Restaurant QuickBooks Guide, 2nd Edition (PDF Format)
Chocolate or Vanilla Which Version of QuickBooks Is Right for Your Restaurant?
By John Nessel,
Restaurant Resource Group
Reprinted with permission from Restaurant Startup & Growth Magazine
In June 2005, I wrote an article for Restaurant Startup & Growth Magazine titled "Counting Your Beans With Confidence: A QuickBooks Primer for the Startup Restaurant." I noted that QuickBooks was the most popular accounting software for independent restaurants, an observation that was later confirmed by a RestaurantOwner.com survey.
In my role as a restaurant financial consultant, I rarely come across any other programs in use. While the dominance of QuickBooks is not in question in the independent restaurant community, the way it is used is changing dramatically. "Cloud computing," that is, Web-based software, is growing in popularity, and QuickBooks has been a leader in developing and aggressively promoting its online version, compared with the traditional desktop version of the software.
While Intuit (the maker of QuickBooks) first offered a Web-based version of QuickBooks back in 2008, it was slow to catch on. There were many reasons for this, including its sluggish response times when making entries and presenting information, the fact that it was not as user-friendly as the desktop version, the higher cost (monthly subscription vs. one-time purchase), and the fact that most folks were simply not comfortable using Web-based software at that time. As Bob Dylan famously said, "… oh, the times, they are a changing!" Intuit is now making a major push with its online version, and most knowledgeable accounting techies believe that this trend will be accelerated in the future.
So how do you know what is the best version for your restaurant? First, you need to be aware that even though the two versions share the name "QuickBooks," they are not the same program. Far from it actually. Unlike Microsoft Office 2016, which offers both a desktop version and a Web-based version that are identical products, QuickBooks Online was created from scratch with a very distinct look and feel compared with the original desktop version. It uses a different database structure, navigation, and even goes about performing basic accounting tasks differently than its desktop cousin. So let's be clear from the outset, QuickBooks online version is not simply a Web-enabled version of the QuickBooks desktop version. It's a unique program, that if you did not know better, you would assume was created by a totally different company. In most ways it's like asking if you prefer chocolate or vanilla. The answer can be very subjective.
So Let's Compare
Before you start the decision-making process, you need
to ask two key questions:
1. Who needs access to the data?
2. From where do they need to access the data? There are also other considerations, and I will try to give you an overview of these as well.
Who needs access to the data?
If there is only one person who needs access to the data then you can skip to the next section. If, on the other hand, there are multiple people who need access, and they are not all located in the same physical location (e.g., a bookkeeper who works from home, the on-site restaurant manager and an owner who is not always in the restaurant), then the online version will be better suited to your needs. Don't forget your accountant. If you receive regular or periodic support other than just at tax time, then the online version will more easily allow the data to be accessed without the need to send a back-up file. The online "plus" plan ($40/month) provides five user logins and additional user access can be purchased.
Where is the data?
The most obvious difference between the two versions is that the desktop version is installed on the hard drive of your computer, and you therefore need to be sitting in front of that computer to use it or to access financial information. The online version is a cloud-based program that can be assessed from any computer so long as you have an Internet connection. Of course if the Internet is down then so are you.
So the first obvious reason a restaurant owner might select the online version is to be able to access and input data from outside the restaurant. I remember doing much of my restaurant's bookkeeping from home in the mid-1990s, and I had to constantly make back-up copies of my QuickBooks file (on multiple floppy disks in those days), to move the data from the restaurant to my home office, and then back again. Not an ideal solution and one prone to making what could be a catastrophic mistake. This single feature of QuickBooks online, that is, having remote access to the data, is usually the main reason restaurant folks decide to go with the online version.
Needless to say, the speed of your Internet connection is critical, as even under the best of circumstances the online version is a bit slower than the using QuickBooks on the desktop.
The cost.The desktop version is purchased for a onetime fee (typically $200), and there are no additional costs until you decide to upgrade to a new annual release. The truth is that you can use the same desktop version for many years without any major downside, so the one-time cost might be a major decision point for some users. The online version is a subscription-based service with a typical monthly fee of about $40 (plus version). There are no additional costs, and software is updated automatically so you are always using the most current version. A simple three year comparison of the two products would therefore translate to $67 per year for the desktop version (assuming you did not upgrade) vs. $480 per year for the online version. For some that might be a determining factor, while for most the cost is not the driver of their decision.
