Best Accounting Software For Freelancers & Small Businesses 2024

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Managing finances is one of the most critical aspects of being a freelancer or self-employed professional. Navigating through invoices, tax deductions, expense tracking, and more – it’s not just about making money, but understanding where that money goes and making the most out of it. For many, tracking all financial transactions manually can be daunting, especially when dealing with multiple clients and income streams. I’ve been in those shoes – using a simple Google Spreadsheet to compile all my transactions, crossing my fingers that everything would balance out at the end of the month. Spoiler alert: It’s not an ideal strategy.

Creating a sustainable and financially robust freelance business requires more than just talent and determination. You need the right tools to manage your money effectively and efficiently. That’s why I’ve compiled this comprehensive guide to help my fellow freelancers and self-employed individuals search for the best accounting software in 2024 that pairs well with my guide on the best invoicing tools for small businesses, freelancers and self-employed. These tools are designed to handle the heavy lifting of financial management, giving you more time to focus on what you do best – your work. And trust me when I say this, finding the best accounting software can make all the difference between a flourishing freelance career and one fraught with financial mishaps. So, let’s dive in and take control of our finances.

The Best Accounting Software For Small Businesses

If you are in a hurry and want to know what is the best accounting software per small businesses, freelancers and self-employed, here you are:

– Easier invoicing and faster payments
– Expert bookkeeping services and tax prep
– Automation and Integration
– Plans that fit every need and budget
– Easy to use and no learning curve
– Work globally
– We’ve already reviewed it positively

Try Freshbooks For Free

What Are Best Accounting Software For Freelancers and Self-Employed?

Navigating the financial landscape as a freelancer or self-employed individual can be complex and time-consuming, making reliable and user-friendly accounting software an essential tool. As a lifeline to efficient financial management, these tools can significantly simplify your bookkeeping tasks, from expense tracking to invoice management and tax preparation. Over time, I’ve meticulously reviewed and tested a broad range of the most popular accounting tools on the market, narrowing the selection down to the top 8 that best serve freelancers’ and self-employed professionals’ diverse needs and budgets. The evaluation process involved an independent and unbiased review of each tool, focusing on several critical factors, including ease of use, cost-effectiveness, and the range of features offered. Whether you’re a sole proprietor just starting or an established freelancer looking to streamline your financial processes, this list will help you find the best accounting software tailored to your unique needs.

FreshBooks: A Comprehensive Solution for Freelancers

FreshBooks, a renowned accounting software, has garnered a significant reputation for its services tailored to freelancers. Its inception was due to its founder, Mike McDerment, who grappled with invoicing and accounting issues as a web design freelancer. FreshBooks emerged from these challenges as a solution, transforming into one of the most sought-after accounting software for freelancers in today’s market. Throughout its evolution, FreshBooks has expanded its services to cater to companies of all sizes while maintaining its core focus on supporting freelancers.

FreshBooks offers an impressive suite of features designed to streamline financial management for freelancers. One of the standout features is its implementation of double-entry accounting practices. This system meticulously records transactions on both the credit and debit side, ensuring accurate records and minimizing errors, which is crucial when tax season arrives.

Another unique aspect of FreshBooks is its planning and forecasting feature. This tool enables freelancers to predict their financial future, empowering them to make informed decisions about potential business expansion, like hiring subcontractors, investing in marketing, or even adding to their profits.

Further, FreshBooks addresses the complexities of pre-payment and overpayment tracking with its “Credits” feature. This functionality allows freelancers to track overpayments, client credits, or prepayments and conveniently apply these amounts to future invoices. Such a feature helps maintain accurate financial records and facilitates a smooth transaction process.

FreshBooks provides a cost-effective solution for freelancers looking for comprehensive accounting software. Before diving into a subscription, FreshBooks offers a 30-day free trial. Freelancers can access FreshBooks’ features during this period without inputting any credit card details. Following the trial period, FreshBooks offers subscriptions ranging from USD 6/mo to $20/mo USD, paid annually. The cost varies depending on the desired accounting features.

