When it comes to reporting your finances the German government has strict standards to adhere to. While it is possible to tackle this all on your own in an hour-long Excel session or sit down with a tax advisor, there is also another option available: accounting software.

A few years ago, the choice of accounting software in Germany was fairly limited, but recently several new challengers have entered the market to innovate, especially for English speakers.

Looking for a good accounting software it should include the following skills:

1. Being able to integrate with ELSTER, Germany’s online platform for processing tax returns, for VAT and income tax declarations (among other things).
2. Bank integration capabilities so that all of your income and expenses can be recorded in real-time.
3. Operation and compatibility in multiple languages, especially English.
4. Suitable for both Gewerbe & Freiberufler.
5. Being compliant with Germany’s data regulations set out by the GOBD and GDPR.
6. Compatibility with multiple countries and geographic areas.
7. User-friendliness and having an intuitive interface.
8. The ability to integrate with third-party financial apps and services.
9. Comprehensive support should you have any tax or tech questions.
10. Having a comprehensive data backup and recovery plan, and secure data protection.

In terms of accounting capabilities, the accounting software should also be able to:

1. Automatically create invoices that are compliant with Germany’s strict legal requirements.
2. Monitor open invoices and create and send payment reminders for outstanding or late invoices.
3. Track income and expenses.
4. Track taxes and VAT, and compile relevant reports.

Four providers which fulfill these criteria are:

1. Sorted

   Sorted is a web-based accounting software for freelancers in Germany. Available completely in English, it is great for easily preparing and managing invoices, keeping track of income and expenses, and preparing and submitting tax reports. In essence, it removes the need for a Steuerberater and guides you through the whole complicated tax return process. You can use all of Sorted’s invoicing and accounting features absolutely free of charge. It’s only when you tackle your VAT declaration or submit your annual tax return that the company will start charging you. From that point, you pay either €80 per year if you earn under €22,000 annually, or €20 per month if you earn above that amount. You can also link your bank account directly to the Sorted app and automatically record your income and expenses.

2. Accountable

   Accountable is a German accounting software and app designed to help the English-speaking self-employed from the very start of their freelancing journey. It guides you through the process of registering (for free) as a freelancer, helps you manage your invoices, income, and expenses, and also handles all of your taxes. Accountable has an integrated invoice builder and manager, so you can create legally compliant invoices directly from your smartphone. In terms of pricing, Accountable offers a tiered subscription package. Their free option lets you handle basic invoicing and gives you an overview of your revenue, costs, and profit. Their basic option costs €7.50 per month for a yearly subscription. Other options are avalaible, unlocking additional features.

3. Debitoor

   Debitoor is an invoicing and accounting software in Germany and other countries designed specifically for freelancers and small businesses. It enables entrepreneurs to keep track of their cash flow, create, send, and manage invoices and quotes as well as declare income tax and VAT, and generate profit and loss reports. Debitoor also allows you to connect your bank account, export your financial data, and integrate with a number of third-party financial apps such as PayPal or SumUp. Debitoor works on a tiered pricing system. While you can trial their app for a week, there is no free plan with limited functionality.

4. Lexware

   Lexware is a German accounting software company with a long history of helping entrepreneurs, freelancers, and small-to-medium-sized businesses. They’ve been around since 1989 and are one of the most popular accounting software groups in Germany. While they offer a number of different products, the one that’s most beneficial to freelancers is Lexoffice. It consists of a comprehensive array of accounting tools that easily keep track of your finances and interface directly with ELSTER for simple tax and VAT declarations. It can even help you do the yearly tax declaration. The only problem? It’s all in German, so freelancers who aren’t fluent will have a hard time using it.

If you are searching for an accounting software check out those four options and see which one suits your needs. For more information check out the following article: https://www.settle-in-berlin.com/how-to-become-a-freelancer-in-germany-self-employed/best-accounting-software-germany/