Every accounting software provider says its product is the best fit for small business. The more useful question is whether a package helps you meet your actual obligations to the ATO, at your size, with the people who will use it. That is what this comparison focuses on.
Instead of ranking brands on prices and plan features that change every few months, this guide sets out the criteria that matter in 2026-27: STP Phase 2 payroll, SBR-enabled BAS lodgment, bank feeds, inventory, foreign currency and record keeping. Every rule was checked against the ATO’s digital record keeping guidance, its Single Touch Payroll pages and its BAS guidance.
It is for owners, bookkeepers and new employers comparing packages or reviewing one they already use. If you want a shorter decision guide by business type (sole trader, tradie, ecommerce or employer), read our best accounting software in Australia guide.
Key takeaways
- If you have employees, the software must be STP-enabled and reporting under STP Phase 2, which expanded the data collected from 1 January 2022.
- SBR-enabled software lets you lodge your BAS directly to the ATO. Online lodgers may get an extra 2 weeks for quarterly BAS.
- Most business records must be kept for 5 years, in English, and you must be able to reconstruct them if you change systems.
- Micro employers (1-4 employees) can check the ATO list of no-cost and low-cost STP products costing under $10 a month.
- Compare criteria, not brand claims. Trial your shortlist with real transactions and ask your agent before you commit.
Software selection criteria at a glance
| Criterion | Who needs it | What to check |
|---|---|---|
| STP Phase 2 payroll | Any employer | Listed on the ATO STP product register |
| SBR-enabled BAS lodgment | GST-registered businesses and PAYG withholders | Can lodge activity statements directly to the ATO |
| Bank feeds | Almost every business | Feeds for all your business accounts and cards |
| Payroll and leave | Employers | Wages, annual leave, long service leave, super |
| Inventory and jobs | Retail, wholesale, ecommerce, trades | Stock, work in progress, orders, job costing |
| Foreign currency | Importers, exporters, overseas clients | Multi-currency invoices, bills and bank accounts |
| Records and backup | Every business | 5-year retention, export to CSV or Excel, secure backup |
Source: ATO digital record keeping, ATO what STP is, ATO how to lodge your BAS, ATO record-keeping rules, checked 9 October 2026.
What does the ATO say to look for in software?
The ATO’s digital record keeping page says to choose software that you can understand and operate easily, that meets your record-keeping requirements, and that lets you report digitally to the ATO. It also suggests checking compatibility with your registered tax or BAS agent’s software and choosing a package that will meet your needs in future, not just today.
The ATO lists features worth considering depending on your business, including:
- recording sales, voids, refunds and exchanges
- tracking stock, work in progress, customer orders and jobs
- producing invoices and receipts
- payroll, including wages, annual leave and long service leave
- Single Touch Payroll reporting
- tracking money taken from the business (drawings)
- managing multiple bank accounts or businesses
- dealing with foreign currency
- budgets, cash flow forecasts and regular reports
- backup processes and security
It also warns that electronic sales suppression tools, which manipulate records, are illegal.
Is the payroll STP Phase 2 enabled?
Single Touch Payroll is mandatory. The ATO says all employers should now be STP reporting unless covered by a deferral or exemption. Each time you pay employees through STP-enabled software, you report pay amounts, tax withheld and super liability details. At the end of the financial year you finalise your STP data so employees’ income statements become tax ready.
Phase 2 expanded the information collected from 1 January 2022. It did not change which payments you report, but it changed how they are reported. Employers not covered by a deferral or exemption must have moved to Phase 2.
To check a product, use the ATO’s STP product register. Micro employers with one to four employees can also check the no-cost and low-cost STP solutions list, which is limited to products costing less than $10 a month. The ATO’s STP reporting options page explains what to do if you do not use payroll software at all. Our payroll registration checklist covers the rest of the employer setup, and Payday Super (from 1 July 2026) is covered in our Payday Super guide.
Can it lodge your BAS through SBR?
Your BAS reports GST, PAYG withholding, PAYG instalments and, for some businesses, FBT instalments, fuel tax credits and other taxes. The ATO’s how to lodge your BAS page lists online services, SBR-enabled software, a registered tax or BAS agent, or paper. Only a nil BAS can be lodged by phone.
SBR-enabled software allows secure online lodgment directly from accounting or payroll software. Cloud products build the credential in. Desktop software needs a machine credential set up through Relationship Authorisation Manager. The ATO’s Standard Business Reporting page links to the SBR products register so you can check a product.
| Quarter | Standard due date | Note |
|---|---|---|
| July-September | 28 October | Online lodgers may get an extra 2 weeks |
| October-December | 28 February | Already includes a one-month extension |
| January-March | 28 April | Online lodgers may get an extra 2 weeks |
| April-June | 28 July | Online lodgers may get an extra 2 weeks |
| Monthly reporters | 21st of the following month | For example, July BAS due 21 August |
Source: ATO BAS due dates, checked 9 October 2026.
