3 Online Accounting Software Options for Small Business

As cloud computing gains in popularity, the availability of online accounting software continues to grow.  Many small business owners want a software that has an intuitive and easy-to-use interface  that allows them to bill customers, enter expenses and check their bank balances,.  We also want to be able to access from anywhere (you never know when the desire to do your accounting, strikes!)  I have looked at 3 cost effective, multi functional alternatives below:

Quickbooks Online: The basic version, at $9.95 per month, provides you will the ability to track your invoices and expenses, including sales taxes, and to see where you stand with respect to your payables and receivables.  It also allows you to customize and create invoices, and provides many reporting options. You can manage your account from either a Windows or Mac platform as well as your iphone and Blackberry. Only one user can logon at a time (+ your accountant). There are no limits on the number of the customers or transactions.

An upgrade to $34.95 per month gives you a host of other features including inventory tracking, automated banking (which allows you to download your bank transactions into your QB file), time tracking, industry comparisons and 3 simeltaneous user access. 

Payroll and credit card processing are available as add-ons and have to be purchased separately.

Either version allows a free trial and can be cancelled at any time.

Xero: Although the company is based in New Zealand, small businesses anywhere can use the software. The functionality is similar to Quickbooks except that he plan price differential is much smaller with Xero.  The small plan at $19 a month allows for 5 customer and vendor transactions and 20 bank transactions per month which could be problematic for anyone who has more than 5 clients or customers. The medium and large plans at $29 and $39 per month, by comparison, allow for unlimited transactions.   Also, unlike Quickbooks, Xero allows unlimited users for all it's plans and offers a multicurrency feature. 

Kashoo (formerly Clarity Accounting): For small businesses whose need to track invoices, expenses, payables, receivables and bank balances, this seems like the ideal solution.  For $10 a month, the user can enter unlimited transactions, create invoices, enter expenses, create financial reports and download their bank statements.  User access is unlimited, and they support multicurrency transactions.

Kashoo notably lacks a smartphone app and a payroll add on feature, which can be tedious if you have employees.

All three options provide a similar service, with some noteworthy differences.  Quickbooks offers payroll, credit card add-ons as well as inventory tracking with their plus version, but does not allow for unlimited users or multicurrency transactions.  Xero's medium plan (the small plan seems a little unrealistic for most small businesses) supports multicurrency and unlimited transactions, but is a twice as expensive as Quickbooks basic plan.  Kashoo is cost effective solution except that it does not support payroll or have an accompanying smartphone app.  The choice, of course will depend on your requirements and what you are willing to spend.  All versions provide a free trial, so it is absolutely worth it to try them out and assess which one you are most comfortable with.

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Ronika Khanna is Montreal accountant who helps small businesses achieve their financial goals.  To receive regular updates of articles pertaining to small business, accounting, tax and other topics of interest to business owners you can sign up here.  You can also follow her on Facebook or Twitter