If you’re running a business, regardless of size, you instinctively know how important accounting is to long-term success.

The Challenge – You need software that works for your unique situation. Using a product that’s not scalable to your business size or setup can result in major headaches, including paying for features you won’t use or not being empowered to do more to ensure business growth.

The Solution – QuickBooks caters to all types of businesses, and offers two unique options to meet individual preference:

  • QuickBooks Self-Employed (QBSE)
  • QuickBooks Online (QBO)

Below are the details of each, so you can make an educated decision as to which one will best meet your needs.

QuickBooks Self-Employed At-a-Glance

QuickBooks Self-Employed is an accounting package that covers the basic features a solopreneur may need as it relates to:

  • Managing both personal and business accounting tasks
  • Estimating and paying your taxes

Who is it best suited for?

The QuickBooks Self-Employed platform was designed with a very specific audience in mind. If you need to file a Schedule C document with Form 1040 during tax season, this is your accounting solution. It caters to business owners with simple business structures. This means no employees and/pr contractors, and very few customers that need to be invoiced.

If you have only one income stream and pay most of your expenses with cash or a card (no checks), this is a great option to consider.

Users often belong to one of these groups:

  • Uber drivers
  • Independent consultants or contractors
  • Freelancers
  • Realtors

In many cases, people who use Quickbooks Delf-Employed don’t need to spend a lot on an accounting program. But they do need something that is simple, cost-effective and easier to manage than manually entering data into spreadsheets.

An Important Note: If you know your business will grow in the future and you’ll likely be hiring employees, have additional income streams and/or require more advanced reporting, you’ll probably outgrow this program and may want to consider Quickbooks Online instead.

The benefits of QuickBooks Self-Employed

Quickbooks Self-Employed:

  • Is cost effective
  • Has user-friendly features
  • Is easy to set up
  • Makes it easy to manage personal and business transactions on one platform
  • Is accessible anytime, anywhere – even via your mobile device

And even though it’s a very basic program, you can still invite one accountant to help assist with things during tax season.

The unique features of QuickBooks Self-Employed

Quickbooks Self-Employed draws a huge following because it caters to a unique niche. These features make life easy for people who don’t want the hassles of a more elaborate accounting software.

  • Automated Processes – People who use QuickBooks Self-Employed often have fewer business dealings and factors to manage, but still struggle to properly document everything, including:
    • Tracking Mileage – This can have an impact on your tax payments, especially if you’re an Uber driver. With Quickbooks Self-Employed, you’ll have a detailed record of all your trips.
    • Documenting and Organizing Receipts – File everything in one place by attaching photographs of receipts to transactions. That’s instant, automated filing.
    • Managing Transactions – Connect your bank accounts to the software and import transactions to allocate them. Set up rules and categories, and the program will automatically allocate them for you.

 

  • Makes Taxes EasierEasy tax management is a huge driving force behind how this program was designed. QuickBooks Self-Employed will remind you of due dates and it continually projects estimated tax payments.
    • Both federal and state tax returns are supported (you’ll need the TurboTax Bundle for this)
    • To make your Schedule C tax return easy, the software will transfer relevant information to TurboTax if you opt for this feature. This add-on will do your calculations for you.
    • TurboTax is advanced enough to identify relevant deductions so you can lower your tax liability

  • Effortlessly Keeps Business and Personal Matters Apart – If you’re running this small business on the side or using your personal vehicle for Uber, it can get overwhelming keeping personal and business transactions separate. With Quickbooks Self-Employed:
    • The bank account setup offers categories relating to business expenses and personal expenses
    • The mileage app allows you to mark which trips relate to each category
    • All transactions can be allocated to one of the two categories

  • Easy Paperwork and Reporting – When you keep your data up to date, you can view projected numbers (such as annual profit) at any time. The system will also generate Profit and Loss (P&L) statements, as well as your tax summaries. Although there aren’t as many reports to run as with other accounting software, the P&L statement is often all a solopreneur needs. The other reports generated are only really relevant for a tax consultant.

QuickBooks Online At-a-Glance

QuickBooks Online is an accounting software package that caters to small businesses. It’s a dynamic, but simple tool, that allows you to do basic accounting tasks such as sending invoices and tracking inventory.

Who is it best suited for?

Quickbooks Online is designed to track the transactions of business accounts.

It’s a step up from QuickBooks Self-Employed, and can support the following:

  • Product sales and purchases
  • Accounts payable
  • Employee records
  • The hiring of 1099 contractors

Quickbooks Online is designed for small businesses that file taxes as:

  • Partnerships
  • S-Corps
  • C-Corps

So, for example, if you have an e-Commerce store through Shopify, this accounting solution is an ideal option.

The benefits of QuickBooks Online

Here are a few features that business owners love about QuickBooks Online:

  • Automatically sends invoices, statements, and reports
  • Nightly downloads of bank transactions keeps data up to date
  • Allows multiple windows to be open simultaneously
  • The payroll subscription option
  • The ability to access data from anywhere via any device (all devices are synced, even your mobile phone)

What truly sets Quickbooks online apart is how it caters to small businesses. It’s not jam-packed with unnecessary features that jack up the price.  What’s more:

  • It allows for multiple users
  • You can import data from other QuickBooks programs
  • You can track inventory

QuickBooks Self-Employed vs QuickBooks Online

Both programs are impressive, but only one will serve you best. A summary of differences helps to clarify in which scenarios you’ll find each one dynamic:

  • Cost – QuickBooks Online has a higher monthly premium (view details below)
  • Reporting – Quickbooks Self-Employed only provides P&L statements, while Quickbooks Online facilitates more advanced reporting
  • Mileage – Only Quickbooks Self-Employed is designed to track mileage
  • Business Features – Features essential to small businesses, such as inventory tracking and managing bills, is only be possible with QuickBooks Online
  • 1099 Contractors – You can only pay 1099 contractors via QuickBooks Online
  • Personal vs Business –  Only Quickbooks Self-Employed is designed to help manage personal and business transactions in a single platform

Cost Comparisons

  • QuickBooks Self-Employed comes in at $10/month. There are limits to what it can do, however.
  • The QuickBooks Self-Employed TurboTax Bundle is $17/month
  • QuickBooks Online Plus requires a monthly payment of $50 but provides more features including:
    • Multi-user access
    • Inventory tracking
    • The ability to pay 1099 contractors
    • The ability to manage sales taxes
    • The ability to pay quarterly taxes online

A few important things to keep in mind related to costs:

  • Free trial periods apply, but you won’t be able to take advantage of discounted pricing if you sign up for a free trial
  • These packages can be canceled at any time
  • If you opt for the TurboTax option, one federal and one state tax return will be filed for free
  • QuickBooks Online Plus offers 50% discounts for the first three months

Tips on Deciding Which is Best

  • Remember that you can’t convert QuickBooks Self-Employed to any other version. If you think your business will grow into a larger entity, you’re better off choosing Quickbooks Online.
  • QuickBooks Self-Employed doesn’t allow customization (even on invoices), but the Online version does.
  • Many apps integrate easily with QuickBooks Online, but not with the Self-Employed version.