Make Money

Streamline Your Finances with NerdWallets Top Accounting Software for Consultants

- by Passive Income Author
accounting software for consultants

Find the best accounting software for your consulting business, based on your specific needs.

Discover the perfect accounting software for your consulting business with NerdWallet’s expert recommendations. Find tailored solutions that meet your specific needs and help you efficiently manage your finances. Start optimizing your financial processes today.

One of the top areas of your consulting business that you need to manage is your accounting — and finding accounting software that fits with your business needs can help. Here are our top picks based on ease of use, affordability and functionality.

Our top pick: QuickBooks Online and Xero (tie)

Maybe were cheating a little by including two options as our top pick, but heres why we choose to rank both QuickBooks Online and Xero at the top of the list:

  • Both QuickBooks Online (QBO) and Xero are easy to use. Making your bookkeeping less of a chore means you will be more likely to keep up with it.

  • Both QBO and Xero are supported by a large — and growing — number of accountants and bookkeepers. This means if you need help, youll be able to easily find it.

  • Both programs have an easy-to-use mobile app. This feature is incredibly important if you are a consultant on the go, because you can categorize your expenses, invoice your clients and take care of a number of other bookkeeping tasks while you are away from your office.

  • Both programs have all the features consultants need. Youll find easily integrated time-tracking solutions, billable expenses features with markup capability, and easily integrated mileage tracking with both QBO and Xero. You can even use the mobile apps for both programs to snap pictures of your receipts and attach them to expenses.

With both QBO and Xero ranking at the top of the list, how do you know which one is the best accounting software for your consulting business?

Its largely a matter of visual preference.

Xeros layout is more visually appealing to many consultants than QBOs. You can customize your Xero dashboard to show only the things that are most important to you, and you can easily and intuitively find the things you choose not to put on your dashboard. Xero also steers clear of using accounting jargon, which makes it less intimidating to many non-accountants than QBO.

» MORE: NerdWallet’s full review of QuickBooks Online

Runner up: FreshBooks

Some consultants find QBO and Xero to be a little too much for what they need in their accounting software. If you are looking for an accounting software for your small consulting business that is still fully functional but less overwhelming, check out our runner-up pick, FreshBooks.

FreshBooks started out as an invoicing and time-tracking software for freelancers and other self-employed individuals. It has since evolved into a powerhouse accounting software for small businesses that dont technically need a balance sheet component.

FreshBooks lets you track your expenses and mark them as billable, invoice and collect payments from your clients and — with the MileIQ integration — easily track and import your mileage expenses. Since FreshBooks connects directly to your bank and credit card accounts, you wont have to waste time with data entry. You can be reasonably certain of the accuracy of your data if you monitor your bank feeds closely, even without a separate reconciliation feature.

Although FreshBooks does not provide a balance sheet, they do provide a template if you need to create one. You will need to consult with an accountant if you need a balance sheet, but FreshBooks has a large and growing number of accountants and bookkeepers certified in their software.

If your consulting business is mostly time- and service-based, FreshBooks might be just what you are looking for. Its less robust than QBO or Xero, but still able to provide almost all of the same functionality using any number of third-party apps that easily integrate with FreshBooks. In fact, QBO, Xero and FreshBooks all depend to some degree on third-party apps to customize their software for any particular industry.

» MORE: NerdWallet’s full review of FreshBooks

Honorable mention: Zoho Books

If you dont want to manage a suite of apps in addition to the accounting software for your consulting business, our honorable mention pick, Zoho Books, might be the best choice.

QBO, Xero and FreshBooks are all robust solutions, but some of the features a consultant needs are available only as add-on applications. Its easy to get caught up in a cycle of constantly shopping for the perfect application that suits all your businesss needs. This can be overwhelming and confusing.

Zoho Books solves the problem of app exhaustion by providing a full suite of applications right within the Zoho ecosystem. Regardless of the features you need in your accounting software, Zoho has solutions, called transaction modules, that will integrate directly with Zoho Books. Pair this with the rest of the Zoho ecosystem — including Mail, CRM and Office Suite — and you can easily run your entire consulting business using only Zoho products.

