<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=817262628318194&amp;ev=PageView&amp;noscript=1">

Quickbooks Online vs. Quickbooks Desktop for Law Firms

A topic that has recently picked up steam for us here at Practice Alchemy is the decision of which version of Intuit’s QuickBooks product to implement for your accounting system. The product you choose will have a significant impact on how your firm’s accounting processes are conducted, as well as the effectiveness of financial reporting and analysis. Having strong reporting and analysis is required for financially responsible decision making at your firm.

There are many different versions of QuickBooks, which fall into three main offerings:

  1. QuickBooks Online

  2. QuickBooks Desktop

  3. QuickBooks Enterprise (a more powerful version of Desktop)


Within each of these offerings, there’s a fair amount of variability: Starter, Essentials, Plus, Advanced, Self Employed, Pro, Premier, Enterprise, with or without Payroll, with or without Hosting, and so on. Given the frequency with which this topic is being discussed, our team thought it best to produce this straightforward guide for picking the software that most effectively suits the needs of your law practice. And on that note, let’s dive in.

What is QuickBooks Online?

QuickBooks Online (or QBO) is Intuit’s cloud-based product offering. Since it’s a cloud-based product, there’s nothing to download onto your computer, nor is there a need to use a third-party hosting solution in order to gain access to the system. With QBO, accountants can track income and expenses, invoice clients, accept payments, manage bills, run reports, automate workflows, and gain insights from a 24/7 cloud-based platform that provides users with access anywhere, anytime, and from any device. Since QBO has password-protected logins, firewall protected servers, the same encryption technology used by the world’s top banks, automatic data backup, and 99.8% uptime, you can rest assured that your financial data is safe and secure.

Users also have access to expert support and several other add-on features, including payroll. Perhaps one of the main advantages of QBO versus competitors is the ability to integrate with many other systems. QBO has become widely used by companies of all sizes and as such, the number of applications that integrate with QBO is extremely robust and constantly increasing. PayPal, Square, bill.com, CRM software such as HubSpot, certain case management systems, and payroll software such as Gusto are just a few of the many programs that integrate with QBO. Having these integrations would result in streamlined accounting and finance processes, thereby reducing costs to your firm and allowing for more time on value-add work.

Other advantages of QBO include:

  • Powerful bank and credit card feeds
  • Easy collaboration with accountants
  • Mobile app access and support
  • Automated transactions and scheduled reports
  • PC/Mac agnostic
  • Up to 25 users
  • Lower cost than other versions

However, there are also some downsides to QBO. For larger companies and enterprises, QBO may simply lack the capabilities needed for the accounting function. More robust inventory, sales order functionality, item-level custom fields, and customization are just a few of the features that a user would lack within QBO. From talking to several law firms and their bookkeeping teams, we’ve found that accountants in particular prefer the more traditional Desktop version of QuickBooks due to certain functionality that they may be used to from having spent their careers working with the tool.

There are several versions of QBO to choose from:

  • Self Employed - the most basic plan for tracking income and expenses, capturing and organizing receipts, estimating quarterly taxes, invoicing customers, accepting payments, tracking miles, and running basic reports
  • Simple Start - a basic plan for small businesses, with the features of Self Employed plus the ability to run general reports, send estimates, track sales tax, and manage contractors
  • Essentials - the functionality of Simple Start, plus the ability to manage bills, track time, and have more users (up to 3)
  • Plus - the functionality of Essentials, plus up to 5 users and the ability to track basic inventory and project profitability
  • Advanced - all of the above functionality, plus up to 25 users and the ability to both manage and pay bills, batch invoices and expenses, gain business insights and analytics, customize access by role, automate workflows, and receive access to a dedicated account manager as well as on-demand training

Full disclosure: at Practice Alchemy, we use the Plus edition of QBO. At the moment, we don’t need more than 5 users and have ancillary systems that are integrated with QBO to do invoicing, pay bills, and run sophisticated reports and dashboards. We utilize this plan because as we become a more complex organization over time, we will have the ability to upgrade to Advanced and unlock a number of new features as noted above.

How about QuickBooks Desktop?

QuickBooks Desktop operates under a different business model than QBO. Where QBO is a cloud-based platform with subscription billing, Desktop is typically a one-time software license purchase (e.g. a three-year license) with additional charges as users or new hardware devices are added. There’s also a “Pro Plus” version of Desktop that operates as an annual subscription, providing access to the software plus added services that include customer support, data backup and recovery, and access to the latest features and updates. We’d consider the Pro Plus version to be somewhat of a hybrid, where QBO is pure subscription cloud software and Desktop Pro is a pure one-time purchase software license.

