The best business accounting software for freelancers is easy to use, affordable and powerful enough to provide the functionality you need to run your business efficiently. There are numerous good options on the market for freelancers, but three stand above the rest in terms of functionality, ease of use and affordability. Here are our top picks.
FreshBooks: The good
FreshBooks was made for freelancers. Literally. The company started out as an invoicing- and time-tracking software for self-employed individuals, and has since evolved into a powerhouse accounting software for freelancers, sole proprietors and even some larger small businesses, too.
FreshBooks lets you track your expenses and mark them as billable, invoice and collect payments from your clients. It also has an excellent customer service team that responds quickly to users’ questions by phone and email. For requests submitted via email, you can often get an answer to your question within an hour.
As for price, FreshBooks starts at $15 per month, though you may need to move up to the $25 per month plan. Any additional apps you need will increase your monthly investment. For a limited time, FreshBooks is offering 60% off for six months on Lite, Plus and Premium plans when new users skip the 30-day free trial period and opt to buy now.
QuickBooks Self-Employed: The better
With about 4.5 million users worldwide, QuickBooks Online is the household name in small-business accounting. Intuit’s QuickBooks Self-Employed product has steadily gained momentum since it was first introduced in 2014, offering a simple accounting solution for freelancers and other very small businesses.
QuickBooks Self-Employed has many useful features, including:
An easy-to-use and phone app.
The ability to separate business and personal expenses right on the app.
Automatic mileage tracking.
Simple invoicing, including the ability to turn on online payments.
A receipt capture feature, so you can ditch the paper receipts.
Estimated quarterly tax calculations.
The ability to collaborate with your accountant.
QuickBooks Self Employed has three pricing options. The core option — which includes all the features listed above — costs $10 per month. For an additional charge, you can add the TurboTax bundle. This bundle allows you to pay your estimated quarterly taxes online, export your Schedule C information to TurboTax and file one state and one federal tax return through TurboTax each year. The most expensive subscription tier also includes live support from certified public accountants.
As wonderful as QuickBooks Self Employed is, it has one major shortcoming: You can’t easily upgrade to QuickBooks Online if your business outgrows the freelance business model. If you need to move to a more robust QuickBooks solution, you’ll have to start a completely new QuickBooks subscription and import your data again or move it manually.
QuickBooks Online Simple Start: The best
Earlier, it was mentioned that freelancers don’t really need a balance sheet — and this is true from a business management and tax standpoint. However, accountants and bookkeepers will disagree on this, and for a very good reason.
Although you may not have much in the way of fixed assets or liabilities, and you may not be building equity in your business, a balance sheet is still critical to staying on top of your finances. Without one, it's harder to ensure your books are accurate. But you’re covered with QuickBooks Online Simple Start, which does provide a balance sheet.
This software pick provides freelancers with the ease of use of QuickBooks Self Employed, and the power of QuickBooks Online, for the very affordable investment of $25 per month.
While QuickBooks Online Simple Start lacks the tax bundle option available in QuickBooks Self Employed, it more than makes up for this shortcoming in overall functionality and scalability. With QuickBooks Online Simple Start, freelancers get a complete bookkeeping and accounting solution with a bank reconciliation feature, which is something lacking in QuickBooks Self Employed.
Why is the reconciliation feature so important?
Reconciling your accounts monthly helps you make certain your books are accurate, potentially saving you hundreds of dollars per year in taxes and penalties. This is why a balance sheet is important for all businesses, regardless of size and structure. Without it, there is no true way to reconcile, leaving your bookkeeping open to potentially costly errors.
Plus, QuickBooks Online Simple Start can evolve with your business if you outgrow the freelancer business model, since you can easily upgrade from QuickBooks Online Simple Start to QuickBooks Online Essentials or Plus. And, as is the case with QuickBooks Self Employed, you can easily collaborate with your accountant or a bookkeeper.
A version of this article was first published on Fundera, a subsidiary of NerdWallet