With all this functionality, you might be wondering why Zoho Books is only an honorable mention on this list. There are a few reasons why Zoho Books doesnt top the list:

  • Reimbursed expenses: Rather than booking reimbursed expenses as income, Zoho Books just reduces the expense. While the result on your bottom line is the same, our preference — and the preference of most accountants — is to see the income for reimbursed expenses broken out separately on the profit and loss statement.

  • Cost: 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 on transaction modules. Many of the transaction modules in Zoho Books are standard features in the other accounting software mentioned in this article.

  • Accounting support: You might have a hard time finding an accountant or bookkeeper who understands and supports Zoho Books. This isnt a huge issue if you understand accounting and bookkeeping yourself, but if you think youll want support, you might be better off choosing QBO or Xero for your consulting business.

» MORE: NerdWallet’s best small-business apps

How to pick the best accounting software for your consulting business

The best accounting software for your consulting business is the software you are comfortable using. Even if you engage the services of an accountant or bookkeeper to help you do your monthly bookkeeping, you will still need to use your accounting software to track your expenses and bill your clients.

Before making a final decision about the accounting software for your consultancy, take advantage of the free trial period offered by QBO, Xero, FreshBooks, Zoho Books or any other accounting software you are considering. Rather than using the free trial period to set up your books perfectly, test the features you will use most often and make sure the software you choose supports you best.

Choosing the right accounting software for your small consulting business will help you stay on top of your billing and bookkeeping, which in turn will ensure your profitability and your ability to continue helping your clients grow their businesses.

A version of this article was first published on Fundera, a subsidiary of NerdWallet.

What consultants need in an accounting solution

 

 

Consultants have specific needs when considering the best accounting software for their businesses. Some of these needs include:

  • Time tracking and customer billing: Time is the consultants most precious commodity. If you use a value pricing or package pricing model in your consultancy, you need to know where you are spending your time. If you bill by the hour, time tracking becomes critical to your businesss revenue. Your accounting software needs to be able to quickly pull your billable time into an invoice, which you can then easily send to your client.

  • Billable expenses: Whether expenses are a regular part of the consulting business or incidental expenditures, most consultants must pass billable expenses on to their clients. Your accounting software must allow you to not only track your billable expenses and easily pull them into an invoice, but also to apply a markup charge if applicable. Your accounting software will get bonus points if you can easily attach receipt images to expenses, since many clients will require backup documentation prior to paying your invoice.

  • Mileage tracking: All small businesses can benefit from keeping a mileage log if the owner uses a personal vehicle for business. Although technology has made it easy for consultants to work with clients all across the country and even around the world, many consultants still travel to their clients businesses and need to be able to track their mileage for billing. Your accounting software should have a built-in mileage tracker or be able to easily integrate with one.

Should accounting software for consultants include a balance sheet?

 

 

Unless you maintain an inventory of products you sell to your consulting clients, strictly speaking you dont need a balance sheet. Thats because, in most cases, consultants dont have fixed assets or inventory to track, and any business debt is minimal. Many consultants arent interested in building equity in their business, either, at least not in the early stages of business.

Beware though: Even if you dont need to track assets or liabilities, without a balance sheet your accounting system is open rather than closed. In other words, you are missing a piece of the accounting equation, which can help you make sure your bookkeeping is accurate. Most specifically, open accounting systems usually lack a separate reconciliation feature, which is vital to making sure all your income and expenses are recorded properly.

If you choose an accounting software for your consulting business that does not contain a balance sheet component — and one such accounting system is recommended on our list (more on that below) — make sure you are reconciling your bank and credit card accounts regularly outside of the accounting system.

 
 
 
 
 
   
   
   
   
   
   

Thanks to Source

TAGS

accounting software for consultants

accounting software for consultants

accounting software for consultants

Related Posts

haunted house, Halloween attractions

The Economics of How to Run a Haunted House

how to start a clothing line

The Ultimate 12Step Guide on How to Start a Clothing Line Successfully

eBay business

Starting an eBay Business A StepbyStep Guide for Beginners

About Passive Income Author

View all posts by Passive Income Author →