Accounting software for small business, built on a real ledger

What accounting software for small business should actually do

Good accounting software for small business does four jobs. It records what you sell and what you buy, it keeps track of who owes you and who you owe, it tells you how much cash you have, and it produces reports you can trust at tax time. Everything else is a convenience layered on top of those four jobs.

That sounds obvious, but many tools started as invoicing apps and added accounting later. If the software can make an invoice but can't tell you your balance sheet, you will end up rebuilding your books in a spreadsheet every year, or paying an accountant to do it. Cloud accounting software for small business should make the correct record the default, not an extra step.

Cash basis vs accrual basis, in plain English

There are two ways to decide when income and expenses count.

• Cash basis records income when money arrives and expenses when money leaves. It is simple and many very small businesses use it for taxes. See cash-basis accounting.
• Accrual basis records income when you earn it (when you issue the invoice) and expenses when you incur them (when the bill arrives), whether or not money has moved yet. See accrual accounting.

Say you finish a $4,000 project on December 20 and the client pays on January 10. On a cash basis that income belongs to January. On an accrual basis it belongs to December, and the $4,000 sits in accounts receivable until it is paid.

PilotLedger works on the accrual basis: invoices post to accounts receivable and bills post to accounts payable as soon as you approve them. That gives you a truer picture of profit month to month. If you file taxes on a cash basis, your accountant can make that adjustment from the reports; PilotLedger does not have a cash-basis report switch today.

Why double-entry matters, even if you never say "debit"

In double-entry accounting, every transaction touches at least two accounts and the two sides always balance. When a customer pays a $500 invoice, cash goes up by $500 and accounts receivable goes down by $500. Nothing appears or disappears without a matching entry.

This is what makes the numbers trustworthy. If the ledger is out of balance, something is wrong, and you find out immediately instead of at year end. It is also why a profit and loss statement, a balance sheet and a cash flow statement all agree with each other.

You don't have to type debits and credits to get these benefits. Creating an invoice, recording a bill or reconciling a bank statement in PilotLedger writes the journal entry for you. If you or your bookkeeper want to post a manual journal entry, you can, and PilotLedger will refuse it unless it balances. New to the idea? Our guide to double-entry accounting basics walks through examples.

How PilotLedger fits a small business

PilotLedger is double entry accounting software that tries to stay out of your way. The everyday screens talk about customers, invoices, bills and bank accounts. The accounting screens, such as the chart of accounts, journal entries and opening balances, are there on every plan when you or your accountant need them, and the Business plan adds a lock date and period-close checklist.

A few things worth knowing before you choose:

• Team access: invite an accountant or bookkeeper as a user, with roles and permissions that control what each person can see and change. Every change is recorded in the audit log.
• Customer portal: on the Starter, Growth and Business plans (from $14.99/month) your customers can sign in to view invoices, download PDFs and accept quotes. See the customer portal.
• Bills and payables: record and approve vendor bills, pay them in full or in part, and track vendor credits. See bills and accounts payable.
• Your data stays yours: reports export, and items can be imported and exported as CSV.

What PilotLedger doesn't do yet

We would rather you know now than find out after you sign up. PilotLedger does not currently offer:

• Automatic bank feeds. You record transactions in your bank accounts yourself, then reconcile against your statement.
• Payroll. Use a dedicated payroll provider and record the payroll journal in PilotLedger.
• Online card payments on invoices. Customers pay you the way they do today, and you record the payment.
• Recurring or automatic invoices. Each invoice is created when you need it.
• Mobile apps, receipt scanning, time tracking or mileage tracking.

If any of those is essential for you today, a tool such as QuickBooks Online or Xero may suit you better, and our QuickBooks alternative page is honest about where it is stronger. If what you need most is clean, correct books at a fair price, see the full feature list or compare plans and pricing.