What is the best accounting software for Australian small businesses?

10 min readApr 17, 2020

We get contacted a lot about what is the right software to use in people’s businesses. The standard consultant and right answer is always “it depends”. It depends on so many things:

What industry you’re in?
What business goals you have (an exit, growth, status quo etc)?
Who is going to drive the system and what experience/skills do they have?
How big is the company?
What problems are you trying to solve?
Do you have an existing system and what is it?
Does your bookkeeper or external accountant have a preference?
Do you need mobility in your business around data entry and reporting?
…and the list goes on

Realistically, whilst the list of “it depends” questions can be very long, different answers still end up with the same recommended solutions, time and again.

This is especially the case when your turn-over is less than $3m and you have less than 20 employees (the majority of companies in Australia). Above that, I’d call you a mid-sized business, you’ll likely be confronted by the SMERP Dilemma, you should read this and then you should come and talk to us at Value Adders, to help guide you in your decision making.

But if you do fit into the small and micro-business majority demographic, and you’re interested in choosing the right software, then read on.

Reality check — most “will do”

First thing is first: most available retail bookkeeping/accounting software will do the/a job. Invoicing. Expenses. Projects. Estimates. Bank feeds…. There is some level of homogenisation.

In accounting terms, a Dr is a Debit and a Cr is a Credit and realistically any one of the top 10 most popular options will work for most small and micro businesses.

By our calculations, the top 10 most popular, accounting / bookkeeping software in Australia includes:

These mostly satisfy the baseline prerequisites I always advise when choosing business software for small and micro-businesses:

To ensure the software will more likely be around 5 years from now, go for the browser and mobile-based options only (this includes all of the above except for MYOB AccountRight which will have a browser front end soon, apparently);
To ensure the software vendor will be around 5 years from now, go for well-known, established brand with a decent sized client base over the flashy and new (most of the top ten will likely be here 5 years from now);

I know at this point, some people will just be thinking, what’s the cheapest? And I’ll always say the lowest price is rarely the best value, knowing some people won’t hear me and will just look at the pricing, at which point:

Wave is free for bookkeeping (invoicing, bills, accounting);
and if you need a payroll app for Single Touch Payroll, Payroller and Reckon STP app are free

Those wanting the best value and not just the cheapest, read-on.

The question is then what will be the best fit, over a period of time, delivering the fewest compromises and providing a genuine return on investment?

To help narrow in on an answer, I’ve unpicked the things I see as the key considerations:

Key considerations for best fit

1. Your Accountant’s / Bookkeeper’s preference

I stress this relates to SMALL and micro businesses only (<20 staff, sub $3m turnover).

Are you delighted with your existing external Accountant / Tax Agent?

If yes, go and ask them what software they’d recommend/prefer you use.
If no, the first place to start (almost in business let alone in choosing business software) is to work with a good external accountant. One that delights you, not just the one you know. The technology they use, *should* influence your decision whilst you are small.

2. Do you use or do you intend to use a bookkeeper that delights you?

If yes, go and ask them what software they’d recommend. My view is, the bookkeeper’s opinion/preference (due to regularity of use and intimate knowledge of your business) trumps the accountant’s.
If no, see question 1.

Invariably, I would suggest more accountant’s and bookkeepers these days will prefer Xero, followed by MYOB and QuickBooks Online.

If you’re accountant or bookkeeper is industry focused (such as creatives or trades), they may favour the lesser known products like Rounded or Freshbooks — but most will suggest one of the BIG 3.

I am obliged to emphasise once again that I personally find the value of external accountant and bookkeepers preferences on business systems, as inversely proportional to company size.

2. Integration with operational software

The bookkeeping software is often not the key operational tool these days. If you’re in retail or hospitality, you need a Point Of Sale System like Square, Vend, Kounta or Hike.

If you are a tradie, whilst you can probably get away with just using the bookkeeping apps on their own (particularly the mobile friendly QuickBooks, Xero and Freshbooks), you might consider tradie specific apps like ServiceM8, Tradify, NextMinute and Simpro

If you’re a yoga studio or gym you need apps like Mindbody to book your appointments and manage your classes. I could go on…

My point is that the accounting/bookkeeping software is less important than the key operational software. This means the key value of the bookkeeping software is its ability to integrate with these operational tools and the number of options that these integrations make available.

Xero wins hands down in Australia in this regard. Followed by QuickBooks (who’s add-ons suffer from different connections per region and so often good apps only connect with the US QBo). Then MYOB.

Whilst most offer integrations to best-of-breed 3rd party operational tools, Zoho probably deserves a special mention, with ZohoBooks being one small part of a comprehensive suite of products the company bundles under the ZohoOne offering. From accounting to reporting, inventory management to email marketing, CRM to project management and beyond… ZohoOne is marketed as “The Holistic Approach To Business Software”. It is impressive at the price point.

3. Best mobile apps

10 years ago the concept of allocating bank statement transactions such as customer payments on a mobile device would have sounded ridiculous to me. Now, its where I do most of my bookkeeping. I personal value the mobile capability of an app highly and think it shows a company who understands and keeps up with the technology and customer demands.

On this score I rate QuickBooks (Online and Self-Employed) slightly ahead of Xero, as far as comprehensive solutions on a mobile. ZohoBooks also scores well with a comprehensive mobile solution. Meanwhile small Australian player Rounded aren’t as comprehensive with their mobile solution, but rate very highly in the app stores for user satisfaction.

