The difference between a micro business and a small business is size and scale. Micro businesses typically comprise up to nine employees, while small businesses employ ten to forty-nine (we have separate article on accounting software for small businesses).
Micro businesses obviously require less capital to operate, and their business activity is lower, but their tax requirements are the same as any other company. However, many micro businesses are not in a position to pay an accountant for their tax requirements. Without professional help, accountancy and tax compliance can seem overwhelming, particularly if you are a freelancer or a start-up.
Thankfully, research suggests that around 75 percent of accounting tasks can be automated using accounting software. There are hundreds of intuitive and affordable options available to meet the accounting needs of micro businesses. So how do you choose the one that’s right for you? To help you arrive at a decision quickly, we have tested, reviewed and ranked hundreds of platforms to help you find the best accounting software for micro businesses.
We’ll go into more detail later in the article, but here is a quick snapshot of the best accounting software for micro businesses:
- Freshbooks: Best overall accounting software for micro businesses. FreshBooks is a well-rounded platform for professionals with basic needs and those micro business owners looking for insight and automation.
- Zoho: Zoho offers accounting software features and inventory control, customer relationship management, and human resource management. Their features also expand to other elements of the micro business.
- Xero: There are over 1000 third-party apps that connect with Xero. These integrations customize your automated process and grow with your business.
- Kashoo: Kashoo is an easy–set up and easy-to-use accounting software that covers all the basics without conquering a learning curve. It’s a “no experience required” type of software.
- Wave: For free software, Wave is hard to beat. It offers features that you won’t find with most other free accounting software, such as eCommerce tools and multi-currency support.
We looked for software based on specific criteria when considering our list of the best accounting software for micro businesses. You can read more in detail on the methodology a little later.
- Functionality – How well the software meets the needs of micro business owners. We considered features ranging from those that meet the basic requirements to those who want more advanced options.
- Third-party compatibility – To create a comprehensive system, we looked at the ease, number, and popularity of software subsystems integrating with the micro business accounting software.
- Ease of Use – Automation and streamlining make repetitive and tedious tasks quicker, easier, and less frustrating to accomplish. We’ve reviewed software based on how intuitive and easy it is to set up and navigate.
- Value – Not all software is priced reasonably. We’ve reviewed prices based on what the software offers. Sometimes you get what you pay for, and sometimes you get more or less than you pay for!
1. FreshBooks
Best accounting software for micro businesses
FreshBooks is cloud-based accounting designed especially for businesses ranging from the start-up phase, passing through the micro business stage, and on to the small business classification.
Functionality:
FreshBooks is a well-rounded platform ranging from professionals with basic needs to those micro business owners looking for more insight and automation.
Here are some of the wide range of features:
- Easier invoicing and faster payments. As a micro business owner with a small budget, being paid on time is especially important. FreshBooks offers crucial billing and payment options such as recurring invoices, automated payment reminders, and online payments.
- Client tracking. Stay on top of every client’s account, including estimates, proposals, time tracking, and client account statements.
- Taxes. Tax time is less stressful with FreshBooks. Invoices, payments, mileage, and expenses are automatically tracked year-round.
- Automated mileage tracker app. Mileage is automatically logged for each trip.
- Mobile. Snap pictures of receipts, manage expenses on the go and chat with clients. Work anywhere from any device.
- Time tracking. Record time spent on a specific client, automatically bill for tracked hours, and track time for a particular project, all with a built-in timer for desktop and mobile.
- Project management. Promotes client collaboration from project planning to executing work and tracks and interprets a project’s profitability.
Reporting:
Accurate reporting ensures compliance. The double-entry accounting platform matches revenue with its related expenses, and there is an automatic check and balance process that provides accurate records. The reporting capabilities include a balance sheet, accounts payable, trial balance, chart of accounts, general ledger, cost of goods sold, and journal entries. Your accountant can have easy access to your financial information and selection of detailed reports.
Integrations:
FreshBooks integrates with plenty of other tools and software packaged. These include Microsoft Outlook, Mazuma, GSuite, Stripe, Fundbox, Gusto, Bench, Shopify, Square, and PayPal. Don’t see an integration that you would like to have? FreshBooks invites you to suggest apps that would make running your business easier.
