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What is the Best Accounting Software for Entrepreneurs?

Think Entrepreneurship Quickbooks Freshbooks Accounting Software.36.18 AM

Income, outcome, sales, expenses, payroll, invoicing, inventory, taxes, etc., etc., etc.; ugh, accounting. Quickbooks and Freshbooks are two online accounting services that can make all of that stuff a whole lot easier. Quickbooks is considered an ‘industry standard’ for small business to midsize business accounting these days, a complex yet honed software that’s part of the Intuit suite (which also includes TurboTax). Freshbooks is a much newer cloud-based-only software that can do a lot of what Quickbooks can, but is geared especially toward the freelance and start-up industries, with some easy to use tools and a quirkier sense of humor.

Quickbooks

Quickbooks keeps track of your deposits and expenses by downloading your banking and credit card transactions. You can assign categories for each transaction—like “Supplies & Materials, Cost Of Goods,” or “Meals & Entertainment”—setting you up for tax time. When you first sign up, it goes back about three months, so several transactions may “need your attention.” This can be a bit of a time suck when starting out, but the system begins to recognize certain vendors as certain categories and will automatically match them, you just have to approve with a click.

Think Entrepreneurship Quickbooks Freshbooks Accounting Software.40.23 AM Keeping track of customers, vendors, and employees is also a breeze. Invoices can be emailed directly or printed, and payments can even be accepted through Quickbooks (for an additional fee). Expenses can be logged and later “matched” when they show up in your bank transactions (or just logged when they show up). In all packages but the very cheapest, you can also pay your bills from Quickbooks. Payroll is another additional service for an additional fee which enables you to keep track of each employee and help with taxes. All of this information can then be used to run reports on your business, presenting the information in easy-to-read graphs, and the data can be exported to email or Excel.

The big news with Quickbooks this year of 2014 is that the desktop software can finally talk between its Mac and Windows versions. It seems still to be in early stages of communication however, taking a few steps to prepare and convert the files back and forth, not a seamless dialogue, just yet. This is kind of a big deal if your accountant uses a PC and you use a Mac, or vice versa. In that case though, you’d probably do most day-to-day transactions in one system, and just export the final summaries/reports to the other. You can always export data to Numbers or Excel to view and work with them, but of course adjustments won’t be made within the actual Quickbooks software.

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Left Hand Toolbar

Quickbooks for Mac 2014 boasts, “Designed for Mac Users by Mac Users.” The interface looks like a typical Mac application, and has pretty straightforward and easy navigation, including a new customizable Left Hand Toolbar for shortcuts to your most-used features. The PC version doesn’t quite follow suit with the new and improved Left Hand Toolbar, but still seems to display all the necessary information, just in a more PC style.

Other 2014 newness includes better email tools to interact with customers, a cleaner and more screenspace-efficient income tracking interface, and improved bank linking, so you can link up and keep track of multiple bank accounts right on Quickbooks.

Quickbooks offers both online and desktop versions of their product. The desktop versions are more expensive upfront, with two different packages at $149.97 or $239.97. The online versions charge by the month, with packages: Simple Start for $12.95, Essentials, $26.95, and Plus, $39.95. Each tier comes with a few more features for ascending business size/complexity, like how many accounts can use it, or the ability to create 1099s. So online is more accessible up front cost-wise, and time-wise too—if you have a good internet connection. You can download it on the spot, plus it is cloud-based, so you can access it from any device, including your phone at the coffee shop. The desktop version seems a bit more clunky, but the one-time cost could last you several years, and your accounting ability is not dependent on your internet access. And to do the math, $12.95 per month multiplied by 12 months comes out to $155.40—the least expensive Simple Start ends up costing more than the desktop. However, the online software is constantly updated, not stuck in the year you buy it.

Freshbooks

Freshbooks “is simple and intuitive, so accounting isn’t intimidating,” says the website. Invoicing tools for freelance workers seem to be the company’s niche that they’ve chosen to focus on and set themselves apart. Almost as an afterthought the “And So Much More” section includes the rest of their accounting services, including tracking expenses and linking to your bank account, or generating accounting reports and dealing with sales tax. The site also emphasizes the convenience of the cloud-based system, so you can access the constantly-updated software from anywhere on any device—as long as you have internet.

