Small Business | Finance | QuickBooks | Money | Self-Employed | Entrepreneur | Bookkeeping | Tips | Self-EmployedThis post contains affiliate links to products that I use, know, and love! Affiliate links mean that if you sign up for something through my link I receive a small commission. I only recommend products that I have tested, use for myself or for my clients.

Are you ready to make the switch to a digital accounting program but wondering what to use? Maybe you’ve stumbled upon the words QuickBooks Online a million times and now you’re wondering if it’s right for you. It’s no secret that I LOVE QuickBooks Online but that doesn’t mean it’s right for everyone. (psssst… use this link to get 50% off of QuickBooks Online for 12 months)

This week on the Andi Smiles Show I’m telling you WHO needs QuickBooks Online, who doesn’t, and I’m giving a demo of some key features to help you decide if QuickBooks Online is right for you to manage your business finances.

Watch the video below to get the whole shabang or check out the recap under the video.

 

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What the heck is QuickBooks Online? (2:59)

QuickBooks Online is a digital accounting program which means that it digitizes your accounting. Now I know that sounds really obvious. Here’s the thing… Just because something is on a computer doesn’t mean it’s actually digitizing your accounting. A good example of this is a spreadsheet.  A spreadsheet is digital, but I wouldn’t consider that digitizing your accounting because spreadsheets have a one-dimensional functionality.

A spreadsheet can do some calculations for you and maybe even keeps things formatted in a way that’s easy to look through and read. But that’s about it and that’s what I mean when I say one dimensional.

Digital accounting programs like QuickBooks Online are more three-dimensional in the way that they interact with your business finances and their functionality. So, when I say digitizing your accounting I’m talking about a system that is automating the processes involved in your accounting.

QuickBooks Online is a professional accounting software. This doesn’t mean it is only for professionals, but what it does mean is that it checks all the boxes that a digital accounting program should have. Let’s get real for a moment. Many of you are not bookkeepers. But, there are a lot of accounting best practices that bookkeepers and accountants do to ensure that everything is accurate.

We rely on these best practices to make sure that everything is in balance.  If something doesn’t balance, that means that something is off in your finances. If you make a mistake you’re going to know it. Programs that aren’t professional accounting programs don’t have these practices built into them to ensure that you catch your mistakes.

organize business finances

What makes QuickBooks Online different from other tracking methods? (6:11)

There are a lot of other tracking methods out there and sometimes people get confused about what they should use. Many wonder why they would need a bookkeeping program over a spreadsheet.

As I mentioned earlier, spreadsheets are one-dimensional. They manually organize your data and you can use a few formulas to calculate stuff. Spreadsheets don’t do much else. With a spreadsheet, you are steering the reins by manually putting your information in yourself.

Here’s the difference between a spreadsheet and QuickBooks Online.

With QuickBooks Online, there’s rarely any manual entry if you’re following bookkeeping best practices and keeping your business and your personal account separate. Everything is automated for you.

QuickBooks Online works in the background to do all the heavy lifting for you in your accounting. It’s syncing to your bank account and downloading your transactions automatically. It’s also attempting to categorize and match those transactions to make things a lot easier for you.  A spreadsheet doesn’t do that.

Another difference between a spreadsheet and QuickBooks Online is that a spreadsheet does not have automatic reporting. Sure, you can put in formulas but if you ever wanted to get *really* detailed with your reporting, you wouldn’t be able to do that with a spreadsheet.

To get detailed reports from your spreadsheet, you’d have to manually create a report yourself. In QuickBooks Online, all of this reporting automatically takes place in the background and you can create ANY report you can think of. Magic- I know.

Check out the video above at time stamp 9:06 to see a screen-share demo of the differences between using a spreadsheet and using QuickBooks Online. I’m using my QuickStart spreadsheet freebie for this example.

There’s another type of a tracking method that people are curious about and that’s add-on bookkeeping features. These are bookkeeping features that are add-ons to programs that are not bookkeeping programs.

A great example of this is Dubsado or 17hats where they have a bookkeeping functionality. But it isn’t actually a system specifically for bookkeeping. Instead, this is an add-on feature.  Here’s a big question that people have.

If I use Dubsado, do I really need to use QuickBooks and why?

While something like Dubsado or 17hats is tracking income and expenses for you, there’s still manual entry involved. They are NOT synced with your bank account and downloading that information automatically. I think of these programs like bookkeeping lite because they’re a step above a spreadsheet but they’re not quite as full-fledged as an actual bookkeeping software program.

There’s also no automation happening in programs like Dubsado or 17hats. If you only receive income through Dubsado or 17hats that’s okay. But if you have other ways that you receive income, then all of that other income that comes into your business will have to be manually entered.

There are some interactions with your data that add-on bookkeeping features can offer. There are a few reports that you can run and you can search your transactions. In this case, it’s a step up above a spreadsheet but it is not as robust as a digital accounting program.

If you’re somebody that’s a little bit forgetful or you get distracted in the middle of a task, manual entry is probably not a good process for you. Guess what? You get another demo. This time I am doing a comparison with Dubsado. Watch the video at time stamp 15:35 to view the screen share demo.

