QuickBooks

QuickBooks Vs Square: Which Is Best for Your Small Businesses?

by Envoice
15 min read
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Giving your customers a convenient way to pay is the only way you can get paid faster. For 62% of businesses, managing cash flow is the most impactful issue. [1] 

If you have a for-profit venture, utilizing a payment processing tool that makes payments easy and affordable for you and your customers is an effective way to get paid quickly and on time. 

Most businesses have the same opinion – 83% of companies are already implementing ways to speed up payments by expanding the range of accepted payments to include digital wallets, mobile payments, and same-day ACH. Paying by cash, debit, or credit card is still popular, but times are changing. 

As online commerce continues to grow, it also makes sense to have more payment options. However, there are several factors to consider if you want to accept more payment types – the biggest of which is your payment processor. 

Your payment processing tool can be a game changer for your business. You want to focus not only on its ability to accept payment but also on other features that could benefit your business. 

Among the most popular payment processing tools today, Square and QuickBooks are two of the most popular among business owners, especially SMBs. 

In this post, we will help you evaluate these two payment processing tools and how they can help you run and manage your business effectively.

But first things first, why does payment processing matter?

Why Do Payment Processing Tools Matter?

The business landscape is changing, and so should your payment process. Customers and businesses today are looking for an affordable, convenient, and secure way to pay. 

Using online and digital options to accept invoice payments is the most important change identified by business owners. Receiving timely payments comes in second while having more payment options rounds up the top three.

All these considerations should be part of your criteria for choosing your payment processor. As the tool that allows your company to handle financial transactions and receive payments, you should constantly evaluate if your payment processor is still the best choice. 

Here are some factors to consider when choosing a payment processor for your business. 

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Processing Speed and Reliability

About 28% of businesses consider payments to be too slow to be the biggest challenge for them. Payment delays and account holds hamper business operations. Tight cash flows could potentially affect your ability to meet obligations. You may have to delay payments to your suppliers, creditors, or worst employees if you don’t get paid on time or if your payment processor doesn’t release your funds within the expected timeline. Problems like this can be disastrous for a small business owner with limited cash buffers. 

In choosing a tool to process online and in-person transactions look into how fast payments would arrive in your account and become available.

Security and Fees

Aside from receiving on-time payments, businesses consider security and transaction fees to be their second biggest concern. Businesses could attract more customers if clients are confident that their existing POS software can process credit card transactions securely. However, payment security should not come with high monthly fees.

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Before choosing point-of-sale software, consider the cost of using the tool for you and your customers. Find a payment processor that allows you to accept credit and debit cards, cash, and digital wallets.

Savings from using the right payment tool could result in sizable savings for your business and encourage customers to be repeat buyers. 

Competitive Advantage

Providing a flexible payment experience is a value driver that can provide a competitive advantage. 

Then there’s access to insights and personalization.

Modern payment processing tools allow companies to integrate information from disparate systems, allowing businesses to gain insights about their customers. Information gained from leveraging this data could lead to better customer targeting and more sales. For instance, data insights could allow a business to decide whether they should offer buy now, pay later plans or not. Without insights from customer payments, there could be much guesswork in deciding whether to offer a particular payment method or not. 

Compliance

Regulatory compliance is another factor to consider. 

As technology upgrades, businesses must consider the impact of these changes on their business operations as well. For instance, collaborating with regulatory bodies like tax authorities or central banks will be easier and faster if companies modernize existing systems rather than rely on traditional ones. 

Given the importance of using the right payment provider, it makes sense to research your options. 

Square and QuickBooks payments are among the top choices for invoicing and recurring payments processing credit card transactions. Both tools have a full slate of features in addition to the ability to accept payments. 

Now, let’s focus on comparing Quickbooks vs. Square to see what each tool has to offer. We will focus mainly on the payment processing capability, but we will tackle other related aspects as well.

Let’s dive in.

Square vs. QuickBooks: What Can These Business Tools Do?

Square and QuickBooks rank high on the list of payment processing tools reasons.  

Here’s a short overview of how each tool makes life easier for the business owner.

Why is Square Worth Considering?

Square made a name for its mobile processing system that allows businesses to use the Square point of sale app on a smartphone or a wide range of hardware to accept in-person payments. 

Square website
Courtesy of Square

Founded in 2009, Square made a name for being a digital payment provider for small businesses. However, the company does more than cater to the needs of small businesses. Aside from providing in-person payment processing, the company also offers solutions to allow businesses to accept debit and credit card payments online or over the phone. Square also started offering Buy Now, Pay Later options to let merchants accept installment payments upon checkout.  

