Best Accounting Software for Self-Employed

Accounting software, which some describe as the financial wizard behind the scenes, is the digital backbone that modern businesses rely on. This software isn’t just a tool; it’s the compass that guides businesses through the turbulent waters of finance, helping them navigate the intricacies of income, expenses, assets, and liabilities.

Businesses need accounting software to maintain accurate financial records, track cash flow, ensure compliance with tax regulations, and generate reports for informed decision-making. It streamlines financial processes, reduces manual errors, and saves time, making it essential for effective financial management and long-term business success.

QuickLook: Best Accounting Software for Self-Employed

Why Self-Employed and Freelancers Should Consider Getting Accounting Software?

Accounting software is a valuable tool for self-employed individuals and freelancers. It enhances efficiency, ensures compliance, simplifies financial management, and provides valuable insights. Ultimately, it empowers freelancers to focus on their work while maintaining control and clarity over their finances.

Best Accounting Software for Self-Employed

There are several freelancer accounting software options on the market. For the self-employed, the cost of accounting software may be the most important aspect, but there are several things to consider when choosing the best software for you.

QuickBooks

QuickBooks is widely used by small and medium-sized businesses for accounting and financial management. It has a version specifically designed for self-employed individuals (QuickBooks Self-Employed), which helps to track income and expenses, manage invoices, and organize tax information.

Key features of QuickBooks software include:

• Expense Tracking: QuickBooks Self-Employed allows users to connect their bank accounts and credit cards to automatically track expenses. It categorizes expenses and helps users to separate personal expenses from business ones.
• Invoicing: The software offers customizable invoice templates that allow users to create and send professional invoices. It also tracks invoice status, sends payment reminders, and helps manage payments received.
• Tax Estimations and Deductions: QuickBooks Self-Employed provides a robust tax module that helps users estimate quarterly tax payments, track deductible expenses (like home office expenses, mileage, and more), and organize income and expenses in a tax-friendly manner.
• Mileage Tracking: With a mobile app, QuickBooks Self-Employed can automatically track mileage while users are on the move, categorizing miles as business or personal and helping maximize mileage deductions at tax time.

Pricing:

• Simple Start: $15 per month
• Plus: $45 per month
• Advanced: $100 per month

Pros:

• Ease of use
• Tax management

Cons:

• Limited scalability 
• High cost

Get started with QuickBooks

Freshbooks

FreshBooks is known for its simplicity and is often chosen by freelancers and self-employed individuals for managing invoices, expenses, and time tracking.

Key features of Freshbooks include:

• Invoicing: FreshBooks offers a powerful invoicing feature that allows users to create professional-looking invoices effortlessly. It includes customizable templates, the ability to accept online payments, and functionalities to automatically send reminders for overdue payments.
• Expense Tracking: The software allows users to easily track expenses by connecting bank accounts and credit card accounts to the software. This feature automatically categorizes expenses, making it easier to manage and monitor business spending.
• Time Tracking: FreshBooks includes a time tracking feature that enables users to log hours spent on various projects and automatically bill them to clients. This is particularly useful for freelancers and service providers who bill on an hourly basis.

Pricing:

• Lite: $8.50 per month
• Plus: $15 per month
• Premium: $27.50 per month

Pros:

• User-friendly interface
• Customer support

Cons:

• Limited advanced features
• Higher costs

Get started with FreshBooks

Zoho Books

Zoho Books is a cloud-based accounting solution tailored for small businesses. It provides an easy-to-use platform and has functionalities, such as invoicing, expense tracking, and simplified taxation processes, useful for self-employed people

Key features of Zoho Books include:

• Invoicing and Billing: Zoho Books enables users to create customized and professional invoices, track their status, send payment reminders, and manage receivables.
• Expense Tracking: The software allows users to record and manage all business expenses. By connecting bank accounts, users can directly import transaction data and categorize expenses, making it easier to monitor and control financial outflows.
• Bank Reconciliation: Zoho Books allows you to sync your bank accounts with the software, providing automated bank feeds and facilitating seamless bank reconciliation, ensuring all financial data is accurate and up-to-date.

