QuickBooks Online vs QuickBooks Desktop for Construction Companies

March 15, 2023

Intuit’s QuickBooks was released in 1992, and quickly became the software of choice for small to medium sized construction companies (and small to medium sized businesses as a while). It provided a great way for people without an accounting background to successfully manage their business’ bookkeeping.

In 2004, Intuit launched QuickBooks Online, and while it shares the same name and is made for the same purpose – small business accounting – it is really a completely separate software.

QuickBooks Online had several advantages over QuickBooks Desktop – the most obvious being the fact that it is online – but its feature set when it was launched was severely limited compared to QuickBooks Desktop. Intuit has put a ton of work into QuickBooks Online over the last 9 years though, and its functionality has caught up with and even surpassed QuickBooks Desktop in several key areas. Despite this, QuickBooks Online seems to have retained its reputation for having a limited feature set, especially among current QuickBooks Desktop users.

So what are the actual differences between QuickBooks Online and QuickBooks Desktop, and how do those differences apply to construction companies? What advantages does QuickBooks Online have? What advantages does QuickBooks Desktop have? Should you upgrade from QuickBooks Desktop to QuickBooks Online, or if you are not using accounting software yet, should you choose QuickBooks Online or QuickBooks Desktop for your construction business? Hopefully we can shed a little light on these questions and help you make the right decision for your company.

What are the key differences between QuickBooks Online and QuickBooks Desktop?

The biggest difference between the two softwares lies in the name: QuickBooks Online is cloud based, while QuickBooks Desktop is on your computer (or maybe on a server where multiple users can connect to it if you have an IT team). What does this mean? QuickBooks Online can be accessed from anywhere on any machine as long as you have an internet connection. QuickBooks Desktop can only be accessed on a computer that it has been installed on. The fact that it is cloud based is what gives QuickBooks Online most of its advantages over QuickBooks Desktop.

As far as features go, QuickBooks Desktop and QuickBooks Online are very comparable: both offer your standard accounting functionality, both offer the ability to send invoices directly to customers, both can connect to your bank accounts, both have the capability to do inventory management, both can handle your payroll if you want: the list goes on. If you dig a little deeper though, you can see some differences between the two options.

1. Access: Like we discussed previously, you can log in to QuickBooks Online anywhere from any device. It is possible to set up QuickBooks Desktop so you can access it from anywhere using the correct device, but it will require some IT investment, infrastructure and maintenance.
2. Multi-User Access: QuickBooks online can be accessed by multiple users simultaneously. With some IT investment and maintenance, QuickBooks Desktop can be set up to achieve this – to an extent. Certain parts of QuickBooks Desktop can only be accessed by 1 user at a time, and you will constantly be dealing with this in your day-to-day operations if you’ve got more than one or two people who need to work in QuickBooks.
3. Usability: QuickBooks Online is more user friendly than QuickBooks Desktop. If you know and are familiar with QuickBooks Desktop, there’s going to be a learning curve if you dive into QuickBooks Online, but if you haven’t used either software before, QuickBooks Online is going to be much easier to work with.
4. Banking Connections: QuickBooks Online offers seamless and free connection to your bank accounts allowing you to easily review and categorize all your transactions. QuickBooks Desktop can also be connected to your bank, but it’s going to take a little more time and money both to set it up and keep it running.
5. Cost: Before 2019, QuickBooks Desktop was significantly less expensive than online since you only had to purchase the software once, and you did not need to buy it again each year unless there was some key functionality you wanted to operate with. This changed in 2019, however, with QuickBooks Desktop moving to a subscription model. If you have a pre-2019 version of QuickBooks Desktop you’ll save some $$ by sticking with it for as long as you can, but other than that, the difference in cost between the two softwares is not super significant.
6. Payroll: Both platforms offer payroll functionality, but QuickBooks Online payroll is reputed to be a little difficult to work with: especially if you need to make a change to something or do something outside their strictly defined method. QuickBooks Desktop Payroll works well and can be modified easily as needed. QuickBooks Desktop also has the ability to generate certified payroll reports which are related to prevailing wage. It is worth noting that you are not required to use QuickBooks Payroll if you use QuickBooks Online. You can use other services such as Gusto, which is a cloud based, easy to use payroll software that can integrate with QuickBooks if needed.
7. Inventory Management: QuickBooks Online and QuickBooks Desktop both have the ability to track inventory. QuickBooks Online inventory management is limited though – specifically missing the ability to create and track assemblies and Bills of Materials for individual projects. Just like with payroll though, you are not required to use QuickBooks for your inventory management just because you are using it for accounting. There are several inventory management softwares available, or you could even have your favorite software developers build you a custom system for your specific needs.
8. Job Costing and Reports: The most common reason I’ve heard for not upgrading to QuickBooks Online is the reporting. QuickBooks Online has come a long way since it was launched, however, and more than likely you’ll be able to pull all the reports you need from QuickBooks Online.
9. Integrations: Since QuickBooks Online is cloud based, it’s simply much easier to integrate with other services. QuickBooks Online has a store that allows you to integrate all kinds of different software with QuickBooks. It also has an api which allows integrating custom apps with QuickBooks. While it is possible to integrate with QuickBooks desktop, it’s going to be far more difficult, and your options will be limited.

What advantages does QuickBooks Online have?

• Cloud based - you can access QuickBooks Online from anywhere on any device.
• Works better for multiple users
• Easier to use
• Better banking integration
• Better integrations

What advantages does QuickBooks Desktop have?

• Better payroll
• Better inventory management
• Possibly better job costing and reports

Should you upgrade from QuickBooks Desktop to QuickBooks Online?

If you use QuickBooks inventory management and/or QuickBooks payroll, you are probably going to be better off sticking with QuickBooks Desktop unless you are open to switching to a different payroll provider and/or inventory management system. Otherwise it does look like the pros outweigh the cons for moving to QuickBooks Online, although there is the pain-of-change to consider as well! If you are looking to get your accounting online, a good first step might be to get in touch with an accountant who specializes in moving businesses to QuickBooks Online or other cloud based accounting software.

If I’m not using any accounting software, is QuickBooks Online or QuickBooks Desktop a better choice for me?

Unless you have your heart set on using QuickBooks Payroll or Inventory Management, you are almost certainly better off starting with QuickBooks Online. Being able to access it from anywhere on any device is a huge advantage, and you can go from 0 to sending your first invoice in less than 20 minutes.

From 10,000 feet, QuickBooks Online and QuickBooks Desktop look like they will be pretty similar, but when you get into the details, there are definitely some critical differences you’ll want to take into account, especially if you are currently using QuickBooks Desktop. If you’d like a video dive that goes even deeper than we’ve gone here, check out this video by Hector Garcia who puts out a ton of super in depth and helpful content around QuickBooks. He’s even got a spreadsheet he shares on his website that lists every single feature in QuickBooks Online and QuickBooks Desktop and whether or not it is supported: https://hectorgarcia.com/versus/