Its user-friendly interface, robust invoice management, and unique planning & forecasting features are among its strong suits. Moreover, the free trial and affordable subscription plans make it a viable choice for freelancers. Read our comprehensive Freshbooks review for more insights.

Bonsai: An All-Inclusive Business Solution Tailored for Freelancers

Bonsai is an accounting marvel for freelancers that doubles up as an all-in-one business solution. Unlike its rivals, such as QuickBooks or FreshBooks, Bonsai is purpose-built for freelancers. This exclusive focus makes Bonsai an exceptionally potent accounting app that complements freelancers’ dynamic and unique needs.

Bonsai offers an array of features that work in synergy to streamline the financial management process for freelancers. One of its standout features is its capacity to generate crucial accounting reports. These reports, such as Profit & Loss Statements or Balance Sheets, provide freelancers with essential insights into their business’ financial health, enabling informed decision-making.

Another notable feature of Bonsai is the customization of expense categories. Bonsai allows freelancers to tailor their expense categories to their unique requirements. Apart from standard categories such as marketing & advertising, office expenses, you can also incorporate custom categories like the cost of goods sold or client gifts. This customization is instrumental in generating accounting reports that are more relevant and beneficial.

Perhaps the most significant feature of Bonsai is its shareable accountant access. This feature allows freelancers to delegate their accounting tasks to professionals. You can manage much of your accounting work with Bonsai’s software, but should you be apprehensive or short on time, you can integrate your accountant for seamless management.

Bonsai’s wide range of impressive features and freelance-centric approach make it one of the best accounting software for freelancers. As for the pricing details, Bonsai offers a 14-day, risk-free trial, which provides freelancers ample time to assess all its accounting features.

Following the trial period, Bonsai offers a starting price as low as $19/mo USD for freelancers, making it an affordable and comprehensive accounting solution.

Its tailor-made approach for freelancers, customizable expense categories and an all-in-one business solution, set it apart from its competitors. Additionally, the 14-day free trial and affordability make it a highly appealing choice for freelancers.

Wave: For Freelancers Seeking a Comprehensive and Free Accounting Solution

Wave enters the accounting software arena with a distinctive edge—it’s not only user-friendly but also offers a wealth of features at no cost. This unique proposition makes Wave attractive for freelancers seeking a simple yet efficient solution for managing their finances.

The strength of Wave lies in its comprehensive suite of free accounting features. Unlike many of its competitors, there are no limitations—no restrictions on the number of accounts or clients. Wave sustains itself financially by charging a nominal percentage of payments processed through their software. This fee model ensures you can fully leverage the software’s capabilities without worrying about cost barriers.

Wave offers the ability to link unlimited bank accounts, ensuring comprehensive tracking of every business expense and income. In addition, it facilitates the creation of crucial reports like Profit & Loss Statements, Balance Sheets, and Cash Flow Reports, all essential tools for managing and understanding your financial health.

Importantly, all invoicing and accounting tools are entirely free with Wave. They provide unlimited credit card or bank connections, ensuring no big or small transaction escapes your financial records.

The pricing model of Wave is as unconventional as it gets. As already mentioned, the core services offered by Wave are entirely free. However, reasonably priced upgrade options are available for those wishing to expand their functionalities to include features like payments, payroll, and advisory services.

Payments, for instance, which allow clients to pay directly from your invoice, incur a fee starting at 2.9% + USD 0.60 per transaction. Bank payments from clients attract a 1% fee. If you’re considering advanced features, Payroll services start at $20/mo, and advisory or coaching services start at $149/mo.

Wave comes with many advantages that make it a compelling choice for freelancers. Its primary draw is free access to comprehensive accounting tools, unlimited bank connections, and an easy-to-use interface. 

