QuickBooks Online (QBO) is the accounting software most small businesses use, and for good reason. Bookkeepers use it. CPAs use it. Banks recognize it. Is it perfect? No. But it’s the one everybody speaks fluently, and that makes your life a whole lot easier.
But here’s where a lot of business owners get tripped up: QuickBooks Online comes in several different versions, and picking the wrong one is like showing up to a job with the wrong tools. Too many and you’re hauling around weight you’ll never use. Too few and you’re making extra trips when you need something you don’t have.
So, let’s fix that. Answer these four questions and you will have a better understanding of which QBO version works for you.
Question 1: Will You Be Entering Information Yourself?
A lot of business owners assume they need to be actively working inside QBO to run their business. But plenty of business owners outsource this work so everything runs smoothly without the owner ever touching QBO.
That’s where QBO Ledger shines, and you likely didn’t know it existed.
Ledger is a streamlined version of QBO that is only available through accounting professionals. Its features are simple and designed to be used by your professional accountant. The features don’t include invoicing, bill management, or other bells and whistles, but it has all the capabilities that an accountant needs to get the required information to the IRS and give you solid financial reports too. For a business that gets all the essential reports from an accountant, QBO Ledger is the best solution.
Since Ledger is only available through your accounting firm, the only way to get it is to have a CPA in your corner.
Hands off the books? Ledger may be your answer. Want to be in the file yourself? Keep reading.
Question 2: How Many Users Do You Need?
Each tier of QBO includes a preset number of users who can set up unique logins to access the file. Simple Start gives you one user, Essentials bumps that to three. Each plan also includes two accountant logins, which are separate from the user count. Every QBO user should have their own login. QBO has an audit trail that tracks every change made in the file and who made it. The moment something goes wrong in the books, you’ll wish you had this information.
In practice, we rarely set clients up on Simple Start. The single user limit gets outgrown faster than most people expect, and the moment you need anyone else in the books, you’ve already hit the ceiling. If you need access to the file, Essentials is the practical starting point for most.
Simple Start isn’t the wrong answer for every business. If you’re a true solo operator, it does the job. But if there’s any chance you’ll need a second set of hands, start with Essentials and save yourself the upgrade later.
One user with no plans to add more: Simple Start. Everyone else: Essentials is likely where you’ll land.
Question 3: How Do You Need to Handle Invoicing and Customer Payments?
The most common reason owners need to be in QBO is to manage customer invoices and payments. All QBO plans, excluding Ledger, allow you to create invoices, accept payments, and manage basic billing without any issue. If that’s all you need, your answer really comes back to user count. It gets more interesting if you need a way to send estimates to customers. The full workflow from estimate, to invoice, to customer payment, is where Plus becomes the starting point.
Many small businesses use an industry specific software like Toast for restaurants or House Call Pro for home repairs, but QBO offers a solid system for invoicing and collecting payments from your customers. An advantage to using QuickBooks for invoicing and payments is that it’s easy to find help from a local accountant if you run into problems.
If your business wants to send out an estimate, and then convert that to an invoice, QBO Plus gives you an easy way to make that happen
Basic invoicing and payment collection: Simple Start or Essentials has you covered. Need estimates flowing into invoices: Plus is worth the conversation.
Question 4: Do You Need to Track Performance by Location or by Job?
In practice, this question is the most common issue that separates the Essentials user from the Plus user.
If you’re running multiple locations, Plus gives you the ability to monitor each location separately through class tracking. Instead of one big picture of how the business is doing, you can use class tracking to make better decisions based on the performance of each class. This also makes Plus worth gold for rental property owners who need to track income and expenses separately by property.
If you’re juggling multiple jobs, Plus includes project (or job) costing and project profitability tracking, which allows you to assign estimates, invoices, bills, and expenses to certain jobs giving you the full picture of profitability on one singular project.
These features sound like a dream, but here’s what nobody tells you upfront: the software can’t do it alone, and your accountant can’t either. Class tracking and job costing take a lot of input and making notes on purchase receipts from someone managing the jobs. You need to code the class or project for each item. If that’s not happening consistently (and before someone forgets), no accounting software will be able to give you what you want. It’s a process problem, not a software problem. If you want these features to work, someone has to own that process. Full stop.
Multiple locations, rental properties, or job costing: Plus is your plan, but go in with a clear, consistent process or the results won’t be there.
Did We Forget about QBO Advanced?
No, we didn’t forget about QBO Advanced. These four questions cover the most common decision points we see with small business clients, but they don’t cover every scenario. QBO has features and capabilities beyond what we discussed here, and your situation may not fit neatly into any of these buckets. If that’s the case, that’s exactly what we’re here for, but the answer probably isn’t QBO Advanced.
Advanced exists for businesses whose structure has gotten complex enough that Plus simply can’t contain it anymore. We’re talking multiple locations, maxed out user limits or chart of accounts, or complex reporting needs.
If that sounds like you, Advanced is worth every penny. If you had to think about whether that sounds like you, it’s probably overkill.
Advanced is a tool, not a status symbol. You only actually need it if you’ve hit a limitation of your previous version.
If your business structure has outgrown the limits of Plus: Advanced. Everyone else: one of the first four questions has your answer.
So, Which Plan Is Right for You?
Hands off the books? QBO Ledger, through your CPA
One user, basic invoicing and payments? QBO Simple Start
Need more than one user in the books? QBO Essentials
Need estimates flowing into invoices? QBO Plus
Multiple locations, rental properties, or job costing? QBO Plus, with a clear process behind it
Structure too complex for Plus? QBO Advanced
Not Sure Where You Land? Let’s Talk.
At Bearden Stroup & Associates, helping small businesses get set up right is what we do every day. Whether you’re brand new to QuickBooks Online or wondering if you’ve been on the wrong plan this whole time, we can help you figure it out. If you have questions about features we didn’t cover here, we’d be happy to make some recommendations for your business. And here’s one more thing worth knowing: when you set up through us, we pass a portion of our accountant discount directly to you, so with Bearden Stroup CPAs you will always pay less for your QBO subscription.
Reach out and let’s make sure your books are working as hard as you are. After all, that’s what working together is all about.