The Differences Between Freshbooks and QuickBooks

Because Freshbooks and QuickBooks have similar names, people often wonder if they are alternatives. The QuickBooks-Freshbooks difference question just came up in the LAB, in fact.

Despite the names and a few overlapping features, Freshbooks and QuickBooks are very different products. Here’s a breakdown of the differences, and when and why you should use each one.

Freshbooks

Freshbooks is timekeeping and billing software. Despite the books in its name, it doesn’t really do bookkeeping of any kind. What you can do is track your time and expenses, send customizable invoices to your clients by email or mail (Freshbooks even licks the stamps for you), and even take online payments, if you want to.

I’ve been using Freshbooks for years, now, and it’s by far one of my favorite things. It’s dead simple to use; you can be up and running in moments. Most of my business clients pay me a monthly fee, and Freshbooks makes it easy to set those up as automatic payments with my credit card merchant account. If I do anything extra for a client, it will also automatically add that expense to the invoice and charge my client.

The Freshbooks customer service is outstanding, too. If you call Freshbooks, a human being will answer the phone, and he or she will treat you like a human being and actually help you.

In all the time I have used Freshbooks, I’ve only run into one problem. When clients set up automatic recurring payments by credit card, Freshbooks doesn’t ask for their billing address, and there’s no way for the client to update the billing address when they pay their invoice. If I have it wrong in my system, it’s wrong for the transaction, so I’ve gotten a lot of address verification service bounces over the last few months. My clients have been patient, but it’s an ongoing annoyance.

Since the automatic recurring payments is a newer feature, I’m sure this just didn’t come up before. It doesn’t matter for one-time payments. And when I wrote to customer service, they agreed it doesn’t make sense not to let clients update their billing address. Hopefully, it will be fixed soon.

Freshbooks is hands-down the best timekeeping and billing software for small firms (say 30 or fewer timekeepers) I have ever used. But that’s all it does. If you want bookkeeping features, you’ll need something like QuickBooks.

QuickBooks

QuickBooks does bookkeeping* and billing, but has only rudimentary timekeeping and expense-tracking features. When it comes to small business (or small firm) accounting software, QuickBooks is the popular choice, for some good reasons.

For one, while it isn’t at all intuitive, it is pretty easy to use. For another, your accountant (and bookkeeper, if you have one) probably uses it, and QuickBooks makes it easy to just send a copy of your file to your accountant when it’s time to check up on your books or do your taxes.

I don’t love QuickBooks, but I use it for those reasons, and I don’t have any good reason to switch.

If you are a solo, you might be able to get by with tracking time in QuickBooks. If you aren’t, it’s pretty cumbersome to try to have multiple people entering time, because QuickBooks really isn’t set up for that. About the only way QuickBooks works for tracking time is if you have all your billers track their time on paper, and make just one person responsible for entering all the time at the end of the month.

Should you use both, one or the other, or neither?

I use both Freshbooks and QuickBooks. I much prefer tracking time and expenses in Freshbooks, and the slick online payment portal makes it really easy for clients to pay me using a credit card.

But for keeping the books, QuickBooks just makes more sense. My bookkeeper and accountant both use it, and it’s easy enough to use for my purposes.

That means there is some duplication. When I generate an invoice in Freshbooks, I have to account for that invoice in QuickBooks. I find it is actually a nice double-checking tool for making sure I got all the expenses right. For time, I don’t bother feeding the details into QuickBooks; I just put the total hours as a single line-item. It means that the duplication is pretty minor, and even serves a useful purpose.

Plus, it’s slightly cheaper to use Freshbooks for automatic recurring billing than most credit card processers charge.

Before you dive in to either, or, or both, consider whether practice management software might make more sense. Most of the old-school practice management software, like Time Matters (yuck) and PC Law include backoffice bookkeeping as well as timekeeping, and connect everything up to your clients and matters. Some of the newer (and better) practice management software like Clio does (very) basic bookkeeping, as well.

If you do have or decide to use practice management software, it’s probably better to stick with it for everything you can, instead of layering Freshbooks or QuickBooks on top and complicating things.

*Accounting is what an accountant does—and what many small business owners do, even though they should probably hire an accountant to do it properly. Bookkeeping is what the software is for.

