Update: This information is specific to QuickBooks Desktop 2020
Many business owners are familiar with Intuit QuickBooks, as it's one of the leading accounting software programs for managing payroll, operations, accounts receivable and numerous other financial functions.
Despite the platform's ubiquity, however, many business owners remain uncertain about the differences between QuickBooks Desktop and QuickBooks Online. Here, we'll detail everything you should know about the two versions, including their core functions, pricing tiers, hosting location and extra features.
What is QuickBooks?
QuickBooks is one of the best-known and most widely used 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 installed locally or hosted remotely, has vastly different functions than the QuickBooks Online cloud computing version, which is fully remote.
QuickBooks Desktop vs. Online: The similarities
Despite those 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
QuickBooks Desktop and QuickBooks Online offer similar essential functions, including the following:
- Invoice creation
- Invoice scheduling
- Invoice sending
- Sales reporting
- Tax reporting
- Mileage tracking
- Accounts payable management
- Assistance from QuickBooks accountants
- Integrations with more than 650 cloud-based apps
Both QuickBooks Desktop and QuickBooks Online are especially well regarded for these capabilities:
- Tax compliance
- Cash flow and expense tracking
- Budgeting
- Ability to accept online payments
- General reporting features
Multiple tiers available for each
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 get into those details later on.
QuickBooks Desktop vs. Online: The differences
Here are some of the key differences between QuickBooks Desktop and QuickBooks Online:
Features
The largest differences between QuickBooks Desktop and QuickBooks Online are found in their features. The online version has several top-notch, modern features that QuickBooks Desktop doesn't. Here are some of the features that are exclusive to QuickBooks Online:
- Automatic scheduling and sending of transactions, with delayed charges and credits
- Audit logging for reviewing actions and tracking changes
- Several budgets per fiscal year
- Automatic nightly bank account syncing
- Unlimited time tracking and reports-only users
- Management and presentation-ready report packages
- Inclusion of documents, signatures, images and other items in transactions
- Custom banking rules broken down by dollar values, classifications, percentages and location
- Extensive customer labeling options
- Transaction tracking by location (not just class)
- Auto-addition of bank rule options
- Journal entries with several accounts receivable and accounts payable (AR/AP) lines
However, many classic QuickBooks Desktop tools can't be found in the online version. These Desktop-only tools fit neatly into five categories:
- Accounting:
- Ability to back up, restore and condense data and company files
- Correction of unapplied credits and payments
- Statement writing
- 1099 management
- Client data reviewing
- Ability to post to extra AR/AP accounts
- Undeposited-funds management
- Correction of sales taxes
- Reporting:
- Industry-specific reporting
- Extensive customization of report headers and footers
- Several vendor ship-to addresses
- Business planners, balance sheets and forecasting by class
- Data entry:
- Batch invoice creation, transaction entry and timesheet entry
- Rate-level billing
- Automated Clearing House vendor payments
- Inventory:
- Ability to build manufacturing features and assemblies
- Inventory reordering
- Partial receipt against purchase orders
- Value inventory using average cost
- Management of sales orders and invoice tracking, unit measures and availability to promise
- Job costing:
- Mileage tracking
- Ability to charge orders and mark up estimate columns
- Payroll and labor cost calculation
- Reports for job costing estimates and actual amounts
Although only QuickBooks Desktop offers these features, QuickBooks Online integrates with many third-party apps that offer them too. However, these apps will cost you extra. Additionally, not all QuickBooks Desktop tiers have all of these features.
Hosting
One of the key differences between QuickBooks Desktop and QuickBooks Online is its 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 just a few licensed computers. QuickBooks Online can be accessed from any internet-connected device, including a mobile device with the QuickBooks app installed, with 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 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 get to that specific device with the software installed.
One-time vs. monthly purchases
QuickBooks Desktop is a yearly subscription or one-time purchase, with the exception of the hosted Enterprise solutions, which are billed monthly. You won't need to renew your plan or make additional purchases unless you're looking to add new, expanded services or an additional device to your current plan. 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 multiple service tiers for both QuickBooks Desktop and QuickBooks Online. [Check out our comprehensive review of QuickBooks Online.]
