Top 5 Accounting Tools for Freelancers and Small Businesses

Jacco Blankenspoor

Being a developer, chances are you probably aren’t very fond of doing your accounting. I’m not either. Luckily, modern tools can help out in many ways. It will still require some time, but in this article I’ll introduce you to several tools which aim to reduce that admin time to a minimum. All of these tools are geared toward freelancers and small businesses.

Features

All of the reviewed tools come with:

  • Invoicing & Expenses: the foundation of bookkeeping.
  • Import bank transactions: tll allow exports, and some even use automated imports.
  • Reporting: sales reports, expenses overview, tax summaries, and so on.
  • Free trial or free account: you can try all of these tools for free for 14 or 30 days, without a credit card (except for LessAccounting, which does require a credit card).

Some of them also offer:
- Time Tracking: often in combination with invoicing to send a bill based on collected hours.
- Estimates / Quotes: send prospective clients a proposal, and convert it to an invoice when successful.
- Payroll: keep track of your employees or hired freelancers.
- Mobile: some offer apps for scanning receipts, others for time tracking and bookkeeping.

To keep it interesting, none of them offer all of these features in one product out of the box. So it’s up to you decide what you find most important, or where you want to dedicate extra time.

I will take a look at what features are included and how much it’s gonna cost you (hint: some of these tools are free). More importantly, I will look at the distinctive features of each product. When five products are so similar, it all comes down to usability. Let’s see how they compare.

Wave

Let me start by saying that even if you don’t like Wave at all as an app, you’ve got to admit they have a beautiful sales page.

Wave offers all the necessary features, except for time tracking (which is a real shame, by the way). And it’s totally free, except for the Payroll and Payments features, which are both low priced. It’s ad-supported, but at least the ads are generally relevant.

Why choose Wave?

Automated transaction imports

In my case I added my Paypal account. After running for a while, I got a list of transactions. Some were even already categorized.

As long as your bank or payment provider supports automated transactions, you’re good to go.

Invoices / Recurring / Estimates

Wave Invoice

It’s all very convenient. You can turn estimates into invoices, and you can set up recurring invoices.

For a low fee, you can even collect payment via credit card, so customers can pay your invoices right away.

Receipts

Wave Receipts

This feature really impressed me. I used a non-personalized email address to send in my receipt. They connected it to my account because I used my account’s email address. So far nothing magical.

Within minutes the receipt appeared in my account, and Wave had already figured out it was for a parking fee. I just needed to fill in some extra details, and that’s it. The receipt itself is saved in your account for future reference. Works like a charm. You can also use a mobile app, or upload receipts manually.

Payroll

Wave comes with a low-priced payroll option. You can use this to calculate wages and taxes, and even to pay them out.

FreshBooks

FreshBooks comes pretty close to supporting all the features listed above, except for payroll. In addition, transactions have to be manually imported.

There is an add-on for payroll, but it will cost you more than FreshBooks itself, which is $19.95 a month with up to 25 clients.

Why choose FreshBooks?

Mobile

Freshbooks Mobile

FreshBooks is the only tool with a full-feature mobile app. With this app you can track your time, take a picture of your invoices, and do full accounting as well. It syncs perfectly with the desktop version, as you can see in my screenshot.

Time Tracking

Freshbooks Time Invoice

You can use a timer on both mobile and desktop. After a task is finished, you can attach it to a specific project, task and/or client. When it’s time to pay, you can then make up an invoice with the detailed time recordings.

Stamps

They hide it on the sales page, but you can buy and use good ol’ stamps and envelopes directly from FreshBooks, for clients who require a printed invoice. You don’t even need to print and send yourself — it’s all handled for a small fee by FreshBooks.

Zoho Books

Zoho Books is the second contender to offer all features except for payroll. You can set up automated bank imports, and categorize them easily.

Its mobile app has all of the necessary functionalities. It can be used for adding records like invoices, expenses and payments, and it allows for time tracking.

Zoho has one pricing plan, with a flat fee of $24 a month per organization.

