QuickBooks is still the leading accounting software for small businesses in terms of sales, but many people are looking around for other options out of curiosity. I, like many small business owners, have this sense that there ought to be some sort of great open source accounting software. I have yet to find a great open-source accounting software which makes sense. It would be difficult to update free accounting software frequently to coordinate with tax software and code. Instead, most people are turning to web applications like the ones below.
1) FreshBooks– The name itself sounds lovely. And a little bit like QuickBooks. FreshBooks is the best online option out there for time tracking and invoicing. You can easily create, send, and check on invoices with your smartphone. FreshBooks tries to advertise itself as accounting software, which it is but only to a very small degree. If you are a cash-based business and do not need to report a balance sheet for taxes, then you could probably get away with FreshBooks.
Main benefit: For small and creative businesses, FreshBooks could be your accounting system. Otherwise, its only use is in conjunction with other software like QuickBooks.
Negative: QuickBooks does all of this (time tracking could be done the same way with the online version) and the desktop version allows you to easily email invoices, so why add more software?
2) Wave – Free. Yes, it’s free. And it automatically downloads bank data. There is even an option for payroll. I really like this app, particularly for small cash-based businesses. The huge benefit over FreshBooks is that you can create balance sheet accounts. It also offer free invoicing. Although not as pretty as FreshBooks, it has the same basic functionality.
Main benefit: For service-based businesses who do not need to keep track of inventory, this is a great online application for keeping track of data.
Negative: Items! QuickBooks has the one-up here. There are no items in Wave so it is difficult to keep track of different lines of business without making many income accounts.
3) Xero – Beautiful, maybe. And the company received a bunch of money, but there is a lot of work to do. There is no running balance for the bank account, which I could deal with for a free application, but at the same price is QuickBooks Online, what’s the point? If I can’t balance my bank account, why pay money?
Main benefit: It looks cool and coordinates with tons of other applications. The future potential is there and it seems like there is an active community.
Negative: Everything listed above. Maybe it’s not fair to compare them to Intuit yet, but there are small issues that will drive accountants and small business owners crazy as they try to solve seemingly trivial issues.
I just spent a week researching the differences between these 4 accounting services (including Quickbooks) and ultimately decided on Quickbooks. I wish I’d found your post sooner! I could have saved myself a lot of time…
Thank you for the post regardless though, as it helped me validate my decision.
Hi Michael,
Thanks for the comment! Glad you made the right choice!