Ease of use:
The software is easy to set up and navigate. Those with little or no accounting experience can easily navigate the program. The interface is bright, clean, and intuitive. The dashboard is straightforward, and the reports are detailed. All-in-all it’s a simple program to navigate even with its more robust features.
Cost:
FreshBooks provides a range of monthly pricing options, depending upon the plan selected. FreshBooks has four payment plans ranging from $15-$50 (GBP £10.87-£36.24) a month. Custom pricing is available for unlimited clients and specialized features.
As far as cost goes, FreshBooks is in the middle of the pack—not the most expensive, but not the cheapest either. Price increases as the number of billable clients and users are added. Custom pricing is necessary if you exceed 500 clients, but once you get to those numbers, you get an account manager, lower rates for credit card transactions, and custom training. FreshBooks offers a 30-day free trial.
BEST ACCOUNTING SOFTWARE FOR MICRO BUSINESSES: FreshBooks is our #1 pick. It provides the most effective combination of features, reports, and integrations that are easy to execute and navigate, all at a reasonable price.
2. Zoho
Best accounting software for micro businesses based on features
Zoho is best for micro businesses and small businesses looking for online accounting software that manages finances, collaborates with colleagues and accountants, and automates business workflows.
Functionality:
Zoho offers robust accounting features for end-to-end accounting, all while collaborating with colleagues and accountants throughout the entire process. It provides accounting software features and inventory control, customer relationship management, and human resource management.
Here are a few of Zoho’s standout features:
- Receivables. Keep the cash flowing with the quick and simple feature of creating invoices, payment reminders, and an online payment option.
- Payables. Monitor payables by creating & sending purchase orders, uploading expense receipts, and keeping track of payments made.
- Inventory. Manage inventory by keeping track of stock at all times, establishing reorder levels, and organizing inventory by SKU, cost, and stock on hand.
- Banking. Avoid data entry by importing bank statements, automating categories for bank transactions, and reconciling accounts.
- Time tracking. Manage multiple projects by creating invoices directly from projects and tracking unbilled hours and expenses.
- Contacts. Manage your contacts, communicate through the client portal, and securely store customers’ payment information.
- Reports. Runs over 50 reports for real-time overviews and insights.
Reporting:
Users can stay up-to-date and current with every aspect of their business with the option to choose from over 50 reports. Customize reports and filter them for detailed breakdowns. Reports conveniently display insights and overviews on the customizable dashboard.
Integrations:
Zoho integrates with over 40 apps to make running your micro business more efficient. These apps include GSuite, Stripe, PayPal, Square, 2checkout, Braintree, Forte, and Uber for Business.
Ease of use:
Zoho requires no previous accounting knowledge to operate. The software is easy to set up and easy to navigate. It also provides plenty of resources, such as a comprehensive help guide, videos, migration guide, blogs, business guides, webinars, and forums.
Cost:
Zoho offers a free plan in addition to three paid plans. They offer monthly and annual subscriptions, with the yearly fee running slightly less than the monthly plan. Their monthly plan runs anywhere from $12 to $36 a month per organization.
3. Xero
Best accounting software for micro businesses looking to integrate with third-party apps and services.
Xero is a cloud-based software designed for micro businesses and small businesses looking to grow their business but still want simple accounting software. It’s highly recommended for sole proprietors, freelancers, and the consulting industry.
Functionality:
Xero simplifies the accounting process for micro businesses and small businesses with features that include invoicing, expense management, inventory management, project management, and bill payment. The features are located under the navigation tabs on the menu bar.
Here are some of the top features of Xero:
- Pay bills. Track and pay bills on time by scheduling payments in advance and making batch payments.
- Claim expenses. Claim expenses by capturing costs by taking photos of receipts, monitoring employee spending, doing expenses on the go, and viewing spending using the expense tracker.
- Bank connections. Connect your business bank account to Xero to benefit from automatic bank feeds.
