You probably chose your career path as a freelancer in order to pursue a passion—writing or design or IT consulting. Or, you might have started freelancing because it provided a level of freedom that you weren’t able to get in a regular nine-to-five job. Whatever your rationale, you probably didn’t decide to become a freelancer because you wanted to do bookkeeping and financial reporting.
Unfortunately, this part of the freelance life is unavoidable. From tracking mileage, to sending invoices, to paying estimated quarterly taxes, staying on top of your finances is not only important for the financial health of your business, it is also required by law. Fortunately, there are a number of cloud-based accounting software options that help minimize the amount of time you spend on tracking it all, and increase the quality of your financial-based decisions.
Whether you are looking for a platform to use with a bookkeeper or accountant, or you are planning on doing it all solo, here are the five best accounting software services for freelancers. Each of these come with a free trial period so you can try before you buy.
Quickbooks still remains the gold standard for accounting software, and Quickbooks Online is designed with small businesses in mind. The entry-level package includes the ability to set up bank and credit card feeds and create monthly financial reports.
Or, upgrade in order to track your time and expenses and apply them to invoices. If you plan on using an accountant or bookkeeper, you’ll find this is the software that they want to use; otherwise, it might be a bit much.
Price: From $9.99 per month
Unlike some other options, Xero is intuitive and easy to use. For freelancers, I recommend the Standard plan ($30 per month) so that you can create and send unlimited invoices.
You can even send your clients automated reminders to help you get paid faster. Xero also offers nearly 500 apps to integrate with other business management tools you might be using such as Harvest, Insightly, and HubDocs.
Price: From $9 per month
If you spend a lot of time away from your computer and on your phone, consider FreshBooks. Their app allows you to track time, snap pictures of receipts, and create invoices—all while waiting for the kids at soccer practice.
Another unique feature of FreshBooks are the included project management tools that allow you to upload and share files, communicate due dates, and more.
Price: From $15 per month
The best thing about Wave is that it is free. Yes, FREE. If you are just starting out as a freelancer, this is a good place to start.
If your bank supports automatic feeds, you can sync your checking account to Wave to easily import and track expenses. The one drawback about this option is that you can’t track time, so you’ll have to do that in separate tool.
For client management, Zoho can’t be beat. Your clients can log into the “Client Portal” to see estimates, invoices, and even leave you comments. Additionally, each time they login the system keeps a record, so you know once they’ve seen their invoices. Use the “Reports Gallery” to run generate cash flow statements, income statements, tax statements, and more.
Price: From $9 per month
Why These Are “The Best”
There are plenty of other options out there, but these picks meet a couple of critical criteria:
As a freelancer you don’t have an IT department, or a data security group. Desktop based software requires a huge investment, and requires servers and other infrastructure that you are unlikely to have. Cloud-based software allows you to work from any computer at any time, and you don’t have to do any of the hosting or take additional security measures.
By setting up automatic bank feeds and invoice collection, you are increasing data integrity and saving time. You have better things to do than enter data manually, or to find mistakes when you enter something wrong.
- Financial accounting and reporting.
The whole point of accounting software is to journal and account for income and expenses in such a way that it is easy to report to the IRS. This is why a personal financial tracking system like Mint doesn’t work for a freelance business—you need to track and report on your financials with recognized business accounting best practices.
There is a trade-off for freelancers between cost and benefit. Each of these software services provide a good intermediate place—an affordable monthly fee (or FREE in the case of Wave) for more than adequate accounting tools.
There will come a time when you need help with your accounting. These software choices provide good in-house customer support, and are supported by independent accountants, bookkeepers, and consultants. Don’t use a system that nobody is going to be able to help you with.
Depending on where you are in your freelance journey, one of these accounting software services will fulfill your needs. Just starting out? Try Wave. Lots of clients and invoices? Use Xero. And if you have grown to the point where you are ready for an accountant or bookkeeper, choose Quickbooks Online.
Whichever of these options you pick, you can rest assured that you have the best tools to keep your finances in order so that you can and get back to writing, or designing, or whatever it is that you actually like to do.
Kristen Bonkoski is a freelance writer and bookkeeper. She and her husband own Burton Bookkeeping which provides cloud-based accounting services to other freelancers and small businesses.
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