How We Selected the Best Accounting Software
Accounting software can greatly benefit your business with features like payroll management, bank reconciliation, inventory management, and so on. But which one is right for you? To help you choose the right accounts management software, we compared some of the best accounting software based on metrics like features, benefits, pricing, etc.
We especially considered crucial features like bank reconciliation, inventory management, invoice management, accounts payable and receivable management, etc. Not every accounting software offers all these features. Some provide basic accounting features mainly for small-sized businesses while others include advanced accounting features, suitable for big enterprises.
Furthermore, we compared accounting software based on their free trial, free version, and paid plans. Many accounting software options offer a free version for beginners.
What is Accounting Software?
Accounting software helps organizations record and manage everyday accounting and financial transactions. It can be used for automating various accounting tasks like expense tracking, fixed asset management, payroll management, invoice generating, accounts payable and accounts receivable, reports and analytics, and so on.
Additionally, it also creates an annual financial report that helps treasurers, controllers and CFOs measure the financial health of their business. P&L owners also get greater visibility into the operational level performance.
What are the Types of Accounting Software?
There are five key types of accounting software that you can use to perform different accounting operations as enumerated below:
- General Accounting Software: This type of account management is used for tracking important accounting data and sharing it with different systems. It is mainly used for creating a general ledger where all business transactions are recorded and also for managing accounts payable and receivable.
- ERP Software: The enterprise resource planning software is developed for businesses that want to track their assets along with finances. In addition to managing accounting, it can also help you with managing personnel, production, and material data in real time.
- Payroll Software: Payroll software is most useful for keeping track of your employees' paychecks and taxes. It ensures the timely payment of wages and accurate calculation of taxes and bonuses. You can also use it for managing the payroll of employees in different countries.
- Inventory Management Software: This type of software is most suitable for product-focused businesses to keep track of stocks in real life and sort them based on their size, color, and physical traits. Further, it can help with managing purchase orders, tracking expired products, updating stock levels, and so on.
- Invoicing Software: This type of software is most suitable for generating and sending invoices for rendering services. It can be used for managing payments, maintaining payment records, customizing invoices, and also for generating GST-compliant invoices.
- Spreadsheets: Google Sheets, OneDrive, and Microsoft Excel are often used by startups to list their income, expenses, sales, and other financial data. For managing advanced functions, businesses often opt for a complete solution.
What are the Key Features of Accounting Software?
Accounting solutions can help you with managing the cash flow, generating financial reports, monitoring the account balance, and analyzing and summarizing financial data. Other important features of this software are:
- Automatic Payment Reminders: You can use this accounting software to automatically send payment reminders to your clients in the case of outstanding payments.
- Bank Reconciliation: Link your bank account directly with the system and automatically reconcile your bank statements along with invoices, payments, etc.
- Inventory Management: Accounting software can help in tracking and managing inventory in real time. Through this tracking, businesses can avoid situations like inventory overstock and understock.
- Invoice Management: With this feature, you can easily create, send, manage and record digital invoices. This helps businesses by creating and sending invoices manually and ensuring all the invoice data is recorded accurately.
- Balance Sheets: Using the best Indian accounting software, you can automatically generate a balance sheet with all the liabilities and assets for the current year. This provides you with a comprehensive view of your overall financial health.
- Asset Management: Accounting software can be used to manage the entire lifecycle of assets including their acquisition, capitalization, depreciation, disposition, etc. This information helps in properly representing appreciation and depreciation value in the record book.
- Reporting and Analytics: With reporting and analytics, businesses can use reports, graphs, and charts to represent financial data. This data can then be analyzed to assess financial health and identify ratios like current ratio, quick ratio, debt-to-equity ratio, etc.
- Audit Trail: The audit trail feature of accounts management software can be used to track and validate different types of transactions like bills, invoices, purchase orders, debit and credit notes, etc.
- Risk Management and Compliance: Accounting software can help in mitigating risk and staying compliant by ensuring that financial reporting is as per the government rules and regulations.
- Budgeting: The software can generate an accurate balance sheet of the organization that can highlight its financial health. This data can then be used to allocate the budget for different projects and raise capital for the company.
Comparison of the Best Accounting Software for Small Businesses
|Comparison of the Best Accounting Software |
|Metrics ||TallyPrime ||Vyapar Billing Software ||HostBooks Accounting Software ||FreshBooks ||Easy Accountax GST |
|Offline Access ||No ||Yes ||No ||No ||No |
|Integrations ||Yes ||Yes ||Yes ||Yes ||No |
|Mobile App ||On the Installed Device ||Available for android ||Available for both Android and iOS ||Available for both Android and iOS ||Available for both Android and iOS |
|Payroll Management ||Yes ||No ||Yes ||Yes ||Yes |
|Business Size ||Medium and large enterprises ||Automated ||SMBs ||Self-employed professionals, freelancers, etc. ||All business types |
|Asset Management ||Yes ||No ||Yes ||Yes ||Yes |
What are the Benefits of Accounting Software?
