When you started your business, you probably heard “You need Quickbooks” to manage your finances. But is it true that every small business needs Quickbooks? 

Prior to signing up for a plan (Quickbooks isn’t cheap!), it makes sense to see if the industry-leading accounting app actually fits you. Here’s what you need to know before you migrate your business bookkeeping to Quickbooks.

How Does Quickbooks Handle Small Business Accounting?

Quickbooks is a powerful accounting app that helps small business owners get a handle on their finances. You can see profit (and loss); track your expenses; manage and track time; generate reports, including the ever-important P&L (profit and loss statement); and even do payroll or get professional “LIVE” bookkeeping services, depending on the plan you choose. 

Plus, Quickbooks is the industry standard, so it integrates with other apps you may already use and vice versa, and has a mobile app, too. Packing more function than flash, Quickbooks is recommended because people know it works and trust it. Why? Because it has been around forever.

Why else would you want Quickbooks to handle your bookkeeping?

• Your accountant and bookkeeper will sing its praises — and yours. Set things up right, commit to using Quickbooks, and stay organized, and you’ll make your accountant’s job much easier. Tax time can be a breeze, too.
• You’ll get a big-picture overview of small business finances. You can stay on top of every financial transaction associated with your operation, which can also help ensure you remain profitable, cash-flow positive, growing, and thriving.  
• Generate reports you need to grow. Applying for a small business loan? You’ll need to provide a lot of business financial info. Quickbooks’ reports will cover everything you need.

So why not just sign up already? Because there may be an alternative to using Quickbooks that fits your small business and budget better.

We Asked an Accountant: What Software Works Better Than Quickbooks?

We wanted to get a hands-on analysis of whether Quickbooks is right for all small businesses.  So we asked Mary Jo Watson, owner of Balancing Act Accounting and an operational CPA (a.k.a., an accountant who helps you run your business but doesn’t do taxes) what she thought: can a small business not use Quickbooks?

Her answer: It’s true — not every small business needs to shell out the monthly fee for Quickbooks, which currently starts at $50 per month for sole proprietors and increases from there. (Although Watson notes “Look for a coupon!”). 

Specifically, which businesses don’t need Quickbooks? 

• Solo-preneurs, sole proprietors, or other 1-person businesses. Solo service providers — think consultants, coaches, trainers, or anyone who is basically selling one thing, their own time — may not need a dedicated accounting software at all. Watson’s advice for this category of business owners is to stick to spreadsheets, like Excel or Google sheets, and word processors (MSWork, Google docs) to create invoices. Then connect client payments right into your bank account (direct deposit of checks will link your online payment system to your bank), and your bank statements may be all you need to monitor your business’s financial wellness.

• Businesses with very few clients and products. If you only have one or two clients and one or two products, Watson says Quickbooks can be overkill. “If you are a sole proprietor and only have one or two major clients, you can probably keep track of everything in your bank account. You may be able to just use an Excel spreadsheet instead,“ she notes. However, finances get more complicated when you work with multiple clients, clients who pay in installments, or whenever you need invoicing features, reminders, and coordination of payments. But if your business isn’t there yet, save your cash.

• Businesses with limited and predictable expenses. Are all of your expenses recurring, like rent, Internet, phone, and website hosting? Are your “Cost of Goods Sold” equal to “not much at all”? A bank statement is probably enough.

If you want to learn more, ask your Entrepreneurs Forever peer group and your facilitator what they think about QuickBooks and for advice about which bookkeeping apps they use. You can also view this Forever Forward with Watson where she goes into detail about which businesses need Quickbooks, why, and alternatives to try, too. 

Remember, Small Business Bookkeeping Is Still Necessary!

Here’s the catch: regardless of the size or complexity of your small business, you can’t ignore your numbers. And even if you decide not to use a fancy accounting software program, that doesn’t mean you can shun bookkeeping altogether! Watson’s own clients — plenty of whom use just Excel spreadsheets for bookkeeping — still need to check in on a regular basis for a  big-picture view of their operations and finances and create at least a primitive P&L statement and balance sheet.

And one more thing to note: if you are looking for a loan or investors or if you interact with a government entity (like when you applied for a PPP loan), you probably do want to use a software program like Quickbooks … or Freshbooks or Zoho, if you’re small. Financial institutions need to see a historical record of your actual payments and receipts. While your bank statements might do in a pinch, you’ll know that the financial statements will pass muster if you get the reports from Quickbooks.

FAQs about Quickbooks for Small Business Owners

Why should a small business use QuickBooks?

When used correctly, QuickBooks can simplify accounting and bookkeeping tasks for small businesses. It integrates with other apps, tracks expenses, and helps business owners quickly see their business’s financial health. 

Why would a small business decide not to use QuickBooks?

For 1-person businesses that provide a very limited number of services or sell just 1-2 products, QuickBooks may be unnecessary and may not be worth the required investment of time or money.

Do I still need an accountant if I use QuickBooks?

QuickBooks does not take the place of an accountant, although if it’s used correctly, it can make tasks more efficient and easier for the accounting team, which can save time and money for business owners, too.

Can I use QuickBooks for my LLC? 

QuickBooks has no set size constraints and can grow with LLCs (at least to a point) since it can handle a large number of vendors, employees, and customers. QuickBooks can also be a smart accounting solution for C-Corps, S-Corps, 501(c)(3)s, and other business and organizational structures. 

What alternatives to QuickBooks are good for small businesses? 

If your business is really small (1 person) and simple (1 or 2 products or services), you may want to try alternatives to Quickbooks, including Freshbooks, Zoho, Sage, HoneyBook, or Xero. You can also look for solutions based specifically on needs. For example, if you’re looking for an app that will invoice and accept payments, Square, Wave, or Invoice Ninja may do the trick. Want time tracking? Clockify, Toggl, Harvest, or Paymo could be right for you. Most apps offer more than just a single service so read reviews and look for free trials so you can test them out.

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The information provided on this website is of a general nature and does not take the place of professional advice from your own business advisors.