Bookkeeping is unfortunately one of those tasks that all creative professionals have to keep up with in order to stay in business.
At it’s core, bookkeeping is simply maintaining a list of income and expenses. Things get a little more tricky when you have to then categorize your income and expenses for tax purposes – but it doesn’t have to be a horrible time sucking task.
In this article I will highlight a few of the bookkeeping accounting software options available for freelance creative professionals, and how they fit into my business workflow.
For the purpose of this article, I will assume that most freelance creative professionals are sole proprietors or individual corporations. Things get very complicated very fast once you’re into the realm of staff and payroll in which case you’re probably better off hiring a professional bookkeeper.
Many of the tools mentioned below do have support for payroll, but I am only going to concentrate on the core features that individual freelance professionals are most likely to use.
Intuit Quickbooks Online
Quickbooks has been the accounting software industry standard for a long time – think Photoshop for accountants and bookkeepers.
The Quickbooks Simple Start plan is $15 per month and includes everything most freelance creative professionals need, including tracking sales tax which is not available with the base plan.
The big knock against Quickbooks is that it is overly complicated – which it is – so you should be prepared for a bit of a learning curve.
The best way to get started with Quickbooks is to hire a professional bookkeeper to help get you setup and show you what to do. After that it is pretty easy to maintain on your own.
There are two reasons why I use Quickbooks.
First, almost every professional in the accounting industry uses Quickbooks, so when you have to work with accounting industry professionals (such as your accountant) your files are compatible, the report formats are familiar and everyone know how things work.
Or if your business grows to the point where you need to hire a professional bookkeeper, your books are already set up in a format that they can continue with.
Second, the ability to download transactions directly from your financial institutions is life saving. There are many accounting software suites that can do this, but if you are used to manually entering transactions, this feature alone with change your life.
The one issue I have with Quickbooks – and this is a major issue – is that it cannot currently handle multiple currencies. This is really inexcusable in today’s world – almost every creative professional I know works in at least 3 or 4 different currencies (USD, CAD, EUR and GBP are pretty common for me).
You can work around this by creating multiple categories for multiple currencies and then manually converting the totals at the end of your reporting period, but it is a hassle and it messes up your account reconciliation.
Alternatives to Quickbooks
I found them perfectly usable, however because they are just not that well known by accounting industry professionals, it was too much of a problem outputting data into formats that my accountant and other accounting industry professionals could use without explanation.
Its like if you only ever use Photoshop and someone gives you a Gimpshop file to work on.
I believe Quickbooks can do timesheets internally, but to be honest I’ve never been able to figure it out.
I have a few clients that I have to keep track of billable time on a timesheet, and then generate invoices based on the time tracked.
I spent a long time searching for a simple timesheet tracker that would allow me to assign hours to a specific task and client.
Most timesheet solutions only have a timer – you hit start and it times how long you spend on a task. That level of time management is just a pain in the a$$ – I just need to assign hours without tracking what I’m doing to the minute.
Keeping track of your income and expenses is one thing, but keeping track of paper and electronic receipts is a whole other issue.
If you’re like me and most people, you stuff all of your receipts into one big folder and never look at them again.
However, if you do need to find a specific receipt – for a return, a warranty claim or for an audit, it is nearly impossible to find.
Shoeboxed solves this problem by digitizing your paper and electronic receipts and storing them in a sortable, searchable database.
From a smartphone photo (or scan), Shoeboxed will automatically record the date, vendor, amount, tip, tax and any other pertinent information on the receipt and save an electronic copy.
They even have a service called “Magic Envelopes” where you can simply mail them your big giant mess of receipts and they will digitize them for you.
The text recognition isn’t always perfect and because there is no standard format for dates, years/months/days occasionally get mixed up – so a certain level of manual intervention is still required.
Most creative professionals would need the Classic plan for $39 per month (unless you have less than 50 receipts per month in which case you could get by with the $15 per month Lite plan).
I used Shoeboxed for years and really liked the service. It is surprisingly useful to always have all your receipts available (especially for returns and warranty claims) and when used in combination with Quickbooks, your bookkeeping is audit ready.
However, after a while I just couldn’t justify the hefty $39 per month price tag – so my receipts went back to the physical shoebox.
Estimates, Invoices and Payment Processing
I have been using PayPal for all my estimates, invoices and payment processing for a long time (for more information read: Old Fashioned Bank Accounts Cost Your Business Time and Money – Why Not Use PayPal Instead?).
PayPal is expensive – skimming 2.9% off of every transaction they process – which really adds up over time. However, for me the convenience is worth the cost – especially if you’re working with global payments and multiple currencies.
Everyone is familiar with the PayPal brand which is also important – people know how to use the service and trust the interface – so you never have to explain how to make a payment.
What Bookkeeping Accounting Software Do You Use?
How do you handle your books?
Is there any particular software that you recommend?
Anything that you don’t recommend?
Leave a comment below and share your thoughts and experiences!