There are several benefits of using online accounting software such as automating manual tasks, simplifying tax filing, providing insights into the financial data, and so on. Here are some other benefits of using an accounting solution for your business:
- Reduces Data errors: When the accounting data is entered manually, chances are higher that data errors may occur along with incorrect tax calculations. However, accounting software automatically calculates the tax and accurately records the data in different accounting books to ensure accuracy.
- Helps with Tax Management: Calculating tax manually may create data discrepancies along with improper tax filing. However, accounting software reduces this possibility by automatically calculating different taxes like GST, VAT, sales tax, etc., as per the taxation rules to stay compliant.
- Easily Creates Financial Reports: The software comes with pre-built templates that can be used to automatically generate reports like profit and loss accounts, balance sheets, general ledger, etc. Therefore, providing you with a comprehensive view of all your revenue and expenses.
- Saves Your Valuable Time: Accounting software can help save time on various time-consuming accounting processes by automatically pulling and categorizing data. It automates the process of calculating tax, generating reports, managing accounts payable and receivable, creating balance sheets, and so on.
- Cost Savings: By automating administrative tasks and core calculations, you won’t have to devote valuable resources or outsource finance management to a financial expert.
- Secure Billing: Billing and payment become secure with this software. The best billing and accounting software supports multiple payments with industry-grade standards.
What is the Cost of Accounting Software?
The cost of accounting software depends on the software vendor, the features required, and the number of users. The accounting software price ranges from INR 0 to 12k per month for the basic plan. As a beginner, you will get many free and open-source accounting solutions that you can use with zero investment and customize as per your requirements.
Under the basic plan, you will get features for categorizing income and receipts, creating General Ledger, sending invoices, and preparing reports.
However, when your business grows, you can upgrade to the advanced plan to get features like compliance management, assets management, balance sheet generation, etc.
How to Choose the Right Accounting Software?
To buy the right accounting software that compliments your business needs, consider the following factors:
- Free Trial: The accounting solution you are planning to buy must offer a free trial so you can test its features before actually buying it.
- Invoice Templates: The availability of invoice templates will make it easier for you to quickly generate and share different types of invoices with clients.
- Project Based Accounting: This feature will help you bill your clients based on the time you spend on their projects.
- Cost: Choose the software that falls under your budget and provides all the necessary features you need in that software.
- Usability: You must ensure that the accounting management software you are planning to buy should be easy to use. All its modules should be easily navigable.
- Scalability: Scalable business accounting software will help you meet future accounting requirements as your business grows in number.
How Does Accounting Software Work?
Accounting software helps businesses in processing and managing financial data. It comes with several accounting features like billing and invoicing, expense management, payroll processing, and so on. With these features, companies can automate and complete multiple tasks such as:
- Recording financial transactions
- Downloading financial statements and reports
- Maintaining customers' info and payments
- Generating and sharing invoices
- Sharing financial information with the accounting
- Filing business taxes
Automating these tasks can help in appropriately managing finances and reducing data errors.
Who Can Benefit from Accounting Software?
Accounting software can be beneficial for the following groups of people:
- Accountants and Bookkeeping Professionals: They can use this for financial reporting like forecasting, profit and loss reports, cash flow statements, audit trails, and so on.
- Accounting Firms: They use accounting software to manage the accounts of their clients including balance sheets, financial reports, profit and loss accounts, etc.
- Controllers: Controllers use online accounting software for small businesses and large organizations to monitor all types of accounting activities. This will ensure that all the ledgers appropriately reflect the flow of cash in and out of the organization.
- Freelancers and Consultants: They can leverage accounts management software to manage their clients' accounts, track their income, measure billable hours, etc. It can also be used for generating digitized receipts and recording expenses.
What’s the Difference between ERP and Accounting Software?
It is used to manage all the aspects of a business including inventory, finance, HR, supply chain, etc.
It is used to manage key accounting tasks including general ledger, profit and loss account, cashflow management, etc.
Analysis can be done for all the business areas.
Analysis is limited to financial and accounting data.
Comprehensive Business View
Comprehensive view of all business areas.
The view is limited to only financial health.
A bit expensive, as it offers all the business modules.
It is less costly than ERP
The collaboration takes place across multiple departments
The collaboration takes place within the finance and accounting departments.
