Top Accounting Software Features for Your Small Business

Every business needs accounting software that does more than just balance the books and store receipts. The right tools help you stay on top of cash flow, get paid faster with professional invoicing and online payments, and keep spending in check with automated expense tracking.

Modern accounting software can help you save time, reduce errors, and paint a clear picture of your business performance.

As FreshBooks co-founder Mike McDerment says, “Every time software gets easier to use, it becomes more accessible to more people.” And we think it perfectly captures the power of having an accounting software with the right features in your corner. 

Keep reading as we dive into what features make a great accounting software, so you can find the best one for your small business. 

Key takeaways

• Automating tasks like data entry and invoicing saves time, reduces errors, and frees you to focus on growing your business.
• Professional invoicing and integrated online payment features can help you boost your cash flow and get paid faster.
• When choosing software, remember to consider factors like scalability, integration with other apps, mobile access, and data security.

Table of contents

1. Core accounting features every small business needs

2. Driving revenue: invoicing, payments, and sales features

3. Optimizing operations: tracking expenses, time, and mileage

4. Managing your people: payroll and team management

5. Project tracking and client management

Empowering your small business with smart accounting

Top 25 accounting software features listed

Frequently asked questions on accounting software features

1. Core accounting features every small business needs

Effective financial management is the foundation of any successful small business. Modern accounting software provides the tools you need to create and maintain a clear, accurate financial picture from day one. Here are some basic features you should keep an eye out for when looking for accounting software.

Accounting and bookkeeping

Almost all small business accounting software includes essential bookkeeping features. This foundational layer includes features such as:

• Journal entry forms to record every transaction.
• A general ledger to serve as the central hub for all financial activities. 
• Customizable chart of accounts (COA) for classifying your income, liability, asset, and expense transactions.

Most accounting platforms adhere to double-entry accounting principles, which ensure your books are balanced and comply with generally accepted accounting principles (GAAP).

Another helpful feature is the ability to connect your business bank and credit card accounts directly to your software. Automating the import of transactions saves you from tedious manual data entry and helps you keep your records up to date. Accounting software can also automate a wide range of financial tasks, such as recording transactions, reconciling accounts, and generating financial reports, so you can manage core accounting tasks efficiently.

Accounting and bookkeeping in action: Maria, a freelance web developer, connects her business bank account and credit card to her accounting software. Payments for her projects are automatically categorized as service income, and her software subscriptions are logged as operating expenses. At the end of the month, the software automatically reconciles these financial transactions, saving her hours of manual work and stress come tax season.

Financial reporting

Good accounting software provides robust reporting tools that generate real-time financial statements, including the profit and loss (P&L) statement, balance sheet, and cash flow statement. Essential reports such as income statements and cash flow statements are key to understanding business performance, providing insights into your business’s profitability and financial health. Customizable reports and user-friendly dashboards offer at-a-glance insights into sales performance, accounts receivable, expense trends, and profit margins.

Financial reporting in action: John, who owns a small architectural firm, regularly consults his P&L report to see which types of projects are most profitable. He uses the cash flow statement to make sure he has enough cash in the bank to cover his expenses. His dashboard shows outstanding invoices and project budgets, so he can spot potential financial issues early and adjust his strategy proactively.

Access to accurate financial reporting, including the ability to easily generate financial statements, transforms financial management from painful to a powerful tool to help you make smarter business decisions. 

2. Driving revenue: invoicing, payments, and sales features

One of the most important—and dare we say, exciting—parts of building a business is getting paid. Accounting software doesn’t just help you keep track of money, it helps you earn it. Here are some accounting software features that can help you get paid faster.

Invoicing

Accounting software can help you create and send professional, customizable invoices that reflect your brand identity. Key features include setting up recurring invoices for retainer clients, automatically adding billable hours from time tracking, and sending automated reminders for overdue payments. Plus, accounting software streamlines invoicing and collection processes by automating billing, sending payment reminders, and allowing you to manage credit terms for clients—such as setting credit limits, monitoring overdue payments, and enforcing credit policies. For project-based work, flexible options like progress invoicing allow you to split an estimate into multiple invoices based on milestones or a percentage of work completed, so you can keep a consistent cash flow.

Invoicing in action:  A small digital marketing agency uses a solution like FreshBooks for their invoicing. They send branded invoices to their clients, which are automatically populated with billable hours tracked by the team. As Zach Barton, Director of Barton Interactive noted, “FreshBooks’ recurring invoices have been so valuable—we love that reliability in our cash flow.” Automated late payment reminders have also significantly reduced the time they spend chasing and tracking payments.

