So you’re in the market for some accounting software and have stumbled upon Quickbooks Online as a possible solution. Makes sense! Quickbooks is the most popular accounting software used by small business owners and has been an industry leader for decades. Intuit, the maker of QB, has been making the push to move business owners to their cloud-based solution, Quickbooks Online. For many small businesses this is a great solution as it offers the ability to look at the books from anywhere. While it’s not right for every business it does offer many great features and app integrations for most business owners. In this article we will take a look at Quickbooks Online features and determine which version of the software may be right for you.
Assessing Your Needs
The first step in determining which QBO package you may require is to perform a needs assessment for your company. Some key information to review includes:
- Understanding your industry
- Business goals (90 days, 1 year, 3-5 years)
- Accounting year end
- Growth Rate
- Reporting Requirements
- Compliance and Filing Deadlines
- Payroll Needs
- Inventory Requirements
- Sales Tax Compliance
Having a good understanding of these basic needs will steer you in the right direction so that you are getting all of the features you need out of QBO without paying extra for unnecessary ones. There are currently five different tiers of the software, with each version building upon itself.
Understand the Features of Each Version
The most basic version of QBO offers users the ability to create simple invoices, track business expenses, estimate sole proprietor taxes (Sch C), and track mileage. This version is great for business owners who are just starting up and provide only a few goods or services. It is simple to set up and get started with minimal coaching or help from an advisor.
QBO Simple Start
Simple start is great for business owners who are starting to increase their transaction volume and need greater flexibility in terms of interacting with customers. This version adds the ability to create custom invoices, sales receipts, set up individual products and service items, send estimates, measure sales taxes, send electronic bill payments (fees apply), and integrate apps.
Essentials is the version that will likely meet the needs of most business owners. It adds the ability to track accounts payable, set up recurring transactions to save time on bookkeeping, and track employee time and billable hours. It’s great for that mid-sized business or mom and pop shop that’s growing but isn’t so big that it needs to track inventory or work with different classes or locations.
Plus is an excellent option for companies that are expanding quickly and have more complex reporting needs. This is the “meat and potatoes” version of QBO and adds more advanced features such as tracking billable expenses by customer, creating customized transaction classes that management wants to measure, location tracking, budgets, inventory (FIFO only), and project tracking.
The highest level of QBO versions. This version includes every feature of the previous versions as well the ability to customize reporting features, import invoices and budgets, batch-entry of transactions, and automate tasks such as expense approvals. Advanced is best suited for business owners who are growing and need to track multiple locations, inventory, and have a large volume of transactions. You should work with your accounting professional to determine when the right time is to consider using advanced vs. moving to a more robust ERP system.
The following images from Intuit provides a good summary of the features for each version and reiterates which customers would find the versions most useful:
Pricing and Billing Options
There are two ways to purchase a QBO subscription. The first is simply by going to Intuit’s website yourself and selecting the plan you want. Remember that Intuit wants to sell you the most expensive version they can so it’s important that you went through the needs assessment steps to determine which is right for you. If you do select a plan and find it doesn’t have all the features you need you can always upgrade to the next higher plan at your convenience. Current pricing for picking your own version as of writing this article are as follows:
- Self-Employed: $7.50/mo first 3 months, then $15/mo going forward.
- Simple Start: $12.50/mo first 3 months, then $25/mo going forward.
- Essentials: $25/mo first 3 months, then $50/mo going forward.
- Plus: $40/mo first 3 months, then $80/mo going forward.
- Advanced: $90/mo first 3 months, then $180 mo going forward.
Note that Intuit makes it difficult to find the self-employed and essentials version for some reason. You’ll have to do a specific search to find those versions on their website.
Different billing options are available if you are working with a QBO ProAdvisor. Your ProAdvisor can set your account up at a discount. Current discounts are 30% off on an ongoing basis (Intuit bills the ProAdvisor) or 30% off for the first year of service (Intuit bills you). Either way if you go through an accounting professional you will see subscription savings.
No matter which version of Quickbooks Online you choose you can rest easy knowing you are making a good decision for your business. Proper bookkeeping and accounting are the number one process you should dial in so you can make better business decisions. After all you can’t manage what you don’t measure. If you are ready to jump in to Quickbooks Online or an alternative accounting software, let our firm at Olympus CPA take the hassle out of the implementation. We can help you pick which version is right for you and set up everything correctly at the start. Reach out to us today to get started.
David Lewis, CPA