FreshBooks started its life as a simple invoicing solution. Over the years, it has expanded in scope, adding new tools and enhancing existing ones every year. It’s now a full-featured, double-entry accounting application for small businesses. The FreshBooks family of applications manages accounts receivable and payable, inventory, and payroll (through an integration with Gusto). Changes to FreshBooks since our last review bring new editing capabilities in the Chart of Accounts and enhancements in other areas, including the Profit & Loss report, journal entries, and reconciliation. FreshBooks is one of the best small business accounting applications, and we recommend the Lite version in particular for the smallest of businesses, including freelancers and sole proprietors. In that category, it’s an Editors’ Choice winner. Our other Editors’ Choice winner for very small businesses is Wave, which is free but lacks some of FreshBooks’ design excellence and features.
How Much Does FreshBooks Cost?
FreshBooks offers four plans: Lite ($15 per month), Plus ($30 per month), Premium ($55 per month), and Select (custom pricing). You get a slightly better deal if you pay annually. A 30-day free trial lets you try out any plan type, with no banking details required. We used the Lite version for testing.
The Lite plan is ideal for very small, entry-level businesses, even individuals with only a side gig or two who need to track income and expenses. Other versions offer more advanced features and could go head to head with accounting services that cater to small and mediums-sized businesses (SMBs). But its usability and simplicity are so good absolute beginners can master it. Plus if your company grows, you can move up to a higher service tier.
If you choose the Lite plan, you can create records for customers, vendors, and products. You can send invoices and estimates to up to five clients. This plan also allows you to track expenses, time, projects, and mileage. You can run business health reports and accept online customer payments. Adding team members costs $10 per person per month. It’s more than what’s offered by similar accounting software for microbusinesses, namely Wave and TrulySmall Accounting.
FreshBooks’ Plus plan lets you bill up to 50 clients, and adds features like standard financial reports, e-signatures, and proposals and client retainers. The Premium plan lets you send unlimited invoices to an unlimited number of clients. Additional features include vendor and bill management, a reporting tool called Project Profitability, and customizable email signatures.
Is FreshBooks Safe To Use?
All information traveling between your browser and FreshBooks is protected with 256-bit SSL encryption. A lock icon in your browser verifies you aren’t using a phishing site impersonating FreshBooks and that your data is secure in transit. Its servers are scanned regularly for vulnerabilities, and FreshBooks uses industry standard encryption protocols and practices to responsibly transmit sensitive information. Multi-factor authentication is required.
Is FreshBooks Built On Double-Entry Accounting?
Like Wave, FreshBooks adheres to the rules of double-entry accounting, the industry-standard bookkeeping method accountants and other small business accounting services use. Your accounting records have a solid framework that provides structured record keeping and improved insight into your finances.
Specifically, FreshBooks has a Chart of Accounts and General Ledger. Since our last review, the company has modified the Chart of Accounts so users can make modifications to it, like adding their own accounts. Previously, only accountants could do this. The site now has an Other Income account (to capture, well, other income), Cost of Goods Sold, bank reconciliation, and all the standard financial reports, like Trial Balance and Cash Flow. If you’re using the Lite version, though, you can’t access the bank reconciliation, account access, or some of the other advanced tools, which is just as well for novices.
What’s Special About FreshBooks?
Overall, FreshBooks has the simplest, most intuitive, and most attractive interface of all the small business accounting services we reviewed, which makes a complicated process like accounting less complicated. Navigation tools are top-notch.
FreshBooks went through a major user interface overhaul a few years ago that dramatically improved its user experience. In the last couple of years, the company added inventory tracking. It’s also incorporated a new user role (manager), automatic mileage tracking in the mobile app, and checkout links, meaning clients can make payments without being invoiced. Contractors can track their own time, and managers have greater control over reports.
The Projects feature has two new tabs for Invoices and Expenses. FreshBooks has also added numerous enhancements to invoices and the overall workflow. For example, a new Preview tab shows you how an invoice will look before you send it. Invoices now display unbilled time and expenses. The client message is customizable. Finally, clients can now make partial payments. It would be nice, though, if there were more invoice customization options.
How Do You Get Started With FreshBooks?
FreshBooks has enhanced its onboarding process. The app first asks a few basic questions about your business, such as what type of work you do and how you bill clients, so it can customize various elements for you. You provide contact information and are encouraged to invite any team members to set up accounts. Then, FreshBooks drops you into the main site, where the setup tool suggests you start getting used to the application by adding a client, sending an invoice, adding an expense, and setting up online payments. These steps are optional. You can close this setup window if you just want to get on with it and add those things on the fly.
