What is QuickBooks? A Complete Small Business Guide

QuickBooks is one of the most widely used accounting software platforms designed specifically for small business financial management.

This comprehensive guide will explore what QuickBooks offers, highlights of the various editions, how it works, top features, pricing, and ideal user profiles. With a strong understanding of what QuickBooks is, who it’s best suited for, and how to leverage it, you can determine if it’s the right solutions for your business needs.

We’ll cover:

• Overview of QuickBooks and its key capabilities
• How QuickBooks works for tasks like invoicing and reporting
• Breakdown of the QuickBooks Online vs Desktop editions
• Detailed features of each QuickBooks version
• Pros, cons, and pricing of QuickBooks
• Useful applications and integrations
• How to decide what version fits your business

Let’s get started understanding exactly what QuickBooks is all about and whether it should be the accounting platform powering your small business.

What is QuickBooks?

QuickBooks is accounting software built specifically for small business use cases such as:

• Streamlining bookkeeping and financial management
• Tracking income and expenses
• Generating invoices, estimates and financial reports
• Enabling multi-user collaboration
• Accepting online payments
• Managing payroll, taxes and 1099 contractors
• Simplifying tax prep with smart categorization
• Integration with other business apps

In essence, QuickBooks aims to provide an easy-to-use system to handle key financial processes, reporting, and workflows for SMBs without requiring extensive accounting expertise.

Used by over 5 million businesses, QuickBooks is tailored for the financial user experience of entrepreneurs, solopreneurs, startups, SMBs, retailers, restaurants, service providers, contractors, and freelancers.

Next let’s explore how QuickBooks actually works.

How Does QuickBooks Work?

One of the keys to QuickBooks’ popularity is its ability to streamline core financial management processes in a user-friendly way. Here are some of the key workflows:

Invoicing & Payments

Easily generate professional looking invoices and track payments. Send to clients for online payment or record when paid outside QuickBooks.

Accounting & Reporting

Categorize income and expenses for smart reporting. Run ubiquitous reports like Profit & Loss, Balance Sheet, Accounts Payable, Accounts Receivable, and more with a few clicks.

Payroll & 1099s

Built-in or add-on payroll handles paying employees and independent contractors, calculates associated taxes, and files forms like W-3 and 1099s.

Inventory Management

Record and track inventory items. Enable low stock alerts, assemble bill of materials, and monitor costs. QuickBooks Online Advanced provides robust inventory capabilities.

Lead & Contact Management

Sales-focused editions have built-in CRM including contact database, lead scoring, pipeline visualization, and sales reporting.

Multi-user Access

Invite your accountant or bookkeeper to access your QuickBooks company file online for easy collaboration. Restrict access by user role.

This covers the key ways QuickBooks aims to help small businesses manage their finances all in one place while eliminating tedious workflows. Intuitive design and automation remove much accounting complexity.

Now let’s explore the two main editions of QuickBooks – Online vs Desktop.

QuickBooks Online vs Desktop: Key Differences

There are two primary versions of QuickBooks:

QuickBooks Online

The cloud-based Software-as-a-Service (SaaS) version that runs in web browsers and mobile apps. Data is stored in the cloud.

QuickBooks Desktop

The desktop version installed directly on Windows or Mac machines. Local file stored on your computer.

Here is an at-a-glance overview comparing the two options:

While the core features overlap, QuickBooks Online provides greater convenience, mobility, security and adding capabilities over time. But QuickBooks Desktop remains a viable option for certain use cases we’ll cover next.

QuickBooks Online Editions and Features

QuickBooks Online packages several tiered editions to serve different business needs. Here is an overview of the main options:

QuickBooks Online Simple Start

The most basic SMB package with core financials.

Key Features:

• Invoicing
• Expense tracking
• Reporting – P&L, Balance Sheet
• Multi-user access
• Works with Alexa
• Mobile app
• Same-day bank feeds

Best For

Microbusinesses and solopreneurs looking for easy accounting basics.

Pricing

$15/month

QuickBooks Online Essentials

Adds light inventory management, 1099s, and projects capabilities.

Key Features:

• Everything in Simple Start
• 1099 contractor payments
• Basic inventory tracking
• Project cost and profit tracking
• Quotes and sales orders
• Multi-currency support

Best For

Service businesses, consultants, and freelancers.

Pricing

$20/month

QuickBooks Online Plus

Robust inventory and project management for product-based businesses.

Key Features:

• All Essentials features
• Advanced inventory tracking
• Manufacturing and assembly capabilities
• Container and serial number tracking
• Routine bill pay
• Budgeting

Best For

Retailers, wholesalers, manufacturers, and other product-based SMBs.

Pricing

$35/month

QuickBooks Online Advanced

Adds advanced reporting and customization for more complex needs.

