Choosing the best accounting software for freelancers

It may sound like I’m not being very imaginative or helpful but the honest answer to the often-posed question – ‘Which accounting software is best for freelancers?’ is this -- it’s the one that works best for you, writes Graham Jenner, founder of tax and accountancy firm Jenner & Co.

The accounting software you don't want (and do want)

Accounting software that is unduly complex for your needs as a self-employed sole trader, or that is time-consuming to enter information into and check, will ultimately become a burden rather than a benefit.

Over the past few years, freelancers should know that there have been vast improvements in the types of software packages available. Generally-speaking, accounting software for single-person enterprises is increasingly able to integrate more and more with the day-to-day running of your business and broadly-speaking, that’s what you want.

What accounting software suits creative freelancers?

In various sectors or marketplaces, including the creative industries, and especially in light of the maturing of working from home and flexi office time, a cloud-based accounting system may be suit you best.

Need some brand names, platforms and providers to checkout?Well, Xero, Quickbooks and Sage are all able to offer self-employed freelancers a cloud-based system. Potentially helpful for you, Sage will also offer you a non-cloud-based version.In the main, we find that the big advantage of a cloud-based system is that it allows you to access your bookkeeping records any time, any place and on any platform.

Cloud accounting benefits (continued)

Cloud-based systems also reduce the paperwork requirements for your micro-business and most have the option to share a link with your accountant, meaning there is no longer any need to drop off your records in a plastic bag at the year-end!

These accounting platforms all work on a real-time basis and most also have a bank feed available. This is a very nice-to-have feature, as it enables bank transactions to be entered into the accounting software direct from your bank and serves to keep your records up-to-date.Most bank accounts allow this interaction, but you would need to check (in advance) that your bank is already on the list of approved providers with the software company of your choice.

A further perk -- most of the cloud-based systems have links with third party software providers. So payroll packages Stripe, PayPal, simPRO and WorkflowMax are usually link-able, with the effect that your bookkeeping package can become a ‘one-stop-shop’ for all of your business needs.

What goes into the cost of accounting software for the self-employed?

Be aware, there are of course monthly subscription costs for accounting software packages and the costs of these will depend upon whether they are cloud-based or non-cloud-based. The price tag also tends to reflect the level of service you require, and if there are any third party packages that can be added on. Obviously the more ‘bells and whistles,’ the more you’ll pay.

At the time of writing, Xero, Quickbooks, Sage all comply with Making Tax Digital for VAT purposes – but check before you subscribe. Some providers are looking at creating a link so that your year accounts can be filed with HMRC straight from their software package in the future. To my mind, that may be a step too far, as most freelancers would want their accountant to check the accounts before they are filed with HMRC.

Invoices, Purchase Orders and Job-Costing

Something else to consider -- Xero allows you to send invoices directly to clients (a feature which FreeAgent offers too), send purchase orders to suppliers, record time for billing or job-costing purposes, and a range of other functions.The best accounting software -- and probably the system you’d be difficult to find fault with -- constantly evolves, by which I mean it gets updated on a quarterly or other regular basis, ideally based on feedback received from users. That’s customers, just like you’ll be!

This article is only a quick-start guide to choosing the best accounting software for your freelance business.

So once you’ve digested the tips herein, it is important that you take your own time to review the software providers and packages on offer before subscribing. If you can find an existing user or two online – actual currently paying customers --that might help reassure you, or cause you to rethink, about the package you’re leaning towards.

Final considerations before you subscribe to software

In my experience, the best accounting software for freelancers should be user-friendly, such as being easy and quick to display details conducive to maintaining the cashflow of your business. Beyond that, go for the package that assists you with the running of your business and so, use any ‘free trial’ period on offer to endure it tangibly reduces your workload and accounting or bookkeeping hours, so that you can focus on growing your business or getting business in, rather than being bogged down by admin.

Penultimately, if you freelance while simultaneously being in a full or part time PAYE employment, it may be tempting to go for a package that enables you to track your personal finances, investments and assets. If you want that from an accounting software suite, then that is fine, but otherwise it just leads to additional time-inputting transactions.

Lastly, speak to your accountant regarding your final choice of software. They should be able to guide you on what your particular business needs from what has become the successor to spreadsheets, and should also have a good feel for what accounting software would be a good fit for you as an individual.