However, it’s not without its downsides. The fee charged on payments and additional costs for advanced features could add up, particularly for those with a high volume of transactions or those needing more sophisticated services. 

Harpoon: The Underrated Yet Powerful Accounting Software for Freelancers

There are many accounting apps for freelancers on the market, but one might not be as well-known as the others, yet it packs a powerful punch in its capabilities. Meet Harpoon, a software that brings a unique and tailored approach to freelance accounting. Despite not being as mainstream as brands like Quickbooks or Freshbooks, Harpoon’s stellar features make it one of the best accounting software for freelancers.

Harpoon’s robust focus on financial forecasting and goal tracking is what sets it apart from other accounting apps. Harpoon doesn’t just keep track of your work and builds a financial forecast, providing you with a snapshot of your future revenue. The software revolves around your financial goals, constantly providing insights to help you improve and achieve your targets over time.

One of Harpoon’s standout features is its financial goal tracking. The reports are designed around the goals you’ve set for your business, aiding you in reaching these targets ahead of schedule. In addition, Harpoon’s real-time revenue forecasting shifts the focus from past performance to the future of your business, equipping you with insights into your financial trajectory.

Harpoon also offers responsible project and expense budgeting, emphasizing the need for prudent spending in successful freelancing. This feature assists you in managing your project expenses, ensuring that you never overspend and that your overall spending remains under control.

With its powerful and unique features, Harpoon rightfully earns its place at the top of the list of best accounting software for freelancers. Regarding pricing, Harpoon offers a 14-day free trial, allowing you to explore its unique features and set your financial goals. Post-trial, Harpoon’s freelancer-tier package starts at a fairly affordable $19/mo USD, considering its substantial financial forecasting benefits.

Harpoon brings a host of benefits to freelancers with its financial forecasting, goal tracking, and budgeting features, providing a well-rounded view of past, present, and future finances. However, it’s worth noting that its relative obscurity compared to bigger brands may mean fewer integrations and community resources.

Quickbooks: The Classic and Robust Accounting Software for Freelancers

Quickbooks is a classic that has stood the test of time in accounting software. As many alternatives have sprung up over the years, Quickbooks remains a strong position, being a reliable choice for businesses of any size, including freelancers. Quickbooks Self-Employed, in particular, offers powerful solutions catered to the unique accounting needs of freelancers.

Quickbooks offers a range of essential accounting features to make the financial management process easier for freelancers. Here’s a rundown of some of the most critical features:

• Manage Multiple Bank/Online Accounts: Quickbooks lets you connect and manage multiple bank or online accounts from a single platform. This includes major banks, smaller entities such as credit unions, and your PayPal account.
• Track Mileage & Receipts Easily: For freelancers who frequently drive to client meetings or purchase goods for clients or office use, Quickbooks’ mobile apps are a lifesaver. They allow you to snap receipts or track mileage, which can later be deducted from your taxes.
• Assistance with Quarterly Taxes: Quickbooks simplifies the often complex process of submitting quarterly tax payments. The software assists you in estimating your payment and sends timely reminders to ensure you pay your dues on time.

While Quickbooks offers extensive features, its pricing model can be complicated. However, it remains an affordable choice considering its robust offerings.

Quickbooks offers a 30-day free trial for those who want to give it a spin before committing. Alternatively, freelancers can sign up for Quickbooks at a 50% discount for the first three months. After the promotional period, the most basic plan starts at $25/mo USD. Although this may seem a bit pricier, it provides a comprehensive accounting solution for freelancers serious about their financial management.

On the upside, Quickbooks offers excellent bank account integration, handy tools for tracking expenses, and valuable assistance for quarterly tax payments. On the downside, its pricing structure can be somewhat confusing, and it may require some time to familiarize yourself with the platform. Quickbooks stands as a top contender in accounting software for freelancers, thanks to its comprehensive feature set, time-tested reliability, and dedicated support for self-employed professionals.

