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

QuickBooks Online has five versions, Self-Employed, Simple Start, Essentials, Plus, and Advanced, and pricing runs from $15 to $200 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 issue invoices regularly
• QuickBooks Online Essentials: Best for small businesses needing to assign hours worked 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 access for up to 25 users

QuickBooks Online Comparison: Pricing & Features

QuickBooks Online is our overall 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 our article for a more detailed comparison of the five QuickBooks Online versions.

FSB Case Study

To help you determine which QuickBooks Online plan is best for you, we formulated an internal case study showcasing the key differences among the options. We evaluated each 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.

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 option—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 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. We even consider it the best for tracking freelance income and filing tax returns in our guide to the best accounting software for freelancers. Check out our review of QuickBooks Online Self-Employed to see what it can do for freelancers and solopreneurs.

Meanwhile, 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 want a dedicated expert to handle your ongoing bookkeeping work, you can sign up for QuickBooks Live Bookkeeping, available in Simple Start and all higher plans.

QuickBooks Simple Start vs QuickBooks Essentials

The advantage of QuickBooks Essentials vs Simple Start is the ability to assign hours worked to specific customers. Very small businesses that bill customers for hourly services usually find that Essentials meets their needs, and most companies that choose Essentials over Simple Start do so because they either need more than one user or wish to add billable time to invoices automatically. Unfortunately, you can’t assign billable expenses unless you upgrade to Plus.

Case Study Results for Simple Start vs Essentials

Case study results for QuickBooks Simple Start vs Essentials

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.

With Essentials, you can track your unpaid bills easily and pay them directly within QuickBooks. You just need to select the bills you want to pay from the Pay Bills window, place a checkmark next to the bills, and then select Save & Print.

Pay Bills screen in QuickBooks Online Essentials

Record Time Activity as Billable to Customers

With QuickBooks Essentials, you can track billable time by job and assign it to a specific customer—something you can’t achieve with Simple Start. 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. Some of the other 20-plus built-in standard reports available include P&L by month and customer, quarterly P&L summaries, and general ledger.

Meanwhile, Essentials gives you access to more than 40 reports, including those you can generate in Simple Start. Its additional reports include 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 only the total outstanding.

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QuickBooks Essentials vs QuickBooks Plus

QuickBooks Plus is a substantial upgrade compared to Essentials. The most crucial improvements are that Plus allows you to create billable expenses and assign them to customers, track inventory costs and calculate P&L by project. Other helpful features in Plus are budgets, classes, customer types, locations, and unlimited report-only users.

Retailers and wholesalers should choose Plus so that they can track the quantity on hand and 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.

You can learn more about QuickBooks Online’s most popular version by reading our complete QuickBooks Online Plus review.

Case Study Results for Essentials vs Plus

Case study results for QuickBooks Essentials vs Plus

Track Inventory

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

Create POs

With Plus, you can make POs, track them, and send them to vendors. 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 Plus, you can input specific items you want to purchase. When your POs are fulfilled, you can convert them to a bill easily.

Monitor P&L by Location

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.

Sample report on profit and loss by class run in QuickBooks Online Plus

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 Plus or any of the other 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.

Project tool in QuickBooks Online Plus

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

• Create and manage budgets
• Generate 60-plus reports, including unbilled charges, unbilled time, and budget overview and budget vs outturn
• Track time via QuickBooks Time

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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, such as it removes the limitations on the number of classes, locations, and chart of accounts, making it ideal for businesses with a growing staff. So, unless you need more than five user seats, support from a dedicated success manager, and free training to help your team members familiarize themselves with new features, then you can stick with Plus.

Case Study Results for Plus vs Advanced

Since the majority of the features added in Advanced 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. The main reasons for an upgrade to Advanced is when you need additional users, a dedicated manager, and free staff training, which is crucial if you aren’t familiar with QuickBooks.

Case study results for QuickBooks Plus vs Advanced

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QuickBooks Online Plan Comparison Frequently Asked Questions (FAQs)

Which QuickBooks Online plan is right for you?

The right QuickBooks Online plan depends on the size of your business and the features you need. For example, Self-Employed is best for freelancers or solopreneurs who need to monitor income and expenses, while Simple Start works well for very small businesses wanting to track assets and liabilities but not unpaid bills. Growing businesses with up to five users should consider Essentials, especially if they need to generate accrual-based financial statements. If you need inventory and project management, go with Plus. However, if you scale to 25 users, then upgrade to Advanced.

Can I upgrade or downgrade my QuickBooks Online subscription?

Yes, you can. You may check out QuickBooks’s guide to upgrading or downgrading your QuickBooks Online subscription.

Is QuickBooks Online better than QuickBooks Desktop?

QuickBooks Online is better than QuickBooks Desktop if you prefer a cloud-based accounting software to a locally installed one. QuickBooks Online’s biggest advantage is its ability to be accessed from anywhere with an internet-enabled device, making it easy for you to share your files with your accountant. As a locally installed program, QuickBooks Desktop makes it a bit hard for you to share your files with your bookkeeper—unless you have one working on-site. Read our comparison of QuickBooks Online and QuickBooks Desktop to learn more.

When do I need to consider a QuickBooks Online alternative?

QuickBooks Online isn’t a one-size-fits-all solution. Some instances where you need to find an alternative include:

• You want free accounting software: If you’re looking for a free invoicing and accounting solution, you should consider Lendio Accounting (formerly Sunrise).
• You need parts inventory management: While QuickBooks Online has strong inventory management features, it can’t track parts and inventory assemblies. If you’re a manufacturing company that needs this feature, QuickBooks Desktop Pro is a good alternative.
• Fixed assets are a big part of your business: QuickBooks Online can’t track fixed assets. We recommend Xero if you need to track depreciation for your fixed assets, like office equipment, machinery, and vehicles.

If you think QuickBooks isn’t for you, check out our top alternatives to QuickBooks to see if you can find something better.

Bottom Line

The best QuickBooks Online version depends on the size of your business and your particular needs. If you heavily deal 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.