Today I’m going to review the top freelance bookkeeping options. Keeping track of finances is probably one of my least favorite parts of being a freelancer. In order to properly manage a freelance business you have to manage a wide range of accounting components.
- Profit and loss reports to capture your overall profitability.
- Aging reports to see how long it takes to get paid.
- Expense logging to ensure you capture all potential deductions.
- Accounts receivable system so that you can get paid.
- Project tracking tools if you’re working on large scale projects for clients.
Freelance Bookkeeping Options
I’ve used a number of bookkeeping solutions over the years and the following are some of the ones that I’ve had the best experience with.
Freshbooks is the system that I use for my freelance business. As far as accounting software goes it covers 100% of the requirements I have. Thankfully it is also easy to use, which means that I didn’t have to spend time learning how to use the software. It has an intuitive interface and allows me to login, perform whatever tasks I have to, and then get back to working.
How it works
On this page I can:
- Select a client.
- Add additional accounting information. This includes items such as a purchase order number.
- Add items to the invoice. I also like how easy it is to add fractional quantity units. If I worked a little over 14 hours I can enter 14.1 hours and Freshbooks calculates the amount.
- Enter the payment method. This portion of the system makes it easy to let clients know if I want to be paid via: standard PayPal, PayPal Business, or via Freshbooks Payment system.
- Add comments. You can post any additional information that will be sent to the client.
It would take hours to go through the full system, so I will simply gloss over some of the other features I find the most useful.
- Invoice sending flexibility. As great as it is to send invoices electronically I still have a few clients who prefer paper based invoices. Thankfully, not only does Freshbooks allow me to print out invoices, they actually mail them for me directly to the client.
- Expense tracking. Tracking business expenses is a tedious exercise. However with the Freshbooks mobile app I can take pictures from my phone, enter in the expense details, and the expense will be logged into the system.
- Creating estimates. In the past I would create an estimate in Excel or Word, and then send it to the client. If they approved it I would then have to enter the details into an invoice. However with Freshbooks I can create an estimate and email that directly to the client. If they decide to move forward with the project the estimate will automatically transfer into an invoice.
As much as I love the Freshbooks system, it does have a few weaknesses. First and foremost it can get a little expensive if you get a large number of clients. Also, if you start hiring a large number of employees it can become a little unwieldy to manage. Personally I’d recommend using Freshbooks for any business with under 20 employees. When you grow beyond that point you’ll want to move to a more scalable system.
If you’ve grown out of Freshbooks, Quickbooks may be a good option for your business. Quickbooks has been the industry leader for small business accounting software as long as I’ve been around. Even though the company has acquired the reputation for being difficult to manage, over the past few years they’ve done a good job in making the system more flexible.
When you list all of the potential features needed by accounting software for a small business, Quickbooks has it all. Also, due to its popularity, there is a good chance that any admins that you hire will already have experience using the system.
With all of that being said, I personally wouldn’t choose to use Quickbooks for devCamp or any of the companies I work with. The main reason is because I’ve seen too many times where companies grow out of Quickbooks and found it very hard to migrate to a new system. I also don’t like the reporting engine that the software uses. For example, if you plan on running your financial data through a big data analysis reporting engine, Quickbooks makes it difficult to export it in a format that’s easy to use.
If your business is growing, both in clients and employees, Netsuite is a great bookkeeping option. Technically Netsuite is probably overkill for the typical freelance business. However if your development shop starts to turn into a full fledged digital agency you’ll need a robust ERP system. ERP systems are different from traditional bookkeeping software. Typically they’ll offer tools such as:
- Resource planning. This means you can allocate developer time on a project basis.
- Advanced tax planning tools. Once your business hits a certain size it’s important to ensure you’re taking advantage of all the potential tax deductions available. Tools like an ERP system do this for you.
- Payroll Integrations. Being able to manage your employees, track turnover, and tasks such as that get important as your business grows. However they’re hard to track manually. A system like Netsuite calculates all of your employee tracking metrics so you can use them to manage your team.
I hope that this has been a helpful set of freelance bookkeeping options that will help you decide on the right system for your business.