QuickBooks is a small business accounting software program businesses use to manage income and expenses and keep track of the financial health of their business. You can use it to invoice customers, pay bills, generate reports, and prepare for taxes. The QuickBooks product line includes several solutions that work great for anyone, from a solopreneur to a mid-sized business.
Since there are several QuickBooks solutions, it’s important that you pick the right one. Before you commit, take QuickBooks for a spin by signing up for a free 30-day trial; the trial is a fully functional version of QuickBooks, so you can test all of the bells and whistles. Best of all, no credit card is required–but if you decide to buy, the software is currently 50% off.
8 Ways Small Businesses Use QuickBooks
Small business owners typically use QuickBooks to manage their invoices, pay their bills, and track their cash flows. They also use it to generate month- and year-end financial reports as well as prepare for quarterly or annual business taxes. It’s common for business owners to manage QuickBooks themselves or use an in-house or outsourced bookkeeper.
1. Manage Sales & Income
You can manage sales and income in QuickBooks by creating invoices to track sales by customer. Stay on top of what customers owe you (also known as your accounts receivable balance) by reviewing your Accounts Receivable Aging Report, which includes the details of both current and past due invoices. Below is a sample Accounts Receivable (A/R) Aging Report from QuickBooks Online.
2. Keep Track of Bills & Expenses
QuickBooks automatically keeps track of your bills and expenses by connecting your bank and credit card accounts to QuickBooks so all of your expenses are downloaded and categorized. If you need to track a check or cash transaction, you can record it directly in QuickBooks in just a few minutes.
QuickBooks will also help you pay your bills when they’re due. For example, 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 so you can be sure to quickly address any issues. Below is a sample A/P Aging Report from QuickBooks.
3. Gain Key Reporting Insights to Your Business
By managing all of your cash inflow and outflow activities in QuickBooks, you are able to access several reports that provide valuable insights into your business and its financial health. All of the reports are prebuilt in QuickBooks and can be run in just a few clicks; reports are updated in real-time as you enter and save transactions.
This can be beneficial if you need to provide financials to a potential investor or to your lender for a small business loan or line of credit. In addition to the Accounts Receivable Report and the Accounts Payable Report, you can run the three key financial reports you need in order to assess the overall status of your business:
- Profit and Loss Report
- Balance Sheet Report
- Statement of Cash Flows
Below is a brief description of each of these reports along with a snapshot of what it looks like in QuickBooks Online.
Profit & Loss Report
The profit and loss report can be run in a couple of minutes. It will show you how profitable your business is by summarizing its income minus its expenses. The report shows you the bottom line net income (loss) for a specific time period, such as a week, a month, or a quarter. Below is a sample Profit and Loss Report.
Balance Sheet Report
The Balance Sheet Report shows the assets, liabilities, and equity for a business at a particular point in time. You can create a balance sheet report in QuickBooks Online quickly and easily. Below is a snapshot of a Balance Sheet report.
Statement of Cash Flows
You can quickly create a Statement of Cash Flows in QuickBooks. This report will show you all of the activities that affect the operating, investing, and financing cash inflow and cash outflow for your business. Below is a snapshot of the statement of cash flows.
4. Run Payroll
Payroll is an area that you don’t want to skimp on by trying to do it manually. Mistakes made in calculating paychecks can result in steep penalties and unhappy employees. QuickBooks has its own payroll function that can automatically calculate and run payroll as often as you need it.
The best part about using QuickBooks payroll is that it is integrated with QuickBooks so your financial statements are always up to date as of the latest payroll run. The purchase of a QuickBooks payroll subscription is required so you have access to the latest payroll tax tables used when calculating employee and employer payroll taxes.
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 directly from QuickBooks
Here’s a video from QuickBooks on how QuickBooks small businesses use QuickBooks payroll to pay employees:
5. Track Inventory
If you need to keep track of the inventory you sell, such as on-hand amounts and unit costs, QuickBooks will automatically track and update this for you as you enter transactions. In QuickBooks, there are several reports available to manage inventory.
While keeping track of inventory is doable in a spreadsheet, it can be time-consuming and prone to errors. 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.
6. Simplify Taxes
If you have to consolidate several spreadsheets or organize a shoebox full of receipts, it can take longer to get your tax professional what they need than it takes to prepare your tax return.
Here at Fit Small Business, we use QuickBooks Online to manage all of our business accounting and taxes. We have set up our tax professional with a user ID and password to access our QuickBooks data and pull the information they need to file our tax returns. Since everything is tracked in QuickBooks, we do not spend a lot of time organizing receipts and bank statements. This not only ensures that we have accounted for all income and expenses, but also improves accuracy as a result.
7. Accept Online Payments
One of the best ways to improve your cash flow is to offer customers the option to pay their invoices online. With QuickBooks, you can add the Intuit Payments feature.
Once activated, all customer invoices you send via email will include a “Pay Now” button. Your customer can click on that button and pay their invoice using a major credit card or by entering their bank account information to authorize an automated clearing house (ACH) payment directly from their bank account.
