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Accounting Tools for Freelancers

TrinaRimmer's avatar
TrinaRimmer
Former Staff
8 years ago

There’s an old saying that “time is money,” a notion most of us can appreciate. But when you’re a freelancer, you’re actually living and breathing that truth every day!

Whether your freelance business consists of a few clients or side jobs, or is a burgeoning boutique e-learning shop, getting a grip on your finances is the only way to make informed decisions about your business. And when time is money, what’s the point of being in business for yourself if you’re not streamlining your administrative work and continuously reevaluating your goals to optimize both time AND money? That’s where accounting tools come in.

In a previous article, I dove into the world of time management tools—which are helpful to everyone. In this article I’d like to expand the focus to include tools that are especially helpful to freelancers: accounting tools. So let’s jump in and run through some apps and tools you might want to check out.

Billing

When you’re freelancing, getting paid (especially on time) is everything. Without the predictability of a paycheck, staying on top of your billings and monitoring your cash flow become essential to your survival.

Here are a few tools that can help make the cash flow and invoicing part of your freelance life a little easier to manage.

  • If you’re a solo shop or just picking up a few projects here and there on the side, you may not need robust invoicing software when PayPal’s invoicing feature will do the trick. PayPal invoices are easy to create and send from a desktop or mobile device, and you only pay a small fee when you’re paid. It’s also a great way to give clients the flexibility to pay you by credit card online, rather than waiting for a check to show up in the mail.
  • Paydirt, an app I mentioned in my rundown of time management tools, also offers invoicing, as well as features that scale well from individuals to small teams, like online quoting and estimating, integration with PayPal and Stripe for credit card processing of invoices, and simple reporting that allows you to see uncollected invoices or keep tabs on your productivity.
  • Due is an app focused on invoicing and on making payments easier for you and your clients. A notable characteristic is Due’s credit card processing for international transactions,  which makes a lot of sense if you do business with companies in other countries. Due also integrates with apps like Wave (for accounting) and Basecamp (for project management).
  • Harvest turns up on nearly every “tools for freelancers” list, and for good reason: it’s easy to use, scales well from individuals to teams, and is feature-rich. Harvest includes time tracking, expense logging, resource forecasting (via an optional add-on called Forecast), and invoicing. But perhaps its most appealing feature is how well it integrates with other popular apps for freelancers and small teams, like Basecamp and Stripe.
  • Although scalable from individual to small business, Freshbooks leans a little more toward small business in its product features. Overall, the features are comparable to Harvest—time tracking, expense logging, and invoicing. Freshbook’s prebuilt reports give you a quick way to save time when you’re crunching the numbers or prepping for tax time (more about that below). And it integrates with Bidsketch, Capsule CRM, Acuity Scheduling, and other small business apps.

Taxes

Freelancing is a great way to build your portfolio doing work that you love with more autonomy. But when it comes to tax time, every freelancer I’ve ever known expresses a bit of longing for the good ol’ days when the HR department took care of all that pesky paperwork. But tax time doesn’t have to be a headache when you’ve got tools to do the heavy lifting.

Many of the tools I’ve already highlighted, both here and in the time management article, offer reporting capabilities to make tax time a bit less … um … taxing. But here are a few others you might want to add to your list.

  • No list of accounting tools is complete without including Intuit’s Quickbooks. And Quickbooks’ new “Quickbooks Self-Employed” is pretty ideal for freelancers. Not only is the tool easy to use, but it’s popular, which means it integrates with most banks, allowing you to easily import your income and expenses. Quickbooks can even separate work and personal expenses automatically. Springing for the Quickbooks “Tax Bundle” gets you the added convenience of quarterly online tax filing and payments through TurboTax.
  • Wave is a feature-rich solution for freelancers and small businesses. It offers invoicing and payments, as well as a host of other features. When I’ve heard from folks who use Wave, it’s almost always to praise its accounting feature. Wave prides itself on being easy and intuitive, so if you’re someone who doesn’t use an accountant, this might be a good fit.
  • Xero is another online accounting app for small businesses. It offers features such as bank account integration for monitoring cash flow and reconciling accounts and the ability to invite a bookkeeper or accountant to collaborate. Speaking of collaboration, I like that Xero also has a partner program for accountants and bookkeepers who specialize in helping clients who use Xero. This is good if you’re cool doing some basic record-keeping but want the help of a pro from time to time.