MYOB’s offering on mobile is disjointed and weak compared to its competitors.

4. Automation

If the last few years have been about the trend to mobile, then I believe beyond 2020 is about automation in the form of workflows and Artificial Intelligence.

The best systems offer functionality such as:

Automated debtor reminders (Xero, MYOB Essentials, ZohoBooks);
Recurring transactions such as invoices, bills and journal entries (QuickBooks Online, Xero, ZohoBooks)
Auto-coding of banking transactions — evolving from customer defined rules to suggestions driven by big data and AI (QuickBooks, MYOB, Xero)
Automation of bill/expense entries, from pdf or image to entered and coded (Xero, MYOB, QuickBooks and ZohoBooks)

All told, it takes large datasets and significant resources to build automation engines that work effectively.

Automation is the economic moat or barrier to competition where global players have a massive competitive advantage. We are already seeing the likes of Intuit (QuickBooks), Xero, Sage and Zoho deliver in this area and I can only see them accelerating away from smaller players because of their size, access to data and significant human capital to build such things.

5. Integrated Payroll

Single-touch payroll is a requirement for any business with employees. If you have staff, you need a modern payroll software to give you compliance and ease of process. If you’ve set-up as a company, chances you’ll be paying yourself as an employee and need a payroll system.

QuickBooks has partnered with KeyPay to bundle Payroll as part of their Australian QuickBooks Online solutions. Ironically so too has Sage with Sage Business Cloud Financials. KeyPay as an embedded “best-of-breed” probably wins on this front.

Xero ‘s Payroll is not its absolute strength, but it is more than decent and is definitely getting better and is light years ahead of the payroll dished up in MYOB (Essentials particularly).

Saasu and ReckonOne both offer OK integrated Payroll solutions included or at a small additional cost.

6. Can you just Google it?

Not sure how to do something? What’s the quickest way to work it out. Just Google it…

I think giving weighting to a product based on the availability of online content for a wide range of How Tos, from wikis to community help, Facebook groups to Youtube… is a fair assessment point as it is the modern way people learn systems.

Logically the big players have more content online from themselves and their communities/partners. For mine, Xero is best in Australia for “just googling it”. QuickBooks Online has the most content but suffers from American dominant focus, where the product is slightly different. MYOB deserves an honourable mention for the volume of market specific content, though there are multiple versions and you can get lost in which product, which version etc.

7. Support

On customer feedback alone, Rounded probably scores the highest on support satisfaction. Its only fair to point out that customer support in software for small and micro businesses, is very difficult to scale well. I would suggest Rounded leads the way as they remain small and haven’t yet experienced the scaling problem and their key directors are still very hands-on in supporting their clients.

QuickBooks scores well for support in Australia, probably ahead of the other BIG players by offering phone, email and live chat support. MYOB offer phone and other forms of support to a high level (though my experience is not as timely as QuickBooks). Xero cops a bit flack for not offering phone support (see this thread for example), but not everyone wants phone support in 2020 and in general Xero do OK, given their size and their responsiveness to online queries.

8. Pricing

For the price (free), Wave, owned by H&R Block since last year, is actually a decent solution. Though the old saying is, if you’re not paying for the product, then you ARE the product that is being sold. At present, after previously flirting with ads, they monetise based on customers using their very reasonably priced merchant facility. Similar to what Square do with POS.

I’ve accused QuickBooks of price dumping in the Australian market before (big US player looking to muscle Xero in their home market). I think there has been a noticable shift away from this though in recent times, under a new CEO. They have increased their prices, but still under-cut the Xero and MYOB price for equivalent offerings.

Reckon have very aggressive pricing on ReckonOne using a modular approach and an entry point at just $7/month. Saasu is good value for what you get, starting at just $15/month.

Freshbooks and ZohoBooks seem great value too, but I really dislike how they use pricing per contact/customer, as even really small businesses can have loads of contacts.

I think MYOB over prices its solutions for comparative functionality, relying on the goodwill of their long-standing brand and rusted on, boomer client base.

Xero price relevant to their market-leadership and the premium offering they deliver. You’re unlikely to pick Xero on price alone, though I do believe it offers great value when all factors are considered.

Conclusion

I could go on with many more factors to consider when choosing small and micro-business accounting software. The fact is the same names keep popping up.

I genuinely don’t think you can go too wrong choosing any of the top 10 products. If you’re planning to be in business for a while and to grow over time, then I suggest the major players like Xero and QuickBooks is where you should be looking. I think their products are already market leading and the future of automation should see them delivering even better solutions.

If you’re a freelancer, who works and bills on jobs and appreciate a nice aesthetic in your software with great local support, Rounded is a decent option.

If you just want to get your first invoice out and don’t want to spend much/any money yet, Wave is not a bad solution at all.

Looking for “one-throat-to-choke”, a broad toolkit of integrated solutions from one vendor, at a reasonable price, then checkout Zoho.

Want to support Australian manufacturing / companies? Xero is listed on the ASX but still thinks itself a Kiwi company (reporting and paying company tax in kiwiland). MYOB whilst based here, are now owned by KKR, a big international equity firm. This leaves Reckon, Saasu and Rounded as the genuine local players in the top 10.