Lots of people get QuickBooks Self-Employed and QuickBooks Online confused.

That’s a real shame because, despite their similar-sounding names (and the fact that they’re both made by Intuit), QBSE and QBO are separate products with completely different capabilities.

To help you understand the differences, here’s a quick overview of what each program does and who it’s designed for. Since QBO has been around a lot longer than QBSE, we’ll start there:

QuickBooks Online (QBO)

  • In a nutshell, QBO is an all-purpose general ledger accounting system for small businesses. That means it’s powerful and versatile enough to handle the full range of accounting functions that most small businesses need — including things like bookkeeping, customer billing and invoicing, accounts receivable and accounts payable, inventory management, and complete 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 and CPAs need, like 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 now and 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, cheaper, simpler accounting app designed specifically for self-employed people. 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 be a full-strength accounting program for small businesses, QBSE has limited capabilities and avoids complicated features on purpose. It allows you to set up bank feeds, categorize your business vs. personal expenses, track mileage (if you want to), and generate a basic P&L.

  • QBSE also integrates with Turbotax and was clearly created with the DIY market in mind. On the downside, it comes with little or no support from Intuit — so if you decide to use QBSE, you’re basically on your own.

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

Which one is right for me?

That depends. If you’re a freelancer or sole proprietor with ultra-simple accounting needs, QBSE could be the ideal choice. It will help you keep your business income and expenses organized, track the amount of money your making, and stay on top of your quarterly estimated tax payments (a critical issue for self-employed people). It also lets you do most things straight from your phone or iPad, which makes it extremely easy to use.

However, if you have a small business with traditional accounting needs (like A/P and A/R, payroll, inventory, and full financial reporting), then QBO will be a better choice right from the start. QBO is also the better option if you plan to use third-party apps and/or grow your business significantly in the future, because it comes in multiple versions and is very scalable.

In either case, keep in mind that QBO and QBSE run on completely different platforms. You can’t transfer data or convert easily from one program to the other, so it’s important to choose wisely right at the start.

Additional Resources

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