As a finance professional working on the front line with many startup business owners and entrepreneurs, these are two of the most common questions I get asked – a lot! And the short answer is – it depends. Whether or not QuickBooks Online is a good fit for your business will depend on the type of business you have and what you will need to get done with the software in order for your business to be fully functional. QuickBooks Online has many benefits on its own, and there are many third-party applications available that are designed to extend QuickBooks reach. However, there are instances where the Online version of QuickBooks will not be the best solution for your business. Let’s take a look at some of those instances.
When is QuickBooks Online not Right for My Business?
I operate a Manufacturing business and require various units of measure
My type of business require detailed job costing
I operate a business with very robust inventory needs
I need to have multiple users with very detailed user permissions
I need to be able to progress Invoice and receive partial purchase orders
I require rigorous, customized reporting capabilities
If your business does not fit into the above-mentioned list, and the below describes your business, then QuickBooks Online can definitely work for you.
When is QuickBooks Online Right for My Business?
I run a service-based business or a product-based business with light inventory needs
I want to work on the go and be able to access my information with my iPhone, iPad, Android, or other mobile device like a tablet
My business has one or more locations
I need to have multiple people access and use QuickBooks simultaneously
Anytime, anywhere access as long as there is an internet connection
Capacity to integrate with multiple third-party software applications
Automatic updates and upgrades
Data is backed up automatically
Easy data access from a tablet or smartphone
Automatic bank and credit card transactions download from multiple financial institutions
Capability that allows your CPA and/or bookkeeper to access your data
Multiple built-in business reports to help track business finances
Ability to accept payment for your products/services online via your Invoices
Free technical support
Are there any downsides to using QuickBooks Online?
Yes, although not many, there are downsides to using QuickBooks Online. Here are a few of the most common:
Accessing multiple screens at one time can be difficult. (You can use multiple windows in your browsers to keep what you are using open, but it will sign you out if left inactive for long periods.)
If your Internet goes out or Intuit’s servers go out, you will not be able to access your company file at all.
You cannot backup your data, and keep a copy of your file.
QuickBooks Online Interface is constantly changing, and although change is good, it can be a bit annoying. (You can use QuickBooks today and it’s one way with the navigations where they’re use to being, and you logon tomorrow and they are somewhere else. Maybe not such a big deal!)
Is QuickBooks Online Secure Enough to Protect My Information?
QuickBooks Online has the same security and encryption that banks have. According to the fine print on the QuickBooks Online website, it has 128-bit Secure Sockets Layer (SSL), which is the same encryption technology used by some of the world’s top banking institutions to secure data that is sent over the Internet. So as a matter of safety, it is safe to say QuickBooks Online is safe to use.
So the first thing you need to do is identify the specifics that you must have in a software, then decide if QuickBooks Online is right for you. You can test drive a QuickBooks Online company file for free which is a great way for you to try out QuickBooks Online before you make your purchase. Feel free to play around with the sample data as much as you want to, as you will not be messing anything up. Click on this QuickBooks Online Test Drive link and enter the security verification code as shown on the screen. Any data that you enter will not be saved after you close the browser, or refresh the page.
Also, it’s important to note that there are three subscription types of QuickBooks Online available; QuickBooks Online Simple Start, QuickBooks Online Essentials, and QuickBooks Online Plus. See comparison chart below (Double click image to view enlarged):
If QuickBooks Online will not do the tasks you require, and you cannot find a software application that will, then you should use one of the desktop versions of QuickBooks. Also, bear in mind that QuickBooks Online is constantly being updated, and although it may not be a good fit for your business now, you should keep checking back to see if it has caught up to what you are looking for. Technology is constantly changing, and so is QuickBooks Online.
Watch CPA Michelle Long break down the differences between QuickBooks products:
QuickBooks Online interface is very different, and if you are use to the desktop versions, you probably will not like the Online version. It works differently and what can be easily done in the desktop version in a few, usually requires jumping through 2+ hoops in the online version. It is actually more expensive in the long run and clients who have more than one business will definitely find the desktop version more cost effective.
However, according to its maker – Intuit, QuickBooks Online will be the future and so it’s best to get on board sooner than later. Also, I have to say QuickBooks Online has improved greatly within the last three years, and prior to these improvements I was not recommending it at all to my clients.
As with everything else, QuickBooks Online has its advantages as well as disadvantages. The two (2) main advantages of QuickBooks Online being: 1) The ability to access it from anywhere with an internet connection on multiple devices, as well as host multiple users simultaneously. And 2) QuickBooks Online has a ton of third-party applications that can be integrated to make it do much, much more than it already does by itself.