In addition to Pro, there is also a Premier version of Desktop. Similar to Pro, Desktop Premier is typically a one-time software license purchase with additional charges as users or new hardware devices are added. With Premier, an organization would gain all the features of Pro (robust tracking of inventory, sales tax functionality, professional estimates and invoices, bills and purchase orders, etc.), in addition to:

  • Industry-specific reports
  • Sales order functionality
  • Cost tracking for products and inventory
  • Product and service prices by customer type
  • Customized inventory reports
  • Up to 5 users

Perhaps the biggest advantage we’ve seen for Desktop Premier is the industry-specific functionality. General contractors, manufacturers and wholesalers, retailers, and nonprofit organizations would all benefit from the more robust platform. However, there are also some clear benefits to law firms. On their website, QuickBooks calls out specifically the following for firms that would fall within our client base:

  • Track unbilled time and expenses - “See all clients with unbilled time and expenses by employee, project, client or service on a single screen. Easily send an invoice in just a few clicks
  • Set different billing rates by employee, client, and matter type - “Pay and get paid the right amount by quickly and easily setting different billing rates
  • Analyze profitability by matter and client - “Reports like Billed vs. Proposal by Project, Cost-to-Complete by Job, and Job Costs by Job and Vendor help you stay on top of which projects are most profitable

As a professional service firm, it’s fair to say Practice Alchemy would benefit from some of the above features. Up to this point we’ve largely been able to replicate this functionality with a variety of cloud-based systems that stack onto our instance of QBO. That said, for some law firms it may be more straightforward and beneficial to have one system such as Desktop Premier that will provide them everything for their accounting and finance needs.

Moving to the Enterprise QuickBooks

The most powerful version of QuickBooks on the market is Enterprise. Similar to Premier Plus, QuickBooks Desktop Enterprise is priced as an annual subscription, with all of the features of Pro and Premier in addition to:

  • The ability to scale up to 30 users
  • 6x the list capacity of Pro
  • Up to 1 million customers, vendors, and inventory items 
  • Over 200 report templates
  • Advanced inventory and fulfillment tools
  • Priority customer service

Another unique feature of Enterprise is the opportunity to add hosting functionality, meaning you wouldn’t have to host the system on your own local servers. This hosting functionality would allow for remote access to Enterprise anytime, anywhere, on any device, essentially mimicking cloud-based tools such as QBO. 

Intuit’s latest and greatest version of Enterprise is QuickBooks Enterprise Diamond. The lucky VIP companies with this product will get up to 40 users, a full-blown payroll tool, top-notch customer support, and the most robust inventory, reporting, and pricing functionality. At this level in the product hierarchy, QuickBooks is looking to compete with some of the well-known enterprise resource planning (ERP) tools such as Oracle’s NetSuite and Sage’s Intacct, which will all require a significant investment of time and money to implement and maintain.

QuickBooks Pricing For Law Firms

QuickBooks is offering some favorable pricing at the moment for all of its products. Here’s a breakdown of what you’d be looking to pay with pricing as of May 2020. The pricing below may also vary based on add-ons, including Payroll and Hosting.

Quickbooks Online

QBO Simple Start

QBO Essentials

QBO Plus

QBO Advanced

$8/month (reg. $25)

$12/mo (reg. $40)

$21/mo (reg $70)

$45/mo (reg $150)

QuickBooks Desktop

QB Desktop Pro

QB Desktop Pro Plus

$299.95 (one-time)

$149.95/yr (reg $299.95)

QuickBooks Desktop (Premier)

QB Desktop Premier

QB Desktop Premier Plus

$499.95 (one-time)

$249.95/yr (reg $499.95)

Quickbooks Desktop Enterprise

QB Desktop Enterprise

QB Enterprise Diamond

$849.10/yr (reg $1,213.00)

Custom Pricing

 

Which QuickBooks Offering Should Law Firms Choose?

There’s no shortage of considerations when looking at what accounting system is right for your firm. It’s likely you wouldn’t need Enterprise Diamond, but QBO Plus may not get the job done either. When considering your options, we recommend starting in the middle and comparing, say, QBO Advanced vs. Desktop Pro or Premier. If you find you still need to move upmarket from there, take a look at Enterprise. We also advise talking to your CPA firm, as they should have familiarity with all the tools and what might be best for their tax purposes. Still unsure about which QuickBooks platform would be the best fit for your firm? Let us know and we can match your firm to the best QuickBooks option. 

Selecting the right version of QuickBooks for your firm is one step in creating a proper suite of integrated systems that will provide for accurate reporting and efficient law firm operations. QuickBooks will help provide the financial data that will feed into your business planning, strategy, and analysis as you set up your firm for future success. Using QuickBooks by itself will not be enough to drive the financial analysis that you need to make data-backed decisions for your firm. Dashboards, integrated systems, and a clear financial strategy for the future all play a part in the grand plan for a successful law firm.

If you’d like to learn more about how Practice Alchemy can help with your accounting and bookkeeping needs, or if you’re interested in exploring our executive level finance services, request a consultation with our team or reach out directly to me: jonathan@practicealchemy.com.

Jonathan A. Medeiros, CPA, MBA

CFO @ Practice Alchemy

QuickBooks Logos and the "QuickBooks" brand are properties of Intuit Inc.