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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.
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Simple Start:
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The Simple Start version of QuickBooks Online 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.
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No accounts payable module
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. This can be done manually in Simple Start by using a "zero expense" and "items" or "journal entries", but having an accounts payable module will make your accounting life easier, and I recommend upgrading to a higher-level version.
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No time tracking system or labor distribution module
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. Also, without the time tracking module, you won't be able to connect to QuickBooks Time, a DCAA and Grant compliant timekeeping system, or any other 3rd-party DCAA and Grant compliant timekeeping system.
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No budgeting
Simple Start does not have a budget module. You will need to subscribe to the Plus or Advanced version for this feature.
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​Essentials:
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The Essentials version of QuickBooks Online 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.
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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.
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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, a DCAA and Grant compliant timekeeping system. In addition, several other 3rd-party DCAA and Grant compliant timekeeping systems are available.
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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 Essentials version of QuickBooks Online 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. Otherwise, without GovBooks, a manual Labor Distribution can also be computed and entered manually into QuickBooks Online Essentials.
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 Plus or the Advanced version.
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No budgeting
Essentials does not have a budget module. You will need to subscribe to the Plus or Advanced version for this feature.
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Plus:
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The Plus version of QuickBooks Online includes everything in 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 (see below for solutions to obtain compliance). Up to 5 users are supported.
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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. A manual Labor Distribution can also be computed in Excel and entered manually into QuickBooks Online Plus.
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Project Profitability Reports are already available in the Essentials version
In the Essentials version, you can run profit and loss reports by Customer and Sub-customer, which can be used just like a Project. The Plus version does provide a dedicated module that organizes these type of reports nicely, and it may be worth the added expense for this convenience. GovBooks also provides Contract and Project reports if it is connected to any version of QuickBooks Online.
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Yes, it has an inventory system.
If you need an inventory system, you'll need either the Plus or Advanced version.
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Yes, it has a budgeting system.
The Plus version allows you to enter both financial budgets and project budgets.
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Advanced:
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The Advanced version of QuickBooks Online includes everything in 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 Essentials, but for larger companies, it may be worth the added expense.
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Custom Access Control
Although other versions of QuickBooks Online offers some control over access with limited roles and permissions, the Advance version offers a very high level of precision in assigning roles and permissions to users.
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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.
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​​GovBooks:
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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. Although you can obtain DCAA and Grant compliance with QuickBooks Online and the help of complicated Excel spreadsheets, you will appreciate the time saving convenience and automation provided by GovBooks.
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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.
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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.
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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.