Automate Your Bookkeeping
As a freelancer, it’s important to focus as much of your time as possible on the work you have or getting the work you need. And that means minimizing administrative tasks. Take bookkeeping, for example.
Bookkeeping is critical for maximizing tax deductions and monitoring the overall health of your business, but it’s a royal pain. In this post I’ll show you how to automate bookkeeping tasks so you can stay focused on existing jobs while marketing your talents.
Decide on a bookkeeping system
Many people still hand-write their income and expenses in a notebook or Excel spreadsheet and then type up invoices in Word or a similar program. This can work just fine if you don’t work a lot of jobs. If, however, you find yourself with multiple clients, invoices and expense reports, you will spend more and more of your time trying to keep everything together. A dedicated, automated bookkeeping system and/or bookkeeper is a necessity at this point.
For years Quickbooks has been the lord and master of small business accounting software. But for me it was just too expensive, too complicated, and not Mac-friendly. And for most independent freelancers without the need for payroll it’s just too big and bulky.
Use online accounting tools
After trying several Mac-based programs I decided to take my bookkeeping online. This was a big decision, since going online with something as private as bookkeeping meant possible exposure to the outside world. If you go this route, you must be confident in the security of the online solution and have a backup plan such as the ability to export whatever you enter into the system.
I’ve been using online invoicing software for three years and am very happy with it so far. I started with Blinksale, which was a good start. At the time all it did was create invoices and run simple reports. I still think it’s a great solution for anyone who wants an easy invoicing program that works.
Two years ago I moved over to Freshbooks. I wanted to integrate time tracking, estimates, richer reporting and some other features into my setup. A few friends were using Freshbooks so I decided to give it a try. However, I still needed a simple online cash accounting system. That’s when I found Outright.com.
Integrate before you automate
While Freshbooks includes expense reporting, it’s a little more involved than Outright. Outright integrates seamlessly with Freshbooks and has beautiful reporting features. I can run a profit/loss statement at the press of a button. I can run monthly, quarterly and annual reports just as fast. And I can quickly see who my highest paying customers are and where I need to cut expenses. In many respects, Outright has become the digital dashboard for my business.
And the best part is Outright is free. At least right now. Freshbooks and Blinksale are free to start, but as you get more clients/invoices you’ll need to pay a monthly fee. There are many other free and online options as well.
Automating the system
The biggest challenge with automating any software solution is actually getting the data into the system. How do you automate that? This is where a system plus a virtual assistant can really help.
I run my entire business using two dedicated credit cards and Paypal so there’s always a paper trail. At the end of the month I download my statements into an encrypted Excel sheet and send it to my VA for entry into Outright. Using this system, my total time each month for bookkeeping is about 15 minutes.
Is it perfect? No. Is it expensive? It depends on your perspective. The monthly cost of Freshbooks plus my VA’s time is around $35. For me it’s a great value. It’s cheaper than a bookkeeper, I can check the pulse of my business at any time and am free to pursue existing projects and opportunities.
Your Turn
Do you think automating your bookkeeping is worth doing or not? How would you do it differently? Please leave your thoughts in the comments.
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I agree bookkeeping should be automated. You should also give SUBERNOVA a try, http://www.subernova.com. You can send estimates and invoices, even lets you brand the domain of invoice and estimate links with your own.
Yes your bookkeeping should definately be automated, I’ve been using Freshbooks for the last year and all my clients find it easy to use and often comment on how professional I look as a company by using a package like this. I’ve also been very impressed with the constant upgrades that Freshbooks does – there is always a new feature they are implementing to make my life easier.
I’d recomend freeagent if you’re from the uk.
http://www.freeagentcentral.com/
I am planning to switch from QuickBooks to something else. I am on a Mac, so an online solution would work best. I have looked into Freshbooks, but it costs the same as QB online and has half the features. Sounds like Outright will be charging in the future, so the total cost will be higher. Not sure I hate QB enough to switch to a rigged together system using beta software that is online (potentially unsafe) and costs more.
