Which Version of QBO is Right For Your Business

Are you struggling to determine which version of QuickBooks Online is the best for your Canadian business? With so many options, it's easy to feel overwhelmed. But the good news is in this video, I am going to help you work through each version of QuickBooks Online, help you determine what's best for your business and give you some tips on how to make that decision even when there is still some doubt. And finally, I am going to give you one tip about what not to do. So stick around till the end where I will share that. My name is Ranika Canna. I am a cpa, a CFA and the founder of Montreal Financial, where you can find lots of resources for small businesses and take the stress out of your business finances by signing up to my newsletter. Okay, so my first tip is to understand your business needs. What type of business are you? You could be a freelancer, you could be self employed, a solopreneur, or you could be a slightly larger small business. And QuickBooks Online has four plans, as we can see here. It has the Easy Start Essentials plus and Advanced. And so if we look at each plan, we can see that in the most basic version of the plan, which is Easy Start and there is a discount for the first six months and then it is $24. So this is really the price that you should keep in mind because that is what it will be going forward. And they also increase their prices every year. So that's also something to keep in mind. But anyway, so in the Easy Start plan, you can track your income and expenses. You can so, which means you can enter your income via invoicing or directly. You can enter your expenses and you can generate reports, profit and loss statements, etc. You can track your sales and sales tax. This is really important for a lot of small businesses and many of you are switching or upgrading to QuickBooks Online because you have registered for sales tax. It helps you to capture and organize receipts, which means that you can take photos of your receipts and have QuickBooks read the receipts. It does this imperfectly but fairly well. And then it will match to a transaction that has already been downloaded. You can run reports. There are all kinds of reports in QuickBooks Online. In the Easy Start version they're a little more limited, but you still have plenty of reports, the most important ones being the profit and loss, the balance sheet and sales by customers, expenses, etc. You can invoice your clients and your customers directly through QuickBooks Online and send them to your customers or clients. And you can also receive payments, which means that QuickBooks is actually also a payment processor. So as an alternative To Stripe or PayPal, you can sign up for their payment service and then accept payments to directly. Once you email your customer the invoice, there's progress invoicing, which is you can invoice someone over time. It helps to maximize your tax deductions. That's just a benefit of any accounting software that you use, because you track all of your taxes and you can send estimates, which can be really useful to those of you who create estimates or proposals or quotes for your customers. You can do it directly through QuickBooks Online and save yourself the cost of a separate software to do this.

So in the Essentials plan, you can see that everything that's included in Easy Start is also included in Essentials. In addition, one of the three significant changes that everybody should note is that you can manage bills and payments. So in the Easy start version of QuickBooks Online, you cannot add bills. And a bill as opposed to an expense is something that a supplier vendor sends you today, but it is actually due in 15 days or 30 days and you can actually set it up to pay later. So essentially you would have an accounts payable report. This is not really possible with the Easy Start version, but it is a feature of the Essentials version, not some very small businesses. It's not a big deal because most of you freelancers are self employed or many of you don't actually have bills or you don't have a lot of expenses, so it's not necessary. But if you do have suppliers and then you do want to monitor how much you owe them and you want to manage your cash flow, then it is a good feature to have.

Multi currency support. This is only available in Essentials if you have international clients, clients in the US or Europe or anywhere else in the world. QuickBooks is actually quite good at calculating the foreign exchange on on it so that it converts it back into Canadian dollars. And there's very specific rules around foreign exchange and it can be a complex area, a huge pain. And so QuickBooks really takes the stress out of doing that. And again, this is only available with Essentials. And you can enter your time through QuickBooks Essentials. And this means that if you bill your customers or clients based on time, or if you have subcontract factors, do that. There's a space where time can be entered and then tracked. And finally a Easy Start is really just you as a user and you might be able to add an accountant. But with Essentials you can have up to three users so if you have an accountant, a bookkeeper, an administrator, if there are a couple of business owners, you can at least all log into QuickBooks on line with different logins.

