Key takeaways

  • QuickBooks Online is better for small businesses that need prebuilt accounting tools and workflows, making it easy for them to get started without extensive customization.
  • Excel is more suitable for small businesses that prefer to work manually on spreadsheets for added flexibility and control in managing their financial transactions.

Expert Tip

QuickBooks is an accounting software suite with different versions, including QuickBooks Desktop, QuickBooks Online, QuickBooks for Mac, and QuickBooks Self-Employed. QuickBooks Online is the most popular and commonly used version, so we will be using it for our QuickBooks vs Excel comparison.

Check out our Accounting Software Guide for additional recommendations for your business needs.

QuickBooks Online vs Excel: Which is better?

QuickBooks Online and Excel are both suitable for business accounting, but they have different essences and serve different purposes. QuickBooks Online is a cloud-based accounting software with a comprehensive set of features for various tasks, such as creating invoices, managing expenses, reconciling accounts, and tracking transactions. 

On the other hand, Excel is a spreadsheet application that provides a flexible solution for organizing, analyzing, and presenting financial data. Also, it can be used to track transactions like invoices and unpaid bills, but it requires users to be knowledgeable about Excel’s features like formulas, conditional formatting, and data manipulation techniques.

QuickBooks vs Excel: Quick comparison

QuickBooks Online

Excel

Essence

Accounting software

Spreadsheet app

Deployment method

Cloud

Cloud or desktop

Pricing (cloud version)

From $30 per month

From $6 per user, per month*

Pricing (desktop version)

N/A

$159.99 (license; Excel only)

Number of Users

1 to 25

Excel license (1)

Microsoft 365 Subscription (1)**

Key Features

  • Bank reconciliation with automated transaction import and matching
  • Bill management (QuickBooks Bill Pay)
  • Automated workflows, like payment reminders and recurring invoices
  • Print financial statements
  • Formulas and functions for financial calculations
  • Spreadsheets for tracking data, like bills and invoices
  • Reporting tools, like PivotTables, charts, and graphs

Ease of Use

Easy to use; doesn’t require you to set up formulas

Moderate to difficult; requires Excel knowledge and skills

Phone Support

Yes

Yes

Visit QuickBooks Online
Visit Excel

*For a Microsoft 365 subscription

**Each additional user is charged a full subscription fee. 

QuickBooks Online: Better for small businesses that need accounting tools out of the box

QuickBooks Online provides prebuilt accounting tools that you can use right away without the need to perform complex setup and customization. For instance, it has a plug-and-play invoicing form that lets you immediately create and send invoices without having to set up any forms or spreadsheets, which is the case in Excel. Formulas are already built into QuickBooks, so there’s nothing to calculate manually. 

Additionally, QuickBooks Online offers excellent integration options that make accounting tasks much easier. It integrates seamlessly with other business apps like payment processors, point-of-sale (POS), and ecommerce platforms. It also connects with banking institutions, allowing you to import transactions automatically from your bank statements. 

Key features

  • Financial statements: As a complete bookkeeping system, QuickBooks Online tracks all of your assets, liabilities, income, and expenses to generate financial statements that are often needed to file tax returns and apply for loans.
  • Bank reconciliation: QuickBooks Online allows you to match your bank transactions against your books easily and find and resolve discrepancies. Also, the ability to connect your bank accounts speeds up the reconciliation process.
  • Invoicing: You can create and send invoices directly to your client without leaving QuickBooks Online.
  • Bill pay and management: You can enter and pay bills and track unpaid bills directly from the system.
  • Project accounting: QuickBooks lets you create and set up projects and track their statuses until they are completed. Also, you can add transactions, such as bills, invoices, and time entries, directly to projects. 
  • Inventory management: For businesses with inventory, QuickBooks lets you manage and track items and the cost of goods (COGS) sold. 
The QuickBooks logo.

Pros

  • Is a specialized software; designed specifically for accounting and financial management
  • Automates many accounting tasks, like invoicing, bill pay, and bank reconciliation
  • Doesn’t require you to set up formulas like in Excel
  • Offers scalable pricing plans; suitable for businesses of all sizes
  • Provides access to a large network of QuickBooks ProAdvisors for bookkeeping support

Cons

  • Is a bit expensive, especially for very small businesses
  • May not offer as much flexibility and customization options as Excel
  • Doesn’t work offline
  • May still have a learning curve, especially for those new to accounting software

Excel: Best for small businesses that prefer a manual data entry approach for added flexibility and customization

Unlike accounting software like QuickBooks, Excel is a self-service type of software. You generate your own reports, queries, charts, and data analysis tools. While it offers automation features, such as formulas and macros, data entry and manipulation in Excel typically require manual input by users. That said, to make it work, you have to be Excel-savvy as you’ll be working on formulas, functions, and advanced formatting options.

