Quick answer

If you're not an accountant, look for four things in a bookkeeping app: a reliable connection to your business bank account, categorisation you can understand without a finance background, a bank reconciliation that tells you plainly when something doesn't match, and reports your tax preparer can use. Also check that the tool lets you attach receipts and invoices to transactions, because the IRS expects supporting documents behind the numbers. In Publication 583, the IRS lists cash register tapes, deposit slips, invoices, canceled checks and account statements as examples.

Pick the amount of hands-on work you're willing to do first, then pick the tool. Software suits someone who will enter and review the data. A bookkeeping service suits someone who wants it done for them. Everything else is secondary.

What does bookkeeping software actually do?

Bookkeeping software does four jobs. It records money coming in and going out, it categorises each transaction, it reconciles those records to the bank, and it produces the statements that summarise the result.

Recording is the foundation. Each sale, payment, bill and expense becomes an entry. Most tools can pull these in automatically from a connected bank or card account, so the person using the software reviews entries rather than typing them.

Categorising is where a transaction gets a label such as software subscription, advertising, or supplies. The labels matter because the reports are only as good as the categories behind them. A purchase sitting in the wrong category is the most common way books quietly go wrong.

Reconciling means checking that the software's version of the account matches the bank's version. If the bank says the balance is one figure and the books say another, something is missing, duplicated or miscategorised. Reconciliation is how that gets caught, and for a non-accountant it is the most valuable habit the software can build.

The output is a set of reports. These typically include a profit and loss statement, which shows income less expenses over a period, and a balance sheet, which shows what the business owns and owes at a point in time. A tax preparer works from these figures, and that is the reason to keep them tidy all year rather than in a rush at filing time.

What should someone who isn't an accountant look for?

Start with the bank connection. The less manual entry a tool requires, the fewer errors creep in, and the more likely the person is to keep using it. Check that the tool connects to the institution where the business account is held.

Next, look at how categorisation feels in practice. Good tools suggest a category and learn from corrections. Someone without bookkeeping training should be able to look at a transaction and understand what the software is asking.

Then look at reconciliation. The tool should make it obvious what is matched, what isn't, and what to do about the difference. If reconciliation feels like a specialist task, the tool is probably aimed at someone else.

Document attachment is the fourth requirement, and it comes straight from the official guidance. The IRS, in Publication 583, names the supporting records it expects behind each kind of figure. For gross receipts, it lists cash register tapes, bank deposit slips, receipt books, invoices and credit card charge slips. For expenses, it lists canceled checks, cash register tapes, account statements, credit card sales slips and invoices. A tool that lets someone photograph or upload a receipt and attach it to the transaction makes that habit easy.

Finally, think about who else needs to see the books. If an accountant or tax preparer will work from them, ask which tool they already use. Matching the preparer's tool often matters more than any feature difference.

What do the IRS and other agencies say about keeping records?

The software stores the records, but the agencies set how long they must be kept. The figures below come from the official sources named, and they cover only the situations listed.

The IRS, in its guidance on how long to keep records, sets a default of three years. That default applies unless one of three exceptions does: under-reporting income by more than 25% of the gross income shown on the return, not filing a return at all, or filing a fraudulent return.

Those exceptions work as follows, according to the same IRS guidance:

  • Records should be kept for six years if income that should have been reported was left off the return and the omitted amount is more than 25% of the gross income shown on it.
  • Records should be kept indefinitely if no return was filed.
  • Records should be kept indefinitely if a fraudulent return was filed.
  • Records should be kept for seven years for a claim for a loss from worthless securities or a bad debt deduction.
  • Employment tax records should be kept for at least four years after the date the tax becomes due or is paid, whichever is later.

Other agencies set their own rules. The US Department of Labor, in Fact Sheet 21 on Fair Labor Standards Act recordkeeping, says employers must preserve payroll records, collective bargaining agreements, and sales and purchase records for at least three years. Supporting records such as time cards, piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages must be kept for two years.

State rules differ again. In California, the California Department of Tax and Fee Administration, in Publication 116, says sales and use tax records should be kept for at least four years, and longer during an audit: all records covering the audit period should be retained until the audit is complete. Other states' retention rules are not covered here, and a reader in another state should check with their own state tax agency.

These periods matter when choosing software because the records have to remain accessible for the full period. Before relying on any tool, check what happens to stored data and attachments if the subscription ends. That detail is not published in a comparable form across providers, so it is worth asking before committing.

What is the difference between software, a bookkeeping service and an accountant?

These three get confused, and they do different work.

Bookkeeping software is a tool. The person using it does the entry, review and reconciliation, and the software does the arithmetic and organises the output. It costs the least in money and the most in attention.

A bookkeeping service is a person or team who does that work in the software for the business owner. The owner hands over the receipts and bank access, and the service keeps the books current. It costs more and requires far less of the owner's time.