Pricing:

• Standard: $20 per month
• Professional: $50 per month
• Premium: $70 per month
• Elite: $150 per month
• Ultimate: $275 per month

Pros:

• Integration capabilities
• User-friendly interface

Cons:

• Limited payroll functionality
• Scaling for larger businesses

Get started with Zoho Books

Netsuite

Oracle’s NetSuite is a cloud-based suite of applications, offering solutions that cater to financial management, customer relationship management, and e-commerce. It might be more than a self-employed individual needs due to its wide array of functionalities and focus on larger business operations.

Key features of NetSuite include:

• Comprehensive Accounting: NetSuite provides a robust accounting solution, including general ledger, accounts payable, accounts receivable, and more.
• Order Processing: It automates order processing by managing sales orders, billing, and fulfillment effectively, and provides centralized order management to enhance customer experience.
• Customer Data Management: Manages comprehensive customer data, including purchase history, communication, and segmentation.

Pricing:

You can subscribe to NetSuite for an annual license fee. Your license is made up of three main components: core platform, optional modules, and the number of users. There is also a one-time implementation fee for the initial set up.

Pros:

• Comprehensive financial management
• Scalability and customization

Cons:

• Complex implementation
• High costs

Get started with Oracle’s Netsuite

Xero

Popular for its cloud-based platform and usability, Xero is often favored by small businesses. Xero is quite user-friendly and offers a range of features that can be beneficial for self-employed individuals, such as easy invoicing and expense management.

Key features of Xero include:

• Online Invoicing and Billing: Xero allows users to create and send professional invoices to clients and customers directly from the software. You can customize invoices with your branding, set up recurring invoices for regular payments, and accept online payments through various payment gateways.
• Bank Reconciliation: One of the key features of Xero is its bank reconciliation functionality. It simplifies the process of matching transactions from your bank and credit card accounts with those in your accounting records. This helps ensure accuracy in your financial data and makes it easier to identify discrepancies or missing transactions.
• Financial Reporting and Analytics: Xero provides a range of financial reporting options to help understand your business’s financial health. Users can access standard financial statements such as profit and loss (P&L), balance sheets, and cash flow statements.

Pricing:

• Early: $13 per month
• Growing: $37 per month
• Established: $70 per month

Pros:

• User-friendly interface
• Accessibility and collaboration

Cons:

• Cost of add-ons
• Limited inventory management

Get started with Xero

Wave

Wave is known for its free accounting and invoicing functionalities, which can be particularly helpful for freelancers and self-employed persons who need to manage their finances on a budget.

Key features of Wave include:

• Expense Tracking: Users can easily record and categorize expenses in Wave. You can upload receipts, manually enter expenses, or link your bank and credit card accounts to automatically import transactions.
• Bank Reconciliation: Wave simplifies the process of reconciling your bank and credit card accounts. You can match your transactions with those in your accounting records to ensure accuracy in your financial data. This feature helps identify discrepancies, errors, or missing transactions, which is crucial for maintaining financial integrity.
• Financial Reporting: While Wave’s reporting capabilities may not be as extensive as some paid accounting software, it offers essential financial reports like P&L statements, balance sheets, and cash flow statements. These reports provide valuable insights into your business’s financial performance and are especially useful for tracking your income and expenses over time.

Pricing:

One of the most significant advantages of Wave is that it offers a free accounting software solution. This makes it extremely cost-effective for small businesses and freelancers with tight budgets. While some optional paid services are available, such as payroll processing and credit card payments, the core accounting features remain free.

Pros:

• User-friendly interface
• Affordable and free

Cons:

• Limited advanced features
• Customer support limitations

Get started with Wave

Sage 50 Accounting

Sage 50cloud is known for its comprehensive features suitable for small and medium-sized businesses. This accounting software might be more feature-rich than needed for a sole proprietor or freelancer, but could be suitable if your operations are complex or if you plan to grow rapidly.