Why choose Zoho Books?

Unlimited everything

This means unlimited projects, clients and most importantly: users. Your employees all can use the same account without it costing your extra money. This is very useful for time tracking.

In comparison, with FreshBooks you pay $10 a month for each additional user.

Client portal

Zoho Client Portal

This one is pretty advanced. Your customer can login to see your estimates, and their invoices. And right after they’ve seen your invoice, it’s logged in your invoice history — you’ll know when a client has seen their bill. They can even comment on your invoice if needed.

Auto-Categorization of transactions

The normal categorization is already perfectly executed (you can even upload a receipt for each transaction). You can also set up rules to scan a transaction for specific details, and have it categorized right away.

Usability

Zoho Usability

Zoho Books certainly scores points on this one. The tool looks amazing, and works perfectly. Everything is well documented and explained. You can really get started within minutes.

The whole billing process, for example, is a breeze. From tracking time to sending the final invoice, it’s all just a few clicks and it looks damn good. You can even include several different payment options, which connect to your account so it all runs on auto-pilot.

Zoho Books just works, and better than you can imagine. Their mobile app is just as great. They did a really good job on usability in general.

QuickBooks

QuickBooks is the oldest kid on the block, and certainly one of the largest players. This is one solution that will take you from startup to hundreds of employees, since they offer enterprise solutions.

QuickBooks offers all of the above features, except for time tracking. This is strange, since they do have an app (which is used for adding entries). You can use an add-on, but these are all paid. This shouldn’t be necessary for such basic, useful functionality.

QuickBooks offers different payment plans, but the “Essential” plan, currently at $18.95 per month, should be sufficient for small businesses. Payroll management is an option, but it starts at about twice the Essential rate, plus costs per employee, plus cost per state (ie. pretty expensive).

Why choose QuickBooks?

It’s QuickBooks

More than with the other tools, chances are you already have QuickBooks installed on your computer. Their desktop version was quite popular several years ago, and is easily converted into QuickBooks online.

I admit this is not a very convincing reason to choose, so let’s look at what makes QuickBooks really unique.

Fast import of transactions

I used my PayPal account to test each service on this list, and QuickBooks was by far the fastest in importing transactions. It took a few seconds, while others needed up to several hours (for a few dozen transactions).

QuickBooks automatically checks for new transactions, which are then easy to find and process.

Reports & Dashboard

QuickBooks offers great reports and beautiful dashboards, a hallmark of a polished product. There’s a company snapshot which shows you pie charts of how your business is doing over multiple years.

Vendors

QuickBooks Vendors

QuickBooks is the only tool which allows you to list your vendors. You can even filter them on the status of your owed or completed payment.

LessAccounting

I always like to finish a review article with a tool that claims to be much easier to use than the rest. Or as LessAccounting states it, they suck lesser than the rest.

LessAcounting has the least features of them all: no mobile app, no payroll and no integrated time tracking.

When it comes to their sales page, they could learn a lot from Wave. There are no simple pricing or feature pages, for example, and the trial requires your credit card, which, while it may be good for business, I always find a major turnoff.

So basically all they do is accounting, and the “Less” in their name stands for reduced time spent on your accounting. How does this work out?

So why LessAccounting?

Less clicking

Less Accounting Transaction

I must admit that there are indeed fewer steps needed to accomplish basic tasks. Take, for example, connecting a imported payment to an outstanding invoice.

You can instantly apply a payment to an invoice. Sounds very simple, because it is. In this case it takes two clicks and you’re done, and it works this easily on every page.

Less counting

Less Depreciation

This is something I haven’t seen in the other tools: a depreciation chart. You got several options to choose from, and the deprecation is shown right in your transaction screen.

Less Depreciation Report

It even comes with a report, which will make your accountant very happy.

Less guessing

Less dashboard

This cashflow statement can be found in your dashboard, right where it should be. You shouldn’t need a report for this, as this graph says it all.

