Last editedMay 20223 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.
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
While there’s a selection of contractor accounting software on the market, many of these products share similar features. As you start to compare your options, you should look for software that includes:
Accounting and project management features
Invoice creation and tracking
Integration with payment apps
Automated receipt categorization
1099 tax forms
What is the best accounting software for contractors?
Keeping the features mentioned above in mind, here’s our selection of the best accounting software for contractors:
You’ll usually find Xero at the top of the list for accounting software, no matter the industry. Already popular throughout Australia, New Zealand, and Europe, it’s now increasingly used by contractors in the United States. Xero’s user-friendly accounting app includes construction accounting 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 platforms like GoCardless, PayPal, and Stripe.
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 customizable, 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.
3. Sage 100 Contractor
You may be familiar with Sage, a popular accounting software that’s been around since the 1990s. Sage 100 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 center, and track overtime hours. Access data in real-time and use the dashboard to view forecasted cash flows.
4. 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.
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.
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 helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.