About one month ago I finally decided to upgrade my accounting systems. I had previously been using a combination of Excel, Word, a desktop application called Billings and a few other pieces of software. Although I could accomplish everything that I needed to do in my business it was far less than eloquent. Getting my books and processes together had been on my to-do list for literally a year. I dreaded the process as I felt it would take a lot of work, a ton of research and too much trial and error to get a new system in place. And as a small business owner that handles a lot of the hands-on work myself there just never seemed to a be a good time to tackle this.
One weekend I decided to finally get to this. After I made a list of all my requirements such as invoicing, logging expenses, time tracking, being web-based, multiple user support and so on I spent about two hours looking over all the major players that I could consider. It came down to a short list of Quickbooks Online and FreshBooks. As I used Quickbooks online for a few months a couple of years ago and had a less than enjoyable experience with it I decided to give FreshBooks my money.
Their fee structure seemed very reasonable for the amount of functionality I would gain. Having only a few people that work for me I would, however, need to spend the $10 per extra person fees. This is something to consider if you have a lot of employees that you want to have accessing your system for things like time tracking and project management. It’s really a low cost considering what you get…but something to take into consideration if there is a large staff.
In Billings I had grown very accustomed to the way it handled time tracking. Out of the box FreshBooks does give you a browser-based time clock that you can track time with and assign to projects and tasks. But I had used browser-based time clocks before and I never really liked them as they are easy to forget about. What I liked about Billings was that it put an easy to notice counter in the menu bar. Digging a little deeper into the many available FreshBooks add-ons I noticed they had a similar add-on for use on OSX that would give me a time tracker like I am used to. After working with this for a while now I can honestly say that I like this widget much better now. It does add another $1/month though.
After it’s all said and done the cost is roughly $61/month for myself and 3 other people that do work for me that I want in my system. This is $61/month more than I was paying previously so it does hurt a little. But after working with FreshBooks for a while now and realizing just how much time it’s saving me, how much more power I have and how much more accurate all of my systems are now I would happily pay more.
Once I started diving into FreshBooks I quickly learned just how easy it is to work with. It was a quite a lot of work for me though as I wanted to add all of the current year’s history into the system to keep things easy for me for when it comes time to deal with uncle sam. It was, however, a great way to quickly learn the software and for the amount of work I had to do, I found it quite painless.
Below I outline some tips and how I went about setting up FreshBooks. I am not an accountant, bookkeeper or even someone that I would consider especially good at setting this kind of stuff up. So there are very likely better ways to go about things than what I have done. This is just how I decided to set things up for my web design business.
To save time I think it’s a great idea to go through and set up all of your clients at once before you need to send them invoices. This way you can add them all at once and it will make sending out an invoice quite literally a 10-second process if you do this beforehand.
Be sure that the contact information that you set up for your client is the person that should be receiving the invoices as it could be different than the person that you normally speak with. This way you wont have to rely on your primary contact to forward your invoices onto the appropriate people to get you your money. I like to set up my primary contact as well (you can have multiple contacts) in the system though. If you do this you will be able to send your invoice to everyone in your contact list or just select the contact you want.
If you want to make life easy for yourself with managing things like time sheets, job profitability and time & material projects I would HIGHLY recommend spending the $10/month per employee (or user) to give them access to your system. This way they can run a timer on their computer that can be used to keep track of hours per project & tasks within that project. It will also make figuring out what to pay them a snap for both you and them.
I spent some time when I set up access for the first user beyond myself by logging in as them to see what they will see and be sure that I understand the experience they will have while logged in. For instance, in my set up I did not want them looking at any of the invoicing and only essentially wanted them to be able to manage their own time sheets. The settings to handle this can be found by clicking the link at the top right for settings and then adjusting things on the “Permissions” tab.
Here is how I have things set:
The next thing you should do is to think through common tasks that you perform on typical projects. These will be tasks that you can select from a drop down while tracking time. For instance:
You can set these up by going to Time Tracking >> Tasks.
Now you want to go in and set up your current projects for any job that you want to track time against either for profitability purposes or for the purpose of time tracking on jobs you get paid for by the hour. In my case, I have a few different types of projects: Web Development projects, retainer marketing accounts (SEO, PPC, SMM) and misc time and material jobs for web updates. You can create a new project by going to Time Tracking then clicking on the projects link. Here you will add your new project.
A few things to keep in mind when doing this:
When I name a project I like to use a prefix number to keep them grouped together when I look at them on the project page. For instance: Adding a “1 – “ before all web development projects and adding a “2 – “ before any SEO jobs. You will also want to think about the budgeted hours for a project and make sure that you enter this number in. It is great to be able to see how close to budget you are hour-wise when glancing down the project list.
Before sending out an invoice I also think it’s a good idea to set up your “Items”. Items are the line items that would show up on your invoices such as “Monthly PPC Marketing” or “Logo Design” or “WordPress Development”. You can even set up default pricing for these items if you tend to charge the same thing over and over. You can set these up by going to Invoices >> Items. All of these items will be in a drop-down menu when you go to create your first invoice. You can also save re-usable items when you create new invoices if you don’t already have that item in your items list.
The common theme here is to take the time to customize FreshBooks and set up as many “default” settings as you can as soon as you get an account. This will save you a lot of time going forward and really show you how painless your bookkeeping can be.
When you land a new job (#congrats!) you can now go send your first invoice. A lot of my projects are fixed price and have a 50% down and 50% at the end project term. What I do is generate an invoice for the deposit and send that out and then I also create & save a draft for the final payment at the same time. This way when I finish a project all I have to do is go to my invoice list and find my draft for the final payment and hit send.
Doing this also allows me to do a custom search in my invoice list to show only “drafts” or show only “drafts, sent, viewed, etc” which is my way of quickly forecasting all of the payments I will have coming one day. To do a custom search visit your invoice page and click on the “search” button at the upper right.
FreshBooks has greatly simplified my bookkeeping life and I would highly recommend it to anyone. The features and power of FreshBooks continue to amaze me as I spend more and more time with it. Features like being able to see when a client has looked at my invoice or being able to run profit and loss reports with the click of the mouse (and I could go on and on) all are reasons why I took the time to write this post. Visit FreshBooks here and give it a try (for free) for yourself! (Disclaimer: I do get paid if you sign up from clicking on that link as they have a nice referral program in place. I, of course, would never recommend anything that I didn’t fully believe in).