Business Accounting

Getting the Most Out of QuickBooks Online

2017-12-06 | by Gene B. Reynolds, CPA

Utilizing QuickBooks Online for your accounting needs is like trying to find the best shoe available in the store. You need to assess the size, width, and style to ensure the best fit. Otherwise, you’ll walk out of the store with shoes that will not serve their proper function.

Similarly, every business is different and requires different tools and tricks available through QBO. There are so many available options to get the most out of the cloud-based accounting software from Intuit that we want to share helpful tips to ensure you find the right fit for your business.

What Businesses Should Use QuickBooks Online?

There are four versions of QBO. The key is matching up your business with the following versions, which are listed in order of price and heftiness.

– QuickBooks Self Employed (QBSE): This is the most inexpensive version of QuickBooks Online. QBSE is geared towards individuals and contracted employees who need an efficient method to capture their business-related expenses and income.

This version is geared toward freelancers, sole proprietors, and other one-person type businesses that need support tracking their business expenses and to link up with tax reporting software.

Notably, this is the only version that does not integrate with Intuit online payroll. Therefore, if your business has more than one employee, you will need to consider the following three options.

– QuickBooks Simple Start (QBO Simple Start): This version of QBO works well for companies in the beginning stages of their business. Simple Start especially applies to companies in the service industry with minimal inventory and who need to track sales tax.

This version is limited for most established small businesses, but it is a step up from QBSE for companies looking to grow into a new stage of operations.

– QuickBooks Essentials (QBO Essentials): This version is a step up from QBO Simple Start. It includes everything offered through QBO Simple Start, plus bill management to pay vendors, multiple users, and time tracking capabilities.

QBO Essentials is geared toward established small to medium-sized businesses looking to manage their regular business activity.

– QuickBooks Plus (QBO Plus): This is the most popular version of QuickBooks Online. In addition to the features available through QBO Essentials, QBO Plus offers these additional capabilities:

  • Inventory tracking system
  • Budgeting capabilities
  • Location-based and class-based tracking for reporting purposes
  • Generate reports on payments to 1099-misc contractors and vendors

Notably, all QBO versions allow you to make payments to 1099-misc contractors and vendors. However, QBO Plus is the only version that allows you to generate reports and track those vendors.

5 Tips to Maximize Your QuickBooks Online Software

Now that you’ve matched up your business needs with the available versions of QBO, here are five helpful tips to get the most out of the software.

1. What are the Inventory Tracking Capabilities in QBO?

The inventory tracking system, which is only available through QBO Plus, has some limitations. For a manufacturing company with a long transfer process from raw materials to finished goods, QBO does not yet have a deep enough inventory tracking system.

However, QBO does have a dependable tracking system for standard business operations to ensure that your business is stocked with inventory. With this system, your business can track products, calculate cost of goods sold, and receive notifications when inventory is low. You can also view popular items sold, create purchase orders, and manage vendors.

The added benefit of this system is that you can import data from Excel and sync with Amazon, Shopify, Etsy, and more online storefronts to manage the digital aspect of your business.

2. Can You Track Mileage Using QBO?

The only version of QuickBooks Online with the built-in capability of tracking mileage is QuickBooks Self Employed. This version includes a mileage tracker to help self-employed individuals track their activity traveling for business.

If you utilize one of the other three versions — QBO Simple Start, Essentials, or Plus — there is a workaround. Intuit-approved third party apps such as Expensify and TripLog will track your mileage as you go. This is especially helpful for companies with salespeople or delivery drivers who are routinely on the road as part of standard business operations.

3. Can You Incorporate Job-Costing into QBO?

Job-costing is a work in progress for QuickBooks Online. If you have a hefty job-costing system, you may need to consider using QuickBooks Enterprise, which is a separate software offering geared toward larger companies with complicated business activity.

However, there is a workaround in QBO Plus to use job-costing. The set-up is a difficult and lengthy process, but Reynolds and Associates can guide you through this step. If your company needs a job-costing solution without having to advance to QuickBooks Enterprise, contact our firm to discuss setting up in QBO Plus.

4. What are the Budget Capabilities in QBO?

QBO Plus is the only version of QuickBooks Online that includes budgeting capabilities. If that fits your business, you can take advantage of the ability to create budgets based on class, location, and customer.

The budgeting capability is especially valuable if you need to sync with the job-costing workaround. This will allow you to create budget-to-actual reports. Again, Reynolds and Associates can help your company set up these features in QuickBooks Online to maximize the available tools.

5. Which Tracking System Should Our Company Utilize?

For small to medium sized businesses with complex activity, the two tracking options in QBO are location-based tracking and class-based tracking.

– Location-based tracking records activity on a transaction by transaction basis. A company with multiple locations may want to consider using location-based tracking. This will also allow you to create a P&L Report (Profit & Loss) that captures the financial performance of a specific location.

– Class-based tracking is helpful when a company has multiple service lines available and the company wants to classify transactions accordingly. This tracking method goes into further detail than location tracking. You can also generate a P&L Report by class to take a deeper dive into financial performance.

How Reynolds and Associates Can Support Your QuickBooks Needs

As a certified QuickBooks ProAdvisor, our firm is very familiar with QuickBooks Online. We’re able to provide additional tricks and tips to help our clients utilize the software to the fullest. We know how to set up and utilize the various workarounds that we tailor to your business on a case-by-case basis.

Paired with our accounting and tax knowledge, we can help your company align business needs with appropriate laws and regulations to ensure you are set up properly in the QBO version that fits your business.

Additionally, we provide training support for your company to ensure that users are aware of how to properly use QBO. To get set up, contact our Reynolds and Associates team today to discuss how we can ensure your best fit with QuickBooks Online.

About the Author

Gene B. Reynolds, CPA

Gene is the Founder and President of Reynolds and Associates, a Houston-based CPA Firm. He has spent 42 years helping Houston entrepreneurs navigate their enterprises through both calm and stormy waters.


Search our blog