The Biggest Differences (14:43)

We’ve already gone through the individual differences between using a spreadsheet and other tracking methods. I want to talk with you about the biggest differences.

Bank Syncing

I think I’ve said it a million times, but the bank sync feature is major because it just saves you so much time. You don’t have to type anything in QuickBooks. It learns your transactions and categories and starts to remember them for easy automatic categorization.  And that’s another big difference. Programs like Dubsado and a spreadsheet don’t really learn what your what your vendors and categories are.

Third Party Integrations

QuickBooks has a lot of integrations with third-party software. In fact, Dubsado and QuickBooks have an integration. QuickBooks Online can integrate with pretty much everything including Zapier so you have endless integrations. There’s also a lot of third-party apps that will connect various software to QuickBooks Online so it’s easy to build yourself an automated bookkeeping system.

Accounting Best Practices

Here’s the kicker. You don’t get accounting best practices with 17hats, Dubsado, or your handy dandy spreadsheet. There’s something that you should be doing and not everyone does call reconciliation.

Reconciliation is double checking that everything that appears on your bank statement is also in your bookkeeping program. You need to be sure that the data from your bank matches the data in your in your tracking system because, if it doesn’t, that can look bad for you in an audit.

 

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Who is QuickBooks Online good for? (21:33)

There are some business owners who really need QuickBooks Online and some business owners that don’t.

Corporations

First of all, if you are a corporation which means you are a C Corp or an S Corp, you should definitely be using something like QuickBooks Online. Once you become a corporation you’re filing a separate business tax return from your personal return. That’s different than being a single member LLC or being a sole proprietor.

Having clean accurate books is crucial because your business is an entity that stands alone on its own. I would say anytime anyone is moving into being a corporation (C Corp or S Corp) it’s time to get into a digital accounting program.

More than 25 Transactions a Month

If your business has more than 25 transactions a month it’s time to get into a digital accounting program. That’s a lot of manual entry for incoming and outgoing money from all of your different accounts or credit cards and it’s easy to miss something.

Bosses with Diversified Income Streams

If you have diversified income streams or daily inflow, it’s time for a digital bookkeeping system.  Diversified income streams mean that you have income coming in from multiple sources. For example, in my business, I invoice and collect payments through Dubsado, Thrivecart, Stripe, Paypal, and QuickBooks Online.

Since I have so many different ways that money comes into my business, it makes no sense for me to have to manually type in every single deposit that’s made into my account. This, again, is where bank account syncing is really going to help you out.

Digital Product Sellers

If you’re somebody who sells digital products, have an Etsy store, or have money coming into your business every single day, then you want to move into the into QuickBooks Online to manage your daily inflow. The reason is that keeping up with the daily inflow deposits is a lot of work that can be very time consuming and tedious. I’m a professional bookkeeper and I don’t even know if I could keep up with that much manual entry.

You’re a Square User

If you use Square as your payment processor you should definitely think about QuickBooks Online because Square and QuickBooks Online have a really great integration. If you take the time to set it up properly, it will actually save you a lot of bookkeeping back-end time because the integration does so much of the backend work for you.

Forgetful Entrepreneurs

If you are forgetful about doing your bookkeeping, forgetful about entering in your transactions or you tend to get a little distracted when you’re doing something then that banking sync feature with QuickBooks Online is really going to help you out.

Businesses Two Years and Older

Once your business hits two or three years old you definitely want to be in a digital accounting program because this is where you start to have enough data to see financial trends in your business.

The first year of your business is kind of hard because you don’t really have any data or information to go off of in terms of making strategic financial decisions about your business.

At the end of year two and beyond, you’ll start to recognize trends in your business and these trends are really important because they help you make strategic decisions about your finances, marketing, promotional plans, what you sell, and pretty much everything else. If you have three years of data in a spreadsheet it’s really hard to extract what you need out of a format like that.

As your business matures, you want your accounting software to mature with you that so you can go back and start running the numbers from the previous years to see what the financial growth is in your business.

Anyone who wants a higher level of reporting.

If you are really into reporting and there’s a lot of details you’re curious about in your business, then a spreadsheet isn’t going to do it for you. Dubsado and 17hats isn’t going to do it for you either. You need something like QuickBooks Online which has unsurpassed reporting. I’m serious. I have made so many random reports for people that are so detailed and I’ve been able to do it using QuickBooks Online.

If you’re at that point where you really need to start drilling down into the details of your business finances to make sound decisions, QuickBooks Online is for you!

It’s for people who need to do basic invoicing and estimates

If you send estimates to your clients you can do that in QuickBooks Online and then turn that estimate into an invoice. You can do your digital invoicing as well. QuickBooks Online also has its own built-in a payment processor.

People can pay their invoices directly online and, since this feature is built into the software itself, the software takes care of matching that payment to the deposit in your bank account, and splitting out the merchant account fees automatically. If you send out a lot of invoices daily, QuickBooks Online is going to be a really good option for you.

1009 Contractor Tracking

If you need 1099 contractor QuickBooks Online has a really cool built-in feature that helps you keep track of all of your 1099 vendors.