Excel allows you to perform a highly tailored deep-dive analysis if you know what you’re doing. Otherwise, it will take some trial and error to get your formulas right. However, there are also templates available, so you don’t necessarily have to start from scratch.

The program might work well for a small startup but not for the long term or for larger businesses that require complete financial statements. So, if your business is very small and you’re well-versed in data entry and spreadsheets, you can certainly get by with Excel.

Key features

  • Formulas and functions: Formulas and functions in Excel can be effective for calculating totals, like income and expenses and net profit margin, and visually highlighting important information, such as overdue invoices and unpaid bills. 
  • Spreadsheets for tracking invoices and unpaid bills: As long as you are proficient in Excel, you can create and customize a spreadsheet for tracking unpaid bills and expenses. 
  • Reporting tools: Excel offers a wide range of reporting features, such as PivotTables, charts and graphs, sparklines, and conditional formatting, that allow you to create beautiful and easy-to-read financial reports. 
Excel logo.

Pros

  • Is generally more affordable than accounting software
  • Offers advanced calculation capabilities and built-in functions for financial analysis
  • Is widely adopted and accessible
  • Can access work offline
  • Has extensive resources, tutorials, and templates available online

Cons

  • Relies heavily on manual data entry, which can be time-consuming and prone to errors
  • Has limited automation, as compared to QuickBooks
  • Has no version control; may be difficult to track changes
  • Opens local files to risks, like viruses and accidental deletion

QuickBooks Online vs. Excel: A detailed comparison

QuickBooks Online

Excel

Starting price

$30 per month

$6 per user, per month*

Free trial

30 days

30 days

Create and send invoices directly from the software

Yes

Create manually but can’t send directly

Pay bills directly and track unpaid bills

Yes

Can track but can’t pay directly

Bank reconciliation

Automated transaction import and matching

Completely manual

Inventory management

First-in, first-out (FIFO) and average cost (AVCO)

Provides more flexible tracking options

Tax calculations

Automatic sales tax calculation

Can create formulas manually for tax calculations

Financial reporting

Excellent; readily available financial reports

Poor; requires extensive formula writing to produce financial statements

Real-time collaboration

Excellent

Limited

Ease of use

Easy to use

Moderate to difficult

Customer Support

Phone support, live chat, chatbot, and online resources

Phone support, email, live chat, chatbot, and online resources

Visit QuickBooks Online
Visit Excel

*For a Microsoft 365 subscription

Pricing

QuickBooks Online and Excel have different pricing structures. QuickBooks is offered as a monthly subscription while Excel can be purchased as a single license or monthly subscription as part of the Microsoft 365 suite.

QuickBooks Online is available in four subscription options:

  • Simple Start: $30 per month; includes one user
  • Essentials: $60 per month; includes up to three users
  • Plus: $90 per month; includes up to five users
  • Advanced: $200 per month; includes up to 25 users

You can either sign up for a 30-day free trial or purchase right away to get a 50% discount for the first three months.

You can purchase a single Excel license for a one-time fee of $159.99 for a single user. If you need Excel with the Microsoft 365 suite, which includes Word, PowerPoint, and Outlook, then you can choose from the following options: 

  • Business Basic: $6 per user, per month; includes web and mobile versions of Excel, Word, PowerPoint, and Outlook
  • Apps for Business: $8.25 per user, per month; includes web, mobile, and desktop versions of Excel, Word, PowerPoint, and Outlook
  • Business Standard: $12.50 per user, per month; includes everything in Business Basic, plus additional features like video editing and design tools with Microsoft Clipchamp
  • Business Premium: $22 per user, per month; includes everything in Business Standard, plus additional features, like advanced identity and access management

Excel. Here’s why: When you purchase a single license of Excel, you own the software outright and don’t need to pay any ongoing subscription fees. This makes Excel more cost-effective, especially for very small businesses with very limited budgets. Additionally, you can also get Excel plus the other Microsoft 365 products for as low as $6 per user, per month, as opposed to QuickBooks Online’s starting price of $30 monthly.

