Don't Buy QuickBooks -- QuickBooks vs. Quicken

Quickbooks is a great product if it fits your business, but, most business could use a simpler product - Quicken- which is faster to learn and costs less.

Quicken and Quickbooks are registered trademark of Intuit. I am sure that they have better name recognition the most of the Presidential Candidates.

My goal is to make sure that the right person gets the right product.

Who should use Quicken?

You know the old saying, "to err' is human but if you really want to mess thing up you need a computer."

For many small businesses, Quickbooks is the enabler that allows you to really mess things up.

How many men go into business and expect their wife to be the bookkeeper? The fact she has no bookkeeping experience doesn't seem to be a factor in making that decision. This often leads to all kind of marital problems. Quicken my be good for you marriage!

Quicken can be used for:

  • Cash business
  • With some adjustments, small business on the accrual basis
  • Restaurants
  • Professional practices like Doctors, Lawyers, Consultants etc.
  • Small contractors and other service businesses
  • Rental properties


Quicken, Quickbooks and most software providers keep updating their programs. The problem with this is that often they are "fixing" something that just is not broke. The additional features gives the unsophisticated user more ways to really screw things up.

In my opinion, anyone who does not know the difference between an asset and an expense, or a debit and a credit should not use Quickbooks. If they do not know whether sales should have a debit of credit balance (the correct answer is credit), they will have a hard time with Quickbooks because they are being ask to learn a basic bookkeeping and a computer system at the same time.

For people who have never had bookkeeping training Quicken may be the answer. Ask your accountant if Quicken could work for you.

Quicken is Inexpensive

There are several versions of Quicken, all of which have a basic checkbook program. It is this basic checkbook program that we are interested in, so, you can purchase the most basic quicken for less that $30.

Make sure you print out detailed summaries monthly. If your system "blows up" you just start with those totals. Don't worry about support. It that price you can always buy another.

Quicken can print your checks. Computer printed checks look very professional and having the computer print check can save time.

What Quicken Cannot Do

Quicken cannot track accounts receivable, accounts payable, or inventory, that is predominantly used for cash businesses.

If Quicken is not for you, the next program to consider is Quickbooks.

Many professionals have their own manual system for tracking accounts receivable. For example a lawyer may have very few receivables so he can keep track of them manually.

Many business do not use a computer to keep track of inventory; they just take an inventory once a year.

How to use Quicken in Small Business that is on the Accrual Businesses

Small businesses can use Quicken even if they are on the accrual method. They first use Quicken to track their cash receipts and disbursements. They then give their accountant:

  • The year end inventory figure
  • Total accounts receivable at the end of the year
  • Accounts payable at the end of the year, subtotaled by expense (For example; the total accounts payable may be $2,000 of which $1,000 is for merchandise purchased, $500 is for utilities, and $500 is for subcontractors)

The accountant then makes the necessary adjustments to convert the Quicken data from cash basis to accrual basis.

Your Bookkeeping Goals

The goals of a simple bookkeeping system is to provide a summary of the funds that came into the business (cash receipts) and the funds that went out of the business (disbursements). The summary must meet the following standards:

  • It must balance! By that I mean:


Beginning Book Balance + Cash Receipts - Disbursements = Ending Book Balance


If the above formula is not true, there is a problem which must be found.

With Quicken this should not be a problem.

  • The check book balance must be reconciled with the bank. Generally there are some checks that have not cleared. Also there may be a deposit that was not yet made or did not show up in the bank. At the end of the year all revenue should be entered in Quicken even though you may not take the last day's sales to the bank until the first day the following year.


Categories or Accounts

All deposits and disbursements must be charged to a category. Accountants and bookkeepers often refer to the categories as "accounts." It appears that Quicken's writers felt that this is less confusing. They use the word "account" to mean bank account or cash account.

What accountants refer to a "chart of accounts" Quicken refers to as "list of categories."

There will be a list of categories already in Quicken. You may have to set up your own list of categories. You may find it useful to hide the categories already in Quicken.

