Enter your business details to see what each option would cost you. Prices are live from our database and shown in US dollars.
You have formed the company, opened the bank account, and maybe signed a first customer or a first check from an investor. From here, every payment in and out needs to land somewhere your co-founder, your accountant and, one day, an investor's diligence team can read it. This guide is for newly formed US startups, usually an LLC or a C corporation, with founders, early hires and perhaps a fundraise ahead. If you are a solo founder billing clients for your own services, our guide to accounting software for freelancers is the better fit, and the small business guide covers established businesses that are not planning to raise money.
How we chose. Our engine prices all 5 accounting tools we list for US businesses, the same one behind the accounting software comparison. For a startup the entry price matters less than what happens as the company grows, so the picks turn on a login for each new person, a seat for the outside accountant, payroll the month you hire, and foreign-currency invoicing if you sell abroad. The table above opens at 20 invoices a month, two users and no employees; change any of them and it re-prices. Affiliate status never changes the picks or their order.
What accounting software does a startup need in its first year?
A startup's first-year accounting software needs to do three things: bring in every transaction from a business-only bank account, keep the receipts behind each cost, and give your accountant a login. It does not need investor reporting or revenue automation yet. What matters is that the books start on the day the company is formed.
The IRS guide for new businesses, Publication 583 (revised December 2024), says one of the first things to do is open a business checking account and keep it separate from your personal one. Our business bank account comparison prices the options. Once the account exists, connect it to your accounting software so every payment arrives by bank feed instead of being typed in.
The same publication explains why the first weeks matter. A new business can elect to deduct up to $5,000 of start-up costs and up to $5,000 of organizational costs, such as the legal fees for forming the company. Each $5,000 is reduced by the amount your costs go over $50,000, and the rest is amortized. Founders often pay those costs personally before the company has an account, so record each one with its date and receipt as soon as the books exist, or your accountant cannot claim it.
Keep the records too. The IRS says to keep records for at least three years after you file in most cases, and longer in some, such as employment tax records.
Which tax return will your startup's books feed?
Your startup's accounting software produces the figures for one federal income tax return, and which return depends on how the company is taxed, not on what it is called. An LLC with one owner is reported on the owner's return, an LLC with two or more members files a partnership return, and a corporation files Form 1120 or, if it elects S corporation status, Form 1120-S.
| How the company is taxed | Federal return | Due for a calendar year |
|---|
| Single-member LLC (by default) | Reported on the owner's own return, because the IRS treats the LLC as disregarded for income tax | With the owner's return |
| LLC with two or more members (by default), or a partnership | Form 1065, with a Schedule K-1 for each partner | 15th day of the 3rd month after year end: March 15 (instructions) |
| C corporation, or an LLC that elects corporate treatment on Form 8832 | Form 1120 | 15th day of the 4th month after year end: April 15 (instructions) |
| S corporation | Form 1120-S | 15th day of the 3rd month after year end (instructions) |
Due-date rules are from the IRS instructions for 2025 returns. A due date that falls on a weekend or legal holiday moves to the next business day.
The return decides what your books need to show. A partnership return splits income between partners, so each founder's capital contributions and draws need their own accounts from the start. A C corporation pays its own tax and, as the IRS puts it, profits paid out as dividends are taxed again to shareholders, so how founders take money out of the company is a question for your accountant before the first payment. Set up the chart of accounts with your accountant before the first month closes, not after the first year.
Cash or accrual: which accounting method can a startup use?
A startup can usually choose cash or accrual accounting for its tax return. The limit falls on C corporations and on partnerships with a C corporation as a partner: they can use the cash method only while average annual gross receipts for the three prior tax years stay at or under the IRS gross receipts test. Below it, the choice is yours.
The two methods differ in timing. Under the cash method, income counts when it is received and expenses when they are paid. Under accrual, income counts when it is earned and expenses when they are incurred, whether or not money has moved (both from Publication 583).
Publication 538 sets out who cannot use the cash method: a C corporation, a partnership with a C corporation as a partner, and a tax shelter, unless the gross receipts test is met. For tax years beginning in 2026, the test is average annual gross receipts of $32,000,000 or less over the prior three tax years (Rev. Proc. 2025-32, section 4.30). The same test lets a small business taxpayer that sells products choose not to keep an inventory for tax, though it still needs a method that clearly reflects income.
The tax rule is only half the choice. If you will send monthly figures to a board or investors, ask them which basis they expect, and ask your accountant whether to keep the books on accrual and adjust for the return. Then check that your software can run its profit and loss and balance sheet on the basis you pick; our data does not record that for each provider, so test it in the free trial.
Startup bookkeeping as the team grows: users and accountant access
Startup bookkeeping rarely stays with one founder. A co-founder wants to see the cash position, an operations hire enters bills, and an outside bookkeeper or CPA closes the month. The plan in our table limits how many of those people get a login, and on some plans the accountant's login comes free while on others it needs a paid plan.
| Provider | Users included | Accountant access |
|---|
| Xero | Unlimited | Yes (free) |
| QuickBooks Online | 1 (Simple Start) | Yes (free) |
| Zoho Books | 3 (Standard) | Yes (free) |
| Wave | Unlimited (with limited roles) | Yes (Pro) |
| FreshBooks | 1 | Yes (Plus) |
A plan name in brackets means that is where the feature starts. Xero shows the same allowance on every plan. QuickBooks Online raises the user count by plan: Simple Start is one user, Essentials three, and Plus, $140/mo, five. Zoho Books includes three users on Standard and sells extra seats on top. Wave allows unlimited users with limited roles. FreshBooks includes one user on Lite and charges for each extra team member; it is not a pick here, but the full comparison prices it at your team size.
