The Best Online Accounting Software for the Self-Employed

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Shelley Elmblad was a personal finance software expert for The Balance, and has experience researching and teaching savings strategies over 20 years.
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Shelley Elmblad
Updated November 20, 2019

If you're self-employed working on your own as a consultant or small business owner, the cost and features of some accounting programs can be overwhelming. Instead, check out cloud-based programs to manage your business effectively while staying within your budget.

There are several low-cost, online-based small business accounting apps that can grow with your business. This software is easy to use, has help documentation written in plain English, and does the double-entry accounting for you. Some cloud-based accounting software even makes it easy for you to share records with an accountant, and all choices come with a free trial so you don't invest in the software unless you're sure you'll be able to use it. 

Xero Cloud Accounting Software

Xero.com has tons of accounting features for a self-employed individual and beyond should your business grow. Log on and you'll see a dashboard with an overview of recent sales, bills that are coming due, and bank account balances. There are modules for inventory, paying bills, and contact management tools. You can create depreciation adjustments, or use the online collaboration to work with an accountant to get this done.

Xero offers many add-ons, but other than those for tracking time, most of the add-ons are more useful for businesses that are larger and not so much for the self-employed individual. There are over 25 financial reports included.

The lowest cost option at $19 per month is very limited but adequate for many self-employed individuals who work on just one or two projects a month, with support for only five invoices, five bills and the ability to reconcile 20 bank statement items per month. The next level up costs $29 per month and supports hundreds of invoices, bills, and bank transactions. Add another $10 per month for multiple currency support.​

  • Cost: $19 per month / $29 per month / $70 per month
  • License: Unlimited users
  • Free Trial: Endless, as long as you only create five invoices and bills, and have under 20 transactions in your bank account.
  • Mobile Apps: iPhone, Android

Wave Accounting

Wave Accounting is part of an integrated set of online small business finance tools that also include Invoicing, Payroll, and Receipts. Noting that most small business accounting software is usually actually designed for larger businesses, Wave focuses on serving businesses with nine or fewer employees. All of the Wave apps are free. There is also a Wave Pro directory of accountants that can work with the Wave services and the small business owner.

Wave Accounting is designed to be simple and uncluttered. Easily download transactions from banks, Paypal and other financial institutions, generate financial reports, and it works seamlessly with the Invoicing and Payroll apps.

The Invoicing app lets you choose from templates to create an attractive invoice with your logo. Invoices can be emailed and, for a small fee, can include a "Pay Now" button to allow customers to pay via credit card. The Payroll app includes direct deposit at no cost. The "Receipt" is a mobile app for taking photos of business receipts with a smartphone and uploading receipts as transactions to the Accounting app where they are approved.

Many self-employed people like to manage personal finances alongside their business accounting, and Wave Personal can track your personal finances and investments, and be used to create a budget.

  • Cost: Free
  • License: Unlimited users
  • Free Trial: Not Applicable
  • Mobile Apps: iPhone, Android

Zoho Books

Log on to Zoho Books online accounting app and the first thing you will see is a dashboard with your at-a-glance business finance information like an account watch list, income to expense chart, an aging summary of your bills and invoices, and bank and credit card balances.

Zoho Books offers automatic account transaction downloads, so very little manual data entry is required. You can set up rules to automatically categorize expenses as well and use online payment systems like Paypal, Google Checkout, Authorize.net, and PayPal Payflow Pro. Modules in Zoho Books include those for time tracking, timesheets, and invoicing.

The majority of transactions entered automatically follow the double-entry accounting standards, but there are times that manual adjustments need to be made to any small business's books. Manual journal entries can be made by you or your accountant to fix errors, transfer balances between accounts, and record depreciation. You can establish different permissions for your accountant and for different employees so they just see what they need to.

Zoho Books includes many different financial reports along with traditional accounting reports like trial balance and balance sheets.

Zoho has a whole set of online business apps, which include an invoicing app and a CRM app, but you'll pay extra for these.

  • Cost: $24/month or $240/year (that's two months free)
  • License: One user, add more for $5 each per month
  • Free Trial: 30 days, full access to all features
  • Mobile apps: None at the time this was written