What Is QuickBooks? Versions and Use Cases Explained

For any business, meticulous financial management is crucial to staying profitable. QuickBooks offers accounting software allowing small business owners to manage many financial tasks, from tracking income and expenses to determining payroll taxes. Whether you’re a sole proprietor or an established entrepreneur, QuickBooks can help you run your business with greater efficiency and financial clarity. 

What is QuickBooks?

QuickBooks is business accounting software developed and marketed by Intuit. QuickBooks products are geared mainly toward small and medium-sized businesses and offer both on-premises and cloud-based accounting. Its accounting software automates many tasks, such as tracking income and expenses, invoicing clients, and payroll accounting.

QuickBooks offers many benefits for businesses, including:

• Automated data entry and bank reconciliation

• Reduced manual input and risk of human error in financial records

• Financial clarity with real-time data and financial health reports

• Simplified tax preparation with organized financial records and automated tax categorization

• Enhanced cash flow management through tools for invoicing clients, tracking bills, and processing payments

How does QuickBooks work?

• Invoicing
• Tracking bills
• Managing payroll
• Expense management
• Financial reporting and budgeting
• Sales and sales tax management

QuickBooks lets businesses input and categorize their financial transactions. It connects with your business bank account and credit card accounts to import transactions automatically. For cloud-based versions, an internet connection is required for full functionality, though some mobile app features can work offline.

Invoicing

Businesses can use QuickBooks to create, send, and track invoices. You can customize invoice templates with your logo and brand colors, send invoices via email or SMS texts, and set up recurring invoices for regular clients. QuickBooks Payments integrates with QuickBooks Online, so customers can pay directly online with various methods like ACH payments and credit cards.

Example: When a customer makes a purchase, you can use QuickBooks to generate and email an invoice. The invoice includes a secure link for the customer to pay directly using their preferred method via QuickBooks Payments. Funds are received and the transaction is recorded in your books.

Tracking bills

Tracking bills in QuickBooks helps business owners keep a close eye on their accounts payable, pay bills promptly, and avoid late fees. You can input vendor bills, set due dates, and track their status. The platform also lets you make partial payments, enter recurring bills, and categorize business expenses for reporting.

Example: Let’s say you’re a retailer who receives regular invoices from bulk suppliers, and you enter those bills into QuickBooks. When you pay bills to a supplier, the payment is recorded in QuickBooks, providing a real-time overview of outgoing funds. 

Managing payroll

QuickBooks Online Payroll, a direct integration with QuickBooks Online, simplifies the process of paying employees. It calculates employee wages, deductions, and payroll taxes, generates pay stubs, and can even handle direct deposit for employees. It also ensures businesses are compliant with regulations for federal, state, and local payroll taxes. You can generate necessary tax forms like W-2s and take advantage of a 1099 e-file option for contractors.

Example: Every pay period, your QuickBooks Online Payroll system automatically calculates hours, wages, and deductions for each employee, then initiates direct deposit. At year end, QuickBooks generates the necessary W-2 and 1099 e-file forms.

Expense management

QuickBooks allows you to track and categorize all your data related to expenses, whether through connected business bank accounts, business credit card accounts, or manual entry. This expense management feature is crucial for understanding spending patterns, identifying areas for cost savings, and maximizing tax deductions. The receipt capture feature in the QuickBooks mobile app makes it easy to snap photos of receipts when you’re on the go.

Example: You connect your business bank account and credit cards to QuickBooks. All transactions related to marketing expenses, website hosting, and product sourcing are automatically imported and categorized. This lets you see where your money is going and generate detailed reports for tax time. The receipt capture feature helps you digitize all purchase records.

Financial reporting and budgeting

Intuit QuickBooks offers customizable financial reports, including profit and loss (P&L) statements, balance sheets, and cash flow statements. These reports provide invaluable insights into a business’s financial performance, which helps you make data-driven decisions. Many versions also include budgeting tools to help plan and forecast cash flow. You can also share reports easily with accounting professionals from within the software.

Example: Assume you regularly run a P&L report in QuickBooks. This report shows revenue and business expenses during a specific period. The information lets you identify the most profitable product lines so you can adjust your marketing strategy accordingly, benefiting from the built-in budgeting tools.

Sales and sales tax management

For businesses selling goods, QuickBooks helps track sales and automatically calculates sales tax based on various jurisdictions. It can connect to ecommerce platforms to automatically sync sales data, making sales tax remittance much simpler. If you sell internationally, it helps you manage multiple currencies too. Shopify users can sync their sales data with QuickBooks using apps like QuickBooks Sync, automating your accounting, and ensuring data is accurate. 

Example: If you sell products to customers across multiple states, QuickBooks integrates with your ecommerce platform and automatically calculates the correct sales tax for each order based on the customer’s location. This ensures you collect and remit the appropriate sales tax to each state’s tax authority.

