FreeAgent: The Ultimate Bookkeeping Service

Bookkeeping is one of the most important and potentially stressful parts of running any business. It doesn’t matter if you’re a fresh-faced freelancer or a heartless multinational corporation, if your business income and expenditure isn’t properly accounted for then you can end up spending many a sleepless night frantically shuffling through a years worth of receipts and invoices, hoping to somehow balance everything inside a spreadsheet. Worse still, you risk fines and penalties if you don’t properly calculate your taxes.

Even knowing the above, the word “bookkeeping” immediately evokes mundane thoughts of dusty offices and leather-bound ledgers being thumbed through by monocled gentlemen in pinstripe suits. It’s difficult to get excited about taxes and spreadsheets, isn’t it?

Fortunately, bookkeeping doesn’t have to be mundane. After spending some time with FreeAgent, it’s actually — dare I say it — fun!

Introduction

FreeAgent is available in UK and US markets. As tax differs between the two regions, I’m reviewing the UK version and will make references to all applicable local laws and taxes.

FreeAgent is a complete bookkeeping service, allowing you to manage every aspect of your business. Its feature set is extensive and can be used by a wide number of different people and businesses, all with different needs.

FreeAgent's overview gives you at-a-glance information about your business.

FreeAgent’s overview gives you at-a-glance information about your business.

Estimates

FreeAgent features a comprehensive invoicing and estimate function. Gone are the days of writing estimates in a word processor or saving them as an invoice that gets cancelled, estimates exist outside of your invoices. This keeps them away from any profit or tax calculations. Estimates can then be easily converted to an invoice, retaining all the required information.

You can generate and send estimates directly from FreeAgent.

You can generate and send estimates directly from FreeAgent.

Adding information to estimates is incredibly easy and works in the same way as creating invoices so there’s no worry about discrepancy when working with the two.

Contacts & Projects

Each client you deal with can be added to FreeAgent, along with any contact information. Contacts can be imported and exported via vCards so any contacts you’ve built up in your address book already can easily be brought into FreeAgent. I’d love to see some form of syncing capability such as CardDAV when it comes to contact management, saving the need to constantly import contacts.

All of the work you do for clients is split into projects. For example, you may be creating a new website for ACME Design as well as providing consultancy services. Each project can be given a different budget and hourly rate (should you be charging by the hour), even if it’s the same client. It also means you aren’t digging through all of a client’s invoices just to find one for a particular piece of work you did.

Once a project is finished (or cancelled), you can change the status of it accordingly. It’s important to remember that even if a project is cancelled or complete, any paperwork for it is never deleted. Once you start adding lots of projects, the project view does get a little crowded as the default page view is to list all projects, not just active ones. This means if you’re regularly finishing projects, you need to continually change the view option to “active projects” which can get a little tedious.

Time Tracking

Tracking time is simple, just select the client and project then enter the time with a comment.

Tracking time is simple, just select the client and project then enter the time with a comment.

One of the best features I’ve found in FreeAgent is its exceptional time tracking. Unlike many other services that either don’t offer time tracking or it has to be added to invoices manually, you can keep track of any work done for clients simply and easily. Time is tracked on a per-project basis though the project list can get pretty long if you’re dealing with many clients. Comments can also be included which will also appear on the invoice, clearly explaining what that time was for.

All of your tracked time is broken down by each day of the week along with any comments you have added.

All of your tracked time is broken down by each day of the week along with any comments you have added.

When it’s time to invoice a client, you can simply create a new invoice and tick a box that will add all of the outstanding tracked time that needs to be billed and it will be added to the invoice automatically. For those regularly tracking time, it’s almost perfection.

Multiple Users

FreeAgent supports multiple users per account which means you can have employees interact with FreeAgent as well. If you’re running a design studio and have multiple people working on the same client project, each can be assigned specific rights and allowed to enter their tracked time. Any time that is tracked is clearly labelled with the user’s name and will also be included when generating a new invoice. You don’t need to have people keep track of time separately and then give that to you to track, users can be empowered to enter it directly into FreeAgent.

Invoices

Invoices works in almost the same way as estimates with them being easily customised and costs added. If you’re working by the hour, you can automatically populate invoices with outstanding time. For those offering products and services with fixed costs, you can add costs based upon many criteria, including “Expenses”, “Products”, “Services” and “Bills”.

Invoices are generated in the same way as estimates but you can also include any tracked time automatically.

Invoices are generated in the same way as estimates but you can also include any tracked time automatically.

Invoices can be set with payment terms and if FreeAgent doesn’t see any payments made then it can also send out reminder emails on your behalf without any interaction from you.

Bills & Expenses

We’ve covered the income side of FreeAgent but there’s a lot more to it than simply getting you paid. Remember, FreeAgent is a complete bookkeeping tool. We can keep track of any expenses and bills within FreeAgent so they can be dealt with and, where necessary, tax-deducted.

Bookkeeping isn't just about getting paid - you need to keep track of expenses too.

Bookkeeping isn’t just about getting paid – you need to keep track of expenses too.