Please consider the following categories:

Sales
Rental income
Capital Contributions
Loans received
Interest income
Equipment
Furniture and fixtures
Leasehold improvements
Buildings
Land
Direct labor
Subcontract
Materials and supplies
Purchases for resale
Consulting
Travel
Payroll taxes- FICA
Payroll taxes- unemployment
Worker's compensation insurance
Rent
Utilities
Telephone
Equipment rental
Small tools
Repairs and maintenance
Office supplies
Legal and accounting
Insurance
Medical insurance
Contributions
Licenses
Dues and Subscriptions
Postage
Meals
Interest
Owner's draw

Cash Based Profit and Loss Statement

Certain items like loan, owners draws, and capital contributions are not income or expense. With Quicken you will have to call them income or expenses. However, if you check the box for tax reporting when you set up a category you will be able to get a tax reporting summary that is really a cash based profit or loss.

I would recommend that your accountant be given both the banking summary and the tax reporting summary. You want him to review all the transactions. You would not want to miss an item because the tax reporting box was not checked when you set up the category.

Quicken Can Record Complicated Transaction

Quicken has the ability to record rather complicated transactions by using the split transaction feature.

For example: Assume you are making a deposit for $ 5,200. It consists of $5,000 in sales (at full price) but your customers gave you coupons of $200 and sales tax of $400. A the following split transaction could be use

Sales
$5,000.00
Sales tax
$400.00
Coupons
($200.00)
 
---------------------------
Deposit
$5,200.00
 
==============
 
 

Another example: Assume you write a payroll check for $673.50. It consist of Gross wages of $1,000 less: FICA and Medicare of $76.50, Federal withholding of $200, and state withholding of $50. The entry for the check would be:

Wages
$1,000.00
FICA and Medicare
($76.50)
Federal Withholding
($200.00)
StateWitholding
($50.00)
 
 
 
---------------------------
 
$673.50
 
==============

Credit Cards Purchases

Quicken allows you to set up credit cards just like a bank account. If you have a credit card that is used for business this is a nice feature.

If you just occasionally make a credit card purchase, It is not necessary to do this. Just write a check to yourself for the item you used your personal credit card to purchase.

Reports

It is easier to understanding what you are doing it you print out your reports. You can see how one report flows into another.

At a minimum you should print out the following reports periodically:

  • Banking Summary
  • Transactions
  • Bank reconciliations
  • Itemized categories (expanded to show all transactions)


Back Up

Be sure to back up you files. Also, the reports you printed out serve as a back up. It is a good idea to keep a back up off premises in case of a catastrophe.

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Comments 7 comments

freecampingaussie profile image

freecampingaussie 5 years ago from Southern Spain

Excellent hub ! I found you while hubhopping !


sarasotadui profile image

sarasotadui 5 years ago from Florida, USA

Nice ideas man! Very informative.. Thanks for informing us about Quickbooks.


cyoung35 profile image

cyoung35 5 years ago from Corona, CA

I agree that if you don't have inventory and you're just a service type business Quicken would be easier than Quick Books. We use Quick Books because we carry inventory and track account receivables but we don't use half of the features that it offers. To me the extra features are not needed and if you set it up wrong from the start you're creating a lot of work and possibly money to fix it. Great inforamation, maybe this will help someone save some money on their accounting software.


Weekend Reader profile image

Weekend Reader 3 years ago

Many small businesses would be able to just use a simple spreadsheet, but they don't think that's formal enough. I've seen bookkeepers make a hash of QuickBooks. Quicken is definitely software that more small businesses should consider.


small business owner 3 years ago

Quicken is a very good software and have been using it for years


Julia 3 years ago

Excellent post. Quickbooks are a very good solution, and very popular. some people forget that there are other things on the market. I am leaving here a link to a comparison table between Quickbooks and Quicken:

http://bit.ly/162a2lH

You might also be interested in checking the Accounting Category from GetApp. We have listed more than 250 solutions. You can use filter to get better results and find exactly what you are searching for:

http://www.getapp.com/accounting-software


Lora Sims 8 months ago

I always choose http://www.quickencoach.com/ quicken personalized training over books.

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