Isaac M.O'Bannon for CPA Practice Advisor writes: There has been a lot of activity in the online accounting market over the past few years and, according to some vendors, there is a big battle being waged for the minds (and wallets) of small businesses.
While there is certainly a battle, how big is it really? Looking at the really big picture, cloud accounting vendors are actually still on the edge of a vast frontier. After all, there are more than 11.5 million small businesses 1-20 in the United States, according to the latest available Census Bureau statistics. If you include “non-employer” businesses, generally independent contractors, that number rises to about 32.8 million.
Now, when you look at the number of users that the primary developers of online small business accounting software report, you can see that they’ve barely tapped this potential market. Even the definitive leader in the space, the proverbial giant Intuit, has only about 575,000 businesses (with an average of approximately three users each) using its QuickBooks Online system.
Current Online Accounting Users (paying):
- Intuit QuickBooks Online: 1.75 million
- Xero: 250,000
- Kashoo: 150,000
- Less Accounting: 100,000
(Note: The numbers above represent users, not individual businesses. Many business entities using a program have multiple users. Also, cloud accounting makers FreshBooks and Wave report 5M and 1.5M users, respectively. However, since they do not disclose what percentage of these are paid users versus free or dormant accounts, the numbers cannot be accurately positioned against these other vendors, who provided the paid user numbers above.) -SNIP-
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