QuickBooks can be a vital tool for small business owners, office managers, or anyone who needs to log financials and back-office tasks. It’s so important that we actually train our clients in how to use QBO (QuickBooks Online) during our onboarding process. We feel it's an invaluable tool for our clients.
That said, it doesn’t do everything – and if you’re a small business owner you might have some questions about the differences between working with a CPA firm and using QuickBooks on its own. How do you decide when it’s time to hire a CPA and when it’s not? Here’s what you, as a business owner, should know.
First of all, let’s clarify the different components of QuickBooks. Like we said, we do recommend that you use QuickBooks Online. But, what is it? In a nutshell, QBO is cloud-based accounting software. QBO also allows real-time collaboration and access to your QuickBooks file from any device.
What is QuickBooks Live bookkeeping?
If you’re a small business owner or office manager, you may be well aware of Intuit’s QuickBooks software, which allows you to log, manage, and view your business’s cash flow, assets, liabilities and equity. In recent years, QuickBooks has expanded that service with QuickBooks Live Bookkeeping, described on their website as: “Have a bookkeeper categorize expenses, reconcile accounts, and close your books with guaranteed accuracy, so you know where your business stands.”
So, does QuickBooks actually offer a full alternative to getting a CPA for your business? Well, not exactly. Here’s what QuickBooks can help with – and what they can’t.
What’s included with QuickBooks Live
Intuit says that QuickBooks offers “live full-service bookkeeping” but what does that mean exactly? Well, for starters, you’ll have one of their bookkeepers assigned to your account.
Next, they’ll do something very similar to an onboarding process. They call it the “clean up” phase where they’ll connect your bank accounts and teach you the basics of QuickBooks. If you've already been using QuickBooks – and with your active participation in the process – that assigned bookkeeper may be able to complete the cleanup in as little as 30 days after they've received of receiving all necessary documentation from you.
The bookkeeper will categorize your transactions. Your bookkeeper can also close your books and prepare a trial balance. They might send a P&L statement or balance sheet, DEPENDING on your level of service.
What’s not included in QuickBooks Live Full-Service Bookkeeping?
If you’re used to a CPA, you might be surprised to find that there are some features from “full-service” that aren’t included.
- They won’t provide financial advisory services
- No tax advice
- They will not facilitate the filing of income or sales tax returns
- They will not create or send 1099s
- They will not manage payroll. (payroll is available as an add-on)
It's also good to know ahead of time that some bookkeepers are only available for a set number of hours or days per week.
How much does QuickBooks Live cost?
QuickBooks Live costs between $200 - $400 a month, depending on your tier of service. There may be additional add-ons (like full-service payroll) that could push it as high as $600. Is it worth it? Well, let’s compare what it might look like to work with a CPA.
What a CPA does for your business
A CPA firm recognizes the importance of accurate books, but ultimately their greatest strength is in an advisory role. Once they help you get your books squeaky clean (more on that in a minute), they’re going to offer you advice. Typically, a good CPA hire will be familiar with the industry your company works in and will have seen most scenarios that might crop up for your business.
This highlights an important feature of a CPA: We match you with one of our CPAs based on your needs and the CPA’s knowledge of – and experience with – your industry. We always say a small business needs three best friends: their lawyer, banker, and accountant. These are the key players who support what you do. That’s because as a business owner your passion is rarely the books – that’s a CPA’s job.
A CPA will onboard you (similarly to QuickBooks, though the process will ultimately be tailored more to your experience), help you get your books clean, and then - this is a big difference - help you PLAN where you want your business to go. Yes, this will absolutely include a tax plan, but even more than that, they’ll help you understand the ins and outs for your business so you can better plan for meaningful growth.
That can be HUGE when things like loans come up. When you go to a bank for a loan they’re going to look at bank statements, tax returns, financial statements, and other documents to know that you’re a good risk. An accountant will help you understand those ratios in addition to making sure the numbers are right.
How much does a CPA cost?
It’s hard to put an exact number on this, since every firm is different. Most clients we work with have around a $500-650 monthly fee. That means that typically for us it makes the most sense for us to work with folks who have greater than 500K in annual revenue.
Which is better, a CPA or QuickBooks Live bookkeeping?
It’s not necessarily a better or worse scenario. So let’s talk about who should go for either product:
You should get QuickBooks Live Bookkeeping if… you’re a small business with less than 500k revenue, you’re a startup, or if you’re a sole proprietor running an Ecommerce business.
You should hire a CPA if… you’re a small business with more than 500k revenue, you need help planning your business's growth, you’re looking to potentially get a business loan, or most importantly, you want tax and business advice to help you proactively manage the business versus the business managing you.
We hope that helps clear up some things! As always, if you have a question about any of this information, we’d be happy to talk it through with you.