If you need to access your data away from the office or want to give users outside of your company access, it’s time to convert to cloud-based accounting software like QuickBooks Online. The good news is converting from QuickBooks Desktop to Online is so easy, you can do it yourself. If you get stuck, you can contact QuickBooks support for free.
QuickBooks Online (QBO) is available in four versions. If you haven’t already, you might want to compare QuickBooks Online products to choose the program that is right for you. Once you start your free trial subscription to the QBO product of your choice, you can follow along with the step-by-step instructions below.
The process described in this article is for small businesses that currently use the Windows Pro or Premier version of QuickBooks Desktop. If you use QuickBooks Mac, you can follow Intuit’s conversion instructions for QuickBooks Mac. If you use QuickBooks Enterprise, Intuit also has conversion instructions for QuickBooks Enterprise.
Features Not Available in QuickBooks Online
Although we rated QuickBooks Online as the best small business accounting software, there are a few features available in QuickBooks Desktop that are not yet available in QuickBooks Online. Before you convert QuickBooks Desktop to Online, you should consider whether the many benefits of QBO are worth losing any of the following Desktop features:
- Sales orders
- Fixed asset tracking with Fixed Asset Manager
- Price levels
- Estimate to actual reporting
Here are the nine steps to convert QuickBooks Desktop to Online:
1. Check the Timing & File Size Requirements
You can only import your data to QuickBooks Online within the first 60 days of the subscription start date. You have two options if you have had your QBO subscription for more than 60 days:
- Find a QuickBooks ProAdvisor who can convert files within the first 180 days of their subscription start date.
- Set up a new QuickBooks Online subscription using a different email address.
Once you know you are within the allowed time frame, you need to verify the total target count in your QuickBooks Desktop file. To do this, open your QuickBooks Desktop file and press F2. In the example below, the total number of targets is 25,642. Total targets cannot exceed 350,000 for the import to work. If your file exceeds 350,000 targets, you will get an option to import lists for customers, vendors, products, and services, along with account balances.
2. Prepare Your QuickBooks Desktop Data for Export to QuickBooks Online
Use the steps below as a checklist to ensure your data is ready for export:
- Update your data: This is your opportunity to clean up your data; for example, you may want to add or change customers’ or vendors’ contact information.
- Complete outstanding tasks: Make sure all bank accounts have been reconciled, payroll has been processed, and inventory adjustments have been made prior to your converting to QuickBooks Online.
- Back up your data: Make a backup of the data file before importing it to QuickBooks Online by going to File>Back Up Company>Create Local Backup, as indicated in the screenshot below:
3. Create a QuickBooks Online Account
The screenshot below shows where you enter basic contact information like email address, name, mobile number, and password to get your QuickBooks Online account set up. As mentioned previously, an existing QBO account has to be less than 60 days old for you to convert your data from QuickBooks Desktop. If your account is more than 60 days old, you will need to create a new one using a different email address.
Provide Basic Company Information
The QuickBooks Online purchase process asks for additional information about your business, starting with the screen below:
Log Out of Your QBO Account
After signing up for your QuickBooks Online trial subscription, you will be taken to your company’s dashboard. You must log out of QuickBooks Online to import your data from QuickBooks Desktop. Click on the Gear icon (upper right corner) and select Sign Out, as indicated in the screenshot below:
4. Open QuickBooks Desktop
Open your QuickBooks Desktop program and sign in to the company you are converting to QuickBooks Online. You’ll need to export your data out of this account and into QuickBooks Online.
5. Export Company File to QuickBooks Online
Within your QuickBooks Desktop company, click on the Company menu across the top of your screen and select Export Company File to QuickBooks Online, as shown below:
If you don’t see the Export Company File to QuickBooks Online option, you need to download the most recent QuickBooks Desktop update. From the Help menu, select Update QuickBooks, as indicated in the screenshot below. Once the update has completed, close QuickBooks Desktop, reopen and sign back in, then return to Step 2 above.
If your QuickBooks Desktop program is older than three years, you may not be able to update the program to export your data because QuickBooks stopped supporting desktop programs that old. One workaround is to get a free 30-day trial subscription to the latest QuickBooks Desktop. Open your company in the new software and the data file will be updated. Then you should be able to export your company from your new version of QuickBooks Desktop to QuickBooks Online.
