Woman looks over finances with glasses

The Pros and Cons of Free Accounting Software

5 min read • May 21, 2021 • Derek Miller

In a world where apps exist for finding clean public toilets and making siren noises, many small business owners still rely on Excel spreadsheets and manual systems to manage their finances. These entrepreneurs often start with spreadsheets in their first year—and as they grow, they never transition away. 

Spreadsheets are wonderful tools, but they have their limitations. They can’t send reminders to customers when an invoice is almost due or automatically record and categorize expenses.

If this all sounds familiar to you, then it may be time to invest in accounting software. But should you go for a free or paid version? If you’re considering the more affordable option, first review the pros and cons of a free accounting tool.  

Pro: Digitize Your Accounting Systems

A free accounting system will do much more than any spreadsheet or physical ledger. Many digital tools allow teams to access accounting data on-the-go with mobile applications—which isn’t possible if you keep physical records or use a static spreadsheet on your desktop. 

This mobility allows you to check invoices or access financial data wherever you are instead of restricting your decision-making to the office.

Digital tools have apps that can be accessed from your mobile device and features that allow for sharing with different team members. You can hire an accountant down the street—or in a different state—to create financial reports and share your books with them instantly. Plus, if a disaster strikes your office, your financials will be online, in the cloud, and perfectly safe. 

Con: It May Not Have the Features You Need

Many free accounting systems limit the number of features they offer to customers. They’ll hide more desirable features and options behind a paywall and encourage users to upgrade to unlock them. 

Before you sign up for a free accounting system, check to ensure that you’ll have access to the features you need and won’t have to pay extra for them.

Pro: Build Good Bookkeeping Habits

A free system is always better than no system at all. With a free tool, you can learn valuable bookkeeping habits like accrual-based accounting and reviewing balance sheets. You can learn key lessons about financials and make strategic decisions for your business. These habits can propel you forward regardless of your industry and business model. 

Con: You Might Not Be Able to Scale Up

Along with hiding top features behind a paywall, some free tools limit how many records you can keep and how many transactions you can complete. As your business grows, it might require a larger system beyond what the free solution offers. 

Look for a tool that lets you scale up your efforts and accommodate your growth, no matter how slowly or quickly you expand your business. 

Pro: Save Time With Automated Tools

Not only can an accounting system make it easier to record transactions and keep your books organized—it can also help you save time by sending automated invoices, recording payments, and adjusting your ledgers when digital transactions come through. Some free accounting systems can also auto-generate reports if they have all of the information you need.

Time is money when you run a small business. If you can shave 30 minutes each week off of your invoicing and accounting time, then you can use that period to advance your business in additional ways. 

Con: You Could Make Mistakes by Trusting the System 

Free accounting software isn’t the end-all to bookkeeping and accounting. You’ll still need to review the reports that your free accounting tool generates and ensure that every invoice and transaction is accurate. 

Technology is built on algorithms, and these systems sometimes make mistakes. If you opt for a free tool, consider keeping an accountant on retainer for a few hours each month to manage the system and check for errors. 

Pro: Establish a Company Infrastructure

When your business first starts out, you’re just trying to stay operational. As a result, you might opt for band-aid solutions that get you through the short-term without setting yourself up for success in the long run.

Investing in accounting software means building up the processes and infrastructure within your company. You’re preparing your business to grow and establishing good habits for when you hire employees or agencies to take on your finances. 

Con: It Could Be Difficult to Export Your Records

In the event that you choose to upgrade your accounting system to a paid service, you may have trouble downloading your records or exporting them to the new system. Before you sign up for a free tool, make sure this option is available. 

If you can’t download your existing information, you could end up with financial records split across 2 platforms—or face a major project re-uploading past invoices and receipts to your new tool. 

An alternative to prevent the need to export your information: find a free accounting system that has paid upgrades. However, even this can’t help you if you want to switch brands or opt for a more intuitive tool. 

Pro: Save Money

Simply put, a free accounting system is the most affordable accounting solution. If you aren’t sure if you’re going to use digital bookkeeping tools and don’t know what you want out of these apps, then a free option is the best place to start. Free tools are ideal for testing out multiple apps before you know what you want—they also mean you won’t get locked into contracts or have to contend with automatic monthly payments. 

See How Lendio Works for You

If you want to test out a free accounting system, look into Lendio’s software. We won’t upsell you on different features or restrict access until you upgrade to higher levels. We believe in providing access to our customers and helping them to get their bookkeeping efforts in order. Check out our app and see how it can help you.

Where’s all your money going? With Lendio expense tracking, it’s easy to account for every penny.


Derek Miller

Derek Miller is the CMO of Smack Apparel, the content guru at Great.com, the co-founder of Lofty Llama, and a marketing consultant for small businesses. He specializes in entrepreneurship, small business, and digital marketing, and his work has been featured in sites like Entrepreneur, GoDaddy, Score.org, and StartupCamp.