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.
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.