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Which version of QuickBooks Online works best with GovBooks?
Intuit, the makers of QuickBooks Online, offer several versions. The following versions all work fine but your selection will affect how you set up contracts, keep track of time, invoice customers, and determine labor and project costs. As a rule, as you upgrade to higher-level versions, you obtain more automation and processing speed and eliminate time-consuming supporting schedules maintained in Excel.
QuickBooks Online Simple Start:
QuickBooks Online Simple Start is the most basic version available. Although this version will work, I do not recommend this version because it lacks several features that will make your accounting life a bit easier. Only a single-user version is available, which may be fine for the smallest of organizations.
No accounts payable module
QuickBooks Online Simple Start does not have a Bill Management feature. DCAA and Grant compliance requires accrual-based accounting, which means that accounts payable will need to be entered into the accounting system.
No time tracking system or labor distribution module
QuickBooks Online Simple Start also does not have a time tracking feature. This can be done using another time tracking system or even Excel, but having a time tracking module in QuickBooks Online will allow you to create customer invoices for T&M contracts directly from the system. A time tracking system in QuickBooks Online will also allow you to create a Labor Distribution for labor costing, a DCAA and Grant requirement, by connecting QuickBooks Online to GovBooks. Without the time tracking module, you won't be able to connect to QuickBooks Time, any other 3rd-party timekeeping system, or post labor distribution using GovBooks.
No budgeting
QuickBooks Online Simple Start does not have a budget module. You will need to subscribe to the QuickBooks Online Plus or QuickBooks Online Advanced version for this feature.
QuickBooks Online Essentials:
QuickBooks Online Essentials is a step up from Simple Start and it is really all you need for DCAA and Grant compliance. Up to 3 users are supported.
Yes, it has an accounts payable module
You will be able to enter vendor bills and manage accounts payable, a DCAA and Grant requirement. An integrated bill pay feature is also a time saver.
Yes, it has a time tracking system
You will be able to enter time and create T&M invoices. You will be able to connect to QuickBooks Time. In addition, several other 3rd-party timekeeping systems are available. And, you will be able to post labor distribution using GovBooks.
No, it does not have a labor distribution system
DCAA and Grant compliance requires the posting of labor costs to separate general ledger labor accounts based on the type of labor in order to compute indirect rates, and the posting of direct labor costs to separate contracts. Unfortunately, the QuickBooks Online Essentials does not include a labor distribution module. However, connecting to GovBooks will correct this issue because GovBooks has a labor distribution module that posts labor costs to separate general ledger labor accounts and separate contracts directly to QuickBooks Online.
No, it does not have an inventory system.
If an inventory system is required for you company, you will need to upgrade to either the QuickBooks Online Plus or the QuickBooks Online Advanced version.
No budgeting
QuickBooks Online Essentials does not have a budget module. You will need to subscribe to the QuickBooks Online Plus or QuickBooks Online Advanced version for this feature.
QuickBooks Online Plus:
QuickBooks Online Plus includes everything in QuickBooks Online Essentials, plus a Projects module, which allows you to create a Labor Distribution using two different methods; Hourly Costs and Payroll Expenses. However, the Labor Distribution created by QuickBooks Online Plus is not DCAA and Grant compliant for salaried employees because it does allow labor costs to be posted to more than one general ledger labor account which prevents you from computing indirect rates, a DCAA requirement. Up to 5 users are supported.
Labor distribution not DCAA and Grant compliant
The Labor Distribution that is created is not DCAA and Grant compliant because it cannot post the labor cost to more than one general ledger account (a single wage account is used). It does post labor costs to projects, which is useful for most commercial companies and government contractors who do not need DCAA and Grant compliance. However, DCAA and Grant compliance requires posting to separate labor accounts based on the type of labor in order to compute indirect rates. Connecting to GovBooks will correct this issue by posting to more than one general ledger account and create a DCAA and Grant compliant Labor Distribution.
Project Profitability Reports are already available in QuickBooks Online Essentials
In QuickBooks Online Essentials, you can run profit and loss reports by Customer and Sub-customer, which can be used just like a Project. QuickBooks Online Plus does provide a dedicated module that organizes these type of reports, and it may be worth the added expense for this convenience. However, I do not recommend using Projects in QuickBooks Online Plus or QuickBooks Online Advanced due to its limitations that won't work well for most government contracts (see my article). GovBooks overcomes these limitation by providing Contract and Project reports at the level of complexity needed for government contracts.
Yes, it has an inventory system.
If you need an inventory system, you'll need either QuickBooks Online Plus or QuickBooks Online Advanced.
Yes, it has a budgeting system.
QuickBooks Online Plus allows you to enter both financial budgets and project budgets.
QuickBooks Online Advanced:
The Advanced version of QuickBooks Online includes everything in QuickBooks Online Plus. Larger companies can make use of its advanced features, which are many. I put this version in the category of a true enterprise system, allowing for up to 25 users. However, it is more than 3 times as expensive as QuickBooks Online Essentials, but for larger companies, it may be worth the added expense.
Custom Access Control
Although other versions of QuickBooks Online offers some control over access with limited roles and permissions, QuickBooks Online Advanced offers a very high level of precision in assigning roles and permissions to users.
Other Useful Features
Data sync with Excel, employee expense reports, batch invoices and expenses, exclusive premium apps, workflow automation, data restoration, 24/7 support and training, and revenue recognition.
GovBooks:
GovBooks is a web-based application that connects to QuickBooks Online to help you pass DCAA and Grant audits, maximize profits and win more government contracts. Without GovBooks, you'll need to use complicated and clunky Excel spreadsheets to pass DCAA and Grant audits.
Timesheets
GovBooks has a simple to use yet powerful Timesheets module that is tightly integrated with QuickBooks Online. GovBooks works with other 3rd-party timesheet systems but GovBooks Timesheets is better suited for government contracts.
Labor Distribution
QuickBooks Online will not create the Labor Distribution in a DCAA and Grant compliant manner, but GovBooks will do so when it is connected to your QuickBooks Online system.
Indirect Rate Computation
QuickBooks Online is not able to compute indirect rates and allocate indirect expenses to contracts, but GovBooks will take care of this DCAA and Grant requirement.
Contract Management
QuickBooks Online does not have a contracts module that tracks contract funding and backlog, but when you connect your QuickBooks Online system to GovBooks, you will have this capability.