How to choose accounting software for a service-based small business?
I know you’ve likely been staring at a computer screen for a while thinking: I know I need to get this small business accounting stuff set up, but how do I even know what is going to work best for a service based business?
In this article, I’ll be answering the question: How to choose accounting software for a service-based small business?
At the very least, this should decrease the amount of head banging on the wall…unless of course you are really really into heavy metal music.
But at best, you should leave this read with a clear idea of what platform will help you as a service-based small business best, what other platforms have to offer, and how to start navigating the world of bookkeeping for small businesses.
Want more individualized support with your bookkeeping? Schedule a chat with me so we can figure out what exactly you need and how to get you where you want to be.
TLDR
Use QuickBooks Online for your service-based small business accounting
Xero is close to QuickBooks, but is a similar price point and not all accountants work with the platform compared to QuickBooks
Quicken is for personal finance, please don’t use this for your small business bookkeeping
NetSuite is too robust for most small businesses and far more expensive than what a service-based small business needs.
FreshBooks is most similar to QuickBooks Online at a smaller cost, but is focused on solopreneurs and freelancers who need time-tracking versus growing service-based small businesses.
QuickBooks Desktop is still available, but not updated nor as collaborative as QuickBooks Online software.
How to choose accounting software for a service-based small business?
Short Answer: Use QuickBooks
Long Answer: You have several platform and online options that you can choose from for small business accounting, but they likely are scaled too large for your business or are going to give you lots of tools that you don’t really need (and cost a pretty penny too).
Read more about my individual software breakdown below.
Accounting Software to Choose From
Xero
Xero is a cloud based bookkeeping software that aims to be budget friendly and more user-friendly than QuickBooks.
It isn’t bad; but it also isn’t much cheaper than QuickBooks either.
So then the draw to switch over has to come from somewhere else, but it has more pitfalls than benefits in this area.
Not all accountants/bookkeepers can work with Xero, but almost all of them know QuickBooks and can help you if you use that software.
The popularity of QuickBooks also means that there are many more apps and integrations that work with QuickBooks…making it the top bookkeeping software with bank integration for small businesses.
Xero only works well for you if you are looking for a slightly cheaper price but with the basics that only a micro-business would need.
Quicken
Originally created by Intuit, the same parent company as QuickBooks, but sold years ago, Quicken is very inexpensive compared to QuickBooks.
There’s a reason for that though…
Quicken isn’t a professional bookkeeping software for your small business.
It is a personal finance tool meant for individuals to keep track of their personal expenses and will not be able to do the functions of a service-based small business.
NetSuite
Woah there!
Netsuite is a very powerful tool meant for large companies with an entire In House accounting department.
It is much Much more expensive than Quickbooks and has far more than you would need access to as a small business.
I specialize in small business bookkeeping support, and there has never been a need for my clientele to ever use this type of software.
FreshBooks
FreshBooks is geared toward service-based businesses and runs moderately cheaper than QuickBooks by comparison.
It has bank integration and a mobile app as well (just like QuickBooks has available). Their website even looks a little similar with that QuickBooks green.
You can invoice, pay bills, collect payments, track expenses, run payroll, and several other similar features to QuickBooks.
They also have a FreshBooks AppStore that allows integrations - though not as many natively intuitive ones to QuickBooks (100+ vs 750+) meaning you may need to set up Zapier automations (and paying for Zaps) in order to make those same automations happen.
There is still the issue that your bookkeeper and/or accountant may not be familiar with the platform and unable to help you (as most accountants prefer working inside QuickBooks).
Ultimately, Freshbooks is great for when you have limited clients (as there are client limits) and your sole focus is on client invoicing and time-tracking. They have no inventory options and really focus on freelancers and service solopreneurs to be most effective.
QuickBooks Desktop Vs QuickBooks Online
QuickBooks gets two mini categories that I focus on most. You have lots of options within QuickBooks for the right service for your business (I’ll go into that in a different post next month).
For now, let’s talk about QuickBooks Desktop Vs. QuickBooks Online for your service-based small business.
I know a lot of old school accountants prefer desktop, and I get it.
Desktop offers some features that online doesn’t, and they don’t like the subscription-based model of businesses nowadays.
But the old days where you could buy QuickBooks Desktop once and be done are already gone.
QuickBooks Desktop is now a subscription, and a more expensive one than QuickBooks Online.
Plus, using QuickBooks Desktop means that you need to share a company file with your bookkeeper, either by email or USB drive. Then you need to wait for the bookkeeper to make their adjustments before you can download their changes, then try to get caught up on all the financial activity that happened in the meantime.
QuickBooks Online is really the future of Quickbooks and that is where they are putting all of their efforts as a platform to make sure it stays updated.
You get free updates and new features all the time. I even have to make sure to stay on top of all these updates with my QuickBooks ProAdvisor certification every year.
You never need to worry about not being supported on new operating systems or downloading new drivers to protect against security issues.
So QuickBooks online makes it so that you can do all the things your service-based business needs with the level of support from both QuickBooks and from your finance team.
My Recommendation for the Best Bookkeeping Software for Small Businesses
Short answer: QuickBooks Online
And no, QuickBooks does not give me any money for supporting them in this way. I just truly appreciate what they have to offer.
The best part of QuickBooks Online is that it allows for real time collaboration.
Your accountant and bookkeeper both have access (without needing your login information) to your business books from their accountant profile. Their accountant profile gives them access to even more features to help you as well.
Plus, with the variety of options for which type of QuickBooks Online account you can have, some of which are exclusively available through a QuickBooks Advisor like myself, you can always find something that works specifically for your small business. Each option has its own price point and features for you to choose from.
One of the first services I often provide for clients is a Review and Assessment of what they are doing currently for their small business. This allows me to assess if they are actually using the best version of QuickBooks Online for small business and how they may be missing out on features that would help them (or even overpaying for features that they don’t need).
I had a client that paid me $150 for a Review and Assessment service to see what was truly going on behind the curtains.
Right away, I saw that the client was paying for a version of QuickBooks much more advanced than what she needed. I advised them to downgrade to a more appropriate version of QuickBooks Online, and they immediately started saving $150/month!
And I hadn’t even done any bookkeeping yet!
Just having a review completed paid for itself many times over.
If you are worried about which QuickBooks Version you should actually be using or are wondering about a switch from another bookkeeping software, let’s chat to make a clear plan to move forward with.