Key features of Sage 50cloud include:

• Financial Management: Sage 50cloud provides comprehensive financial management tools, including general ledger, accounts payable and receivable, and bank reconciliation. Users can easily record transactions, reconcile bank statements, and generate financial reports.
• Payroll Processing: Sage 50cloud offers integrated payroll processing, allowing businesses to handle payroll tasks efficiently. You can calculate employee salaries, deductions, and taxes; generate pay stubs; and manage payroll compliance. This feature helps streamline the payroll process and ensures accurate payments to employees and tax authorities.
• Cloud Integration: With Sage 50cloud, you can take advantage of cloud-based features, enabling you to access your financial data from anywhere with an internet connection. This facilitates collaboration among team members, accountants, and other stakeholders. It also offers secure data backup and synchronization between devices, ensuring data integrity.

Pricing:

• Pro: $595 per year
• Premium: $970 per year
• Quantum: $1,610 per year

Pros:

• Comprehensive financial management
• Custom reporting

Cons:

• Significant upfront costs
• Learning curve

Get started with Sage

What Features to Look for in Accounting Software for Self-Employed

When choosing accounting software for self-employed individuals, it’s essential to consider features that cater to the specific needs of freelancers and sole proprietors. Here are some key features to look for:

Expense Tracking

The software should have the capability to track and categorize business expenses, including receipts and invoices. It should allow you to easily input and organize your expenses for tax purposes.

Invoicing and Payment Processing

Choose software that enables you to create professional-looking invoices and accept online payments. It should have features such as customizable invoice templates, automatic payment reminders, and integration with payment gateways or platforms like PayPal.

Tax Preparation and Reporting

Look for accounting software that can handle self-employed tax requirements, such as calculating estimated tax payments and generating tax reports. It should simplify the process of filing taxes and provide accurate financial data needed for tax purposes.

Bank Reconciliation

The software should be able to import and reconcile bank statements, making it easier to keep track of your financial transactions and ensure that your records match your bank statement.

Integration with Other Tools

Consider whether the accounting software can integrate with other tools you use, such as payment processors, e-commerce platforms, or project management software. Integration can streamline your workflow and save you time by automatically syncing data between different systems.

Empower Yourself, Enrich Your Business

In the realm of self-employment and freelancing, accounting software isn’t just a practical tool. Whether you’re tracking expenses, crafting invoices, or navigating tax compliance, the right accounting software becomes your trusty compass through the financial labyrinth. 

From the intuitive ease of QuickBooks to the budget-friendly allure of Wave, there’s an accounting software solution tailored for you. So, embrace the digital wizardry, simplify your financial life, and let your entrepreneurial spirit soar with the support of these invaluable tools.

FAQs

Can I use accounting software for self-employed people even if I have no prior accounting experience?

Yes, you can use accounting software for self-employed individuals even if you have no prior accounting experience. In fact, many accounting software solutions are designed to be user-friendly and intuitive, precisely to cater to individuals who may not have an accounting background.

Does accounting software for self-employed provide invoicing capabilities?

Yes, most accounting software designed for self-employed individuals provide invoicing capabilities. Invoicing is a fundamental feature in accounting software, especially for freelancers and self-employed professionals who need to bill clients for their services.

Can accounting software for self-employed help me with tax preparation?

Yes, accounting software for self-employed individuals can be a valuable tool for tax preparation. However, it’s important to note that it does not replace the need for tax expertise. If you have complex tax situations or questions, it’s advisable to consult with a tax professional or accountant to ensure accurate and compliant tax filings. 

Is it possible to integrate accounting software with my bank accounts as a self-employed?

Yes, it is possible to integrate accounting software with your bank accounts as a self-employed individual. Many accounting software solutions offer this feature, allowing you to connect your bank and credit card accounts directly to the software.

Can accounting software for self-employed generate financial reports?

Yes, accounting software for self-employed individuals can generate a variety of financial reports. These reports provide valuable insights into your business’s financial health, profitability, and overall performance.