When you close the setup box, however, you’re on the site’s Dashboard, with no further guidance on how to get started. Wave offers better onboarding tools that walk you through numerous steps. Whether you want a little hand-holding will depend on how much you know about financial management and how much experience you have learning new tools. FreshBooks is designed for small business owners who have no accounting experience, but a little more upfront guidance wouldn’t be amiss here.
Look and Feel
FreshBooks’ Dashboard gives you a quick overview of your company’s financial status. The Outstanding Invoices graph at the top of the page tells you how much money is tied up in outstanding and overdue payments. Monthly Recurring Revenue is next. Then Total Profit gives you a real-time number for your current profit or loss, and you can change the date range for it. Spending displays your expenses by category. FreshBooks has added two more charts: Revenue Streams and Unbilled Time. Seeing these charts every time you log in tells you a lot about the financial health of your company.
Links to the Help Center and to a page describing what’s new in FreshBooks appear in the lower right. Links in the upper right take you to pages where you can invite team members, including an accountant (not in Lite), and create new records and transactions. Regrettably, you have to scroll a lot to see the charts, and you don’t get a to-do list.
A vertical pane to the left displays navigation links to the core areas of the site: Dashboard, Clients, Invoices, Payments, Expenses, Estimates, Time Tracking, Projects, My Team, Integrations, Reports, Accounting, and Add-ons. Click the link above this list, next to your company name, and a list of the site’s settings opens. Here you can, for example, add additional businesses, contact support, create item and service records, and integrate third-party apps (there are more than 100) including Microsoft Outlook (new), Google Workspace, and Shopify.
How Do You Set Up Connections to Bank Accounts?
If you enter your login credentials for your banks and other financial institutions, FreshBooks connects to those accounts and imports your account transactions. I didn’t have any trouble with it.
The other connection you may want to set up is to a payment gateway, which allows you to accept credit and debit card payments, as well as bank transfers from your customers. Your customers can make payments to you using FreshBooks’ own payment function, which is in fact a rebranded version of payment processing service WePay. It costs 2.9% plus 30 cents per transaction and 1% for bank transfers (ACH), which is effectively the industry standard. You can also accept payments through Stripe and PayPal.
Clicking the Invoices tab in the toolbar opens a page telling you everything you need to know about your accounts receivable (though the site doesn’t use that accounting term) status. This Invoices page provides a lot of information about your recent and historical invoices. With the From Me tab highlighted, you see dollar totals for invoices that are overdue, outstanding, and in the draft stage. Below are links to your most recently updated invoices. A list of all invoices and recurring templates appears at the bottom. You can also create estimates.
You click New Invoice to get started, and an invoice template opens with your contact information and logo, the current date and due date, and an invoice number. You complete the rest of the document by selecting items or services and entering quantities. If you’ve created sales tax rates already, you can assign the correct one(s). You can add a discount, which some small business accounting apps allow. In FreshBooks, however, you can also request a deposit and set up a payment schedule. The latter is unique to FreshBooks. Once you complete the invoice, you can save it or send it.
If you haven’t set up sales taxes already, you have the option to do so right from your invoices. When you click the Add Taxes link directly below each item’s rate, a small window opens where you can define multiple sales taxes. You can either check a box to apply those taxes to all line items on the invoice or assign them individually. FreshBooks does not directly integrate with a sales tax service like the gold standard Avalara. Even so, FreshBooks handles sales taxes more or less the same way other accounting apps for small businesses do. A Sales Tax Summary report will help you complete any necessary related forms.
As you work on invoices, FreshBooks displays links to context-sensitive settings over to the right, which is unique to FreshBooks. Other tools have one giant section where you define all its settings. This context sensitivity is great because it saves you time and constantly reminds you of available options. For example, you can switch to a different invoice style here. You can also make the invoice recur at specified intervals, either automatically or manually, and set up online payments. Additional context-sensitive settings appear once you save an invoice.
How Do You Create Client Records?
To create a new client record in FreshBooks, you click Clients in the toolbar and then New Client. Enter the client’s name and contact information, or as much as you have at hand. When creating clients, you can also customize reminders, late fees, currency, language, and invoice attachments for them by modifying the client settings to the right of the data entry fields. For every client you create, FreshBooks builds a client homepage, which eventually populates with additional information once you have a transaction history.
