QuickBooks Desktop vs. Online: Which Should You Use?

What is QuickBooks?

QuickBooks is one of the best accounting software platforms on the market. It’s widely used because it can handle income and expenses, invoicing and payments, tax deductions and more for businesses of all sizes, including self-employed professionals. It also includes useful tools many competitors lack, such as integrated advanced time tracking.

There are two main versions of QuickBooks: QuickBooks Desktop and QuickBooks Online. QuickBooks Desktop is installed software, while QuickBooks Online runs in a web browser. Although they share many of the same accounting tools, the experience of using them is quite different.

Currently, new customers have one QuickBooks Desktop option: QuickBooks Desktop Enterprise. QuickBooks Online offers several versions, including options for self-employed professionals and tiers like Simple Start, Essentials, Plus and Advanced.

>> Learn More: 11 Accounting Mistakes That Cost Small Businesses Significant Growth

QuickBooks Desktop vs. Online: The similarities

Despite their differences, QuickBooks Desktop and QuickBooks Online also have plenty of overlap in their essential core functions. All versions include the following functionality:

• Import and organize transactions from bank and credit card accounts (QuickBooks Online includes native integrations for services such as PayPal and Square, while Desktop Enterprise supports numerous third-party integrations.)
• Invoice creation
• Estimate and quote creation
• Invoice payment acceptance (In QuickBooks Online, invoices can include an embedded payment link through the QuickBooks Payments network for direct, seamless payments.)
• Real-time invoice tracking
• Categorize business expenses for tax purposes
• Create reports
• Capture receipts via optical character recognition with expense category matching
• Charge and track sales tax (Additional marketplace integrations are available through third-party applications.)
• 1099 contractor management
• Inventory management (Desktop Enterprise includes more advanced inventory tools, while QuickBooks Online Plus and Advanced include built-in inventory tracking and support additional inventory integrations.)
• Time tracking (QuickBooks Online includes more automation and mobile functionality, while Desktop Enterprise offers advanced time-tracking capabilities through QuickBooks Time.)

Both QuickBooks Desktop and QuickBooks Online are especially well regarded for the following capabilities:

• Tax compliance
• Cash flow and expense tracking
• Business budget planning
• Ability to accept online payments
• General reporting features

QuickBooks Desktop vs. Online: The differences

Here are some of the features exclusive to QuickBooks Online:

Features

The primary differences between QuickBooks Desktop and QuickBooks Online lie in the accounting software features offered. The online version has several helpful components that aren’t available in QuickBooks Desktop.

Here are some of the features exclusive to QuickBooks Online:

• Attach documents, images and signatures to individual transactions from mobile and desktop devices
• Audit logging to track actions and changes over time
• Automatic nightly synchronization of bank transactions
• Auto-add banking rules for streamlined categorization
• Customize banking rules based on dollar value, percentage, class and location
• Journal entries with multiple accounts receivable and accounts payable (AR/AP) lines
• Create and share customizable management reports
• Schedule and send future transactions with delayed credits and charges
• Support for multiple budgets during a fiscal year
• Automated recurring transactions and workflows
• Time-tracking users and reports-only users (plan dependent)

Conversely, many classic QuickBooks Desktop tools are not available in the online version. These Desktop-only tools fit neatly into four categories.

Accounting:

• Back up, restore and condense data and company files
• Correct unapplied credits and payments
• QuickBooks Statement Writer (for businesses that need GAAP-compliant financial reporting)
• Client data review tools
• Post to multiple AR/AP accounts
• Manage undeposited funds
• Correct sales tax amounts
• Create period-specific accounts

Reporting:

• Industry-specific reporting options
• Customize headers and footers on reports
• Support multiple vendor ship-to addresses
• Business planners, balance sheets and class-based forecasting

Data entry:

• Batch invoicing, transactions and timesheets
• Rate-level billing
• Automated clearing house payments to vendors

Inventory and manufacturing:

• Assemblies and bill of materials management
• Inventory reordering and sales order management
• Available-to-promise tracking
• Partial receipt against purchase orders
• Warehouse management, barcode scanning and cycle counts
• Serial number, lot number and expiration date tracking

Job costing and labor management:

• Calculate payroll and labor costs
• Job costing reports comparing estimates and actuals

If you’re a QuickBooks Online user who wants these Desktop features, many third-party apps offer them for an extra charge.

Hosting

• QuickBooks Desktop: Most businesses run QuickBooks Desktop on a local computer or network. However, QuickBooks Desktop Enterprise can also be hosted by authorized cloud-hosting providers for remote access. Because the software isn’t as accessible as QuickBooks Online, it’s often a better fit for companies that prefer a traditional desktop setup or rely on Enterprise-specific tools.
• QuickBooks Online: QuickBooks Online lives entirely in the cloud. As long as you have an internet connection and your login credentials, you can sign in from a computer, tablet or smartphone. That flexibility makes it an excellent option for business owners and employees who work from multiple locations or need access while away from the office.

Payment model

• QuickBooks Desktop: In the past, QuickBooks Desktop products were available as one-time purchases and often sold on CDs. Today, QuickBooks Desktop Enterprise is available on an annual subscription basis, while other Desktop editions are no longer available to new customers.
• QuickBooks Online: QuickBooks Online operates on a subscription model with pricing that varies based on the plan you choose.

QuickBooks Desktop vs. Online: Service tiers and pricing

QuickBooks currently offers one active service tier for new Desktop users (Enterprise) and several for QuickBooks Online.

QuickBooks Desktop service tiers and pricing

QuickBooks Desktop looks much different than it did a few years ago. Intuit no longer sells most QuickBooks Desktop products to new customers, and QuickBooks Desktop Enterprise is now the primary Desktop option available for purchase.

The table below outlines the current QuickBooks Desktop Enterprise plans.

QuickBooks Online service tiers and pricing

Here’s a look at current QuickBooks Online offerings:

Note: Intuit also offers a free plan among its self-employed options for freelancers, independent contractors and sole proprietors. The company frequently runs steep introductory promotions as well, so you’ll likely see lower prices than the standard rates listed here.

Should you use QuickBooks Desktop or QuickBooks Online?

For those still trying to decide, here’s the bottom line: 

You should use QuickBooks Desktop if…

• Your business prefers a traditional desktop accounting environment over a cloud-based solution.
• You need advanced inventory tracking, job costing or industry-specific reporting features that are more robust in the Desktop version.
• You rely on manufacturing, warehouse management or other Enterprise-specific capabilities that aren’t available in QuickBooks Online.
• You don’t mind paying for an annual subscription in exchange for Enterprise’s advanced functionality.

You should use QuickBooks Online if…

• You prefer cloud-based accounting for easy access from anywhere on multiple devices.
• You need automated features like bank feeds, mobile invoicing and real-time collaboration.
• You want a lower-cost entry point and the flexibility to choose from multiple subscription plans.
• You want access to Intuit’s expanding ecosystem of integrations, add-ons and ongoing product updates, since QuickBooks Online is the company’s primary platform going forward.