Accounting Software for Different Businesses
Accounting software can be used by multiple businesses to streamline and automate key accounting tasks. However, the modules of software for every business are different. Here are some of the businesses that can leverage accounting solutions:
Accounting Software for Transport Businesses
This type of software can help transportation businesses in managing route payment vouchers, fuel consumption, delivery challans, hired vehicle billing, etc. The solution can also help in managing the repair and maintenance operations of vehicles.
Accounting Software for Financial Business
Financial firms can use accounting management software for managing ledger, creating balance sheets, managing inventory, reconciling bank statements, etc. You can also use this software for managing sales and purchase orders.
Accounting software for Online Sellers
Accounting software can help online sellers in managing their product inventory, tracking the cashflow, calculating sales tax, processing bills and invoices.
Accounting software for Travel Agencies
Travel agencies can use accounting software to send tickets to customers, manage payment receipts, accept payments from customers, and so on. Further, it can also help them in tracking expenses.
Accounting Software for Construction Companies
Construction companies can leverage accounting software for managing contracts, tracking equipment, estimating project costs, and so on. It can also be leveraged for managing the payroll and expense of workers on the construction project.
What is the Difference Between Desktop and Cloud-Based Accounting Software?
Desktop or offline accounting software comes with a package installer in a physical storage device such as DVDs, external hard drives, and pen drives. In addition, data related to the software is stored on the local computer.
Cloud-based accounting software allows you to access the data online with a single sign-in. Whatever work you do on the software, is stored remotely on third servers. This enables users to access the free accounting application from any location with an internet connection, and on any device, including smartphones and tablets.
Today, most of the accounting and bookkeeping software is available in cloud versions for SMEs and big enterprises. Online accounting software companies also run software updates and fix bugs remotely, without any hassle. Moreover, a cloud accounting system does not require an in-house hardware installation and is a budget-friendly option for SMBs. Look at the quick comparison of offline vs online accounting software.
|Desktop Vs Cloud Accounting Software |
|Features ||Desktop Accounting Software ||Cloud Accounting Software |
|Number of Users ||One Person at a Time ||Multiple Users Simultaneously |
|Pricing ||Up Front Fee ||Monthly/Yearly Subscription |
|Accessibility ||On the Installed Device ||On Any Device with Internet |
|Customization ||Less Customizable ||More Customizable |
|Data Backup ||Manual ||Automated |
|Updates ||Manual ||Automated |
|Data Security ||Self-Managed ||Vendor Managed |
|Offline Access ||Yes ||No |
Top Accounting Software Examples Based on the Company Size
Top accounting software Online vendors in India cater to the financial management needs of different businesses. While some cater to SMBs with a package of essential features, others provide additional modules to manage the complex aspects of financial management.
Accounting software for small businesses often comes with custom modules and capabilities. However, this software for large enterprises provides standard modules and features that cater to the diverse financial management tasks across silos.
|Top Accounting Software for Your Business |
|Segments ||Vyapar ||myBillbook ||PEASx |
|Offline Access ||Yes ||No ||Yes |
|Online Store ||Yes ||Yes ||No |
|Mobile App ||Yes ||Yes ||No |
|Target Users ||SMBs ||SMBs ||SMBs |
|Supported OS ||Android, Windows & Mac ||Windows & Android ||Windows & Mac |
|Barcode Management ||Yes ||Yes ||No |
Different Deployment Options for Accounting Software
Accounting software can majorly be categorized into three types depending on the deployment types.
Cloud-based accounting software is the preferred option for small businesses. These are hosted in the cloud and do not require any installation or on-site maintenance. The requirement can easily be scaled by upgrading the subscription.
- Pros: Affordable initial cost and easily scalable.
- Cons: Entirely dependent on the Internet and third-party service providers.
- Best for: Small Businesses and start-ups.
- Popular Cloud-Based Accounting Software: Vyapar, myBillBook, QuickBooks, etc
In this type of deployment, accounting software is installed on a private network. It is generally preferred in cases where the security and privacy of data are a significant concern.
- Pros: High-level data security.
- Cons: Expensive and limited to the workplace.
- Best for Business entities with centralized operations and Government organizations.
- Popular On-Premises Accounting Software: Intuit QuickBooks Enterprise Solutions, Oracle Hyperion, etc.
This is one of the most common and widely deployed options for medium and large businesses. The software can either be used offline or through the web. A private cloud is created for the entire business data in a hybrid deployment, and users can access it from a centralized interface or a web portal.
- Pros: Reduced cost and remote accessibility
- Cons: Technical and data security concerns
- Best for: Enterprises with decentralized billing.
- Popular Hybrid Accounting Software: Oracle NetSuite, Tally Prime, etc