The best online accounting software for small business and freelancers

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The best online accounting software for small business and freelancers in 2021

Bookkeeping and financial reporting is not my favourite activity as a freelancer, but thankfully there is a range of fantastic online accounting software to make this stressful part of the job much easier, so you can focus on doing the freelance work you love.

The best online accounting software makes it easy for you to stay on top of your freelance finances, from sending clients invoices, to tracking expenses, paying quarterly taxes and submitting annual returns.

There are a range of cloud-based accounting software choices out there, some that let you do your accounting on your own, others that you need to help from a bookkeeper or accountant to use.

Whatever direction you choose, it’s important to take advantage of the free trials that most accounting software provides so you can see which platform is right for your freelance finances.

Once you choose the best freelance accounting software for you and start sending client invoices, it can be hard to switch to a new platform!

Here are the best accounting software services for freelancers, with details of their monthly cost, main features, pros and cons, and insight into what other freelancers have said as to why they’ve picked that particular platform as their top accounting software choice.

Freshbooks

30-day free trial
From $15/month
Sign up at freshbooks.com

What is Freshbooks?

FreshBooks is one of the most established freelancing accounting software in the market today, having been founding back in January 2003, by the owner of a design agency who was frustrated that when it came to billing clients, Word and Excel were difficult to use and weren’t built to create professional looking invoices.

Over the past few decades, Freshbooks has grown to a comprehensive freelancing accounting platform that automates tasks like invoicing, organizing expenses, tracking time and following up with clients.

Getting start with Freshbooks is easy. Most people send their first invoice seconds after starting their free trial. The same goes for tracking time, managing expenses, collaborating with contractors and viewing financial reports.

If you need help at any time, their award-winning customer service is a phone call or an email away.

You also get a 30-day money back guarantee, so you don’t have to worry about switching away from FreshBooks if it’s not right for you.

Their mobile app is also worth a mention as it’s one of the more polished apps on the market and event lets you respond to your clients’ questions and feedback right from the app so even when you’re on the go, your conversations are kept in one place.

Freshbooks Features

Customize invoices and look professional
Send estimates that help you win jobs
Accept credit cards online and get paid faster
Simple time tracking to never miss a billable hour
Automatically import expenses to track spending
Project budgets that keep your team on track
Dashboards that keep your finger on the pulse
Powerful reports with insights about your business

Freshbooks Pros

Proposals, invoices, projects, expenses and time tracking all in one – you can run your whole freelance business through Freshbooks
Professional looking invoices that are quick to create.
Tracking expenses in FreshBooks is straightforward
Time tracking features mean you can track time using FreshBooks.
Freshbooks claims you can get paid up to 11 days faster when you accept credit cards online in FreshBooks.
Reports in FreshBooks are simple enough for you to understand but detailed enough for your accountant to use
With the FreshBooks mobile app you can stay connected with your clients and be able to take care of your accounting on the move.

Freshbooks Cons

Limits the number of clients you can invoice on the lower paid tiers
Some freelancers report issues with automated connections to bank accounts or paypal
Recent enhancements have made the product less intuitive and more difficult to use.
Setting the time on a task is counter-intuitive and seems to be visual perk that has no value and there is no timer on phone apps
Can’t create recurring expenses
Cannot sort invoices by type, or by paid or draft.

What freelancers think of Freshbooks

“FreshBooks has allowed me to free up time and focus on growing my business. Thank you!” – Deric

“Freshbooks has been a program I’ve been using for several years now as they’ve made my time tracking and invoicing so much more efficient than my old school manual method of Excel and custom invoices.” – Victor

“FreshBooks should be a great product. It’s easy to use with good workflow, the UI is terrific, our customers love it and it does exactly what we want. Except … in only a few weeks’ use, we’ve encountered significant bugs including an error totalling invoices on the dashboard.” – David

“I really liked Freshbooks up until the recent updates. I find that a lot of the original functionality I found useful for business (reports, filtering etc..) have taken a hit. – Eugene

“It’s a little pricey if you have multiple businesses. Otherwise I love everything about it.”. – Matthew

Read our full Freshbooks review

Quickbooks

30-day free trial
From $15/month
Sign up at quickbooks.com

What is Quickbooks?