General ledger (GL)

The most fundamental purpose of an accounting system is to:

  • Record transactions
  • Post those transactions to the appropriate accounts
  • Total each account
  • Carry account balances to the financial statements

QuickBooks Online does all of this with little input from the user while Excel requires major customization to achieve a GL system.

QuickBooks Online completes the entire GL process based on the input screens completed by the user. For instance, when a user issues a sales invoice, QuickBooks Online will:

  • Record a sales transaction debiting accounts receivable (A/R) and crediting sales
  • Carry the amounts debited and credited to the A/R and sales accounts, respectively
  • Calculate the new total for both the A/R and sales accounts
  • Carry the new A/R balance to the balance sheet and the new sales balance to the profit and loss (P&L) statement

If you’re hoping to use Excel as your only accounting software, you’ll need to create a system manually to perform each of the steps above. In addition to knowledge of programming in Excel, you’ll need a solid understanding of bookkeeping to create the proper transactions to record all the various activities of the business.

QuickBooks Online. Here’s why: QuickBooks Online offers a more automated approach to bookkeeping and financial reporting through its complete GL feature. You just need to complete the appropriate input screens for various transactions, and QuickBooks outputs the financial statements. It takes a lot of both Excel and bookkeeping expertise to achieve this in Excel.

Bank reconciliation

Both QuickBooks Online and Excel can be used for bank reconciliation but they have different approaches. QuickBooks provides some automation to speed up the reconciliation process while everything is done manually in Excel. 

QuickBooks automates bank reconciliations through direct bank connections or bank feeds, allowing you to import your bank transactions automatically. The platform then matches the imported bank transactions with those entered into the system and highlights transactions for review, making it easier for you to reconcile accounts accurately. If there are any unmatched transactions, you can investigate and resolve them before reconciling. 

Below is a sample reconciliation screen in QuickBooks Online:

Quickbooks bank reconciliation.

To perform bank reconciliation in Excel, you must input everything manually, including the opening bank balance and transaction details from your bank statement. This can be an acceptable approach but it can be time-consuming and prone to errors. Additionally, Excel may require you to create complex spreadsheets with formulas and conditional formatting, which can be a problem for users without advanced Excel skills.

Here’s a sample bank reconciliation template in Excel: 

Excel bank reconciliation.

QuickBooks Online. Here’s why: We give the win to QuickBooks because it offers more advantages than Excel, including ease of use, automated transaction import and matching, and detailed reconciliation reports. It’s ideally more helpful than Excel for most businesses, especially those handling a large volume of bank transactions daily. 

However, note there are some instances where Excel may be more usable than QuickBooks. Say you need to perform a four-column bank reconciliation or proof of cash — Excel allows you to design custom spreadsheets with multiple columns and formulas, and this is something you can’t do in QuickBooks Online. 

A/R

You’ll find significant differences between Excel vs QuickBooks in terms of invoicing. With QuickBooks, all you need to do is enter the invoice information while in Excel, you must first create a spreadsheet to store and track invoice data.

QuickBooks allows you to create invoices easily, with strong customization options, including the ability to upload your company logo, change invoice colors, and add personalized messages for customers. Invoicing in QuickBooks is easy, as all you need to do is input the required information, such as customer name, amount, and product/service descriptions. Once the invoice is created, you can send it directly from within QuickBooks. 

To track your receivables, QuickBooks provides a list of invoice transactions, and you can filter them to see which are unpaid, paid, and overdue. 

Quickbooks invoice.

Excel also allows you to create highly customizable and professional-looking invoices but, again, it requires manual data entry. You can experiment with different layouts, designs, and formatting options based on your needs. However, you can’t send invoices directly from within Excel, so you will need to use your email to send it as a PDF or Excel file to your client. 

Similarly, you can create a spreadsheet to track A/R. It involves creating a file with headers for relevant columns, like invoice number, client name, due date, invoice amount, and payment amount. To calculate amounts like the number of days due and the outstanding balance, you must create formulas in Excel. 

Excel invoice.

QuickBooks Online. Here’s why: In addition to the ability to create and send invoices directly from the platform easily, there’s no need to create formulas to calculate amounts like outstanding balances. You can track them all in one place within QuickBooks Online.

Accounts payable (A/P)

Just like with invoicing, QuickBooks Online and Excel vary in terms of how they manage and track bills. QuickBooks uses a built-in feature called QuickBooks Bill Pay. Excel, in comparison, requires you to create a spreadsheet to store and track bill information. 

