Choosing the right accounting software is crucial for small businesses to manage their finances efficiently. In this article, we review some of the most popular accounting software options - Sage, Xero, QuickBooks, FreshBooks, and Zoho Books - highlighting their features for tracking inventory, purchases, and calculating the cost of goods sold (COGS). We also cover pricing, ease of use, and integrations to help you make an informed decision. Before purchasing any software, you should make use of the free trials available. It is also worth noting that there are often discounts available to clients who work with an Accountant.
1. Sage
Features
Inventory tracking: Sage Accounting Plus allows you to track stock, orders, sales and services. It offers real time stock data and warning reports if you are out of stock.
Purchases: You can calculate the profitability of your stock when you record a purchase.
COGS calculation: Sage Accounting Plus and Standard facilitate advance reporting of profitability and COGS.
Pricing
Accounting Start: £15/month
Accounting Standard: £30/month
Accounting Plus: £39/month
Ease of use
The automation functionality is not as advanced as some other providers. Sage does offer other tools that provide automation for an additional fee.
Integrations
Sage offers fewer integrations than its competitors but does integrate with e-commerce apps such as Shopify and WooCommerce when linked with Zapier.
2. Xero
Features
Inventory tracking: Xero offers both tracked and untracked inventory options. Tracked inventory allows you to record stock and account for COGS, providing real-time updates on inventory levels.
Purchases: You can enter bills and purchase orders, and Xero will automatically update your inventory levels.
COGS calculation: Xero uses the weighted average cost method to calculate COGS, ensuring accurate financial reporting.
Pricing
Ignite: £16/month
Grow: £33/month
Comprehensive: £47/month
Ultimate: £59/month
Ease of use
Xero is known for its user-friendly interface and clean design, making it accessible even for those without extensive accounting knowledge.
Integrations
Xero integrates with over 1,000 apps, including popular e-commerce platforms, inventory management tools such as Unleashed and payment gateways.
3. QuickBooks
Features
Inventory tracking: QuickBooks Plus and Advanced offer real-time inventory tracking, automatically updating stock levels as you make sales and purchases.
Purchases: You can manage purchase orders and bills, and QuickBooks will adjust your inventory accordingly.
COGS calculation: QuickBooks uses the weighted average cost method to calculate COGS, ensuring accurate financial statements.
Pricing
Sole Trader: £9/month
Simple Start: £14/month
Essentials: £30/month
Plus: £42/month
Advanced: £104/month
Ease of Use
QuickBooks is praised for its intuitive interface and ease of use, even for those without accounting experience.
Integrations
QuickBooks integrates with over 750 apps, including PayPal, Shopify, and TurboTax, making it a versatile choice for small businesses.
4. FreshBooks
Features
Inventory tracking: FreshBooks offers basic inventory tracking, allowing you to manage stock levels and automatically update them when items are invoiced.
Purchases: You can track expenses and attach receipts, making it easy to manage purchases.
COGS calculation: FreshBooks provides simple tools for tracking expenses and calculating COGS, though it may not be as robust as other options.
Pricing
Lite: £15/month
Plus: £25/month
Premium: £35/month
Ease of use
FreshBooks is known for its straightforward and easy-to-navigate interface, making it a great option for freelancers and small business owners.
Integrations
FreshBooks integrates with various apps, including Shopify and Squarespace, to streamline your business operations.
5. Zoho Books
Features
Inventory tracking: Zoho Books offers comprehensive inventory management, including tracking stock levels, setting reorder points, and managing multiple warehouses.
Purchases: You can manage purchase orders, vendor bills, and expenses, with real-time updates to your inventory
COGS calculation: Zoho Books uses the FIFO (First In, First Out) method to calculate COGS, providing accurate financial reporting.
Pricing
Free: £0/month
Standard: £10/month
Professional: £20/month
Premium: £25/month
Ease of Use
Zoho Books is user-friendly and offers a clean interface, making it easy for small business owners to manage their finances.
Integrations
Zoho Books integrates seamlessly with other Zoho products and popular third-party apps, providing a comprehensive solution for small businesses.
Conclusion
Each of these accounting software options offers its own features and benefits tailored to small businesses. Xero and QuickBooks are excellent for comprehensive inventory management and robust COGS calculations. FreshBooks is ideal for freelancers and small business owners looking for simplicity and ease of use. Zoho Books provides a well-rounded solution with extensive integrations and advanced inventory management.
Consider your specific business needs, budget, and desired features when choosing the best accounting software for your small business. With the right tools, you can streamline your financial processes and focus on growing your business.