Zoho Books: The Comprehensive and Customizable Accounting Solution for Freelancers

Zoho Books is a dynamic accounting software designed with a vast range of features to cater to the specific needs of freelancers. Whether you’re a freelancer with less than $50,000 in annual revenues or a project-based freelancer seeking an affordable alternative to other tools, Zoho Books has a plan to suit your needs.

Zoho Books offers numerous features to streamline your accounting process. It allows you to create up to 1,000 invoices under the free plan or 5,000 per year with the Standard Plan. Other notable features include a client portal, online and offline payment options, mileage and expense tracking, project tasks for individual tasks within a project, manual journals, reports, and invoice customization. Zoho Books provides almost every feature you desire from an accounting program, allowing you to manage your business finances more effectively.

Zoho Books offers six pricing plans:

• Free: This is suitable for businesses with less than $50,000 in annual revenues and includes one user plus one accountant and up to 1,000 invoices per year.
• Standard: Priced at $20 per month, it is limited to three users and 5,000 invoices.
• Professional: This plan costs $50 monthly, limited to five users with unlimited invoices.
• Premium: Priced at $70 per month, it is limited to 10 users.
• Elite: Costs $150 per month, limited to 10 users, and includes advanced inventory.
• Ultimate: This costs $275 per month, limited to 15 users.

Add-ons are available, such as additional users at $3 per user monthly, receipt scanning at $10 for 50 scans per month, and snail mail credits for sending invoices at $2 per credit.

Zoho Books offers an excellent free plan for freelancers starting with features such as invoicing and expense tracking. As you upgrade your plan, you get access to more advanced features. However, the fee-based add-ons may add to the cost if you need the additional features they provide. Zoho Books is a versatile and affordable alternative to other accounting software, offering a broad range of features for managing your financials as a freelancer.

Xendoo: An All-in-One Accounting Solution for the Diverse Needs of Freelancers

Xendoo is an online bookkeeping and accounting service, known for its technology-based approach and specialization in catering to small businesses. The company’s services extend beyond mere bookkeeping, tax preparation, tax consulting, and filing services, providing a complete accounting solution for freelancers.

Xendoo provides a multitude of notable features for its users. These include bank and credit card reconciliation, financial statement preparation, record catch-up bookkeeping, and integrations for e-commerce platforms like Amazon, Shopify, Walmart, Etsy, WooCommerce, BigCommerce, and eBay. Furthermore, Xendoo provides a dedicated bookkeeper for personalized service, supports multiple companies under the same account, offers franchise support, and integrates with Gusto for seamless payroll management.

Xendoo offers three subscription plans tailored according to your business’s monthly expenses and the number of connected bank and credit card accounts. Pricing starts at $395 monthly for businesses with up to $50,000 in monthly expenses. Custom plans are available for those with monthly expenses exceeding $125,000. Xendoo’s pay-as-you-go services are charged at the beginning of the subscription term, and a 10% discount is offered for annual subscriptions. Xendoo offers catch-up bookkeeping starting at $295 per month for any past bookkeeping and previous years’ tax returns.

One of the primary advantages of Xendoo is its scalable all-in-one accounting solution suitable for businesses of different sizes. The access to a dedicated bookkeeper and the ability to manage multiple companies under one account adds to its convenience. Furthermore, the platform’s e-commerce integrations and payroll integration with Gusto make it a robust accounting solution for freelancers.

However, Xendoo’s pricing may be considered steep for freelancers with limited budgets. The service is billed at the beginning of the term, and though there’s a 30-day money-back guarantee, it comes with specific stipulations. Nevertheless, Xendoo’s comprehensive features and dedicated support make it a worthy investment for those seeking a robust accounting solution.

