4 Best Accounting Software for Startups | Reviewed by a Series A Founder

Choosing the right accounting software is a crucial decision for any startup. As an early-stage company, you need a solution that can scale with your rapid growth while also being easy to use and affordable. As a founder that's used and integrated with every accounting software imaginable, it's clear some are better for startups than others. Let's dive in.

My Picks for the Top Accounting Software for Startups

Now that you know what to look for, let’s compare some of the top accounting software options for startups:

QuickBooks Online

Quickbooks is the most widely used software for startups. You can't go wrong with Quickbooks due to the fact an integration supported by just about every software you will use. It's not my personal favorite but it works for a lot of startups.

Pros:

• Very easy to use with little accounting knowledge
• Scales from 1 employee up to tens of millions in revenue
• Hundreds of integrations with other business apps
• Robust mobile app
• Any bookkeeper you hire will know it.

Cons:

• Reporting functionality not as strong as competitors
• Have to pick cash or accrual accounting, can't do both.
• Impossible to support multi-entity. When you start spinning up subsidiaries managing quickbooks becomes a chore.
• Multi-currency accounting is a massive pain.

Pricing: Starts at $25/month but for most startups it will be $90/month

Xero

Xero is a more popular choice for companies outside the U.S, especially ones with multi-currency needs. Personally I wouldn't recommend it unless you're certain you'll be working with multiple currencies. It's more complex, more expensive and less widely supported than Quickbooks in the U.S so I'd never recommend it for domestically focused U.S businesses.

Pros:

• Excellent multi-currency capabilities and usage
• Integrates with most 3rd party software
• Fairly popular so most bookkeepers will be able to use it.

Cons:

• Difficult to use for multi-entity businesses
• Intimidating for founders with no accounting backgroung
• Higher learning curve than QuickBooks
• Less 3rd party integration support than Quickbooks

Pricing: Starts at $30/month, $80 a month more realistically. You may have to pay for some 3rd party integrations.

Puzzle

Puzzle is the new kid on the block for startup accounting. It's my personal favorite for the best accounting software for startups. Unlike other accounting softwares, Puzzle has native integrations with your bank accounts and other financial software like Meow and Bill.com. This means Puzzle can handle your bookkeeping fairly autonomously and push back the need to hire a bookkeeper. It's an excellent choice for founders without an accounting background.

Pros:

• Automates bookkeeping which will save you time and result in more accurate books and records
• Saves money since you probably won't need to hire a bookkeeper
• Free financial reports like burn tracking and runway

Cons:

• Less 3rd party integrations. Since Puzzle is new there aren't as many 3rd party integrations that support Puzzle. So if you use more uncommon financial software you could struggle to get Puzzle to work most effectively
• More expensive subscription at higher tiers

Pricing: Starting at $43 a month. More realistically $200 a month.

Zoho Books

Nobody I know uses Zoho Books, but I'm including it here because apparently it's popular in some circles. Generally Zoho Books seems focused on keeping things simple but at the cost of being inconvenient to scale with your business.

Pros:

• Very affordable
• Everything needed for basic accounting/bookkeeping
• Easy to use even for accounting newbies

Cons:

• Maximum of 5 users per account
• Light on reporting compared to alternatives
• Limited payment platform integrations
• Not well known by bookkeepers relatively

Pricing: Free plan for up to $50k revenue, paid plans start at $19/month

Key Criteria for Evaluating Accounting Software

As an early-stage startup, you likely don’t need all the advanced functionality that solutions made for larger enterprises offer. And you certainly don’t want to pay for features you won’t use!

Here are the key criteria to evaluate when choosing accounting software for your lean startup:

Scalability

Your accounting needs will change drastically as your business grows. Choose software that can scale up with you without requiring a complex and costly migration to a new platform.

Integration Capabilities

Your accounting software should integrate seamlessly with other systems you rely on — bank accounts, payroll, payments platforms, etc. This saves you time on manual data entry and reduces errors.

Reporting

Easy access to financial reports is vital for tracking metrics like burn rate and making data-driven decisions. Prioritize software with customizable real-time reporting.

Ease of Use

As a lean team, you want software that’s intuitive to use without extensive training. Chances are you, the startup founder, don't have a background in accounting and you won't be able to afford a good bookkeeper right away. You're still going to need accurate books and records to fundraise in the early days so an easy to use software is paramount for founders.

Cost

Carefully evaluate both monthly costs and implementation fees to choose affordable software that fits your budget.

Additional Features to Consider

Beyond the core accounting essentials, here are some of the extra features you may want to look for:

Invoicing: Customizable invoice templates, recurring invoices, online payment links

Expense Tracking: Receipt capture, company credit card integration, automated categorization

Payroll: Built-in or third-party integrations to easily manage payroll

Bill Pay: Automated accounts payable to simplify paying routine bills

Project Accounting: Track time and expenses by client project

Inventory: Built-in inventory management (especially for ecommerce startups)

Getting Set Up for Success

Once you’ve chosen the best accounting software for your startup, there are a few things you can do to set yourself up for success:

Take advantage of free trials and demos to confirm the software meets your needs. Don’t be afraid to test a couple options!

Sign up for onboarding calls, online courses and tutorials to quickly gain financial literacy. Understanding key accounting concepts will ensure you use the software effectively. If you'd like a referral don't hesitate to DM me on X at https://x.com/bryce_meow

Consult with an accountant on any complex aspects of your accounting and finances. Investing early in expert advice prevents costly mistakes.

Implement a documented process for critical tasks like reconciling accounts and collecting expense receipts. Don’t let important items slip through the cracks.

Choose software that enables you to own your financial data so you can switch solutions without significant migration costs.

The right accounting foundations will provide immense value as you scale your startup – saving you time, effort and money. Now that you know what to look for, you can find accounting software that fuels your growth rather than holding you back.

The key is matching the strengths of each solution to your startup’s financial management needs, growth trajectory and budget. With the criteria in this post as your guide, you can make a confident, informed choice.

Final Thoughts and Recommendations

Most startups would be well served to use Puzzle in my opinion. Even though it's new there are tons of features that make accounting a lot easier and less time-intensive for founders. Remember accounting software largely hasn't changed in over a decade. Puzzle brings a lot of the benefits of AI and automation that's been overlooked by incumbents.

For companies that don't want to take the risk with a new software like Puzzle, I'd recommend Quickbooks in the majority of cases. However if your startup is going to transact heavily in multiple currencies then I'd recommend Xero.