Still looking for accounting software ideas.
Hey Shanna, this is Kevin from Outright.com. Just wanted to let you know that the core service will remain free. We will add other paid services (like the online 1099 filing service we launched last month: http://outright.com/contractors/1099) but the core bookkeeping will stay free. Hope that helps.
What about Billings from Marketcircle? Is anybody using that software? How does it compare against Freshbooks and Outright? I’m trying to figure out what to get when I start my business. I’m running a Mac btw
For me it’s extremly necesary to have a clean book keeping, why? one short reason you can be paying wrong amounts of taxes and you’ll be lost on your company’s budget.
Another great option to look at is WorkingPoint. Not only do they have a free version, but their paid version is extremely inexpensive and comes with a ton of extremely valuable features (especially for reporting purposes at tax time!). It also handles CRM, inventory and other broader functions that are extremely valuable in streamlining a freelancer’s bookkeeping processes. (And, because the free version comes with two accounts, the freelancer can keep one and give the other one to a bookkeeper or CPA, which often works really well once it is time to enlist help.)
I used to automate my billing until freelance work died down. It is definitely worth doing. Its a real time saver in the end.
Can you recommend a good VA service?
I can recommend me!
Now if somebody could just tell me how a VA is supposed to automate her own bookkeeping data entry….
This is almost exactly how I “automate” my bookkeeping now. However, I believe I’m missing the VA component. Where do I find a VA, and how do I get started with one that’s trustworthy?
The only trouble I’ve had with Freshbooks is when contractors don’t want to setup a free account to send me their invoices. Otherwise, it does just about everything a small business needs.
One extra component is shoeboxed.com to manage receipts: paper or electronic. Shoeboxed even integrates with Freshbooks now.
The last problem I have is that I have too much information that doesn’t always match up across all these systems: Freshbooks, Outright, Shoeboxed, and then Mint.com for personal finances. It can drive you a little crazy. Therefore, I’m just about ready to take the plunge into Quickbooks. But if all I need is a VA, that could be ideal.
[quote]I have too much information that doesn’t always match up across all these systems: Freshbooks, Outright, Shoeboxed, and then Mint.com for personal finances. It can drive you a little crazy.[/quote]
That is exactly what I am worried about. If I can’t get the hang of QB after 5 years, and I have tried, then getting things to sync up across apps will be a problem. I was under the impression the different add-on apps worked with Freshbooks a little more cohesively, but that doesn’t seem to be the case. Maybe I am wrong about them being add-on apps?
I think a VA might be the answer.
I’m glad you mentioned Shoeboxed, that is something I have been looking for.
Couldn’t agree more with this post. I’ve been using Freshbooks for awhile and have been very pleased with it overall. I just discovered Outright in the past week, so I’m happy to hear you give it high marks. I’ll now put it to use. Thanks.
For me excel works great. Besides that, everything is on my computer.
” The monthly cost of Freshbooks plus my VA’s time is around $35. ”
You realize that in 3 months you could pay for Quickbooks right? Quickbooks is completely automated (syncs to your bank accounts), allows you to do online bill pay, runs reports, and now with the purchase of mint.com is completely online.
I’ve been using LessAccounting.com for a year now. It’s free to start but I soon outgrew the free level.
You can do everthing from creating estimates, turning them into invoices, to expense tracking and other accounting tasks.
However, I’m now looking for a bookkeeping/accounting software rather than keep paying a monthly fee for an online service.
I’m considering Quickbooks, since it comes highly recommended by my freelancing friends. It looks bloated for my needs though.
Another solution I’ve found is Tinybooks (Mac only). The interface isn’t pretty but it has the features I need. I’m taking advantage of the free trial to make a decision.
Hope this helps!
I have attempted to try LessAccounting.com, and it looks great. But it lacks some of the goodness that FreshBooks offers. Personally, I find it frustrating that I am encouraged to use multiple products from different companies. It’s positive encouragement, but it’s still like using several different software programs to do one all-encompassing thing. And my tax person doesn’t really want to get a login for some new system, when they are used to industry-standard software like Quicken or Quickbooks.
