QuickBooks Desktop and QuickBooks Online both have pros and cons.

So let’s look at what they are and explain why you should probably make the switch!

  • QuickBooks Desktop is a desktop application that sits on your computer that uses a single source file as the storage space for that QuickBooks client.
  • QuickBooks Online is a fully fledged internet application, used by millions of accountants.

A Quick History of QuickBooks

QuickBooks by Intuit has been the leader in small business and startup accounting software for 40 years or more. It is the industry standard. However, in 2006, a little startup out of New Zealand came along called Xero, and Xero built the first cloud-based accounting system.

This was revolutionary for all of the reasons we are about to talk about, but the bottom line is accountants loved it. It improved productivity, since accountants aren’t in the business of managing files.

Even though it was still a slightly rudimentary app (it was pretty early in the internet application game), Xero meant lots of people could work on a client at the same time and so it took off like a rocket. This must have given QuickBooks Intuit a bit of a fright because, all of a sudden, QuickBooks realized they really needed to get QuickBooks Online going.

And so an “arms race” began, and we were a part of it. We were using Xero AND we were using QuickBooks Online. Despite having a way to go, QuickBooks Online had the QuickBooks brand. It had the QuickBooks support system and almost all accountants know how to use it.

Reasons Why QuickBooks Online Took Off

There are plenty of reasons why QuickBooks Online is so popular and many of them are because of how it differs from QuickBooks Desktop:

  • Fewer corrupted files. With QuickBooks Desktop, the conversion over to an internet-based application can be really difficult since it is a file-based tool. This means keeping numerous client files in Dropbox, or a different storage tool, and risking those files being corrupted. You could lose up to a month’s worth of work. Having QuickBooks Online means you don’t risk your files being corrupted.
  • Better file syncing. Another risk that came with QuickBooks Desktop occurred when two different accountants would be using different files on one client at the same time. This means only half the work would actually be captured. That was a huge architectural problem for QuickBooks and so getting online practically eradicated this issue. 
  • Simplified user experience. Once QuickBooks Online became good enough, it really simplified IT management and made things much easier for accountants. They could focus on what they’re good at, which is accounting.
  • Easy accessibility. Another thing that QuickBooks Online does better than QuickBooks Desktop is that it is accessible for everyone, no matter where you are. Desktop did have some virtualization partners, which meant you could tunnel in via an application and view or maneuver a QuickBooks desktop file, but it was rudimentary, slow, and really hard to use. QuickBooks Online is just a normal internet application that lives inside your browser.

Due to all of these factors, approximately six years ago Kruze decided to standardize on QuickBooks Online and transition all of our QuickBooks Desktop clients into it. There were only a few exceptions. That was a huge day for Kruze, since we were able to standardize our processes and training.

Using QuickBooks Desktop for inventory

There is one situation where it can still make sense to use QuickBooks Desktop: if your business is inventory-intensive. 

There are some pretty good plug-in applications for QuickBooks Online and they are slowly developing inventory tools, but QuickBooks Desktop has definitely got a more robust inventory management system. If you have a large number of SKUs and you are doing a lot of inventory, then we would probably still recommend QuickBooks Desktop.

However, about 18 months from now, we will revisit that advice, and our prediction is that QuickBooks Online and the third-party application community will have developed enough that it makes sense to use QuickBooks Online for inventory.

Why do some accountants still like Quickbooks Desktop?

There is basically one reason why some accountants still like QuickBooks Desktop. As we previously mentioned, you can only access QuickBooks Desktop if you have the particular file. Well, that is a way accountants can control their clients. If an accountant has access to the QuickBooks Desktop file but the client doesn’t, it is pretty difficult for that client to look at the books. Therefore, they don’t really know what is going on, and that protects mediocre accountants.

Unfortunately, we still meet new potential Kruze clients who are working with an accountant on Desktop and they don’t have access to the folders. We immediately let them know they need to check on that, as there is a very high correlation between companies that are still using QuickBooks Desktop and those who are having accounting issues.

This is another reason why we recommend QuickBooks Online, so that you, the client, have access to all of your information. You are able to see exactly what is happening in your accounting system and you can take it over if you feel like something is wrong.

Making the switch

If you are still using QuickBooks Desktop, we really recommend that you do yourself a favor and switch over. It’s really not that hard and will probably take you less than an hour to do! Intuit has a straightforward process where you can download a version of Desktop, take the file and then upload it into QuickBooks Online. Then you are good to go!

If you have any questions on QuickBooks, startup investing, startup accounting, taxes, or venture capital please contact us. You can also follow our YouTube channel and our blog for more information on accounting, finance, HR, and taxes for startups!