With QuickBooks Bill Pay, you can manage and pay bills directly from QuickBooks Online. You can store and manage vendor information, including contact details, payment terms, and billing preferences. To pay vendor bills, QuickBooks supports various payment methods, including bank transfers and paper checks. 

Also, QuickBooks helps you automate the process of tracking unpaid bills. Once you enter bills in the system, QuickBooks tracks those bills for you automatically. You can keep track of all unpaid bills in one place, and once you process payment, it will be marked as paid. To help you stay on top of your payables, QuickBooks provides reports for tracking unpaid bills, payment history, and A/P aging. 

Furthermore, QuickBooks offers many time-saving features. These include the ability to schedule one-time or recurring bill payments, apply vendor credits and discounts to bills, and create reminders for upcoming bill payments. 

With Excel, you can create a spreadsheet to track important invoice and payment information, including the vendor name, bill amount, and due dates. When you pay a vendor, enter the details in the spreadsheet and update the status of the bill. You can use Excel’s conditional formatting feature to visually highlight bills that are overdue or unpaid.

QuickBooks. Here’s why: With QuickBooks, you can automate many aspects of bill tracking and payment processes. All you need to do is provide the required information — and QuickBooks will do the rest. However, if you think neither QuickBooks nor Excel is right for you, check out top alternatives in our A/P Guide.

Inventory tracking

Depending on your subscription, QuickBooks Online uses the FIFO inventory and AVCO method to calculate your cost of inventory sold during the year. Excel, while manual data entry is needed, provides more flexibility and customization options to accommodate other inventory flow assumptions, such as last-in, first-out (LIFO) and specific identification.

QuickBooks Online allows you to track inventory items and COGS. When sales transactions, such as invoices and sales receipts, are recorded, it will reduce the quantities from your inventory automatically, and when a purchase transaction, such as bill, is made to receive items, the system increases the quantity on hand automatically. 

In addition to tracking inventory quantity, QuickBooks Online will track and record your COGS automatically. For instance, when you enter the sale of inventory, not only will revenue be recorded but an expense will also be recorded for the cost of the inventory.

Additionally, QuickBooks allows you to create and send purchase orders to vendors, adjust inventory if needed, set up alerts for low inventory, and generate inventory reports. Those include inventory valuation summaries and inventory valuation detail reports.

Excel’s flexibility in formulas and calculations makes it a more ideal choice than QuickBooks Online for advanced COGS tracking. Say you need to create customized costing methods for each product type you sell — you can use Excel to create separate spreadsheets for different product lines or categories. 

It depends on your needs. You may prefer QuickBooks if you use standard costing methods, like FIFO or AVCO, frequently. However, if you want more flexibility for customized inventory costing beyond what QuickBooks offers out of the box, then you may find Excel a more versatile solution. A caveat, however, is that you must be proficient in using Excel’s features for manual data entry.

Project management

Businesses can either use QuickBooks or Excel for project management, depending on their needs. QuickBooks comes with basic project tracking features while Excel provides extensive customization options, including the ability to design custom worksheets and tables.

With QuickBooks Online, you can create new tasks or projects easily and assign them to employees or customers. You can track the status of each project, and you can attach various transactions associated with that project, including bills and invoices. 

A nice supplement to QuickBooks’ project features is its built-in time tracking feature, which allows you to capture time worked and record time entries directly to invoices and projects. When you upgrade to Advanced, you can compare budgeted vs actual project costs for deeper profitability tracking.

Excel enables you to create customized project tracking workflows using task lists, Gantt charts, and dynamic dashboards. It doesn’t have a built-in timer, but you can enter your time worked manually and input formulas to calculate total hours worked, billable hours. 

It also includes advanced features. Those include the ability to generate resource allocation tables and charts for tracking resource availability and workload distribution.

It depends on your needs. We recommend QuickBooks Online for businesses with relatively simple project management needs, especially those billing clients based on billable hours and project expenses. For companies needing advanced features, such as a customizable project dashboard and resource allocation, Excel might be better.

Tax computations

QuickBooks Online automates sales tax calculations. Meanwhile, Excel requires manual entry and calculation of tax amounts for each transaction.

QuickBooks Online applies the appropriate sales tax rates automatically to transactions based on several factors, such as your customer’s location and product/service type. However, it doesn’t calculate federal and state income tax rates, so you must separately calculate and manage them using tax forms, tax tables, or tax preparation software.