So, I may soon sacrifice things for Quickbooks. But I use a Mac, so it’ll have to run in Windows 7 / Parallels. But that kinda sucks because Parallels takes up a lot of resources, depending on the configuration.
I need a VA (Virtual Assistant), and am awaiting response about that question…
I used quicken for years until, when WAMU became Chase (and they never asked me!) and I got duplicate entries… which Quicken says can’t happen. So I’m changing banks… to a local credit union (http://moveyourmoney.info/) and switching to mint.com … and yes I think getting as automatic is critical… not just for taxes but because when I’m clear on my money everything, even writing, gets easier.
Thanks for the article… I write about dealing with money fairly often.
you know Intuit owns QuickBooks & Mint.
yeah, I do know that, but leo laporte, the tech guy uses mint… talked with him about it and he wishes it were otherwise… thanks tho’ it’s important.
Fantastic article Mary, thanks for trying Outright.com and more so for the support! With what we have planned I think you’ll find Outright.com will shortly put your entire back office on auto pilot so you can focus on your success
@Shanna rest assured Outright.com is not going to start charging for the fundamental bookkeeping experience. We don’t believe in it; we’re trying to help people make a living and deal with the IRS, to do that, you have to keep your records straight. That said, certainly we have to make money but you’ll already notice that we’re doing that by adding things that people might want. It costs $5 to have us e-File 1099s with contractors and the IRS; if you want to do it yourself, great, we’ll even help with that by collecting taxpayer identification (the W-9) at no cost.
@Kevin jump in our community and reach out to a bookkeeper or VA; you can give them direct access to your books and be off and running. On another note; I’m confused about what you’re doing with Freshbooks and Shoeboxed because both integrate with Outright – plug them in through Outright and everything syncs. If still not working, drop us a line, we’re very hands on.
Any chance of a lessaccounting.com integration?
I would have to say I am a little disappointed. I found the fact that in order to bring a CSV into Outright you have to modify it in Excel a little annoying. I am still looking it over though!
For Jonas, (and anyone else who’s a Mac user) I’d really recommend Billings from Marketcircle, (http://www.billingsapp.com).
I can honestly say it’s one of the best pieces tracking/billing software I’ve ever used. I’m dyslexic, so finance is not my strong point, but it’s very intuitive and easy to use and empowers you to a very high level.
I’ve also got the companion app on my iPhone which is a brilliant combination and well worth the extra expense.
I find it completely indispensable and can’t really image how I’d get by without it.
I’ve been using Freshbooks for the last year and all my clients find it easy to use and often comment on how professional I look as a company by using a package like this
You missed the one bright star here. I have tried just about everything out there and have ended up with QB for years and always hated it, but it didn’t have gaping holes like all the rest. I now have switched everything over to lessaccounting.com. It integrates my paypal, my bank account (syncs both nightly),automatic bank reconciliation, invoicing (both paper and digital), Shopify integration for my online store, and all the reports I needed from QB without all the crap I didn’t need.
The twitter spam from less accounting has been enough to keep me from even looking at them. Any time I tweet something related to accounting, @lessaccounting will spam me to say give up on “sick books” and try something “dope.” How professional.
Had no idea about the twitter thing. Shouldn’t let that get in the way of an unbiased tryout. I feel your though, QB has been spamming my inbox for the last 6 years as well. I can say I don’t get any email spam from them. I looked extensively and for my needs it was a perfect fit. I am a designer, illustrator etc and not an accountant, in fact that is probably my weak point all round. So I was in need of something that synced all my accounts together, reconciled what the money was for (without me being too involved) and would allow me to make invoices and accept payments. I have simple needs but like them automated so I can work on what I do best and not struggle with paperwork.
lessaccounting looks good, but mint seems to do what I want and is free… why should I use lessaccounting?