Key Features:

• All Plus edition capabilities
• Custom fields and saved customizations
• Advanced reporting – up to 60 customizable
• Advanced inventory with bin tracking
• Visual workflow automations
• Integrates with WorkflowMax PSA software

Best For

Midsize businesses with more robust needs around reporting, processes, and integrations.

Pricing

$60/month

These four online editions scale from essential basic accounting to more advanced inventory management, reporting and automation.

Now let’s examine the QuickBooks Desktop versions and their differences.

QuickBooks Desktop Editions and Features

Here is an overview of the key Desktop editions for Windows and Mac:

QuickBooks Pro

The flagship QuickBooks Desktop offering. Covers core financials for most SMBs.

Key Features:

• Invoicing and estimates
• Account management
• Reporting – P&L, payables, receivables, etc
• Inventory and bill of materials
• Process payroll in-house or with add-on
• Class and location tracking
• Up to 3 simultaneous user access

Best For

Service businesses, retailers, and other SMBs that value offline accessibility and don’t need heavy inventory features.

Pricing

One-time license fee around $325

QuickBooks Premier

Additional inventory planning capabilities such as assemblies and serial numbers.

Key Features:

• Everything in Pro
• Advanced inventory assemblies
• Serial number tracking
• Up to 5 users supported
• Estimates by sales reps

Best For

Light manufacturing, wholesalers, and distributors with moderate inventory volumes.

Pricing

One-time license fee around $450

QuickBooks Enterprise

Robust inventory and manufacturing tools for advanced users.

Key Features:

• All Pro and Premier capabilities
• Advanced manufacturing and inventory
• Enterprise user security roles
• Custom fields and reporting
• Field service management
• Up to 30 simultaneous users

Best For

Larger or multi-entity product-based businesses with complex needs.

Pricing

One-time license around $1,600

For most basic accounting needs, Pro should suffice. But Premier and Enterprise meet scaling complexity as businesses grow.

Now that we’ve explored the editions, let’s highlight some of QuickBooks standout features.

Top QuickBooks Features and Capabilities

Both QuickBooks Online and Desktop share many hallmark features:

Multi-user access – Add employees or accountants to simplify collaboration.

Invoicing – Easily create customized professional invoices and accept online payments.

Expense tracking – Categorize business expenses for tax prep and reporting. Snap photos of receipts.

Reporting – Run key financial reports like Profit & Loss, Balance Sheet, Accounts Receivable and Payable with one click.

Inventory management – Track inventory down to the SKU level. Enable low stock alerts and quick reordering. (Advanced capabilities in QuickBooks Online Plus)

Sales tax – Automatically calculate state and local sales tax on invoices. Supports sales tax rates by ZIP code.

Mobile apps – Native iOS and Android apps allow managing invoices, expenses, contacts, inventory and reporting on-the-go.

Payroll – Built-in or add-on payroll with direct deposit, tax calculations, and filings. Works with full service providers like Gusto.

1099s – Easily pay independent contractors and generate 1099-NEC and 1099-MISC forms.

Estimates – Create professional quotes and estimates to share with clients and convert to invoices once approved.

Non-profit support – Versions tailored to churches and non-profits with fund accounting, donor management, and Form 990 support.

QuickBooks simplifies these universal small business financial workflows all in one connected system.

What Companies Use QuickBooks?

QuickBooks is designed for and used widely across countless industries including:

• Service businesses – consultants, marketing agencies, IT services, repair shops, gyms, salons, healthcare, etc.
• Retailers – stores, boutiques, restaurants, franchises, kiosks, etc.
• Manufacturing – light assembly, food production, industrial, consumer goods, crafts, etc.
• Non-profits – churches, animal shelters, foundations, charities, associations, etc.
• Construction – contractors, electricians, landscapers, plumbers, carpenters, painters, etc.
• Transportation – taxi fleets, trucking, couriers, towing companies, auto dealers etc.
• Professionals – accountants, lawyers, architects, designers, photographers, freelancers, etc.

From Main Street to Wall Street, QuickBooks meets the financial management needs of virtually any type of small to midsize business across every industry.

Next let’s explore the pros and cons of using QuickBooks.

Pros and Cons of QuickBooks

QuickBooks Pros

• Specifically designed for small business accounting needs, workflows and mindset
• Far easier to use than accounting software aimed at enterprise
• Helps avoid mistakes by doing math automatically behind the scenes
• Everything centralized in a single connected system – billing, expenses, payroll, reporting, etc.
• Scales from simple to advanced capabilities with different editions
• Third party integrations extend functionality
• Mobility and multi-user collaboration
• Brand recognition provides credibility with clients

QuickBooks Cons

• Steep learning curve for extensive capabilities
• Buggy features or slow performance at times
• Reports lack customization in lower-tier editions
• Initial setup can be time intensive
• Third party apps and payroll increase costs
• QuickBooks Online lacks full feature parity with Desktop

For most SMBs, the specialized strengths far outweigh the limitations. But it helps to be aware of potential pain points upfront.