QuickBooks Desktop service tiers and pricing
QuickBooks Desktop Pro and Pro Plus
- About Pro and Pro Plus: QuickBooks Desktop Pro and Pro Plus are desktop products intended for businesses that need to track performance and organize business finances using data already compiled in Excel, Quicken and other platforms. Pro Plus requires an annual subscription and includes unlimited customer support and automated data backup. Pro is a one-time purchase with neither unlimited customer support nor automated data backup. They include these features:
- Income and expense tracking
- Invoicing
- Reports
- Estimate sending
- Sales-tax tracking
- Management of bills and accounts payable
- Time tracking
- Inventory tracking
- Limits
- 1099 contractor payment
- Unlimited customer support
- Data backups and upgrades
- Multiple users
- Number of users: Up to three
- Best for: Small business owners and accounting staff
- Cost: $299.95 per year for Pro Plus or a $399.99 one-time payment for Pro
QuickBooks Desktop Premier and Premier Plus
- About Premier and Premier Plus: QuickBooks Desktop Premier and Premier Plus are desktop products intended for businesses with a strong focus on inventory management. As with Pro and Pro Plus, you’ll pay for Premier Plus annually and Premier just once. Premiere Plus also includes unlimited customer support and automated data backup unavailable to non-Plus users. Both Premiere and Premiere Plus have all of the features of QuickBooks Desktop Pro, plus forecasting and industry-specific features.
- Number of users: Up to five
- Best for: Companies with extensive inventories of physical products to store, sell and track, especially if the products differ by category
- Cost: $499.95 per year for Premier Plus or a $649.99 one-time payment for Premier
QuickBooks Desktop Enterprise
- About Enterprise: QuickBooks Desktop Enterprise is a desktop product intended for businesses that need advanced tracking tools. It has all of the tools of QuickBooks Desktop Premier, plus mobile inventory barcode scanning and end-to-end sales order fulfillment. Unlike other QuickBooks Desktop plans, you can add cloud-based file hosting to your Enterprise software. This way, your files aren’t stored on your office computers but instead on Quickbooks’ online server, so you can access your files from any device – whether in or outside the office.
- Number of users: Up to 40, plus advanced roles
- Best for: Manufacturing and wholesale, nonprofit, contractors, retail, accountants and professional services
- Cost: 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 your software is installed locally or you opt for a cloud-based hosting provider. Local installations are billed annually, while hosted solutions are billed monthly. The base prices for Enterprise plans are as follows, but with an annual subscription, they are marked down 10% for the first year:
- Gold plan, with one user and local installation: $1,577 per year (equivalent to $131.42 per month)
- Platinum plan, with one user and local installation: $1,940 per year (equivalent to $161.67 per month)
- Diamond plan, with one user and local installation: $3,825 per year (equivalent to $318.75 per month)
- Gold plan, with one user and hosting: $175 per month (equivalent to $2,100 per year)
- Platinum plan, with one user and hosting: $206 per month (equivalent to $2,472 per year)
- Diamond plan, with one user and hosting: $363.79 per month (equivalent to $4,365.48 per year)
QuickBooks Online service tiers and pricing
Self-Employed
- About Self-Employed: QuickBooks Online Self-Employed offers the Essentials and Plus plans at a reduced rate.
