Official FAQ
Official FAQ Answer Wiki at SavvySME

What is the best bookkeeping and accounting software for self-employed individuals?

Which accounting software packages are best (both cloud and desktop software) for sole traders without employees? My question is mainly directed at freelancers, the self-employed and one-person small businesses.

Top voted answer
Yee Trinh

Yee Trinh, Cofounder at

Most sole traders are looking for a simple, user-friendly software that allows you to perform all of the essential bookkeeping tasks to run your business smoothly. Not all accounting software is made equal. For example, some are better suited to businesses that require minimum functions, and others to businesses that plan to scale fast. That being said, some of the best accounting software for self-employed business owners are:

  1. Xero: Xero has over 2 million users worldwide and is arguably the most popular option for sole traders. It’s super easy to use and allows you to create professional invoices for clients, pay your bills, and monitor your cash flow. They offer a 30-day free trial which is definitely worth a shot.

  2. Wave: Wave is 100% free and is a great option for sole traders on a tight budget. It has all the tools you need to manage business expenses and keep everything in order for financial reporting.

  3. QuickBooks: QuickBooks is ideal for sole traders that need to track miles, monitor cash flow, calculate tax deductions and do invoicing and payments. It also comes with industry-specific features to help you grow your business.

  4. Sage: Sage is simple to use but has a large suite of tools to manage your books and be more productive. You can settle bills, send invoices and create reports. The mobile app is particularly handy!

  5. Freshbooks: Freshbooks is really user-friendly and easy to use. As well as invoicing, billing and time tracking, you can also create estimates, proposals and reports.

The key is to figure out what you need the software to do, what kind of budget you're working with and read about others' experience of how the software works. 

Good luck!

User
Gillian Nathan

Gillian Nathan, Owner at

It depends on the business and what the business needs are - do they need payroll (ie) does the sole trader employ staff, and is the business registered for GST. If so - I would recommend that the sole trader uses accounting software to keep track of their accounts, GST and manage their Single Touch Payroll (STP) reporting.

As far as I am aware, if you have an existing account set up in WAVE - you can keep this, but new accounts for WAVE are no longer allowed for residents outside Canada. Bank feeds for Aussie bank accounts are also not automatic, whihc for me, makes WAVE not an option for sole traders long term. 

I personally love XERO and its ability to customise with additional add on apps (if / when required). I love that you can create rules, use things like Receipt Bank / Hubdoc etc seamlessly.  I find that users (business owners) are more comfortable in XERO then something like QBO or MYOB essentials - but it really depends on the business owner and what they are comfortable with, and again, what the business needs are. 

Irrespective of what is chosen - its best to get a separate business bank account , get the accounting software / system set up correctly and  get some training on it.  Get the foundations correct at the beginning, so you can build a successful, sustainable business long term. 

Hatty Bell

Hatty Bell, Community Manager at

Thanks @Gillian Nathan ! Worth investigating and then choosing whats best for you and your business then?

User
Bruce Patten

Bruce Patten, Director at

Top 10% Business Grants

Every business is different so there is no best software accounting package. MYOB, Xero, WAVE, Quickbooks etc all have different functionailty. Does the business need a POS  interface? Does it require stock records? Do you need time keeping, traceability, barcode reading,  multiple currencies conversion and reporting?  Record keeping and reporting is critical for all businesses, but so are budgets and planning.  Around 80% of start-ups fail in the first 5 years. so is the software decision a high prority? My suggestion:

1. Define a business plan with milestones and dates.
    Most businesses aim at nothing and hit it with incredible accuracy.
2. Find a good bookkeeper or accountant
    You will be busy running the business.
    Get a professional to do the accounting and provide financial advice, lodge BAS, tax etc. 
3. Get an Executive Support Team (people that will give you straight and honest feedback).  
    Don't do it on your own - you are too close to see the reality.   
    Ego's, emotions, passion can get in the way of objectivity and success/failure.
4. Set a budget for at least 12 months by month.
   What is the breakeven point?   How much money do you need to succeed?
5. Manage the business against the budget.
   You can only manage what you measure. Know when to reassess priorities or stop.
   Failure is a great teacher than can lead to success. But it can't do it on its own. 

And the original best accounting software decision..  we covered that in point 2
As a side you should explore any grants available to support your business.

Hatty Bell

Hatty Bell, Community Manager at

Great insight @Bruce Patten 

User
Marcus Tjen

Marcus Tjen at

Top 10% Market Research

If you're sole trading or freelancing without employee, you don't have to use accounting software.   You can consider using Excel spreadsheet for your accounting record.  Unless you have a lot of inventory, most of the things you are going to record are purchase orders and invoices and Excel can do all that easily.  You can record your expenses as well.  Any accountant can work with Excel spreadsheet, convert it to financial statements and work out your tax.

User
Stephanie Mellick

Stephanie Mellick, Accountant, Consultant & Strategist at

Yes, an excel spreadsheet can work effectively, but this can become complicated if the sole trader is registered for GST.  Tracking GST and submitting BAS statements can be made much easier by the use of cloud accounting software.  Moreover, financial statements can be generated at the touch of a button, linked directly to a fixed asset register and invoices can be generated and sent directly to clients from the system.  This keeps all data in the one spot in an organised manner. It is also incredibly easy to examine accounts payable and receivable this way.   

User
Stuart Reynolds

Stuart Reynolds, Partner at

Wave is one of the best accounting software for self-employed individuals - and it's totally free! 2 million other businesses on the platform can't be wrong. It does bank feeds and reporting which is handy for us accountants.

User
Hatty Bell

Hatty Bell, Community Manager at

Would be great to get your thoughts on this @Bruce Patten @Peter Khalil @Lachlan Grant @Gillian Nathan 

User
User
Related Articles