6. Sign Back Into Your QBO Account
After selecting the data to export to QuickBooks Online, your QuickBooks Desktop program will open a window for you to sign into your QBO account. Enter your user ID and password to open your QuickBooks Online company, as indicated in the screenshot below.
7. Indicate Whether You Want to Import Inventory Into QuickBooks Online
If you are managing your inventory in QuickBooks Desktop, it is currently valued using the average cost method. However, if you bring the existing inventory into QuickBooks Online, it will be valued using the first in first out (FIFO) inventory method. This may have a significant impact on the value of your inventory, plus changing your inventory method must be reported to the IRS. Be sure to consult with your accountant before importing your inventory.
If you click yes in response to the above question, the value of each inventory item will be recalculated using the FIFO method as of the start date you select. As noted above, you should consult with your accountant before importing your inventory and changing inventory methods.
If you don’t have an accountant and want to finish your conversion to QuickBooks Online, click no. You can always import your inventory from an Excel spreadsheet once you have consulted an accountant.
8. Select Your Company in QBO
Select the QBO company that you want the data to import to from the drop-down list. If you forgot to set up your account, click on the Create new QuickBooks Online company link and follow the on-screen instructions.
9. Copy Data File
Once you complete the online instructions for selecting your company, you should see a notification similar to the one below that the copying process has begun. The time this process takes depends on the size of your file. It could take just a few minutes for a small file or several hours for a large file.
You will see a notification similar to the one below once your data file has been copied. Click on the Ok, got it button and log out of QuickBooks Desktop. Don’t use QuickBooks Desktop after this point, since any changes will not be exported to QBO.
Once your data is ready, you will receive an email saying your data is ready to review in QBO, similar to the one below. Click on the Complete your setup button to log into QBO and review your data.
Reasons to Convert From QuickBooks Desktop to Online
There are benefits to converting your data from QuickBooks Desktop to QuickBooks Online instead of starting QuickBooks Online from scratch. If you’ve been in business for at least a year, you’ll want access to your business’ existing financial data so you can run comparison reports. In addition, converting your data preserves the history of your customer and vendor transactions and your item lists.
Listed below are three benefits of importing data to QuickBooks Online instead of setting up a new company in QuickBooks Online:
1. Gain the Ability to Run Comparison Reports
Whether you’ve been in business for 12 months or a few years, one of the advantages to having access to historical data is that you can run reports to compare the current year to previous years. This allows you to see trends in income and expenses. These trends can help you to make decisions that could impact the future of your business.
2. Preserve Vendor & Customer Transactions
Transferring your QuickBooks Desktop data to QuickBooks Online preserves all your past transactions with vendors and customers. If questions arise concerning prior payments from customers, you won’t have to open your old books in Desktop to find the answers. All of your current and historical information will be in one place.
3. Preserve QuickBooks Items
As a QuickBooks Desktop user, you should be familiar with the importance of complete and accurate item lists used in payroll, invoicing, purchasing, and other areas. QuickBooks Online utilizes the same item lists. By converting your existing company, you save time by not having to recreate these lengthy lists.
When Not to Convert QuickBooks Desktop to Online
There are a couple of situations where you may not want to convert your data from QuickBooks Desktop to QuickBooks Online. The first is when you have over 350,000 targets and therefore not allowed to do the transfer. You also may not want to convert your data if your Desktop books are a mess. In that case, you want to start with a clean slate.
For both of these situations, you may want to transfer all the lists from QuickBooks Desktop to QuickBooks Online without transferring any of the transaction data. These lists include your customers, vendors, and items, among other things.
1. File Contains Over 350,000 Targets
As discussed in Step 1 above, QuickBooks Desktop files with over 350,000 targets cannot be transferred to QuickBooks Online. The next best option for these companies is to export the Desktop lists so that customers, vendors, and items do not have to be recreated.
2. Start With a Clean Slate
Let’s say that your existing QuickBooks file has seen more than its share of bookkeepers who didn’t do such a great job of managing your books. In that case, you may not want to transfer your data but instead export your customer, vendor, products, and services lists from QuickBooks Desktop to QBO, provided the information is still reliable.
How to Transfer Lists From QuickBooks Desktop to QuickBooks Online
When a full conversion of your QuickBooks Desktop data is not possible or advisable, the next best thing is to manually transfer individual lists of data via an Excel spreadsheet. To export a list from QuickBooks Desktop, display the list and click on the Excel icon located in the toolbar, as indicated in the screenshot below:
Next, select Export Customer List as indicated below:
Note: In the above example, we have used the customer list; you can follow these steps to export the vendor, products, and services lists.