One more cost consideration will significantly influence users that maintain more than one company file (e.g., a multiunit restaurant where each location maintains its own accounting file). In this case there is no additional cost if using the desktop version, as you can create as many company files as you like. As for QuickBooks online, a subscription can be used for only one company. So if you have, for example, three restaurants, you will need three QuickBooks online subscriptions.
Ease of use.This is a subjective consideration, and I can only offer my opinion. As a desktop user of QuickBooks since 1998, I am biased toward this version, but I have had many clients that use the online version, so I have had a fair amount of experience with it. With this in mind, I am clearly still a fan of the desktop version, and find it to be much more intuitive and easy to use. The user interface of the online version is, in my mind, not particularly easy to navigate. At this time I would not migrate to the online version unless remote access of my financial data was required.
Performance.QuickBooks online has been hindered by performance issues since it was introduced. If you were a desktop user moving to the online version you would immediately notice how long it takes to execute simple tasks, to refresh screen views as you navigate, and for your data to be presented. The newest release (code named "Harmony") is said to address these performance issues, and given Intuit's plans to make the online version its flagship product, I have no doubt that these issues will be satisfactorily resolved as time goes on.
Specific feature differences.While the vast majority of features and functionality are the same in both versions, there are some features that are available in the desktop version but not online. The same is true in reverse. The good news is that from the perspective of a typical restaurant operation, most of these differences involve features that you will never use. I will therefore mention only those that might be important for a restaurant user to consider when making the choice.
Available in the Desktop Version but not Online:
1. Balance Sheet by Class to track account balances of multiple locations in a single file
2. Advanced Excel Export to update existing exported reports
3. Compatible with Multiple Currencies
4. Ability to Collapse Rows in Financial Reports (this is a nice feature that instantly displays consolidated P&L information)
Available in the Online Version but not Desktop:
1. Reports that can be scheduled to be sent automatically via email
2. More than one Accounts Receivable or Accounts Payable entry for each Journal entry (this can be very helpful when using the Journal Entry method of entering Daily Sales)
3. Location Tracking, a secondary level of class tracking for restaurants with multiple locations and profit centers within each
Hosted Desktop Version
Some users are going to prefer the experience and/or features of the desktop version, but still desire the option of remote access. Luckily there is a solution. It's called Hosted QuickBooks, and the result is that the desktop version is accessible on the cloud using a third-party remote server (not Intuit's). The hosting company installs and manages the desktop version of QuickBooks with all your data files accessible on their company server. You access the data by logging onto their Web page or directly to their FTP server.
The companies that provide this service are called ASP hosts (application service provider). They are simply companies that have set up racks of servers, which they manage; allocating memory, hard drive space, security and user rights. Based on how much of the hosts resources or features you need, you will select a monthly plan that best suits you.
This is a great option for those who have been using the desktop version, are comfortable with it, and don't want to go through the retraining process of learning to use the online version. Moreover, your file does not need to be converted to be compatible with the online version because it's the same program simply moved from the local hard drive to an online host. Similar to the online version, you can now share the data with an outside bookkeeper, managers or owners who are not always in the same location, and your accountant.
One downside to using a hosted service is that the monthly cost might be a bit more than using the online version of the software. Aside from the additional cost of purchasing a license for your own copy of the program (and having to purchase again down the road when you want to upgrade), the infrastructure required by hosting companies is a bit more complex. With the online version there is a single application and data framework that is shared by all subscribers, whereas with a hosting service the company must manage each subscriber's program file individually. At the end of the day the satisfaction of the user may depend on how well the host can manage its individual needs.
Another potential problem occurs if multiple users simultaneously try to access the file. Unlike the online version, the desktop version is not designed to do this, so when a second user logs in they may be prohibited from completing a task until the first user logs off.
If you think that a hosted version of the desktop program is a good fit for you, how do you go about finding a good hosting company? My suggestion is to check out a few QuickBooks forums and search for a thread on QuickBooks Hosting. See what other folks have discovered and even ask questions that are relevant to your needs.
What's the Verdict?
I wish I could give you a simple answer but hopefully you now see that there are a lot of factors to consider when making the choice to go with the desktop or online version of QuickBooks. If you do not have a reliable or fast Internet connection, then the choice is probably simple. The same is true if only one person needs access to the data file and does not need to access the file from more than one location. The desktop version is most likely perfect for you. Otherwise you really need to access your needs and choose. Upshot: Vanilla or chocolate - you can't go wrong with either.
Click here to purchase the Restaurant Operators Complete Guide to QuickBooks