Keeper Tax: A Streamlined Solution for Freelancers’ Tax Deduction Needs

Keeper Tax, founded in 2018 by Paul Koullick and David Kang, is a service that specializes in assisting independent contractors in tracking their work-related expenses eligible for tax deductions. Although Keeper Tax is not a comprehensive accounting software, it is a convenient repository for your receipts and facilitates tax filing. Its simplicity and intuitive design mean you can use it immediately after purchase. While specific pricing details are not provided, including state and federal tax filing in your Keeper Tax subscription offers value for money. Headquartered in San Francisco, Keeper Tax has reportedly helped over 50,000 customers find over $40 million in tax savings. The service goes beyond merely tracking expenses and handles tax filing, with its application being available on iOS and Android platforms.

Some notable features of Keeper Tax include expense scans, bookkeeping by text, tax filing, and the ability to export data for a one-time fee of $39. The app connects to over 10,000 financial institutions to monitor your bank statements for tax-deductible expenses. A Keeper Tax bookkeeper will send you daily text messages to verify that your purchases are work-related, thus ensuring accurate categorization for tax write-offs. 

In addition, Keeper Tax provides free tax tools such as a tax calculator for estimating your quarterly tax payments and a tax bill calculator that estimates your annual tax obligations. Their website also offers guides that cover self-employed tax tips like qualifying for home office and car-related deductions.

The primary advantage of Keeper Tax lies in its simplicity and specialized focus on tracking expenses and maximizing tax deductions for freelancers and self-employed professionals. Its tax filing feature and the convenience of bookkeeping by text are standout elements that contribute to its user-friendliness. However, one potential downside could be that Keeper Tax may not cater to more complex accounting needs, given its specific focus on expense tracking and tax deductions. Nonetheless, for freelancers seeking an easy and efficient way to handle tax-related expenses, Keeper Tax offers a tailored solution.

How to Choose the Best Accounting Software for Freelancers and Self-employed?

When selecting the most suitable accounting software for your freelance business, a thoughtful, in-depth evaluation of your needs and resources is crucial. You must be clear on your expectations and capabilities to ensure that your chosen software addresses your current requirements and can grow with your business. 

Analyzing Your Client Base

The first question to consider is, “How many clients do I have?” The size of your client base can significantly influence the type of accounting software you need. If you’re handling multiple clients, you’ll require a system that can effectively manage and organize distinct income streams, invoices, and expense tracking for each client. On the other hand, if you’re starting out or have a smaller client base, simpler and less sophisticated software may suffice.

Tool Integration Capabilities

The next aspect to evaluate is whether you need your accounting software to integrate with other tools. In today’s interconnected digital world, having your different business tools “talk” to each other can save you considerable time and effort. For instance, it may be beneficial to have accounting software that can integrate with your project management tools, time-tracking apps, or customer relationship management systems. 

Investment in Time and Money

Determining how much time and money you’re willing to invest in this tool is an equally important factor. High-end accounting software has advanced features and capabilities but often carries a higher price tag. On the other hand, less expensive or even free options may offer fewer features and require more manual work. It’s crucial to balance your budget, the time you can dedicate to managing your finances, and the necessary functionality.

Commitment Level

Lastly, consider your level of commitment. Are you prepared to dedicate the time and effort to learn and regularly use an accounting tool? Or would you prefer to delegate this task to a professional accountant or bookkeeper? Understanding your willingness and capability to handle financial management will inform whether you need user-friendly software for beginners or more complex systems intended for financial professionals.

Once thoroughly consider these questions, you can choose the best accounting tool for your freelancing business. The right software can streamline your financial management processes, giving you more time to focus on delivering excellent work to your clients. It’s about finding a tool that suits your needs, complements your working style, and ultimately supports your freelance business’s financial health and growth.

Is Accounting Software for Small Businesses Worth It?