Less mileage administration

Less mileage administration

Seems like accountants built this tool. Just like the depreciation report, this is a clever feature.

Simply add one or more vehicles and start tracking your mileage. Just run a report when you need it, and you’re good to go.

Rounding up

After going thoroughly through these five tools, it’s difficult to choose an overall winner. They’ve all got their unique features which make them stand out.

In the end it all depends on what you prefer. Just make sure to try them out first.

Let me know what you think of these tools, and which one if your favorite.

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  • http://robhammann.com Rob Hammann

    Such an important decision. The right tool can really streamline your work flow. The wrong tool can add hours of work (and frustration) to your processes. The decision on acct software shouldn’t be taken lightly. Our company used Xero for 5 years before we closed. It is very similar to those above. Just another option to consider in selecting your system.

    • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

      Hi Rob,

      thank you for your response! Xero was on the short-list, but didn’t make it in the end. Very similar to the first few indeed, and a great product as well. Had to choose though :-)

  • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

    Hi, this article comes at the right time then :-) I do know LessAccounting is reading this article, so it’s possible they might follow up on you. In the mean time, maybe you can share why you’re gonna try Zoho (just curious :-)? Thanks!

  • http://www.downloadcrunch.com/ Sainik Biswas

    I use wave for my freelance services and for my business too. This is my first Invoicing an accounting app and it is just damn easy to manage by business. I think they are just amazing. If you haven’t used it yet, give it a try.

    • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

      Hi Sainik,

      thank you for your input, great to hear other’s opinion!

  • Raghavendra Kopalle

    I tried so many of these before meeting Wave and accounting has never been better. 5 stars for Wave! Highly recommended.

    • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

      Hi, thank you for your comment. What made you decide to stick with Wave if I may ask?

      • Raghavendra Kopalle

        Ease of use, I liked what the mobile app does, it allowed me to connect my bank account(most others dint support Indian banks) and pricing was optimum for a startup.

        • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

          You make a good point about Indian banks. I’m from the Netherlands, and most tools won’t connect with a Dutch bank account. Same problem as you experienced, so thank you for emphasizing that. Thanks for your contribution!

  • Pardeep Singh Basi

    Hi nicely written article, but I am surprised you didn’t mention freeagent?

    • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

      Hi, thanks! That’s what you get when making a top 5, there will always be a few who didn’t make it to the list :-) Are you using FreeAgent yourself?

      • Pardeep Singh Basi

        Hi Jacco, yes I am and I do believe it covers all the above mentioned features? All for a flat fee ☺

        • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

          Great, thanks! I saw they have a free 30-day trial, so people can try this one as well.

  • http://www.invoicera.com veronikatondon

    Hi…Thanks for the list mentioning top 5 accounting tools for freelancers & small businesses. I was a bit surprised not seeing Invoicera in the list. I would like to recommend Invoicera as it has all the features given above & it is one of the best online invoicing application so far.

    • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

      Hi, looks great. Certainly worth a shot!

  • Jakob Petrussen

    Thank you. However, I think Nutcache greatly deserves to be on your list. Very intuitive and fully free!

    • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

      Hi Jakob, I believe Nutcache seems more to be a time tracking tool with invoicing functionality. My next article will cover the top 5 time tracking tools (unfortunately without Nutcache, but you’re free to mention it in the comments then :-)

  • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

    Hi Reshma,

    you’re welcome, it’s a cool product. Good to know about the vendors functionality, thanks!
    Jacco

  • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

    Hi Foysal, thank you for the compliments. When checking out InEx I couldn’t find any pricing details. Is it forever free or am I missing something?

  • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

    Hi, seems your first comment got stuck in queue because of the link :-) Thank you for this extra info!

  • http://www.buildyourownwebstore.com/ Jacco Blankenspoor

    Ok, until proven otherwise we will consider this a free tool :-)

  • http://LessEverything.com Allan Branch

    Jacco, thanks for reviewing LessAccounting, if you’re ever in Florida, give us a shout, we owe a beer and a hug.