What cloud accounting software a business picks comes down to a combination of reliability, ease-of-use, accounting sophistication, up-to-date technology, available third-party apps, reporting, company location, customer support, breadth of advisor community, and price. What follows is a discussion of Xero, QuickBooks Online, and Zoho--the top three cloud accounting products for small business. Freelancers may find FreshBooks, Kashoo, and Wave to be viable alternatives, while somewhat larger sized businesses may want to consider Sage (50 or Intacct) or AccountEdge (MYOB). A number of non-accounting cloud software operators have also added free accounting software to their offerings to draw more customers.

Xero (US HQ in San Francisco; world HQ in New Zealand) scores top marks for ease-of-use, reliability, third-party app support, and up-to-date technology. The interface is far superior to virtually any other cloud product and a joy to use for both accountants and entrepreneurs alike. Synchronization, bank statement balancing, and transaction categorization are superior. Xero supports a very broad third-party app community through the use of an open interface to its software and partner certification. The accounting software itself is a modern rethink in how such programs should operate and the result is quite intuitive. Customer support is reasonably responsive. Xero offers payroll functions in addition to its standard accounting module. Third-party payment processors can be easily linked to Xero.

QuickBooks Online from Intuit (world HQ in Mountain View, CA) scores top marks for technical accounting, reporting, breadth of the advisor community, and backward compatibility with Intuit desktop accounting products. Long time QuickBooks desktop users will find the software mostly familiar, while first-time users will be put off by the non-intuitive interface. Reporting is extremely robust and search functions are fairly flexible. Third-party apps are numerous, although the interface is clunky. Clients will easily find an advisor local to them given the thousands of available advisors. Customer service is spotty, so finding an accountant is advisable. Bank synchronizations are reasonably smooth, although error correction can be problematic. QuickBooks offers payroll and tax functions and a captive payment processor in addition to its standard accounting module.

Zoho Books (US HQ is in Pleasanton, CA; world HQ in India) scores top marks for reliability, captive app support and programming, and up-to-date technology. The interface is reasonably easy to use, although not overly intuitive. The accounting functions are recognizable. Reporting is weak in terms of options and formatting. Zoho's closed ecosystem of companion apps is quite superior to any other cloud accounting software, with the additional attraction of allowing self-programmed software to interface with the many of those apps. Customer support is reasonably responsive. Zoho does not offer payroll.

Have more questions? Fee free to reach out to me (Jeff Morris, sr. tax and accounting partner at Nathaniel Jacobson LLC CPAs) at [email address]. We are local to the Washington DC metro area.