Clients and small business friends regularly ask our CPA firm which is better, QuickBooks Online or QuickBooks Desktop.
Over the years, and as we’ve worked with hundreds of small businesses using QuickBooks, our thoughts have evolved. But we can, in general, describe the situations where the desktop version of QuickBooks beats the online version… and then also the situations where the online version beats the desktop version.
Where Desktop Beats Online
The desktop version of QuickBooks beats the online version, hands-down, in a couple of areas. So let me go over those advantages, first…
Cost of the software
The subscription pricing model of QuickBooks Online means the cost of the software over the lifetime of use will be hundreds of dollars more than the cost of QuickBooks desktop.
This effect is amplified if a small business owner has multiple companies. QuickBooks Online requires the business owner to purchase a separate subscription for each company, while QuickBooks Desktop lets you manage multiple companies with one software license.
Higher-complexity accounting features
Another advantage of the desktop version of QuickBooks? There are a whole smörgåsbord of features in desktop versions of QuickBooks that are missing from QuickBooks Online.
As just one example, QuickBooks desktop has job costing features that as of this writing are missing in QuickBooks Online. But numerous other features exist, and you’ll want to be sure to do your research before buying into QuickBooks Online in case it’s missing a feature that your business really needs.
Where Online Beats Desktop
QuickBooks Online, however, provides some really powerful attractions for many small businesses.
Time savings for the bookkeeper
QuickBooks Online, for example, comes with time-savings features that you often have to pay extra for in QuickBooks desktop, such as a Bank Feed update. In addition, QuickBooks Online integrates with many more third-party apps that automate almost every bookkeeping task you could hope for.
Ease of collaborating with your accountant
Sharing a QuickBooks desktop file with your accountant comes with hassles that don’t exist in QuickBooks Online. Because those hassles don’t exist, when you use QuickBooks Online, your accountant can perform general accounting work in a small fraction of the time that it takes to perform the same work for someone using a desktop product.
Often small businesses that need outside accounting help discover that while the cost of the QuickBooks desktop software is cheaper, the cost of the accounting system as a whole (software plus professional fees) is cheaper when using QuickBooks Online.
For example, our firm charges $200 less per tax return to business clients who use QuickBooks Online, simply because it adds an extra couple of hours of work to the tax return to work with a desktop QuickBooks file.
For a small business using QuickBooks simple start, this creates a net financial gain as a result of using QuickBooks Online. (Annual simple start price as of this writing is $15/mo × 12 mo = $180.)
Ease of collaborating with other team members
QuickBooks desktop theoretically has multi-user mode, but we can tell you from practice that this doesn’t work very well.
The issue? QuickBooks desktop just isn’t a product that was ever designed for servers (and Intuit admits as much). Further, many small businesses simply lack the networking skills to manage the hardware side of things.
Therefore, if you want a version of QuickBooks that handles multi-user well, QuickBooks Online is the way to go.
Ease of oversight for distant branches and subsidiaries
QuickBooks Online is a popular choice for small businesses with far-flung branches and foreign subsidiaries, and it’s easy to see why.
If you live in Seattle, WA and you need to obtain financial data about your Irish subsidiary, having the bookkeeper send you financial statements from the desktop computer in Dublin “whenever they get around to it” isn’t going to cut it.
You need the accountability that comes from being able to log into your books and instantly see financial reports, recently cleared transactions, bank balances, etc. QuickBooks Online provides this accountability and oversight.
Final Comments
Accounting software seems expensive. We get that. Further, we are nervous about Intuit’s subscription pricing model, seeing it partly as a way for the company to neatly bump prices.
However, what’s more expensive than subscription fees for accounting software is trying to run a small business successfully without good accounting data.
I personally prefer QuickBooks Online because of it time sharing and quick access. Thank you for sharing.
It seems that tough QuickBooks desktop is cost effective and we don’t have to get new subcriptions for different companies, QuickBooks online version is more beneficial to small business companies. I personally use Xero for bookkeeping purposes and it is quite effective. Thanks for the information.
Good point about desktop being more affordable. If I am correct regarding online cost: 5 years on QB is $200 per month = $12,000, plus support fees.
I think the monthly price is a little less than $30 a month or roughly $350 a year. The five year cost, then, is between $1500 and $2000.
You need to do the math for you situation, though, because you can use the desktop version for several companies but not pay any incremental fee.
But there are the other additional costs with desktop too… if you need help from a CPA or bookkeeper, probably the online version makes sense because there’s not an economical, easy way to outsource your accounting using desktop.
One thing that worries me about using online accounting software is what happens to your data when you cancel or change providers. What happens if your credit card expires and you don’t get in quick enough to renew?
It also seems like a lot of software providers are moving to the monthly billing model and as you quite rightly point out it ends up costing a lot more than the stand alone desktop version.
Mike, I agree with your concerns.
With regard to something like an expired credit card, you do get a bit of grace… but definitely something to consider.
With regard to the way a subscription pricing approach affects costs, I totally agree: We lamented this practice here: https://evergreensmallbusiness.com/diseconomy-of-subscription-style-services/
I appreciate you listing some of the pros and cons for Quickbooks desktop and online versions. It’s important to have a good understanding of your personal or business needs in mind so that you can visualize how each may be beneficial to you. With so many things going online with internet collaboration, I can see how having your accounting done online can help you better work with your accountant.
Thank you for sharing this article and also highlighting on what is the difference between the use of both. I like to use QuickBooks online version because it is more beneficial to us as our business is small.
Keep Posting such more informative articles.