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QuickBooks is the most popular small business accounting software businesses use to manage income and expenses and keep track of the financial health of their business. You can use it for invoicing customers, paying bills, generating reports, and preparing taxes. The QuickBooks product line includes several solutions that work great for anyone, from a freelancer to a midsized business.

QuickBooks offers several alternatives, but we recommend QuickBooks Online for most new businesses. You can try QuickBooks Online for free with a 30-day trial that doesn’t require a credit card.

9 Ways Small Businesses Use QuickBooks

Small business owners typically use QuickBooks to manage their invoices, pay their bills, and track their cash flows. They also use it to generate month- and year-end financial reports as well as prepare for quarterly or annual business taxes. Some business owners manage QuickBooks themselves while others prefer to use an in-house or outsourced bookkeeper.

1. Create and Track Invoices

You can create invoices easily and either print them or email them to customers. QuickBooks will record the income and track how much each customer owes you automatically. You can view the number of your outstanding invoices—known as your accounts receivable (A/R)—as well as how many days they’re overdue by running an A/R aging report. Below is a sample A/R aging report from QuickBooks Online:

A/R Aging Summary in QuickBooks Online

2. Keep Track of Bills & Expenses

QuickBooks keeps track of your bills and expenses automatically by connecting your bank and credit card accounts to QuickBooks so that all of your expenses are downloaded and categorized. If you need to track a check or cash transaction manually, you can record it directly in QuickBooks in a few minutes.

You can also enter bills into QuickBooks when you receive them so that QuickBooks can help you track upcoming payments—or A/P. You can ensure that you pay your bills on time by creating an A/P report. This report will provide you with the details of your current and past-due bills. Below is a sample A/P aging report from QuickBooks:

A/P Aging Report in QuickBooks Online

3. Print Financial Statements for Your Business

By managing all of your cash inflow and outflow activities in QuickBooks, you can print financial statements that provide useful information about how your business is performing. Lenders often require financial statements when you apply for a small business loan or line of credit.

You can produce these three primary financial statements in QuickBooks with a few clicks:

• Profit and Loss report
• Balance Sheet report
• Statement of Cash Flows

Below is a brief description of each of these reports, along with a snapshot of what they look like in QuickBooks Online.

Profit and Loss Report

The Profit and Loss report will show you how profitable your business is by summarizing its income minus its expenses. The report shows you the bottom line net income (loss) for a specific time period, such as a week, a month, or a quarter.

Profit and Loss report in QuickBooks Online

Balance Sheet Report

The Balance Sheet report shows what your business owns (assets), what it owes (liabilities), and its net worth (equity) at a particular point in time.

Balance Sheet report in QuickBooks Online

Statement of Cash Flows

The Statement of Cash Flows in QuickBooks will show you all of the activities that affect the operating, investing, and financing cash inflows and cash outflows for your business.

Statement of Cash Flows in QuickBooks Online

4. Track Employee Time & Expenses

Employees or subcontractors can enter their own time as they progress through the day, or a bookkeeper can enter their weekly time if the employee submits a manual timesheet. Time entered and assigned to a customer will be available to add to the customer’s next invoice. Any expense entered can be marked as billable and assigned to a customer. Just like time, these billable expenses will be available to add to the customer’s next invoice. You don’t need the payroll add-on to track employee time for billing purposes.

5. Payroll

Payroll is an area that you don’t want to skimp on by trying to do it manually. Mistakes made in calculating paychecks can result in steep penalties and unhappy employees. QuickBooks has its own payroll function that can automatically calculate and run payroll as often as you need. When you enter employee time as discussed above, the hours not only flow to your invoices but also to the payroll module. This way you can be confident that every hour you pay your employee is also considered for billing to a customer.

The best thing about using QuickBooks payroll is that it’s integrated with QuickBooks so that your financial statements are always up to date as of the latest payroll run. The purchase of a QuickBooks Payroll subscription is required to run payroll, but you have several levels of service to choose from to fit your needs.

Running your payroll through QuickBooks will allow you to:

• Pay employees with a check or direct deposit
• Calculate federal and state payroll taxes automatically
• Have QuickBooks fill in the payroll tax forms for you
• E-pay your payroll taxes directly from QuickBooks

Here’s a video link from Intuit on how QuickBooks small businesses use QuickBooks Payroll:

5. Track Inventory

QuickBooks can track the quantity and cost of your inventory. As you sell inventory, QuickBooks will allocate a portion of your inventory to the cost of goods sold (COGS) automatically, which is an expense account that reduces your income. This allocation is a requirement for calculating taxable income and very cumbersome to do by hand. QuickBooks can also remind you to order inventory automatically when quantities are low.

Below is a sample Inventory Valuation Summary report from QuickBooks Online. This report shows a list of your inventory products, quantity on hand, average cost, and their total value:

Inventory Valuation Summary report in QuickBooks Online

6. Simplify Taxes

Perhaps the most important thing QuickBooks can do for your small business is to simplify tax time. By far, the largest headache in preparing a tax return is compiling your income and expenses. If you use QuickBooks during the year, all you need to do at tax time is print your financial statements. Better yet, with QuickBooks Online, you can invite your tax preparer to access your account directly so that they can review your numbers and print whatever information they need to prepare your return.

7. Accept Online Payments

One of the best ways to improve your cash flow is to offer customers the option to pay their invoices online. You can add QuickBooks Payments (formerly known as Intuit Merchant Services) so that customers can pay online directly from their emailed invoice. QuickBooks Payments is similar to other merchant services. However, because it’s integrated completely within QuickBooks, the sale, credit card fee, and cash deposit are all recorded automatically as they occur.

