There are over 1.2 million small business employers in Canada, a number which is steadily growing as more Canadians are starting businesses.
Often, one of the most difficult aspects of entrepreneurship is handling your small business accounting.
Expense management, inventory management, and keeping track of sales can be a real headache if you’re not prepared for it.
Thankfully, there are many accounting software options small business owners can take advantage of to make things easier.
Below, I’ll outline some of the best accounting software for small businesses in Canada, so you can decide what’s best for you.
Benefits of Using Accounting Software
Some of the most compelling benefits include:
- Time Savings: Manual bookkeeping is time-consuming. The software can automate many tasks, allowing you to focus on other aspects of your business.
- Accuracy: Human error is inevitable in manual accounting. The software can minimize these errors, ensuring your books are accurate.
- Financial Overview: With a click, you can view various financial statements, giving you a clear picture of your business’s financial health.
- Cost-Efficient: In the long run, using software can be more cost-effective than hiring a full-time accountant, especially for businesses that are just starting out
- Cash Flow Management: Monitor incoming and outgoing funds, ensuring you maintain a positive cash flow, which is crucial for small businesses.
- Professional Invoicing: Send professionally designed invoices, quotes, and receipts, improving your business’s image.
- Data Backup: Most software solutions offer cloud storage, which ensures your data is backed up and can be accessed in case of any technical failures.
Considerations When Shopping For The Best Accounting Software
Invoicing and accounting software programs share many of the same features, such as:
- Expense tracking
- Receipt scanning
- Tracking business accounts
- Processing online payments
However, each program has its own unique selling points and advanced features that could make it more appealing to your small business. For example, some programs are better suited for generating financial reports, while others offer an easy-to-use mobile app.
Here are some important things to consider before you decide on your small business accounting solution.
1. The Type Of Business You Operate
Service-based businesses typically follow a slightly different accounting system than retail businesses.
As a service-based business, you’ll primarily keep track of individual clients and jobs. Conversely, as a retail business, you’ll need an accounting program that can integrate with your sales software to keep track of daily receipts.
To determine the best overall accounting software for your business, write a brief list of the key accounting features that will help you manage your business more efficiently.
2. The Number Of Clients You Have
Free and affordable accounting software is best suited to growing businesses and freelancers.
However, if you’re an established business with a long client list, multiple employees, and a long list of expenses, then you may need to invest in a more comprehensive tool that offers advanced accounting capabilities.
When it comes to software for small businesses, you get what you pay for.
3. How Many Employees You Have
97.9% of businesses in Canada qualify as small businesses and have fewer than 100 employees.
Still, keeping track of 99 employees can be quite a challenge if you’re only relying on free software. Growing businesses may need to invest in an accounting program that offers features such as:
- Payroll solutions
- Ability to add multiple users or unlimited users to the program
- Time tracking
4. Your Computer Skills
The programs used by accounting professionals may not be the best suited to the average business owner with limited computer skills. In my opinion, the best accounting software is the one that is easiest to use.
Some programs are made by data analysts for data analysts, while other companies offer more simple accounting software that the not-so-tech-savvy of us can easily use.
This is why I always recommend that you take advantage of the free trial period offered by most accounting systems before you make a final decision.
5. Your Budget
If you’re a start-up that’s operating with a limited budget, you will not need a full-blown $200/month enterprise-level subscription.
Thankfully, most accounting and invoicing services offer multiple subscription tiers, allowing you to choose the most affordable option for your current needs.
Best Small Business Accounting Software In Canada (2024)
The right accounting tool can make a major difference in your business. The key is to pick the one that is best suited for your business.
1. FreshBooks Accounting Software
- Base-Tier Subscription Cost: $19/month
- Free Trial Available: Yes
- Learn More: website
FreshBooks is one of the best cloud-based accounting software programs for service-based businesses. All new users can try it for free, before upgrading to one of FreshBooks’ paid plans:
- $19/month (up to 5 clients)
- $32/month (up to 50 clients)
- $60/month (unlimited clients)
If you’re a larger business in need of more specialized accounting features, FreshBooks can custom-tailor an accounting system that fits all of your needs. Some of the key features available to all FreshBooks account users include:
- Easy time tracking
- The ability to accept online payments
- Job management
- Invoice creation
- Detailed client database
- Expense tracking
While FreshBooks is an excellent choice for service-oriented businesses, it’s not the best for eCommerce or retail businesses.