Large business customers are also likely to make up a larger part of Square’s market as the company focuses on this market to fuel growth. [2]

Why is QuickBooks Worth Considering?

Most business owners and companies heard of QuickBooks software. Intuit introduced this tool to make accounting easier for businesses. While QuickBooks continues to make upgrades to improve income and expense tracking, it has also been adding features to support the needs of its customers.  

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Over the years, QuickBooks has been exploring ways to allow users to include payment processing in the QBO ecosystem. QuickBooks Money is a product designed for money management – it can be purchased as a standalone app or as part of your QBO subscription. 

QuickBooks is also using the GoPayment app to allow businesses to accept mobile payments. Customers can also purchase a card reader that businesses can use for on-site payments. With the GoPayment app, customers can pay with chip cards, Apple Pay, and Google Pay.

Business users can connect their GoPayment account to their QuickBooks Online account to push information from the app to their accounting software. 

Square was originally a payment processor but has ventured into providing other software solutions for payroll, client invoicing, and other business tools. QuickBooks, on the other hand, used to focus only on cloud accounting. However, Intuit started providing payment processing as an additional service for clients. 

What Does QuickBooks and Square Offer?

QuickBooks and Square offer similar services when it comes to processing payments. Here’s a short list of their similar features:

  • Mobile card readers
  • POS platform for accepting multiple payment types
  • Debit and credit card processing
  • Features to handle recurring bills
  • ACH transfers and online payments
  • Magstripe/EMV/NFC payments
  • Invoicing plans
  • Paypal
  • Optional add-ons such as payroll service

QuickBooks and Square have similar features, but some capabilities are unique to each provider. One notable difference between these providers is the tools used for each platform.

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Most of Square’s tools are proprietary, and users can only use them when using their Square account. QuickBooks, on the other hand, leans more on offering add-ons to existing subscriptions and using services from third-party providers.

QuickBooks POS Vs. Square: Payment Service

Square and QuickBooks accept almost the same types of payments as detailed above. QuickBooks GoPayment app has also been updated to include the option to accept cash payments for customers. [4]

One feature in Square that QuickBooks doesn’t have is the full QR payment support. Users may have to use another app to do this if they’re using QuickBooks.

Another distinction between QuickBooks and Square lies in the payment services they offer. Square is a payment service provider, not a full-service merchant account. Square then aggregates all transactions into one merchant account. QuickBooks, on the other hand, requires each user to open a full-service merchant account. There are pros and cons for each side.

Full-merchant accounts like QuickBooks require more paperwork, time, and effort. You can get your own business ID, but you can set transaction limits to avoid account holds. Complying with requirements to minimize account holds will be your responsibility since you will open and maintain the account yourself. 

Square, on the other hand, is like a large merchant account where you share one merchant account with other businesses. In this arrangement, Square aggregates accounts from different customers and takes care of the paperwork, compliance, and account maintenance. You have less paperwork and documentation to worry about. However, aggregate merchant accounts are stricter, and suspicious transactions may be placed on hold until the company completes verification. Your account is more likely to be frozen or shut down if you have unusual transactions and when you don’t comply with the policies of the payment provider.

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QuickBooks Payments vs. Square: Ease of Use and Support

Both QuickBooks Payments and Square are easy to navigate. The reporting features for both are also straightforward.

Mobile App Support

Square and QuickBooks can still be used to accept payments even if you don’t have or you’re not planning to get a card reader. You can use the Go Payment app in QuickBooks to receive mobile payments.  

Square, on the other hand, has the Point of Sale app that uses NFC technology to enable tap-to-pay options.

Customer Support

Perhaps the biggest difference between QuickBooks Payments and Square involves access to customer support. Some reviews indicate that Square offers more accessible support to its users.[5]

TrustPilot score for QuickBooks is lower than Square. While the reason for getting such a low score is not solely due to customer support, it is one of the factors cited to be an issue with users.

QuickBooks vs. Square Free Plans

QuickBooks and Square offer a free trial for 30 days. Both tools also have free plans that you can try.

Square plans start at $0. There are no upfront fees if you get the free plan. So, if you’re a small business, this would be an affordable way to receive payments while you’re starting out. 

QuickBooks has also started offering QuickBooks Money which allows you to accept payments. With this plan, you are only paying for the payment software – you can’t use the accounting features to keep track of your revenues or expenses. Like Square, you only need to pay per transaction. 

If you’re already using QuickBooks for your bookkeeping, you can start accepting payments from clients without paying extra.

For both plans, you can get the card reader for an extra fee. 

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QuickBooks POS vs. Square: Transaction Fees and Charges

As mentioned above, both QuickBooks and Square offer a free plan that allows users to pay per transaction. Here’s a quick comparison of what the fees are like based on published rates.

