Choosing accounting and invoicing software

The IRS’s recordkeeping (opens in a new tab) page explains that you choose a recordkeeping system suited to your business, as long as it clearly shows your income and expenses. Supporting documents such as sales slips, invoices, receipts, deposit slips and canceled checks back up what goes in your books. Publication 583 (opens in a new tab), Starting a Business and Keeping Records, covers how long to keep them and what each record is for.

That means software is optional. Some owners start with a spreadsheet and a folder of receipts. Software tends to help once there are many transactions, invoices to chase, sales tax to track or an accountant who needs access. Our bookkeeping basics guide and expense tracking guide cover the habits.

• Cloud accounting software: connects to bank and card accounts, categorizes transactions, reconciles, and produces reports. Most include invoicing.
• Invoicing apps: focused on sending invoices, taking card or bank payments, and tracking who has paid. Some sync to accounting software.
• Receipt and expense apps: capture receipts with a phone and match them to transactions.
• Spreadsheets: free and flexible, but manual and easier to get wrong.
• A bookkeeper or accountant: often works inside one of the tools above, so ask which they prefer before you pick.

• Price structure: monthly plans often differ by number of users, invoices or features. Check what happens to the price after any introductory period.
• Bank feeds: whether it connects reliably to your bank and card accounts.
• Invoicing and payments: recurring invoices, reminders, and which payment methods customers can use. Payment processing usually has its own fees.
• Accountant access: whether your accountant can log in, and whether that costs extra.
• Payroll: whether payroll is built in, an add-on or a separate service. See our payroll toolkit.
• Sales tax: whether it tracks sales tax by location, if you collect it.
• Reports: profit and loss, balance sheet and cash flow, which lenders often ask for. See our loan-ready guide.
• Data export: whether you can download your full general ledger and attachments in a standard format.

• No full data export, or an export that leaves out attachments and history.
• Losing read-only access to your records as soon as you stop paying.
• Prices that jump after an introductory period without clear notice.
• Bank connections that break often, leaving gaps you have to fill by hand.

1. Does it connect to my bank and card accounts?
2. Can my accountant or bookkeeper work in it, and do they have a preference?
3. What does the plan I need cost after any introductory period?
4. Can I export everything, including receipts, if I leave?
5. Does it handle the invoicing, payroll and sales tax features I need now, without paying for ones I do not?

The SBA’s manage your finances (opens in a new tab) guide and SBA resource partners such as SCORE and Small Business Development Centers can help you set up a simple system. A tax professional can confirm what records your situation needs.