Cloud accounting software has become a game-changer for small businesses, offering flexibility, accessibility, and efficiency in managing finances. With the rise of remote work and the need for real-time financial insights, more small business owners are turning to cloud-based solutions to streamline their operations.
In 2025, the demand for these tools continues to grow, driven by trends like automation, AI integration, and enhanced data security. But with so many options available, how do you choose the right one for your small business?
In this article, we compare four leading cloud accounting platforms—Xero, FreshBooks, Zoho Books, and Patriot Accounting—focusing on their features, pricing, usability, and more, to help you make an informed decision.
Why Cloud Accounting Software for Small Businesses?
Cloud accounting software allows small businesses to access their financial data anytime, anywhere, using any internet-connected device. This is particularly valuable for remote teams or business owners on the go, a trend that has solidified since the shift to remote work during the COVID-19 pandemic.
These platforms often include automation features that reduce manual tasks like data entry and invoicing, saving time and minimizing errors. Additionally, cloud solutions typically offer better scalability and lower upfront costs compared to on-premise software, making them ideal for small businesses with limited budgets.
For small businesses in 2025, the focus is on finding a tool that balances affordability, ease of use, and essential features like invoicing, expense tracking, and reporting.
Xero: Best for Collaboration and Scalability
Overview: Xero, a fully cloud-based accounting software founded in 2006 in New Zealand, is designed for small to medium-sized businesses (SMBs) needing a scalable solution. With over 3 million subscribers globally as of 2025, Xero is known for its user-friendly interface and ability to support growing businesses with unlimited users on all plans.
Key Features:
Invoicing and Quotes: Xero allows unlimited invoices and quotes in its Growing and Established plans, with payment options like PayPal and Stripe. The Early plan caps at five invoices per month.
Expense Tracking: Capture receipts via the mobile app and submit claims (Established plan), streamlining expense management.
Bank Reconciliation: Automatic transaction imports and smart matching reduce manual effort, though occasional bank reconnects may be needed due to security protocols.
Project Tracking: Track time and costs for projects (Established plan), ideal for service-based businesses.
Reporting: Offers profit-and-loss, balance sheets, and advanced reporting in higher plans.
Mobile App: Updated in 2025, the app supports invoicing, reconciliation, and report generation on the go.
Pricing: Plans range from $15/month (Early) to $78/month (Established), with a 30-day free trial and a 75% discount for the first three months. Payroll via Gusto costs an additional $40/month plus $6 per person in the U.S.
Usability: Xero’s clean dashboard and in-app tutorials make it accessible for beginners, though advanced features like multi-currency support may require some learning.
Best For: Small businesses with collaborative teams or those anticipating growth, thanks to unlimited users and extensive integrations with over 1,000 apps like Shopify and HubSpot.
FreshBooks: Best for Invoicing and Freelancers
Overview: FreshBooks, launched in 2003, is a cloud-based accounting tool tailored for freelancers and small service-based businesses. With over 30 million users worldwide as of 2025, it excels in invoicing and time tracking, making it a favorite for professionals like consultants and marketers.
Key Features:
Invoicing: Offers customizable invoices with automated payment reminders, recurring invoices, and online payment options via Stripe and PayPal. Invoice status tracking shows when clients view or pay.
Time Tracking: Available in all plans, users can log billable hours, assign them to projects, and convert them into invoices, with geolocation tracking on the mobile app.
Expense Tracking: Connect bank accounts for automatic imports or upload receipts via the mobile app, with options to mark expenses as billable.
Double-Entry Accounting: Available in Plus and higher plans, includes journal entries and a chart of accounts, though not as robust as Xero.
Reporting: Basic reports like profit-and-loss and tax summaries, with advanced reporting in the Premium plan.
Mobile App: Updated in 2025, the app supports invoicing, expense tracking, and client messaging, but lacks report viewing.
Pricing: Plans range from $19/month (Lite, 5 billable clients) to $60/month (Premium, 500 billable clients), with a custom-priced Select plan. Additional users cost $11/month each, and a 30-day free trial is available.
Usability: FreshBooks’ intuitive interface and simple setup make it ideal for non-accountants, with a visually appealing dashboard and guided onboarding.
Best For: Freelancers and small service-based businesses needing exceptional invoicing and time-tracking features, though client limits may require upgrades as businesses grow.
Zoho Books: Best for Budget-Conscious Businesses
Overview: Zoho Books, part of Zoho Corporation’s suite since 2011, is a cloud-based accounting software targeting small businesses and freelancers. It offers a free plan for businesses with annual revenue under $50,000, making it a cost-effective choice for microbusinesses.
Key Features:
Invoicing: Customizable invoices with a client portal for payments and feedback, supporting recurring invoices and automated reminders.
Expense Tracking: Import bank transactions, upload receipts, and categorize expenses, with bulk actions for managing transactions.
Time Tracking and Projects: Built-in time tracking across all plans, with project management to track expenses and profitability.
