If you’re a small or medium-sized business owner, you’ve probably found yourself staring at a mountain of receipts at 11 PM on a Tuesday, wondering if there’s a better way. And you’re not alone. Research shows that 40 percent of small business owners spend at least 80 hours a year wrestling with taxes, payroll, and financial paperwork – that’s two full work weeks that could be spent growing your business instead! And when your technology isn’t working efficiently, those costs multiply.
Here’s the thing: small to medium-sized businesses make up 99.9 percent of all U.S. businesses, with 89 percent having fewer than 20 employees. So, whether you’re a solo freelancer or managing a growing team, the right accounting tools can give you back your time and peace of mind.
The good news? You don’t need a degree in finance or a massive budget to get your business management processes under control. In this blog post, we’ll walk you through what accounting software does, how to choose the right solution for your needs, and highlight the powerful yet accessible options from Microsoft that can grow with your business.
Learn more about how to calculate the true cost of technology that isn’t working.
What is Accounting Software?
Accounting software is designed to help you record and report your business’s financial transactions. While its functionality varies by product, an effective accounting solution includes modules for accounts payable, accounts receivable, general ledger, journals, and payroll.
At its core, accounting software should help you:
- Record transactions (bookkeeping)
- Organize receipts
- Pay your employees
- Generate invoices
- Pay bills from suppliers
- Track sales and calculate sales taxes
- Collect information for tax returns
According to recent industry data, approximately 64% of small business owners use accounting software, with cloud-based solutions now representing over 65% of new deployments. Many business owners are opting for software solutions over hiring dedicated accountants. In fact, around 70% of small businesses operate without an in-house accountant, relying instead on technology to manage their finances.
Thanks to automation, modern accounting software helps small business owners track transactions, analyze performance, and maintain accurate records while saving valuable time. Studies show that automation can reduce manual data entry by up to 60%, freeing you to focus on growth rather than paperwork. Ultimately, the right accounting software should give you financial clarity to make confident business decisions.
How to Choose the Right Accounting Software for Your SMB
Just like the organizations who use them, accounting software comes in many different shapes and sizes. Whether your accounting needs are simple or complex, the right technology depends on your budget, business requirements, and growth plans.
Today’s accounting software market offers solutions ranging from free basic tools to comprehensive enterprise platforms. Most modern accounting software is now available as a cloud-based subscription service, making it more affordable and accessible for small businesses. Popular options like QuickBooks Online, Xero, and FreshBooks have become industry leaders because they balance ease of use with helpful features that go beyond spreadsheets alone.
While free, or near-free, accounting software might seem appealing at first glance, it’s important to understand the full picture. Many organizations discover hidden costs down the road, from limited features and scalability issues to integration challenges and support gaps.
However, what works for one business may not work for another. A freelancer might need nothing more than a simple spreadsheet alongside free online accounting solution to manage expenses and income. On the other hand, growing businesses with multiple employees, customers, and revenue streams typically need more robust software to handle invoicing, transactions, payments, and payroll while ensuring financial or industry compliant record keeping.
The key is matching the solution to your current reality while planning for your future. Before comparing options, take time to:
- Identify your needs: Are they basic (expense tracking, simple invoicing), moderate (AP/AR, payroll, multiple users), or slightly more advanced (multi-entity management, inventory tracking)?
- List must-have features: What capabilities are essential versus nice-to-have?
- Consider integration: Does the software work with tools you already use (Outlook, Teams, banking, CRM, e-commerce)?
- Think long-term: Will this solution scale with your business over the next 3-10 years?
In the next section, we’ll explore some powerful Microsoft accounting solutions that are made to grow alongside your business, from basic spreadsheet tools to comprehensive financial and business management platforms.
SMB Accounting Solutions from Microsoft
As a team with numerous Microsoft certifications, you could say that we are big fans of their products, especially in our work advocating for and enabling growing SMBs with right-fit technology. When it comes to affordable, flexible software, Microsoft is arguably the leader in offering the most usable, scalable, and functionally rich solutions. Even Forbes recently named their premier cloud business management solution, Business Central, as ‘best cloud ERP solution.’
Overall, Microsoft offers a wide selection of business management software and productivity tools that can all integrate together to grow and manage your business.
Once you have outlined your SMB needs and budget, here are some Microsoft accounting solutions to consider:
Microsoft Excel
Excel is the most popular tools for accountants for a variety of tasks. Many growing SMBs start off using spreadsheets to manage basic accounting tasks like bookkeeping, budgeting, and forecasting. From pivot tables to what-if analysis, Excel is a familiar and low-cost accounting solution that offers a ton of flexibility for summarizing raw data, comparing complex datasets, creating reports, and managing cash flow. Excel also includes ready-made templates for all types of accounting functions, including invoicing templates, ledgers, and budget trackers.
