This article is part of a larger series on Accounting Software.
What We Recommend FreshBooks For
We evaluated FreshBooks across 11 categories and found that its biggest strengths are project accounting, accounts payable (A/P), and accounts receivable (A/R) management. Based on these results, we consider FreshBooks a great choice for any kind of business that needs to manage and track projects from inception to completion. Project-based businesses looking for an easy way to send invoices will also benefit from the software. FreshBooks doesn’t manage inventory and can’t track income by class like QuickBooks, but it can be a great alternative for automating business processes, including expense management and time tracking.
FreshBooks Is Especially Good For
- Invoicing customers: We ranked FreshBooks as one of the best invoicing software applications because of its powerful invoicing capabilities. You can create professional invoices in seconds, choose your preferred currency, and send invoices from anywhere with its mobile app. FreshBooks is also one of our choices for the best time-tracking apps. With FreshBooks, you can track employee time easily and add it to your invoices.
- Project management teams: FreshBooks has time-tracking and collaborative tools that allow you to track the hours spent on a project and chat with your team members easily. You can also compare your budget costs to actual time and expenses to help you better manage your budget and operations.
- Businesses looking for an alternative to QuickBooks: FreshBooks offers many of the same features available in QuickBooks Online for a lower price, including expense categorization, receipt capture, billable time tracking, and simultaneous users. You can explore other alternatives in our review of the best QuickBooks alternatives.
- Businesses engaged in ecommerce: If you’re engaged in selling products online, FreshBooks can help with integrations for Squarespace, Shopify, eBay, Selz, and others. However, if you keep substantial inventory on hand, we suggest reading our review of the best e-commerce accounting software for other alternatives.
FreshBooks Is Not a Good Fit For
- Companies with inventory: FreshBooks cannot track the cost of your inventory and the cost of goods sold (COGS) without an integration. Xero is a good software app for small companies dealing with inventory.
- Tracking income/expense by class: FreshBooks doesn’t let you run income or expense reports by class like QuickBooks Online. QuickBooks Online allows you to run financial statements separated by class of products and services plus location.
- Companies seeking very basic bookkeeping for free: While FreshBooks offers far more features, Wave offers basic functions like importing bank transactions and compiling financial statements for free.
Are you looking for something different? Read our guide to the best small business accounting software and check out our top picks.
FreshBooks Accounting Pros & Cons
|All plans include unlimited invoices||Cannot track inventory|
|Can track time and bill clients for hours||Can’t track income or expenses by class|
|Better customer service than most competitors||Cannot track and reconcile bank accounts without a live bank connection|
|Includes a mobile app for accounting and invoicing on the go||Requires a fee for additional users|
FreshBooks Case Study
Our case study shows a side-by-side comparison of FreshBooks, Sunrise, and QuickBooks Online to help you decide which is right for your business:
FreshBooks beats Sunrise and QuickBooks Online in terms of projecting accounting, mobile app, and customer success. It does better than Wave in terms of managing A/P and A/R, but it’s not as powerful as QuickBooks Online.
FreshBooks’ weakest point is inventory management, which is extremely important for product-based businesses. If you sell products regularly, QuickBooks Online is the best choice for managing inventory.
FreshBooks offers four plans with monthly fees that start at $15 per month. The plans vary in terms of the maximum number of billable clients and the advanced features available, such as automated recurring invoices, double-entry accounting reports, and a dedicated account manager. You can save an additional 10% by paying annually.
Pricing & Features
Unlimited Customized Invoices
Double-entry Accounting Reports
Dedicated Account Manager
All plans include one user with additional users available for $10 per month. FreshBooks also integrates with Gusto to support your payroll needs.
Below we provide a quick assessment of FreshBooks within each category based on our comprehensive case study to help you decide if it’s the right software for you. We also include videos of our detailed assessment of each feature.
Setting up FreshBooks is relatively easy. It takes a few steps to input your company information, including company name, email address, and telephone number. As an owner, you can access pretty much anything, except the ability to create journal entries and set up custom accounts in the chart of accounts. You need to invite an accountant to execute these tasks for you, which can be frustrating for business owners who don’t work with an accountant or bookkeeper. FreshBooks also doesn’t allow you to enter beginning balances unless you use the Journal Entry window. You can’t close prior-year books to prevent changes in your previous transactions. If you need to have one or more people besides you work in FreshBooks, you can add additional users, but with limited options for user roles and permissions.
FreshBooks General Features Video
Available for Premium and Select users, the accounts payable tool in FreshBooks includes bill and vendor management features, which can be found under the Expenses tab. Transactions entered manually can only be recorded to the Petty Cash account. Those transactions can then be assigned to a bank account when the transaction is imported via the bank connection and reconciliation performed. Therefore, there’s no way to assign expenses to bank accounts without allowing FreshBooks access to your bank account. Connecting your bank account is a great time-saving feature, but if you aren’t comfortable allowing this connection, you’ll be better off with QuickBooks. QuickBooks allows a connection but doesn’t require it.
You can create a new vendor on the fly and enter a bill from scratch or by uploading a receipt. To enter a new bill in FreshBooks, click on the Expenses menu, select the Bills drop-down menu, and then tap on the New Bill button. Provide the required details in the New Bill screen and then click Save:
FreshBooks also allows you to record a payment and assign it as billable to a project or contractor. You can also set up non-stock and service items within a service order and add a default price for each item, but you can’t use the item to pay independent contractors. A/P is connected to your cash flow statement and profit and loss (P&L) reports, so you can view outstanding bills instantly.
