What We Recommend QuickBooks Online For
QuickBooks Online has earned a reputation for being an ideal accounting software program for small businesses. To prove that it deserves the top spot in our list of best small business accounting software, our experts conducted a thorough evaluation of QuickBooks Online through an internally developed case study. We examined the software across 11 categories, and the results reflect QuickBooks Online’s excellence, especially in terms of banking management, reporting, accounts payable (A/P), accounts receivable (A/R), inventory, and project accounting. This makes QuickBooks Online a great choice for small businesses that need all-inclusive software program for paying bills, invoicing customers, generating reports, managing inventories, and preparing taxes.
QuickBooks Online Is Especially Good For
- Invoicing customers: QuickBooks Online has exceptional invoicing features, such as the ability to automatically calculate sales tax to apply to an invoice. With QuickBooks Online, you can customize invoices to any industry, making it our overall best invoicing software.
- Small businesses: QuickBooks Online is our choice for the overall best small business accounting software, as it can be customized to meet the needs of nearly any business.
- Ecommerce: QuickBooks Online has always been great for ecommerce retailers, but their recent focus on ecommerce integrations makes it the clear winner for the best ecommerce accounting software.
- Mobile accounting: The mobile app for QuickBooks Online includes nearly all the functions of the desktop interface, plus mileage tracking and receipt capture, making it our top pick for mobile accounting apps.
- Property management companies: The class and location tracking features in QuickBooks Online give property management companies the ability to separate net profit by type of property and location. You can learn more in our guide to real estate accounting software.
We rank QuickBooks Online as our overall best farm accounting software and a great option for churches, restaurants, construction firms, nonprofits, trucking companies, freelancers, and businesses that need a receipt scanner app.
QuickBooks Online Is Not a Good Fit For
- Manufacturing companies: QuickBooks Online can’t track inventory assemblies, which is a huge problem for manufacturing companies that manage and track raw materials and finished goods. QuickBooks Desktop Pro has a robust inventory management system that tracks inventory parts and assemblies (bill of materials). Check out our comparison of QuickBooks Online and QuickBooks Desktop to see which is right for you.
- Businesses looking for free software: While arguably the most powerful small business accounting software available, QuickBooks Online is also one of the most expensive. For budget-minded small businesses that are willing to sacrifice some features, we recommend Wave or one of our other best free accounting software choices.
- Businesses that need fixed asset management: QuickBooks Online doesn’t track or calculate the book value of your fixed assets. Xero is unique among accounting programs because it can track and calculate depreciation for fixed assets, such as vehicles, machinery, and equipment.
- Law firms: Without an integration, QuickBooks Online cannot perform the triple reconciliation between the client trust account, client ledgers, and bank statements that law firms require.
Are you looking for something different? Read our guide to the best small business accounting software, and check out our top picks.
QuickBooks Online Pros and Cons
| PROS | CONS |
|---|---|
| Provides efficient bank reconciliation | A bit expensive compared to other similar products |
| Strong inventory management features | Cannot track inventory assemblies like QuickBooks Desktop |
| Can generate a wide selection of accounting reports | Mobile app can’t record time worked |
| Capable mobile app with many bookkeeping features | Cannot compare estimated to actual project costs |
| P&L by class, location, or project | |
QuickBooks Online Case Study
We formulated an internal case study to see how QuickBooks Online stacks up against Xero and FreshBooks:
Based on the result of our case study, QuickBooks Online dominates FreshBooks in almost all categories but has a close fight against Xero. QuickBooks Online stands out in terms of banking and cash management, A/R, and reporting. Both QuickBooks and Xero are equally good at managing inventories and A/P.
Xero has a clear advantage over QuickBooks for fixed asset management while FreshBooks beats QuickBooks online in customer service.
QuickBooks Online Pricing
QuickBooks Online is available in four subscription levels ranging from $25 to $180 per month. Its most popular plan is Plus (at $80 per month), which contains all the features nearly any small business will need. Integrated payroll can be added to any subscription for an additional fee. New subscribers can choose between 50% off for three months or a 30-day free trial.
Simple Start | Essentials | Plus | Advanced | |
|---|---|---|---|---|
Monthly Cost | $25 | $50 | $80 | $180 |
Users Included | 1 | 3 | 5 | 25 |
Payroll Core Add-on Monthly Cost | $45 plus $4 per employee | $45 plus $4 per employee | $45 plus $4 per employee | $45 plus $4 per employee |
QuickBooks Online Features
QuickBooks Online offers a wide range of accounting features, depending on your subscription. Before checking out our detailed assessment of QuickBooks Online as part of our case study, you might want to take a look at the table below to have an idea of what you’ll get from each level of subscription.