Payments

Modern accounting systems can also seamlessly integrate with online payment gateways to let you accept credit cards, debit cards, digital wallets, and ACH transfers directly within the invoice. The best accounting platforms support multiple payment methods, including credit card payments and transactions in multiple currencies, accommodating diverse client needs and international transactions. This makes it easier—and faster—for clients to pay you. For subscription-based businesses, automated recurring billing can also help you keep consistent revenue without having to manually invoice and bill clients every month. Keep an eye out for platforms that prioritize security with measures like data encryption, tokenization, and PCI DSS compliance to protect your business and clients’ sensitive financial information. 

Payments in action: An online fitness coaching platform uses its integrated accounting software for all client payments. Recurring billing is set up for monthly packages, with payments processed securely via credit card or ACH. This creates a smooth and professional experience for clients and keeps your income flowing.

Proposal software

Integrated proposal software helps you create professional, conversion-focused proposals with clean layouts and customizable templates. Features often include built-in digital signature capabilities and direct payment support within the proposal itself, which helps you land customers faster. 

Proposal software in action: A freelance marketing consultant uses proposal software to craft detailed project proposals. They customize a professional template with their branding and scope of work details. Once the client accepts and digitally signs the proposal online, the system notifies the consultant, who can then instantly convert it into a new project and issue the first invoice.

Estimating software

For many service-based small businesses, customers want to understand your service and the cost. Estimates help you clearly outline the scope of your work and your pricing, so you know that you and your clients are on the same page before you get started. You can even outline costs of individual items or services, so clients can choose the services that work best for them.

The best accounting software programs include features to create estimates. And once the work is complete, you can easily convert the estimate into an invoice to get paid quickly. 

Estimating software in action: A small carpentry business uses the estimating feature on its accounting software to quickly and accurately generate detailed quotes for custom furniture projects. This clearly outlines the scope of work and associated costs to their clients, so they can make informed decisions about moving forward. 

3. Optimizing operations: tracking expenses, time, and mileage 

Efficiently managing your operational costs and time is essential for stay profitable. Accounting software provides specialized features that automate and streamline these critical areas.

Expense tracking and receipts tracking

Accounting software simplifies expense tracking by connecting to your bank accounts and credit cards to automatically import and categorize financial transactions. A game-changing feature is smart receipt scanning, often powered by optical character recognition (OCR) technology. You can simply snap a photo of a physical receipt with your phone, and the software automatically pulls key details like the vendor, amount, and date, so you don’t have to enter it all manually yourself. These tools also make it easy to track reimbursements and generate detailed expense reports for tax purposes.

Expense and receipts tracking in action: Sarah, an e-commerce business owner, uses her accounting software’s mobile app to snap photos of receipts right after a purchase. The app’s smart scanning automatically extracts the financial data and categorizes the expenses, so her financial records are always up to date, making reconciliation and taxes a breeze.

Mileage tracking

For any business that involves travel, a mileage tracking feature is a must have. Many accounting solutions offer automatic GPS-based mileage tracking through their mobile apps. The app logs your business trips as you drive, so you can say goodbye to messy manual logs. You can easily categorize trips as business or personal, and the software calculates your potential tax deductions based on standard mileage rates, providing you with IRS-compliant reports.

Mileage tracking in action: David, a mobile pet groomer, uses an integrated mileage tracking app like the one in FreshBooks. The app automatically records his business mileage via his phone’s GPS. Each week, he quickly reviews and categorizes his trips, and the software calculates his potential deductions, maximizing his tax savings without the hassle.

Time tracking

Time tracking is essential for service-based businesses, freelancers, and consultants. It allows you to accurately record the time you spend on tasks and projects, which is crucial for accurate invoicing and analyzing project profitability. Automated time tracking eliminates manual timesheets and guesswork.

Time tracking in action: Emily, a freelance graphic designer, uses the time tracking feature in FreshBooks, which is integrated into her workflow. She starts a timer for each client project, ensuring every billable minute is captured. When it’s time to invoice, these tracked hours are automatically added to the client’s invoice, ensuring she’s paid for all her work. She also uses reports to analyze her time allocation, which helps her refine her pricing and improve future estimates.

4. Managing your people: payroll and team management

As your business grows, your needs extend beyond core financial tracking. Advanced accounting software offers features to streamline how you manage your team and your client relationships.

Payroll

Payroll software automates the complex calculations of employee wages, deductions, and taxes, ensuring accuracy and compliance with ever-changing tax laws. It can handle automated tax filings and direct deposits, simplifying payroll for everyone. Modern accounting software also automates payroll calculations, including payroll tax withholdings and local payroll taxes, so you can stay compliant across different jurisdictions. Many platforms also offer secure employee portals where your staff can access their own pay stubs and W-2s, reducing administrative questions.