Then at the end of the year, you can run your 1099 reports and you can easily print an information sheet that shows you the vendor’s name and how much you paid them.

This is super helpful. If you know if you have one or two 1099 vendors it’s probably not going to be as game-changing as if you have 25. I have clients with 25-30 1099 contractors and we use QuickBooks Online to keep track of all of these different people and all of their W9 data.

You Collect Sales Tax

If you are collecting sales tax in your business you definitely need to level up.

QuickBooks Online actually has a really great built-in feature for sales tax. It also categorizes it correctly. This is important.  When you collect sales tax from your customers that credit is categorized in a different way and QuickBooks helps you with that. It will help you do the right categorizations so you’re not counting sales taxes as income.

Who doesn’t need QuickBooks Online? (32:50)

Here are some general guidelines on who does not need QuickBooks Online.

Less than 25 Transactions per Month

The first reason you won’t need QuickBooks is if you have less than twenty-five transactions a month in your business. If you only have 5 or 10 transactions a month, manual entry is really not that bad and you can probably keep up with that.

You have a Simple Income Structure

If you have a simple income structure with one income stream, one payment method, or one way you receive money it’s not going to be as hard to do the manual tracking in a spreadsheet or in something like an add-on bookkeeping feature. There’s not as much that you need to keep track of so manual entry will do just fine with simple income streams.

Your Sole Proprietorship is One Year Old or Less

If your business is under a year old and you’re just getting going, you won’t need QuickBooks right away.  In that case, it’s OK to stick with your spreadsheet or whatever else you’re using.

Business Owners in the Startup Phase

These are people who are actually starting up their business. There’s probably a lot of outflow of money going out of your account but maybe not as much inflow or any inflow because you’re building your website and designing your products and so on. It’s okay to stick with a spreadsheet and just keep track of all of your startup expenses there because again, you don’t have enough happening in your finances to fully benefit from a program like QuickBooks Online.

Business Owners that do Progress Invoicing

The only a digital accounting program I’ve been able to find that does progress invoicing is Xero. If you do progress invoicing I recommend you look into Xero and not QuickBooks Online. If you don’t know what progress invoicing is don’t worry about it (because you’re not doing it!).

Basic features to help you decide (36:07)

Let’s about some key features in QuickBooks Online. I’ll also demo these features in the video so you can envision what it would for you to use QuickBooks Online.

Bank Account Sync

The first key feature in QuickBooks Online that I think is really great is the bank account sync. This is going to bring in transactions from your bank. This feature also helps you auto-categorize and match transactions that are pulled from your bank account too! Check out the video at time stamp 36:42 for the screen share demo of this feature.

Digital Invoicing

I love digital invoicing. I think digital invoicing is really cool. Creating invoices in QuickBooks Online is a breeze! Once the client pays your invoice QuickBooks will show it closed and will also recognize and match that payment to the correct invoice and category. Watch how to easily create an invoice in the video demo at time stamp 38:30.

Reimbursable Expenses

The other feature I love about QuickBooks Online is reimbursable expenses. I’ve been using reimbursable expenses lot this because I’ve been filing a million 1099s this year. You can actually take an expense and mark it as billable to a customer so when it’s time to send your client an invoice, QuickBooks will remind you to add it to the invoice. Let me show an example of how reimbursable expenses work in the video demo at time stamp 42:10.

Time Tracking

Let’s talk about time tracking. This is another feature that I really like and QuickBooks Online. It works a lot like the reimbursable expenses. Take a quick peek at the demo at the 44:06 time stamp.

Chart of Accounts

Another feature that I love about QuickBooks Online is that you can customize your chart of accounts. Take a look at how I’ve set up my chart of accounts in QuickBooks in the video at the 45:31 time stamp. I have my income and expense accounts in the software but QuickBooks allows me to name them and split them into detailed categories at my heart’s content.

Reporting

I know you’ve heard me say it before! The reporting in QuickBooks is unparalleled. If you can dream up any financial report, you can run it in QuickBooks.   You can do a Profit and Loss, previous year comparison. You can do a Profit and Loss comparison over any period of time that you want. You can run a budget versus actuals report. You could do a balance sheet or even a Profit and Loss by customer if you’re trying to figure out how profitable each customer is. The list can literally go on!

The QuickBooks App

The last thing that I love about QuickBooks Online is the app. What I really like about the app is that you can categorize your transactions on the go. You can also take pictures of your receipts, store them in QuickBooks Online, and match them to transactions that are downloaded from your bank account.

You can send invoices from the app and then, of course, you can look at your numbers from the app as well. You can also categorize on the go. There’s nothing like handling these tasks while you’re traveling, standing in line at the post office, or even riding along in you Lyft.

By now you must be totally in love with QuickBooks Online. It’s time for you to get your QuickBooks Online account, get set up, and start managing your money like a bad ass boss! Use this link to get 50% off your first 12 months of QuickBooks Online!

If you are chomping at the bit to get into QuickBooks Online and get started, I have something for you. I’ve included a QuickBooks Online Set Up Cheat Sheet just for you. It’s a PDF with 6 key steps you need to take when you first get QuickBooks Online. I’ve given you the tools, now you’re ready!

 

 

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