Why Migrate from Quickbooks Desktop to Online?
QuickBooks Online offers several advantages over the desktop version:
- Access your financial data anytime, anywhere
- Automatic updates and backups
- Seamless collaboration with team members and accountants
- Mobile app for on-the-go accounting
- Enhanced integration with other business tools
Before You Begin: Pre-Migration Checklist
Before initiating the transfer from QuickBooks Desktop to Online, complete these preparation steps:
| Task | Description |
| Update Desktop | Ensure your QuickBooks Desktop is running the latest version |
| Clean your data | Mark inactive customers, vendors, and accounts as inactive |
| Check file size | Verify your file has fewer than 750,000 targets |
| Backup your data | Create a backup of your QuickBooks Desktop file |
| Print reports | Save key reports like Sales Tax Liability and Balance Sheet |
Step 1: Create Your QuickBooks Online Account
First, set up your QuickBooks Online account:
- Visit the QuickBooks website (or use a partner link for better pricing)
- Choose the right subscription level for your needs
- Create your account with a unique company name you’ll recognize later
- Skip bank connections and payment setup during initial setup
Choosing the Right Plan
When migrating from QuickBooks Desktop to Online, selecting the appropriate plan is crucial.
Most QuickBooks Desktop Pro and Premier users will choose either Essentials or Plus plans, while
Enterprise users typically need Advanced.
Step 2: Prepare Your QuickBooks Desktop File for Migration
Before using the QuickBooks desktop migration tool, take these important steps:
- Update QuickBooks Desktop to the latest version
- Check your file size by pressing Ctrl+1 (file should have under 750,000 targets)
- Clean up unnecessary data:
- Mark inactive vendors, customers, and accounts
- Delete unbilled charges for inactive entities
- Reconcile all bank and credit card accounts
Checking Your File Size in QuickBooks Desktop
- With your company file open in QuickBooks Desktop, press Ctrl+1 on your keyboard
- This opens the Product Information window
- Look for “Total Targets” in the information displayed
Why File Size Matters
Import QuickBooks enterprise to QuickBooks online files with fewer than 750,000 targets. If your file exceeds this limit, you have two options:
- Condense your data: Use the condense data utility in QuickBooks Desktop before migrating
- Start fresh: Create a new QuickBooks Online file and manually enter beginning balances
What are “Targets”?
In QuickBooks, each transaction creates links or “targets” to related entries. For example, a single invoice might have targets for:
- The customer
- Each item sold
- Each account affected
- Related payments
- Tax codes
Complex businesses with years of transaction history can easily exceed the target limit.
Step 3: Using the QuickBooks Desktop Migration Tool
The simplest way to convert QuickBooks enterprise to QuickBooks online is using the built-in migration tool:
- In QuickBooks Desktop, press Ctrl+1 to open Product Information
- Press Ctrl+B+Q and click OK
- In the migration tool window, click “Get Started”
- Choose to export all company data or specific data only
- If you have inventory, decide whether to track using FIFO
- Log in to your QuickBooks Online account
- Select your destination company and click Export
Step 4: Verify Your Data After Migration
After migrating from QuickBooks Desktop to Online, verify that your data transferred correctly:
- Compare Profit & Loss reports from both systems
- Check Balance Sheet totals
- Verify customer and vendor balances
- Confirm inventory quantities and values (if applicable)
- Review historical transactions for accuracy
Common Post-Migration Issues
Some differences between systems might require adjustments:
- Inventory valuation (Desktop uses average cost, Online uses FIFO)
- Minor reporting discrepancies
- Custom fields and templates need manual setup
- Online banking connections need to be reestablished
What Transfers and What Doesn’t
When migrating from QuickBooks Desktop to QuickBooks Online, it’s important to understand what data transfers successfully and what might require manual adjustment.
Data That Transfers Successfully
- Chart of accounts
- Customers and vendors
- Products and services
- Transaction history (invoices, bills, payments)
- Bank account balances
- Most reports
- Estimates and sales orders
- Class tracking
Data That May Transfer with Modifications
- Inventory: Will convert to FIFO method (from average cost)
- Payroll: Basic employee information transfers, but you’ll need to set up QuickBooks Online Payroll separately
- Custom fields: May transfer partially, with limited functionality
- Memorized reports: May need adjustment in QuickBooks Online
- Multi-currency: Settings transfer, but some transactions might require verification
Data That Doesn’t Transfer
- Customized forms and templates
- Fixed asset item lists
- Reconciliation reports (though reconciliation status will transfer)
- Scheduled transactions/memorized transactions
- Online banking connections (need to be set up again)
- Budgets
- Audit trail
- User permissions (need to be reconfigured)
- Letter templates
- Loan manager information
- Vehicle mileage
- Third-party app connections
Important Note for Inventory Users
If you track inventory in QuickBooks Desktop using Average Cost method, you’ll be switched to FIFO (First In, First Out) once you migrate to QuickBooks online. This change can affect your cost of goods sold and may have tax implications. Consult with your accountant before migrating if you’re mid-fiscal year.