An accountant interprets and advises. That includes tax planning, preparing returns, and guidance on structure and decisions. An accountant can also do bookkeeping, but the two roles are distinct, and many businesses use software or a service for the daily records and an accountant for the yearly work.

For a non-accountant, the practical question is not which category is best but which parts of the work the owner will reliably do. Someone who will spend twenty minutes a week reviewing transactions can do well with software alone. Someone who knows that won't happen is better off paying for a service. Deeper comparisons between those routes are covered elsewhere on the network, and this page stays with what the software itself does.

Which tools are worth knowing about?

The providers below are listed alphabetically, not ranked. Prices are as of 2026-10-06, and the monthly figures are the ongoing prices unless labelled promotional.

Bench. Bench is priced as a bookkeeping service rather than a self-serve tool. Bookkeeping Light is $199 per month, Bookkeeping is $399 per month, and Bookkeeping + Tax is $649 per month. A fractional bookkeeper is $55 per hour plus a $1,200 onboarding fee. It suits an owner who wants the work done and is willing to pay service-level prices for that.

FreshBooks. FreshBooks plans are Lite at $23 per month, Plus at $43 per month and Premium at $70 per month. A Select tier is available by quote only. FreshBooks has also offered a promotional rate of $1 per month for one year on Lite, which is not the ongoing price. It is worth considering for an owner who wants a simple tool for a small number of transactions.

QuickBooks Online. QuickBooks Online has five tiers: Free at $0, Simple Start at $38 per month, Essentials at $85 per month, Plus at $140 per month and Advanced at $340 per month. A promotional rate of 50% off for three months has been offered, and that is not the ongoing price. It is the most widely used option, and if an accountant already works in QuickBooks Online, matching it is likely to be the practical choice.

Wave. Wave's Starter plan is free, and Pro is $19 per month or $190 per year. A promotional rate of $9.50 per month for three months on Pro has been offered, and it is not the ongoing price. Add-ons are priced separately: card processing is 2.9% plus $0.60, the receipts add-on is $8 per month, and payroll starts from $25 per month. It suits an owner who wants to start without a subscription.

Xero. Xero's plans are Early at $27 per month, Growing at $59 per month and Established at $97 per month. A promotional rate of 80% off for three months has been offered, and that is not the ongoing price. It is a general-purpose option with tiers that step up as needs grow.

ZenBusiness Money Pro. ZenBusiness Money Pro is $30 per month, according to ZenBusiness's own published pricing as of 2026-10-06. It is sold as an add-on alongside business formation, and its published description covers custom invoicing, revenue and expense tracking, and tax preparation tools. It is a bookkeeping service rather than accounting software, so it isn't comparable feature for feature with the self-serve tools above. It is best understood as bookkeeping handled for the owner, bundled with the entity work.

Zoho Books. Zoho Books has a Free plan at $0, limited to businesses under $50,000 in annual revenue. Paid plans are Standard at $20 per month, Professional at $50 per month, Premium at $70 per month, Elite at $150 per month and Ultimate at $275 per month. It offers a wide range of tiers, which suits an owner who expects the business to grow.

What should come before choosing software?

The software only works if the money going into it is clean. That starts with a separate business account.

The IRS says this directly in Publication 583: "One of the first things you should do when you start a business is open a business checking account." It adds that the business account should be kept separate from the personal one. The same publication says to use the business account for business purposes only, and to note the source of deposits and the type of expense. It calls the business checkbook "your basic source of information for recording your business expenses."

That guidance applies to anyone who is just starting out, and to anyone who has been mixing business and personal money. Sorting out a mixed account later is slow, and no software removes that work. Opening the account first means every transaction the software imports is already a business transaction.

For someone still forming the business, the order that makes sense is the entity, then the EIN, then a separate business account, then the books. ZenBusiness handles the formation, the EIN and the registered agent, and publishes a guide to accounting basics. It also offers a free accounting consultation to customers who form an entity with it. It does not offer business banking, so the account itself is opened with a bank of the owner's choice.

For an owner who wants one provider for formation and ongoing bookkeeping support, that combination is a real convenience, and a standalone software tool cannot offer it. For an owner whose business already exists and whose books are in good order, none of that is necessary, and any tool above can do the daily work. The right answer depends on where the business is today.

Frequently asked questions

Is bookkeeping software the same as accounting software? The terms overlap heavily. Bookkeeping covers the daily recording and reconciliation, while accounting adds interpretation, planning and tax work. Most products described as accounting software include the bookkeeping functions.

Do the numbers in the software count as the official record? The IRS describes supporting documents, such as receipts, invoices and statements, as what backs up the entries. Keeping those documents attached to each transaction is the safest way to hold both together.

How long should the data stay accessible? It depends on the agency and the situation, as set out in the retention section above. The IRS default is three years, with longer periods for specific cases, and other agencies set their own.

Sources

This is general information, not legal, tax or accounting advice, and requirements vary and change.