2. Intuit QuickBooks Online
- Base-Tier Subscription Cost: $11/month
- Free Trial Available: Yes
- Learn More: website
Intuit QuickBooks Online is, by far, the most widely recognized accounting tool on the market. QuickBooks Online provides users with a full suite of accounting tools, featuring:
- Inventory tracking and inventory management capabilities
- Online payment processing
- Expense tracking (it can track your bank account transactions)
- Easy invoicing
- Sales tax management
- A fast mobile app for on-the-go accounting
QuickBooks Online can be used for both service and retail businesses. Intuit also offers a very low-cost accounting tool for freelancers at just $7.50 per month.
From the online platform, you’ll be able to keep track of all of your accounts receivable, track invoices that you’ve sent out (and whether or not they’ve been paid), and see detailed expense records.
One of the best features of QuickBooks Online is that it directly integrates with TurboTax, another program offered by Intuit.
When it’s time to do your taxes, simply export the data from QuickBooks into TurboTax, and filing your taxes will be an absolute breeze.
Is QuickBooks For Small Businesses Worth It?
If you have a small business, QuickBooks is an incredible resource. Although the learning curve can be a bit steep (it’s a pretty involved program), it truly is an all-in-one accounting solution.
The amount of time that QuickBooks can save you compared to traditional accounting is well worth the small monthly fee.
Do I Need A CPA If I Use QuickBooks?
QuickBooks is an excellent resource for bookkeeping. However, when it comes time to file your business taxes at the end of the year, you still may need to hire a CPA.
However, if you’ve kept detailed business records in your QuickBooks software, your CPA’s job should be quick and easy.
3. Sage Business Cloud Accounting
- Base-Tier Subscription Cost: $17/month
- Free Trial Available: Yes
- Learn More: website
Sage Business Cloud Accounting is an advanced tool that’s capable of taking care of all of your accounting needs. From payroll solutions to billing, inventory management, taxes, and bank transaction tracking, Sage can do it all.
One of the features that’s most appealing about Sage is that the company offers personalized software for small businesses in a variety of different industries, including:
- Construction
- Wholesale Goods
- Manufacturing
- Nonprofits
- Chemicals
- Food and Beverage
- Subscription-based Businesses
Sage provides an online hub for users to help each other and offers comprehensive educational resources, so you can learn all of the ins and outs of your accounting software.
It’s definitely one of the more advanced tools on the market, which is why it’s used by accounting professionals. However, if you’re moderately tech-savvy, you should be able to learn it quickly.
4. Xero Accounting Software
- Base-Tier Subscription Cost: $17/month
- Free Trial Available: Yes
- Learn More: website
Xero is one of the newer players on the market. However, it’s received overall positive reviews from its users and offers a variety of tools designed to fit the accounting needs of small businesses.
Like Sage, Xero offers customized layouts, depending on the industry you’re in, which really helps to streamline the set-up process.
Xero offers a 30-day free trial period, so you can decide whether or not you like the program. After that, you’ll be able to choose from the following plans:
- $17/month – Starter Plan (good for sole proprietors, start-ups)
- $42/month – Standard Plan (good for most small businesses)
- $54/month – Premium Plan (good for mid-sized businesses)
5. Zoho Accounting Software
- Base-Tier Subscription Cost: $15/month
- Free Trial Available: Yes
- Learn More: website
Zoho is a simple yet effective piece of software for small businesses. It’s also one of the most affordable. Zoho offers a 100% free version, which is great for managing your side hustle or start-up business that generates less than $50,000/year.
You can use the free version to create invoices, manage clients, keep track of vehicle mileage, track bank accounts, and more.
Once you need something more comprehensive, you can upgrade to one of Zoho’s paid plans, which range from $15/month for the Standard plan to $240/month for the Ultimate plan.
The Ultimate plan is capable of hosting up to 15 users, managing warehouses, and can even handle high-volume eCommerce stores.
