QuickBooks Desktop to be Phased Out
Should You Convert to QuickBooks Online and GovBooks Now?

Intuit, the makers of QuickBooks, has announced a phase-out plan for QuickBooks Desktop. If you are already using the online version of QuickBooks, no worries; you will not be affected. This pertains only to users of the Windows or Mac versions that install on your local, remote or virtual server.

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Although the phase-out period is expected to take a while (timeline is not fully disclosed at this point), there is now a start date (August 2024) with a step-by-step phase out plan designed to smooth the transition to QuickBooks Online.

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This article provides you with several options to consider for your government contracting business with the associated advantages and disadvantages of the current options. But first, let's review the current phase out plan.

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QuickBooks Desktop Phase-out Plan:

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Starting in August of 2024, no new subscriptions to QuickBooks Desktop Pro or QuickBooks Desktop Premier will be sold by Intuit. Existing subscribers to Desktop Pro or Premier will be allowed to renew their annual subscription, for the time being. This means that if you are starting a new company, or wanting to use Desktop Pro or Premier for the first time, after August 2024 you will not be able to do so. Intuit has not indicated when existing subscriptions will no longer be renewable, but they do warn to get ready. So, eventually, Desktop Pro and Premier will be phased out for everyone to include existing subscribers.

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QuickBooks Desktop Enterprise will be unaffected, for now. After July of 2024, new subscriptions for Desktop Enterprise will still be sold by Intuit. However, Intuit has not indicated that it would continue to support Desktop Enterprise, forever, and given that it is based on Windows Server technology, you can expect an announcement at some point in the future that Desktop Enterprise is to be replaced by the online version, QuickBooks Online Advanced. So even if you are a Desktop Enterprise subscriber, get ready.

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Here a link to Intuit's announcement. Expect additional announcements starting in February:

 

QuickBooks Desktop to stop selling to new U.S. subscribers

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Please read the fine print and note the * which says "Availability, terms, conditions, pricing, special features, and service and support options subject to change without notice." So, at some point, expect a change to stop selling QuickBooks Desktop altogether.

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Your Options:

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It is not surprising that Intuit is encouraging us to move onto the online version due to the cost savings and efficiencies they obtain. And there are advantages for the QuickBooks user as well. Many users now use remote desktops running on virtual machines to host their QuickBooks Desktop application and are therefore already in the cloud environment. Performance can be negatively impacted for QuickBooks Desktop after a new Windows update is installed on a virtual machine, resulting in downtime for many users. To improve the user experience, QuickBooks Online eliminates downtime due to software updates, the need to manage software updates, data backups and dedicated remote virtual servers. Many companies will experience significant cost savings and time efficiencies by converting to QuickBooks Online.

 

Option 1: Stay on QuickBooks Desktop as long as possible

If you already have a subscription, you will be able to stay on QuickBooks Desktop for a while, but for how long is an unknown. If you are using any third-party integrations and apps, expect those responsible for their development and maintenance to focus more of their resources on the QuickBooks Online version because QuickBooks Desktop will eventually go away. If you are hosting your QuickBooks Desktop on a remote virtual server, expect higher storage and network access fees, and more downtime with less reliability. You are likely to save money and have a better experience with QuickBooks Online.

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Option 2: Convert to QuickBooks Online and subscribe to GovBooks

Converting your existing QuickBooks Desktop file to QuickBooks Online and subscribing to GovBooks is straight-forward. Here are the steps. If you need help, I would be glad to assist.

 

1. Update your current QuickBooks Desktop to the latest version

2. Export your company file to the QuickBooks Online version

3. Subscribe to the QuickBooks Online version of your choice (read my article on which version to use)

4. Upload your company file which may take a few hours depending on the size of your company file

5. Compare your profit and loss report and balance sheet between the two systems to ensure they match

6. Subscribe to GovBooks and connect your QuickBooks Online account

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What about DCAA and Grant Compliance and QuickBooks Online?

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QuickBooks Online offers the same level of project accounting as QuickBooks Desktop. A complete audit trail is also easily available. So, in theory, QuickBooks Online can be DCAA and Grant compliant. However, you need to ensure that the labor distribution is accomplished in a DCAA and Grant compliant manner. 

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Labor distribution not DCAA and Grant compliant in QuickBooks online unless you subscribe to GovBooks

The Labor Distribution that is created in QuickBooks Online is not DCAA and Grant compliant because it does not 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. GovBooks solves this issue.

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Excel Spreadsheet Method

You can create a spreadsheet to calculate a journal entry that credits wages and debits the required general ledger labor accounts. I don't recommend this method as too time consuming and prone to error.

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Subscribe to 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. Although you can obtain DCAA and Grant compliance with QuickBooks Online and the help of several Excel spreadsheets, you may like the time saving convenience and automation provided by GovBooks.

 

GovBooks 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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GovBooks Indirect Rate Computation

QuickBooks Online (and QuickBooks Desktop) 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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GovBooks Contract Management

QuickBooks Online (and QuickBooks Desktop) 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.