What Is QuickBooks & What Does It Do?

QuickBooks is the most popular small business accounting software used to manage income and expenses and keep track of financial health. You can invoice customers, pay bills, generate reports, and prepare taxes. The QuickBooks product line includes several solutions to support different business needs, including QuickBooks Online, QuickBooks Desktop, QuickBooks Payroll, QuickBooks Time, and QuickBooks Checking.

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QuickBooks Products

Being one of the top accounting software providers in the market today, QuickBooks offers supplementary products to augment your overall QuickBooks experience. These include:

• QuickBooks Checking: You can open a business checking account with QuickBooks Checking for free and enjoy no monthly fees or account minimums. Instant deposit is available at no extra cost.
• QuickBooks Payroll: With this, you can manage payroll easily. What’s more, you can track employee hours and billable time effortlessly with QuickBooks Payroll and QuickBooks Online.
• QuickBooks Payments: Through this product, you can integrate payments seamlessly on QuickBooks Online. Get paid easily and process online payments effortlessly.
• QuickBooks Time: Formerly known as TSheets, QuickBooks Time offers time-tracking features for employees for tracking client or project billable hours.
• QuickBooks Live: This is an online bookkeeping service wherein you can get a ProAdvisor to work with your bookkeeping needs.
• QuickBooks Capital: You can get additional financing options up to $150,000 with this product.

17 Ways Small Businesses Use QuickBooks

1. Create and send invoices
2. Track bills and expenses
3. Pay bills online
4. Customize your expense classifications with a chart of accounts
5. Print financial statements for your business
6. Track employee time and expenses
7. Monitor project profitability
8. Manage payroll
9. Track inventory
10. Simplify taxes
11. Accept online payments
12. Scan receipts
13. Track mileage
14. Connect your apps
15. Perform accounting tasks on the go
16. Collaborate with a QuickBooks ProAdvisor
17. Manage sales taxes

1. Create, Send & Track Invoices

All QuickBooks Online plans allow you to create invoices and either print them or email them to customers—you can learn how to do this through our tutorial How To Create and Send Invoices in QuickBooks Online. QuickBooks will record the income and track how much each customer owes you automatically. You can view the number of your outstanding invoices—known as your accounts receivable (A/R)—and how many days they’re overdue by running an A/R aging report.

You can also create an invoice from scratch or by converting an existing estimate into an invoice. Then, customize the invoice by changing the color and adding your company logo.

2. Keep Track of Bills & Expenses

QuickBooks keeps track of your bills and expenses automatically by connecting your bank and credit card accounts to QuickBooks so that all of your expenses are downloaded and categorized. If you need to track a check or cash transaction manually, you can record it directly in QuickBooks in a few minutes.

You can also enter bills into QuickBooks when you receive them so that QuickBooks can help you track upcoming payments. You can ensure that you pay your bills on time by creating an accounts payable (A/P) report. This report will provide you with the details of your current and past-due bills. The ability to pay bills and track unpaid bills is available in QuickBooks Essentials and higher plans.

3. Pay Bills Online

You can pay bills online in QuickBooks using the online bill payment feature. Available in QuickBooks Online Essentials and higher plans, QuickBooks Online Bill Pay allows you to pay bills via bank transfer or check directly from QuickBooks in a few seconds and pay several bills at once. It also allows you to pay any vendor or supplier with a credit card. QuickBooks Online Bill Pay is integrated with QuickBooks Essentials, Plus, and Advanced.

To pay your first bill, you need to enter your bank account information, the payment method you’d like to use, and how your vendor would like to receive their payment. QuickBooks Online will then use this information automatically to process future transactions, reducing data entry. QuickBooks Online will mark your bills paid automatically and will remove them from the list of outstanding bills.

Note that you must first enter your bills in QuickBooks Online and then pay them online by clicking the + New button and then selecting Pay bills online.

4. Customize Your Expense Classifications With a Chart of Accounts

Your chart of accounts in QuickBooks provides a complete listing of all the accounts you need to track your financial data. These accounts are useful for tracking income, expenses, assets, liabilities, and equity accounts that might be required on your tax return.