Good for you then. I just need something beefier I guess. I wish there was a free app that did everything I needed and was automated enough to keep me out of it as much as possible.
@Jamie
Give me a list; what are we missing at http://outright.com? To be clear, it is designed for self employed professionals and freelancers; which is to say, it isn’t accounting, nor will it be so – not dealing with accruals or depreciation, etc., or just bookkeeping (the site will manage W9s, file 1099s, run your Schedule C for you, etc.).
That said, we’re building it to be exactly what our users need so if we have a gap, please let us know! (we’re working on a slick integration with banks: http://bit.ly/a0DfpX)
Thanks everyone for these great comments. Glad this was helpful and seemed to spark a lively conversation.
@Ryan, @Lexi and @Kevin Regarding VA services: I’ve been using AskSunday http://www.asksunday.com for about a year and a half. They are good for general admin tasks and things like making appointments. For my bookkeeping I use someone I know personally and can trust with sensitive information. I think any higher end VA can do that, but I just happened to know someone in my area. I’ve also used VA resources from assistu.com. Pro Resource http://www.proresource.com/ has some great tips about getting the most from outsourcing. I subscribe to their newsletter and highly recommend it.
@SunfishInteractive Sounds like Quickbooks works for you, and that’s great. Cost is only one of three factors for me. For what I need, Quickbooks is too big and bulky, and not Mac-friendly. My goal is to make the best use of my time, which means minimizing administrative work so I can focus on the business.
@Paul Thanks for your kind words, but thanks also for making such a great app. I’m really looking forward to seeing what’s coming
@Jamie Thanks for suggesting lessaccounting.com. I knew there were other solutions out there and was just writing about what worked for me. Glad to hear you’ve also got a good solution.
I just started using Outright starting this calendar year so I’m right there with you in thinking it is a real time-saving way to do your accounting. I would say it is even easier than using timetracking softeare.
I use MYOB for my accounting. It works on both the Mac and PC platforms.
I have fought with QuickBooks on Mac for the past 2 years and finally made the switch to LessAccounting. Better UX was big for me, but so was being able to be totally mobile (I used QB on my desktop). I would’ve liked this article to give a few more options besides Outright so we could compare, but this is a great lesson for us all I think.
Well I started with QuickBooks about 3 years ago when I first starting I.T consulting and then I realized i needed a more mobile solution.
Don’t understand me wrong, in the hands of an able-minded accountant (i also hold a business degree) Quickbooks is a very powerful accounting solution. I was a fan of it mainly because my bank exported my monthly statements into a downloadable version of themselves that could be imported into quickbooks.
The only reason why I switched was because I operate virtually everywhere. My office computer, my home computer, my laptop, my iphone, the clients computers.
I needed an accounting (or in this case; book keeping) solution , that obviously needed to be web based, that had also had project management and CRM integrations available.
I do agree that most single freelancers probably wont be using that big of an eco system ( PM – CRM – Accounting ) however, it was needed by me.
After much research, i finally found xero (http://xero.com) The only drawback of xero is that it cannot track inventory. Which is not that big of deal if you are a service based freelancer.
It does handle all my needs, as well as automatic paypal reconciliations, and it handled my bank reconciliations the same quickbooks did. Also I really like how the invoices integrate with pay online and cut-able paystubs.
I have also integrated it with http://postalmethods.com to send by paper if need be.
The iPhone app is pretty handy, and mixes well with my other iphone apps to allow me to run my business pretty much from iphone, not to go off track here, but business iPhone apps are…
WorkFlowMax (Web App PM)
oDesk (Outsourcing)
Xero (Web App Accounting)
Remember The Milk (Getting Things Done)
Evernote (note taking)
Dropbox (file storaage)
You Mail (visual voicemail / email )
Google Calendar Web Shortcut
okay now I’m going off on a tangent, anyways, Xero rocks and Vouch for it.