Legal Technology, Practice Management

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  • Josh

    I use Clio for timekeeping, billing, and trust account bookkeeping and think it’s great for all three functions. So, as you suggested above, Clio basically obviates the need for Freshbooks.

    I just started using Quickbooks online for general bookkeeping and love it, especially the feature that allows me to sync my business checking account with the (cloud) software. My question–which is slightly off topic–has to do with using an accountant rather than tax preparation software. Given that I am vigilant about making sure that Quickbooks captures ALL my business transactions, why do I need an accountant? This is not a rhetorical question; I really want to know.

    • http://lawyerist.com/author/samglover/ Sam Glover

      In general, you need an accountant to do your taxes because you are not an accountant, just as most people need lawyers to do legal work because they are not lawyers. If only a fool has himself for a lawyer, I think the same can be said for accounting.

      Neither are you a bookkeeper, which means you may not be recording your transactions correctly, or in such a way that you will get the best tax treatment. It helps to have someone look over your books at the end of each year and prepare you for the year to come. I don’t know the first thing about accounting for depreciation, for example, but my accountant makes sure those get added to my accounts in QuickBooks.

      I really don’t consider it an option, although many lawyers insist on doing their own taxes. Maybe they are more tax-savvy than I am, but I don’t have the time or the inclination to learn to do my accountant’s job in addition to my own.

    • http://www.bryceaschmidt.com Bryce Schmidt

      I agree with Sam, you need an accountant to do your year-end taxes and bookkeeping review. I use AbacusLaw for all of my accounting/bookkeeping, but at the end of the year, I give the data to an accountant to figure out depreciation, retained earnings, deductible expenses versus non-deductible expenses, and to give me corrections for my bookkeeping mistakes (surprisingly there haven’t been too many).

      It really isn’t a matter of not being able to do my end of year taxes and accounting, it’s a matter of not having the time to invest in learning how to do something that I’m not trained to do. This is also why I don’t process my own payroll, but use a payroll processing company that handles state and federal tax and Social Security withholding. I’m a true solo (I have no employees in my firm other than myself), so I don’t have enough time to keep up with all of the tax issues and accounting rules that have to be followed. The cost for having an accountant do a year-end review and prepare your taxes isn’t really that significant either, especially if you have a small firm, or you’re a solo like me.

  • Emy

    THANK YOU you so much for writing an entire article about this whole debacle. I am just starting my own practice or at least trying to and am a little “out of sorts” as I don’t have any idea really what I’m doing. I have found your site to be one of the best despite not even claiming to be “for newbies”.
    I have been researching the billing/accounting software for more than a week and am no closer to being able to make a decision on what to buy.I’d like something super easy to use to bill (DUH?) but at the same time reliable enough to ensure that my trust account and operating account don’t violate state bar rules. I have no idea what I’m doing when it comes to that nor have I found any useful information on how to make the operating/trust accounts work either with Freshbooks or anything else..So I’m hoping you can help:
    1. I have to track billable hours but I liked the idea of a monthly fee…. but I’d like to know how is that recurring payment working for you on PayPal if you are using Freshbooks?
    2. How much are the credit card transactions total in general please? Both for paypal or whatever merchant PLUS for the Visa, MC, etc. expense? Can you please explain these and give me some indication of what percentage of the total amount paid by a client would be allocated to these type fees say on each $1000?
    3. I found this site that claims to sync Freshbooks and Quickbooks…. what do you think??…… http://www.freshqb.com/

    • http://lawyerist.com/author/samglover/ Sam Glover

      I don’t use PayPal for recurring payments; I have a merchant account set up through Authorize.Net. The cost is pretty reasonable. There’s more on the cost in this article.

      If Freshbooks and QuickBooks could sync smoothly, I’d be all over that. It seems like too much to ask, but I’ve definitely asked it of Freshbooks on multiple occasions.

  • http://www.lisastewartlaw.com Social Lawyer

    I’m in a similar position to Emy, but am beginning to agree with Sam that an accountant is the best option for taxes.

  • Shannon

    After a year of using Time59 and Quickbooks, I have moved over entirely to Freshbooks and Outright. I just went through the process of inputting all of my Quickbooks information into Outright and took it to my accountant for my 2011 taxes. He liked the reports Outright generated and prepared my return just fine using Outright. I like the Freshbooks-Outright combo because they integrate and I don’t have to enter anything twice. I am a solo practitioner in the truest sense of the word – no staff whatsoever – and Quickbooks is too complicated for my needs. For someone just starting out, Freshbooks and Outright may be a viable combo.

