Software companies are moving more and more towards having their products in the cloud, and QuickBooks is no different. The desktop version has been a bestseller among small and medium-sized business for years, and the online version has also been picking up steam in recent years. Maybe you’re using the desktop version and are considering moving online, or maybe you’re starting a business and deciding which version is right for you. The 2 versions are very similar, but not identical, so it’s not just a matter of flipping a switch and replicating everything online. The best option for you will depend on the specific needs of your company, so I’m going to discuss the main differences to help you make a decision.

One similarity is that, whether you use the desktop or online version, there are multiple tiers to work with, and higher end options have more features and functionalities available. You’ll need to pick the tier that’s right for your company. For QuickBooks Desktop, you can compare the 3 tiers here, and for QuickBooks Online, you can review the 4 tiers here.

An obvious difference is that, for the desktop version, you pay once and can use it as long as you want, but for the online version, you have to keep paying each month. Long-term, the online version will likely end up being more expensive if you don’t update the desktop version frequently. A new desktop version comes out each year, and each version is supported for 3 years. You don’t strictly need to update, but once a version is no longer supported, you’ll lose access to certain features, such as payroll, online banking, sending email, and merchant account processing.

There are a few functionalities that QuickBooks Desktop has, and QuickBooks Online does not, but some of these can be overcome with apps you can install from the QuickBooks Online app store. Likewise, QuickBooks Online has a few features that QuickBooks Desktop lacks.

Features in QuickBooks Desktop that QuickBooks Online lacks:

  • 1099 preparation is not available in the Self-Employed, Simple Start, or Essentials tiers of QuickBooks Online.
  • Multiple inventory tracking methods, with the Advanced Inventory add-on module. QuickBooks Online only offers FIFO.
  • Batch invoicing, to bill multiple customers at the same time
  • Batch transaction entry and timesheet entry
  • Progress invoicing for customers
  • Generating reports on estimated job costs
  • Sales orders
  • Partial receipts against purchase orders
  • Industry-specific versions

Features in QuickBooks Online that QuickBooks Desktop lacks:

  • Automation for some data entry, e.g. for invoices and receipts
  • Access from any computer with an internet connection
  • Mobile apps to use QuickBooks on your phone or tablet
  • App store to add functionality to QuickBooks or integrate with outside services, e.g. CRMs, payroll, expense report management, inventory management, importing data from Excel
  • Ability to use multiple AP or AR accounts in journal entries
  • Ability to set up multiple budgets in a fiscal year
  • Ability to use both classes and locations
  • Automatic daily download of bank and credit card transactions (needs to be manually initiated in QuickBooks Desktop)
  • Set up a Management Report package to prepare a full package of reports at once, including a cover page and end note
  • Unlimited free technical support (requires a fee for QuickBooks Desktop)
  • No need to send your company file to your accountant. You can invite them as an accountant user, and they can login when they need to.

Intuit, the company that develops QuickBooks, is investing heavily in the online version and encouraging people to move to it, and some accountants are encouraging their clients to do the same. Before you make the change, you should consider the differences between them and decide which option is best for your company.