QuickBooks Desktop vs. Online: Which Should You Use?

What is QuickBooks?

QuickBooks is one of the most widely used and top-rated accounting software programs on the market, in part due to its vast capacity for handling income and expenses, invoicing and payments, tax deductions, and more for businesses of all sizes — even self-employed people. Its prominence also stems from its inclusion of tools its competitors lack, such as integrated advanced time tracking.

There are two main versions of QuickBooks — QuickBooks Desktop and QuickBooks Online — and there are many differences between them. In particular, the QuickBooks Desktop platform, which is either installed locally or hosted remotely, offers different functions than the QuickBooks Online cloud computing version, which is fully remote.

>> Learn More: Accounting Mistakes Your Small Business Should Avoid

QuickBooks Desktop vs. Online: The similarities

Despite their differences, QuickBooks Desktop and QuickBooks Online also have plenty of overlap. Here’s a look at how these two QuickBooks accounting software options stack up.

Essential core functions

There are two versions of QuickBooks Desktop (Premier Plus and Enterprise) and four versions of QuickBooks Online (Simple Start, Essentials, Plus and Advanced). 

All versions of QuickBooks offer similar essential functions, including the following:

• Import and organize transactions from bank and credit card accounts (PayPal and Square integration on Online only)
• Invoice creation
• Estimate and quote creation
• Accept payment from an embedded invoice link (through QuickBooks Business Network on Online only)
• See the status of invoices in real time
• Categorize business expenses for tax purposes
• Create reports (more reports on Desktop Enterprise and most Online versions)
• Capture receipts via OCR with expense category matching
• Charge and track sales tax (sync with Amazon, eBay and Shopify on Online only via third party apps or via add-on for Desktop Enterprise)
• 1099 contractor management 
• Inventory management (more inventory features for Desktop Enterprise and Excel imports/marketplace syncs via third-party add for Online editions)
• Time tracking (sync with QuickBooks Time Elite via add-on for desktop versions)

Both QuickBooks Desktop and QuickBooks Online are especially well regarded for the following capabilities:

• Tax compliance
• Cash flow and expense tracking
• Business budgeting
• Ability to accept online payments
• General reporting features

Multiple tiers

Both QuickBooks Desktop and QuickBooks Online offer multiple service tiers that cater to different business needs, such as the number of employees who need to access the software. We’ll go into more detail on this later.

QuickBooks Desktop vs. Online: The differences

Here are some of the key differences between QuickBooks Desktop and QuickBooks Online.

Features

The main areas of difference between QuickBooks Desktop and QuickBooks Online lie in the accounting software features offered. The online version has several useful components that QuickBooks Desktop doesn’t. Here are some of the features exclusive to QuickBooks Online:

• Attach documents, images, signatures and more to individual transactions from both mobile and desktop devices
• Audit logging for tracking actions and changes over time
• Automatic nightly synchronization of bank transactions
• Auto-add banking rules
• Customize banking rules based on dollar value, percentage, class and location
• Journal entries with multiple accounts receivable and accounts payable (AR/AP) lines
• Turn management reports into presentations
• Scheduling and sending of future transactions with delayed credits and charges
• Support for multiple budgets during a fiscal year
• Transaction scheduling and dispatch automation
• Unlimited time tracking and reports-only users

Conversely, many classic QuickBooks Desktop tools can’t be found in the online version. These Desktop-only tools fit neatly into five categories.

1. Accounting:
   • Ability to back up, restore and condense data and company files
   • Correct unapplied credits and payments
   • QuickBooks Statement Writer (add-on package for GAAP compliance)
   • Client data reviewing
   • Ability to post to extra AR/AP accounts
   • Undeposited fund management
   • Correction of sales taxes
   • Create accounts for a specific time period
2. Reporting:
   • Industry-specific reporting options
   • Header and footer customization on reports
   • Support for multiple vendor ship-to addresses
   • Business planners, balance sheets and forecasting by class
3. Data entry:
   • Batch invoices, transactions and timesheets
   • Rate-level billing
   • Automated Clearing House payments to vendors
4. Inventory:
   • Ability to build manufacturing features and assemblies
   • Inventory reordering
   • Partial receipt against purchase orders
   • Value inventory using the average cost
   • Management of sales orders and invoice tracking, unit measures and availability to promise
5. Job costing:
   • Ability to charge orders and change/markup estimate columns
   • Payroll and labor cost calculation
   • Reports for job costing estimates and actual amounts

If you’re a QuickBooks Online user who wants these Desktop features, many third-party apps offer them for an extra charge. 