Accounting software for small businesses is generally considered a worthwhile investment. Here’s why:

1. Time-Saving: Manual accounting processes can be time-consuming and labour-intensive. Accounting software automates these tasks, significantly reducing the time spent on bookkeeping and allowing small business owners to focus more on core business operations.
2. Accuracy: Manual accounting can lead to human errors, which could result in significant financial losses or regulatory complications. Accounting software reduces the risk of such errors by automating calculations and data entry.
3. Real-Time Financial Analysis: Accounting software allows small business owners to access real-time financial data, helping them make informed decisions about their business. It can generate comprehensive financial reports, profit and loss statements, and balance sheets at the click of a button.
4. Tax Compliance: Accounting software can assist in maintaining tax compliance by keeping track of income, expenses, and applicable tax rates. It can also generate tax forms and help ensure tax filings and payments are made on time.
5. Scalability: As a business grows, its financial management becomes more complex. Accounting software can scale your business, accommodating increased data volume and more complex financial management tasks.
6. Cost-Effective: While there’s an upfront cost to purchasing accounting software, it can save small businesses money in the long run by reducing the need for extensive manual labour and minimizing errors.

In conclusion, while each business has unique needs, accounting software offers many benefits that can help small businesses streamline their financial management, improve accuracy, and support informed decision-making.

Frequently Asked Questions

1. Tax software vs. accountant: what’s the best choice for your business?

Determining whether to utilize tax software or hire a professional accountant for your business needs is not straightforward; it requires careful consideration of various factors specific to your business situation.

For freelancers or self-employed individuals, preparing their taxes using tax software can potentially lead to significant cost savings. Tax software programs, such as Quickbooks, Bonsai, Xendoo, and Freshbooks, are designed to simplify the tax preparation process, enabling you to manage your tax-related responsibilities efficiently. They provide various features, including expense tracking, mileage recording, automatic bank reconciliation, and in some cases, tax filing assistance. Furthermore, modern tax software is increasingly sophisticated, equipped with AI and machine learning capabilities to identify tax-saving opportunities.

However, hiring an accountant could be a more viable solution if your business is expanding rapidly or involves complex financial transactions. Accountants bring a wealth of knowledge and experience beyond simple tax preparation. They can provide strategic advice on financial planning, tax optimization, business structuring, and compliance issues. Furthermore, they can handle complicated tax matters, assist in audits, and represent you in tax disputes with the IRS.

The costs associated with both tax software subscriptions and hiring an accountant are generally tax-deductible as business expenses. However, the overall value derived from these options depends on your business’s specific needs and circumstances.

Ultimately, the decision between tax software and an accountant should be based on your comfort level with tax matters, the complexity of your business finances, your budget, and the amount of time you can dedicate to tax preparation. Tax software could be cost-effective for businesses with straightforward financials and comfortable with do-it-yourself tax preparation. In contrast, businesses with complex financial situations or those who prefer professional guidance might find more value in hiring an accountant.

2. What’s the difference between accounting software and invoicing software?

At first glance, accounting and invoicing software might seem interchangeable, but they serve distinct functions within your financial management process.

Accounting software is a comprehensive tool that helps you keep tabs on your financial transactions, encompassing everything from expense tracking to invoice recording. However, it’s not specifically designed to streamline the process of invoice creation, dispatch, and payment collection.

On the other hand, invoicing software specializes in generating and sending invoices to your clients, ensuring a seamless process from bill creation to payment receipt. It simplifies the invoicing process but doesn’t include a broad spectrum of accounting functions.

While both tools are essential in managing your finances, they each have unique strengths and uses. For a well-rounded approach to financial management, you may consider integrating both into your business operations.

3. What features should I look for in accounting software as a small business?

As a freelancer, you should prioritize accounting software that offers features such as invoice generation, expense tracking, tax preparation assistance, financial forecasting, time tracking, and project management.

4. Do freelancers and self-employed need accounting software?

While not mandatory, accounting software can greatly simplify the financial management aspect of freelancing, making it easier to track income and expenses and prepare for tax season. It’s an investment that can save you significant time and stress.

5. Are expenses for accounting software tax-deductible for freelancers?

The cost of accounting software is usually considered a business expense and can be deducted from your taxable income as a freelancer.

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