Quickbooks has been around for a long time, first as a desktop version and now as online accounting software.

Quickbooks have heavily invested in their AI and automation features to help you quickly tag and categorise your invoices and expenses so you can see what you’re really making and spending

Connecting QuickBooks to your bank account and credit card accounts, and let QuickBooks do the work for you. You’ll eliminate tons of data entry, and your books will always be up to date and accurate.

For expenses, QuickBooks fills in who you paid and what it was for. You can change this information if you need to. This is where QuickBooks starts to help you out. It can find other expenses that look like the one you just added, and assign them all the same category.

QuickBooks can also automatically categorise client payments to a sales account. If QuickBooks isn’t sure about a category for an expense, it’ll leave it as uncategorized. You can pick a category or choose Ask My Accountant to file it away to go over with your accountant later.

QuickBooks lets you know if you have any expenses that need to be reviewed. As you categorize more expenses, QuickBooks learns from you so it can help. A transaction in green means QuickBooks recognizes that you categorized a similar transaction in the past. So it automatically assigns the same category for you.

Reports like the profit and loss report show you more detail about how your expenses are categorized. You can even see your expenses as a percentage of your income. This is very helpful in understanding where your money is going.

You can even explore QuickBooks for yourself with a free product test drive.

QuickBooks Features

Automates standard bookkeeping tasks such as entering transactions, performing calculations, and organizing data to keep your books balanced.
Automatically Imports your bank transactions and organizes them
Built-in sales tax calculator that calculates sales tax based on where you are, what you sell, and the address on the sales receipt or invoice
Track business expenses all year to get every deduction at tax time.
Automatically sorts expenses into expense categories and keeps them organized for you.
Track your bills and their due dates in one place so that you always pay on time and avoid late fees.
Set up automatic payments so that your bills are paid for you
Use the QuickBooks app to turn your phone’s camera into a receipt scanner. Snap a photo of a receipt and QuickBooks will attach it to the expense in your books
Create custom, professional business reports, access your balance sheet, cash flow statement, income statement, and over 50 other reports
Create professional estimates and quotes for a prospective customer
Create invoices and get paid fast via credit card, debit card, Apple Pay, and more
Bill incrementally and get paid throughout the course of the job or project

Quickbooks Pros

One of the easiest online accounting software to use ‘out of the box’.
Links directly to your bank account for reconciliation.
A very capable product with some great features
Suitable for small businesses with only one currency who are happy to pay PayPal’s premium rates for payment processing.
The customer support is fast, friendly and efficient.

Quickbooks Cons

Some have found the interface to be slow and confusing
Lack of payment processors: PayPal is the only option
No helpdesk support system for tickets
Direct Bank Feeds can take from 5 days to several weeks to set up
Invoice Templates are very basic

What freelancers think of Quickbooks

“Good platform and great support – would definitely recommend to anyone looking for any easy to use accounting platform.” – Virginia

“Great software, wish i started using it earlier. A lot to get your head around, but they are a phone call away if you get stuck.” – Seun

“I’ve been a QuickBooks user for a lot of years and was very pleased when the online version became available. I’ve had a couple of hiccups and the initial response wasn’t particularly impressive. However, when I eventually got connected to the right person in Technical Support, I have to say, I couldn’t fault his commitment to sorting out my issues.” – Sean

Read our full Quickbooks review

Hello Bonsai

14-day free trial
From $16/month
Sign up at hellobonsai.com

What is Hello Bonsai?

Hello Bonsai isn’t strictly accounting software, though we did include it in our best online accounting software review roundup.

Unlike some other options, like Freshbooks or Quickbooks, Hello Bonsai is intuitive and easy to use.

