QuickBooks Online 2022 Comparison: Which Version Is the Best for You?

QuickBooks Online offers five versions: Self-Employed, Simple Start, Essentials, Plus, and Advanced. Pricing runs from $15 to $180 per month. Based on our QuickBooks Online comparison, your ideal plan depends on the number of users you need and whether your business requires features like accounts payable (A/P), time and expense billing, or inventory.

• QuickBooks Online Self-Employed: Best for small service business owners who report business income on Schedule C of their personal tax return and have no employees
• QuickBooks Online Simple Start: Best for small service businesses that have employees and regularly issue invoices
• QuickBooks Online Essentials: Best for small businesses needing to assign billable time and expenses to customers, track bills due, and provide access for up to three users
• QuickBooks Online Plus: Best for retailers, wholesalers, contractors, and other small businesses requiring inventory tracking, job costing, budgeting, and access for up to five users
• QuickBooks Online Advanced: Best for small and midsize businesses (SMBs) wanting more detailed reporting, custom user permissions, a dedicated support manager, and up to 25 users

QuickBooks Online Comparison Chart: Pricing & Features

QuickBooks Online is our top pick among the best small business accounting software. To help narrow down the best plan for your business, answer a few short questions below. This will offer you a customized recommendation based on the responses you give. Afterward, continue reading the article for a more detailed comparison of the five QuickBooks Online versions.

QuickBooks Self-Employed vs QuickBooks Simple Start

QuickBooks Online Self-Employed works very well for people who work for themselves in a service industry and report their business income on Schedule C of their personal income tax return. Check out our review of QuickBooks Online Self-Employed to see what it can do for freelancers or solopreneurs. We even consider it the best for tracking freelance income and filing tax returns in our guide to the best accounting software for freelancers.

Simple Start includes payroll processing, which allows you to calculate and track payroll taxes, and is preferable to Self-Employed if you need to track assets and liabilities and use automated sales tax on invoices. It’s a great fit if you’ll be doing the bookkeeping yourself and don’t need inventory accounting. If you need a dedicated expert to handle your ongoing bookkeeping work, you can sign up for QuickBooks Live Bookkeeping, available in Simple Start and all other higher plans.

To help you determine which QuickBooks Online plan is best for you, we formulated an internal case study showcasing the key differences between the plans. In the latter part of the discussion, we present a detailed evaluation of each plan and a head-to-head comparison to see which one fits your needs. We conducted separate evaluations for each plan, except for QuickBooks Self-Employed as it isn’t a full-fledged double-entry accounting software and has limited accounting features.

QuickBooks Self-Employed vs Simple Start at a Glance

Takeaway: Schedule C businesses should go with the higher-priced Simple Start if they have employees, need to charge customers sales tax, or need a balance sheet showing assets and liabilities. If your Schedule C business has inventory, you’ll need to upgrade to QuickBooks Online Plus to calculate your cost of goods sold (COGS) and ending inventory.

QuickBooks Simple Start vs QuickBooks Essentials

QuickBooks Essentials allows three users vs Simple Start’s one user. The advantages of Essentials vs Simple Start are the ability to manage unpaid bills and assign hours worked and billable expenses to specific customers. In addition to helping you pay bills on time, recording unpaid bills is necessary if you need to produce accrual-based financial statements. Very small businesses that bill customers for hourly services usually find that Essentials meets their needs.

QuickBooks Simple Start vs Essentials at a Glance

Our case study aims to evaluate the top accounting software on the market on a multidimensional level. We evaluated each software based on a fixed set of categories and functions, including general features, banking and cash management, A/P, and accounts receivable (A/R), among others.

The chart below shows the summary of our case study for QuickBooks Simple Start vs Essentials. We also include a detailed explanation of the key differences to help you decide which plan suits your needs:

Manage A/P

The biggest difference between Simple Start and Essentials is that Simple Start doesn’t allow you to pay and manage bills. This is a bit inconvenient since even solopreneurs or freelancers have bills that need to be paid. However, if you only need to record expenses as you pay them, then Simple Start might be enough.

The Essentials plan allows you to enter and track unpaid bills within the program. It even reminds you of bills due and allows you to pay multiple vendors simultaneously. In our case study, the program also enabled us to create recurring expenses, which is important for businesses with regular payments to make.

Other benefits of Essentials over Simple Start are the ability to record a vendor credit for refunds and add it to an invoice, set up a service item and use it to pay independent contractors, and short pay an invoice.

Record Time Activity as Billable to Customers

With QuickBooks Essentials, but not Simple Start, you can track billable time by job and assign it to a specific customer. Once you’ve recorded your billable time, you can add them to your invoice and then send it to your client. This feature is ideal for service-based businesses that charge work by the hour, such as lawyers and independent contractors.

Reporting

Simple Start runs basic reports, including cash flow statements, profit and loss (P&L) statements, and balance sheets. Other built-in standard reports available include P&L by month and customer, quarterly P&L summaries, and general ledger.

