For us Unemployable types, choosing to strike out on our own was a no-brainer. But taking on all that goes with running your own business can make your head spin, particularly when it comes to managing your finances. So, it’s mission-critical for you to have a handle on the best accounting software for freelancers.
Done right, bookkeeping for freelancers goes beyond basic functions like invoicing and bill payment. The best online accounting tools empower you to track your revenue, business growth, and tax implications all year long. Setting business goals is much easier when you have up-to-date financial information at your fingertips.
Freelancing Benefits of Accounting Software
Let’s say you’re talking with a potential client, and they ask you to put together an estimate for a new project.
Or maybe you’ve been working with a few clients for a while but aren’t sure how much revenue you’ve made.
How do you keep track of it all? How do you identify areas of your business that need work and the areas that are successful?
Using reliable accounting software that helps you run your business can mean the difference between a so-so year and a fantastic year of work.
Outsourcing Accounting Makes You Better at Your Job
As freelancers, there is no accounting department to keep track of this side of the business for us. Here’s a dose of healthy reality: YOU are your accounting department.
But you’re a freelancer — your craft is what you really do. While there are many freelancer tools to help streamline and simplify your work, perhaps the most critical is online accounting software.
After all, accounting work can be boring, and tedium was not what you were looking for when you decided to fly solo.
Thankfully, there are powerful solutions that are easy to use and even fun. The best accounting software for freelancers will act like an outsourced financial team — without the hassle or expense of having to hire actual humans.
What to Look for in Accounting Software
There are tons of reliable accounting software solutions that make accounting for freelancers a snap. So, what can a trusted accounting tool do for you as your own chief financial officer?
Here are some of essential functions you can expect in an accounting tool:
- Keep track of invoices (both late and paid)
- Manage expenses and receipts
- Compare how much money you billed vs. how much you took home
- Create customized project proposals
Let’s take it a step further with some features and functions that can help you take your freelance business to the next level.
- An easy mechanism to pull billable expenses into invoices so you can get reimbursed by your clients. (You should be able to markup those expenses, too, to enhance profitability.)
- Automated recurring invoicing for retainer clients (our favorite type of client)
- Built-in payment options that make it simple for clients to pay, either by bank transfer (ACH) or credit card
- Mileage tracking, if your business requires you to be on the road a lot
- The ability to delineate between business and personal expenses if your freelance work is a side hustle or you’re just starting up, and you don’t have a dedicated business bank account or credit card yet
The best accounting software for freelancers also makes navigating tax season easier — whether you plan on doing your taxes yourself or hiring an accountant to do the heavy lifting for you.
Aside from helping you manage the day-to-day operations side of freelancing, accounting software can help you track your success, identify what services generate the most income, and when to raise your rates or make significant business changes.
You might be thinking, “That’s great … but how do I know which tool to use?”
The Best Online Accounting Services
We’ve rounded up a few of the leading accounting software services and analyzed what makes them so great. This list will help you narrow down your search and choose the best accounting software for your freelance business.
- Assign individual rates per project and client
- Set recurring invoices
- Track time per project
- Integrates with apps like Basecamp, Asana, G Suite, and more
FreshBooks allows freelancers to create customized invoices, sent estimates (and seamlessly convert those into invoices), keep track of expenses, and compare month-over-month revenue all in one easy-to-use platform.
FreshBooks is a widely-used, trusted accounting platform complete with a mobile app so you can always ensure your books are up-to-date. Colorful graphs and charts make understanding expense breakdowns, comparing project revenue, and viewing overdue invoices a no-brainer.
The popular cloud accounting software prides itself on being “built for self-employed people, meaning it has features designed to make your life easier. According to FreshBooks, their customers save an average of 16 hours per month on accounting. Talk about valuable time saved!
The ability to offer clients different payment options is another reason why we love FreshBooks. Your clients can pay via credit card, check, Apple Pay, and more. Like other popular accounting software, FreshBooks allows you to sync your credit cards or bank accounts, making tracking money in and money out a breeze.
Who should use FreshBooks?
- Freelancers who have a complicated billing structure for a project or client
- Freelancers who charge clients hourly
- $15/month for up to five clients
- $25/month for 50 clients
- $50/month for 500 clients
- Data integration with TurboTax
- Calculate quarterly taxes and make payments
- Categorize personal vs. business expenses
- Track mileage
Powered by Intuit, QuickBooks Self-Employed offers a comprehensive suite of accounting features and functions. This powerful tool has every essential accounting function, including the ability to seamlessly sync with one of the top self-employed tax apps: TurboTax freelance.
This version of QuickBooks for freelancers is especially recommended if you’re interested in doing your taxes on your own.
One thing we love about QuickBooks is that it safeguards against overpaying or underpaying on your taxes. Pretty great, right? QuickBooks not only calculates your quarterly tax payments but it allows you to e-file all within the same platform.
QuickBooks’ automatic mileage tracker makes reporting mileage at tax time simple if you do any driving for work.
In addition to the TurboTax integration, QuickBooks allows you to create invoices, track expenses, and organize receipts with ease.
Who should use QuickBooks Self Employed?
- Freelancers who want to file their taxes on their own
- Freelancers who need an easy way to track mileage
- $25/month with the tax bundle
- $35/month with the live tax bundle
- Create customized invoices
- Accept payments from all major credit cards
- Scan and track receipts
- It’s completely free!