    • http://lawyerist.com/author/samglover/ Sam Glover

      I can’t tell from the Outright website. Does it integrate with Freshbooks, at all? I’m very inteerested in finding a cloud-based alternative to QuickBooks (that isn’t QuickBooks Online), but it would be nice if it would plug into Freshbooks.

      • GeriSjo

        I feel like a dinosaur, but, I’m personally spooked about having all my credit card and bank account info in the cloud. Isn’t anyone concerned about that sort of thing anymore?

        • http://samglover.net/ Sam Glover

          If you have ever purchased anything online, your credit card information is already in the cloud. Besides, all the credit cards and bank accounts I have include zero liability if someone gains access to my account. So I guess I’m just not very worried about it.

  • http://consumerlawyer.mn/cgi-sys/suspendedpage.cgi Randall Ryder

    Learning Quickbooks is like teaching a platypus how to ride a horse. But, once you get the hang of it, it’s pretty easy.

    Unless you do lots of billing, I don’t think you need to use both. I actually prefer to generate invoices in Quickbooks when I use them (which is rare). I’ve heard people love Quickbooks online, but after a year, it costs much more than just buying the program outright.

    • http://lawyerist.com/author/samglover/ Sam Glover

      That’s for sure (RE cost). I’m still using QuickBooks 2010, in part because my bookkeeper hadn’t bothered to upgrade. You really don’t need to upgrade QuickBooks more than every few years.

      In writing this article, I realized that, since I don’t really do any time tracking anymore, I could definitely get by with just QuickBooks. Except that, for my (low) number of clients, Freshbooks is cheaper for the automatic recurring billing than my merchant account (or Intuit Merchant Services) would be.

      • http://consumerlawyer.mn/cgi-sys/suspendedpage.cgi Randall Ryder

        I will admit that the invoices generated by Quickbooks look pretty lame, especially compared to Freshbooks. But when I want a “spiffy” invoice, I just generate one in Clio, since I use that for case management anyway.

  • Dale N

    I use Freshbooks and don’t really even think it compares to QuickBooks which I find to be very dated and not all that user friendly (maybe it’s just me lol) With freshbooks I could keep using my existing merchant account which was very important to me because I am very happy with merchantinc and I was really not in the market to look for a new merchant account. Freshbook I find to provide a much more professional looking invoice compared to the Do-it-yourself looking invoices QB offers. And at the end of the year when Uncle Sam wants to hear from you FB makes it easy to get all your accounting together for the year.

  • George B

    I recently switch from FreshBooks to Cashboard after minor annoyances with the service. FreshBooks was too overpriced for my team of developers. I’m pretty happy with the change. You might want to check that out if you work with more people than the limited options FreshBooks gives you.

  • Nadine

    There is a software available that will sync Freshbooks and Quickbooks, called SyncBooks, here is the website: http://www.freshqb.com/ I haven’t used it myself but going to give it a try, has anyone else used this software? It’s the only thing similar that I could find, Freshbooks doesn’t have a supported integration for quickbooks like they do for Simply Accounting.

  • Julia Rozwens

    Finding the right accounting tool for your business might be tough! QuickBooks are definitely the most popular option, and it is decent as well (you can additionally check this review http://bit.ly/Y2f25I).

    Picking between Freshbooks and QuickBooks is not easy. In GetApp we also prepared this side-by-side comparison so you can easly spot the differences between the solutions: http://bit.ly/RJl7z0

  • GSjo

    So… How would you recommend setting up a trust (credit) payment in Freshbooks? I like Freshbooks so far, but, I need to create trust accounts. Thanks.

    • http://samglover.net/ Sam Glover

      It’s not accounting software. It is timekeeping and billing software. If you want to track trust accounts, use QuickBooks.

      That said, you can track credits and bill against them, which is pretty much the same thing as taking advances and billing against them. It should do the trick unless you are getting fancy.

  • http://jamescampbell.us/ jamescampbell

    I found Harvest to be the best solution for me for time tracking, cheaper than Freshbooks for the basic plan.