QuickBooks versions explained

• QuickBooks Online
• QuickBooks Solopreneur
• QuickBooks Desktop Enterprise
• Other QuickBooks products

Various versions of QuickBooks are tailored to different business operations and needs, each with its own set of features and pricing. It’s a good idea to talk to a sales representative or consult the official QuickBooks website for the most current offers and deals. You can also take advantage of a free 30-day trial to determine if the software is a fit.

QuickBooks Online

QuickBooks Online is the cloud-based online version, offering accessibility from any device with an internet connection. It’s generally preferred by small to medium-sized businesses and those needing to manage their finances remotely. QuickBooks Online users benefit from automatic updates and cloud backup of all your data. The QuickBooks Online app extends functionality to your mobile phone.

Features: Automatic bank and credit card accounts synchronization, invoicing, expense management, customizable reports, receipt capture, mileage tracking, integration with numerous third-party applications, multi-user access (number varies by plan), and QuickBooks Online Payroll options. It supports project profitability tracking and inventory management in higher tiers.

Pricing: QuickBooks Online offers a choice of four plans, which are priced based on available features.

• Simple Start. $38 per month (often discounted for initial months). Ideal for one user, focusing on tracking income and expenses, invoicing, and basic reports.

• Essentials. $75 per month. Includes Simple Start features plus recurring invoices, time tracking (QuickBooks Time integration), and up to three users.

• Plus. $115 per month. Includes Essentials features plus inventory tracking, project profitability, and up to five users.

• Advanced. $275 per month. Includes Plus features, enhanced reporting, batch invoicing, custom access controls, and up to 25 users, along with dedicated support.

QuickBooks Solopreneur

Formerly QuickBooks Self-Employed, QuickBooks Solopreneur is designed for freelancers, independent contractors, and sole proprietors. It is useful for those who need to separate business expenses and personal expenses and simplify tax preparation (especially Schedule C).

Features: Automatic categorization of business and personal transactions, mileage tracking, receipt capture, basic invoicing, expense management, and direct integration with TurboTax for simplified tax filing and managing tax deductions. It also helps with 1099 e-file for payments to contractors.

Pricing: $20 per month, and is designed for a single business owner. 

QuickBooks Desktop Enterprise

QuickBooks Desktop Enterprise is installed directly on your computer to be used without an internet connection. It is preferred by businesses with complex inventory needs or industry-specific requirements. It operates on a monthly subscription fee, billed annually.

Features: Enhanced or assisted payroll (depending on tier), inventory tracking, cloud access for an additional fee, online backup data storage, multi-user access (number varies by tier), premium support and training, and bill and purchase order workflow approvals.

Pricing: Select from four tiers, which vary in price depending on plan and number of users.

• Gold. Starts at $2,210 annually for up to 30 users. Includes robust reporting and accounting tools tailored to your industry, integrated QuickBooks Enhanced Payroll, and premium support and training with QuickBooks Priority Circle.

• Platinum. Starts at $2,717 annually for up to 30 users. Includes all Gold features plus advanced inventory and advanced pricing modules. It is best for companies with complex inventory needs, multiple warehouses, manufacturing processes, or intricate pricing structures.

• Diamond. Starts at $5,364 annually for up to 40 users. Includes all Platinum features, plus integration with Salesforce CRM, assisted payroll, and enhanced time tracking.

Other QuickBooks products

One of the benefits of using QuickBooks is access to its integrations, which include bill pay and time tracking. Some, like QuickBooks Payroll and QuickBooks Time, are direct integrations embedded within the software. Other QuickBooks products include:

• QuickBooks Live. Gives users on-demand access to a team of certified bookkeepers who can help with account set-up and bookkeeping, and provides you with the information necessary to file your income taxes.

• QuickBooks Payroll. Simplifies the process of paying employees, with features for calculating wages, taxes, and deductions, as well as direct deposit and automated tax filings.

• QuickBooks Time. Businesses are able to accurately track hours for payroll, invoicing, and job costing. Mobile time tracking, GPS tracking, and simplified timesheet management features are also available.

• QuickBooks Bill Pay. Streamlines the process of paying vendors and expense tracking, offering the ability to schedule payments, track approvals, and update your accounting records.

• QuickBooks Payments. QuickBooks Payments lets you accept payments, including credit cards and bank transfers, directly within QuickBooks. This simplifies bank reconciliation.

• QuickBooks Money. Offers a simplified business banking solution designed for small businesses, combining banking, payments, and cash flow insights.

• QuickBooks Checking. Integrate a business bank account with QuickBooks, with features like no monthly fees, instant deposits for QuickBooks payments, and cash flow insights. 

• QuickBooks Capital. Provides small business loans, offering a flexible way for businesses to get funding based on their QuickBooks data, without having to complete extensive paperwork.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months based on sales.