One of the most important areas of your consulting business to manage is your accounting – and your search Accounting software That fits your business needs. Here are our top tips based on ease of use, affordability, and functionality.
Our top picks: QuickBooks Online and Xero (tie)
We may be cheating a little by including two options as our top picks, but here’s why we choose to rate both QuickBooks Online and QuickBooks Online Xero at the top of the list:
Both QuickBooks Online (QBO) and Xero are easy to use. If you make your bookkeeping less of a hassle, you are more likely to keep up.
Both QBO and Xero are supported by a large and growing number of accountants and bookkeepers. That said, if you need help, it is easy to find.
Both programs have a user-friendly mobile app. This feature is incredibly important when you are an advisor on the go as you can categorize your expenses, bill your clients, and do a variety of other accounting tasks while you are away from your office.
Both programs offer all the functions that consultants need. You will easily find integrated time recording solutions, functions for billable expenses with markup function and simply integrated mileage recording with QBO and Xero. You can even use the mobile apps for both programs to take pictures of your receipts and attach them to expenses.
How do you know which QBO and Xero leaderboard is the best accounting software when it’s at the top of the list? Your Consulting business?
It’s largely a matter of visual preference.
For many consultants, the layout of Xero is more visually appealing than that of QBO. You can customize your Xero dashboard to show only the things that matter most to you, and you can easily and intuitively find the things that you don’t want to include on your dashboard. Xero also eschews the use of accounting jargon, making it less intimidating than QBO for many non-accountants.
Second place: FreshBooks
Some consultants find QBO and Xero a little “too much” for what they need in their accounting software. If you’re looking for accounting software for your small consulting firm that is still fully functional but less overwhelming, check out our FreshBooks runner-up.
FreshBooks started out as billing and time tracking software for freelancers and other self-employed people. Since then, it has developed into a powerful accounting software for small businesses that technically do not require a balance sheet component.
With FreshBooks, you can track your expenses and mark them as billable, settle bills, and collect payments from your customers. With the MileIQ integration, you can easily track and import your mileage costs. Because FreshBooks connects directly to your bank and credit card accounts, you don’t have to waste time entering data. You can be reasonably sure of the accuracy of your data if you closely monitor your bank feeds, even without a separate reconciliation function.
While FreshBooks doesn’t provide a balance sheet, they do provide a template in case you need to create one. You need to contact an accountant if you need a balance sheet. However, FreshBooks has a large and growing number of accountants and bookkeepers who are certified for their software.
If your consulting business is primarily time and service driven, FreshBooks may be exactly what you’re looking for. It’s less robust than QBO or Xero, but can provide almost all of its functionality with any number of third-party apps that easily integrate with FreshBooks. In fact, QBO, Xero, and FreshBooks depend to some extent on third-party apps to customize their software for a particular industry.
Honorable Mention: Zoho Books
If you don’t want to manage a bunch of apps in addition to accounting software for your consulting firm, we recommend: Zoho booksmight be your best choice.
QBO, Xero, and FreshBooks are robust solutions, but some of the features a consultant needs are only available as add-on applications. It’s easy to keep looking for the “perfect” application that meets all of your business needs. This can be overwhelming and confusing.
Zoho Books solves the problem of app exhaustion by delivering a full suite of applications right into the Zoho ecosystem. Regardless of the features you need in your accounting software, Zoho offers solutions, called transaction modules, that can be integrated directly into Zoho Books. Combine this with the rest of the Zoho ecosystem – including Mail, CRM, and Office Suite – and you can easily run your entire consulting business using just Zoho products.
With all of these features, you might be wondering why Zoho Books is only a Honorable Mention on this list. There are a few reasons why Zoho Books isn’t high on the list:
Reimbursed costs: Instead of posting reimbursed expenses as income, Zoho Books only reduces expenses. While the bottom line is the same, it is our preference – and the preference of most accountants – to split the income for reimbursed expenses separately in the income statement.
Costs: While no single component of the Zoho ecosystem is prohibitively expensive, you can easily exceed the subscription cost of QBO, Xero, or FreshBooks by adding transactional modules. Many of the transaction modules in Zoho Books are standard features of the other accounting software mentioned in this article.
Accounting support: You may have a hard time finding an accountant or bookkeeper who understands and supports Zoho Books. This is not a big problem if you understand bookkeeping and bookkeeping yourself. However, if you feel that you need assistance, it might be better to choose QBO or Xero for your advisory business.
How to choose the best accounting software for your consulting business
The best accounting software for your consulting business is the software you are familiar with. Even if you use the services of an accountant or bookkeeper to help with your monthly bookkeeping, you still need to use your accounting software to keep track of your expenses and invoice your customers.
Before making a final decision on which accounting software to use for your consultation, take advantage of the free trial of QBO, Xero, FreshBooks, Zoho Books or any other accounting software you are considering. Instead of taking advantage of the free trial period to get your books set up perfectly, try out the features you use most and make sure the software you choose will do the best for you.
By choosing the right accounting software for your small consulting firm, you will keep track of your billing and bookkeeping, which in turn will ensure your profitability and your ability to help your clients grow their business.
A version of this article was first published on Fundera, a subsidiary of NerdWallet.