So the plus version is $80 per month, whereas the essentials was $54. Again, there's a discount for the first six months. They want to get you hooked into their ecosystem, after which it becomes difficult to switch. And the consideration on, on the payment, on this monthly payment, which might seem like a lot. So certainly at $80 is how much is your time worth? And if your time is worth over $80 an hour or for a couple of hours, the plus version or all of these versions of QuickBooks Online can save you a ton of time. Compared to using a spreadsheet or doing it manually, it is worth the upgrade, certainly if you have enough transactions to warrant it. You, you want to see history and you want to be able to track your transactions, invoice directly and reduce or eliminate errors. So in the plus version, in addition to everything in the Essentials version, you can also track your project profitability. So this is for people who have projects, the number of users increases from three to five. So that could be useful if you are probably a slightly larger business that needs help or has multiple users of your file. You can track inventory. And this is the big difference with Plus. So in An Easy Start and Essentials, you cannot track inventory. You can cobble it together, but you can't actually see the ins and the output outs. Whereas with plus, you can actually set up your inventory by SKU or whatever system you use. And then every time you sell something, you can take it out of inventory. Every time you buy, buy some inventory, you can add it. So it is a very useful way to see how much inventory you have, track it, ensure that you have enough, see what products are selling well, et cetera. You can do budgeting in the plus version of QuickBooks, which is useful for those of you who want to do budgets and are not that comfortable with using Excel or Google Sheets to do that, although it is fairly straightforward in a spreadsheet as well. And you can track classes and locations. And this is a really useful feature. If you have multiple divisions, say you are a rental property, if you have different locations, then you can track income and expenses for each of those locations. You can set it up as a location, or you could set something up as a class where you define essentially a division. And again, it could be geographical, it could be a type of customer you, it could be a type of product that you sell there's all kinds of ways to set up classes and locations. But keep in mind Easy Start and Essentials also has tags and tags might be sufficient for your purposes. So before upgrading to plus you should play around with tags to see if that works for you and then you actually wouldn't have to upgrade. And finally, in the advanced version of QuickBooks Online, in addition to everything in the plus version, you have all of these other features. This is quite expensive at $160, so double the amount of plus. So this is more for medium businesses and it gives you the ability to restore and backup your data. For those of you who are concerned that you might there might be an issue with your data, you have customer reporting fields, you can set up three accountants. So again if you're a company that actually has an annual audit, this might be really useful because you want different users in your QuickBooks account. Premium support. So you will get a special support line number that you can call anytime you have issues. And then there are a variety of other features that again are more for medium sized businesses. So you'll know once you reach that point whether it's worth upgrading to the advanced version of QuickBooks or whether you at this point might want to select a different accounting software. One other tip that I will give you and then we are going to get to what not to do. And that tip is if you are not sure if you're ready to start using QuickBooks online, I think that's great. I think it can be really useful, huge time saver and also help you save with costs. And my tip is if you're not sure which version to use to start with Easy start because you can upgrade at any time. If there is a feature that you are missing and that you want or need for your business, you can do that mid year or after you have started using it. Once you have set it up, it's totally fine to upgrade later. You can also downgrade. But if you use, if you sign up for a higher version. But it is often better to start small and then upgrade as you need to. So my final tip about on the plans version is it's not actually an option here, which is interesting. It is in a completely different ecosystem than these versions of QuickBooks Online. And what that means is if you were to get QuickBooks self employed and your business started to expand or grow, there is no way to upgrade to Easy Start. So this is a real problem because you basically have to take all of the data that you entered into your QuickBooks self employed and transfer it over manually to Easy Start. Additionally, if you look at the price point it is only $20 versus $24. That is a minimal difference per month and even per year. And there are features in Self Employed that are just not available. One of the most important ones is if you're a business located in Quebec, there is no QST tracking functionality for QuickBooks self employed. Additionally, there are other just basic features that are missing. It's not a great product and for the price differential again I just do not recommend using it. A lot of people freelancers self employed, they don't really know this is advertised to them. If I were QuickBooks Online, I would just remove this product altogether and somehow adjust Easy Start or have another version that is at least within the same ecosystem. And that concludes some tips to help you choose the best version of QuickBooks Online for your small business. If you have any questions about your version of QuickBooks or what you think you should choose, please don't hesitate to leave a comment. If you found this video helpful, please like and subscribe to get notified about Future Videos about QuickBooks and small business accounting and Tax Have a great day.