Intuit Payments Fees
Non-monthly Fee Plan
Monthly Fee Plan
Swiped Rate-Credit/Debit Card
Invoice: PayPal & Apple Pay
Keyed Rate-Credit/Debit Card
PIN Debit Rate
Per Transaction Fee
Per Standard ACH
8. Scan Receipts
Another key to making tax time a breeze is being able to organize your receipts in QuickBooks. All QuickBooks Online (QBO) subscribers can download the QuickBooks app to their mobile device for free, take a picture of a receipt, and upload it to QBO in just a few minutes.
No more lost receipts or manually matching up receipts with downloaded banking transactions. QuickBooks allows you to attach a receipt to the corresponding banking transaction. You can upload an unlimited number of receipts to QBO, which are stored in the cloud along with your data. This can be really helpful for companies that track a lot of expenses.
QuickBooks Features & Pricing
The QuickBooks product line includes QuickBooks Online, QuickBooks Desktop, QuickBooks Self-Employed, and QuickBooks Mac. Each of these products offer a variety of features that start at a monthly fee of $15 for QuickBooks Self-Employed or a one-time fee between $300 and $1,155. To help you narrow down which one is right for you, check out the summarized table below.
QuickBooks Options for Small Businesses
Small to medium-sized businesses that need flexible access to financial data
$25 to $150
Small to medium-sized businesses in any industry
$299 to $1,500
Independent contractors, real estate agents, Uber/Lyft drivers
$15 to $35
Small to medium-sized businesses in any industry that need a Mac solution.
$299 and up
QuickBooks Online is a cloud-based product that does not require software installation. This QuickBooks product is available in multiple subscription levels including Simple Start, Essentials, Plus, and Advanced. It is ideal for any business that does not have complicated invoicing requirements. QBO allows you to access your data from any computer with an internet connection using your secure login.
Visit our free QuickBooks Course to learn how to use QuickBooks.
QuickBooks Desktop comes in six versions (Pro, Pro Plus, Premier, Premier Plus, Enterprise, and QuickBooks for Mac). Each requires you to install software on your computer. QuickBooks Pro is ideal for most small businesses that do not manufacture products. QuickBooks Premier is ideal if your business falls into one of these industries: manufacturing, contractors, retail, or nonprofit. QuickBooks Enterprise is for large enterprises.
These industry-specific versions of QuickBooks include a custom chart of accounts and reports for these industries. We break down each of these products to help you understand what QuickBooks is in our QuickBooks Desktop comparison article.
QuickBooks Self-Employed is the ideal product for freelancers, real estate agents, and independent contracts (e.g., Uber and Lyft drivers). Similar to QuickBooks Online, it is a cloud-based product that can be accessed from any computer with an internet connection and your secure login. It includes unique features that are not available in QBO and QuickBooks Desktop, like the ability to separate business from personal expenses, track miles, and transfer data to TurboTax.
QuickBooks Self-Employed will calculate your estimated quarterly tax payments and remind you when they are due. There are three QuickBooks Self-Employed pricing plans to choose from (Self-Employed, Self-Employed Tax Bundle, and Self-Employed Live Tax Bundle). To learn more, read our QuickBooks Self-Employed guide.
QuickBooks for Mac is the only desktop product available for Mac users. If you don’t want to go with QBO and you have a Mac computer, then you have to go with QB Mac. This product is very similar to QuickBooks Pro, and it is ideal for most small businesses that do not manufacture products. Check out our article on QuickBooks for Mac to learn more about this product.
Frequently Asked Questions (FAQs) about QuickBooks
What is QuickBooks?
QuickBooks is an accounting software used broadly by small businesses. QuickBooks is used for everything from running payroll to tracking income and expenses to putting together financial reporting packages and more. Plus, QuickBooks automates time-consuming processes, like preparing bank reconciliations, and you don’t have to be an accountant or bookkeeper to use it.
What’s the difference between Quicken & QuickBooks?
The primary difference between Quicken and QuickBooks is that Quicken is designed to keep track of your personal budget and spending. While a few people use Quicken to keep track of business income and expenses, it does not have the capability to manage sales nor track inventory like QuickBooks does.
Do I have to be an accountant to use QuickBooks?
You do not have to be an accountant or bookkeeper to use QuickBooks. This is one of the many features that sets QuickBooks apart from its competitors. It has a user-friendly interface and simple terminology that make it easy to navigate and use.
How do I get a crash course in bookkeeping?
While you don’t need a bookkeeping background, it can’t hurt to educate yourself on the basics of bookkeeping. Our small business bookkeeping guide will help you understand some bookkeeping basics, such as ways to track cash inflow and outflow, how to set up a chart of accounts, and how to read financial statements.
How does QuickBooks work?
Businesses can use QuickBooks accounting software for all of their financial tracking and reporting needs. You will need to purchase the QuickBooks product that is right for your business, customize it to fit your business needs, and start using it.
QuickBooks is the most popular small business accounting software. It includes multiple features that allow you to keep track of your income and expenses, pay your employees, track your inventory, and simplify your taxes. When you’re ready to begin using QuickBooks, make sure to take our free QuickBooks training tutorials.
Before you commit to a QuickBooks product for your small business, take QuickBooks for a test run by signing up for a free 30-day trial; the trial is a fully functional version of QuickBooks so you can test all of the bells and whistles. Best of all, no credit card is required.