Free accounting software for startups is usually a high priority for brand new businesses, and for good reason. When you build a business from scratch you make every effort to whittle down your bottom line - at least until you have built up a greater level of income.
But you can’t afford to compromise your standards for accounting software purely because it is a free service.
- Do you have to pay for add-ons?
- Are the necessary features included?
- Is the hassle of bad accounting software worth the fact that it is free?
In short, you don’t just need free accounting software, but you also need the best accounting software for 2022. One that is the right fit for your business, but isn’t going to negatively impact your accounting or your future.
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Is free accounting software for startups really free?
Yes… however, they each come with limitations to some degree.
This tends to be a deliberate feature, designed to encourage startups to upgrade to the more comprehensive, paid plans once they outgrow the free version. Some accounting software has limited reporting capabilities. Others may charge for you extra fees for every invoice payment.
But they are designed to help you begin your first invoices and build your startup. They’re useful, to begin with, but free accounting software is not a permanent fix. The features that do not come with free accounting software may end up saving you money later on.
But we’ll let you decide for yourself. Let’s check out our list of free accounting software for 2022.
Zoho Invoice - what it offers
Zoho Invoice is a potential accounting software choice for startups and very small businesses.
Zoho is known for its simple, easy-to-use tools without any of the in-depth features that larger businesses require. With a clear customer relationship management (CRM) tool, project management and email hosting, it covers all of the most basic offerings.
You can send out customer invoices and manage payments through a single account as well as customise brand templates and track expenses.
Zoho Invoice - what it doesn’t offer
As with anything, the free version comes with limitations. On the free plan, you’re limited to a maximum of 1000 invoices per year, bank feeds are not available to you and you only have access to email support.
If that isn’t enough for you, then you can upgrade to the standard plan of £12 per month. You then receive access for three users and can track, receive and plan your budget through your accounts.
Wave - what it offers
One of the most popularly mentioned among free accounting software, Wave offers a slick user experience and a great deal of features. It allows you to connect an unlimited number of cards and bank accounts to your books, unlimited expenses, income tracking and you may add as many collaborators or partners as you like.
You’ll also be able to invoice and scan receipts completely free, connect multiple businesses under the same account and organise your income and expenses into tax categories for the future.
Wave - what it doesn’t offer
In the case of this free accounting software, it isn’t about which features are missing features. It is about hidden extras.
If you want customers to pay directly through the invoice - then that will cost you. It’s a 2.9% + $0.30 charge for each credit card payment and a 1% (minimum of $1) for each ACH payment.
Not only that, but if you intend on using free accounting software from Wave - you will have to pay for your payroll through them as well.
QuickFile - what it offers
QuickFile is accounting software that offers a versatile user experience and is often used by small businesses and startups.
The free feature plan covers a great deal of the necessary features, and their automation is handy as it clears out the drudgery that often comes with accounting. With up to 1000 ledger entries available in the free plan, you can also provide invoices, quotations, support different currencies and integrate with multiple payment solutions.
QuickFile - what it doesn’t offer
We all remember what YouTube was like before the adverts, right? Now it has become an annoying stream of sponsored adverts in between videos and playlists.
Well, QuickFile features many free advertisements within the free version of the app. It’s by no means a barrier to your job - but it can be a large distraction when you simply want to finish your work and get your accounting done.
The integrations are also limited with the free version, but it does offer payment options such as Paypal. So while you’ll not be charged directly to receive payment, you will have to pay the standard Paypal fee on every transaction.
GnuCash - what it offers
It looks like something from the early ages of 90’s dial-up internet, but behind its aesthetic, GnuCash contains a boatload of features that startups may require.
An open-source based piece of software that allows you to tackle your accounting finances head-on. Oversee invoices, customer payments, control customer and vendor management and make use of the vast array of reporting tools available.
Thanks to its open-source nature, GnuCash also offers a wide support network for any problems. It comes with an easy-to-understand manual, has its own Wiki to brush up on knowledge and is also featured in many YouTube walkthrough tutorials. This means that with time and learning, you can use this free accounting software to do all manner of tasks.
GnuCash - what it doesn’t offer
Set aside the aesthetic, after all, accounting isn’t the most glamorous job in the world. GnuCash falls short on several fronts. Most importantly is that it’s not a cloud-based accounting software.
Cloud-based accounting software means that all of your data is controlled, hosted and secured on your single device. Nowadays, cloud-based software offers numerous advantages because it can be accessed via anything with an internet connection. While this may not be an issue initially, as your startup grows, so will your team and the information flowing in and out of your accounts.
Aside from the lack of cloud access, GnuCash possibly offers too many complex features. While its open-source nature provides you with a powerful, free accounting software, it also means that you face a huge amount of learning with this new system compared to more intuitive software available elsewhere.
CloudBooks - what it offers
CloudBooks offers free accounting software that has robust functionality and covers the basic needs of a small business.
It even comes pre-integrated with Stripe and Paypal for convenience when you set up with the free plan. You can create projects, manage with an unlimited number of users, perform time-tracking and handle expenses.
CloudBooks - what it doesn’t offer
You are limited by the free version. Without upgrading to a paid version, you’ll be unable to brand your invoices and are capped at sending a maximum of five invoices every single month.
So let’s just hope that those are large invoices!
