5 Best Accounting Software for the Self-Employed

Updated on August 20, 2021
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The 5 Best Accounting Software for the Self-Employed

  1. QuickBooks Online: Best for full-service functionality.
  2. Xero: Best for easy-to-use features.
  3. FreshBooks: Best for independent contractors.
  4. Zoho Books: Best for very small and simple businesses.
  5. SageOne: Best for low-price accounting software.

Good accounting practices are a key element of a successful business. With good accounting—and the best accounting software for self-employed people like you—you can keep your business running smoothly. Here are our picks for the best accounting software for the self-employed, plus how to decide which package is right for you.

What Advantages Can the Best Self-Employed Accounting Software Deliver?

If you establish good accounting practices and get into steady habits, you can reap a lot of benefits:

  • Keep your customers happy. Have you ever gotten a reminder for a bill you’ve already paid? You likely thought twice about doing business with that company again.
  • Keep your staff happy. Running out of money for payroll is a good way to lose employees. It can also get you into legal hot water.
  • Save yourself a lot of stress and money. The business bookkeeping records that many proprietors throw together right before the tax deadline can contain hundreds of dollars of costly mistakes.

How to Pick the Best Accounting Software for Self-Employed People

Not all accounting software is created equal, and it’s very important to understand your business’s needs before investing in a certain one. At minimum, answer these three questions before choosing the best accounting software for your sole proprietorship:

  1. What accounting functions do I need to handle?
  2. How often will I use my software, or reports from my software, to make business decisions?
  3. What do I envision for the future of my business?

Your accounting software should be able to grow with you, which will save you the hassle of switching accounting software down the line.

The 5 Best Accounting Software Picks for the Self-Employed

Here are our picks for the best accounting software for the self-employed, listed in the order we think you’ll want to consider them:

1. QuickBooks Online

There’s a very good reason QuickBooks Online tops this list of best accounting software for the self-employed. QuickBooks is the reigning incumbent for accounting and bookkeeping software in the U.S. It’s easy to use, inexpensive, and training resources abound.

QuickBooks Online comes in three different varieties: Simple Start, Essentials, and Plus.

For the best accounting software for self-employed people specifically, Essentials is the best place to start. That’s because Simple Start is too simple for most businesses. As your business grows, you can move up to Plus. But be warned—once you upgrade your subscription, you can’t downgrade it again.

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What About QuickBooks Self-Employed?

QuickBooks Self-Employed is a nice solution for freelancers and independent contractors, especially now that Self-Employed users can collaborate with their accountant or bookkeeper right inside the software. That said, QuickBooks Self-Employed lacks certain features that most sole proprietorships will need eventually—if not right away. If you’re not a freelancer, you may want to look into QuickBooks Online instead.

Buy QuickBooks Self-Employed for 50% Off

2. Xero

Xero tops the best accounting software lists in New Zealand, Australia, and several European countries. It’s gaining ground in the United States, too

Similar to QuickBooks Online, Xero has an extensive network of accounting professionals who support it, and it’s easy to find good online training resources. Self-employed users will especially appreciate the lack of accounting jargon that Xero uses. That means no “debits” and “credits” here—just good old-fashioned “money in” and “money out.”

If you’re in a creative industry, Xero may be the best fit for you; it’s popular with marketing firms, writers, designers, etc.

3. FreshBooks

FreshBooks started out as time-tracking and online-invoicing software. But it’s evolved into a platform that can be ideal for simple, service-based businesses.

If you have inventory, payroll, or need advanced job costing, you’ll need to look elsewhere for accounting software, or plan to learn an integrated app, too. But if your business is a relatively simple service-based business with no fixed assets to track, FreshBooks could be the best self-employed accounting software for you.

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4. Zoho Books

If you already use the Zoho platform for your CRM, mail, and/or expenses, adding Zoho Books could be the accounting software solution of your dreams. All of Zoho’s products integrate nicely with each other, giving you a true ecosystem for a relatively low investment.

We think Zoho Books works best for extremely small and simple businesses. If you often have “split” expenses (i.e., you go to the office supply store and buy not just office supplies but also janitorial supplies and have brochures printed for advertising), you might find Zoho Books a bit frustrating. That’s because you can’t easily split expenses from the bank feed.

There are some other quirks to Zoho Books, too, but again, these only really become an issue in more complex businesses.

Unlike Xero, Zoho Books sometimes uses terminology that isn’t the most intuitive to non-accountants. Still, with a little  patience during the learning process, small businesses already in the Zoho ecosystem may enjoy working with this accounting software.

5. Sage

Sage is often underrated. Its platform is competitively priced, it’s easy to learn and use, and Sage software has an international presence.

Sage is worth a good look. It’s robust enough to grow with you but simple enough to not overwhelm you as you’re getting started.

Learn More About Sage

About Free Accounting Software for Self-Employed People

You’ve probably seen the ads for free accounting software for self-employed individuals. Many claim to be as good as paid software. And although some business owners get good results with some of these solutions, for the most part, you often get what you pay for.

How to Choose the Best Accounting Software for Self-Employed People

By picking your best match, you’re making your life easier—and your accountant’s life easier.

All of the software companies mentioned have partner programs for accountants and bookkeepers; you can usually access these directories when you’re logged into the software.

If you choose to pass the bookkeeping hat off to a professional at some point, you should be comfortable enough with your accounting software to perform basic functions in it and to access the reports you need to make decisions about your business. Use those free trial periods to evaluate your options before choosing accounting software for self-employed people. That way, you’ll definitely end up with the best fit for your business.

Billie Anne Grigg
CPO at Pocket Protector Bookkeeping

Billie Anne Grigg

Billie Anne Grigg is a contributing writer for Fundera.

Billie Anne has been a bookkeeper since before the turn of the century. She is a QuickBooks Online ProAdvisor, LivePlan Expert Advisor, FreshBooks Certified Beancounter, and a Mastery Level Certified Profit First Professional. She is also a guide for the Profit First Professionals organization. 

Billie Anne started Pocket Protector Bookkeeping in 2012 to provide an excellent virtual bookkeeping and managerial accounting solution for small businesses that cannot yet justify employing a full-time, in-house bookkeeping staff.

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