What is QuickBooks online?
QuickBooks is an accounting software developed by Intuit, a USA-based tech company specializing in financial software. QuickBooks was first a desktop application, operating locally on the premises. But, as has happened with most accounting software tools, it has now moved to the cloud and can be accessed from anywhere via a web browser.
QuickBooks allows SMEs (Small to Medium-Sized Businesses) to generate invoices, manage bills, run payroll, and keep detailed accounting for all of their business transactions. It also allows businesses to prepare P&L Statements (Profit and Loss Statements) and Balance Sheets which are required when submitting annual company accounts to HMRC.
QuickBooks Desktop and Online offer essentially all of the same features but the way they are accessed is extremely different. Also, many of the inherently “cloud-style” services such as remote access, user licenses, latest product updates, and automatic backups are additional services that must be paid for separately with QuickBooks Desktop, whereas these are offered out of the box in QuickBooks Online.
The price differences between QuickBooks Desktop and QuickBooks Online are starker for US-based companies. But even in the UK, the price for the online version is far more competitive.
The main deal-breakers for the desktop version are:
- No mobile access via the smartphone app
- Not possible to restore company data
Large, product-based companies might prefer the desktop version because it offers far more advanced features in this area.
QuickBooks is sometimes promoted as being primarily for SMEs (small to medium-sized businesses) but they also cater to sole proprietors, one-person businesses, and micro-entities.
The online version is suited to companies who need to access their company’s accounting information on their phones, or who seek the peace of mind of having a managed cloud service that takes care of maintenance and backups.
The mobile app allows you to carry out vital tasks on the road, such as writing an invoice, sending quotes, or managing expenses.
QuickBooks automatically connects to all the major UK banks as well as any other bank that follows the Open Banking Protocol.
The Open Banking Protocol is a communications standard that allows people to share their banking information securely with selected third parties for 90 days. After 90 days, the connection must be verified again.
You can find the full list of banks that can connect automatically to QuickBooks here. The list also includes all the five best online-only UK banks (according to us)—Cashplus, Monzo, Starling, Revolut, and Wise Business (previously Transferwise)—as well as many credit card accounts.
The automatic bank feed is an incredible time-saver. Quickbooks can automatically assign your transactions into the proper categories through pre-configured bank rules that you set up. The matched transactions will go into a “Review” section to be manually verified before being inserted in the books. But you can even configure bank rules to go directly to your books by selecting the “Automatically confirm transactions this rule applies to” option when configuring the rule.
QuickBooks allows you to quickly create professional invoice templates that contain all the necessary data required by HMRC to be considered a valid invoice.
Using QuickBooks’s “Custom Form Styles” allows you to design these invoices professionally without needing to know anything about design.
Every single aspect of the invoice is customizable and the final result will lend your company an extra touch of professionalism.
Once the invoice template has been designed, generating a new invoice is a piece of cake. All you need to do is select the client, add the product or services, and then send it off. If your company is registered for VAT, it will be automatically added for applicable clients.
The VAT charged on invoices, and that paid on expenses is automatically calculated at the end of each quarter when you need to submit your VAT returns to HMRC.
You can configure all your upcoming bills in QuickBooks and then match them to transactions when they come due. Adding upcoming bills to the system allows QuickBooks to create accurate Profit & Loss forecasts and Cash Flow statements for the future.
It’s also possible to assign a “job” to an expense so that you know what your Profit & Loss is per job, to determine which projects and clients are most profitable.
It’s possible to give access to your QuickBooks to your accountant or Tax Consultant so that they can look at your finances any time they need information for HMRC or an upcoming filing. Your accountant can also log in at any time and help you with any financial questions without having to resort to complicated (and possibly insecure) remote-access tools, or asking you for your password.
To invite your accountant to your QuickBooks Online account, click on “My Accountant” in the left menu, then type in your accountant’s email address.
Once the accountant gets the invitation link via email, they will be able to set themselves up to access your account.
In addition to your accountant, it is also possible to add additional users to your QuickBooks Online, depending on the package that you’ve signed up for.
QuickBooks Online Simple Start
- 1 billable user.
- 2 accountant firm users.
- Zero reports-only and time-tracking-only users.
QuickBooks Online Essentials
- 3 billable users.
- 2 accountant firm users.
- Unlimited time-tracking-only users.
- Zero reports-only users.
QuickBooks Online Plus
- 5 billable users.
- 2 accountant firm users.
- Unlimited time-tracking-only and reports-only users.
