Should I Convert My Existing QuickBooks File to QuickBooks Online or Start a New Accounting File? 

Are you a Managed Service Provider (MSP) who is still stuck in the world of QuickBooks Desktop (QBD)? Are you ready to get started with QuickBooks Online (QBO)? Do you wonder if you should convert your existing file or start from scratch and create a new one altogether? 

Just like an athlete coming back from a major injury or a performer stepping out onto the stage for the very first time, you have a mental hurdle that you must clear before you can move forward.  The fact that you clicked on this blog in the first place indicates that you already have some interest in QuickBooks Online. You have most likely considered the effect it could have on the future profitability of your business. If you are concerned about the daunting nature of a QBD to QBO conversion, let us assure you that we understand. 

The scope of a conversion can be terrifying. 

If you are unsure or feel like you need more information on the pros and cons of QBO check out our 11 Reasons You May Love QuickBooks Online and also our Twelve Reasons You May Hate QuickBooks Online. 

Now, you are at a decision point. 

Is the information in your current accounting file so critical to the success of the organization’s future that it is worth converting and keeping all the details or is it easier to start with a new file and include the basic financial data without the years of history?

You can convert your QuickBooks Desktop file to QuickBooks Online using the standard method, or you can start from scratch with a new accounting file in QuickBooks Online.  Both options have advantages and disadvantages. This post should help you decide which is easier for you.    

Converting an existing file into QBO can work well. If the size of the file is small enough and you want to take everything with you. The advantages to this are everything will transfer into the new file.  Historical bank accounts, customers, vendors, sales tax payments and jurisdictions all transfer in.  While it is common to have minor mishaps with a conversion, usually it can be rectified with minimal pain.  However, historical information builds in an accounting file gradually and can become like emotional baggage to your company. 

Before you convert the file, ask yourself a few questions:

  1. Do I really need access to the client I served 11 years ago? 
  2. How many items in my existing file do I truly need?  
  3. Do I want to verify sales tax payments made in prior years?

Take your time to think this through. 

There are many conversion failures out there.  And this decision is probably the genesis of most of them.  We do not want you to regret your decision.  What if you want to know how much you paid a vendor in 2005?  (Let’s ignore the fact that you have not looked up data older than two years in for . . . ever!)  Having that data included in the new accounting file provides a level of comfort; just knowing the information is there, that your books are in order, and you can answer an IRS audit.  There are solid reasons mixed in with the fear of loss driving this decision, a combination of rational and emotional.

While many articles address the rational reasons alone, many of the actual reasons accountants choose not to do things are emotional, grounded in risk aversion, and rooted in fear of getting lost in the process due to the lack of a proper guide. 

Let us just pause here and acknowledge that a software migration is an emotional challenge and this overwhelming desire to not mess up your company’s financial data prevents many from achieving it. 

Even if the migration is a success, there is a learning curve to the new software which will reduce your team’s capacity while you work through it.  These are legitimate reasons for not converting software.  Pairing down the items in your file may tug at you a bit.  After all, this is a system you have personally cultivated, perhaps for many years. 

But consider this; sometimes, you must cut the heartstrings to save the purse strings.  

QuickBooks Online is price-based on usage metrics; the more items, locations, clients, and vendors you have in your file may increase the cost of the version to which you convert.  Saying goodbye to historical transaction data is not easy.  But the plentitude of future, more profitable transactions makes that sting go away pretty quickly.  Regardless, as much as we would like to convince you that everything will be okay emotionally, that is a bridge you will need to cross on your own.  For more information on the details of a conversion check out How Do I Convert My MSP’s QuickBooks Desktop File to QuickBooks Online? 

Now, if that somewhat protracted dip into the pool of emotion did not scare you into choosing a QBO conversion versus starting from scratch with a new accounting file, this next part may be better for you.  If, on the other hand, you are already convinced that file conversion is what you need, please keep reading.  You need to understand the differences before you commit to that decision.  

Rationally, it is easier to detail the reasons why you might want to start fresh. 

Here are the reasons you may prefer starting over with a new file versus converting directly from a QuickBooks Desktop file.

  1. You are tracking inventory in a method other than First In First Out (FIFO).  QBO only supports FIFO, and any deviations that need to be discussed with the IRS.  (Check with your accountant before changing inventory methods.)
  2. Your file is too big (over 750,000 targets), and you have not been able to find a way to condense the data.  (A target is Intuit’s metric for lines of details in transactions.  Targets, as opposed to file size, are the limiting factors when converting to QBO.  While the number of targets with the ability to convert has moved up with the maturation of the software, it is still a limiting factor for many companies.)
  3. You just do not need that much data and want to manage less historical information.  You may have significant numbers of vendors, employees and customers that you no longer do business with, jurisdictions where you previously paid sales tax, and simply do not want them to occupy any space going forward.  Just like a move from one house to another forces us to decide what to discard and what to move, a move into a new accounting file can facilitate an opportunity to purge unnecessary data.

If you are still worried about losing your legacy data you can always go back and access your old QBD file, print reports, and view all types of information.  For instructions on how to keep your QBD file handy go here:  What Do I Do With My Old QuickBooks File After Converting to QBO?

The way ahead..

Regardless of which way you choose to go, we understand that there is what may look like a mountain ahead of you.  This is where we come in.  Like a Sherpa, we will meet you at the base and help you scale the summit.  We will guide you in the process, whichever one you choose. We make that next action a little less like a leap of faith and more like a step of assurance.  

Explore the ways we help our clients transfer to QBO. Connect with us.