Payroll in action: A small marketing agency with five employees uses the integrated payroll service in their accounting software. The software automatically calculates pay, deducts for taxes and benefits, and processes bi-weekly direct deposits. At year’s end, it generates and files W-2s and 1099s, and employees can access their documents via a secure portal, which reduces the administrative burden and ensures compliance.

5. Project tracking and client management

Cloud accounting software is designed for collaboration, allowing owners, managers, employees, and even your accountant to have access at the same time.  Role-based permissions help you control who sees what, protecting sensitive financial data while still enabling teamwork. Robust task and workflow management features allow you to assign tasks, set deadlines, track progress, share files, and communicate directly within projects, keeping everyone on the same page.

Project tracking in action: An accounting firm with a distributed team uses their accounting software’s integrated project tracking and team management features. For each new client, a dedicated project is created, and tasks are assigned to the right team members. Everyone can track their time, attach client documents, and leave comments for each other, while the project manager monitors progress and profitability from a central dashboard.

Client management

Modern accounting software isn’t just for crunching numbers anymore, it can also offer some helpful client management features. Think of it as your all-in-one hub for everything client-related: contact info, past chats, project updates, and more. This helps you keep client interactions smooth and stay on top of invoices and payments. You get a clear, unified view of all your customer data, which makes it easier to focus on serving clients. In many cases, clients can hop into their own accounts to check invoices, approve quotes, make payments, and even collaborate on projects. That means fewer back-and-forth emails, easy access to info, and a much smoother experience.

Client management in action: An independent accountant uses their accounting software’s client profile to store quotes, proposals, and invoices. When a client asks about a proposal you sent several months back, you can easily find it right within their profile and turn it into an invoice when they’re ready to get started. 

Choosing your ideal software: key considerations

Selecting the right accounting software can be a game changer for your small business. 

When making your choice, be sure to evaluate the accounting system as a whole, considering the features each software offers and how it aligns with your business needs.

Integration capabilities

The ability of your accounting software to connect seamlessly with other business tools—like your CRM, POS system, inventory management, or e-commerce platform—can have a huge impact on how you work. As WordPress founder Matt Mullenweg observed, “Technology is best when it brings people together.”

When your tools are connected, it can reduce manual data entry, minimize errors, and give you a holistic view of your operations—without having to constantly switch between tabs.

Scalability

As your business grows, your software should be able to grow with you. Look for a solution that offers advanced features and tiered plans that you can upgrade to as your needs change. Thinking long term can prevent the headache and costly process of switching platforms down the line.

Mobile accessibility

In today’s fast-paced world, a robust mobile app for iOS and Android is essential. A good app enables you to manage your finances from anywhere, whether you’re sending an invoice from a client’s office, scanning a receipt at a coffee shop, or checking your cash flow while on the go. Mobile support is crucial for real-time financial management and workflow continuity, so you get the benefits of accounting software no matter where you’re working.

Data security

Given the sensitive nature of financial data, reputable cloud-based accounting software should invest heavily in advanced security measures, including data encryption, multi-factor authentication (MFA), and regular backups. Ensure any provider you consider is compliant with industry standards like the Payment Card Industry Data Security Standard (PCI DSS) for secure credit card handling.

User friendliness

The best software in the world won’t help you if it’s too complicated to use. An intuitive and user-friendly interface is critical, especially if you don’t have an extensive accounting background. Solutions like FreshBooks are often recommended for their simplicity and ease of use, which minimizes the learning curve and helps you get up and running quickly.

Customer support

When you have a question or run into an issue, you need to know that help is available. Look for a provider that offers comprehensive and responsive customer support through multiple channels, such as phone, live chat, and email. Bonus points if they offer extensive online knowledge bases and tutorials.

Empowering your small business with smart accounting

Modern cloud accounting software can put you in the driver’s seat of your business growth and finances. From robust invoicing and payment processing to insightful financial reporting, these tools give you a 360-degree view of your business.

For small business owners, freelancers, and service providers, investing in cloud accounting software is not just an expense, it’s a strategic investment in your business’s future. The right tools can transform financial management from a chore into a powerful engine for business growth. Solutions like FreshBooks provide these essential features, to help you build the business you’ve always dreamed of.