It’s also important to know, that despite coming pre-integrated with Stripe and Paypal, if you want to receive payments directly through the invoices you still have to upgrade to a more comprehensive plan.
ZipBooks - what it offers
The bare bones of accounting software in one single place. ZipBooks places a value on simplicity in their software. Unlimited invoices, customers and bookkeeping are available and are all completely free. In addition to this, you can handle reports and expense management at the click of a button.
ZipBooks - what it doesn’t offer
For starters - their mobile app is limited. On top of that, you’ll need to receive payments via Square or Paypal (and pay their fees for every transaction.)
They do offer a fully integrated payment service with Gusto, but this starts at $40 a month and only goes upwards from there. In addition to that, their reports are severely limited, with the advanced ones only available from their paid accounting software packages.
Potential missing features for free accounting software
Trying to choose the best free accounting software for your business entirely depends upon your priorities. What you lack in one will appear in another, but your choice is directly related to the needs of your startup.
By electing for free accounting software you may miss out on certain features that actually save you money in the long run. Potential issues include bookkeeping backup or tax fines, or a lack of accurate reports that allow you to approach strategic development within your business.
If you consider your business to be on the road to growth, then you may want to consider paid plans that include such features as these.
Generally speaking, free accounting software will give you brief report capabilities. These will be brief entry-level reports with limited detailing.
With paid plans, you have access to more sophisticated reports. Data visualisations, custom numbers, analysis and far more detailed features give you more valuable, actionable insights into the future of your business.
Invoices and user count
Most free accounting software for startups give you a cap on the number of users or invoices. Even if you’re working as a small team, the user cap can raise difficulties in coordinating and communicating your finances.
The invoice cap can be even more problematic depending upon your business. Some accounting software can cap you at as little as five invoices per month. This simply isn’t a viable option for many small businesses that rely on a greater number of orders.
Inventory and order tracking
Very few free accounting software provides inventory, let alone order-tracking services. These are paramount concerning any small retail store.
Free accounting software alternatives - “free-trial”
Free software alternatives are no replacement for the real thing, but they are understandable for new startups looking to get off the ground. That being said, they are not viable in the long term.
At some point you’ll have to purchase a paid version of accounting software, whether it is an entirely new service, or simply a paid upgrade from a free version.
Once you admit that these free accounting softwares are a temporary service for your business, you might want to consider an alternative to them - free trials. There are several accounting softwares that offer free trials for your business use and see if they will be the right fit for your growing business.
Let’s take a look at some of your free-trial options.
Sage doesn’t offer you a free trial, but it does offer you 75% off your first three months of usage. That means with their starter plan of £12 per month is just £3 per month while you try out the software.
With the basic necessities of invoice sending and finance tracking covered, Sage also streamlines expenses with an auto entry tool. It is also HMRC recognised, so you can collate and submit your VAT easily and digitally.
Upgrades to the plan include financial forecasting, inventory management, multicurrency banking and in-depth reports.
Cloud-based accounting software with a fully customisable dashboard, Xero gives a more personalised experience when it comes to your business accounts as well as a full 30-day free trial to get to grips with what it has to offer.
You then have access to an unlimited number of users, integrations with hundreds of apps, VAT submissions, reports and calculations. However, the basic plan does limit you to sending 20 invoices a month.
Upgrades to Xero can be quite pricey, but they offer significant useful features that can save time and money in the long run including staff pensions, payroll, multiple currency handling and no limits to invoicing.
Quickbooks is another software that doesn’t offer a free trial, but rather offers you 50% off your first three months of usage.
Not only that, but aside from their standard packages they also provide a dedicated package for self-employed freelancers at $15 per month ($7.50 with the discount.) This gives even solo business ventures the ability to stay up-to-date with their accounts.
Their standard package however starts at $25 ($12.50) per month and it offers a robust range of features for you to use. You can send pay-enabled invoices, maximise tax deductions, track expenses and receipts, manage cash flow and receive reports on your finances.
The final word on free accounting software
Free is great … for a limited time, but there is no potential for growth or strategic development of your company. There will always come a stage where you have to upgrade to a paid accountancy software.
So try them out for yourself - whether you decide to make as much as you can from a completely free accounting software or choose a paid option. Even a free-trial on one of the paid options will give you enough time to decide if it is the right fit for your business.
Most of the time that still isn’t enough to guarantee a startup success. Sooner or later your burgeoning business will require some specialised hands experienced with startup finances. With Accountancy Cloud’s help you can receive bookkeeping, tax prep and financial expertise that aligns with your company’s present and future.
Don’t worry, our systems integrate with many different types of accounting software, in fact over 70% of our clients come from DIY accounting software backgrounds.
We will evaluate your needs, install all your bookkeeping tools, introduce you to your dedicated finance team and let you do what you do best - grow your company. We’ll handle the numbers side and our experts will provide you with accurate financial forecasting to enable you in making the best financial decisions.
We work with startups at a rate that suits you, and scale up our services in proportion to match your needs - just read about how we started with global digital media company Bettor Publishing! You can also sign up free for our School of Startups to get unlimited access to guides and advice on how to grow your business from scratch.
So get in touch with us today and start a conversation with an expert about your business needs and you’ll soon see what we have to offer. After that, it’s a simple matter of growing your business to the next level!
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