What Version of Quickbooks Online is Right For You?
I’ve been asked several times about the differences between Quickbooks plans. I will start by saying that some of these plans I highly recommend, others I do not, and some I will ask you to avoid at all costs. QuickBooks Online has really transformed the way that bookkeeping is done for small businesses, and it's made it simpler for clients to really get a grasp on their bookkeeping and financials for their business.
The types of plans for QuickBooks are QuickBooks Self Employed, QuickBooks Simple Start, QuickBooks Online Essentials, Plus, and Advanced. Then you also have additional add-ons such as QuickBooks Payroll.
QuickBooks Self Employed
I will tell you to avoid QuickBooks Self Employed at all costs, and there are several reasons for that. For example, one of the main issues that I have with this particular product is that there's no way to reconcile the transactions within the system. Without reconciling each month, you cannot guarantee that your books are accurate. You don't know that all your transactions have actually been brought into the QuickBooks Self Employed system, so it's not a true bookkeeping system. A true bookkeeping system actually has two different sides to the puzzle. You have debits and credits, and what you do on one side, you have to do to the other side. It's called double-entry accounting, and that is what businesses need.
You also do not have a balance sheet which is very important for self-employed individuals to be able to see how much money is in their bank accounts. Who do they owe, who owes them, and what is the worth of their company? Those things are only told on a balance sheet, and QuickBooks Self Employed does not contain that.
You also are not able to customize your chart of accounts. So what they give you is what you get, and for me, being a proactive bookkeeper, that is very important, especially with my CFO analysis work that I do for my clients. I want to customize that chart of accounts, meaning your income sources and your expense categories, to better suit my client's needs.
I want to break that advertising down into different segments, different ways that they advertise. I want to break their utilities down into phone, electrical, water, and so forth. And I also want to break their income sources down into different types of income based on their services. But QuickBooks Self Employed does not give you that option.
One of the other things that I hear about QuickBooks Self Employed is, “well it's the cheapest so I'll start there and as my business grows, and I'll upgrade to the other platforms,” Unfortunately, QuickBooks Self Employed cannot be upgraded to the other QuickBooks products, so you actually have to start over if you wanted to use their other platforms. If that is the reason for you to get started on Quickbooks Self Employed, I'll tell you now, that is not a reason because it will not work that way.
If you’re realizing that you really don't care to customize your chart of accounts, you really don’t care about having a a balance sheet. Then I recommend that you don't go with a monthly subscription to QuickBooks Self Employed, but instead you download my Calculated Tax Planner, which is a one time fee, no monthly subscriptions, and it will reconcile for you. You will know that things are done appropriately because there is a double entry type system to my Calculated Tax Planner.
And not only will you be able to customize it, you will also be able to track your profit and loss, you will be able to track your cash flow, and even be able to estimate your taxes that you're going to owe at the end of the year based on your business income. So, if you really want to go that route, you don't care about a true bookkeeping system with the checks and balances and make sure to go and download that Calculated Tax Planner.
QuickBooks Online Simple Start
This would be my recommendation for anyone who is starting off in the bookkeeping space. This is your very first time using QuickBooks. Maybe you're a solopreneur and maybe you're in charge of the company bookkeeping and you want your accountant in on it as well, you want to invoice, and you want to keep up with receipts. Maybe you even have some contractors that you have to send a 1099 at the end of the year. Then, Simple Start is going to be for you, it's your basic bookkeeping system. There are the checks and balances you are going to reconcile, you do have that balance sheet, you do have profit and loss statements, cash flow statements, and you can customize things.
Quickbooks Online Essentials
With Essentials, you get everything that Simple Start has, but you are able to have three users in your QuickBooks, not including your accountant. You're also able to manage and pay bills within the QuickBooks system, so you can automatically pay your bills there. You can also track time in Essentials, which is great if you have hourly employees or contractors.