After the lists are exported from QuickBooks Desktop, they must be imported into QuickBooks Online. To import lists of data to QuickBooks Online, check out the following three video tutorials:
- How to set up customers: The lesson includes a section on how to import customers from an Excel spreadsheet, which is needed after you perform the export described above.
- How to set up vendors: Similar to customers, the lesson includes a section on how to import vendors from an Excel spreadsheet.
- How to set up products and services: The lesson shows how to import the cost, quantity, and detailed description of each product and service sold from an Excel spreadsheet.
What to Do After You Import Data to QuickBooks Online
Before you begin working in QuickBooks Online, you need to verify that your data was successfully imported. The best way to do this is to run a profit and loss statement and balance sheet report in both QuickBooks Desktop and QuickBooks Online and compare the totals.
For both reports, use the following parameters:
- All dates
- Accrual method (note: even if you are a cash basis business, use the accrual method for these reports)
If you find a discrepancy when comparing your reports, contact the Intuit support team at 1-800-638-8615 and they will troubleshoot the issue at no cost to you.
Get Up to Speed With QuickBooks Online
Now that you’ve verified your data imported correctly, it’s time for a crash course in QuickBooks Online. Fit Small Business has created a free QuickBooks Online course that includes 39 video tutorials and written step-by-step instructions.
The good news is that you don’t have to complete all 39 videos because you converted your data as opposed to starting from scratch. With that said, I recommend that you complete the following lessons first:
- How to Set Up Company Information
- How to Import Banking Transactions
- How to Manage Downloaded Banking Transactions
- How to Import Credit Card Transactions
- How to Manage Downloaded Credit Card Transactions
- How to Set Up Multiple Users
In addition to setting up QuickBooks Online, we also have video tutorials to help you run your business, including topics like managing banking transactions and credit card sales. You can download the entire QuickBooks Course for free.
Frequently Asked Questions (FAQs) About Switching From QuickBooks Desktop to Online
Below we have answered some of the most frequently asked questions about switching from QuickBooks desktop to online.
Can you use both QuickBooks Desktop & QuickBooks Online?
Unfortunately, you cannot use QuickBooks Desktop and QuickBooks Online for the same company. QuickBooks Desktop is software that must be installed on your computer, and the company files that you create will be stored locally on your hard drive or network.
QBO is a cloud accounting software that does not require software installation. Instead of your QuickBooks data being stored on your computer or network, the data is stored in the cloud. This means that there is no way to connect QuickBooks Desktop to QuickBooks Online, which is why you cannot manage your books using both products at the same time.
What’s not imported when you move from QuickBooks Desktop to QuickBooks Online?
While most of your data will import when switching from QuickBooks Desktop to Online, there are a few items that will not convert, including:
- Bank and credit card account reconciliation reports: Once you convert to QBO, you will need to start your reconciliations from where you last ended them. If you need access to prior reconciliation reports, you can still get them from your desktop version as long as you don’t delete it.
- Recurring credit card charges: You’ll need to cancel your existing recurring credit card transactions in the Merchant Center. Once that’s done, you’ll need to rebuild them in QBO. This is done by building them as a recurring sales receipt.
- Audit trail: There is nothing you can do about your audit trail from the past other than to retain a copy of your desktop version and the information contained in it. You will, however, get an improved audit trail with QBO going forward.
- Inventory from QuickBooks for Mac: While you can’t transfer your inventory from a Mac computer, if you have access to a computer running Windows, you can make the transfer there.
- Reports: QBO contains a variety of reports that can replace many of those you’ve been using in the desktop version. The best solution is to find a new QBO report and begin using it.
How do I upload a company file to QuickBooks Online?
The steps outlined in this article essentially allow you to upload your company file to QBO. However, the QBO support team must take the data and put it in a readable format before you can use it, which is why it is not immediately available once you complete the final step.
Bottom Line: Converting QuickBooks Desktop to Online
Congratulations on successfully converting from QuickBooks Desktop to QuickBooks Online. Once you’ve had a chance to check out a few of our video tutorials, please let us know what you think—we would love to hear from you.
If you have not yet made the conversion, sign up for a 30-day free trial and give it a try. This article walks your through the steps, and QuickBooks support is there to help with the conversion.