Ask your accountant which software they already work in before you choose, because they will be closing your books in it every month.
When the startup hires: payroll in your accounting software
A startup's first employee, who may be a founder taking a salary through a C corporation, brings payroll. Xero, QuickBooks Online, Wave and FreshBooks each sell a payroll add-on to run alongside the books, priced as a monthly fee plus a fee per employee. Zoho sells payroll as a separate product, Zoho Payroll.
| Provider | Payroll | Payroll price |
|---|
| Xero | Yes (add-on) | $36/mo + $6/emp |
| QuickBooks Online | Yes (add-on) | $50/mo + $7/emp |
| Zoho Books | No (add-on) | Separate (Zoho Payroll) |
| Wave | Yes (add-on) | $40/mo + $6/emp |
| FreshBooks | Yes (add-on) | $40/mo + $6/emp |
Here is what accounting plus payroll costs each month at 1, 3 and 10 employees:
| Provider | 1 employee | 3 employees | 10 employees |
|---|
| Wave | $46 | $58 | $100 |
| FreshBooks | $69 | $81 | $123 |
| Xero | $69 | $81 | $123 |
| QuickBooks Online | $95 | $109 | $158 |
| Zoho Books | Get quote | Get quote | Get quote |
Estimated monthly cost in US dollars for accounting plus payroll, at one user and 20 invoices a month, on the cheapest plan of each provider that covers those inputs, at the price each provider publishes; we do not add sales tax. Zoho Books shows Get quote because its payroll is a separate product our table does not price. Plans and pricing checked October 2026.
A payroll add-on in your accounting software is not your only choice. A dedicated payroll provider is the other route; our guides to payroll software for small business and payroll for a single employee compare them. For the federal paperwork a first hire brings, and the HR software that holds it, see our HR software for startups guide.
Contractors are a separate record. If your startup pays a non-employee for services, the IRS says the Form 1099-NEC reporting threshold is $2,000 for payments made in 2026, up from $600 before 2026. Each of our picks lists 1099 reporting in the full comparison, and our payroll guide for contractors covers paying them.
Selling abroad: multi-currency in startup accounting software
A startup that invoices customers, or pays suppliers, in another currency needs multi-currency accounting so each invoice is recorded in its own currency and converted to dollars in the books. Xero, QuickBooks Online and Zoho Books include it from the plan named below; Wave and FreshBooks list limited support.
| Provider | Multi-currency |
|---|
| Xero | Yes (Established) |
| QuickBooks Online | Yes (Essentials) |
| Zoho Books | Yes (Professional) |
| Wave | Limited |
| FreshBooks | Limited |
A plan name in brackets is the plan where multi-currency starts. At Xero that is the top plan, $97/mo (Established); at QuickBooks Online, the middle plan, $85/mo (Essentials); and at Zoho Books, also the middle plan, $40/mo (Professional, annual). "Limited" means some foreign-currency handling short of full multi-currency books, so if you sell abroad, test a foreign-currency invoice and payment in the free trial before you commit.
Selling abroad can also bring sales tax, VAT or GST obligations in other places. Your accounting software records them; it does not decide whether you owe them, so ask your accountant before your first overseas sale.
Getting a startup's books ready for investors and due diligence
No accounting software makes a startup investor-ready on its own. Before a fundraise, aim for books that reconcile to the bank, a profit and loss and balance sheet on a consistent basis, and records behind every figure, and ask your lead investor what their diligence will request. Our data does not record investor-reporting features, so treat this section as a list of what to check.
- Reconcile every month. A bank feed brings transactions in; reconciling confirms the books match the bank. A year of unreconciled months is slow to put right under a fundraising deadline.
- Keep founder money visible. Money a founder put in, or paid on the company's behalf, needs its own accounts, whether it is equity, a loan or a cost to reimburse. Your accountant decides which; the software only records it.
- Ask how subscription revenue should be recognized. If you bill customers a year in advance, the cash arrives at once but the revenue may need to be spread over the year. Ask your accountant how to record it, and check whether the software can do it or needs an add-on; none of our data says which tools automate it.
- Keep the cap table out of the books. Who owns what share of the company sits in a cap table, not in accounting software; the books record only the money that came in.
Which accounting software suits your startup?
Pick by your situation, not by the price column alone:
- Several founders and a bookkeeper all need a login: Xero.
- You are about to put yourself or a first hire on payroll and want it from the same company as your books: QuickBooks Online.
- You invoice customers in other currencies: Zoho Books on its Professional plan.
- The company is formed but money is barely moving yet: Wave on its free Starter plan, moving to Pro when you want a bank feed.
- You mainly bill clients for services and track time and projects: FreshBooks, which our freelancers guide covers in more depth.
Whichever you choose, the habits matter more than the brand: a business-only bank account from day one, a bank feed, a monthly reconciliation and an accountant with their own login. This guide is general information, not tax advice; check the IRS links above or ask a CPA for your own company.