Top 25 accounting software features

Category	Feature	Primary benefit for your business
Foundational Accounting	General ledger	Serves as the central hub for all your financial activities and transactions.
	Bank connections	Automatically imports transactions from your bank and credit cards to eliminate manual data entry.
	Automated reconciliation	Intelligently matches bank transactions to your records, flags discrepancies, and ensures accuracy.
	Chart of accounts (COA)	Allows you to classify all income, asset, and expense transactions for organized bookkeeping.
Financial reporting	Profit and loss (P&L) statement	Shows your business’s profitability over a specific period so you can see what’s working.
	Balance sheet	Provides a snapshot of your company’s financial health at a single point in time.
	Cash flow statement	Details the movement of cash in and out of your business so you can manage liquidity.
	Customizable dashboards	Offer at-a-glance insights into your most important financial data, like sales and expenses.
Invoicing	Customizable invoices	Create professional, branded invoices that reflect your brand identity and are easy to read.
	Recurring invoices	Automates billing for regular clients, saving time and ensuring consistent revenue.
	Automated payment Reminders	Automatically follows up on overdue invoices, reducing the time you spend chasing payments.
	Progress invoicing	Allows you to bill clients based on project milestones, which helps maintain a steady cash flow.
Payments	Online payment gateways	Accept credit cards, debit cards, and ACH transfers directly from your invoices.
	Automated recurring billing	Ensures consistent revenue from subscriptions or ongoing services with minimal effort.
Proposals and estimates	Professional proposals	Create conversion-focused proposals with clean layouts and e-signature capabilities.
	Estimating tools	Provide clients with cost estimates for projects and services.
Expense and receipt tracking	Smart receipt scanning	Extracts key details from photos of receipts, virtually eliminating manual data entry.
	Automated expense categorization	Automatically sorts your business expenses into the correct categories for easy tracking and tax prep.
Mileage and time tracking	GPS mileage tracking	Automatically logs business mileage as you drive, maximizing potential tax deductions.
	Automated time tracking	Accurately records time spent on projects, ensuring proper client billing and profitability analysis.
Payroll management	Automated payroll and tax filings	Calculates employee wages, deductions, and taxes, and handles automated tax filings to ensure compliance.
	Employee self-service portals	Allows employees to securely access their own pay stubs and tax forms, reducing administrative questions.
Team and client management	Multi-user access and permissions	Allows your whole team to collaborate while managing who can see sensitive financial information.
	Project collaboration tools	Facilitates teamwork by allowing users to assign tasks, share files, and communicate within projects.
	Secure client portals	Provides clients a secure place to view invoices, approve quotes, and make payments, improving their experience.

Frequently asked questions on accounting software features

As a freelancer, which accounting software features are most critical for me to start with?
For freelancers and service-based businesses, the most critical features are those that manage revenue and time. Prioritize software with professional invoicing and online payment processing to ensure you get paid quickly, and integrate time tracking to bill for all your hours accurately. Automated expense and receipt tracking is also essential to manage costs and prepare for tax time.

What is the difference between basic invoicing software and a full accounting platform?
Basic invoicing software is limited to creating and sending bills to clients. A full accounting platform integrates invoicing with a complete financial ecosystem, including automated expense tracking, bank reconciliation, and real-time financial reporting (like P&L reports and balance sheets), giving you a comprehensive view of your business’s health. Many platforms also offer a range of advanced accounting software features, including tax management capabilities, to support businesses operating in multiple locations or jurisdictions. 

Which specific features are best for maximizing my tax deductions?
To maximize tax deductions, look for three key features: automated expense tracking that connects to your bank account, smart receipt scanning that captures every detail from physical receipts, and automatic GPS-based mileage tracking that logs all your business-related travel. These tax management accounting software can ensure you have an accurate, audit-ready record of all potential write-offs.

How does an automated bank reconciliation feature actually save me time?
Automated reconciliation saves hours of manual work by connecting directly to your business bank accounts and credit cards to import transactions automatically. The software then intelligently matches these financial transactions to your recorded income and expenses, instantly flagging any discrepancies for your review to save you time, without having to manually reconcile bank statements.

If I plan to hire employees soon, which features should I ensure my software has?
If you plan to grow your team, you should look for two important features. First, look for integrated payroll services that automate wage calculations, tax deductions, and filings to keep you compliant. Second, look for team management capabilities that allow for multi-user access with role-based permissions, so you can collaborate securely with your new employees.

Why are reporting features like a profit and loss statement so important?
While it may sound complex, a profit and loss (P&L) statement is vital because it clearly shows your business’s profitability over a period of time. This report helps you understand which clients or projects are most profitable, identify trends, and make smart, data-driven decisions to grow your business.

I’m just starting my business. Do I really need accounting software right away?
Yes, starting with accounting software from day one is highly recommended. It helps you establish good financial habits, organize your records accurately, and avoid common pain points like manual data entry errors and poor financial visibility that many new businesses face. This sets you up for sustainable growth and makes tax time much less stressful.

Can my accountant access my books if I use this software?
Absolutely. One of the major benefits of cloud accounting is its ability to support collaboration. You can grant access to your accountant, bookkeeper, and other team members, allowing them to work on your books simultaneously from anywhere. This streamlines communication and makes sure that everyone is working with real-time data.

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