FreshBooks has the most comprehensive client records of all the small business accounting services designed for microbusinesses. Each client record is a digital business card of sorts, with fields for the client’s name, company name, mailing address, email addresses, and phone numbers. A chart next to the client card shows how much outstanding revenue is associated with that client, and breaks it down into draft invoices, unbilled time, and unbilled expenses. Further down the page is a table with lists of invoices, recurring templates, retainers, credits, Checkout Links, expenses, estimates, time-tracking, projects, and reports for that client. A Relationship tab at the top of the screen opens a private note-taking area.
How Do You Track Expenses?
If you’ve connected one or more bank accounts to FreshBooks, you see a list of recent transactions when you click the Expenses tab in the left vertical pane. FreshBooks tries to automatically categorize them (with choices like Professional Services, Supplies, Meals & Entertainment, Personal, and so on), but it doesn’t always hit the mark. You have to train it at first by correcting inaccurate categories, which you should do, as this information is very important for use in reports and taxes.
Whether you enter an expense manually or edit one you’ve imported, you can add or modify a lot of detail. The five most recently updated expenses appear at the top of the Expenses section. They look like strips of cash register tape. Individual expense records, which appear in a list below, contain fields for the vendor, category, date, source, client/project/description, and amount/tax/status. You can attach a file, drag and drop a receipt image, mark the expense as billable to a specific client, change the currency, and designate it as cost of goods sold (COGS). FreshBooks’ expense management is better overall than that of its competitors.
Bills, Payroll Management, and Time Tracking
FreshBooks Lite does not offer bill tracking and management, but you can get it with the Premium version. Wave does offer bill-tracking.
Payroll management is included in all versions of FreshBooks through an integration with Gusto. At the microbusiness level it’s unlikely you’d have employees, however.
FreshBooks is the only accounting application designed for very small businesses I’ve reviewed that offers time-tracking, and it’s quite good. You can create individual time entries by either entering the hours manually or using the built-in timer and assign them to team members. Your services can be billed to specific clients, and FreshBooks converts entries automatically into invoices.
Simple Project Management Tools
FreshBooks Lite offers good project-tracking functionality. Each project has its own overview page where you can review related transactions and add more, as well as exchange messages with your team members. At the bottom are lists of project-related items you’ve entered elsewhere and assigned to the project: time entries, invoices, estimates, expenses, and services.
FreshBooks’ project-tracking tools work very well. You can work strictly from the project homepage to enter the time and expenses needed to complete your project, or you can use the tools provided outside of the project homepage. The site lacks the flexibility and features offered by true standalone project management apps, but their integration with the rest of the site makes it possible to keep a running tally of your projects’ progress and profitability. And no competitor in this group of applications offers tools like these.
FreshBooks’ Mobile Apps
FreshBooks offers Android apps and iOS apps that are largely similar. The apps are easy enough to use, and they offer an exceptional user experience, just like you get from the web portal.
The FreshBooks mobile app opens to a dashboard containing four critical charts: Outstanding Revenue, Total Profit, Mileage, and Total Spending. Icons at the bottom take you to the working areas of the tool, where you can view, add, and edit data contained in invoices, expenses, time tracking, estimates, mileage, and client records. The mobile apps don’t let you do everything, though. You can’t work with projects, accounts, and reports, for example. But you can access core features you’d be most likely to use away from your desk.
FreshBooks’ mobile apps have a feature I’ve only ever seen before in the QuickBooks Online app: automatic mileage tracking. You run the app with your smartphone’s location services on, and FreshBooks tracks your mileage as you drive. You can record trips as personal or business and go back and add trips if you missed one. You also always have the option to enter trip information manually instead.
Should You Pay for Microbusiness Accounting?
If you’ve never used FreshBooks before, you shouldn’t have much trouble learning how it works. It has an exceptional design, and the navigation tools are intuitive.
Even at its lowest, least expensive tier, FreshBooks’ smart set of accounting tools is superior to those of other accounting services made for microbusinesses. The fact that the company offers more powerful, flexible versions makes it an excellent starter application for a business that hopes to grow.
The FreshBooks family has all the tools very small businesses—and some larger ones—would need. FreshBooks Lite has progressed rapidly over the last several years, and it remains our Editors’ Choice winner for very small businesses, such as sole proprietors and freelancers, who don’t mind paying for the best accounting solution. Microbusinesses that would be happy with slightly less functionality and customizability should consider Wave, our Editors’ Choice for free financial management. Both can save you time as they simplify your work life and bring organization and insight to your income and expenses. Other businesses that aren’t quite on the micro scale should look to Intuit QuickBooks Online and Zoho Books, our Editors’ Choice winners for accounting software for SMBs.