While Zoho’s user interface does seem a bit outdated, the program has all of the functionality you need to manage small businesses and large businesses alike. Plus, they also offer a mobile app so you can keep track of your business no matter where you are.
6. Liberty Tax Filing Accounting Software
- Base-Tier Cost: $45.95
- Free Trial Available: No
- Learn More: website
Unlike the other accounting software services that I’ve mentioned so far, Liberty Tax doesn’t offer bookkeeping services. Rather, the platform is designed to help you file your taxes in Canada.
You may have even seen one of the company’s brick-and-mortar locations in your city.
Liberty Tax is a well-known tax preparation company that offers tax filing solutions for businesses of all sizes.
7. Wealthsimple Tax Filing Accounting Software
- Base-Tier Cost: Free to File, $50 deducted from the return
- Free Trial Available: No
- Learn More: website
When it comes to filing personal or small business taxes, you can’t go wrong with Wealthsimple Tax. I far prefer this program to Liberty Tax, as it’s easier to use and the software helps me find quick and easy business tax deductions that I can take advantage of.
Best Free Accounting Software In Canada
While most of the programs I mentioned above offer free trials, they are not free forever. Once the trial period ends (usually one month), you’ll be required to upgrade to a paid plan.
That being said, there are some great pieces of free accounting software out there that small business owners can take advantage of.
8. Wave Accounting Software
- Base-Tier Subscription Cost: 100% Free, No Paid Version
- Learn More: website
Wave Accounting software is a great choice for small start-ups, service-based businesses, and even small retail stores.
They’re one of the only accounting programs on the market that offers a 100% free online accounting platform. Some of the features offered by Wave Accounting include:
- Income and expense tracking
- Ability to add unlimited account collaborators
- Unlimited bank and credit card connections
Wave Accounting also provides users with a simple dashboard that allows you to view your invoices, accounts payable, and keep track of profits and losses.
In addition to Wave’s accounting software, Wave also offers a free invoicing service and a paid online payment processor (Wave takes a percentage of each transaction).
9. Square Invoices
- Learn More: website
Chances are, you’ve already heard of Square. The company offers simple, easy point-of-sale (PoS) solutions to retail businesses.
All of Square’s hardware is directly integrated with Square’s free accounting software. However, you don’t have to have a Square PoS system to sign up for a Square Invoicing account.
With Square Invoicing, you’ll be able to email invoices to clients and have them pay online. All of your sales, payments, and invoices will be tracked via the Square dashboard.
The downside is that Square isn’t a comprehensive accounting tool. It doesn’t offer much in the way of inventory management, and can’t track expenses or clients. It’s great for small retail stores and side hustles, though.
10. ZipBooks
- Base-Tier Subscription Cost: Free
- Free Trial For Paid Version Available: Yes
- Learn More: website
ZipBooks is somewhat similar to FreshBooks. The only difference is that ZipBooks offers a free-to-use base version.
If you need something more comprehensive, you can upgrade to one of ZipBooks’ paid plans, which are better suited to growing businesses.
The free version is a great place to start, though, and features:
- Square or PayPal integration
- Ability to manage unlimited vendors and customers
- Unlimited invoicing
- Basic reporting
- The ability to link one business bank account
11. Momenteo
- Base-Tier Subscription Cost: Free
- Free Trial For Paid Version Available: No
- Learn More: website
Momenteo offers useful accounting tools with its free-to-use tier. As a free user, you’ll be able to take advantage of:
- Unlimited service quotes
- Free support
- Ability to manage two clients
Unfortunately, Momenteo really doesn’t offer a lot with its free version. If you want to take advantage of online payments, then you’ll have to upgrade to the base paid version, which costs $4.95/month.
12. Kashoo
- Base-Tier Subscription Cost: Free
- Free Trial For Paid Version Available: Yes
- Learn More: website
Kashoo is a relatively new accounting software for small businesses that’s based out of Canada. Kashoo offers a 100% free-to-use base tier, with options to upgrade to a $20 or $30/month paid subscription.