While Excel is an undeniably powerful tool for data entry, analysis, and organization, it is not a suitable standalone financial or operational management solution for businesses beyond single-member LLCs and freelancers. Excel lacks built-in controls to prevent data entry, workflow, calculation errors, and inconsistencies.
Microsoft 365
Previously known as Office 365, Microsoft 365 is an integrated cloud platform that delivers Microsoft’s industry-leading productivity apps together with intelligent cloud services and world-class security. Microsoft 365 includes all of the essential tools a growing SMB needs to host meetings, manage files, connect with customers, create budgets or reports, collaborate with employees, defend against cyber threats, keep customer data protected, and manage IT. Here are some of the key apps and features included in Microsoft 365 subscription plans:
- Microsoft Excel – essential spreadsheet software with templates for budgeting, reporting, and bookkeeping (as outlined above).
- Microsoft Teams – host online meetings and collaborate with your team from one place.
- Microsoft Word – create and collaborate on documents, proposals, contracts, and internal communications.
- Microsoft PowerPoint – build professional presentations, sales decks, and training materials with built-in templates and collaboration tools.
- Microsoft OneNote – capture and organize notes, meeting minutes, ideas, and project documentation in one shared workspace.
- OneDrive Cloud Storage – store and share files with 1TB of space.
- Exchange Online Protection – help protect your email against spam, malware, and known threats.
While Microsoft 365 applications aren’t designed to perform dedicated financial management functions, they are an essential cornerstone for supporting the day-to-day operations of growing small to midsized organizations, providing critical communication, organization, and presentation capabilities.
Microsoft Dynamics 365 Business Central
Business Central is Microsoft’s cloud-based ERP solution built for growing small to midsized businesses. Unlike free accounting software or bookkeeping apps, Business Central is a complete business management solution designed to connect your sales, service, finance, and operations. It is an easily tailored and extendable solution, allowing you to use the functionality you need and add on to the system as you grow. Business Central’s financial management capabilities include
- General ledger
- Dimensions
- Multiple currencies
- Budgets accounts schedules
- Consolidation
- Intercompany postings
- Cash flow forecast
- Fixed assets
- Cost accounting
- Deferrals
- Bank account reconciliation
Many small businesses start with simple invoicing or off-the-shelf accounting software but outgrow it after a few years. An ERP system might seem like a drastic jump from pure accounting software, but the benefits speak for themselves. Today’s flexible cloud ERP software is not like the expensive and cumbersome ERP systems of old.
To learn more about how cloud ERP can transform your growing business, read the 9 benefits of cloud ERP for your growing small business.
Microsoft Dynamics 365 CRM/CE
While Dynamics 365 Business Central, Excel, and Microsoft 365 Office apps give you the accounting, operations, and ERP backbone your SMB needs, it’s worth noting that Microsoft also offers a robust CRM platform that complements your financial and accounting infrastructure by focusing on customers and opportunities rather than ledgers and cash flow. Dynamics 365 CE (often referred to simply as Dynamics 365 CRM) isn’t an accounting solution, but it excels at managing sales pipelines, tracking leads and opportunities, organizing customer interactions, and supporting service teams.
When paired with Business Central, CRM fills in the front-office side of your business: helping track contacts and deals, managing cases and service activities, and giving you the tools for customer engagement. This tight ERP-CRM combination with Microsoft means you and your teams work off a unified platform, enabling better visibility, smarter forecasting, and stronger customer relationships as your SMB grows.
Take Control of Your SMB Finances
Choosing the right accounting solutions and tools isn’t just about managing today’s finances, it’s about building a foundation that supports your growth for years to come. Whether you start with Excel’s flexibility, leverage Microsoft 365’s comprehensive toolkit, or scale up with Business Central’s full ERP capabilities, the key is leveraging what matches where you are now while leaving room for where you’re headed.
Remember, you don’t have to figure this out alone. As a fellow SMB ourselves, we’ve helped countless businesses navigate these exact decisions. We understand the challenges you’re facing because we’ve faced them too.
Ready to find the Microsoft accounting solution that’s right for your business? Our team would love to discuss your specific needs. Whether you have questions about any of the Microsoft solutions we’ve covered or want personalized recommendations based on your unique situation, we’re here to help.
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