QuickBooks allows you to upload receipts via your computer, mobile, or even via email. QuickBooks will then extract information from the receipt.
To upload via mobile, take a photo of the receipt via the QuickBooks mobile app.
To match the extracted data to an existing transaction, you must then review and edit the data as necessary, and find the matching bank transaction to assign the data to. If there is no transaction it can be matched to (for example, for out-of-pocket expenses), you can manually add a new transaction.
There are other tools out there that can extract receipt data and then connect with QuickBooks and Xero, but these are becoming less common now that QuickBooks has cooked its own in-house version.
In addition to extracting the data, an image file of the receipt will also be stored on QuickBooks’s servers, so it’s important not to upload any documents that contain sensitive data.
QuickBooks Online has several versions, from the single-user Sole Trader version up to the Plus version for companies which allows for 5 billable users. (There is an additional version for US-based companies, with up to 25 billable users.) More users can be added for a fee.
|Version||QuickBooks Self-Employed||QuickBooks Simple Start||QuickBooks Essentials||QuickBooks Plus|
|Price||£8/month (£96/year)||£12/month (£144/year)||£20/month (£240/year)||£30/month (£360/year)|
|Number of Users||1||1||3||5|
|Prepare Self Assessment||Yes||Yes||Yes||Yes|
|Check VAT for errors||No||Yes||Yes||Yes|
|Submit VAT to HMRC||No||Yes||Yes||Yes|
|Payroll||N/A||Standard Payroll + Advanced Payroll options Standard Payroll Pricing: £48/year + £1/month per employee Advanced Payroll Pricing: £96/year + £1/month per employee||Standard Payroll + Advanced Payroll||Standard Payroll + Advanced Payroll|
The Simple Start, Essentials and Plus versions of QuickBooks Online come with free UK phone support. The Self-employed package comes with free chat support. There is also an online community that can offer help when needed.
Like all accounting software, there is a bit of a learning curve involved when you get started with QuickBooks. And if you don’t know anything about accounting, the learning curve can be doubly difficult. (To learn the basics of accounting, check out our companion “Basics of Accounting for Freelancers and Businesses” article.)
FreeAgent might do a better job at getting you grooved into the system if you don’t know anything at all about accounting.
Despite the small learning curve, we give QuickBooks a resounding 5 stars ★★★★★ overall, for everything including pricing, usability, and functionality. It is an excellent accounting system that provides everything needed for self-employed sole traders up to multi-million-pounds-per-annum businesses.
As accountants, it also makes it very easy for us when customers use QuickBooks as we can access their accounts without issue to advise them on anything they might need.
Payroll is an additional feature that must be purchased separately. Only the Simple Start, Essentials, and Plus packages offer the option to add payroll software.
QuickBooks contains templates for both invoices and quotes/estimates. The templates are completely customizable, even by people who have absolutely no previous design experience. The result is a professional-looking quote that goes a long way to convincing potential clients that your business is a good choice for them.
Unfortunately, QuickBooks is not able to handle multiple companies within one QuickBooks account. This means that you have to purchase an additional package for a second company. Not only that, but you also have to go through the frustration of logging in and out of each account every time you want to check anything with one of the companies.
In all fairness, the only company out of the other “Big Three” accounting software providers—Sage, FreeAgent, and Xero—that offers multi-company support is Sage, and even then it only does so as part of its Sage 200 Professional package, and you also need a multi-company license. Sage is also not for everyone and is more appropriate to companies that have heavy inventory needs.
So QuickBooks is really no different to the other providers in this regard.
Absolutely. QuickBooks can send payment reminders automatically or manually. You can configure after how many days or weeks from the due date that the first reminder must be sent, and you can schedule second or third reminders as well. It is possible to schedule invoice reminders for 90 days before or after an invoice’s due date.
You can also configure the content of the email that goes out as a reminder.
QuickBooks is an excellent piece of accounting software that covers all the bases for UK sole proprietors and businesses. We feel the learning curve and user experience for FreeAgent is slightly easier if you are completely new to accounting, but it might be considered over-simplified for accounting pros.
Sage is better suited to companies that have a lot of stock and inventory to manage.
Xero and QuickBooks are two giants with excellent overall features, but Xero does come out slightly on the pricier side depending on the features you select. Many of those features are already included in the QuickBooks Online version but Xero only offers them as add-ons.
If you buy QuickBooks online, you can also use its mobile app as part of each user’s license. The mobile app doesn’t work with QuickBooks Desktop users.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning.