QuickBooks Meets Web 2.0 QuickBooks' Web-based alternative lets you do your accounting online. Is it right for you?

Intuit's QuickBooks accounting software leads the U.S. small-business market with over 3.7 million users of its products: QuickBooks Simple Start for the customer with basic needs, QuickBooks Pro for expanded functionality (also available on the Mac), and QuickBooks Premier for businesses with complex inventory.

Yet all of these products share the limitations of PC-based software:

• You have to back up the data to a separate disk, preferably to a remote location.
• It's difficult to synchronize the data between the desktop PCs and laptops.
• Every two to three years, you have to go through an upgrade.
• Sharing data with colleagues and with your accountant requires complex coordination.
• The application takes up disk space and memory on your PC.

One way to sidestep these problems: Intuit's Web-based alternative, QuickBooks Online Edition. How does it compare? What are the benefits? What are the drawbacks? Is it for you? Let's find out.

Part I: Will online accounting work for my business?
Ask yourself whether online accounting fits the way you work.

Do you have Windows everywhere you work?
To run QuickBooks Online Edition, you'll need an IBM-compatible computer with Windows 98 or later, plus Internet Explorer 6 or 7 for your browser. Firefox users and Linux fans will have to look elsewhere for accounting solutions for the time being (try Less Accounting, Freshbooks, or GnuCash). Intel-based Mac users can use Boot Camp or other techniques to emulate Windows.

Are you ready to rely on broadband access?
Do a reality check: Ask yourself how you'd manage if a storm were to knock out your Internet connection for an extended period, especially if you're a home-based worker on the cable company's low-priority list. Or, if you manage your accounting chores from the road, on a plane or on a train, keep in mind that you'll have to save your receipts and timesheets until you're connected.

On the other hand, if your business records are safely kept online, you can worry about other things during a natural disaster. And if you're traveling, you can use any Windows-based PC at your hotel or client site to access your information without having to carry a laptop loaded with licensed software and your latest financial data.

Is QuickBooks Online powerful enough to support your business?
QuickBooks Online Edition borrows the simple "Money In/Out" model (see figure 1) from QuickBooks Simple Start, while still offering many of the advanced features of QuickBooks Pro. However, if you require inventory, job costing, purchase orders, progress invoicing, and pending sales, you'll have to stick to the desktop edition of QuickBooks for now.

Going Online Is a One-Way Trip
Are you willing to commit to working online-only?
Ideally, you'd be able to simply upload your QuickBooks file and use it online, and then download it to work offline. Unfortunately, that's not the way it works.

When you create a QuickBooks Online account, you're given just one opportunity to import data from a desktop edition of QuickBooks. It takes a few steps to upload your file, and then you have to wait for an email notification when your company data is ready. (The instructions promise a 24-hour turnaround, but I received notification within minutes.)

Going online should be considered a one-way trip. You can transfer most of your QuickBooks desktop data to online (see the help file for details), but if you want to go from online to desktop, you're going to lose configuration data and you'll have to start a brand-new QuickBooks file. Thus, it's certainly possible to transfer to a desktop version, but it's akin to switching accounting packages rather than switching versions.

Part II: Is online accounting a good deal?
Several variables go into the financial decision. I've created an online spreadsheet (using Google Docs & Spreadsheets) that can help you to understand the various factors involved. Prices can change without notice.

What does Online Edition cost?
The first month is free, and Intuit is currently offering a $9.95 per month introductory price for the new enrollments. From there, the least expensive option is the "Base" plan ($19.95 per month). Optional services include Online Payroll (add $14.95 per month); the "Sales Package" (add $9.95 per month) for expense tracking and time tracking; and the "Business Package" (add $7.95 per month) for class tracking and budgeting. Or, you can get the fully-loaded "Plus" plan ($39.95 per month), which includes all of the above. These plans support three users, but additional logins are also available (see below).

How many people at your company require access?
The more users you can bring onto the platform, the better the deal.

