Best Accounting Software for Small Business 2017: QuickBooks vs Xero vs Wave
In this guide, we compare the top providers of small business accounting software: QuickBooks Online, Xero, and Wave. QuickBooks and Xero were selected because they both offer features that go beyond the basics, such as inventory management and budgeting. Wave stood out because it is a free option packed with great features. Read on for a detailed comparison.
Best Accounting Software for Small Business Owners: QuickBooks Online
We recommend QuickBooks Online because of the number of features that you get for the price, how easy it is to use, and the availability of free live support via phone or chat so that you can get help when you need it. It’s also the system that we use and love at Fit Small Business. Click here to receive up to 50% off Quickbooks Online.
Best Small Business Bookkeeping Software Summary Table
QuickBooks Online: Best Accounting Software for Small Business Owners
There are four primary reasons why we chose QuickBooks Online as the best small business accounting software:
1. QuickBooks ecosystem
Accounting software is different from other types of software because you’ll be giving other users, such as your accountant or bookkeeper, access to your information. It’s important for these people to be familiar with the system you’re using, and that’s almost guaranteed with QuickBooks. It’s the most commonly used accounting system with over 1 million customers and is regarded as the ‘go to’ accounting software. This is the primary reason we recommend QuickBooks, despite the potentially higher price tag.
There are over 20,000 accountants and bookkeepers who are certified in QuickBooks and a large network of ProAdvisors (myself included) all across the country. Be sure to check out how to find a QuickBooks Proadvisor for tips on how to locate and hire a QuickBooks Pro.
2. It’s easy to use
While all 3 systems are easy to use, QuickBooks is especially ideal for business owners who don’t have an accounting background. The QuickBooks user interface consists of completing forms to bill your customers and to pay bills or write checks. Once you understand how to complete the forms, QuickBooks does the accounting behind the scenes for you. To expand your bookkeeping knowledge, check out our Small Business Bookkeeping Accounting Guide.
3. QuickBooks will grow and expand with your business
It has advanced features like inventory tracking and the ability to create budgets. In addition, you can easily add on payroll once you hire your first employee, and sign up for an Intuit Merchant Services account when you are ready to accept credit card payments from your customers. These services come with an additional cost, but the good news is that you can add them with just a click of a button and there is no need to upgrade to a new version.
4. Create financial statements in minutes
QuickBooks comes with 40 + reports that you can run in minutes. This includes a Profit and Loss Statement, Balance Sheet Report and Statement of Cash Flows, which provide you with a complete picture of how well your business is doing. Xero offers similar reporting capabilities. While you can run a Profit and Loss Statement and a Balance Sheet Report in Wave, you cannot prepare a Statement of Cash Flows.
If there is a downside to QuickBooks, it’s that the quality of the support can be inconsistent. As a QuickBooks ProAdvisor, I have had a lot of experience with calling or using chat support while at a client’s office. My experience using the chat support channel has been much more successful than when I call the support line.
Xero: Best Accounting Software for Free Payroll Processing
Xero is not as well known as QuickBooks and is sort of the “new kid on the block,” but it is quickly making a name for itself with over 1 million small business subscribers. Xero has over 16,000 certified advisors (myself included) who can help you get up and running. You can find a Xero certified advisor by entering your city, state and zip on the website.
In my opinion, the look and feel of the Xero interface is very similar to QuickBooks Online, so it is perfect for existing QuickBooks users that are thinking about making a change. Similar to QuickBooks, we have created a free Xero Course with video tutorials that show you how to set up your business.
Xero includes payroll processing for up to 5 employees in their product offerings (up to 10 in premium edition). The benefit of course is that when your business grows to where you need to hire employees, there is no need to upgrade or any additional costs to pay. With QuickBooks, you need to pay an extra cost if you want payroll functionality.
Unlike QuickBooks, Xero allows an unlimited number of users to access the program at no additional charge. This is great if you have several people like your tax professional, CPA, and employees that need access to your data. Similar to QuickBooks, you can set each person up with their own user id and password and give them access to just the areas of Xero that they need.
The downside to Xero is their customer support. Free email support is included in all plans but if you would like to talk to someone, then you have to include a request for a telephone call in your email. The response time for emails is generally 3-4 hours.
Lastly, although Xero is quickly catching up to QuickBooks, they still don’t have the same number of local experts/certified advisors. So if you’re thinking of choosing Xero, make sure your accountant or bookkeeper is onboard.
Wave: Best Free Accounting Software
Heard of Wave before? Neither had I before I started doing some research for this guide. With a price tag of FREE, I must say that I didn’t expect much. But, I was pleasantly surprised at the long list of features this accounting software has to offer for absolutely free. There are limitations on what you can do with Wave, but for a free online accounting software, the functionality is quite extensive.
Wave was designed for contractors, freelancers, and businesses with 9 or fewer employees. They have over 2500 Pros who support small businesses that use Wave. This is significantly less than the 20,000 QuickBooks Pros and the 16,000 Xero Pros out there so it might be more challenging to find a local expert. However, the program is pretty easy to use and they have some great training resources that we will explore later on in this guide.
Wave is able to handle the day to day business basics like invoicing customers, importing credit card and debit card transactions, and running financial statements like profit and loss and balance sheet reports. However, you cannot run a statement of cash flows in Wave. Also, it is limited when it comes to paying bills. You can enter your bills and manage their due dates in Wave, but you cannot actually write a check in Wave. Therefore, you will have to manually write checks to pay your bills and then go into Wave and manually mark your bills as paid. Since this process is manual, your accounts payable account will not be up-to-date until you have manually marked the bills as paid.
There’s also another catch: you will see display ads on the right side of the screen. But to be honest, after working in the program for an hour, I forgot they were there.
QuickBooks vs. Xero vs. Wave: In-Depth Review
The three companies we compare in this guide range the gamut in terms of price. Wave is free, and Xero and QuickBooks are $30 and $50/month respectively. Here’s a summary of pricing and what you get with our recommended edition and the premium edition of each product.