All those features and more for free? It seems too good to be true, but it’s the truth! Wave is a secure, powerful accounting tool that makes the basics of bookkeeping cost-effective and straightforward.
With Wave, you can edit and customize unlimited invoices, accept payments online or over the phone, gauge the health of your business, and so much more. When tax season rolls around, your expenses, receipts, and payments are organized and ready for you to file.
Wave also offers Wave Advisors, which is personalized accounting help that can take care of your monthly bookkeeping and payroll support for $149 per month, as well as accounting and payroll coaching for a one-time payment of $229. These features are especially useful for new freelancers who aren’t as familiar with the financial landscape of running a small business.
Look at Wave vs. QuickBooks Self-Employed, for example. You’ll find that for an early-stage or solopreneur business, Wave is a more lightweight, easy-to-navigate system that gives you all the functionality you need for a price you can afford. (Did we mention Wave is free?!)
Who should use Wave?
- Freelancers of all experience levels, but new freelancers in particular, who might not have a ton of extra cash lying around
- Less tech-savvy users
- Free! Wave makes money by taking a fee for online payments:
- 2.9% + 30¢ fee of most credit card payments received
- 3.4% + 30¢ fee for American Express
- 1% for bank payments, where available
- Easily scalable — grows with your business
- Highly customizable
- Integrates with 700+ apps, including Shopify, PayPal, and Stripe
- Acts as an online filing system to store receipts, bills, and more
Xero self-employed is an excellent option if you’re planning on having your business grow beyond just you. The interface is user-friendly and straightforward, and it covers all the bases you need when you’re first getting started, like sending invoices, paying bills, and tracking expenses.
From the get-go, it also allows you to capture documents like bills and receipts and store them in one place. Plus, you can share your financial information directly with your accountant if they use Xero.
As you begin to scale your business, Xero empowers you to expand your financial repertoire easily. With hundreds of app integrations, the ability to track expenses per project, and easy payroll features, this versatile accounting app grows along with you.
Who should use Xero?
- Freelancers who plan on expanding their offerings and their payroll
- Freelancers who want to customize their accounting system or work closely with an accountant or bookkeeper
- $11/month “Early” plan (limited invoicing and bill pay)
- $32/month “Growing” plan (unlimited invoicing and bill pay)
- Free version
- Automated billing and reminders
- AI-driven insights to help optimize your business
- Track time per project
ZipBooks has all of the features you need out of the gates: unlimited invoices, managing customers and vendors, accepting payments (Stripe, PayPal), and connecting to a bank account — and best of all, it has a free “Starter” plan.
As your needs change and your business grows, ZipBooks bookkeeping software offers more robust features like time-tracking, automated billing, more sophisticated organization with tagging, and unlimited users.
Who should use ZipBooks?
- Freelancers who work on an hourly basis and need time-tracking
- Freelancers who don’t need a mobile version (Zipbooks doesn’t currently have an app)
- Free starter plan
- $15/month for time-tracking and other more advanced features (up to 5 team members)
The Verdict: What is the Best Accounting Software for the Self-employed?
While you can find many robust, user-friendly, and relatively inexpensive options, our pick for the best accounting software for freelancers overall is QuickBooks.
QuickBooks is the most comprehensive and user-friendly, so even if you are new to business accounting, you’ll be able to master it quickly. This accounting software makes it simple for you to get paid by bank transfer (for no fee) or accept credit cards (2.9% for invoiced cards, plus $0.25 per transaction).
The other main advantage is related to taxes: QuickBooks Self-Employed empowers you to correctly and accurately track expenses and potential tax write-offs. If you’re wondering about the expense-tracking software, Expensify vs. QuickBooks, the answer is that not only does QuickBooks allow you to track expenses easily, it also supports Expensify integration. Its built-in tax tracking feature and easy integration with TurboTax for freelancers helps you sleep well at night, particularly when April 15th rolls around.
Finally, because QuickBooks is an industry leader, there are several other QuickBooks products designed to support small business owners as they grow, including payroll, accounting training, inventory control, and more.
That said, only you can determine which one is right for you and your needs. A great thing about accounting software is that if you try something and aren’t satisfied, you can easily switch to a different tool.
We recommend utilizing the free or discounted trial options to see which one works best for you. As with most things in the freelance world, trial and error will help you figure out what works for you.
Is there a free alternative to QuickBooks?
Yes! Wave bookkeeping software is free to users — you don’t even have to enter a credit card to sign-up. ZipBooks also has a free “Starter” plan; however, the functionality is limited. While they are not free, FreshBooks and Xero offer a free trial period, so you can test-drive the accounting software before committing.
Can you freelance as an accountant?
Absolutely! You can easily freelance as an accountant thanks to the explosion of online accounting software solutions, like Freshbooks, Xero, and QuickBooks. Now that it’s all gone digital with secure storage in the cloud, it’s a game-changer for accountants and bookkeepers — you don’t even need an office. All you need is a laptop, a consistent internet connection, and one or two reliable web conferencing tools.
What is the easiest accounting software to use?
While most online accounting services are designed to be user-friendly, Wave makes it super simple for people with basic accounting and tech know-how to get their business off the ground. If you’re planning on growing quickly, Xero has a lot of built-in features that make it easy for you to use and collaborate with your accountant when necessary.
Don’t forget to check out our round-up of 42 other essential freelancer tools that can help improve your productivity, client relationship management, and overall work/life balance.