What Version of QBO Is Right for your Business

If you are thinking about upgrading from your current accounting system or spreadsheet or starting your new business venture with accounting software, QuickBooks Online is a good way to go. It is perhaps the most well known accounting software and, having used both the desktop and online versions for many years, it can be a great tool for anyone who wants to track their self employed/small business finances.

When you have made your decision, you will have to determine which version of QBO to get. This requires that you understand what features are necessary for your business.

Video version below:

QBO Easy Start ($24/month)

The Easy Start plan is ideal for small businesses and freelancers who are either just getting started or who have few transactions, are service based and want to use QBO primarily for invoicing and reporting. Here’s what you can do with this plan:

• Track income received from customers/clients either by creating invoices (that can be emailed to customers) or sales receipts or simply amounts deposited into your bank account.

• Track expenses relating to your business.

• Manage and track sales tax - GST/HST and QST. QBO greatly simplifies the process of tracking your sales tax and is a good reason to upgrade.

• Capture/scan receipts that allows you to save time on entering them manually.

• Run essential reports such as Profit & Loss, Balance Sheet, and Sales by Customer.

• Accept payments directly through QuickBooks’ payment processing system.

• Create estimates (and potentially save on the cost of proposal software)

• Take advantage of basic tools to maximize tax deductions.

This plan is a good place to start, and you can upgrade later if your business needs evolve.

QBO Essentials ($54/month)

The Essentials plan includes everything in Easy Start and also includes:

• Bill and payment management: While you can enter expenses in EasyStart, you cannot set up bills. This refers bills from suppliers/vendors that have to be paid at a later date. If you need to track amounts owing to your suppliers i.e. accounts payable and cash flow management is important, then you will have to get the Essentials version.

• Multi-currency support: If you have transactions to international customers or suppliers, QBO handles this quite well. You can enter transactions in original currency and QBO will calculate the foreign exchange and make sure your books are accurate.

• Time tracking: Useful for billing based on hours worked or managing subcontractors.

• Up to three users: This is important if you have a bookkeeper, other administrators, partners or collaborators whom you want to have access to QBO.

QBO Plus ($80/month)

The Plus plan is designed for slightly larger businesses with more advanced needs such as inventory, divisions/segments or budgeting. It includes all the features of Essentials, plus:

• Project profitability tracking: helps you review the financial performance of individual projects. This is especially useful if you want to make sure you are on track with your projects and have to bill customers for specific costs.

• Inventory management: If you have inventory that you want to track, QBO has various features that can help makes this process much simpler. You can add to your inventory through bills and reduce your inventory directly from your invoices. There are also various reports that you can use to analyze your inventory including what you have at any given time, re-order levels, what products are selling well etc.

• Budgeting tools: You can create and manage budgets directly in QuickBooks.

• Class and location tracking: This is useful for businesses with multiple divisions, locations, or product lines and that require an extra level of reporting.

• Users: You can have up to 5 users compared with 3 users in the essential plan.

QBO Advanced ($160/month)

The Advanced plan is tailored for medium-sized businesses with complex needs. It includes:

• All features of the Plus plan.

• Data restoration and backup.

• Custom reporting fields.

• Premium customer support.

• Access for up to three accountants.

This plan is a significant investment - once you reach this point it is useful to also examine other alternatives depending on your needs.

QuickBooks Self-Employed

There is also another version of QBO called QuickBooks Self Employed. My advice is to avoid QuickBooks Self-Employed. Although it may seem appealing at $20/month, it operates on a completely separate system and lacks many essential features, such as QST tracking for Quebec businesses. If your business grows, there’s no way to upgrade to Easy Start or any other QBO plan without manually transferring data. For just $4 more per month, Easy Start offers far greater functionality.

Final Tips

• If you’re unsure which plan to start with, opt for Easy Start and upgrade as your needs evolve.

• While the costs of accounting software might be a deterrent to some, you should evaluate how much your time is worth. QBO’s features can save hours of manual effort (and also the frustration), which can more than justify the monthly cost.

• If you think you might need class/location tracking, it is useful to evaluate tags which are available in Essentials, before upgrading to Plus. Tags may provide sufficient tracking for your needs, thereby saving you the cost of an upgrade.

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