This article is part of a larger series on Accounting Software.
The best online bookkeeping services for freelancers prioritize tracking income and expenses for the purpose of filing an annual Schedule C tax return. Ideally, they’re also affordable and provide access to a dedicated bookkeeper or an expert who can assist with questions. Many of the top online bookkeeping firms also offer add-on services such as tax filing and catch-up bookkeeping, which can help you make efficient use of your time.
We have compiled a list of the five best online bookkeeping services for freelancers in 2022:
- Bench: Best overall online bookkeeping service for freelancers
- QuickBooks Live: Best online bookkeeping service for freelancers using QuickBooks Online
- Bookkeeper360: Best online bookkeeping service for freelancers using Xero
- Merritt Bookkeeping: Best low-cost online bookkeeping service for freelancers
- Block Advisors: Best online bookkeeping service for freelancers needing low-cost tax prep
Best Online Bookkeeping Services for Freelancers Compared
Bench: Best Overall Online Bookkeeping Service for Freelancers
- Dedicated bookkeeper: All of Bench’s bookkeepers are in-house employees, not contractors. Your dedicated bookkeeper will serve as your point of contact and handle all aspects of your account.
- Tax assistance: Bench’s Essential plan includes the preparation of a year-end financial package needed to file your taxes. If you need more assistance, you can upgrade to the Premium plan, which includes unlimited bookkeeping and tax support and filing for sole proprietors and contractors as well as businesses. Bench partners with Taxfyle to file your returns.
- Financial reports: You’ll receive financial reports on a monthly basis, and you can also access them through your dashboard, which provides you with real-time updates of your financials and allows you to customize reports for the data you’re seeking. You can tag transactions with labels like products, clients, and location to view your company’s performance.
- Catch-up bookkeeping: If you’re more than two years behind in your bookkeeping, you can enroll in BenchRetro for an additional fee. If you’re less than two years behind, you’ll need the catch-up bookkeeping add-on in which your bookkeeper will update your books on your behalf.
- Specialized bookkeeping: Bench provides additional services on an as-needed basis, including invoicing, bill payment, property tracking, third-party revenue collection, and segment-level bookkeeping starting at $100 per hour.
Our Expert Opinion
We selected Bench as the best overall bookkeeping service because it offers bookkeeping support at a lower cost than its competitors while also offering tax assistance and specialized services like invoicing. It also provides catch-up bookkeeping services no matter how far behind you’ve fallen with your books. Freelancers who work remotely will appreciate the iOS mobile app that provides real-time cash flow updates and financial reporting functionality. It’s also a great option if you don’t want to purchase or learn how to use accounting software.
QuickBooks Live: Best Online Bookkeeping Service for Freelancers Using QuickBooks Online
- Account set-up: Your QuickBooks Live professional will assist in setting up your QuickBooks Online account, which includes setting up customers and vendors and customizing your chart of accounts. They’ll also help you set up bank and credit card account connections so that transactions will be downloaded automatically. We ranked QuickBooks Online as the overall best small business accounting software.
- Reporting: At the end of each month, your bookkeeper will send you PDF copies of key financial reports, including your P&L and balance sheet, with additional reports provided upon request. You can also generate specialized reports and filter them by class or location if desired.
- Ongoing bookkeeping assistance: As part of ongoing bookkeeping, your QuickBooks Live bookkeeper will categorize your transactions and reconcile your accounts. You can also request assistance with bookkeeping practices and troubleshoot transactions with the help of your bookkeeper.
- Communication: You can meet virtually with your bookkeeper on an as-needed basis, although most users meet once or twice per month. Meetings are conducted via one-way video conference or telephone call, and you can also chat live with a member of your bookkeeper’s extended team at any time.
- 100% Accurate Books Guarantee: With the QuickBooks Live 100% Accurate Books Guarantee, users can be assured of 100% accuracy with their books. At your request, it’ll conduct a free audit of your bookkeeper’s work at any time.
Our Expert Opinion
If you don’t need assistance with managing customer invoices and paying bills, then QuickBooks Live is an excellent option if you like QuickBooks Online. Although you need to pay a separate fee for your QuickBooks Online subscription, it’s reassuring to know that you’ll be working with a QuickBooks expert who is available to answer questions, provide bookkeeping assistance, and help with setting up your account. Your dedicated bookkeeper also has the support of an extended team, providing a personal connection with individuals who are familiar with your business. QuickBooks Live also offers enhanced communication with many different options for meeting, including via one-way video conference.
Bookkeeper360: Best Online Bookkeeping Service for Freelancers Using Xero
- Dedicated bookkeeper: You’ll be assigned a dedicated bookkeeper upon enrolling, and they’ll work with you to determine the best strategy for your business. This includes determining the frequency of service and deciding whether you require any services in addition to bookkeeping. Then, you’ll connect Bookkeeper360 to your accounting system (QuickBooks Online or Xero) and work online collaboratively with your bookkeeper to manage your finances.
- Accrual-basis accounting: Bookkeeper360 allows the accrual basis of accounting with the bookkeeping service. This includes complex accounting like deferred revenue, accrued expenses, and inventory.
- Mobile app: Bookkeeper360’s mobile app is available with all plans and connects to your Xero or QuickBooks Online account, and allows you to view your financial data, track your goals, and access your accounting experts all in one place.