The site’s text is conversational and light-hearted, with jokes, slangy sayings, and a witty squirrel mascot, presumably to please the Internet humor of freelancers. Under the “People” tab, instead of “Customers,” you’re dealing with “Clients” and “Staff and Contractors.” In the invoicing section, you can choose a “classic” or “clean” style of invoice; the classic style looks very square next to the Freshbooks’ own clean style. Think Entrepreneurship Quickbooks Freshbooks Accounting Software.35.38 AM

There is also a tab devoted to “Estimates,” so you can send estimates to potential clients. This section, however, only deals with concrete “items,” whereas under the “Time Tracking” section, you can create projects assigned to clients, with individual tasks therein, plus you can estimate the time it will take. But it does not seem to link this time estimate back to the email-able estimates of the Estimates tab.

For certain freelancers, collaboration is a big part of the job, and Freshbooks offers “Team Timesheets” to help keep track of team projects, organized by individual tasks and members. And since everything is cloud based, these timesheets could work for people across town or across the world. They put quite a bit of effort into keeping track of time and expenses on the job, and the team timesheets are a good example of the tools which Freshbooks has specifically created for freelancing life—and Quickbooks hasn’t.

Think Entrepreneurship Quickbooks Freshbooks Accounting Software.30.34 AM To keep track of expenses, Freshbooks offers a pretty straightforward interface. The expense categories are much less specific (and therefore there are fewer categories), and the mechanics of categorizing is not quite as developed as in Quickbooks, which learns to match certain vendors to certain categories. This lack in sophistication proves especially troublesome when multiple accounts are connected, i.e. checking and credit—when you pay your credit card, that counts as its own expense, and cannot be matched to the other expenses on the actual card, so the expense or lump of expense counts twice. There must be a way around that, but it was not obvious on the site.

Think Entrepreneurship Quickbooks Freshbooks Accounting Software.31.07 AM While there are indeed more fun illustrations throughout the Freshbooks site, there are fewer useful graphs and charts to illustrate any actual numbers. The home page has a pie graph to show spending categories and a bar graph for overall profit/loss, but otherwise the graphs don’t come often throughout the rest of the site. Even the “Reports” tab does not seem to have an option for graphs anywhere. Graphs and charts are important to quickly grasp overall trends and concepts; one would think they are important for all entrepreneurs, but perhaps graphs may be more for small business owners and less so for independent freelancers.

Freshbooks does make it easy to accept payment online through PayPal and a number of other avenues. An emailed invoice can have a link to for your clients to pay right then and there. This appears to be an included service with the price Freshbooks. Think Entrepreneurship Quickbooks Freshbooks Accounting Software.11.22 AM

After a free 30 day trial period, Freshbooks offers three pay-per-month packages: Seedling, $19.95; Evergreen, $29.95; and Mighty Oak, $39.95. Almost all of the features are included in all the packages. The main difference is the number of clients you can keep in your invoicing system—seedling cuts you off at 25, the next step up is unlimited. And how many additional staff can access your account, going from 1 to 5 to unlimited among the three packages.

Summary

Quickbooks has been around a lot longer and has more bells and whistles geared toward small business owners. The desktop version is nice if you don’t have internet and would rather pay one up front cost, though it won’t keep itself updated like the cloud-based software.

Freshbooks is quite a bit more ‘hip,’ and can definitely get the job done for freelancers with a straightforward service/billable time -based business.

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After trialing both softwares for my own product-based (as opposed to service-based) small business, I  would ultimately go with Quickbooks. Freshbooks was initially exciting and sleek, but the expense categorization was a big turn off, and Quickbooks is just better build for the mechanics of inventory, employees, etc., of a small business. That said, for writing this article—keeping track of time and invoicing—Freshbooks would make more sense.

  • Austin

    Quickbooks for sure, speaking from experience. Best part is when said entrepreneur grows the business or needs to have their taxes prepared, every accountant has QuickBooks and can just take the individuals records and get what they need out of the software instead of constantly asking for more information.

    • http://www.thinkentrepreneurship.com/ Pete Sveen

      Hey Austin! Great to hear about your Quickbooks recommendations. It means a lot coming from you as a professional in the world of accounting and having the opportunity to work with many entrepreneurs. I’ve used QB since 07 and am making the transition to the cloud based version. Any experience with how easy it is to sync that with your accountaint? Cheers – Let’s grab drinks sometime! Pete

      • Austin

        Hey Pete, I found it easiest having the client provide me a log in to their QuickBooks online version so I can just pull everything I need to and even make the adjusting entries so the books roll forward each year. Definitely a good way to go!

    • http://www.thinkentrepreneurship.com/ Pete Sveen

      Thanks for the expert ADVICE Austin!

  • Samir

    I like monchilla for the bookkeeping work

    • http://www.thinkentrepreneurship.com/ Pete Sveen

      Thanks for another idea!