Managing business finances can be challenging, especially for startups and small businesses working with a limited budget. Free accounting software can help with basic tasks such as tracking income, recording expenses, creating invoices, and reviewing financial reports without adding another monthly cost.
However, ecommerce sellers often need more than basic financial management. Amazon, eBay, and Shopify businesses also have to keep track of orders, refunds, marketplace fees, settlements, payouts, expenses, COGS, and profit. In this guide, we’ll look at what to consider when choosing free accounting software and when a dedicated ecommerce bookkeeping solution may be a better fit.
Key Takeaways
- Free accounting software can help small businesses manage basic income, expenses, invoices, and financial records.
- Important features include expense tracking, reporting, cloud access, and integrations with other business tools.
- Ecommerce sellers may need more specialized tools to track marketplace fees, refunds, settlements, payouts, and COGS.
- Free software can be useful when a business is starting, but growing sellers may need more advanced bookkeeping capabilities.
- Choosing the right solution depends on your business model, sales channels, reporting needs, and bookkeeping workflow.
Advantages of free accounting software
Before comparing different solutions, it helps to understand why free accounting software can be useful for startups and small businesses.
1. Lower Upfront Costs
Free accounting software can reduce upfront expenses for startups and small businesses. Instead of paying for advanced financial software from the beginning, business owners can start with basic tools and upgrade when their bookkeeping needs become more complex.
2. User-Friendly Features
Many free accounting tools are designed with simple interfaces that make everyday financial tasks easier to manage. Small business owners can use them to record income, monitor expenses, organize transactions, and review basic reports without needing advanced accounting knowledge.
3. Cloud-Based Access
Cloud-based accounting software allows business owners to access financial information from different devices and locations. This can be useful for entrepreneurs who manage their business remotely or need to review financial records while working across multiple locations.
4. Room to Grow
Free accounting software can be a practical starting point for a new business. As sales increase and financial workflows become more complicated, however, a business may need additional integrations, reporting capabilities, automation, or dedicated bookkeeping tools.
Where PlugBooks Fits for Ecommerce Sellers
Free accounting software can work well for basic financial tasks, but ecommerce businesses often have more detailed bookkeeping requirements. Sellers may need to track sales across multiple channels, refunds, marketplace fees, settlements, payouts, expenses, COGS, and overall profit.
That is where PlugBooks fits differently. PlugBooks is designed for ecommerce sellers who want to organize and automate their bookkeeping across platforms such as Amazon, eBay, and Shopify. It can help bring sales and financial transaction data into a more organized bookkeeping workflow while connecting with QuickBooks and Xero.
Key PlugBooks Features
- Ecommerce Transaction Tracking: Track orders, refunds, fees, commissions, settlements, payouts, and other marketplace transactions.
- COGS Tracking: Organize cost-of-goods-sold information to get a clearer view of ecommerce profitability.
- Profit Insights: Use organized sales, expense, and COGS data to better understand business performance.
- QuickBooks and Xero Connections: Connect your ecommerce bookkeeping workflow with QuickBooks or Xero.
- Multi-Channel Support: Manage bookkeeping data from Amazon, eBay, and Shopify in one workflow.
- Reports: Access sales, settlement, COGS, and bookkeeping reports for easier financial review.
For ecommerce sellers, the goal is not simply to find free accounting software. The more important question is whether the tool can handle the transaction details created by online marketplaces and stores.
Free Accounting Software vs. Ecommerce Bookkeeping Software
Free accounting software and ecommerce bookkeeping software can serve different purposes. General accounting tools are useful for recording income, expenses, invoices, and other basic financial information.
Ecommerce bookkeeping software focuses more closely on the transactions created by online sales channels. An Amazon, eBay, or Shopify seller may need to account for marketplace fees, refunds, settlements, payouts, COGS, and sales data alongside regular business expenses.
For this reason, an ecommerce seller should look beyond whether software is free and consider whether it can support the actual bookkeeping workflow of an online business.
Key Features to Look for in Free Accounting Software
Examining accounting software requires one to take several significant factors into consideration to make sure the program satisfies your company requirements. Here’s a brief list:
1. Capability for Invoicing
Invoicing tools can help small businesses create and send professional invoices while keeping payment records organized. If invoicing is important to your business, check whether the free plan includes the features you actually need.
2. Expense Tracking
Expense tracking is essential for understanding where business money is going. Look for software that lets you organize expenses, categorize transactions, and review spending over time.
3. Accounting and Reporting
Basic reporting capabilities like profit and loss statements or tax reports abound, even with free products. Search for programs that provide you with financial health analysis.
4. Combining with Other Instruments
Make sure your accounting software can interact seamlessly even if you currently utilize other company applications such as payroll systems or customer relationship management solutions.
When Is Free Accounting Software Enough?
Free accounting software can be enough for a new or small business with straightforward financial activity. If you mainly need to record income, track expenses, create invoices, and review basic reports, a free option may cover your initial requirements.
As your business grows, however, your bookkeeping needs may change. Ecommerce sellers can face hundreds or thousands of transactions, marketplace fees, refunds, settlements, payouts, and COGS records. At that stage, specialized ecommerce bookkeeping software may provide a more suitable workflow.
Conclusion
Free accounting software can be a useful starting point for startups and small businesses that need to manage basic income, expenses, invoices, and financial reports without a large upfront cost.
For ecommerce sellers, however, bookkeeping can involve much more than basic income and expense tracking. Amazon, eBay, and Shopify businesses may also need to organize orders, refunds, marketplace fees, settlements, payouts, COGS, and profit data.
The right solution depends on the complexity of your business and the type of financial information you need to manage. If you sell through ecommerce channels and want a bookkeeping workflow built around those transactions, PlugBooks can help organize your sales and financial data while connecting with QuickBooks and Xero.
