What does accounting software really cost in the first year?

For one person, the first year can cost nothing: four of the six tools here have a free plan that fits one person. QuickBooks Free imports transactions from 1 bank account at no cost; past that, or on Wave or Zoho Books, imports are paid: Wave Pro comes to $228 for the first year, Zoho Books Standard to $240 for the first year, and QuickBooks Simple Start to $399 for the first year with the discount, or $456 with the free trial instead. For three people, paying for three logins on each tool’s lowest-priced option costs $228 to $1,020 for the first year (Square Invoices not priced at this size), with extra people priced in where a vendor sells them as an add-on. That’s the bill for three people, not proof a plan fits your volume. Card fees, sales tax, other add-ons, and your own time aren’t in any of these figures.

What does the first year cost for one person?

Here’s each tool for one person on the cheapest plan that fits, for the first twelve months billed monthly. Free means a free plan fits one person.

The free rows aren’t all the same job. Wave’s Starter plan and Zoho Books’ free plan keep real books with bank transactions typed in, QuickBooks Free imports 1 bank account but is tightly capped, and Square Free is invoicing and payments, not bookkeeping. When free invoicing is enough compares what ends each one.

Xero and FreshBooks have no free plan, so their rows are the regular price, and what each discount is worth sits under the table. FreshBooks says its discount can end at any time, so don’t build a budget on it.

What if you want your bank transactions imported?

That’s the usual reason to pay, with one exception: QuickBooks Free imports 1 bank account at no cost, so if one account and its invoice cap are enough, you don’t need to pay for this yet. For more than that, here’s the first year for one person on each tool’s first paid plan that imports your bank:

Xero’s Early plan reconciles bank transactions too, at $259.20 for the first year with the discount, or $324 with the free trial instead, as long as you stay under its monthly invoice and bill limits.

What does the first year cost for three people?

At three people, QuickBooks Free, Wave’s Starter plan, and Zoho Books’ free plan don’t fit: each is for one user. Square doesn’t say how many people its plans cover, so this comparison can’t tell you whether Square Free fits three people, and the table leaves Square unpriced. That’s unknown, not ruled out: check with Square before you count on it or cross it off. Paying for three logins costs $228 to $1,020 for the first year (Square Invoices not priced at this size).

Each row is the bill for three logins, not proof the plan fits your business. FreshBooks’ row is Lite plus two team members, and Lite stops at 5 clients, archived ones included; FreshBooks doesn’t say whether its discount covers team members, so that row is at the regular price. Xero’s row is its Early plan, which has no per-user fee but caps invoices and bills each month, so a busy team of three may need Growing at $566.40 for the first year with the discount, or $708 with the free trial instead.

Say you run a three-person freight brokerage office: you, a second broker, and an office manager who bills shippers and pays carriers. All three need to log in, and you send about forty invoices and pay about sixty carrier bills a month.

Count people first, then volume. Three logins put QuickBooks on Essentials, at $892.50 for the first year with the discount, or $1,020 with the free trial instead. They don’t change Xero’s price, but sixty bills a month is far past Early’s limit, so Xero means Growing. Zoho Books Standard covers all three at $240 for the first year, and Wave Pro at $228 for the first year. The table’s plan is a starting point, not a verdict: it prices three logins, and your volume decides the plan you’ll actually pay for.

Discounts and trials

Three vendors ask new customers to choose. QuickBooks offers half off the first three months or a 30-day trial; on Simple Start the discount is worth $57 and the trial $38. Xero offers a discount on the first three months or a trial; on Growing they’re worth $141.60 and $59. FreshBooks’ discounts are bought instead of its trial; on Plus, $137.60 against $43.

The discount is the cheaper year if you’ve chosen the tool. The trial is the cheaper mistake if you haven’t. Either way, the discounts are for new customers, for a limited time, so the regular price is the one to plan around.

Yearly billing

Wave Pro billed yearly comes to $15.83 a month, and Zoho Books Standard $15 a month. FreshBooks takes 10% off for yearly plans but doesn’t print the yearly price. QuickBooks, Xero, and Square bill monthly only.

Our view is to pay monthly until you’ve run two or three month-ends in the tool, then switch to yearly if it’s on offer and you’re staying. A yearly plan on the wrong tool costs more than a few months at the monthly price.

What the first year doesn’t include

• Payment fees. Once customers pay by card or bank transfer, the processor’s fees can cost more than the software, depending on how much your customers pay by card. What invoicing costs once customers pay by card works them out at your volume.
• Sales tax on the subscription. Xero and Zoho, for example, say their prices exclude taxes.
• More people later. The three-person figures include FreshBooks’ team members where they’re needed; Zoho Books’ extra users start from a fourth person on Standard. Each extra person adds to the bill every month.
• Add-ons. Payroll, receipt capture on Wave’s free plan, and similar extras are priced separately.
• Your time. Setting up accounts, importing customers and opening balances, connecting the bank, and learning the month-end. It’s usually the largest first-year cost, and the reason not to switch tools in year one.

Our view

For a one-person business, the right first-year budget is often nothing: start on a free plan that keeps books, and pay in the month the bank typing, or the free plan’s caps, get old. For two or three people, the first year is a modest bill on most tools, and the bigger risks are a plan sized by people when your volume needs more, and a yearly commitment before you know the tool. What this view gives up is a “complete” setup from day one, in exchange for paying only for what you’ve found you need.

Your next step

Count the people who’ll log in this year and last year’s busiest month of invoices and bills. Find your row in the tables above, start that tool’s free plan or trial this week, and pay monthly until you’ve closed two or three months in it.