- Back office: The back-office solution provides merchant services that can integrate with QuickBooks Online and Xero and includes next-day funding as well as receivables and payables management. It can also help you manage inventory by assisting in order management, costing, pricing, and maintaining optimal stock levels.
- Cash management: The Bookkeeper360 app provides cash management insights using illustrative charts that show your cash inflows and outflows for different time periods, such as the last 12 months. The cash runway, also called the cash burn rate, shows the estimated number of months until cash runs out.
Our Expert Opinion
Bookkeeper360 provides seamless integration with Xero’s cloud-based accounting software as a Xero Platinum partner. Although it checks all of the boxes in the comparison table, it’s more expensive and offers many features that freelancers don’t need, such as chief financial officer (CFO) advisory, payroll, and human resources (HR) management. However, you can get invoicing and bill pay services for an additional fee, which are services that aren’t always offered by Bookkeeper360’s competitors. The cash management features are especially useful for freelancers that want to maintain an overview of their finances and cash management insights.
Merritt Bookkeeping: Best Low-cost Online Bookkeeping Service for Freelancers
- Bookkeeping catch-up: Merritt Bookkeeping offers catch-up work if you’ve fallen behind on your books. If you have a QuickBooks file, the fee is $140 for each month that they’ll need to get you caught up. The rate goes down to $70 per month for months that are almost complete, but bookkeepers must enter less than 10 transactions to qualify for the discounted rate.
- 1099 filing: Merritt Bookkeeping will assist with filing 1099s for your contractors for an additional fee of $75 for the report preparation and $8 per form.
- Financial reports: Each month, you’ll be sent your profit and loss statement and your balance sheet. You can also access them via your client portal.
- Intuitive user interface: The easy-to-access client portal enables you to review reports and see how your transactions are categorized. If there are any errors, you can make the correction yourself through the custom interface.
- 90-day money-back guarantee: Merritt Bookkeeping doesn’t offer a free trial, but you can test it out for three months with zero risk. If you’re not satisfied with the service after that time, you’re entitled to a full refund.
Our Expert Opinion
If you’re a freelancer on a tight budget, Merritt Bookkeeping is an appealing option because of its affordable flat-rate pricing. You won’t have direct access to your bookkeeper, but you’ll work with a dedicated account manager, which allows for continuity of service. Businesses that issue 1099s can take advantage of the 1099 form filing service for an additional fee. The catch-up bookkeeping option is also affordable, and if you’re not satisfied with the services after three months you can request a full refund, so it’s a worthwhile risk.
Block Advisors: Best for Freelancers Who Need Low-cost Tax Prep
- 100% Accuracy Guarantee: Block Advisors guarantees that if it makes an error on your return, you’ll be reimbursed for any resulting penalties and interest. To qualify, the error can’t be due to inaccurate, inconsistent, or incomplete information that you supply.
- Accessible support: Whether you decide to do your own taxes with the help of an expert or work directly with a tax pro, support is available via phone, video, or live chat. If you decide to work with a tax pro, you can meet with them in person at a location near you.
- Bookkeeping services: Block Advisors provides year-round bookkeeping support: Starter and Full-Service. Both give you free, on-demand access to Xero accounting software. The Starter plan gives you access to an accounting pro who’ll work with you to create an action plan. Full-Service subscribers will also receive financial statements, such as your profit and loss statement and balance sheet. Your accounts will be reconciled and transactions categorized in real-time, and your books will be finalized for tax time.
- Maximum Refund Guarantee: If you discover that an error has been made on your tax return that entitles you to a smaller tax liability or a larger refund, Block Advisors will refund the tax return preparation fee and file an amended return for free.
- Add-on services: You can select from other add-on services for an additional fee, including business tax audit support, a year-end filing service, and an estimated quarterly tax payment evaluation.
Our Expert Opinion
Block Advisors is best suited to self-employed and small businesses that are looking for an inexpensive way to file their taxes. The service prides itself upon being flexible and offering many different options, whether that’s do-it-yourself (DIY) or full-service. Bookkeeping packages also provide two different levels of support, and you can also request additional services such as tax audit support. Since Block Advisors only supports Xero accounting software, you would be better suited with QuickBooks Live or Bookkeeper360 (which works with QuickBooks and Xero) if you don’t want to use Xero. You can learn more about Xero in our Xero review.
How We Evaluated Online Bookkeeping Services for Freelancers
Freelancers are mostly concerned with tracking income and expenses to file a Schedule C tax return at the end of the year.
The best online bookkeeping services should:
- Manage their bank feeds
- Categorize expenses
- Reconcile all bank accounts monthly
- Allow the freelancer access to the software to send occasional invoices and track bills as they become due
- Produce income statements at the end of each month
- Calculate quarterly estimated tax payments
- Prepare the annual Schedule C tax return along with personal tax return, Form 1040
- Provide a dedicated account representative to contact with questions
Things that aren’t particularly important to freelancers:
- Filing of corporate and partnership tax returns
- Advanced tax consulting around entity types and more
- Generally accepted accounting principles (GAAP) or accrual accounting
- Payroll and HR management
The best online bookkeeping service depends on your needs as a freelancer. If you’re using QuickBooks Online, then QuickBooks Live or Bookkeeper360 are great options depending on the services you require. Bench is the best option overall due to its affordable rate and wide range of services offered, but Merritt Bookkeeping is also a good choice for freelancers on a budget. Block Advisors is best for tax filing services, but it also offers ongoing bookkeeping assistance.