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Practical Computer Advice
from Martin Kadansky
Volume 13 Issue 3
March 2019
QuickBooks Online: A Brief Look at the Pros and Cons of Cloud-Based Bookkeeping

If you're thinking about moving your existing business or personal bookkeeping from your computer into "the cloud," or if you want to start online bookkeeping from scratch, there are many web-based bookkeeping systems to choose from.

QuickBooks Online is a longstanding vendor worth considering, but it has many limitations. Read on for some important information about this particular service, and for my advice on what questions to ask when considering any online bookkeeping application.

First, a distinction

QuickBooks Online (QBO) is a web-based bookkeeping and accounting system from Intuit that you can use from any Windows or Macintosh computer running a reasonably recent web browser. To get started, you go to the http://www.intuit.com web site, look for QuickBooks Online, and sign up for an account, which involves choosing either a time-limited free trial or a paid subscription. Then you'll choose one of several plans with a variety of features, and supply an email address (which will serve as your user id) and an account password. When your subscription starts you will pay an ongoing monthly fee, or you can switch to annual billing and get a discount. Your bookkeeping data (called your "company file") resides on Intuit's online server, not on your computer, so each time you work on your bookkeeping you'll start by signing into the QBO web site.

QuickBooks Desktop is computer software for Windows or Macintosh that you can buy, either directly from Intuit or from other retailers like Amazon and Staples, and then install and use on your computer to do your bookkeeping. There are a few different levels to choose from (including a time-limited free trial), but once you've paid for it there are no additional costs (unless you're using extra fee-based services to get additional features) until you decide to upgrade to a newer version, depending on your needs. Your bookkeeping data (also called your "company file") resides on your computer, just like any other document you might create and edit, so in order to work on your bookkeeping you simply open either the program or the company file.

Quick summary

QuickBooks Online does not have exactly the same functionality as QuickBooks Desktop, so if you're used to the desktop program, you may find the online version limited, depending on your needs.

In particular, QuickBooks Online seems to be designed for:
  • Someone who is just starting their bookkeeping now, completely from scratch, or
  • Someone who wants to convert their entire company file from QuickBooks Desktop into a cloud-based system, and who will stop using the desktop version going forward.
However, your bookkeeping situation may be different. For example:
  • You only want to convert a portion of your QuickBooks Desktop file into QuickBooks Online, or
  • You want to bring an existing collection of transactions from a different source (Quicken, Excel, bank and credit card downloads, etc.) into QBO.
In these cases you may find that getting started with QuickBooks Online is much more labor-intensive. See the issues with the QBO "built-in Import function" below for more information.

Pros and Cons

Just to be clear, I'm not an expert on either version of QuickBooks, and this is not a complete nor exhaustive review of every feature of QuickBooks Online, nor a detailed comparison with QuickBooks Desktop or Quicken or other online bookkeeping systems like Mint, FreshBooks, Xero, etc. If you are looking for that sort of information, there are plenty of general reviews and comparisons that you can find online.

  • QuickBooks Online has a useful set of bookkeeping functions, with accounts, registers, transactions, categories, transfers, and reports, very similar to the basic features of QuickBooks Desktop and Quicken.
  • You can easily create additional users and share access to your bookkeeping data with them (e.g., between business owner and bookkeeper and accountant, multiple business partners, etc.), whereas with the desktop version such sharing, whether ongoing or one-time only, can be clumsy.
  • It's cloud-based, so it's impervious to disasters like fire, theft, flood, etc. that might affect your computer.
  • You can upgrade (or downgrade) your subscription level at any time to get (or drop) certain features. If you downgrade, any data elements that you may have entered that used those extra features will probably get deleted.
  • You can save money by paying annually, but there are no partial-period refunds if you cancel.
  • You can get started by doing a one-time import of an entire QuickBooks Desktop file, but you may experience problems that affect your data. The potential issues are documented on Intuit's web site.
  • If you have a bank account or credit card at a supported institution (including Bank of America, American Express, etc.), you can electronically connect QBO's "feed" to those online accounts and pull recent transactions from them directly into QBO, saving you some manual data entry.
  • You'll be working in your web browser, so you can open multiple browser windows or tabs to view different parts of your QBO data at the same time. Just remember that if you change the data in one window, the others probably won't update until you Reload or Refresh them.
  • QBO has a good, integrated online help system.
  • Do you wish it did more? There may be a third-party "app" (add-on software) that adds the function that you need for a price, probably charged monthly.
  • There is no built-in backup or restore function. This means that you have no protection against disasters or mistakes, whether small (deleting a transaction, entering data into the wrong account, etc.) or large (importing 100 transactions into the wrong account, deleting an entire account, etc.), as well as having your data deleted by a server problem or a hacker. (On a desktop computer, backup is usually easy: Close the program, find the data file on your hard drive and make a copy of it somewhere else, either manually or using backup software. Restoring from a backup can be just as easy.)
  • The only functions that resemble backup are a) the ability to export one account at a time to an Excel .xls file, which will omit all split detail, making it useless as a backup, and it cannot be restored in its entirety anyway, given the import issue described below, and b) exporting a report to Excel or PDF, neither of which can be imported.
  • A few months after I did the initial research for this newsletter, Intuit added the ability to Export an entire company file from QBO to QuickBooks Desktop, but given how complicated it sounds and their very long list of limitations, I'm not convinced that this would be a faithful backup of your QBO file that could then be restored after a disaster.
  • The built-in Import function supports the CSV (comma-separated values) file format, but only recognizes 3 fields: Date, Description, and Amount, so if the transactions that you want to bring in also already include check numbers, categories, and memos, all of that information will be ignored. So, after importing you will have to manually edit every imported transaction to re-enter all of those elements, and this does not address any split information that you may also need to preserve. This is horrible if you have months or years of past bookkeeping data to bring in. For details, search for "import" in the online help system, or see my suggested Google searches, below.
  • It's cloud-based data storage, so it's subject to all the usual risks of an online account: If your internet connection is down you will have no access, or a hacker might break in and steal or destroy your data, etc.
  • It's cloud-based software, so you don't control when feature changes or upgrades occur, and you have no ability to go back to a previous version of the software if the new version has bugs, removed features, or other problems.
  • QBO's "feed" (from your online bank and credit card accounts) only goes back 90 days, and it can be offline for weeks at a time with no explanation, so you may find yourself entering your transactions manually, or having to download a CSV from your bank and then uploading it into QBO, especially if the starting date from which you want to enter transactions is more than 90 days in the past.
  • QBO's "feed" has the same limitations as its CSV import, so after pulling in your bank and credit card transactions, you will still have to fill in any check numbers, categories, and memos, and do any required splits, every time.
  • Since QBO requires a monthly (or annual) subscription, over time it will be far more expensive than regular computer-based bookkeeping software like Quicken or QuickBooks.
  • You have no control over any monthly (or annual) subscription cost increases.
Third-party add-on "apps" to the rescue

