If you are new to managing business finances or moving on to digital accounting after using spreadsheets, then you have probably heard of QuickBooks Online. However, the trick is to get to know how it can be used well to ensure that it does not go to waste.
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| How to Use QuickBooks Online |
This comprehensive guide will show you how to use QuickBooks Online in detail, including setup of your company, tracking of income, creation of invoices, expenses, and reports. This tutorial will give you the confidence to start as a small business owner, freelancer or a bookkeeper.
What Is QuickBooks Online?
QuickBooks Online (QBO) is the cloud-based accounting software developed by Intuit that is used by the small to medium-sized business. As compared to QuickBooks Desktop, QBO is a web-based platform and it can be accessed using any device that has access to the internet. It aids in management of:
Invoices
Expenses
Payroll
Banking
Taxes
Reports
It makes accounting duties easier, aids in working with your accountant, and automates a large part of the financial tracking procedure.
Why Choose QuickBooks Online?
Before diving into how to use it, here are a few reasons QuickBooks Online is a preferred choice for millions of users:
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Access from anywhere: Login from any device or location
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Real-time collaboration: Invite your accountant or team members
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Automatic backups: Your data is always safe in the cloud
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Regular updates: No need to install software or worry about versions
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Customizable plans: Choose features that fit your business needs
Step 1: Choose the Right QuickBooks Online Plan
Before you can start using QBO, you need to pick the right plan. QuickBooks offers different pricing tiers:
| Plan | Best For | Features |
|---|---|---|
| Simple Start | Sole proprietors & freelancers | Invoicing, expense tracking, basic reports |
| Essentials | Small teams | All Simple Start features + bill management + 3 users |
| Plus | Growing businesses | All Essentials features + inventory + project tracking |
| Advanced | Mid-sized companies | Advanced reporting, analytics, and more users |
Choose the plan based on your business complexity and team size.
Step 2: Set Up Your Company in QuickBooks Online
Once you’ve selected a plan and created your account, you’ll be guided through the company setup process.
Key Setup Steps:
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Enter your business name
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Select your industry and type of organization (LLC, Sole Prop, etc.)
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Choose your accounting method: cash or accrual
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Set your fiscal year start date
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Add your business contact and address
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Customize your invoice style (logo, font, colors)
You can adjust most settings later, but it’s best to be accurate from the start for clean bookkeeping.
Step 3: Connect Your Bank and Credit Card Accounts
Bank integration may be one of the most potent functions of QuickBooks Online. It automatically imports your bank and credit card purchases, which minimizes the amount of data entry required.
To Connect an Account:
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Go to Banking > Link Account
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Search your bank (e.g., Chase, Bank of America)
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Sign in with your online banking credentials
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Select the accounts you want to connect
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QBO will import up to 90 days of data
You’ll now see transactions appear under the Banking tab, where you can review and categorize them.
Step 4: Set Up Chart of Accounts
Chart of Accounts is the framework of your bookkeeping. It puts all your transactions into categories such as income, expenses, assets, liabilities and equity.
QuickBooks gives you a standard chart that depends on your industry, but you can attach custom accounts:
To Add or Edit Accounts:
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Go to Settings > Chart of Accounts
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Click New to add an account
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Choose the account type (Expense, Income, Bank, etc.)
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Name the account and provide a description
For example, you might create separate expense accounts for “Office Supplies,” “Marketing,” and “Software Subscriptions.”
Step 5: Record Sales and Income
Creating Invoices:
If you bill clients for products or services, you’ll likely use invoices.
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Click + New > Invoice
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Select or add a customer
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Add items or services
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Set payment terms (Net 15, Due on Receipt, etc.)
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Email directly or print as PDF
QuickBooks will track open, paid, and overdue invoices in real-time.
Recording Sales Receipts:
For immediate payments (like in-store or cash sales), use:
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+ New > Sales Receipt
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No invoice is required since payment is received on the spot
Step 6: Track Expenses and Manage Bills
Tracking where your money goes is just as important as monitoring income.
Record Expenses:
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Go to + New > Expense
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Choose the payee (vendor)
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Enter payment account, date, and category
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Attach a receipt image (optional)
Enter and Pay Bills:
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Use + New > Bill to record bills you need to pay later
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When ready, use + New > Pay Bills
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Select the bill, choose the payment method, and save
This helps you stay on top of due dates and cash flow.
Step 7: Manage Customers and Vendors
QuickBooks Online allows you to create detailed profiles for customers and vendors.
Customers Tab:
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Track who owes you
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View invoice history and payment status
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Send payment reminders or statements
Vendors Tab:
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Monitor who you owe
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Keep contact info organized
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Track total spend by vendor
Maintaining accurate records improves communication and reporting.
Step 8: Run Financial Reports
QuickBooks Online makes it easy to generate professional reports to monitor your business performance.
Common Reports:
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Profit & Loss Statement (P&L) – Shows your income, expenses, and net profit
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Balance Sheet – Lists assets, liabilities, and equity
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Cash Flow Report – Highlights how cash moves in and out
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Sales by Customer – Know who your biggest clients are
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Expense by Vendor – See where you're spending the most
To Access Reports:
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Click on the Reports tab in the left menu
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Choose from pre-built templates
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Customize date range, filters, and format
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Export to PDF or Excel
Step 9: Automate Your Workflow
Use Recurring Transactions:
You can automate repeating bills, invoices, and journal entries.
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Go to Gear Icon > Recurring Transactions
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Create a new template
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Choose transaction type and frequency (weekly, monthly, etc.)
Set Up Reminders and Alerts:
Enable email or in-app alerts for:
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Upcoming bills
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Overdue invoices
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Low inventory levels
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Payroll deadlines (if using QuickBooks Payroll)
Step 10: Collaborate with Your Accountant or Team
QuickBooks Online allows multiple users based on your plan.
To Invite a User:
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Go to Settings > Manage Users
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Click Add user
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Choose user type (standard, admin, accountant)
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Enter their email and send invitation
This makes it easier to work with your bookkeeper, accountant, or business partner without sharing passwords.
Extra Tips for Using QuickBooks Online
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Use the Mobile App: Manage your finances on the go, capture receipts, send invoices, and check reports from your phone.
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Backup Regularly: Although QuickBooks backs up automatically, you can export reports or general ledgers for extra safety.
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Reconcile Monthly: Compare your QuickBooks bank balance to your actual bank statement to catch errors or missing entries.
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Explore Apps & Integrations: Connect QBO with tools like PayPal, Shopify, Square, Gusto, or HubSpot.
Final Thoughts
It can be daunting to learn how to use QuickBooks online, but the software is easy to use. After learning the essential features, such as creating your account, handling your revenues and expenses, and running reports, you will feel confident soon.
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Quickbooks Online is a versatile tool that can help you in simplifying bookkeeping, preparing to file taxes, and expanding your business by getting better financial insights.
An understanding of the use of QuickBooks Online is required by small business proprietors and freelancers who desire to have their finances in control. This cloud-based accounting software can assist you in generating invoices, monitoring expenses, conducting financial reports and even payroll all in one dashboard. With the knowledge of how QuickBooks Online can be used, users will be able to simplify the process of bookkeeping, eliminate manual errors, and obtain the real-time data that can inform the user about the business performance. QuickBooks Online can help you to stay organized and make informed financial decisions whether you are just getting started or moving on to it after spreadsheets. It has an easy to use interface that can be used by a novice or a professional.
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