I understand the temptation to go all in with Freshbooks when you are first starting your business. It's easy to look at and use. Its branding is appealing to the non-accountant in you. They do an incredible job at selling you on the value they will bring to your non-bookkeeping background. I hear you.
And I want to stop you from walking that path or, at least, consider an alternative because every client I have that starts with Freshbooks, must eventually migrate to Quickbooks or Xero.
I considered writing a comparative, but this lady, Stacy Kidal, did such a stellar job, I don't need even to go there. If you are using Freshbooks or are trying to decide which system with which to go, read this post now: Freshbooks vs. Quickbooks: Which is Best for Your Business?
Full Disclaimer: I support proper bookkeeping software such as Quickbooks, Xero, anything with a Chart of Accounts that allows you to track balances of all accounts as well as assets.
No matter the size of business, eventually you will need these features when it comes to tax time otherwise spreadsheets, and random manual calculations become your life. Save yourself and your accountant the time and heartache and just do it right the first time. I don't know of a successful, growing business that functions only on Freshbooks.
From my perspective, your financial system should be able to tell you the following, at-a-glance.
- Cash standing. You can see your cash balance (across all accounts, savings, checking, etc.) or the amount you have on hand to spend, less any outstanding checks and expenses.
- Money owed to you aka a receivables report. You can see at all times how much money is owed to you at any given time, along with how long the invoice has been outstanding.
- Money you owe to vendors aka a payables report. I know most freelancers schedule everything as auto-pay on credit cards and don't write checks. So 1990. But on occasion, you may need to manage credit or cash which is where tracking the bills but not paying them upon receipt will come in handy. Trust me. This feature should always be available.
- Debt. You know how much debt (credit cards, lines of credits, loans, etc.) you are carrying as well as how much of your available credit you are using so you can plan appropriately.
- Net income. You can run a profit and loss report for any specified amount of time to see if you've made any money in any given month.
- Fixed Assets. Say what? Forgive the jargon, but fixed assets play a role in the grandiose calculation of your taxes. Fixed assets are items that will be used beyond one reporting period and are purchased at a certain price that makes it a fixed asset. So, like a phat daddy computer versus boring laser computer paper. The computer is a fixed asset, written off over time. The paper is an expense, written off immediately. Most freelancers don't have a ton of fixed assets, but they often do, and that should be reflected in financial statements for ease of filing. I am always surprised at what I purchase over the course of a year, and if it weren't for Quickbooks Online, I wouldn't remember what I bought and that the write off is different than other things on my profit and loss statement.