I often hear from business owners that they don’t use an accounting software like QuickBooks because they can do the same things with an Excel spreadsheet. Excel is a wonderful tool for charting and manipulating data.  It is still holding strong even with a ton of newer competitors on the market. But there are a lot of manual processes that still need to be done and that will take you away from your business. Instead of selling your product or services, you are chained to your spreadsheet. And spreadsheets are only as good as the data on them, or in some cases, not on them.

Companies like QuickBooks Online exist because we always find a better way to do things.  As they say, “Necessity is the mother of invention.” To help the discussion, I asked ChatGPT to detail some of the differences between using Excel and QuickBooks Online. Here is what came up:

QuickBooks Online (QBO) is significantly better than using an Excel spreadsheet for bookkeeping due to its automation, accuracy, and efficiency. Here are some key advantages:

1. Automation & Time-Saving

Bank Feeds: QBO connects directly to your bank and credit card accounts, automatically importing transactions. In Excel, you must manually enter data.

Recurring Transactions: Automate recurring invoices, bills, and payments, which Excel does not support.

Automatic Categorization: QBO learns and categorizes transactions, reducing manual work.

2. Accuracy & Error Reduction

Prevents Manual Errors: Excel requires manual entry, which increases the risk of errors in formulas and data entry. QBO automates calculations.

Built-in Audit Trail: QBO keeps a record of every transaction, making it easy to track changes and prevent fraud.

3. Real-Time Financial Insights

Dashboards & Reports: Get real-time financial reports (profit & loss, balance sheet, cash flow) without manual calculations.

Customizable Reports: Filter and analyze financial data with a few clicks, whereas Excel requires complex formulas and pivot tables.

4. Multi-User Collaboration

Cloud-Based Access: Multiple users (business owners, bookkeepers, accountants) can access QBO from anywhere. Excel files can get lost, corrupted, or outdated with multiple versions.

User Permissions: Control who can access and edit financial data, unlike Excel, which lacks security controls.

5. Compliance & Tax Preparation

Tax-Ready: QBO tracks tax liabilities, integrates with payroll, and simplifies 1099 preparation. Excel requires manual tracking and calculations.

Integration with Tax Software: Syncs with TurboTax and other tax software, reducing tax-time stress.

6. Scalability & Integration

Grows with Your Business: QBO handles increasing transactions and integrates with other business tools (e.g., payroll, payment processing, CRM).

Third-Party Apps: Connects with hundreds of apps, whereas Excel requires manual data entry or complex VBA scripting for automation.

7. Security & Backup

Automatic Cloud Backups: Data is securely stored and backed up in the cloud, reducing the risk of data loss. Excel files can be lost due to hardware failure.

Encryption & Security: QBO has bank-level security, whereas Excel files can be easily accessed if not password-protected.

When Excel Might Be Enough

If you have very few transactions and basic bookkeeping needs, Excel may be a free, simple option.

If you prefer a custom-built financial model with complex formulas, Excel allows more flexibility.

However, for growing businesses, QuickBooks Online is more efficient, accurate, and scalable. Would you like help choosing the right QBO plan for your business?