As a free Kashoo user, you’ll be able to:
- Send unlimited invoices
- Track your business income
- Send estimates to clients
- Accept online payments
- Manage and track clients
Not too bad, right? Kashoo offers some aesthetically pleasing invoice templates which can be customized for any business. The platform isn’t the best for those who need advanced accounting tools, but it’s a solid choice if you just need to track invoices and clients.
Honourable Mention: Google Tools
When it comes to free accounting tools, you can’t go wrong with Google’s comprehensive suite of tools. All Google accounts are entitled to 15 Gigabytes of free Google Drive storage and have access to tools like:
- Google Sheets (spreadsheets)
- Google Docs (word processing)
- Google Business Page management
- Google Calendar
Of course, Google’s free tools aren’t a complete accounting solution, by any means. However, when used in correlation with one of the more comprehensive programs I mentioned above, Google’s tools can help you stay organized, manage clients, schedule virtual meetings, and keep your business organized.
Why Small Business Owners Should Use Accounting Software
Starting a business is, without a doubt, challenging. Unless you’re a wealthy investor who can afford to pay a management team to run your company for you, then you’re going to have to do a lot of the initial footwork yourself.
When I first started my online business, I was:
- The CEO
- The accountant
- The operations manager
- The fixer (of any and all problems)
- The web designer
- The marketing director
The list could go on. Point being – I had to fill a lot of positions until I was able to grow my business and outsource some of my workload.
Despite having a business degree, keeping track of my small business expenses, income, payroll, taxes, receipt scanning, and more was a major drain on my energy.
At this point, I decided that it was time to invest in some desktop accounting software. Using accounting software allowed me to focus my energy on the tasks that I was best at by simplifying my bookkeeping and freeing up more time in my day.
As an entrepreneur, it can be tempting to try to do everything yourself. If you really want to increase your cash flow, though, learning to simplify tasks with technology is crucial to your success.
In short, here are some of the key reasons why a small business owner should use an online accounting software program:
- It will free up your time, allowing you to focus on managing your business
- You’ll be able to keep track of all of your expenses, allowing to take advantage of more tax deductions
- Inventory tracking will become easier, so you don’t have to count your products by hand
- Organized records will make it easier for you to file your own business taxes
- Organized records make your accountant’s job quicker, which means that you’ll pay them for fewer hours of work
- Accounting software often doubles as or directly links to tax software programs for a streamlined tax filing process
- The best accounting software can easily break down your business profits and losses, giving you a broader view of your business as a whole
When it comes to growing your small business, data is everything. Software programs like QuickBooks Online and Sage Business Cloud Accounting (both are reviewed below) handle the data, so you can make the most informed decisions as a business leader.
Simple Accounting Tips For Small Business Owners
To wrap things up, here are a few simple tips for small business owners to help them make the most of their accounting software.
Take The Time To Learn Your Accounting Software
Your software can only help you as much as you’re willing to put it to use. Learning a new program can be challenging, but it’s well worth the time. Watch developer tutorials as well as YouTube videos to figure out how best to put your software to work for you.
Take Advantage Of Cross-Platform Integration Features
Many of the accounting tools I mentioned above can be integrated with tax software, point-of-sale systems, and bank accounts. Cross-platform integration helps you keep track of everything in one place and gives you a better view of your business as a whole.
Separate Business & Personal Bank Transactions
The best accounting programs are able to keep track of your credit and debit card expenses.
This is great if you’re looking to keep track of deductions. However, if you’re using your business cards to pay for personal expenses, your accounting software won’t be able to tell the difference, and things can get mixed up.
For best results, keep your personal and business transactions separate if you plan on integrating your business accounts into your accounting software.
Hire A Bookkeeper To Reduce Your Workload
Even the best accounting software can’t make up for a bookkeeper. At some point, your business may grow so large that you’re needed elsewhere. At this point, don’t be afraid to hire a bookkeeper to manage your accounting software for you.
In Conclusion
From expense tracking to invoicing, payment processing, and inventory management, the right accounting tools can make your life a lot easier.
Both free and paid accounting software for small businesses can dramatically increase your productivity and streamline your business operations.
To ensure your accounting software functions properly, you’ll want to separate personal and business expenses.
The best way to do this is by opening a separate business bank account for your company. Keep on reading to see my list of the best business bank accounts in Canada!