Step 5: Post-Migration Setup in QuickBooks Online
After successfully transferring your data, complete these setup tasks:
- Connect your bank and credit card accounts
- Set up QuickBooks Payments for invoice processing
- Configure user permissions and access
- Customize invoice templates and forms
- Set up tax settings appropriate for your location
Web-Based Migration Tool Alternative
If you’re using an older version of QuickBooks Desktop (2021 or earlier), use the web-based migration tool:
- Visit the Intuit migration tool website
- Sign in with your Intuit account
- Upload your company file (.QBW)
- Follow the on-screen instructions to complete the migration
Special Considerations
For Payroll Users
When migrating from QuickBooks Desktop to Online with payroll:
1. Wait 2-3 days after your last payroll run before migrating
2. Plan your migration between payroll cycles
3. Set up QuickBooks Online Payroll immediately after migration
4. Verify employee information and tax settings
For Inventory Users
Inventory tracking changes significantly in QuickBooks Online:
- Desktop uses Average Cost method while Online uses FIFO
- Consider timing your migration at the beginning of a fiscal year
- Verify inventory quantities and values after migration
Benefits of QuickBooks Online After Migration
After completing your QuickBooks desktop to online migration, you’ll enjoy these benefits:
- Real-time collaboration with team members and accountants
- Automatic updates with the latest features
- Access from any device with internet connection
- Improved backup and data security
- Integration with 650+ business apps
Frequently Asked Questions
General Migration Questions
Q: How long does the migration process take?
A: The migration from QuickBooks Desktop to Online typically takes 1-3 hours depending on file size. However, you should allow 1-2 days for verification and setup.
Q: Can I migrate from any version of QuickBooks Desktop?
A: To migrate data from QuickBooks desktop to Online, you need to understand QuickBooks Online supports migration from Desktop versions 2015 and newer. Older versions need to be upgraded first or may require manual data entry.
Q: Will I lose any data when I switch from Quickbooks online to desktop?
A: Some data types don’t transfer (see the “What Transfers” chart). Most core financial data transfers successfully, but customizations, memorized reports, and some settings need to be recreated.
Q: Can I still use QuickBooks Desktop after migration?
A: Yes, your QuickBooks Desktop software will still work with your original file. Many businesses keep both systems running parallel for a month to ensure a smooth transition.
Q: What’s the cost difference between Desktop and Online?
A: QuickBooks Online uses a subscription model (monthly or annual) while Desktop is a one-time purchase with optional annual updates. Online typically costs more over time but includes automatic updates and cloud features.
Technical Questions
Q: What if my file has more than 750,000 targets?
A: You’ll need to condense your data in QuickBooks Desktop first, or start with a new file in QuickBooks Online and enter beginning balances manually.
Q: Can I migrate multiple company files to QuickBooks Online?
A: Yes, but each company requires its own QuickBooks Online subscription.
Q: What happens to my Desktop payroll after migration?
A: Basic employee information transfers, but you’ll need to set up QuickBooks Online Payroll separately. Payroll history transfers but may require verification.
Q: Can I switch back to QuickBooks Desktop if I don’t like Online?
A: Yes, but the migration from Online back to Desktop doesn’t preserve all data. It’s best to maintain your original Desktop file as a backup during the transition period.
Q: What happens to my inventory when I migrate from online to desktop QuickBooks?
A: QuickBooks Online uses FIFO inventory valuation while Desktop uses Average Cost. This change affects your cost of goods sold calculations and may have tax implications.
Post-Migration Questions
Q: Do I need to reconnect all my bank accounts after migration?
A: Yes, you’ll need to set up bank feeds in QuickBooks Online after migration.
Q: What if the numbers don’t match after migration?
A: Small discrepancies can occur, especially with inventory valuation. For significant differences, consult with a QuickBooks ProAdvisor to help reconcile the accounts.
Q: Can I migrate mid-fiscal year?
A: Yes, though many accountants recommend migrating at the beginning of a fiscal year, especially if you track inventory.
Q: Does my accountant need special access to my QuickBooks Online?
A: You can invite your accountant to your QuickBooks Online company through the Accountant access feature, which doesn’t use one of your user licenses.
Q: How do I get training on QuickBooks Online after migration?
A: QuickBooks offers a free one-hour setup consultation after migration. Additionally, there are numerous tutorials in the Help Center, YouTube videos, and community forums.
Common Challenges and Solutions
Challenge: File Too Large to Migrate
If your QuickBooks desktop migration tool reports your file is too large:
- Use the Condense Data utility in QuickBooks Desktop
- Consider starting with a new file and importing only balances
- Consult with a QuickBooks ProAdvisor for assistance
Challenge: Data Discrepancies After Migration
If you notice differences between Desktop and Online numbers:
- Compare reports by year to identify when discrepancies occur
- Check inventory valuations (FIFO vs. Average Cost)
- Create adjusting journal entries as needed
Working with QuickBooks Professionals
Consider working with QuickBooks online migration experts:
- QuickBooks ProAdvisors specialize in migration assistance
- Data migration services can handle complex conversions
- QuickBooks offers free one-hour setup consultations after migration
FAQs
Q: How much does it cost to switch from QuickBooks Desktop to Online?
A: The cost depends on your chosen subscription level, ranging from $30-$200/month.
Q: Can I migrate my QuickBooks Enterprise file to QuickBooks Online?
A: Yes, but you’ll likely need QuickBooks Online Advanced to support similar functionality.
Q: What happens to my data if I decide to switch back to QuickBooks Desktop?
A: You can export data from Online to Desktop, but some information may not transfer completely.
Q: Do I need to keep my QuickBooks Desktop software after migration?
A: It’s recommended to keep it for at least 90 days during the transition period.
Conclusion
Migrating from QuickBooks Desktop to Online offers numerous benefits for growing businesses.
With proper planning and the right approach, the QuickBooks desktop to online migration process can be smooth and successful.
Follow this guide and leverage the QuickBooks migration tools to ensure your financial data transfers correctly and completely.
The cloud-based features of QuickBooks Online will transform how you manage your business finances, providing flexibility and accessibility that desktop software cannot match.
Parul is a dedicated writer and expert in the accounting industry, known for her insightful and well researched content. Her writing covers a wide range of topics, including tax regulations, financial reporting standards, and best practices for compliance. She is committed to producing content that not only informs but also empowers readers to make informed decisions.