99% of self-employed people don’t need full-strength accounting software. And that’s who QuickBooks Self-Employed is designed for.

Lots of people get QuickBooks Self-Employed and QuickBooks Online confused. That’s a real shame because, despite their similar names (and the fact that they’re both online), QBSE is a separate product with completely different capabilities.

To help you understand the differences, here’s a quick summary of what each program does and who it’s designed for:

QuickBooks Online (QBO)

  • In a nutshell, QBO is an all-purpose general ledger accounting system for small businesses.

  • What this means is that QBO is powerful and versatile enough to handle the full range of accounting functions most small businesses need. This includes basic tasks like bookkeeping, banking, and customer billing/invoicing to harder tasks like A/P and A/R, inventory management, and financial reporting.

  • In addition, QBO integrates with a wide variety of other products — like payroll services, POS systems, and third-party apps — and is therefore very scalable. It also has specific features that accountants need such as the ability to customize the chart of accounts, review and reclassify transactions, and make journal entries.

  • Last but not least, QBO comes in four different versions: Simple Start, Essentials, Plus, and Advanced. As a result, small businesses can choose whichever version of QBO suits their needs right now, then upgrade later if they want.

  • To learn more about the QBO lineup, click here: QuickBooks Online.

QuickBooks Self-Employed (QBSE)

  • In contrast, QBSE is a lighter, simpler, cheaper accounting app designed specifically for self-employed individuals. This includes freelancers, independent contractors, sole proprietors, and just about anybody who files a Schedule C with their personal tax return.

  • While QBO aims to do everything and be an all-purpose accounting program for small businesses, QBSE has limited capabilities and avoids complicated features on purpose. It allows you to set up bank feeds, categorize business vs. personal expenses, track mileage, and generate a basic P&L.

  • QBSE also integrates with Turbotax and was clearly created with non-accountants and do-it-yourselfers in mind. On the downside, it comes with no support from Intuit — so if you start using QBSE, you’re basically on your own.

  • To learn more about QBSE, click here: QuickBooks Self-Employed.

All in all, QBSE is an ideal product if you run your business through your personal checking account (which 90% of freelancers and self-employed people do) and you want a simple tool that will help you keep your business income and expenses organized. QBSE’s killer features include its ability to calculate quarterly estimated tax payments (something no other program does), and the fact that it lets you do most things straight from your phone or iPad (which makes it incredibly easy to use).

However, if you have a small business that requires a full range of traditional accounting capabilities (like A/P and A/R, payroll, inventory, and financial reporting), or if you’re planning to grow significantly in the future, then QBO will be a better choice right from the start. And since you can’t transfer data from QBSE to QBO or convert easily from one program to the other, it’s important to choose wisely.

Additional Resources

If you want to read more about the differences between QBO and QBSE, here’s a nice review from CarefulCents.