8. Scan Receipts

Another key to making tax time a breeze is being able to organize your receipts in QuickBooks. All QuickBooks Online subscribers can download the QuickBooks app to their mobile device for free, take a picture of a receipt, and upload it to QuickBooks Online in just a few minutes—no more lost receipts or manually matching up receipts with downloaded banking transactions. QuickBooks allows you to attach a receipt to the corresponding banking transaction. You can upload an unlimited number of receipts to QuickBooks Online as the receipts are stored in the cloud along with your data.

Receipt capture in QuickBooks Online Mobile App

9. Track Mileage

Many self-employed and employee/owners use their personal vehicles for business purposes. This provides a generous tax deduction of 58.5 cents per mile for 2022. However, to receive the deduction, you’re required to keep a record of the date, miles, and purpose of your trip.

QuickBooks Online makes this incredibly easy. Its mobile app will use the GPS in your phone to automatically sense every time you’re in a moving vehicle. Then, you can review your trips, classify them as personal or business, and mark them as billable to a customer. Billable mileage expenses will then be available to automatically add to the next invoice you create for that customer.

QuickBooks Options & Pricing

QuickBooks comes in both a cloud-based online program and a traditional desktop program. You can read about the pros and cons of each platform in our QuickBooks Online vs Desktop comparison. Most of the online and desktop versions will perform the tasks discussed above, but they come with a wide variety of advanced features and a wide range of prices.

QuickBooks Plan Updates for 2022 Desktop Versions

QuickBooks Desktop: Starting in 2022, Mac, Pro, Premier, and Enterprise will only be available via an annual subscription. The annual subscription includes free upgrades, data backups, and QuickBooks’ newest features.

QuickBooks Online

QuickBooks Online is a cloud-based product that doesn’t require software installation. This QuickBooks product is available in multiple subscription levels, including Simple Start, Essentials, Plus, and Advanced. It’s ideal for any business that doesn’t have complicated job-costing requirements. QuickBooks Online allows you to access your data from any computer with an internet connection by using your secure login.

Visit our QuickBooks Online comparison to learn more about the available versions.

QuickBooks Desktop

QuickBooks Desktop comes in six versions: Pro, Pro Plus, Premier, Premier Plus, Enterprise, and QuickBooks for Mac. Each requires you to install software on your computer. QuickBooks Pro will work well for most small businesses that don’t manufacture products and prefer a desktop solution.

QuickBooks Premier is ideal if your business falls into one of these industries: manufacturing, contractors, retail, or nonprofit. QuickBooks Enterprise is for large enterprises. These industry-specific versions of QuickBooks Desktop include a custom chart of accounts and industry-specific reports.

The Plus versions of Pro and Premier are sold as annual memberships instead of a one-time purchase. Your annual membership includes the new edition each year, unlimited customer support, and off-site backup of your company data.

We break down each of these products to help you understand the various versions in our QuickBooks Desktop comparison article.

Moreover, you can be more productive with QuickBooks Desktop by getting a hosting provider. QuickBooks hosting lets you access your Desktop software anywhere through a remote server. Check out our list of the best QuickBooks hosting providers.

QuickBooks Self-Employed

QuickBooks Self-Employed is the ideal product for freelancers, real estate agents, and independent contractors like Uber and Lyft drivers. Similar to QuickBooks Online, it’s a cloud-based product that can be accessed with your secure login from any computer with an internet connection. It includes unique features that aren’t available in QuickBooks Online or QuickBooks Desktop like the ability to track business and personal expenses from the same bank account and transfer data to TurboTax.

QuickBooks Self-Employed will calculate your estimated quarterly tax payments and remind you when they’re due. There are three QuickBooks Self-Employed pricing plans from which to choose: Self-Employed, Self-Employed Tax Bundle, and Self-Employed Live Tax Bundle. To learn more, read our QuickBooks Self-Employed guide.

If you’re a startup business with plans for expanding your workforce, QuickBooks Self-Employed isn’t the ideal QuickBooks product for you. QuickBooks Self-Employed cannot be upgraded to other QuickBooks versions.

QuickBooks for Mac

QuickBooks for Mac is the only QuickBooks desktop product available for Mac users. This edition is very similar to QuickBooks Pro, and it works well for most small businesses that don’t manufacture products. Check out our article on QuickBooks for Mac to learn more.

Other QuickBooks Products

Being one of the top accounting software providers in the market today, QuickBooks offers supplementary products to augment your overall QuickBooks experience. These include:

• QuickBooks Online: Keep your books organized in the cloud with QuickBooks Online, the fast-growing cloud-based version of QuickBooks.
• QuickBooks Payroll: Manage your payroll easily with QuickBooks Payroll. Track employee hours and billable time effortlessly with QuickBooks Payroll and QuickBooks Online.
• QuickBooks Live: Do you need help with keeping your books? QuickBooks Live is an online bookkeeping service wherein you can get a ProAdvisor to work with your bookkeeping needs.
• QuickBooks Payments: Integrate payments seamlessly on QuickBooks Online through QuickBooks Payments. Get paid easily and process online payments effortlessly.
• QuickBooks Time: Formerly known as TSheets, QuickBooks Time offers time-tracking features for employees for tracking client or project billable hours.
• QuickBooks Capital: Get additional financing options up to $100,000 with QuickBooks Capital.

Learn more about how QuickBooks’ suite of products can help businesses in many different ways.

Bottom Line

QuickBooks is the most popular small business accounting software. It comes in a variety of editions, both online and installed on your desktop computer. QuickBooks includes features that allow you to keep track of your income and expenses, pay your employees, track your inventory, and simplify your taxes.