Quickbooks Online Plus
Plus gives you everything that Simple Start and Essentials gives you, but it also gives you the ability to have five users in your QuickBooks, and the ability to track inventory which is important in some types of businesses. If you're a boutique or a restaurant, for example, those types of things will help you to track your inventory.
It will also help you to have projects. So projects will be very important, as you were, say a construction worker or a construction business, and you need to know how much cost goes into each project. Then the QuickBooks Online Plus would be the plan for you, so you can actually separate out expenses and income based on project, employee hours, and so forth so you can actually know how much money you're making per project.
Quickbooks Online Advanced
This one gives you everything that Simple Start, Essentials, and Plus gives you, but it will also give you more than five users, more analytics, you can batch invoices, you can customize access for your users, there’s workflows - it’s a very robust platform.
If you’re going to go with Advanced, you should really have an accountant helping you with those things as well, and I actually recommend that you use one of the smaller and cheaper platforms for Quickbooks Online with someone who does proactive bookkeeping and also does CFO analysis for you, instead of using the Advanced.
Add-Ons
Again, of course, you have the QuickBooks add-ons, which has payroll, and just like the Self Employed, I do not recommend QuickBooks Payroll because I've just had issues with in the past and it did not work for my business. I prefer a different platform for payroll outside of QuickBooks, and my preferred vendor is Gusto.
For a new business starting to use Gusto for payroll, you will receive $100 after they run their first payroll with this link - https://gusto.com/r/stephanie13203
For accountants that use my referral link to set up an accountant profile and register 3 of your clients with Gusto, you’ll receive $500 with this link: https://gusto.com/partners/r/stephanie13202
Another thing I hear all the time is “I get it, I know I need Quickbooks, I understand that I need a bookkeeping system, but I’m bewildered about it. QuickBooks makes it look so simple, but I have no idea what I'm looking at.”
And it's true, right? And I'll tell you the analogy that I give a lot of people when they ask me about QuickBooks Online and how I feel about it. First of all, I love QuickBooks Online. As a bookkeeper, it is an amazing program and is very robust. But I'll tell you this, if you put garbage in, you're going to get garbage out.
It's very important when you start your QuickBooks Online, if you're going to DIY, that you have someone set up your system for you. Then from there, you can do your monthly bookkeeping and your invoicing, and then have someone look at your work every month or every quarter for analysis.
So maybe you want to DIY and you're not quite ready for a bookkeeper, then my suggestion would be to hire someone to get you started. Get everything accurate within QuickBooks Online, and then show you how to use the system properly. The system is great, but it's only as good as the way that you use it and the information that you put into it. So having someone who is very versed in the system, who knows the system backward and forwards, will really help you to not make any errors in your bookkeeping and to make sure that your reports are accurate.
Then if you don't want to DIY, then hire a proactive bookkeeper who is vetted in the system, make sure they ask them all these important questions. I've actually done a blog and a video on this before on what you should be asking a bookkeeper that you're looking to hire.
But again, I highly recommend QuickBooks Online. If you're just starting I recommend the Simple Start, I do not recommend QuickBooks self-employed.
The last thing here is going to be on pricing, and I'm going to give you the pricing as it is on their website today: The Self Employed is $15 a month, and the simple start is $25 a month. So we're talking $120 more a year to actually have a real bookkeeping system. Essentials is $50 per month, and Plus is $80 per month, and advance is $180 per month.
You can check the website for any promotions. Currently, they have 50% off for a certain amount of time or you can do a free trial. So lots of different things there for you to look at with QuickBooks, but remember, QuickBooks is a monthly subscription. So once you quit purchasing, you don't have your data anymore. Once you start with QuickBooks, you have to continue with QuickBooks.
So you're not quite ready for a bookkeeping platform, and you just need the basics so that you know what's going on in your business, then again, I recommend the Calculated Tax Planner which is a one-time rate and you can use it year after year. It's not a monthly or even an annual subscription. I hope that helps to answer your questions about QuickBooks Online, and I look forward to answering any questions that you may have! Feel free to reach out at any time, or book a free consultation right here.
