Freshbooks

Strengths:

• Time tracking, Freshbooks was designed for creatives. This feature allows you to record billable hours and track progress on client projects. When the job is complete you can easily convert your time into an invoice
• Multiple payment gateways supported. While Freshbooks has a native payment gateway you also have the option to use other popular services such as PayPal or Stripe. Multi-currency invoicing is also supported
• Invoicing, know when your client has viewed your invoice plus automated reminders and late fees for slowpoke clients
• Straightforward expense tracking for tax purposes. You can easily add a bank feed to make data entry 1 step simpler

Limitations:

• Not a true double-entry platform; you can record income and expenses, but you will require an accounting professional to record all equity transactions
• Some features only become available for a higher monthly fee, at which point will be paying the same amount as a true accounting platform
• Limited accountant access, your bookkeeper or accountant will only be able to export reports unless you upgrade to “Evergreen” which allows for an additional user
• While invoicing is unlimited, the number of “active” clients is tied to the service level of your monthly subscription

For you if:

You are a one person show that has a small client base and you need advanced time tracking.

Xero

Strengths:

• True double-entry software
• Integrates with multiple payment gateways as well as multiple invoice templates
• Boasts over 400 add-on partners, (many of these are not free integrations)
• Create “rules” in your bank feed to reduce repetition and speed up data entry
• Customize the look of your dashboard; configure your layout to match your priorities, i.e. bank accounts, expense types or an overview of your receivables
• My most favourite feature is that you can e-mail your documents right to your Xero for file storage and attach to documents.
• Purchase orders

Limitations:

• The number of invoices and bank transactions per month limited to the service level of subscription
• While Stripe is the recommended payment gateway beware that there is no easy way to reconcile stripe payments and the transaction fees and transfers have to be manually imported

(Xero has made it clear on their community forum that this is not a priority item and they will not be addressing it anytime soon)

• Lacks keyboard shortcuts, which I also realize is a personal preference, but I like anything that saves me time
• Correcting errors (like transactions posted to the wrong bank account) can be more arduous and difficult to locate
• While multi-currency is a supported feature it is only an option at the “Premium” service level
• Advanced payroll, (outside the USA) requires a third party add-on at an additional cost

For you if:

Require a true double-entry system, you have several clients and bank transactions, prefer to use Stripe or PayPal as your payment gateway of choice, if your accounting professional has recommended (and uses) Xero in their own practice and if you need to allow multiple users.

QuickBooks

Strengths:

• True double-entry software with the best audit trail, a feature that make “the man” very happy
• Clean user interface that is easy to navigate and the search feature is truly powerful, (the current version is nothing like the first iteration which had few features and was hard to navigate)
• Collecting and remitting sales tax is a snap because the software has a unique design for different regions
• Plus there is a native payroll module that can be activated for an additional monthly fee (no need to fiddle with third party integrations and complex setups)
• Create “rules” in the bank feed to speed up data entry
• Create recurring transaction templates for both invoices and expenses
• Bank reconciliation allows you to see the number of debits (money in) and credits (money out) and tracks them in separate columns which make it much easier to spot an error or duplicate entry
• Contrary to popular belief there are several third-party integrations available

Limitations:

• It is very forgiving, QuickBooks allows users to delete transactions and post journal entries to all of the accounts, (for an untrained user, this can spell trouble)
• The payment gateway is limited to Intuit’s own merchant account. If you are a PayPal user you can add your account in the bank feed but customers cannot pay with PayPal directly on the invoice
• The mobile app only allows you to view transactions in your native currency.
• Online file storage is provided, but you cannot upload in bulk or via e-mail
• Lacks multiple invoice templates

For you if:

You need advanced sales tax tracking, payroll, inventory, multi-user access and especially if you are multi-currency. Also, if it has been recommended by your accounting professional and they use QuickBooks in their own practice.