agreement with your official bank statements. If your business is ever audited, this is something the IRS will want to see. With Xero, the reconcile function allows you to do the comparison part—by importing bank and credit card transactions—but it does not allow users to resolve any discrepancies between their files and the official statements that they receive from their banks and credit card companies. As anyone who has used any accounting software knows, errors will occasionally occur when importing bank or credit card transactions, such as transactions entered twice, missed days, etc. So with Xero, users are left with discrepancies in their file that get recorded as “Rounding.” There is a complicated work-around for resolving rounded discrepancies, but someone has to be really familiar with the Xero in order to do this–and it’s still not a “clean” work-around when all is said and done.

Xero also takes more time. Essentially, when you need to accept a transaction, you have to manually click to each one. In QuickBooks Online, you can grab multiples and only have to click once.

Xero Cost:

 Xero subscriptions start at $9/mth and go up to $70/mth. I have yet to work with a solopreneur (let alone a small business owner) that could operate on the limitations of the $9/mth plan – so plan to purchase at least the $30/mth plan.

The Bottom Line:

You should consider using Xero if:

  • You are not a U.S. business (as you can’t truly reconcile & all U.S. business accounts should be reconciled) and prefer it to QuickBooks Online.

If you want a cloud-based accounting application, you should probably still use QuickBooks Online if:

  • You need more customized reporting options than Xero offers.
  • You are a U.S. business (see the paragraph about reconciling above!)

FreshBooks Review:

FreshBooks is a cloud-based, online accounting software application that was first launched in 2003. It’s a great program, but was created by a non-accounting professional and it shows in both the good and the bad.

The Good:

I love FreshBooks for invoicing! Out of all of the software options reviewed here, FreshBooks (hands down) has the best invoicing. They look the best, and my clients who do their invoicing through this software tend to receive payments way faster. You can also set up payments through all the common payment systems (PayPal, Stripe,, etc.).

FreshBooks also syncs with a variety of different apps (although less than Xero or QuickBooks Online), which can help users improve their invoicing and time-tracking capabilities.

The Bad:

A lot of U.S. consultants and small business owners have convinced themselves that FreshBooks is the best solution to small business accounting because it’s the easiest for them to do. And while FreshBooks does have superior invoicing features, it’s still not a full accounting system. Your business won’t be able to keep all the necessary accounting records through FreshBooks. Unless you are using it simply for invoicing or time-tracking, you will need to use additional software, and I’ll tell you why.

First of all, FreshBooks doesn’t have basic (and necessary) accounting features. Most importantly, you can’t reconcile any account. FreshBooks is operating under the impression that all bank and credit card transactions imported by users will be accurate. But, errors occur. With FreshBooks, there is no easy way to correct these errors because of the inability to reconcile anything. Next, you won’t have the ability to create accurate Balance Sheets and you won’t be able to accurately use liability and equity accounts. Balance Sheets are crucial in order to get a clear picture of how your business is doing. Two years ago, FreshBooks added a feature to enter information into a “Balance Sheet” but this report is deficient. The software also assumes every debit from your bank or credit card accounts should be categorized as an expense (which isn’t taking into account that some payments should be labeled as liabilities, owner’s draws, payments to zero-out payroll liabilities owed, payments toward sales tax payable, repayment of business loans received, etc.). Anything entered incorrectly as an expense will be that much more difficult to fix.

FreshBooks Cost:

FreshBooks subscriptions start at $15/mth and go up to $50/mth. Try if free for a month here.

The Bottom Line:

You should consider using FreshBooks if:

  • Your business plans to use it primarily as invoice software.
  • Your business plans to use it in conjunction with a full accounting software application.
  • You want a better invoicing option than other applications offer.

So, What’s the Best Bookkeeping Software for a Solopreneur or Small Business?

Cloud accounting has become the accounting of the future. One day, we’ll all fully embrace it. 🙂 I used to think that QuickBooks desktop was still the best option, but…

QuickBooks Online is the best bookkeeping software option in 2017!


For the last couple of years (since early 2015), QuickBooks Online has become my top recommendation for my clients and for small businesses across the United States. It’s an effective accounting software that has incredible mobile accessibility, and its features create a usable and streamlined experience that is hands down the best choice.

Prior to 2015, I’ve pushed for QuickBooks desktop software. Although I think QBO is the best software to go forward with, the desktop version can be right – for the right type of business. If you have over 3,000 transactions per month (or want one of the specialized versions) then QuickBooks Enterprise is still the better choice.

If you want to go forward with Xero, feel free, but keep in mind the drawbacks. There are limited options for generating different reports, the data organization is not the best, your reconciliation ability is also limited, and their terminology is often confusing and misleading (not the best combo).

For FreshBooks, my earlier suggestion remains the same. If you want an application for invoicing and time-tracking, FreshBooks is the one. But it’s not a complete account software and there is seriously something lacking when it comes to reconciliations, Balance Sheet reports, and a couple other important business accounting features.

So over to you:

What has been your personal experience with these software applications? Do you agree with my assessment as to the best bookkeeping software? Any favorites or surprises this year?

Curious about the author? I’ve worked with over 300 small business accounting systems (including my own small businesses) for over a decade! I’ve also put in over 10,000 hours of troubleshooting with accounting software–that’s a lot! I’m a Certified QuickBooks® ProAdvisor, a certified advisor for Xero and FreshBooks Software, a certified bookkeeper, and am an Enrolled Agent candidate.  I’m passionate about business owners understanding and optimizing their financials and would love to help you in your entrepreneurial journey.


Wishing you fulfillment & financial success,

Erin Armstrong

Erin Armstrong is a Business Advisor, Chief Financial Officer, Tax Strategist and licensed Enrolled Agent who’s on a mission to financially empower business owners. Her unique, comprehensive approach integrates all the financial aspects of your business (such as accounting practices, tax strategy, profitability, budgeting, & cash flow) with an emphasis on developing a positive money mindset so you can move forward in a confident, proactive and empowered way. Find out more about Erin here.

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