Hello Bonsai’s founder Matt Brown said he built it to “make that annoying and confusing contract for freelance dev and design work easier to create, understand, and sign.”

Matt’s hope is that Hello Bonsai helps build better relationships with clients and gives you one less thing to worry about when freelancing.

You can even send your clients automated reminders to help you get paid faster.

Hello Bonsai Features

Read-receipt notifications
Auto reminders
Client management
Project management
Secured messaging
Multiple currencies
Data export & import
Chat support
Weekly reminders

Hello Bonsai Pros

Streamlined and simplified client onboarding process.
Excellent client contracts and invoice system: clients sign their contracts and pay their invoices quickly and easily
The software will tailor your contracts specific to the project you have at hand.
Nice to streamline the filling and e-signing of a contract
Invoicing with Bonsai is robust without making its UI all that cluttered

Hello Bonsai Cons

Limited language settings: you’re not going to get much use out of it if you’re not in an English-speaking country
Limited customisation options for contracts generated through their system
Freelancers and small business may find more complete accounting packages elsewhere

What freelancers think of Hello Bonsai

“The best part of it all: you can send a W-9 to clients. Having that on board will be so helpful during tax season!” – So Am I Write

“Hello Bonsai is a really great tool for freelancers and agencies. You can keep all your project’s contracts and billing in one place.” – Crafting Hands

“After you have your contract templates set up, it’s just a few clicks and your contract is on its way to your client’s inbox. And after sending my clients their contracts and invoices, most of them (if not all) signed and paid their deposit the next day.” – Molly

Get a free two week trial of Hello Bonsai at HelloBonsai.com

Read our full Hello Bonsai Review

What features does the best online accounting software have?

There are plenty of other options out there, but these picks meet a couple of critical criteria:

Available online 24/7: Back when accounting software was desktop-based, you need costly servers and other infrastructure that you are unlikely to have. Thankfully today most accounting software is cloud-based software, which means you can work from any device – mobile, tablet or desktop – at any time, and you don’t have to take care of any of the website hosting or any upgrades that might be needed – it’s all handled by the accounting software
Integration with banks: By automatically connecting to your business banking, you are increasing thr accuracy of the data passed between your accounting software and your bank. Even better, you’re saving massive amounts of time compared to entering data manually or fixing mistakes if you find you’ve added something to the system incorrectly .
Easy to understand dashboards and reports: The best online accounting software helps you manage income and expenses in such a way that it is easy to see how your business is performing at a glance and report to any governmental departments, such as HMRC in the UK and the IRS in the US. 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.
Low cost and scalable monthly fees: Each of these online accounting software services provide a low cost starting monthly fee which is more than workable for a freelancer or small business that are just starting up. You can then scale and access more complicated features once your business is established and you can afford the higher fees.
Professional Support from trained accountants: if there is a time when you need help with your accounting, then these online accounting software choices provide much needed support, either internally from their own accountants, or by linking you up with external bookkeepers and business consultants. Don’t use a system that nobody is going to be able to help you with – you’ll need someone to turn to when you need help with you books!
Mobile Apps: Being able to snap an expense or check on the invoice while on the move is getting increasingly valuable as our phones get more and more powerful. While not a deal breaker, using accounting software with a powerful and integrated mobile app will help make your work life easier when you’re away from the office.

Which is the best online accounting software for you?

The best online accounting software for you depends on where you are in your freelance journey and how you’ve set up your small business.

Just starting out as a freelance consultant or small business? Try Hello Bonsai.

Lots of clients and invoices, for example a design studio that has a high turnover of projects? Use Freshbooks.

And if you have grown to the point where you are ready for an accountant or bookkeeper, choose Quickbooks – it’s a powerful tool but needs an accountant to help make the most of it.

Whichever of these options is the best online accounting software for you, you can feel confident that you have the best freelance tools to keep your freelance finances in order so that you can and get back to the freelance work you love.

Which online accounting software do you use? I’d love to hear your thoughts and experiences in the comments.