QuickBooks Clinic Series: No. 2 QuickBooks Online vs Desktop Version

In the QuickBooks Clinic Series post number 2, I want to address a question that comes up regularly with our clients. That question is whether they should be using the online version or the more traditional desktop version of QuickBooks.

Let me start with the basics in terms of features and capabilities, and what the online version does and doesn’t offer compared to the desktop version.

For the most part, the online version does everything that the desktop version does with a few exceptions.

  1. The online version doesn’t integrate with QuickBooks Point of Sale the same way that the desktop version does. If your business records a high volume of small dollar sales (such as retail or restaurant transactions) then integration with QuickBooks Point of Sale may be critical to your operation and the desktop version may be a better choice.
  2.  The online version doesn’t provide Bill Pay. If you work with a tremendous number of vendors in your operation this may be a limitation that will point you away from the online version.
  3.  The online version doesn’t do complete job costing. If your business operates in an industry such as manufacturing, clothing retailing or film production where job order costing is important, then the desktop version will be more suitable for you.
  4.  Finally, the online version offers less flexibility to customize forms and reports than the desktop version. If you need customized reporting for analysis and business decision making then you may want to steer away from the online version.

If any of these capabilities are deal-breakers for you, then most likely you’ll want to stay with the desktop version. If none of these deficits, however, impact your bookkeeping, accounting or reporting, then I would suggest looking closely at the online version. Here’s why.

It’s less expensive overall

The concern that paying for it monthly over the long term will be more than buying the software outright is a misnomer. In many cases, it will cost you less. You don’t have to pay for software upgrades because they are included in the cost of the subscription. If you purchase the desktop software and install it you not only are responsible for the cost of annual upgrades but also have to deal with the technical issues of installing them. If you have technical problems and need support, you have to pay for the support since it is not included in the cost of the software. Monthly subscriptions can end up being less expensive, allow you to spread out the cost of the service which helps with cash flow, and reduces potential headaches in terms of upkeep and upgrades.

Online secures your data in the cloud

One of the most serious reservations that owners have about the online version is that of data security. The concern is that the data can be more easily hacked. Experience demonstrates that it is a false sense of security thinking that your data is more secure because it’s in your own offices. In most small businesses there is almost no real security for your data. The data is vulnerable to unscrupulous employees copying data onto thumb drives, or even wireless networks that are open and easily accessed by someone working in close proximity. Data breaches of small business data are more prevalent than large scale online hacks. A recent study by Verizon along with the U.S. Secret Service entitled, “2012 Data Breach Investigations Report,” revealed that small businesses were six times more likely to be hacked into than large companies. Security in the cloud has improved significantly over the years and companies are entrusting their information such as ADP payroll and Salesforce.com client information to cloud-based services. By providing limited access to a select group of trusted employees, your data is more secure in the cloud than on premise. Having your QuickBooks Online can provide another level of security both from a redundancy perspective and in mitigating risks from on premise theft.

Enables redundancy and remote access

While we are not anxious to think about it, during disasters such as fire, storms and here in the Bay Area, earthquakes, the loss of power and internet can shut a company down completely. Companies with cloud-based online services can operate from any location that has power and internet access. On a more pedestrian level, online accounting allows your employees to work wherever and whenever they need to do so. You can employ individuals that are geographically diverse, and have more flexibility on where and when people work. This allows for more flexible schedules to accommodate family and individual needs or hiring individuals in remote locations that have the skills needed at a lower cost, while still meeting the business needs.

Finally, note that software licensing in general is trending toward online delivery and away from discrete desktop installations. This move by software makers is largely due to piracy concerns. Thus, you may expect to see online service offerings become more common in business and more accepted in the marketplace in the immediate future and this may suggest that it makes sense to look more closely at online versions of common software.



Chris Reynolds caricature B

Chris Reynolds is a member of the Financial Systems & Reporting practice group in CFOs2GO where he supports clients across a wide range of business accounting systems including QuickBooks. As the resident QuickBooks expert, Chris builds robust systems from scratch and is able to decipher and fix poorly built processes, bringing them back to working order.

If you would like to speak with Chris, please use the Comments section to make a request.

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