Free Accounting Software For Australian Small Business – Will It Work For You?

"There are in excess of over 100 accounting software packages that are available for small businesses and accountant to use in 2020. Why should a small business or accountant even use accounting software? The reason is that manual data entry can take up to 30% of an accountant or bookeepers time. Time is money after all."
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When it comes to selecting free accounting software for australian small business, the decision is not completely straight forward. Just because the software is free does not mean it is going to be able to meet your business needs now or in the future. There are several considerations a micro/small business should take into consideration before committing to free accounting software. These include: your business size and growth plans, your business type, your accountant or bookeepers software of choice, integration capability, mobile app capability and what support they can offer (if any). 

Table of Contents

To round out this article I am also going to include a brief review into what we believe are the top 3 contenders when it comes to selecting free accounting software options for australian small business. Before we dig in, lets cover off some basic insight into why accounting software has become so important for small and micro businesses in Australia.

Do I need accounting software for small business?

There are in excess of over 100 accounting software packages that are available for small businesses and accountant to use in 2020. Why should a small business or accountant even use accounting software? The reason is that manual data entry can take up to 30% of an accountant or bookeepers time. Time is money after all.

The more tasks that can be automated via accounting software by your accountant or yourself will result in 1) a smaller bill from your accountant and 2) more precious time back in your day to focus on customers. A general rule of thumb is that if you are reliant on more than one person to take care of your basic internal accounting needs, then you should look towards sourcing some form of accounting software.

free accounting software checklist

Consideration 1- Your Business Size and Growth Plans

When determining if free accounting software is going to be right for your australian small business, its important to consider your business size and plans for growth. Why is that relevant? Because if for example you are a small business with a realistic growth trajectory that will see you growing staff from 2 to 30 employees within 18 months, then your accounting needs could drastically change in that time frame. You need to make sure that the accounting software can grow alongside your business.

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If on the other-hand you are a micro business with only 2 people on staff . You predict you size will not change (perhaps ever) then a free accounting software package may be necessary from a cash flow perspective. As you may not be able to afford to pay hundred of dollars for more comprehensive accounting software. Not to mention the time needed to master the software and or train someone else on it.  

How can a company offer a free version of their accounting software?

As a side point – it also might be risky to rely on a pure free only accounting software option. The reason is how can a business like that be sustainable and will it even exist in a few years? What would the business risk to you be of having to switch software providers? For many providers offering a free version (or freemium offering as its often referred to ) is a great way to get people to switch from a trusted product and try their new product. Ultimately the success of that product will be more reliant on the amount of people willing to upgrade to a “paid version”. So bear this in mind.

Consideration 2- Your Business Type

The industry that your small business belongs to is also going to be a big decider in whether free accounting software is going to be the right fit for you. Why is that a factor? Because there can be specialised data requirements for certain industries. These requirements need customized software package add-ons.

For example if you are a manufacturer you might need to keep track of your inventory and or parts and labour.

If you are a retailer or local cafe you might rely on an integration with your Point of Sales (POS) system as that is what contains your transaction and inventory data.

A health professional may require specific functionality to allow them to invoice health insurance companies which is highly specialised.

Make sure to consider the unique requirements of your small business can be met by the free accounting software package before commiting.

Consideration 3 – Your Accountant or Bookeepers Choice of Software

Now this consideration is more relevant to small and micro businesses (1-20 staff). The reality is that majority of accountants in Australia will use one of the big software options namely: MYOB, Quickbooks and Xero. Does this mean an accountant will not use free accounting software at all? Well in general rarely but we are aware that Wave Financial which is one of the free software options we review below, has been really pushing hard to sign up Australian accountants. Why is this the case? The likes of MYOB, Quickbooks and Xero are great at pushing their partner programs which can provide incentives for accountants to use their software. These companies know the more accountants that use their software greatly influences the revenue they can make.

Consideration 4 – Integration Capability of the Accounting App

When considering the fit of free accounting software in Australia you should also think about what other business critical apps/software you rely on. Once you have that list, you need to assess how important it is that that app can integrate with your accounting software. How might this play out for certain industries?

If you are a tradie for example you might be reliant on apps such as ServiceM8 or Tradify (tools which can help with job scheduling and management). 

If you are a small local cafeyou might be reliant on popular point of sales systems such as Square or Kounta.

Determining how important it is that your accounting software can “talk” to these systems will be important. Generally more expensive and paid accounting software will have integration capability. That said free software can generally import data from excel spreadsheets. That is very straight forward. What might become important is the volume of data and whether you can manage that manually or whether you would need some level of automation and integration.

Consideration 5 – Mobile App Capability

Many small businesses these days can run their business almost exclusively from their mobile phones. A great example of this are tradies or any business who spends more time on the road and at client sites. This has created an increasing demand for mobile apps designed to help trades and similar businesses do business. I mentioned Tradify and ServiceM8 as 2 Aussie examples in Consideration 4 above.

When it comes to free accounting software for australian small business, if you have a big need for mobile apps then you are going to want to make sure that the accounting software can deliver. In general the best mobile app functionality comes from bigger players and more premium options such as Quickbooks and Xero, but again Wave is a good contender in this area as well.

Consideration 6 – What Customer Support Do You Require?

What customer support you will need from your accounting software package is going to depend on your own tech saviness and business needs. In general any free software option and the ones we have taken a look at, will not be able to offer dedicated customer support. They might offer automated knowledgebase articles which are very much “here is a list of articles that kinda match the question you are asking” and you need to go figure it out. If it really matters for you to have dedicated and personal support then a free accounting software package is probably not the best choice for your small business.

What is the best free accounting software for small business in Australia?

As promised to close out this article we finally wanted to provide some brief reviews of what we believe are the top 2 free accounting software options for small businesses are. 

3rd Place – Slick Pie

SlickPie is a real innovator and running hot on the heels of both Wave and Free Accounting Software. It positions itself more as “expense management software” and is catered more for Micro businesses. But its definitely an accounting software tool. If you check out their pricing page what really stands out is the feature depth for the free version vs the paid version. Its literally identical features and the only real difference is phone support. So if you are happy with email support alone then this could be a great option for you. What makes them special is their Magic Bot automated receipt tool which makes it super easy to scan receipts and input data from receipt scans into the software – very cool! The reporting and invoice functionality is extremely user friendly also. Definitely take a look.

2nd Place – Free Accounting Software (FAS)

Coming in second place is Free Accounting Software (yes that’s the actual name of the product). What really sets apart this software is how it has made it easy for small and micro businesses to navigate the 2019 STP (single touch payroll) requirements. Based on user feedback the addition of this requirement drove up fees with more expensive software options. Secondly the way it has helped small businesses with automating job keeper requirements in 2020 due to COVID is a second standout feature. Core features include Multi-user functionality, Accounts Payable, customisable PDF and electronic lodgement of the most commonly lodged australia tax documents.

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1st Place- Wave Financial

From our perspective the best free accounting software for australian small businesses is Wave Financial. The reason is the value you get and the fact it is outright free for a large amount of useful features. It is very user friendly, cloud based, and includes handy additional features such as automatic bank feeds, mobile app, automated backups and repeat invoicing. Customers can also accept invoice payments via Wave Financial although there is a cost associated with this feature. The receipt upload functionality is super slick also. Its hard to look past Wave Financial in our opinion also because the premium versions are being advocated by accountants and gives you some confidence that as your business grows the free software you have chosen can grow with it

Final Thoughts

Bringing it all together the ultimate choice of whether your small or micro business should consider using free accounting software comes down to a variety factors. That said if you go the free route make sure that there is a premium version that can address your needs as your business grows. Best of luck with your decision.

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