The main disadvantage is that you have to pay a monthly fee which will undoubtedly be increasing over time, and something you will have no control over. Also, if you have multiple businesses, you will need to have a QBO account for each – unlike the desktop version where you could have as many companies in the one version as you like.
The world is becoming more pro “cloud” whether we like it or not, and so it is inevitable that we will need to be a part of that if we want to do any form of business. I say find the positives, and get with it.
There are three (3) options to accomplishing this task.
Option 1:
You can backup the file you last used – each time you use it, and restore it to the next computer you will be using. This is highly discouraged! Under no circumstances would I advise using multiple copies of the same QuickBooks data file; however, it can be done. The problem with this is that transferring your QB data file back and forth opens the door for errors, which can be very costly. There is so much that could go wrong! Just imagine that you end up having some data in one file and not in the other, while the other has some data that is not in the one you are currently using. Disaster!
To Backup QuickBooks File to Removable Storage Device:
Go to File, Backup, and select the location of the Removable Storage Device. Then click Backup or Start Backup.
To Restore QuickBooks File from Removable Storage Device:
Open the QuickBooks company file on your computer, and go to File, Restore a backup copy, and confirm “YES” when prompted.
For Mac computer, double click on the QuickBooks file on the flash drive or other storage device with your backup, then drag it to your desktop or location you wish to store the file. QuickBooks Mac Pro does not overwrite previous files, instead it creates new disk images with each new file. Because of this, you want to ensure that you keep careful track of the current file in use. You do not want to be using multiple files, thinking that it’s the same file, but realizing later that pieces of your information are in various QuickBooks files. If you are the only one using this file on both computers, and you insist on getting things done this way, be sure to make a note of the last entry you made along with the date just before you backup each time after using. Then, look if that last entry is in the file you are about to use, before you start updating it with new transactions.
Option 2:
You can establish your office computer as the “primary” data file, and use a remote access program such as Go to My PC to access and work on it from home. This way, the QuickBooks data file on your office computer remains the primary file, while allowing you to update it remotely and thus using one file. The problem with this, is that you will need to leave the office computer on, in order to access it.
Option 3:
There are also hosting options available such as, Swizznet.com where you can store your data and access from anywhere with an internet connection; however, like QuickBooks Online, your “real” data is not on your hard drive. If you are going to use this route, you may be better off using the Online version of QuickBooks.
Reconciling Paypal account in QuickBooks is similar to reconciling a bank or credit card account in QuickBooks. You want to ensure that your beginning balance in QuickBooks matches the beginning balance for the period you are reconciling, and subsequently selecting the period end date then checking off the transactions that are on Paypal transaction printout with its corresponding transaction in QuickBooks.
Manually Entering or Downloading Transactions in QuickBooks Prior to Reconciliation
Depending on the number of transactions you have in Paypal and how you want to track them, will be the deciding factor on the method you use. I have a few clients that need each Paypal transaction to be entered individually because each transaction can be for something different. In this case, I have to produce a Sales Receipt for each one and apply the money to the correct item. I then make a deposit using the Undeposited Funds account just like I would any other deposits.
The one difference is that when you have selected all the items that you are depositing you then need to subtract the total Paypal fees. These should not be subtracted from each person/entity you received funds from because you need to show that you received the full amount of the money. Therefore, on the Make Deposit screen I use the next available empty row to add the Paypal fees. If you have an account that you are using specifically for tracking these, then that account will be used in the From Account column.
In the Memo field you can enter Paypal Fees if you would like, and you can insert “PP” for Paypal in the “Payment Method” field. The key to this working is when you enter the cost for the fees in the “Amount” column, they need to be entered as negative numbers. The total deposit should equal the amount that was transferred from PayPal into your bank account. This way the full cost of whatever was purchased will show in their proper accounts and the proper Expense account will be increased by the Paypal Fees.
If you usually have a lot of transactions for Paypal, you may choose to use Simple Port to import your Paypal transactions to QuickBooks. Once you have set the PayPal download to the correct format you will never have to do it again, and when it is configured correctly, Simple Port imports each transaction as a sales receipt, makes the deposit, and records the PayPal fees. The setup process can be a bit daunting, but they do offer free phone help and support and once they are through, your settings will be perfect and you won’t need to change them again. It has helped me tremendously with clients that have hundreds of Paypal transactions to contend with. Within 30 minutes, I usually get about 600 PayPal transactions into QuickBooks if I have to separate by sales tax jurisdiction, and less than 10 minutes if sales tax is not an issue.