It’ll make tax time easier if your Chart of Accounts includes all the line items required on your tax return. In addition to those line items, create enough detail in your Chart of Accounts to provide whatever information will help you better manage your business. Our tutorial How To Set Up a Chart of Accounts in QuickBooks Online walks you through how to add, delete, and customize accounts.

5. Print Financial Statements for Your Business

By managing all of your cash inflow and outflow activities in QuickBooks, you can print financial statements that provide useful information about how your business is performing. Lenders often require financial statements when you apply for a small business loan or line of credit.

You can produce three primary financial statements in QuickBooks: Profit and Loss report, Balance Sheet report, and Statement of Cash Flows. Below is a brief description of each, along with a snapshot of what they look like in QuickBooks Online.

6. Track Employee Time & Expenses

Employees or subcontractors can enter their own time as they progress through the day, or a bookkeeper can enter their weekly time if the employee submits a manual timesheet. Time entered and assigned to a customer will be available to add to the customer’s next invoice.

Also, any expense entered can be marked as billable and assigned to a customer. As with time, these billable expenses will be available to add to the customer’s next invoice. You don’t need the payroll add-on to track employee time for billing purposes. You need at least QuickBooks Essentials to track billable hours and Plus to track billable expenses.

7. Monitor Project Profitability

You can use QuickBooks Online Plus or Advanced to create and manage projects, assign income and wages to a project, and track expenses associated with labor and materials. QuickBooks Online’s project accounting module also allows you to generate project estimates and include inventories, labor, and sales taxes.

While you can’t compare actual and estimated costs, QuickBooks Online allows you to monitor the profitability of each project you’re working on by creating a project profitability summary report.

8. Manage Payroll

Payroll is an area that you don’t want to skimp on and try to do manually. Mistakes made in calculating paychecks can result in steep penalties and unhappy employees. QuickBooks has its own payroll function that can calculate and run payroll as often as you need automatically.

When you enter employee time as discussed above, the hours not only flow to your invoices but also to the payroll module. This way, you can be confident that every hour you pay your employee is also considered for billing to a customer.

The best thing about using QuickBooks Payroll is that it’s integrated with QuickBooks, so your financial statements are always up to date as of the latest payroll run. You have to purchase a QuickBooks Payroll subscription to run payroll, but you have several levels of service to choose from to fit your needs.

Running your payroll through QuickBooks will allow you to:

• Pay employees with a check or direct deposit
• Calculate federal and state payroll taxes automatically
• Have QuickBooks fill in the payroll tax forms for you
• E-pay your payroll taxes directly from QuickBooks

Here’s a video link from Intuit on how small businesses use QuickBooks Payroll:

9. Track Inventory

Available in Plus and Advanced, the inventory management feature helps you track the quantity and cost of your inventory. As you sell inventory, QuickBooks will allocate a portion of your inventory to the cost of goods sold (COGS) automatically, which is an expense account that reduces your income. This allocation is a requirement for calculating taxable income and very cumbersome to do by hand. QuickBooks can also remind you to order inventory automatically when quantities are low.

Below is a sample Inventory Valuation Summary report from QuickBooks Online. This report shows a list of your inventory products, quantity on hand, average cost, and their total value:

10. Simplify Taxes

Perhaps the most important thing QuickBooks can do for your small business is to simplify tax time. By far, the largest headache in preparing a tax return is compiling your income and expenses.

If you use QuickBooks during the year, all you need to do at tax time is print your financial statements. Better yet, with QuickBooks Online, you can invite your tax preparer to access your account directly so that they can review your numbers and print whatever information they need to prepare your return.

11. Accept Online Payments

One of the best ways to improve your cash flow is to offer customers the option to pay their invoices online. You can add QuickBooks Payments (formerly known as Intuit Merchant Services) so that customers can pay online directly from their emailed invoice.

QuickBooks Payments is similar to other merchant services. However, because it’s integrated completely within QuickBooks, the sale, credit card fee, and cash deposit are all recorded automatically as they occur.

12. Scan Receipts

Another key to making tax time a breeze is being able to organize your receipts in QuickBooks. All QuickBooks Online subscribers can download the QuickBooks app to their mobile devices for free, take a picture of a receipt, and upload it to QuickBooks Online in a few minutes.