QuickBooks Transaction Fees

Published rates on the QuickBooks website indicate the following fees[6]:

  • 2.99% – Cards and Digital Wallets like Venmo, Paypal, Apple Pay, Visa, Mastercard
  • 1% ACH transfers
  • 2.5% – In-person payments made through a card reader  
  • 3.5% – Payments made by entering customer information manually

Square Transaction Fees

Based on their website, fees for accepting payments through Square are as follows [7]:

  • 2.9% + 30¢ – Fees for online stores, checkout, and API 
  • 1% ACH fees with a minimum of $1 per transaction for all payments
  • 2.6% + 10¢ – In-person processing fees for contactless, mobile, and Chip and PIN payments 
  • 3.5% + 15¢ – Processing fees for remote card payments and keyed-in transactions entered manually

Stripe has a fee calculator on their website to help you estimate total fees based on your annual sales. You may also be eligible for custom pricing if your annual revenue is over $250,000. 

Based on these rates, high volume sellers may be better off using the payment option for QuickBooks. 

Accepting Payments with QuickBooks vs. Square: Integration With Other Apps

Square has an app marketplace where you can see all the apps that you can link to your account. You can link all sales transactions completed through Square to accounting software like QuickBooks or Xero, online ordering apps, and other business tools. 

While QuickBooks has a marketplace as well, the integrations listed are mainly for linking accounting tools to other business apps. If you’re using QuickBooks to accept payments, it would be more practical if you’re also using QBO for bookkeeping. 

Quickbooks
Courtesy of QuickBooks

Do I Need QuickBooks If I Have Square?

Yes. If you have a Square POS system but QuickBooks is your main accounting software, you still need it. While Square has a lot of features and a lot of different business tools, it doesn’t have an accounting platform. You still need a tool to manage your accounting needs in addition to the square account that you’re using to manage payments. 

If you’re not using QuickBooks for your accounting needs, you can consider other types of cloud accounting software like Xero, Zoho Books, ZipBooks, Sage, FreshBooks, and One Up.

Does Square Integrate with QuickBooks?

Yes. Square app integrates with QuickBooks Online. With the one-way integration, all transactions made through Square will appear on the App transactions tab under Banking.

By using these two applications together you can make your business process more efficient.

 What Happens When You Integrate Square with QuickBooks?

 Integrating Square into QBO allows you to do the following:

Import Sales Transactions

Skip manual data entry and share all sales-related information between Square and QuickBook., You can also group sales by category to make reconciliation easier.

Capture All Information on Sales Receipts

Include information like customers, details like items, quantity, taxes, fees, discounts, and tips in the data imported from your Square account to your QBO account. You can also select to import individual transactions or the daily transaction summary.

Bring in Data from Multiple Locations

Integration will help you manage all sales transactions since you can import information from multiple locations.

Which Is Better for My Business: QuickBooks Or Square?

It depends. As with all types of software, you must weigh the pros and cons of using each payment processor.

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While Square and QuickBooks can help you receive payments, they do not belong to the same software type. Accounting functions will continue to be the main function of QuickBooks while Square is the clear winner if you need a fully functional POS system that integrates with online stores.

Based on the tools and features of each tool, here are some recommendations. 

Square
Courtesy of Square

Square POS: Recommended For: 

  • Businesses in the retail or restaurant industry
  • Seasonal businesses where business activity peaks during some periods
  • Square users who are satisfied with the tool’s price and existing features
  • Small online businesses with minimal requirements for managing payments
  • You need access to a complex sales and inventory management tool.
Quickbooks
Courtesy of QuickBooks

QuickBooks Payments: Recommended For:

  • Businesses looking for a full-service merchant account for better stability
  • Companies where QuickBooks is at the heart of your business operations and you’re only looking for a tool to help you accept payments without paying extra
  • Seamless integration between your payment processor and QBO account is a top priority
  • Service providers with little to no inventory who collect money from customers by issuing invoices

Since both tools offer a free 30-day trial, take advantage of the offer to evaluate these two tools.

In some cases, integrating the two may be the best choice. Automating transactions by allowing your business apps to share data allows for faster data capture and you can update your accounting records quickly. 

Since both tools offer a free 30-day trial, take advantage of the offer to evaluate these two tools.  If neither of them is a good fit for your business model, do a trial run with other payment apps in the market. 

Uncover more ways to cut manual processing in your accounting department. Schedule a free consultation with Envoice today, to see automation in action.

Footnotes:

  1. Federal Reserve
  2. Payments Dive
  3. Square
  4. QuickBooks
  5. Forbes
  6. QuickBooks Fees
  7. Square Fees

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