How Much Does QuickBooks Cost?

Let’s break down the pricing and fees associated with using QuickBooks:

QuickBooks Online Pricing

• Simple Start – $15/mo or $180/yr
• Essentials – $20/mo or $240/yr
• Plus – $35/mo or $420/yr
• Advanced – $60/mo or $720/yr

Discounts for paying annually. Add $10/month per add-on user.

QuickBooks Payroll Pricing

• Basic Payroll – $22.50/month base fee plus $2/employee
• Premium Payroll – $42.50/month plus $2/employee
• Full Service Payroll – Starts at $32/month plus $4/employee

QuickBooks Desktop Pricing

• Pro – One-time fee around $325
• Premier – One-time fee around $450
• Enterprise – One-time fee around $1,600

Add on payroll, payment processing, and other extras for monthly fees. Requires purchasing new version every 2-3 years.

Volume and non-profit discounts available. While competitive, costs add up especially with add-ons.

Useful QuickBooks Integrations

QuickBooks offers an expansive third-party ecosystem with over 500 apps covering functionality like:

• Payments – Merchant services, invoice payments, expense cards
• Banking & finance – Loans, cash flow management, comparison shopping
• Sales & orders – CRM, commission tracking, quoting
• Timekeeping – Timesheets, scheduling, project costing
• Documents – Doc management, eSignatures, file storage
• Inventory – Barcode scanning, multi-channel syncing, shipping
• HR – ATS, onboarding, background checks, trends reporting
• Support – Live chat, email marketing, feedback collection

Popular connected apps include Mailchimp, Gusto, RingCentral, DocuSign, Slack, HubSpot, Zapier and many more. Integrations extend QuickBooks to other critical systems.

Now let’s put everything we’ve covered together into a decision making framework on which version of QuickBooks meets your needs.

How to Choose the Right QuickBooks for Your Business

When deciding between QuickBooks editions, follow this decision tree:

Start here:

• Are you open to a cloud-based system? If yes, focus on QuickBooks Online.
• Do you prefer your data stored locally? If yes, focus on QuickBooks Desktop.

If QuickBooks Online:

• Do you just need basic accounting with minimal inventory? QuickBooks Online Simple Start or Essentials.
• Do you have more robust inventory needs? Look at QuickBooks Online Plus.
• Do you need advanced customization and reporting? QuickBooks Online Advanced.

If QuickBooks Desktop:

• Do you have basic invoicing, expenses, and reporting needs? QuickBooks Pro should suffice for most.
• Do you have light manufacturing and inventory requirements? Upgrade to QuickBooks Premier.
• For advanced inventory capabilities and 30+ users, step up to QuickBooks Desktop Enterprise.

Picking the right edition avoids paying for unnecessary capabilities now, but also allows room to scale in the future.

Should You Use QuickBooks for Your Small Business?

If you need to:

• Streamline invoicing and accounts receivable
• Track income and expenses with categorized reporting
• Manage inventory across products and locations
• Pay employees and contractors with automated payroll
• Create a collaborative multi-user financial system

Then QuickBooks can absolutely benefit your small business. If you simply need basic invoicing, expense logging, and filing taxes, QuickBooks may be overkill.

Also consider workload and staffing. QuickBooks reduces accounting legwork, but takes dedication upfront to setup properly. Make sure you or qualified staff actively use the capabilities for maximum ROI.

QuickBooks Alternatives

Major competitors and alternatives to QuickBooks include:

Wave – Free invoicing, accounting, and payments processor. Best for super early stage and microbusinesses.

Xero – Cloud accounting platform starting at $12/month. Strong overseas presence.

Zoho Books – Combines invoicing, payments, expenses and basic accounting help. From $9/month.

FreshBooks – Online invoicing and time tracking tailored for service businesses. Starts at $11.50/month.

ZipBooks – Freemium invoicing and basic accounting aimed at solopreneurs. $35/month for Premium plan.

SAP Business One – Enterprise ERP with QuickBooks edition tailored for SMBs.

For more scaled needs, also evaluate mid-market systems like NetSuite or Intacct. But QuickBooks remains the undisputed leader specifically targeting Do-it-yourself small business financial management.

Key Takeaways About QuickBooks Software

• QuickBooks provides easy-to-use accounting, payroll, invoicing, reporting and inventory for SMBs
• Available in both cloud-based QuickBooks Online and locally installed QuickBooks Desktop editions
• Scales from Simple Start to QuickBooks Advanced to meet business complexity
• Wide third party app ecosystem extends capabilities
• Used by over 5+ million small and midsize businesses globally
• Affordable starting around $15/month for QuickBooks Online Simple Start
• QuickBooks Pro Desktop suitable for many basic business accounting needs

With the right edition, QuickBooks delivers tremendous ROI helping small businesses manage their finances seamlessly. Just be sure to take time evaluating the features against your needs so you choose the optimal fit.