Features and Inclusion | Simple Start | Essentials | Plus | Advanced |
|---|---|---|---|---|
Upload Receipts From the Mobile App to Create Transactions | ✔ | ✔ | ✔ | ✔ |
Track Miles With the Mobile App | ✔ | ✔ | ✔ | ✔ |
Create Custom Invoices & Accept Payments Online | ✔ | ✔ | ✔ | ✔ |
Approximate Number of Reports Available | 20 | 40 | 65 | 100 |
Give Your Accountant Access Without Counting Toward Your Users | ✔ | ✔ | ✔ | ✔ |
Add Sales Tax to Invoices Based on the Customer’s Address | ✔ | ✔ | ✔ | ✔ |
Send Customized Estimates to Customers | ✔ | ✔ | ✔ | ✔ |
Manage Contractors Including Preparation of Form 1099 | ✔ | ✔ | ✔ | ✔ |
Input and Organize Unpaid Bills & Pay Online for Free | ✕ | ✔ | ✔ | ✔ |
Track Billable Hours & Add to Invoices | ✕ | ✕ | ✔ | ✔ |
Track Income and Expenses by Class & Location | ✕ | ✕ | ✔ | ✔ |
Track Inventory & Calculate the Cost of Goods Sold (COGS) | ✕ | ✕ | ✔ | ✔ |
Track Project Profitability | ✕ | ✕ | ✔ | ✔ |
Dedicated Account Support Team | ✕ | ✕ | ✕ | ✔ |
Input Invoices & Expenses in Batches | ✕ | ✕ | ✕ | ✔ |
Automate Workflows With Custom Reminders & Triggers | ✕ | ✕ | ✕ | ✔ |
We provide a complete comparison of QuickBooks Online subscriptions to help determine which QuickBooks Online subscription is right for you.
Setting up a company in QuickBooks Online takes time. You have to patiently go through a series of steps, including entering your company name, email address, and entity type. To customize your accounting process, you need to configure your advanced settings from the Advanced menu under the Account and Settings page. From here, you can enter the fiscal year and tax year of your company, choose the accounting method, and set up categories to track your income and expenses:
Customizing Account and Settings in QuickBooks Online
One of QuickBooks Online’s biggest strengths is the ability to create classes and locations for tracking P&L. You can also modify your chart of accounts, enter an additional user, and control how much access you want to give them. QuickBooks Online also allows you to close books at year-end, which is important to prevent changes in your financial data. On the downside, you can’t import or input opening balances, so you have to use a journal entry. Overall, QuickBooks Online offers a lot of advanced features to control how you run your accounting, but in terms of ease of setup and use, you might prefer Xero as an alternative.
QuickBooks Online General Features Video
There’s a lot you can do in QuickBooks Online in terms of managing unpaid bills and expenses. You can view the list of your unpaid bills to track them effectively. With a little practice, it’s easy to record a bill, add a new vendor, record an expense without paying, and attach and send a copy of the receipt. All of these transactions can be conveniently initiated from the + New button on your dashboard. You can create recurring transactions, record partial payments of an invoice, set up and track inventory items, and print checks instead of writing them manually:
Use + New button to enter transactions easily
To enter a new bill in QuickBooks Online, click on the + New button, select Bill, and then provide the required information in the Enter Bill screen, as shown in the screenshot below:
Enter Bill screen in QuickBooks Online
QuickBooks Online Accounts Payable Video
QuickBooks Online’s ability to manage sales taxes and invoices is equally as terrific as its ability to manage payables. The good thing is that QuickBooks calculates sales taxes in every jurisdiction where you collect sales tax automatically. In terms of invoicing, there are many reasons to love QuickBooks Online. You can choose from different templates, add your logo, change colors, and add personalized messages. You set up recurring invoices and print and email them to your customers:
Sample Invoice in QuickBooks Online
QuickBooks Online also allows you to combine multiple checks into a single deposit, which makes reconciling between your check register and your bank statement much easier.
Other cool features include:
- View sales tax liability details
- View and track sales tax collected and remitted
- Pay sales tax liability with a check
- Accept short payments from customers
QuickBooks Online Accounts Receivable Video
Just like most accounting software, you can connect your bank and credit card account to QuickBooks Online. If you aren’t comfortable connecting your bank account, you can upload your transactions in a QuickBooks Online format. If you dread manually reconciling your bank account, you can use QuickBooks Online’s powerful bank reconciliation feature and generate reconciliation reports to see cleared and uncleared transactions. Unlike FreshBooks and Xero, QuickBooks allows you to reconcile your bank and credit card accounts, even if you choose to record all activity manually versus importing bank transactions.
QuickBooks Online Cash Management & Banking Video
You can record the purchase of a fixed asset through the normal A/P feature or record it using a journal entry if the asset is financed. However, there are no options to create a schedule of fixed assets or calculate depreciation. Xero is a great alternative if you need comprehensive fixed asset accounting.
