Is Quickbooks® Online an adequate accounting system for government contracting?
Given the job cost requirements of doing business with the federal government, Quickbooks® Pro or Premier has been shown to do the job. In a government contracting setting, contractors are required to track costs by cost objective (typically contracts) for direct activities, accumulate those costs in the general and job cost ledgers, and use those costs, (plus indirect rates and fee) for billing purposes. This is done efficiently in the Quickbooks® Pro or Premier desktop version (we usually recommend Quickbooks® Premier), but not the online version.
While Quickbooks® Online does have a job cost feature, along with the accumulation of reimbursable costs, the online version does not have what’s called the Unbilled Cost Report feature that resides in its desktop alternative.
Can a contractor make Quickbooks® Online adequate? Yes. As with any system, if you want to decentralize your data by using additional spreadsheets and increase the risk of error, Quickbooks® Online is an option. However, the government requests centralized data, evidence of direct and indirect cost accumulation, support of billings, all with an adequate audit trail to properly coded and approved source documents. Using the desktop versions via a hosted server gives you a similar flexibility of the online version and there are several Intuit approved hosting services to choose from. We use a hosted service sharing a desktop data file and it works as well as the online version while getting the other needed adequacy functions. Our comments are based on government contractors and not small commercial organizations where Quickbooks® Online may actually be suitable.
While Quickbooks® Online is getting there, the desktop version remains the best alternative at this time which is what we recommend to our clients.
For more information on this topic and to see how we can help you, please visit us at www.MokerCPA.com