In this long read we take a look at Quickbooks, an accounting software package that helps small business owners to manage all their bookkeeping tasks. This long read is sampled from Crystalynn Shelton’s book Mastering QuickBooks 2020.
QuickBooks is the most popular accounting software for small businesses. The desktop version has been around for more than 25 years and the desktop more than 10 years. It is affordable, easily accessible, and ideal for non-accountants. Many competitors also offer great software, but you need accounting or bookkeeping knowledge to use it. QuickBooks’ special strength is that it does not require such knowledge to set up and use it.
Before you dive into setting up QuickBooks for your business you should understand what QuickBooks is, and what your options are when it comes to using it. Once you know what your options are, you will be in a better position to choose the version of QuickBooks that best suits your needs.
To that end, in this introduction you’ll learn about:
- QuickBooks Online (QBO) Editions
- The QuickBooks Desktop (QBD) Product Line
- Choosing the right QuickBooks Desktop Version
- New features in QuickBooks Desktop 2021
What is QuickBooks?
QuickBooks is an accounting software program that allows you to track your business income and expenses. One of the benefits of using QuickBooks is having access to key financial reports (such as profit and loss) so that you can see the overall health of your business at any time. Having access to these reports makes filing your taxes a lot easier.
QuickBooks comes in two formats: a software application that you can install or download on a desktop computer, and a cloud-based program that you can access from any mobile device or desktop computer with an internet connection.
The cloud-based version, QuickBooks Online (QBO), is available in four editions: Simple Start, Essentials, Plus, and Advanced. The desktop version, QuickBooks Desktop (QBD), also comes in four editions: QuickBooks Mac, Pro, Premier, and Enterprise. We will discuss each of these.
Exploring QuickBooks Online editions
QuickBooks Online (QBO) comes in four editions:
- Simple Start
Each edition varies in terms of price, the number of users to whom you can give access, and the features included.
Choosing the right QuickBooks Online edition
QuickBooks Online is ideal for solopreneurs, freelancers, and mid-to-large-sized businesses with employees and what are known in the USA as 1099 contractors. 1099 contractors are also known as independent contractors, who you may hire to provide services for your business. Since they are not employees of the business, you must provide a 1099 form at the end of the year to any contractor you have paid $600 or more to in the calendar year.
The needs of your business will determine which edition of QBO is ideal for you. The following provides some additional insight into the business types for which each edition of QBO is suitable.
QBO Simple Start
QBO Simple Start is ideal for a freelancer or sole proprietor that sells services only, and no products. You may have employees that you need to pay, but you don’t have any 1099 contractors. The majority of your expenses are paid via online banking or wire transfer, so you don’t need to write or print checks to pay bills.
Similar to QBO Simple Start, QBO Essentials is ideal for freelancers and sole proprietors who sell only services, not products. You have employees but you do not hire contractors. Unlike QBO Simple Start, you pay most of your bills by writing checks, and you need the ability to keep track of your unpaid bills, also referred to as accounts payable (A/P).
Unlike QBO Simple Start and QBO Essentials, QBO Plus is ideal for small businesses that sell products, since it includes inventory tracking. Similar to QBO Simple Start and QBO Essentials, you can pay employees. QBO Plus also allows you to keep track of payments made to 1099 contractors so that you can complete the required 1099 reporting at the end of the year.
QBO Advanced is ideal for businesses that have more than five users needing access to their data. QBO Advanced is QBO Plus on steroids: it includes all of the features found in QBO Plus, along with some great bonus features, such as on-demand online training for your entire team, and Smart Reporting with Fathom.
The bonus features that you will find in QBO Advanced are as follows:
Dedicated account team: With a QBO Advanced subscription, you gain access to a team of experts who will learn how your business works in order to answer your questions. They will also provide additional resources that will help you to better manage your business financials.
QuickBooks training for staff: With QBO Advanced, you get $2,000 worth of on-demand online training to help you and your staff get up to speed on how to use QBO.
Smart Reporting with Fathom: With this reporting feature, you can measure profitability, cash flow, and other key performance indicators (KPIs). This feature is not available in any other QBO edition.
Batch invoices & expenses: Allows you to enter, edit, and email hundreds of invoices, checks, expenses, and bills instead of entering them one by one.