- Number of users: One, with one external user, such as an accountant
- Best for: Sole proprietors, independent contractors, freelancers, consultants and other self-employed individuals with basic accounting software needs
- Cost: $25 per month for Essentials, or $70 per month for Plus
Simple Start
- About Simple Start: Simple start is intended for small businesses that will have just one person using their QuickBooks Online account. It includes the following features:
- Income and expense tracking
- Invoice sending and payment acceptance
- Estimate sending
- Receipt capture and organization
- Mile tracking
- Sales and sales tax tracking
- Tax deduction maximization
- Basic reporting
- 1099 contractor management
- Number of users: One basic role, plus two external users (access levels can be varied by role)
- Best for: Small businesses that need only one user
- Cost: $25 per month
Essentials
- About Essentials: QuickBooks Online Essentials is the introductory tier for service-based businesses that invoice clients for time. It includes the following features:
- Invoice sending and payment acceptance
- Income and expense tracking
- Separation of business and personal expenses
- Bill pay and bill management
- Sales and sales-tax tracking
- Ability to capture and organize receipts
- Number of users: One
- Best for: Smaller, service-based businesses that invoice clients for time
- Cost: $25 per month
Plus
- About Plus: QuickBooks Online Plus includes all of the features found in Simple Start and Essentials, plus several additional functions:
- Enhanced reporting to run specific budgeting, inventory and class reports
- Project profitability tracking
- Time-and-attendance tracking
- Inventory tracking
- Bill management and payment
- Multiple users
- Number of users: Five users and basic permissions
- Best for: Businesses with several budgets, projects, employees and contractors to track
- Cost: $70 per month
Advanced
- About Advanced: QuickBooks Online Advanced is the most powerful and customizable of the QuickBooks Online options. This end-to-end business management software includes all of the features in Essentials and Plus while adding cutting-edge customization features that aren't available with other QuickBooks Online tiers. QuickBooks Online Advanced includes these additional features:
- Batch-entering of checks and invoices
- Automated approvals and reminders
- Assigning of custom user permissions by role
- Customizable workflows
- Key performance indicator (KPI) tracking through Fathom
- Enhanced custom fields for searching, sorting and filtering detailed reports, including revenue stream reports
- 24/7 live support from QuickBooks, with dedicated account representatives and on-demand online training
- Continuous and automatic data backup
- Number of users: 25 users and custom roles
- Best for: Larger businesses with multiple revenue streams
- Cost: $150 per month
Frequently asked questions about QuickBooks Desktop vs. Online
Does QuickBooks Online sync with your QuickBooks Desktop version?
No. QuickBooks Desktop and QuickBooks Online are entirely separate platforms that do not sync with each other. However, in addition to its mobile app, QuickBooks Online has a desktop app. So, 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.
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 does 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 subscriptions instead of one-time payments. Your subscription will be either monthly or yearly depending on your plan. Locally installed plans are paid yearly, whereas hosted plans are paid monthly. Visit the QuickBooks Enterprise pricing page to learn more about how your number of users and your choice between local installation and hosting will affect your price.
How is QuickBooks Enterprise with hosting fixing business challenges?
QuickBooks Enterprise with hosting addresses several challenges of larger businesses, including the following:
- Dealing with limited internet bandwidth
- Securing online data storage
- Handling maintenance and post-disaster recovery
- Implementing new technologies and practices
- Accessing customer service and technical support
- Ensuring that large teams can work remotely
QuickBooks Enterprise addresses all of these concerns because it is a large business solution that can be accessed anywhere, requires no physical infrastructure for data storage and offers extensive customer support.
How often do you have to upgrade QuickBooks Desktop?
While there is no requirement for how often you must upgrade QuickBooks Desktop, it may be wise to do so every year. This way, your platform will include all of the newest features, security upgrades and more. However, if you choose to add the payroll extension (which costs extra) to your QuickBooks Desktop purchase, you will be required to upgrade QuickBooks Desktop every three years.
QuickBooks Desktop vs. Online: Which is best for your business model?
There's no right or wrong answer to this question. Every business has its own needs and demands that make one accounting software version or the other a better fit. That said, you can consider the following general guidelines, which are somewhat flexible, when answering this question:
QuickBooks Desktop may be better for:
- Businesses that need access to the Desktop platform's classic QuickBooks tools and features that are not available in the Online version
- Smaller businesses that do not need online access or cloud computing (or want to keep all QuickBooks information at the office to help teams achieve a proper work-life balance)
- Businesses that prefer to pay yearly for QuickBooks instead of monthly, though you will pay monthly for cloud-hosted versions
QuickBooks Online may be better for:
- Businesses that can rely on third-party app integrations to provide the features and tools available only on the Desktop version
- Larger businesses with many locations, employees and warehouses that all need to share information and quickly access it from computers and mobile devices
- Businesses that prefer to pay monthly (instead of yearly) for QuickBooks
While these loose guidelines for choosing between QuickBooks Desktop and QuickBooks Online may be helpful, you may instead want to prioritize the individual features available through a given tier, regardless of whether it's cloud-based or locally installed. And if you're still uncertain whether QuickBooks Desktop or QuickBooks Online is the better choice for your business, you can always read our review of QuickBooks Online 2020 to learn even more.