The Best Accounting Software For Freelancers in 2020
/Whether your goal is to grow your freelance business to six-figures or a multi-million dollar empire, you will need to learn how to organize and manage your books. When I first started my business, I offered bookkeeping services to small business owners in the beauty and fashion industry. While everyone can benefit from working with a bookkeeper, you should wait to hire a bookkeeper until after you are earning enough to cover your minimum monthly expenses. Ideally, you will be covering your minimum expenses and saving a percentage of your income. Until that point, it is wise to do your own bookkeeping for two main reasons.
Why Its Important To Do Your Own Bookkeeping (at least in the beginning)
First, managing your business finances will improve your financial savviness and give you the skills you need to reach your personal money goals.
Secondly, it will make it that much easier to hire a bookkeeper. You will have a thorough understanding of the work she needs to do and you will be able to easily train her on the nuances of your freelancing business.
As soon as you spend your first dollar on your business, I recommend finding an accounting software that you like and start using it during your weekly money dates. In the beginning, your weekly money dates will be longer as you learn the software but soon you will feel as comfortable using it as you do your phone.
Before we dive into the accounting software, here is a quick checklist of features you do and don’t need.
What you absolutely need from your software
Automatic bank feeds
Invoicing
Profit and Loss report also known as your income statement
What you don’t necessarily need
All the financial reports (such as the cash flow report)
A million software integration options
Nice to have, but not absolutely necessary, features
Receipt capture
Payroll
Dashboard
Automated invoicing
Today’s accounting software tools are intuitive and digital. Digital tools are great because it allows you to send an invoice while you are on vacation. Below are the most popular accounting software tools for freelancers in 2020.
Best Accounting Software For Freelancers In 2020
Xero: this is the program I use and have been using it for several years. I fell in love with their Tiffany blue branding and “beautiful accounting software” slogan back in 2010 when I first discovered their product. This program is great if you are planning to grow your freelancer business from a one-woman shop to hiring contractors or full-time employees. The program is versatile and will grow with you as your business grows. The program can be a little overwhelming if you are keeping your freelancing business as a side hustle, but other than that it’s great.
Freshbooks: One of my first clients used Freshbooks for his catering business and we loved it. The are known for invoicing and I believe they have the best invoicing functionality. You can customize every aspect of the invoice. The reporting functionality is rather limited, but otherwise it’s a great product.
Wave: For a short period, I also used Wave for my bookkeeping. The best part about this software is that it is FREE. If you are just starting your freelancing business and watching every penny, this may be the option for you. It does offer payroll services, so it can grow with you as you grow your business. The design and user experience is awesome. The program does have some glitches and will miss transactions, which is why I stopped using it. You can get around this by manually entering the transactions. Otherwise, great program.
QB Self-Employed: Intuit and Quickbooks are probably the best known software in the United States. They were one of the first tools on the market to allow accountants and their small business clients to access the accounting information. The self-employed software is designed specifically for freelancers. The best aspect of this tool is its integration with Turbo Tax, which makes your tax filing super easy. The downside is that it Intuit’s tools - in my opinion- are not user friendly and can be tough to figure out if you don’t have an accounting background. Otherwise, this is a product worth checking out.
Bench: If you are looking for a software that comes packaged with a bookkeeper, Bench is the one for you. For a monthly fee starting at $99, you can get the bookkeeping program and a bookkeeper to do your books. I’ve been a media partner of theirs for a couple of years and truly love the service they provide. Keep in mind, that you do have to work with one of their bookkeepers in order to use the software. If your business is at a stage where you are ready to outsource your bookkeeping, Bench could be the solution for you.
About Money & Mimosas: Money & Mimosas was started as a passion project by Danetha. A former NFL cheerleader turned entrepreneur, she started blogging as a way to combine all of her passions into a career. Money & Mimosas is now enjoyed by tens of thousands of readers in over forty countries with the same dream of achieving financial freedom without living frugally.