Custom user permissions: Provides a deeper level of user permissions that allows you to manage access to sensitive data, such as bank accounts.
Depending on your business and individual circumstances, you should now be able to determine whether you will need QBO Simple Start, Essentials, Plus, or Advanced. It is important to pick the right version for you so that you have access to the appropriate features you will need. Next, we provide a brief overview of the QuickBooks Desktop product line.
Introducing the QuickBooks Desktop product line
QuickBooks Desktop (QBD) comes in four editions:
Each edition varies in terms of the price, the number of users to which you can give access, and the features included.
Note: QuickBooks Enterprise has three annual subscription plans to choose from: Silver, Gold, and Platinum. All three plans include access to QuickBooks Enterprise, QuickBooks Priority Circle Program for tech support, U.S.-based customer support, automatic online backup data storage, automatic product upgrades, and Advanced Reporting. In addition, the Gold plan includes QuickBooks Desktop Payroll Enhanced, and the Platinum plan includes Advanced Inventory and Advanced Pricing.
All four editions of QBD include the following features:
Track income and expenses: Keep track of all sales to customers and expenses paid to vendor suppliers.
Connect bank and credit card accounts: Connect all business bank and credit cards to QBO so transactions automatically download into the software.
Manage accounts receivable: Invoice customers, enter payments, and stay on top of unpaid invoices.
Manage accounts payable: Track unpaid bills, and pay them by check or through online banking before they are due.
Accept online payments: Allow customers to pay their invoices online with debit/credit card, or through Automated Clearing House (ACH).
Send estimates: Create a quote or proposal, and email it to prospective clients for approval.
Track sales tax: Keep track of sales tax collected from customers, submit electronic payments to state and local authorities, and complete required state tax forms and filings.
Give other users access: Give other users—such as a bookkeeper or an accountant—access to your data.
Time tracking: Track hours worked by employees and contractors, so you can easily bill customers for completed work.
Inventory tracking: Track inventory costs and quantities, using the average cost inventory method.
Pay 1099 contractors: Keep track of payments made to independent contractors, and file the required tax forms at the end of the year.
QuickBooks Mac and Pro versions are priced at $299.95 and are identical when it comes to features included. If your business falls into one of five industries (nonprofit, manufacturing and wholesale, professional services, contractor, or retail), you should consider choosing QuickBooks Premier, which starts at $499.95. Finally, if your business has extensive inventory requirements, QuickBooks Enterprise includes mobile inventory barcode scanning and the Enhanced Pick, Pack, and Shipping feature that none of the other editions offer.
You now have a better understanding of the QBD product line. This information will go a long way to help you determine which desktop version is right for your business. In the next section, we will go into more detail about what is included in the four QBD versions.
Choosing the right QuickBooks Desktop version
QBD is ideal for small-to-large-sized businesses that sell products or services, have employees and contractors, and are looking for a robust desktop accounting solution. If you have a Mac, QuickBooks for Mac is going to work best for you. For small businesses that use a PC or a Windows computer, you’ve got three versions to choose from: QuickBooks Pro, Premier, or Enterprise. Let’s look at these in more detail.
QuickBooks Mac is ideal for any sized business on an iOS platform that has less than $1 million in annual revenue and doesn’t need to give more than three users access to QuickBooks. When it comes to the features included, QuickBooks Mac is almost identical to QuickBooks Pro. You can connect your bank accounts, invoice customers, and pay bills, just like you can in the Pro, Premier, and Enterprise versions. Unfortunately, QuickBooks Mac does not come in industry-specific versions like QuickBooks Premier and Enterprise do.
QuickBooks Pro is ideal for a business of any size that is on a Windows platform, has less than $1 million in annual revenue, and does not need more than three user licenses. It includes all of the features found in QuickBooks Mac, plus it includes more than 100 customizable reports. You can also track hours worked by employees and contractors, to bill back customers as work is completed. Unfortunately, QuickBooks Pro does not come in industry-specific versions, like the QuickBooks Premier and Enterprise versions do.
QuickBooks Premier is ideal for small-to-medium-sized businesses that fall into one of the following industries:
- Manufacturing and wholesale
- Professional services
Unlike QuickBooks Mac and Pro, QuickBooks Premier includes a customized chart of accounts, a custom products and services list, and reports customized for businesses that fall into the industries listed above. QuickBooks Premier also allows you to purchase up to five user licenses, and it includes a forecasting tool.
