The 4 Best Bookkeeping & Accounting Tools for Creative Freelancers
Freelance graphic designers and writers, do you invoice using Word or Google Docs? Does the thought of running a profit and loss report or creating 1099s for subcontractors make you more uncomfortable than a cat at the dog park? Maybe it’s a right brain/left brain thing, but we here at Beam Financial Group have found that creative professionals typically do not find joy — and that’s putting it mildly — in bookkeeping and accounting tasks.
But keeping financial track of your business is a necessary evil, and not everyone has the budget to outsource. That’s why we’re spotlighting these four best bookkeeping tool basics, chosen specifically to help any DIY bookkeeper get — and keep — a handle on their business finances.
TOOL #1: QUICKBOOKS ONLINE SIMPLE START SOFTWARE
One of the most frequently googled questions in this area is, “Is QuickBooks good for freelancers?” The short answer to that question is . . . yes! There are several reasons why this version of QuickBooks from Intuit is the best bookkeeping software for the self-employed creative:
It’s easy to connect all your accounts, from checking and savings to credit and debit cards
The invoice functionality — an essential task for creative freelancers — is strong but straightforward
You can quickly run multiple reports, from simple Profit & Loss to sales breakdown or income by client
It allows you to give your accountant access to your books with their own login
While the ease of QuickBooks Online Simple Start makes it some of the best bookkeeping software for freelancers, it’s important to get started correctly so that you don’t have to undo things later. That’s why we put together a basic course, Primed for Action, to get you up and running with QuickBooks Online. By breaking down its functions into bite-size tutorials, you’ll be able to not only use this essential accounting software with confidence but maximize its potential to help you grow.
Pros: log on from anywhere, very secure, strong invoicing and reporting options
Cons: learning curve for best practices, customer support is meh
TOOL #2: THE GUSTO APP
Have subcontractors that work for you? Then you need to go for the Gusto — the Gusto app, that is. Not only does this reasonably priced app integrate with QuickBooks, but when you use it to pay subcontractors, it can automatically create 1099 forms for them if you’ve entered their information. If you’ve ever had to provide 1099-MISC or 1099-NEC forms before, then you understand just how awesome this function is. The app can also file any required state paperwork related to subcontractors. Even better, should your business grow further, Gusto also handles payroll for W2 employees with ease, filing the appropriate local, state, and federal taxes for you.
Pros: incredibly knowledgeable customer support, cheaper than payroll services like ADP
Cons: requires set-up and syncing to work with QuickBooks
TOOL #3: A CLOUD STORAGE SOLUTION
One of the best apps for the self-employed is a good cloud storage solution for managing receipts. The time-honored shoebox system (as well as any other form of paper storage) is vulnerable to being misplaced as well as physical damage from fire, water, and critters. Storing it on your personal computer also leaves you exposed — if you suffer a tech failure, you don’t want to have to rely on the IRS for mercy when it comes to proving expenses during an audit. The IRS requires you to save receipts for three years and will choose a random sample of expenses for you to prove if you are audited, so a reliable filing system is critically important.
A digital, cloud-based storage system like Dropbox or Google Drive is a cheap (free at the level most freelancers will need), easy solution for keeping all your receipts in one safe place. You can set up some basic folders in the way that makes the most sense to you, i.e., office supplies, utilities, rent. Emailed receipts are already digital, and for paper receipts, you can simply snap a photo and upload it to your storage. Both Dropbox and Google Drive have phone apps so you can access them on the go. While there are several apps such as Hubdoc and Expensify that are designed to track expenses and send that information to QuickBooks Online, they are frequently more trouble than they are worth. A simple electronic organization system can be the most effective (and affordable) solution for the freelance creative.
TOOL #4: A FINANCIAL FORECAST
This tool can be created using old-school paper and pencil, but don’t let that fact make you underestimate its value. When it comes to accounting and bookkeeping for freelancers, this document is a must-have. Not to be confused with a budget, a financial forecast requires thinking through some of the business circumstances coming down the pipeline. At its most basic — which is sufficient for most creative freelancers — a financial forecast should include both your projected income and the expenses you anticipate over the next few months.
An accurate financial forecast can help you:
Achieve profit goals by determining how many new clients you must take on, how much in expenses you must reduce or how much you need to charge to hit a certain target
Estimate your tax liability by calculating 25% - 30% of your forecasted profit
Create a realistic budget for your business by revealing where your liabilities are and how much cash flow you will have
If you really want to use something digital to develop your forecast, Syft is a financial reporting and analytics app that allows you to easily create financial forecasts based on your historic data (it links up to QuickBooks Online). Choose their free basic plan, which has an auto-forecasting function, or one of their paid plans to customize a forecast for your business.
BOOKKEEPING FOR CREATIVES: A RECAP
Obviously, there is an app for everything, but most freelance creatives are looking to keep their spending under control. When it comes to apps and accounting software for freelance creatives, the key is to choose things that are effective, yet simple and affordable. QuickBooks Online Simple Start and Gusto are a great value if you are trying to do your own bookkeeping for freelance work, while a basic cloud storage option and your financial forecast can be cost-free. With these four tools, you should have your bookkeeping needs covered!
At Beam Financial, we believe you should feel connected to, in control of, and confident about your finances. In addition to our Primed for Action QB course, we also offer by-the-hour consulting for the freelance creatives who are going the DIY bookkeeping route. Contact us today to learn how Beam Financial Group can help you stress less and create more.