The good news is that Intuit permits other software developers to create extensions to QBO. In the QuickBooks Online "app store" you can find many cloud-based apps that add a wide variety of features, including backup/restore and better import functions.

However, most apps charge a monthly fee, which will add to your ongoing cost, so include that in your considerations, both for the extra cost and that you should read reviews and test-drive them before making any final decisions. You will also have no control over whether any given app may change or disappear.

Poor and confusing terminology

According to my research, Intuit's "QuickBooks Online Backup" subscription service (along with a newer, separate service called "Intuit Data Protect") is not a backup system for QuickBooks Online. Instead, it is an online backup service for QuickBooks Desktop company files only.

Questions I recommend when considering any bookkeeping system

Whether you're considering a desktop computer-based bookkeeping system or an online cloud-based one, I recommend the following questions.

If you already use a bookkeeping system, start by asking yourself:
  • What does it cost?
  • What features does it have? Which ones do you actually use? Frequently? Occasionally? Make a list!
  • What do you like about it? What don't you like? What features do you wish that it had?
  • Does it interface or interact with any other important systems that you rely on, like time-tracking, project management, customer billing, etc.?
  • Is it able to produce the information that you need?
  • Where does it store its data? How are you backing that up? How would you restore it in case of a problem or disaster?
  • Does it have the ability to export some or all of its data?
For any prospective bookkeeping system, you should ask:
  • What does it cost to get started? What are the ongoing costs? Can you cancel? Will you get a partial refund?
  • What features does it offer?
  • Will it be able to produce the information that you need?
  • If you have existing bookkeeping data, exactly how will this system bring it in (convert or import) while preserving its integrity, completeness, and usefulness?
  • How will you backup up your data? How will you restore it in case of a disaster?
  • How will you enter new transactions on an ongoing basis? Manually? Pulling them in directly from your online bank and credit card accounts? Downloading from those accounts into files on your computer, and then importing?
I also strongly recommend that you not accept any vague answers to your important questions. If you get "I'm sure it does that" and "Of course, no problem," probe deeper!

In my experience researching bookkeeping systems, two functions are almost never clearly explained up front, much less in any detail:
  • Exactly how you would convert and import transaction data, and
  • Exactly how you would backup and restore your entire collection of data.
And, descriptions of products or services almost never include what they don't do. So, do not commit to a new bookkeeping system until you have either been told specifically how these functions work, or have actually tested both of them yourself, ideally during a free trial.

Where to go from here
  • google: QuickBooks Online system requirements
  • google: QuickBooks Online compare OR competition OR competitor OR alternative
  • google: QuickBooks Online Desktop compare OR difference OR review
  • google: QuickBooks Online app store
  • google: QBO import transactions from a csv file
How to contact me:
email: martin@kadansky.com
phone: (617) 484-6657
web: http://www.kadansky.com

On a regular basis I write about real issues faced by typical computer users. To subscribe to this newsletter, please send an email to martin@kadansky.com and I'll add you to the list, or visit http://www.kadansky.com/newsletter

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Copyright (C) 2019 Kadansky Consulting, Inc. All rights reserved.

I love helping people learn how to use their computers better! Like a "computer driving instructor," I work 1-on-1 with small business owners and individuals to help them find a more productive and successful relationship with their computers and other high-tech gadgets.

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