Banking

The bread and butter of FreeAgent’s bookkeeping system is the way it manages your bank transactions and reconciles invoices. You can configure FreeAgent with your bank details and import bank statements into the service, providing you with a regular way of tracking your bank balance. Whether you get paid in cash, cheque or bank transfer, any payments from clients should always go into your business bank account. When this happens, you can select individual transactions and reconcile them against invoices which then marks them as paid.

FreeAgent provides transaction support for tracking everything going in and out of your bank account.

FreeAgent provides transaction support for tracking everything going in and out of your bank account.

FreeAgent will try and guess transactions and if you have an outstanding invoice for £1,000 and it detects an incoming transaction for £1,000, it will suggest that to be used for settling the invoice.

It doesn’t always get it right and I find I prefer to manually go through each transaction than let FreeAgent guess them correctly but you have to confirm any suggestions it makes anyway.

Likewise, you also manage expenses with this and can reconcile any outstanding bills or expenses using the same method.

Bank Feeds

Importing bank statements is so last year. FreeAgent supports direct bank feeds via a secure connection service it has partnered with. Every 24 hours, FreeAgent will automatically log in to your bank and download all transactions. You can then go through them and reconcile as needed.

There isn’t much more to say about that other than it doesn’t support all banks but if you are fortunate enough to be working with one of those banks, it works brilliantly.

Taxes

Depending on what type of FreeAgent account you opened (sole trader or limited company), it can calculate how much tax you owe automatically. With full knowledge of tax details such as personal allowance and VAT, it will give you a running total of how much tax you will owe by the end of the tax year. Furthermore, it provides a breakdown of this with all of the fields of a tax form already completed. All you have to do is copy them into your tax return when you’re filling it in.

Many tax forms will be generated automatically which makes submitting tax returns much easier.

Many tax forms will be generated automatically which makes submitting tax returns much easier.

For businesses dealing with VAT, you can even file VAT returns within FreeAgent. What would take a few hours to do (at least for your accountant) can be done in literally seconds.

Accounting

You can give your accountant access to all the relevant information within FreeAgent but with none of the abilities to generate invoices and other non-accounts related activities so they can keep your accounts in order, letting you know of any potential problems before they happen. FreeAgent even has a dedicated sections for accountants such as balance sheets, profit & loss as well as capital assets.

Your accountant will appreciate how well FreeAgent monitors everything!

Your accountant will appreciate how well FreeAgent monitors everything!

API & Integrations

FreeAgent has a very comprehensive API, allowing for some great integration with some well-known services such as Basecamp. Many bookkeeping and accounting services may manage your invoices but you’re still left to sort out your own payment methods. Not so with FreeAgent as you can add a PayPal account (which FreeAgent can also log in to, if allowed) so that invoices can be paid online. For those wanting to avoid PayPal, FreeAgent has recently begun support Stripe.

Here in the UK, GoCardless is a service that allows anyone to set up Direct Debits and it’s a service that FreeAgent supports. You can set up recurring invoices with GoCardless to make sure clients are paying on time, every time.

There are a number of different apps available for Mac, iOS, Android and Windows that integrate with FreeAgent to provide functions such as time tracking and expenses input.

Costs

In the UK, FreeAgent offers three pricing tiers:

  • £19/month +VAT for sole trader
  • £24/month +VAT for Partnership/LLP
  • £29/month +VAT for Limited Company

There’s a 14-day trial available so you can give it a try.

I would, however, recommend contacting your accountant before doing so for two reasons. The first is to make sure they’d be happy using it (you’ll be surprised how many prefer not to use a 3rd-party app).

The second, perhaps more important reason, is that you may be entitled to a free subscription. FreeAgent has partnered with online accountancy service IRIS to create IRIS OpenBooks. It’s only available to accountants but it allows them to provide a branded copy of FreeAgent to their clients. If you’re keen on switching to FreeAgent then IRIS OpenBooks is the exact same system which your accountant may be able to provide and most accountants offer it for free as part of their service cost.

Conclusion

For something as uninteresting as accountancy and bookkeeping, FreeAgent is by far the best service I’ve ever used. For a fixed monthly cost, you have access to a service that can do your invoicing, time tracking, estimates, expenses and help with your accounts.

Everything works exactly as you’d expect and it’s because of this, coupled with a great web interface, that makes it so good to use. I never thought I’d ever suggest bookkeeping could be fun to do but FreeAgent somehow makes it just that. It’s not boring in the slightest and because you can see an overview of just how your business is doing at any time, it’s a great motivational tool.

FreeAgent is the ultimate bookkeeping and accounting software from which you can run an entire business. There’s no need for other apps or services to fill in the gaps since there aren’t any to fill. I’ve been running my freelancing career through FreeAgent for a long time and nothing I’ve seen or used comes close.

You can find more details about FreeAgent here. If you’ve tried the app, or can recommend a similar bookkeeping software please share with the community. 


Summary

Simply one of the best bookkeeping and accountancy services available today. It's easy to use and makes the daunting task of keeping your business transactions and finances in order actually easy and fun to do.

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