I have also tried
Freshbooks, Free Agent, and KashFlow
While I completely agree that bookkeeping should be automated, as a web applications developer I found the idea of not creating my own system a bit absurd. I created my entire project management and auto-invoicing system for my web hosting and web development company from scratch. It took me quite some time, but was worth it in my opinion. Like the old adage goes, if you want something done right…
I appreciate the links though, I’ll check them out and maybe get some new ideas for ways I can my own system better . I may write my markup and scripting code from scratch, but that doesn’t mean a little inspiration isn’t helpful sometimes.
I don’t understand why some people use Mint for business. How are they getting the business reporting that they need such as P&L statements?
Estrahon, I don’t know the answer to that yet… I use an accountant and this year it will still be quicken….
Outright looks good!
The iPhone app ProOnGo Expense is a really easy way to keep track of all your business expenses so you don’t have to hold on to all your receipts and total them up at the end of the month.
I usually lose half of my my business expense receipts so this is definitely the tool for me
Try Xero (http://xero.com) + MinuteDock (http://minutedock.com) for a great combination of accounting and time tracking that are perfectly in sync.
I gave up on web based applications (there aren’t really any useful ones in the UK) and just started sticking everything into excel. It’s not “pretty”, it’s not “web 2.0″, but it works, and it’s completely reliable.
It’s also free.
Update on VA services: AskSunday has not been very responsive lately, so I decided to cancel my account and try TimeSvr. It’s too bad because AskSunday was really good before they got too busy. If you use any of these services, make sure you get a trial period and really test their effectiveness.
Wanted to thank everyone here for the wise input… I’m going to try outright which I had never heard of before.
Thanks!
or maybe not… I don’t see how to download from my bank/credit union… I’ve sent email to support… none the less, I’m grateful for this thread.
It’s coming Anne; you can even let us know which you need here:
http://community.outright.com/answers/what-bank-integrations-should-we-provide-as-part-of-our-bank-integration-7
I’ve gone through a bunch of online tools, including LessAccounting, Xero, Outright and WorkingPoint. For me, the most important factor in choosing the one I’d use was automation – specifically from my bank account, credit cards and PayPal.
I’ve found that Outright works the best for me, even though they don’t do bank import yet. I really liked Xero and WorkingPoint initially, but they didn’t sync anything. And LessAccounting’s sync didn’t work for my bank account anyway, and they don’t sync with a lot of the other apps I use, and they don’t seem to be very keen on integrating things they don’t want.
I currently use Freshbooks and Outright, and the sync works perfectly with PayPal for my invoicing. I love Freshbooks, as I’m able to coordinate with other vendors and the invoicing works very well. The other options within the above packages just don’t cut it for me. I wouldn’t worry too much about using several apps as long as they sync. For me, Quickbooks just is more work than it needs to be, and I really can’t stand the hoops it puts me through.
I agree about Outright. It came through for me in the end, when Shoeboxed and other services simply complicated things. Here’s my ideal situation so far:
* Freshbooks.com
* My one business credit card (website)
* Outright pulls-in the credit card expenses and Freshbooks invoices and expenses
Simple enough. Done. And I can enter any random expenses directly to Outright OR Freshbooks directly. I may start entering expenses into Freshbooks only…
Hi Eric, thanks for the comment. Freshbooks and Outright are indeed a great combination and the engine behind my bookkeeping automation. I highly recommend them to anyone who wants less accounting hassle so they can spend more time on billable work
I’m concerned about having all of my financial information online at a source other than my bank. Can anyone remark about the security of these tools.
btw I do use Freshbooks but have started migrating over to Billings from MarketCircle ’cause it integrates nicely with Daylite. Freshbooks excels for regular, time based billings such as web hosting fees, but all other invoices are easily managed with Billings.
I love the idea of the services, just concerned about having all of my information out on the internet.
Any thoughts?
I’d recommend using ProOnGo Expense for tracking business expenses.
I have a two different expense templates I need to fill out and I was able to work w/ the developers and integrate both reports…so when I record my expenses on my phone, they automatically format to my client’s expense templates.
Timely information…keep it up!