- Accept payments. Get paid from the online invoice with the ‘pay now’ feature and accept payments using Stripe, GoCardless, and more.
- Track projects. Send customized invoices, track time & costs, prepare quotes based on estimates, and monitor profit margins.
- Payroll with Gusto. Use a combination of Gusto payroll and Xero for automated payroll and to view pay stubs & W-2’s online.
- Bank reconciliation. Keep financials up to date by categorizing and reconciling bank transactions daily.
- Manage contacts. Use contacts to create lists & groups and to connect your email.
Reporting:
Know where your business stands at any time and from any device. Track finances and see how your business is performing with up-to-date accounting reports. Use formulas to compare actual and budgeted amounts to ensure your micro business stays on track and customize reports by deciding what goes into each one.
Integrations:
You’ll be hard-pressed to come up with an app that doesn’t integrate with Xero. There are over 1,000 third-party apps that connect with Xero. These include invoicing, payment, payroll HR, inventory, CRM, and time tracking apps such as ApprovalMax, Shopify, Stripe, PayPal, Gusto, DEAR Inventory, Capsule CRM, and WorkflowMax. These integrations customize your automated process and grow with your business.
Ease of use:
Xero is easy to navigate since it is designed with a simple user interface. The dashboard is entirely customizable to display the most useful information to you. The accounting software can be accessed anywhere, making it highly accessible, and every plan supports unlimited users.
Cost:
All of Xero’s subscription plans support unlimited users, so as your business grows, you can add new users at no additional cost. The pricing plans coincide with the business’s growth. There are three plans that range from $12 to $65 per month. The Early Plan is for sole traders, new companies, and the self-employed. The Growing Plan is ideal for growing businesses, and the Established Plan is for established businesses. Xero also offers a free 30-day trial.
4. Kashoo
Best user-friendly software for micro businesses
Kashoo, marketed and known as ‘the world’s simplest accounting software,’ is ideal for independent entrepreneurs and freelancers whose top priority is simplicity and ease of use.
Functionality:
Kashoo’s simplicity stems from its easy-to-access and easy-to-execute features. This accounting software offers a wide array of user-friendly features.
Standout features include:
- Contracts. Contracts are customizable. You can even review and sign contracts and other related documents online.
- Online booking. Book appointments online and collect online payments.
- Communications. This feature includes template emails, questionnaires, and customer notes.
- Workflows. You can build custom workflows and track tasks by the employee and project.
- Invoicing. Send invoices and automatic late notices.
- Lead tracking. You can organize and track new leads.
- Proposal builder. Create and send proposals effortlessly.
Reporting:
There’s a reporting dashboard that reports on every detail of your business, including bookkeeping, invoices, and business analytics. The all-in-one dashboard lets you know which tasks need to be completed and who they are assigned to. You can also view your weekly schedule, key sales, and performance metrics.
Ease of use:
The software program is easy to set up, customize, and navigate. The look and design of the software are very appealing. It’s easy to train other employees on the software, an essential aspect not often considered. Their support is extremely helpful and includes videos and tutorials. The interface is bright, clean, and intuitive.
Cost:
They have four plans. The Emerging Plan is for one user and one brand designed for new start-ups and is entirely free.
The StartUp plan is for three users and one brand. It is designed for those who have been in business for a year or more. This plan runs $24/month (GBP £17.86) annually or $29 (GBP £21.59) for a monthly plan.
The Studio Plan is for six users and two brands and is designed for the studio with multiple employees or brands. This plan runs $40/month (GBP £29.78) annually or $60 (GBP £44.67) for a monthly plan.
The Hub Plan is for unlimited users and unlimited brands and is designed for larger studios with multiple employees and brands. This plan runs $67/month (GBP £49.88) annually or $80 (GBP £59.56) for a monthly plan.
All paid plans offer a free 30-day trial. Add-ons include online booking and workshop module for $7.50/month (GBP £5.58) annually or $10 (GBP £7.44) for a monthly fee.