QuickBooks Enterprise is the top-tier QBD plan. It includes all the features you will find in QuickBooks Premier, plus the following additional features:
- Up to 30 user licenses: You can purchase up to a maximum of 30 user licenses for multiuser access.
- Granular user access permissions: Includes more restrictive user permissions than other versions of QuickBooks.
- Mobile inventory barcode scanning: Prioritizes sales orders to fulfill, creates customer picklists across multiple warehouses, and sends this information to a barcode scanner.
- Enhanced Pick, Pack, and Ship: Sends items to a picker or packer, with just one click. Plus, you can fill out and print shipping labels for major carriers, directly from QuickBooks. For additional information, visit Intuit.com.
You should now have a better understanding of the differences between QuickBooks Mac, Pro, Premier, and Enterprise. This information should help you decide which desktop edition is right for your business. Next, let’s look at the new features available in QBD 2021.
New features and improvements in QuickBooks Desktop 2021
The new QBD 2021 features included in QuickBooks Pro, Premier and Enterprise are as follows:
Improved Bank Feeds: improvements have been made to allow you to quickly auto categorize and batch-editing. More flexibility and efficiency with bank rules help you to quickly review and resolve discrepancies.
Customer Groups: This new feature allows you to create customer groups based on a set of rules. You can manage communications with specific groups and add a new customer using a select criteria and the customer group will update automatically.
Payment Reminders: This new feature is also known as automated statements. Create an automatic reminder to send recurring statements out on a specific day or date every month or as often as necessary. Create reminders for specific customer groups based on a set criteria.
Customize Payment Receipts: A new template is available that allows you to customize customer payment receipts. You can add your company logo, add color and select from various receipt formats.
Improved Email Invoice and Attachment Preview: This feature was introduced in 2020 and has been improved to ensure confidence that the correct documents are attached to an email before you send it out.
Improved QuickBooks Desktop Manager: This tool makes it easy to find and install all of your owned QuickBooks Desktop software assets. This is ideal for accounting professionals that may need to install an older version of QuickBooks.
This is also helpful to the small business looking for license details and a download link. You can access this tool through using this link.
Improved QuickBooks Tool Hub: This is a resource center that you can obtain answers to fix common issues related to installation, file, network, and password issues. Click this link and search for “Tool Hub” or “QuickBooks Desktop Tool Hub”.
Improved Simplified Employee Payroll Setup: This is a guided payroll setup with an option to invite employees to setup their personal information such as home address, W4 tax withholding and direct deposit details. Business owners can approve the information supplied by the employee and import it into QuickBooks.
Improved Auto Matching of Merchant Payments: This tool has been improved to better match merchant payments to invoices so users can focus on specific transactions that need attention. Faster funding of credit card payments is also included.
Improved QuickBooks Capital Funding: Business owners can access transparent, flexible business funding from within their QuickBooks file. There are no origination fees, prepayment penalties or hidden charges. From within your QuickBooks file, click on the Banking menu and select Get Financing.
In addition to the features and improvements noted above, QuickBooks Desktop Enterprise 21.0 includes the following additional improvements/new features:
Data Level Permissions: This new feature adds functionality to customer and vendor groups.
Batch Delete Sales Orders: This new feature allows you to void/delete unlinked sales orders.
Bar Code Label Prices: This new feature automatically includes an item’s default sales price on printed barcode labels. This supplements the item name and description and helps to improve the shopping experience for customers by giving them visibility to the item’s sales price.
Improved Alternate Vendors on Reports: Alternate vendors can now be included in inventory reports.
Improved Landed Cost Controls: Landed costs increase the cost of recorded inventory items to include shipping, freight, duties and other similar costs. There is now an option to allocate landed costs in closed periods.
Improved Required Lot/Serial Numbers: This feature has been improved to allow you to globally set the preference to require the lot/serial number selection on all transactions; or you can set the lot/serial number to be mandatory on selected items only.
You’ve now seen what QuickBooks is, and know about the QBO and QBD product lines and the feature differences between the versions. Armed with this knowledge you’re in a great position to choose the best QuickBooks variant for your business.
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