FreshBooks Accounts Payable Video
There’s a lot of important invoicing features in FreshBooks. FreshBooks invoices look professional, and you can customize the style, add a logo, and include a personal message. Not only can you personalize your invoice, but you can also add items, such as inventory, labor and expenses, and sales tax items. You can also email and print your invoice. Another nice feature is the ability to create recurring invoices, which comes in handy if you’re billing a customer for the same amount on a regular basis. You can also view a filtered list of your outstanding invoices so you can send your customers a friendly reminder.
To add a new invoice in FreshBooks, click on the Invoices section, hit the New Invoice button, add your details and customize your invoice, and then click Save:
Despite its great features, the accounts receivable has shortcomings. You can’t issue a receipt for a sale paid immediately, issue a refund check to settle a negative accounts receivable, or include a sales tax adjustment on a credit memo.
FreshBooks Accounts Receivable Video
FreshBooks doesn’t perform well in terms of banking and cash management. You can’t reconcile bank statements unless you hook up your bank account. If you aren’t comfortable connecting your bank account, then FreshBooks isn’t for you. At the very least, good accounting software should allow you to record a check in the register, but that’s not possible with FreshBooks. With FreshBooks, all transactions are deposited or withdrawn from cash on hand automatically. From there, transactions can be assigned to bank accounts, but only by utilizing the connection to your bank account. This makes FreshBooks nearly unusable if you don’t establish the bank connection. Almost all software allows a bank connection, but FreshBooks is the only one among its major competitors that requires the connection. If you’re looking for software with strong banking and cash management, then we recommend QuickBooks.
FreshBooks Banking and Cash Management Video
FreshBooks’ biggest weakness is fixed asset management, as reflected by its zero score in our case study. We tried to record a purchase of a job trailer as a fixed asset, but you can’t assign a bill or payment to an asset account, and there’s no option to record a journal entry while logged in as the owner. While very few accounting programs have a built-in fixed asset manager, most at least allow you to record the purchase, which FreshBooks does not. If fixed assets are a big part of your business, you should consider Xero, which is a good general bookkeeping program with a solid fixed asset manager to calculate depreciation and track assets.
FreshBooks Fixed Assets Video
If you need project accounting, FreshBooks is an ideal choice, unless you need inventory accounting. It includes project management features that work directly with its invoicing tool to help you manage timelines and simplify project workflows. You can create an estimate and add items such as labor, inventory, and sales taxes. Once approved, you can convert an estimate to a project and allocate actual labor cost details. You can also compare estimated costs against actual costs, which is important for budget planning. If you need specialized accounting software for project management, check out our list of the best contractor accounting software programs.
FreshBooks Project Accounting Video
FreshBooks lets you add sales tax items to bills, expenses, invoices, credit notes, and other income and vendor transactions. While you can track sales taxes, you have to manually set up the sales tax for each jurisdiction where you’ll be collecting tax. You can generate a tax summary report to see the amount of sales tax collected as well as view your sales tax liabilities. However, you can’t use FreshBooks to pay and file your tax returns.
We evaluated the sales and income tax features across the other categories, so there is no separate video available.
If your business deals with inventories, you need to look for an alternative to FreshBooks. While you can set up inventory descriptions to be added to bills easily, there’s no way to track the number of items on hand, the value of stock available, or the cost of your inventory sold. Tracking your inventory costs by hand with a spreadsheet is very time-consuming and unnecessary with the right software. If your business is heavily engaged in selling products, we recommend more powerful software like Xero to avoid a spreadsheet nightmare.
As with sales and income tax, FreshBooks’s inventory management is assessed across the other categories, so we have no separate video.
FreshBooks generates a wide range of reports, but they aren’t as detailed as QuickBooks Online. For instance, the balance sheets only show main categories, which means you can’t drill down in reports for more specific levels of detail, such as classes and location. Other reports available include A/R aging, A/P aging, income or loss by month or by customer, trial balance, and general ledgers. If you only need basic financial reporting, you should do fine with FreshBooks.
FreshBooks Reporting Video
FreshBooks has earned a reputation for its award-winning customer service. It offers nearly all types of customer support, including phone and email support. You can speak with a customer service representative over the phone, which is rare among accounting service providers. You can also browse its vast self-help resources that include how-to articles and answers to frequently asked questions.
FreshBooks Customer Service Video
FreshBooks has a capable mobile app that you can use for sending invoices on the go. It can execute almost all the functions of the desktop interface. You can enter and pay bills, accept payments, attach receipts, record time worked, and then assign it to a customer. If you often do your business on the go, FreshBooks’ mobile app won’t disappoint you.
FreshBooks Mobile App Video
Assisted Bookkeeping Options
FreshBooks itself doesn’t offer assisted bookkeeping, but it partners with Bench, an online bookkeeping service, to provide users with bookkeeping, tax preparation, and tax advisory services. You’ll be assigned a dedicated virtual bookkeeper who will take over your bookkeeping tasks, from reconciling your accounts to generating reports.
FreshBooks integrates with more than 70 software programs, including Zoom, Shopify, Squarespace, Gusto, G Suite, Fundbox, Stripe, Bench, HubSpot, Dropbox, PayPal, QuickBooks Online, Slack, and Mailchimp.
Best for: Companies looking for inventory accounting
Best for: Businesses that need income and expense tracking by class
Best for: Companies seeking free accounting software
Software from: $9 per month
Software from: $25 per month
Software from: $0
FreshBooks may lack some important features like managing your inventory or tracking income by class, which are present in slightly more expensive software like Xero and QuickBooks Online, but its powerful invoicing and project management features and excellent customer service make it worthy of consideration for your business.