QuickBooks allows you to attach a receipt to the corresponding banking transaction. You can upload an unlimited number of receipts to QuickBooks Online as the receipts are stored in the cloud along with your data.

13. Track Mileage

Many self-employed individuals and employees use their personal vehicles for business purposes. This provides a generous tax deduction of 58.5 cents per mile for 2022. However, to receive the deduction, you must keep a record of the date, miles, and purpose of your trip.

QuickBooks Online makes this incredibly easy. Its mobile app will use the GPS in your phone to sense every time you’re in a moving vehicle automatically. Then, you can review your trips, classify them as personal or business, and mark them as billable to a customer. Billable mileage expenses will then be available to add to the next invoice you create for that customer automatically.

14. Connect Your Apps

QuickBooks Online integrates with hundreds of business applications available in the QuickBooks App Store. These integrated apps are designed to help you simplify the various aspects of your business, from bill management and payment acceptance to cash flow forecasting.

In addition to some native QuickBooks Online integrations—such as QuickBooks Payroll, QuickBooks Time, and QuickBooks Payments—QuickBooks Online connects with popular apps. These include PayPal, Melio, HubSpot, Expensify, LeanLaw, Square Payroll, and Expensify.

15. Perform Accounting on the Go

The QuickBooks Online mobile app allows you to execute various accounting tasks from your mobile devices. Available for Android and iOS devices, it lets you create and send invoices, accept payments online, and assign expenses to projects or customers.

You can also track your business mileage and view financial reports from your smartphone. The QuickBooks Online mobile app is available for download on Google Play and App Store, but you need an active subscription to use its features.

16. Collaborate With a QuickBooks ProAdvisor

Collaborating with a QuickBooks ProAdvisor can be a valuable experience that optimizes your accounting and financial management processes for efficiency and accuracy. QuickBooks ProAdvisors are certified in QuickBooks, and they have extensive knowledge of the software’s features and capabilities.

This expertise can be helpful with setting up your accounting processes, troubleshooting issues, and maximizing the software’s capabilities. QuickBooks users can invite an accountant to view their books, and QuickBooks Desktop users are able to export an accountant copy and import any changes the accountant has made to their file.

The best way to find a QuickBooks ProAdvisor is to search on Intuit’s Find a ProAdvisor website. We suggest reading our article on how to find a QuickBooks ProAdvisor for step-by-step guidance—and we also include a list of other places to find ProAdvisors.

You could also choose to hire a QuickBooks ProAdvisor through QuickBooks Live, an add-on to QuickBooks Online. While QuickBooks Live charges a set monthly fee that is based on your company’s average monthly expenses, you have more flexibility to arrange a payment schedule and customize services with an independent ProAdvisor.

17. Manage Sales Taxes

QuickBooks can help small businesses manage their sales tax obligations by calculating sales tax, preparing sales tax returns, and generating reports on sales tax liability. It can automatically calculate sales tax for transactions based on the tax rates and rules for the customer’s location. This can help ensure that the correct tax amount is charged on each sale. It can also track the sales tax collected on transactions and the sales tax owed to the various tax authorities.

The platform integrates with popular sales tax software providers, such as Avalara and TaxJar, to streamline the sales tax management process and ensure compliance with local and state tax regulations. It can also support businesses that sell products or services in multiple jurisdictions, with the ability to calculate and track sales tax rates and rules for each jurisdiction.

QuickBooks Options & Pricing

QuickBooks comes in both a cloud-based online platform and a traditional desktop program. You can read about the pros and cons of each in our comparison of QuickBooks Online vs Desktop. Most of the versions will perform the tasks discussed above, but they come with an extensive variety of advanced features and a wide range of prices.

QuickBooks Online

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QuickBooks Desktop

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QuickBooks Self-Employed

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QuickBooks for Mac

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Frequently Asked Questions (FAQs)

What is QuickBooks used for?

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Bottom Line

QuickBooks is the most popular small business accounting software. It comes in a variety of editions and has web-based and desktop programs. QuickBooks includes features that allow you to keep track of your income and expenses, pay your employees, track your inventory, and simplify your taxes.