If you want an agent to prepare and lodge for you, see our BAS and GST lodgement service or read our activity statement guide.
Bank feeds, inventory and multi-currency: which do you need?
Bank feeds
Automatic bank feeds import transactions from your business accounts and cards so you code them rather than type them. Check that every account you use is supported, including merchant and payment accounts.
Inventory and job costing
If you sell physical stock or run jobs, you need stock tracking, cost of goods sold and, for trades, job or work-in-progress tracking. Some packages handle this natively and others rely on add-ons, so test it with your real product list.
Foreign currency
Importers, exporters and businesses with overseas clients need to raise invoices, record bills and hold bank accounts in other currencies, with exchange gains and losses tracked. This is often only on higher plans, so confirm before you sign up.
How do you compare packages fairly?
Write down your must-haves first, weight them, and score each shortlisted product during a trial using your own data. That stops a polished demo from winning over the features you actually need.
Worked example: scoring two packages
A homewares retailer with three employees and an overseas supplier weights its criteria out of 100: STP payroll 30, SBR BAS lodgment 25, bank feeds 20, inventory 15, foreign currency 10.
Package A scores (out of 5): 5, 5, 4, 2, 1. Weighted total = (30 x 5) + (25 x 5) + (20 x 4) + (15 x 2) + (10 x 1) = 150 + 125 + 80 + 30 + 10 = 395 out of 500 (79%).
Package B scores: 5, 5, 3, 5, 3. Weighted total = 150 + 125 + 60 + 75 + 30 = 440 out of 500 (88%).
Package A has slightly better bank feeds, but Package B wins because inventory and foreign currency matter more to this retailer. The owner then confirms both appear on the STP product register before deciding.
Rule of thumb: Shortlist only software that is STP-enabled (if you employ) and SBR-enabled for BAS, then choose between those on how well they handle your day-to-day work.
What about records, security and switching?
The ATO says most records must be kept for 5 years, must be in English or easily converted, and must not be altered. You need to be able to reconstruct your original data if your system changes, and may need to export it in a standard format such as CSV or Excel.
Cloud backup can protect records from flood, fire or theft, but the ATO advises downloading a complete copy of cloud records before you change providers. Some software subscription fees can be deductible business expenses.
Common mistakes when choosing accounting software
- Choosing on price alone: a cheap plan that lacks payroll or BAS lodgment often means an upgrade or a manual workaround later.
- Assuming every product is STP Phase 2 ready: check the ATO product register rather than relying on marketing.
- Ignoring your agent: software that does not suit your tax or BAS agent adds rework at BAS and year end.
- Poor setup: a wrong chart of accounts or GST codes will flow through every BAS until someone fixes it.
- Switching without exporting: losing history makes it hard to meet the 5-year record-keeping rule.
FAQ about accounting software comparison
What is the most important feature in small business accounting software?
For any business with employees, STP-enabled payroll comes first, because Single Touch Payroll reporting is mandatory unless you are covered by an exemption or deferral. After that, look for software that can lodge your BAS online, import bank transactions, and keep records the ATO accepts. The best package is the one that meets those obligations and that you will use every week.
How do I check if payroll software is STP-enabled?
The ATO publishes an STP product register on its software developers website, listing STP-ready payroll products. Micro employers with one to four employees can also check a separate list of no-cost and low-cost STP solutions costing less than $10 a month. Your registered tax or BAS agent can confirm whether a product suits your pay arrangements.
Can I lodge my BAS directly from accounting software?
Yes, if the software is SBR-enabled. The ATO says Standard Business Reporting software allows secure online lodgment directly from financial, accounting or payroll software. You can also lodge through Online services for business or through a registered tax or BAS agent. Online lodgers may be eligible for an extra two weeks to lodge and pay quarterly BAS.
Do I need software if I am a sole trader with no employees?
Not always. The ATO recommends digital record keeping where possible, but it also says its free ATO app can suit sole traders with less complex records, using the myDeductions tool. If you are registered for GST, invoice regularly or plan to hire, accounting software usually saves time at BAS and tax return time.
What should I do before switching accounting software?
The ATO advises downloading a complete copy of any records stored in the cloud before you change software provider. Records generally need to be kept for five years and you must be able to reconstruct your original data if your system changes. Close off a BAS period first, export reports and transaction history, and check opening balances carefully in the new file.
Talk to specialist before it costs you
15-minute discovery call. No obligation, no jargon.
Talk to a registered tax agent
Nanak Accountants can help you compare packages against your obligations, set up the chart of accounts and GST codes, and connect payroll for STP. Call 1300 626 258, book a free 15-minute consultation, see our accounting software setup service or choose a meeting time.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO record-keeping, Single Touch Payroll, STP product register, BAS and Standard Business Reporting pages on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