Bank Reconciliation: Smart rules categorize and match transactions, ensuring tax-ready records.
Reporting: Over 40 standard reports, with custom reports in Premium and higher plans.
Inventory Management: Available in Elite and Ultimate plans, tracks stock levels and sales orders, though advanced features require add-ons.
Mobile App: Highly rated for managing invoices, expenses, and time tracking on the go.
Pricing: A free plan is available, with paid plans from $15/month (Standard) to $240/month (Ultimate). Additional users cost $2.50/month each, and a 14-day free trial of the Premium plan is offered.
Usability: Zoho Books’ setup is straightforward, with a clean dashboard and customizable interface, though it may feel less modern than FreshBooks. The mobile app is robust for on-the-go management.
Best For: Budget-conscious small businesses or those already using Zoho products, offering a free plan and affordable pricing with solid automation features.
Patriot Accounting: Best for Simplicity and Low Cost
Overview: Patriot Accounting, developed by Patriot Software since 2002, is a cloud-based solution for small businesses and nonprofits needing basic accounting without complexity. It’s U.S.-focused, emphasizing affordability and ease of use.
Key Features:
Invoicing: Unlimited invoices with customizable fields, supporting recurring invoices and payment reminders in the Premium plan. Integrates with CardConnect for credit card payments.
Expense Tracking: Import bank transactions or manually enter data, with secure cloud storage for receipts and documents.
Bill Payments: Unlimited vendor payments via check or bank transfer, with check printing available.
Bank Reconciliation: Available in the Premium plan, matches transactions with records for up to 10 bank accounts.
Reporting: Basic reports like profit-and-loss, balance sheets, and accounts receivable aging, with customization options.
Chart of Accounts: Manage assets, liabilities, equity, income, and expenses, with department filtering.
Tax Support: Calculates sales tax and generates 1099/1096 forms, but lacks quarterly tax estimates.
Pricing: Plans are $20/month (Basic) and $30/month (Premium), with unlimited users and a 30-day free trial. Optional Patriot Payroll integration costs $10-$30/month plus $4 per employee.
Usability: Patriot’s setup is quick, with a simple interface and minimal jargon, though the lack of a mobile app limits on-the-go access. It’s mobile-friendly via browsers but less convenient.
Best For: Small businesses and nonprofits needing a low-cost, no-frills accounting solution with strong U.S.-based support, though it’s not ideal for businesses requiring advanced features.
Comparing Key Factors for Small Businesses
Cost: Zoho Books offers the best value with a free plan and paid plans starting at $15/month, followed by Patriot at $20/month. Xero starts at $15/month but limits features in the Early plan, while FreshBooks’ $19/month Lite plan caps billable clients at five.
Ease of Use: FreshBooks and Zoho Books lead with intuitive interfaces and guided setups, ideal for non-accountants. Xero is user-friendly but has a slight learning curve for advanced features, while Patriot’s simplicity is offset by a less modern design.
Features for Growth: Xero excels with unlimited users and project tracking, making it scalable for growing teams. Zoho Books adds inventory management in higher plans, while FreshBooks focuses on invoicing but limits clients. Patriot lacks scalability with no inventory or multi-currency support.
Mobile Access: Xero, FreshBooks, and Zoho Books offer robust mobile apps for on-the-go management, while Patriot lacks a dedicated app, relying on browser access.
Support: Patriot stands out with U.S.-based phone and live chat support, highly rated for responsiveness. Xero and Zoho Books offer 24/7 online support, while FreshBooks provides phone and email support with strong user ratings.
Which Cloud Accounting Software Should You Choose?
For Collaboration and Growth: Choose Xero if your small business needs unlimited users, extensive integrations, and scalability for future growth. Its project tracking and reporting make it ideal for service-based teams.
For Freelancers and Invoicing: FreshBooks is the best pick for freelancers or service providers needing top-notch invoicing and time tracking, though client limits may require upgrading as your business grows.
For Budget-Conscious Businesses: Zoho Books is perfect for microbusinesses or startups with its free plan and affordable pricing, offering solid automation and integration with the Zoho ecosystem.
For Simplicity and Low Cost: Patriot Accounting suits small businesses or nonprofits needing basic accounting at a low cost, with excellent support, but it lacks advanced features and mobile app access.
Final Thoughts
Selecting the right cloud accounting software for your small business in 2025 depends on your budget, growth plans, and specific needs. Xero offers the best scalability and collaboration features, making it ideal for growing teams. FreshBooks shines for freelancers with its invoicing capabilities, while Zoho Books provides unbeatable value for budget-conscious businesses.
Patriot Accounting is a simple, affordable option for those with basic needs, though it lacks the depth of competitors. Try out free trials where available—Xero, FreshBooks, Zoho Books, and Patriot all offer them—to see which platform feels right for your workflow. By choosing a cloud-based solution, you’re setting your small business up for flexibility and efficiency, no matter where 2025 takes you.