There are a few versions of QuickBooks, and QuickBooks Online is perhaps the most popular online accounting software for SMBs because it is easy-to-use, affordable, and well-understood by accountants and bookkeepers. Also, it is a cloud-based software, which means that you can view your financial data anytime and anywhere from any device connected to the internet.
QuickBooks Online was introduced in 2000, and since then, freelancers and business owners have struggled to determine which version is their best bet. Everything depends on your needs and what you are comfortable using, meaning that there is no straightforward solution to that dilemma.
According to online feedback from customers, there are various advantages of QuickBooks (e.g., integration with third-party apps, payroll automation, expense tracking, remote access, etc.). However, the cons of QuickBooks Online are non-negligible.
1. Maintaining and adding features is expensive
QuickBooks Online comes with a myriad of features, but they are expensive to maintain. One of the least appealing aspects of QuickBooks service is its pricing. For example, you can add a maximum of 25 users at the same price, but that feature is available only at the highest price point of the software (which is six times more expensive than the basic plan). If you want to maintain your books without breaking the bank, this creates accessibility issues.
As for platform add-ons, they come with their own price, which can only increase the costs of using this service. Unless you sign up for the most expensive subscription, customization features and functionalities (such as automated data backups, multiple users, management charts, customized reporting, and automated approvals) will not be available.
2. No built-up restore or backup function
Without this function, businesses don’t have protection against mistakes or disasters, whether large (deleting an entire account, importing 200 transactions into the wrong account, etc.) or small (entering data into the wrong account, deleting a transaction, etc.). There is also no protection against having your data deleted by a hacker or a server problem. The only functions that resemble data backup are the ability to export one account at a time to a .xls file (but it is useless as a backup because it will omit all split detail and cannot be restored in its entirety).
3. Not supporting the CSV file format completely
CSV (comma-separated values) format is supported by the QBO’s built-in Import function. However, the function recognizes only three fields – Date, Description, and Amount. If the transactions you want to import already include categories, memos, check numbers, and any split information, that information will be ignored. The only way to add that information is to edit each imported transaction manually after importing CSV files. If you have years of past accounting and bookkeeping data to import, it’s almost impossible to do that manually.
4. Lack of industry-specific features
When it comes to inventory management, businesses operating in different industries have different requirements. Industry-specific features are there to help them quickly perform tasks unique to their industry. QuickBooks Desktop is more robust and supports several industries (Retail, Professional Services, Nonprofit, Manufacturing & Wholesale, and General Contractor), but QuickBooks Online doesn’t. For example, general contractors can create a Job by Vendor report to organize job costs by the vendor and see which vendors need to be paid. QuickBooks Online doesn’t offer these features, and there’s no support for inventory management. It is general accounting software, which explains the lack of such features.
5. Inability to revert to a previous version
QuickBooks Online users are not able to restore to a previous version of their books. For example, you won’t be able to go back to a point where the last transaction data is available unless you’re on the highest pricing plan. QuickBooks’ cloud storage and management updates and saves data but doesn’t create any restoration points (which prevents users from going back to modified or deleted transactions). To recreate the data, you need to pay for the advanced plan that creates backups for you or enter data manually. Many other applications that operate in the cloud can generate restoration points within basic plans, so QBO’s lack of support for such an essential functionality can create further issues for accountants who want it without having to pay for a pricey upgrade.
6. Payroll functionality
The QuickBooks Online basic plan doesn’t include payroll functionality. If you want to include it into your accounting system, you will have to pay an additional monthly cost (along with a surcharge per each added employee). If this doesn’t work for you, then you may want to consider a full-service accounting program.
7. You don’t choose when upgrades occur
Since it is cloud-based software, you don’t control when feature upgrades or changes occur. And if the new software version has removed features, bugs, or other issues, you cannot roll back to the previous software version. When it comes to monthly or annual subscription cost increases, you also have no control.
8. Bank and credit card account feed goes back 90 days
The information about your bank and credit card account transactions goes back 90 days. It may happen that it is offline for days or weeks at a time with no explanation, which will force you to either enter all transactions manually or download a CSV from your bank and upload it into QuickBooks Online. You must do that if the date of your transactions is more than 90 days in the past. And as for the CSV upload, we will mention again that you will have to fill in memos, categories, and check numbers, as well as updating any required splits every time after importing it into QBO.
9. Giving a bit of control over your data
When users move from QuickBooks Desktop to Online, they have to give up a bit of control over their data. You cannot upload your data to the QBO servers by yourself, but you can create company files to send them to QB and then they load them for you. Since finance and accounting data is very sensitive and confidential, this can be dissatisfying. Furthermore, data is stored in the cloud, which means it is subject to all the typical risks of an online account – such as a hacker or an unreliable internet connection.
To conclude, the limitations of QuickBooks Online can be potentially more costly over time. You don’t have to pay for upgraded versions or buy multiple licenses with QBO, but it can cost more than simply buying the Desktop version (a one-time purchase, rather than a regular monthly subscription). The software is not for beginners because there’s a learning curve that requires your patience and time, and you might feel confused at the interface at first. QBO has no project management software features, so if you need one, you’ll have to find the best option out of the third-party software that can integrate with QuickBooks Online.
Questions to Ask Yourself when Considering an Accounting Solution
We recommend asking yourself the following question when considering which accounting and bookkeeping system to go with.
If you’re already using a system, ask yourself:
- What are the associated monthly fees?
- What do I like and don’t like about it? What features do I wish it had?
- What features does it have, and which features am I actually using? How frequently am I using them?
- Is it able to provide the financial information I need? Does it increase my company’s financial visibility?
- Does the system interact with other important systems I rely on (e.g., customer billing, project management, time tracking, etc.)?
- Does it have the ability to export all of its data or only some of it?
- Where is my data stored? Am I able to make backups? In case of a disaster or problem, how would I restore it?
For any prospective accounting and bookkeeping system, you should ask yourself:
- What features does it offer?
- Will it be able to provide the detailed information I need?
- What does it cost to get started? Are there any ongoing costs? Can I cancel, and will I get a partial refund?
- How will I backup my data? In case of a disaster, how will I restore my data?
- If I have existing accounting data, how will this new system import it while preserving its usefulness, completeness, and integrity?
- When it comes to entering new transactions on an ongoing basis, will you enter them manually? Will you pull them directly by auto-linking your bank and credit cards? Will you download them from those accounts on your PC and then import them into the system?
QuickBooks Online Alternatives for Growing Companies
Although QuickBooks Online is the world’s most popular accounting software, it’s not the only cloud-based finance accounting software option for growing enterprises. If your company is set on a path for growth, you will quickly run into various obstacles resulting from using QuickBooks Online. Despite the user-friendly nature of QB Online, you should analyze the pros and cons and be aware of a range of disadvantages before investing in the software.
Consero’s Finance as a Service (FaaS) solution provides you with the accounting power, financial models, expert staff, and advanced technology that allows you to integrate and execute workflows within a cloud-based software stack. All of this comes at a fraction of the cost of running an in-house department.
Reach out to Consero and request a free demo today to learn more about QuickBooks Online vs. outsourced finance and accounting.
