We all know how important accounting is in running a business. Without accounting, it would be impossible to keep track of your income, expenditures, do budget planning, make business decisions and measure growth.

Because of the crucial role it plays, all entrepreneurs try to perform financial upkeep systematically, and this could result in tedious processes prone to human errors.

A lot of startups try to do things manually, especially when it comes to accounting. It may begin as something manageable, but when business grows, transactions become more complex, eating up vulnerable time and causing stress.

So, how do new businesses resolve these issues? Let’s find out as I discuss accounting software, its importance, including some of the best accounting software to use for startup business in this article.

What is accounting software?

Before we delve into the options, first let’s get to know what accounting software is.

Accounting software is a type of application used by bookkeepers, licensed professionals, and business owners to help them manage their financial transactions. Activities such as bookkeeping, invoicing, bills payment, payroll, and financial reporting are swiftly and efficiently done with the help of this tool.

The software is usually installed on a computer with compatible hardware to ensure that it runs smoothly. The free ones which are usually downloadable through a link can easily be installed by running the downloaded file. However, many have now emerged as web-based software wherein the tool can be accessed via desktop or mobile (iOS/Android).

Online VS Offline Accounting Software

Online accounting software allows users to maximize the benefits of the tool. When the software or app is connected to the internet, it allows seamless integration, automating most of the processes from invoices, to data backup and security.

In short, you’ll end up still doing things manually if you go for offline accounting software. If you wish to address proficiency and practicality, I would strongly recommend getting an online or cloud-based accounting solution.

I just launched my business, do I need to use accounting software now?

A good accounting system in place starting from the early days of your business is a necessity.

Numerous benefits await fresh entrepreneurs who make use of automated financial tools. They can manage their time and direct their energy to productive tasks, manage clients, reconcile accounts, generate last-minute reports for potential investors, and simplify tax filing.

Incorporating accounting software from the start also sets a standard for your financial transactions and procedures. This means improving accuracy or limiting errors from manual processes.

Although a startup business accounting software doesn’t cost that much, some are reluctant to pay for something that they are yet to use. For those who are new to this tool, test the waters by availing of a free trial, or maybe look for free services and see how you can benefit from its features.

Now that we know what accounting software is and its significance, time to take a look at your options as you work your way in improving your productivity.

Here are the 5 best accounting software for startups in different industries:

1) FreshBooks

If you’re new to accounting and would want to learn the basics including the use of the software, FreshBooks could be your best option. It’s a cloud-based software packed with user-friendly features and allows one to grow with the app. If in time your business dictates upscaling, FreshBooks still has all the power you need to perform your accounting needs.

The lite plan starts at $7.50 per month and can accommodate up to 5 billable clients. It’s great for small businesses and freelancers. You have the option to upgrade and unlock more features in tracking and organizing client info, billing solutions, client payment options, and managing your business as your package goes up.

2) Intuit QuickBooks Online

Have a strong competitive edge in the market? If you think you’d be skyrocketing your sales in no time, QuickBooks is the way to go.

This software boasts its flexibility in accommodating future expansion and different industry-specific accounting needs. Have the option to integrate it with QuickBooks payroll and enjoy automation in your finances at its best!

The lowest pricing is tagged at $7.50 per month for freelancers where you get to track income and expenses, capture and organize receipts, estimate taxes quarterly, track miles, and run reports. For SMEs, the lowest tier is slightly higher with a price of $12.50 per month with more features added, intended for new businesses.

3) Wave

Considering that today proves to be a very challenging period for anyone into business, every entrepreneur would want an awesome tool at zero cost.

With Wave, you just got yourself a chance to use one of the best free accounting software for startups this 2021. Wave offers entrepreneurs to perform all their accounting needs in one package. Create invoices, track receipts, and connect to Wave payroll and payments all for free!

4) Xero

If you already have an obsession with business tools, I’m sure you’ll find Xero extremely convenient.

This software is known for its capability to connect with hundreds of third-party apps. With that feature, you just got yourself a robust systematic structure in your financial management process.

Xero’s plan starts at $5.50 currently at 50% off, with a regular rate of $11 per month. With this package, enjoy sending a maximum of 20 quotes/invoices, billing up to 5 clients, reconciling bank transactions, capturing bills/receipts, and taking short-term cash flow and business snapshots.

5) Sage-50 Cloud Accounting

Do you prefer to take your work on your desktop but with a remote feature? Although Sage-50 is desktop-hosted, it gives you the convenience of accessing data in the cloud.

This dynamic software can help you with your accounting needs regardless of what industry you belong to. Do bills, invoices, purchase orders, costing, and payroll through this tool. If you’re using Microsoft 365, you can integrate it into your account for a fee.

Sage-50’s desktop accounting solution is currently offered in standard and professional packages. The newest product they have accommodates an online accounting software accessible on any device and starts at £12 per month (currently free for 3 months), while the standard package is offered at £65 per month.

Given all these options, have you found the right accounting software for your business? If you’re still not quite sure about which product to choose, you can always take advantage of a free tool while you try to explore the common advantages the software does.

Remember, wave accounting can give a glimpse of what you’re about to experience, more or less, on other online financial accounting tools.