Reconciling Paypal Account With QuickBooks
Now, all you have to do is go to Banking, Reconcile, select the Paypal Account from the dropdown menu, insert the period end date, ending balance and click Ok. Check off each transaction on the statement with its corresponding transaction in QuickBooks. When you are through, the difference at the bottom of the reconcile window should be $0.00. If it is not, then you will need to locate the discrepancy. If you do not see the transactions in QuickBooks, even though they are on the Paypal printout, you will need to manually enter them.
Conversely, if there are transactions in QuickBooks for the period you are reconciling but not on the Paypal printout, you will need to query them and delete or transfer them to the account for which they belong. This can sometimes occur when the download/import is not the option used to enter transactions in QuickBooks.
Note: To get the Paypal report that includes Paypal fees as well as a running balance, go to Activity, Activity (including balance & fees), and run a report for the period.
There are two ways to download Paypal transactions to QuickBooks: 1) via .iif file and 2) via .csv or Excel. I do not recommend the IIF approach as it does not allow for editing before uploading to QuickBooks, and Paypal transactions are not as seamless as bank transactions – they require editing. Instead, export the reports to Excel where you will be able to do the necessary editing before uploading to QuickBooks.
How to Import Paypal Transactions into QuickBooks
Log in to your PayPal account
Click the Activity tab, and select your date range
Click the small Download link to the top right corner of the screen to get to the Download History screen
Choose your date range, either Custom Date Range or Last Download to Present from the drop-down list
Choose File Type to Download, file would be QuickBooks (.iif)
Click Download History
When prompted to enter the account names, enter the account names exactly as they appear in the Company’s Chart of Accounts:
Name of PayPal Account
Name of Other Expenses Account
(Be sure that the expense account being used is not a sub-account of another expense account or it will be turned into a bank account when it is imported into QuickBooks).
(If Accounts Payable balances are being paid by PayPal transactions, you can enter the name of your Accounts Payable account here, but the Vendor names in PayPal must match the names in QuickBooks).
Name of Other Income Account
(Also, be sure that the income account being used is not a sub-account of another income account or it will be turned into a bank account when it is imported into QuickBooks).
(If Accounts Receivable balances are being paid by PayPal transactions, you can enter the name of your Accounts Receivable account here, but the Customer names in PayPal must match the names in QuickBooks).
Note: You will have to fill in all of the boxes, or you will receive a message from PayPal stating: You must complete the above fields to download your log.
Save the iif to the desktop
From the QuickBooks File menu, select Utilities, Import then IIF Files
Select the iif file located on the Desktop, and click Open
QuickBooks is built to work with interchanging of data from one edition of QuickBooks to another using IIF (Intuit Interchange Format), and from CSV (Comma Separated Values) files such as excel, to QuickBooks. However, there are limitations to the extent that QuickBooks provide and allow. For example, you can import your list of customers, vendors, items, and chart of accounts to QuickBooks, but not your invoices, estimates, or any other forms. This is where third party applications come in, to extend QuickBooks usability beyond its limitations.
With QuickBooks being so popular, many software developers have developed and are still developing applications that work and aim to work seamlessly with QuickBooks to get forms and files into QuickBooks from other media, such as excel, access, text, and ODBC (Open Database Connectivity). Thus, there are many applications available to carry out the various tasks that may need to get done, such as:
Transfer of data between QuickBooks company files
Transfer of data between QuickBooks and an e-commerce site
Transfer of data between QuickBooks and generic file formats
Transfer of data between QuickBooks and other programs
Albeit that, QuickBooks database is “closed” and access to their data tightly controlled and so only a few developers will be able to gain access to create a system software that effectively integrates with QuickBooks. Two such importers are:
You can view a complete list of Transaction Pro Importer features, and also IIF Transaction Creator Pro features. Transaction Pro Importer currently does not support Mac platform, but IIF Transaction Creator does. There is also a data transfer program that allows interchanging of information strictly between QuickBooks files known as Data Transfer Utility. This program by Karl Irvin most distinct feature is the merging of two QuickBooks company files.
Importing items into QuickBooks via excel is a two step process; first you have to export them to a file (.CSV, .IIF), and subsequently import the file(s) into QuickBooks. With a third party import software such as Transaction Pro Importer, you import files and forms directly through the program. You can always download a free trial for a test run of each importer program before making your purchase. The main detail to remember when using these importing applications is to always make a backup copy of QuickBooks before importing anything into QuickBooks. These programs and software are man-made, and as such, prone to err.
Visit QuickBooks Marketplace and search for a list of third party applications that integrates with QuickBooks for your industry type, and specific need.
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