5. Wave
Best free accounting software for micro businesses
Best for:
This accounting software is ideal for micro businesses on a budget. You’ll be hard-pressed to find a better price for such an impressive set of features. Wave is free, and the free version offers everything any very small business would need, even one working with multiple entities. Some features, such as payroll and payment processing, have an associated cost, but Wave is still a good option for those needing the extra features.
Functionality:
Wave is a double-entry accounting option that provides the features most micro businesses would need in its free version, including unlimited clients, invoicing, and expense tracking.
Standout features include:
- Income and expense management. These are robust features that are well-organized and laid out. Easily keep track of income and expenses.
- Automatic payment reminders and bank & credit card feed. These free features simplify the micro business owner’s daily task list.
- Invoices. Invoices are customizable and easily created
- Estimates. Estimates can be converted easily to invoices
- Sales tax. Sales tax is automatically calculated for you
- Wave. Wave can also be set up to send reminders and receipts
- Expenses. Offers billable expense and some time-tracking features
- Support. Provides multi-entity support and multi-currency support
- Wave Money. Provides a business bank account, a debit card, and a mobile app to allow the user to integrate their business account directly into the software seamlessly
The payroll feature costs extra, but it’s helpful that the payroll module will enable employees to see their W2s, pay stubs, and bank information. In some states, the module can even file payroll taxes automatically.
Wave is cloud-based and accessible via any browser and an internet connection. Wave has two mobile apps: Wave Invoicing and Receipts by Wave.
Reporting:
Wave enables accrual and cash basis reporting. Cash flow, profit and loss, trial balance, and sales tax reports are available with Wave. Overall, Wave’s reporting ability is not as robust as some competitors, but it’s still enough for most micro businesses.
Ease of use:
Setup is simple, and Wave is easy to navigate. This software application provides many automated features, including bank and credit card automation. The dashboard provides a clear overview of business health. The Wave user community is active and helpful for those who need extra assistance, and the Help Center is easy to navigate and provides numerous tutorials and guides.
Cost:
Wave is free, which is a price that’s hard to beat. Extra modules, for example, payroll and payment processing, do incur a cost, but they are cost-effective.
Methodology: How we found the best accounting software for micro businesses in 2022
Looking for just the right accounting software for micro businesses is overwhelming because there are many to choose from and they all have different features, advantages, and disadvantages.
To ensure we recommend the best solution based on the various needs of businesses, we give the software to real business owners to try in real-world environments. To be precise, we asked two professional accountants and two micro business owners to use each of the solutions for a period of 14 days. We then asked them to score each of the products based on the following criteria:
- Functionality
- Value
- Ease of use
- Financial reporting
- Integration
Each of the criterion is weighted equally because every business owner’s requirements are different. We then take the mean average of the results from our reviewers to arrive at a decision. But our research doesn’t end here. We also keep a comprehensive database of features across a wide range of accountancy software solutions. This data-driven approach helps us better understand the services and we constantly re-evaluate providers as they add new features to their tools. If we feel that a software has changed significantly enough to warrant it, we will retest the solution and update its score accordingly.
FAQ:
Which accounting software for micro businesses is the most user-friendly?
Kashoo is one of the most user-friendly software applications to use for micro businesses. The software program is easy to set up, customize, and navigate. Their support is extremely helpful and includes videos and tutorials. The interface is bright, clean, and intuitive.
Is accounting software for micro businesses better than using an accountant?
While accounting software will take care of most bookkeeping tasks, you should still consult an accountant at tax time. By already having the financial information recorded and organized, the accountant's services may be less expensive.
What is the advantage to cloud-based accounting software for micro businesses?
Cloud-based accounting software allows you to access your company's financial information from anywhere at any time. Remote access has become particularly important during the Covid-19 pandemic when so many are working from home.
More accounting software articles:
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- Best real estate accounting software
- Best Amazon accounting software
- Best contractor accounting software
- Best accounting Software for startups
- Bookkeeping software
Contents [hide]
- Methodology: How we found the best accounting software for micro businesses in 2022
- FAQ:
- Which accounting software for micro businesses is the most user-friendly?
- Is accounting software for micro businesses better than using an accountant?
- What is the advantage to cloud-based accounting software for micro businesses?