QuickBooks Pro and Premier top out at five users, with each user requiring a separate software license and access to a shared file on a network. By contrast, QuickBooks Online Edition supports up to 20 users. The base plan supports three users, and upgrades bring you to either 10 or 20 for an additional charge (add $10 or $30 per month, respectively). Each subscription also includes one free accountant login.

If you're jointly keeping the books with your business partners, QuickBooks Online includes a powerful audit feature ("Activity Log") that shows every user login and activity. The company administrator can also grant limited access to designed employees for accounts payable, accounts receivable, or reports-only.

Take Your Pick of Features
Which features do you need?
QuickBooks Online intentionally bypasses the lengthy start-up interview. Instead, as you explore the features of the software, you'll be asked various questions about which functions you need. (See figure 2.) The answers to your questions help determine which add-ons QuickBooks Online puts into your shopping cart. Just be careful: Answering "yes" indiscriminately to the interview questions may end up subscribing you to the "Business Package" or "Sales Package" for features you can live without.

Having said that, the packages can be worthwhile. For instance, the Sales Package includes a "Time Tracking Only" user type, allowing a small company to invoice based on employee-entered timesheets. As long as you have no intention of exceeding 20 employees, it's a worthwhile option to consider QuickBooks Online for your integrated timesheet as well as accounting software.

Are you diligent with your online backups?
With the Online Edition, there's no need to worry about backups or on-site disaster recovery, since the data resides safely on Intuit's servers. For similar peace-of-mind, QuickBooks PC users have to subscribe to the QuickBooks Online Backup Service for $49.95 per year.

How reliant are you on technical support?
QuickBooks Online Edition includes free technical support, a perk that usually costs $299.95 per year (or $249.95 with the purchase of a new desktop edition of QuickBooks) bundled with the Online Backup Service.

How often do you upgrade?
With desktop software, there are several reasons to avoid the upgrade: It's expensive, it's a hassle, and you're not sure whether the new features are worth it.

It's different with online software. Since new features can be released as they're ready, you can evaluate them at your own pace. Plus, aside from making sure you have the right browser, there's no installation or upgrade involved.

The only remaining hurdle is the price. If you conserve money by purchasing new versions only when absolutely necessary, pay-by-the-month may not be for you. Intuit supports the latest version of its desktop software plus the prior two annual editions, giving you a maximum of three years to use a supported product. After that, the discontinued products still function, albeit without online banking, online billing, payroll, or support.

A More Complete Financial Picture
Part III: What else is different?

Do you bank online?
QuickBooks Pro and Premier download your bank data to your PC, but QuickBooks Online takes a slightly different approach. (See figure 3.) First, you set up connections to your online bank accounts by entrusting your login information to Intuit. Then, each night, Intuit automatically logs onto your bank account and downloads your latest transactions. As a result, your financial picture remains consistent and up-to-date without explicit action on your part. As the service evolves, even greater integration with banking capabilities may be possible.

Are you ready to join an online community?
The home page of QuickBooks Online includes links to the Online Message Board, a community of other QuickBooks Online users. In the future, expect QuickBooks Online to include more community-oriented features. Although Intuit isn't ready to announce anything just yet, here's a hint about what's coming next. "Think about the Amazon recommendation engine, that's based on looking in aggregate at 'What are all these people buying?'," suggests Adrian Fung, group manager for QuickBooks. "In the future, we're thinking about how to make [data] visible in an aggregate way."

Do you want to influence the development process?
If there's something specific keeping you from switching to Online Edition (e.g. Mac/Firefox access, purchase orders), here's how to influence the list of development priorities: Just register for the 30-day test, go to the Help Index, search for the keyword "features," and select the topic: "Features that aren't available." From there, you can click the feedback link to leave a message. You can also opt to receive an email alert if and when your desired feature(s) are complete.

- Ivan Schneider recently set out to start his own business, ivantohelpyou, helping others with theirs. You can write to him here.

(c) 2000-2007 CMP Media LLC. All rights reserved.