The best accounting solutions to use in 2021

December 21, 2020
Francesca Rünger-Field

As a business owner, having a solid accounting solution is imperative. You need something that allows you to book expenses, send invoices, and to get paid, gives you visibility and insight into your profits, and maybe even connects to banks and integrates to other software solutions.

Going without one means using spreadsheets - and for growing businesses, this is simply not a scalable solution. So, what options are there?

QuickBooks Online - the heavyweight

QuickBooks is a household name in the accounting world. Having wrapped up 2019 with a whopping 4.5 million QuickBooks Online (QuickBooks Online) users, their trusted platform (and functionality) continues to grow exponentially.

As the name suggests, QuickBooks Online gives people the ability to access their accounting on-the-go as it is their cloud-based option, though they do also offer a variety of solutions that flex to the customer’s individual business journey, such as QuickBooks Self-Employed and QuickBooks Desktop.

Given that the tool has such a tremendous user base, there are many tutorials and videos out there to aid users in getting set up - but rumor has it that these resources might be necessary as the QuickBooks Online experience isn’t as intuitive as one might hope it to be.

That being said, 62% of QuickBooks Online users are now connected to an accountant - a solid indicator that accountants are incredibly familiar with the tool should you need a hand in getting your financials in order.

Many accounting solution providers offer a partner database, and QuickBooks Online is no different - a list of their ProAdvisors can be found on their website and even filtered by location, enabling you to find accounting help in close proximity.

QuickBooks Online’s robust functionality is virtually second to none, with all the standard features you would expect, such as invoicing, bill management, expense and inventory tracking plus multiple currencies. Their more advanced features such as payments and payroll are also available at an extra price.

One of the benefits of going with the industry leader is that they have established connections to lots of other software tools to help you run your business more efficiently. Their App Store featured hundreds of tools that you can use seamlessly with QuickBooks and includes categories like "sync data" and "track inventory."

In terms of cost, there are three different versions of QuickBooks Online you can choose from that will set you back between $20-$50 a month. Each version offers a 30-day free trial.

Xero - the cloud-based, user-friendly champion

Xero is QuickBooks Online’s top contender, coming in hot and heavy from the land down under where its user base of 2 million dominates much of their home market (NZ), as well as the Australian and the British accounting market.

It is the purpose-built cloud accounting software and has a reputation for being incredibly user friendly with fantastic reporting capabilities, an abundance of integrations, and a very intuitive, easy to manipulate interface.

Xero’s flexibility is another game-changer - users are able to make their own version of an income statement and create drag and drop invoices. Where QuickBooks Online’s structure is a lot more limited, Xero’s reporting is almost independent of the chart of the accounts running in the background.

Similarly to QuickBooks, Xero also offers an extensive advisor network that allows you to find a Xero-accredited accountant or bookkeeper, based on your location and even industry.

Its pricing model is based on the functionality the user requires, and ranges from small to starter, through to premium, ranging from $20-$40.

Freshbooks - for the self-employed self-starters

Freshbooks was designed especially for freelancers and contractors. Though it cannot compete with the giants of the accounting world, the cloud-based solution works perfectly for self-employed workers who need time tracking, invoicing, payments, and reports.

It's simple, sleek, and highly intuitive interface likely makes it the most user-friendly accounting software out there. For such a small tool, Freshbooks offers a vast range of integrations and suits a smaller budget, too.

Again, their pricing model is tiered and depending on the functionality you require, the software will cost you between $15-$50 monthly, with a 30-day free trial available.

Zoho Books - most bang for your buck

Zoho Books is Zoho’s accounting app - one of their 40 apps, making it a great tool to use if your business is growing and you are looking for other seamlessly integrated apps to help run your business.

Zoho offers all the accounting a small business might need, split across three different (and very affordable) pricing tiers. Their functionality includes manual journal entries, financial statements, project management, automated banking, and some inventory. The only feature they do not offer is payroll, though this may really be the only downside.

Books also offer a handy payment reminder feature to make sure your clients are paying on time. The software is very easy to navigate and does not require an accounting degree to be understood.

Inventory management

It should be pointed out that accounting systems are not designed to cater to inventory management. They take snapshots of inventory but their functionality is very superficial.

QuickBooks Enterprise is the only system that has built-out inventory in comparison to other accounting systems, with functionality like backorders, changing BOMs, and multiple shipping addresses, but its interface is very rudimentary. There are most definitely better tools on the market.

Pick the right accounting solution, then make it better

Both QuickBooks and Xero have our vote. You want software that your accountant is familiar with - and both these solutions tick those boxes. However, that being said, their sophisticated functionality caters to a certain crowd and it may well be that you don’t need the mammoth accounting features their softwares offers.

It also adds a whole new set of requirements into the mix when you take running your business to the e-commerce level. What happens if you sell on Shopify or are an Amazon* FBA seller needing to get your Amazon fees and transactions into your accounting system but don’t know where to start?

ParagonSMB is an operations software that hooks up to QuickBooks Online and other e-commerce platforms seamlessly, allowing you to centralize your data in one place so you can perform all your business operations with quotes, orders, inventory, pick/pack/ship logistics, and more. Try it free for 14-days!

ParagonSMB's integration to Amazon is coming in January 2021.

The better way to run your business