Hosting

QuickBooks Desktop is hosted locally, while QuickBooks Online is hosted in the cloud. 

This means that QuickBooks Desktop users are limited to one hosting provider — the computer on which the software is installed — or a handful of licensed computers. QuickBooks Online can be accessed from any internet-connected device, including a mobile device with the QuickBooks app installed, after you enter a valid username and password.

Because QuickBooks Online is cloud-based, it is a great option for those who need QuickBooks access while not in the office. QuickBooks Desktop is often limited to the number of installations included in your chosen service tier, so you may not be able to access the service if you can’t access the specific device with the software installed.

One-time vs. monthly purchases

Before the launch of QuickBooks Desktop 2022, the QuickBook products were available as a one-time purchase. Now, Premier Plus and Enterprise packages are available on a subscription-basis only.

QuickBooks Online, on the other hand, is a monthly subscription. How much you’ll pay for each service depends on the service tier you buy.

QuickBooks Desktop vs. Online: Service tiers and pricing

You can choose from two QuickBooks Desktop tiers and five QuickBooks Online tiers. 

QuickBooks Desktop service tiers and pricing

QuickBooks Desktop will be discontinued on May 31, 2023. After that date, you won’t be able to access QuickBooks add-on services like Online Banking, Online Backup, Live Support and QuickBooks Desktop Payroll Services from any version of the desktop software. 

Only Desktop version users who don’t use any add-on apps will be unaffected.

Several factors will influence your final cost for QuickBooks Desktop Enterprise, including the service tier you choose, the number of users you add, and whether you install software locally or opt for a cloud-based hosting provider. Local installations are billed annually, while hosted solutions are billed monthly. 

QuickBooks Online service tiers and pricing

Frequently asked questions about QuickBooks Desktop vs. Online

Does QuickBooks Online sync with your QuickBooks Desktop version?

No. QuickBooks Desktop and QuickBooks Online are separate platforms that do not sync with each other. However, in addition to its mobile app, QuickBooks Online has a desktop app. Any info you enter into the QuickBooks Online desktop app will sync with your cloud-based QuickBooks platform if your computer is connected to the internet.

What’s the difference between the QuickBooks Online and QuickBooks Desktop integration?

Both QuickBooks Online and QuickBooks Desktop can integrate with over 650 cloud-based apps. QuickBooks Online integrates with many other software platforms, such as PayPal and Square, but these platforms do not always have desktop versions. That’s why QuickBooks maintains a list of apps for QuickBooks Desktop that you can use to determine which desktop apps you can pair with your Desktop software.

However, please note that access to add-on services will be discontinued for all QuickBooks Desktop software after May 31, 2023.

Can you switch from QuickBooks Desktop to QuickBooks Online?

Yes, you can switch from QuickBooks Desktop to QuickBooks Online. Your data will be transferred from QuickBooks Desktop to QuickBooks Online, but not all of the data will copy seamlessly. Visit the QuickBooks guide to switching from Desktop to Online to see precisely which data points do not convert.

It’s important to note that QuickBooks Desktop and QuickBooks Online are two separate products, and data in the two versions do not automatically sync. A company should work with either QuickBooks Desktop or QuickBooks Online to avoid data discrepancies.

Can you buy QuickBooks Enterprise without a subscription?

No. All QuickBooks Enterprise plans are available only via monthly or annual subscriptions, depending on your plan. 

However, if you need access to add-on services to replicate some or all of the features of QuickBooks Desktop software, you may wish to explore QuickBooks Online options instead. That’s because access to online apps for Desktop users is being discontinued after May 31, 2023.

Which QuickBooks product is best for your business model?

Until Intuit’s announced that they were no longer going to support QuickBooks Desktop products after May 2023, this was a hard question to answer. Every business has its own needs and demands that make one accounting software version or the other a better fit.

The online version will soon be the only available version, and it’s used by hundreds of thousands of American businesses. To find out what we thought about it, please check out our review of QuickBooks Online 2024.

Max Freedman contributed to this article.