Excel has no built-in automated tax calculations, but it can incorporate tax table rates and formulas to calculate federal and state income tax liabilities based on taxable income brackets. You can set up lookup tables and nested formulas to find applicable tax rates and calculate tax amounts accordingly.

Excel. Here’s why: Excel allows you to create complex formulas, scenarios, and calculations based on specific business needs and tax requirements. It can be used to calculate various types of taxes, including income tax, payroll tax, and capital gains tax.

Reporting

Financial reports in QuickBooks are readily available while in Excel, you have to create them manually using formulas and functions, which can be time-consuming and prone to errors.

You can generate a wide range of standard reports in QuickBooks, including P&L, balance sheet, and cash flow statements. These reports are predefined and are readily available on the platform. 

If you need to create customized reports, then you can use filters in QuickBooks to generate the reports you need. You may also use customization options to make reports more visually appealing and easy to read.

Unlike QuickBooks, Excel doesn’t have a GL system, meaning you have to create your own worksheets to represent different accounts and then enter the data manually into those worksheets. Nevertheless, if you have the level of expertise needed, you can use Excel for basic financial reporting. Also, you can use it for industry-specific reporting, such as creating nonprofit financial statements for not-for-profit organizations.

QuickBooks Online. Here’s why: QuickBooks offers a more practical and convenient solution to building financial reports, thanks to its complete GL. It captures all transactions and data directly from invoices, bank feeds, and other sources while you have to track down all sources of data needed for your spreadsheets manually in Excel.

Ease of use

QuickBooks Online offers built-in automations, reducing the need for extensive setup and manual configurations. Meanwhile, Excel is more flexible, but it requires advanced technical skills and programming knowledge.

QuickBooks Online provides a user-friendly dashboard for easy navigation. Once your QuickBooks company is set up, you can create transactions immediately, such as invoices, bills, expenses, and inventory items. Transactions like unpaid bills and invoices are tracked automatically, and reports can be generated in an instant without the need to create complicated formulas.

Excel is very usable for accounting and calculations, but it isn’t for everyone. To use Excel effectively, you must have a solid understanding of its features. For instance, you should be familiar with basic functions, like SUM, AVERAGE, IF, VLOOKUP, and advanced functions for financial tracking and analysis.

QuickBooks Online. Here’s why: QuickBooks Online is easier to use than Excel because it provides pre-built workflows and automation for various tasks, like entering invoices and reconciling accounts. With Excel, you have to set up formulas first, so you will be unable to get started immediately.

Customer support

Both platforms have decent customer support options and are both popular and widely adopted, so it’s easy to find helpful resources.

Depending on your subscription, QuickBooks Online provides access to different types of customer support options, including phone, live chat, chatbot, and online resources. If you require personalized support, you can sign up for QuickBooks Live, a bookkeeping add-on in QuickBooks Online, or find a QuickBooks ProAdvisor for assisted bookkeeping support and guidance.

Depending on your subscription, Excel users can access various customer support channels, such as phone support, email, and live chat. Also, it’s been around for so long, so you can find a lot of online resources, including guides and templates.

It depends on your needs. Both offer live chat support options, which is what’s important. However, you may prefer QuickBooks if you want easy access to professional bookkeeping support for tasks like bank reconciliations and advanced reporting. Meanwhile, if you’re an Excel expert, you would probably rarely need support, and if you do, you can seek help easily from the Microsoft 365 team or other Excel-savvy people.

QuickBooks vs Excel: Ready to choose?

Overall, the choice between QuickBooks Online vs. Excel depends on whether you want an automated approach or a more hands-on or manual approach for flexibility and customization. Choose QuickBooks Online if you want to track financial transactions without setting up complex configurations and consider Excel if you are on a budget and are comfortable and proficient with using spreadsheets for tracking financial transactions.

If you’re still unsure whether QuickBooks or Excel is right for you, then explore our Accounting Software Guide for additional recommendations. 

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Mark Calatrava Avatar
Mark Calatrava
Senior Staff Writer
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Mark has been writing for Fit Small Business (owned by TechnologyAdvice) for 5 years and has covered 50+ accounting software for small businesses and niche industries. He contributes to TAcom and TechRepublic, both owned by TechnologyAdvice. With in-depth knowledge of important features of accounting software, he creates insightful content. Also, as a QuickBooks ProAdvisor, he has extensive knowledge of QuickBooks, allowing him to write content that educates businesses on maximizing its benefits.