Essentials gives you access to more than 40 reports, including those you can generate in Simple Start. It contains reports not available in Simple Start, such as A/P and A/R aging, transaction lists by customer, expenses by vendor, uninvoiced charges, unpaid bills, expenses by supplier summaries, and more. You can drill down to a list of your outstanding invoices instead of just the total outstanding.

Takeaway: Most companies that choose Essentials over Simple Start do so because they either need more than one user or wish to automatically add billable time and expenses to invoices. The ability to create recurring expenses is also a significant time-saving feature in Essentials.

QuickBooks Essentials vs QuickBooks Plus

QuickBooks Plus is a substantial upgrade compared to Essentials. The most crucial improvements are that Plus allows your company to track inventory costs and calculate P&L by project. Other helpful features that are in Plus are budgets, classes, customer types, locations, and unlimited report-only users. You can learn more about QuickBooks Online’s most popular version by reading our complete QuickBooks Online Plus review.

Businesses that sell products and need to keep track of the quantity on hand and cost of products sold should subscribe to QuickBooks Plus. While Plus is the best QuickBooks Online option for retailers, wholesalers, and contractors, you should also consider QuickBooks Desktop, which offers more features and flexibility for dealing with inventory and projects. Learn more in our QuickBooks Desktop vs QuickBooks Online guide.

QuickBooks Essentials vs Plus at a Glance

Below is the summary of our case study for QuickBooks Essentials vs Plus:

Here are some of the key differences highlighted in our case study.

Track Inventory

Plus includes inventory accounting that allows you to monitor stock items and quantity—a necessity if you’re selling products. QuickBooks Online Plus uses first-in, first-out (FIFO) inventory tracking, an essential feature that helps manufacturers or retailers determine how their inventory affects their profitability. Plus lets you update inventory costs and quantities, create purchase orders (POs) and send to vendors, and separate taxable from non-taxable items, and set up alerts if you’re running out of stock.

Create POs

With Plus, you can make purchase orders and track them. POs are essential because they help you specify what products and services you need from your vendor or supplier and by when you need them. When creating POs in QuickBooks Plus, you can input specific items you want to purchase. When your POs are fulfilled, you can convert them to a bill easily.

Track P&L by Location

QuickBooks Online Plus allows you to assign classes and locations to your transactions, so you can see how your business performs across divisions, locations, rep areas, or any units that are relevant to your business. If you run businesses in multiple locations and you want to see which one is most profitable, an upgrade to Plus from Essentials is worth the price.

Track Project Profitability

With Plus, you can create projects and add income, expenses, and wages. The Projects tool helps you manage different jobs and projects for your clients and track costs related to labor and materials. However, the problem with QuickBooks Online Plus or any of the other QuickBooks Online versions is that you can’t compare cost estimates to actual costs by project. Nonetheless, Plus has an advanced job costing capability, which is helpful for construction and contracting firms. If comparing estimated costs to actual job costs is critical to your business, check out Xero.

Other features of Plus not present in Essentials include the ability to:

• Create and manage budgets
• Generate more than 60 reports, including unbilled charges, unbilled time, and budget overview and budget vs outturn
• Track time using QuickBooks Time

Takeaway: Retailers and wholesalers should choose Plus so that they can track the cost of inventory. Contractors should also select Plus to track the profitability of individual projects. Other businesses should consider whether tracking P&L by class and location is worth the extra $30 per month subscription.

QuickBooks Plus vs QuickBooks Advanced

QuickBooks Advanced has many bells and whistles compared to Plus but no additional features that are crucial to good bookkeeping. However, as your business grows from small to midsize, you’ll probably need to upgrade from Plus to Advanced for the additional users.

In addition to allowing up to 25 users, Advanced removes the limitations on the number of classes, locations, and accounts imposed by Plus. This makes Advanced ideal for a business with a growing staff, especially considering the maximum number of users for Plus is only five. Advanced is also the only product with a dedicated success manager and free training for your entire staff.

QuickBooks Plus vs Advanced at a Glance

As you can see, since the majority of the features added are more on expansion and customization rather than specific accounting features, the difference between Plus and Advanced in our case study is limited to customer support. QuickBooks Online Advanced users have access to Priority Circle membership, allowing them to seek premium support from dedicated QuickBooks managers for technical issues and free training for team members.

Takeaway: Upgrading from Plus to Advanced isn’t crucial unless you’re running up against the size limitations of Plus. The most likely limitation that will cause you to upgrade is requiring more than five full-access users. Unless you need support from a dedicated manager and free training to help your team members familiarize themselves with new features, then you can stick with QuickBooks Online Plus.

Bottom Line

The best QuickBooks Online version depends on the size of your business and your particular needs. If you’re heavily dealing with inventory or large projects, Plus is the best option. However, self-employed persons should consider Self-Employed—unless they have an employer, which will require an upgrade to Simple Start. If your business is service-based without any inventory, then Essentials should provide everything you need while saving you $30 per month compared to Plus. If you’re scaling from five to 25 users, then go with Advanced.

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