QuickBooks Online Fixed Assets Video
QuickBooks Online is good for project accounting. You can create projects and assign wages and income and expenses to a project. You can also create project estimates, but you can’t set up cost estimates for projects and compare them to actual costs, which is an important feature for contractors. Inventories, sales taxes, and labor can be tied to an estimate. If you want a feature to compare actual costs to estimates, check out alternatives in our list of the best construction accounting software.
QuickBooks Online Project Accounting Video
You can add sales taxes to your receipts, invoices, and estimates, and QuickBooks Online will calculate and track them automatically for easy tax filing. It also keeps track of your tax payment due dates to avoid late filing and late payment penalties. One of QuickBooks Online’s advantages over other similar software is that you can e-file your taxes either through email or your agency’s website.
If you’re working with independent contractors, QuickBooks Online lets you generate 1099 tax forms and either file them online or print and then mail them to the IRS.
We evaluated QuickBooks Online’s sales and income tax features across the other categories, so there’s no separate video.
If inventory accounting is a crucial part of your business, QuickBooks Online is a great choice for you. Available for QuickBooks Online Plus and Advanced users, the inventory accounting feature lets you track stock items and quantities, update inventory quantities automatically, organize items by their taxable and non-taxable status, create purchase orders and send them to vendors, and set up alerts to see when it’s best to replenish your stock. QuickBooks Online doesn’t handle inventory assembly like QuickBooks Desktop.
QuickBooks Online’s inventory management is also evaluated across the other categories, so there’s no separate video.
QuickBooks Online is arguably one of the best accounting software programs for reporting. In our case study, we successfully generated 16 different types of reports, which isn’t possible in most other accounting software. QuickBooks Online can generate more than 100 reports, depending on your subscription. Whether you need standard reports—like balance sheets, P&L statements, and cash flow statements—or sales reports by customer, location, or class, you can do it all in QuickBooks Online.
QuickBooks Online Reporting Video
QuickBooks Online has pretty decent customer service. If you want to talk with a real human, you need to submit a form and wait for them to call you, which means that you can’t initiate a call. You can also seek help through a chatbot, chat with representatives online, and check out its vast self-help resources, such as blogs, set-up guides, troubleshooting tips, and community forums. If you prefer getting support through email, then QuickBooks isn’t for you.
A huge advantage of choosing QuickBooks is the availability of local bookkeepers in your area that can provide assistance. QuickBooks dominates the market for small business accounting, and most professional bookkeepers use it for their small business clients. It’s almost certain you’ll be able to find a local QuickBooks ProAdvisor to help you.
QuickBooks Online Customer Service Video
QuickBooks Online’s mobile app contains many features available in the desktop interface, making it our overall pick in our list of the best mobile accounting apps. The mobile app allows you to create and send invoices on the go, receive payments from customers, assign expenses to customers or projects, and view financial reports. Some of its weaknesses include the inability to enter bills, record bill payments, and record time worked.
QuickBooks Online Mobile App Video
Assisted Bookkeeping Options
QuickBooks Online itself doesn’t come with an assisted bookkeeping service, but you can purchase an add-on called QuickBooks Live Bookkeeping. As the name suggests, it’s a QuickBooks service that gives you access to a QuickBooks-certified live bookkeeper who’ll take care of your books and provide the reports you need. You’ll communicate with your live bookkeeper through a video chat, and you can ask them questions anytime. Business owners who have no time for managing books and those with zero accounting experience find it helpful to outsource bookkeeping tasks to accounting and tax professionals. We rank QuickBooks Live as our overall best online bookkeeping service.
Prices for QuickBooks Live full-service bookkeeping start at $200 per month for businesses with up to $20,000 in monthly expenses. With full-service bookkeeping, your live bookkeeper will set up your chart of accounts, connect your bank and credit card accounts, and guide you through the basics of QuickBooks.
QuickBooks Online Integrations
QuickBooks Online integrates with a wide range of third-party software, including popular tools like PayPal, Square, Stripe, Gmail, Google Sheets, Salesforce, HubSpot, TSheets, WooCommerce, and Shopify. QuickBooks Online also connects with thousands of apps through Zapier. If integration is important to your business process, we highly recommend QuickBooks Online.
QuickBooks Online Alternatives
Best for: Manufacturing businesses that need inventory assembly tracking | Best for: Businesses looking for a free software | Best for: Businesses that need fixed asset management |
Software from: $349.99 per year | Software from: $0 | Software from: $12 per month |
Bottom Line
QuickBooks Online dominates the market for small business accounting software due to its extensive features and flexibility in meeting the needs of nearly any small business. QuickBooks Online can track inventory costs, generate invoices, track unpaid bills, and calculate P&L separated by many factors, including user-defined classes and locations.
