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Top accounting software options for contractors

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedFeb 20234 min read

Contractors not only need to think about sending invoices to clients and recording transactions, but they also need an accurate way to track expenses and comply with tax law.

So, what is the best accounting software for contractors? The best services will make short work of these tasks and more, so that you can cut down the admin and focus on growing your business.

To make the decision easier for you, we’ve compiled a list of the best accounting software for contractors on the market today. Plus, we’ve also snuck in a quick guide on what to look for when making your choice.

5 best accounting software for contractors

Keeping the features mentioned above in mind, here’s our selection of the best accounting software for contractors:

Xero

One of the best known and most reputable providers, Xero offers a range of accounting features relevant to contractors, including payroll, invoicing, inventory and expenses services. It also has a function for importing data from business bank accounts, credits cards and even PayPal. Prices start at £12 for the starter pack to £33 for the premium package.

Xero’s user-friendly accounting app includes software to send quotes, invoice customers for completed jobs, and capture expenses with digital receipts. It also integrates with your bank account and provides online support for easy payment collection by integrating with GoCardless.

QuickBooks

QuickBooks is one of the original pioneers of accounting software, and is still going strong today. With several packages suitable to contractors, the software offers features for payroll, VAT monitoring and reporting tools. Prices start at £3.60/month for the first 3 months, then £12/month for the simple plan.

FreeAgent

Our next pick is FreeAgent, accounting software designed for freelancers and small businesses. While it’s not contractor-specific, it’s used in industries including ecommerce and construction. This cloud-based accounting software comes with an app for on-the-go expenses tracking. It’s also fully customisable, with a free trial to determine whether it’s a good fit for your needs. Set up automated recurring invoices, view data from a central dashboard, and send price quotes or estimates to your clients. You can automatically reconcile transactions without data entry, and create a to-do list for multiple users. In terms of tax preparation, FreeAgent offers sales tax reporting and other financial reports.

Prices vary depending on whether you operate as a sole trader or a limited company. For sole traders, plans start at £9.50/month for the first 6 months and £19/month after that. Meanwhile, for limited companies, plans start at £14.50/month for the first 6 months and £29/month after that.

Sage50

You may be familiar with Sage, a popular accounting software that’s been around since the 1990s. Sage 50 is its version for small businesses, including construction industry contractors. Apart from the accounting features, Sage also offers project management, financial management, and human resources software. If you’re looking for a more comprehensive accounting program to keep pace with your growing business, this is a good option. Export budgets, create a project work centre, and track overtime hours. Access data in real-time and use the dashboard to view forecasted cash flows.

Sage is an all-inclusive accounting package that comes with all the necessary features for contractors, including payroll, invoice management and cash flow forecasts. At the time of writing, Sage is offering the first 3 months free for new customers for all plans, with the starter plan prices at £12/month thereafter.

Zoho Books

Many contractors already use Zoho as a mail or CRM platform, which makes Zoho Books a natural fit for accounting. This contractor accounting software is best for freelancers or small businesses, as its features are limited compared to some others on the list. However, the ability to customize and integrate with additional products in the Zoho suite gives it greater functionality.

Tailored to small businesses, Zoho is an ideal piece of accounting software for accountants. It comes with a range of packages, starting from a free package all the way to the professional plan at £199/monthly.

Why do contractors need accounting software?

General accounting software tracks income and expenses from a central, user-friendly location. Accounting software for contractors is often industry-specific, dealing with union guidelines, tax laws, and project management. It caters not only to the needs of self-employed workers but also to the unique needs of a project-based business.

Contractors often work on the go in a variety of situations, which makes cloud-based software the best choice. Subcontractors can report project costs and progress in real-time, ensuring accurate invoicing and payment tracking.

Contractor accounting software features

The essentials for accounting software include: invoice generation, profit and loss charts, and functions for identifying debtors and creditors.

However, there are some additional features you may want to look out for. These include:

VAT calculation - If you are registered for VAT, it will be very useful to opt for a software that can calculate VAT and produce VAT returns. Some software also offer features for sending VAT returns straight to HMRC which can make things even more efficient.
Payroll accounting - If you’re a contractor with employees, you may require payroll features which allow you to calculate employee wages, generate payslips and even make national insurance deductions. Some software can submit payslips to HMRC automatically, further streamlining payroll.
Budgeting and forecasting - It may be useful to choose a software that can use data from one financial year in order to make a budget and forecasts for the coming year. This can help you stay on top of your finances as a whole.
Fixed asset management - Another important feature is audit history and records and options to calculate depreciation on fixed assets.

How to choose the best accounting software for contractors

Now that we’ve covered a few of the best accounting software for contractors, it’s time to narrow the field down. The best choice will depend on your business’s size, volume of transactions, and budget.

Think about:

Growth: Are there pricing tiers? Can you add additional payment methods and templates as your business grows?
Cost: Are there hidden fees on top of monthly subscription rates? Will you be charged for credit card processing or adding more users to the system?
Ease: Does the software use accounting jargon or is it easy for beginners? Is support and training included as standard? Will you be able to set up the program yourself?

Finally, don’t forget about integrations with other apps you use, particularly those related to invoicing and payment. GoCardless integrates easily with numerous accounting partners, including Xero and others.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. We integrate with over 300 software providers, such as Xero, QuickBooks, and Zuora, to streamline your payments and accounting processes.

Find out how GoCardless can help you with both one-off and recurring payments.