This was just a quick overview of some standout accounting tools for freelancers, but there’s an ever-growing assortment of apps and innovations for supporting workers in the new gig economy. The ones I’ve highlighted here are just the tip of the tool iceberg, so I hope you’ll do your own research and share your recommendations with us here, on E-Learning Heroes. Leave your ideas in a comment below, share lessons learned with a new discussion in the Building Better courses forum—or follow us on Twitter, where we post the latest and greatest news about everything e-learning.

Want to try something you learned here, but don’t have Articulate software? Get a free 30-day trial of Articulate 360 to check out Storyline 360, Review, Content Library, and more. Also, be sure to come back to E-Learning Heroes regularly for more helpful advice on everything e-learning.

Published 8 years ago
Version 1.0
  • Very interesting, having been in my own business for close to 20 years I look at some of this a little different. All these app's are great to help you do a lot of the book work and accounting. But some things to think about are; you have got a project to do, you agreed on a rate of flat fee. You finished the project and presented the invoice. How do you really get paid.
    Two people you should get to be friends with. 1. a good attorney that has a background in this type of work. They can help you wite a good contract that gets signed by both parties so there are no missunderstandings on how and when payments will be made. Remember this project may take longer than a week. Can you live without a pay check for a month or two. Some companies want 30 to 90 day terms on payment. Some want a discount if they pay within 10 days of delivery. What happens if they don't pay? How do you collect? What are your rights, both under the laws of your state and the trems of the contract. 2. A good account. They will tell you what software to buy for your accounting. What you can deduct for your business and what you can't. Is all your travel deductable or not? Is that new computer you just paid $4,000.00 for completley duductable?
    Most business's fail because they were under funded, were not set up properly or run properly. Doctors have office managers to run thier business because they are good doctors not good businsee owners/managers.
    I hope this helps all of you to make and keep the money you work so hard to get.
    • TrinaRimmer's avatar
      TrinaRimmer
      Former Staff
      All very good points, Eric. A lot of the freelancers I've known didn't really think of themselves as a business until they've gotten stuck in tough project with no contractual "out" or, they've found that they didn't factor in what it would really cost to get the job done.

      I agree with you: the apps are just a nice start, but at the end of the day, you really do need a good attorney and a good accountant on your side.

      Thanks for reading and taking the time to share your experience with us. Congrats on 20 years in business, as well!
  • When I worked freelance, I always put aside a part of every check to pay my estimated state and federal taxes, By doing so right upfront, I had that money separated from my other funds so I was covered, no matter what and avoided "sticker shock" at payment time. I put 28% aside for federal taxes and 7% for state taxes, which was a tad high but within my comfort zone.
    • TrinaRimmer's avatar
      TrinaRimmer
      Former Staff
      A very smart idea, Al. Thanks for reading, commenting, and sharing that tip with us.
  • VictorMadison's avatar
    VictorMadison
    Community Member
    Most of the programs and apps you listed are "on-line" type programs. That normally means an annual fee or monthly payments. I like stand-alone programs like QuickBooks that you buy, install and run from your hard drive. This may be old fashion, but there are to many "ciber" thieves waiting to hack on-line programs and steal your information. As such, I use Quickbooks for project management and TodoMoo for time tracking.
    -Vic
  • What recommendations and advice do you have for business insurance? At the moment, I'm gathering quotes on Error and Omissions insurance. What are the recommendations?
    • TrinaRimmer's avatar
      TrinaRimmer
      Former Staff
      Thanks for reading and sharing your recommendation, Karl.
  • MalBez's avatar
    MalBez
    Community Member
    Have a look at Perfex on the code canyon - covers a lot of the above for a freelancer including proposals, estimates and support tickets
    • TrinaRimmer's avatar
      TrinaRimmer
      Former Staff
      Thanks for sharing that one, Mal! I'll go check it out.