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Making QuickBooks Quicker

Tips for Efficiency and Effectiveness

Presented by:Edgar Rollins, CPAAccountency, LLC

Hosted by:Paychex

Accountency, LLC 2

About Edgar & Accountency, LLC

EdgarPracticing accountant since 1986.

President, Accountency, LLC

Certified Public Accountant

QuickBooks Certified Pro Advisor (2001, 2002, 2005, 2006, 2007, 2008, 2009 2010)

Chairman, Local Practitioners Resource Committee of the Maryland Association of Certified Public Accountants.

Accountency, LLCPeer-reviewed accounting firm providing the following services:

Accounting

Bookkeeping, Compilations, Reviews, Financial statement audits

Tax preparation

Business returns for sole-proprietors, partnerships, LLC’s in all states

Individual tax returns for businesses owners and others.

QuickBooks

QuickBooks cleanup (monthly, quarterly, annually)

QuickBooks set-up

Business advising

• Paychex, Inc. is a payroll and human resourceservice company serving approximately600,000 businesses in the US.

• Paychex provides payroll processing, retirementservices, insurance, and a fully outsourcedhuman resource solution

• The company is headquartered in Penfield,New York and has more than 100+ locationsacross the country and has 12,000 employees.

Contents1. Program Basics

2. Getting Started

3. Starting a New Company File

4. Organizing Your Data in QuickBooks

5. Refining the Chart of Accounts

6. Classes

7. Jobs

8. Lists

9. Items

10. Customer Database

11. Document Storage

12. Entering Bills

13. Paying Bills

14 Receiving Payments

15. QuickBooks Data Files

16. Add-In’s

17. Tracking Time

18. Multi-User

19. QuickBooks Reports

20. Year-End

21. Preferences

22. Customizing QuickBooks

23. Tracking Cash Expenses

24. Budgets

25. Other Tips

QuickBooks

Program Basics

Are You Using the Right Edition?

Online Pro Premier Accountant

Simultaneous Users

5 3 5 5

Balance SheetTracking Yes Yes

Working in 2QuickBooksFiles

Yes

Search for Transactions Yes

Client data Review Yes Yes Yes

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QuickBooks Editions

Buying tips: Amazon.com normally has the best price.Don't be afraid of online downloads. If you need to reinstall,

you can.

On line Pro Premier Accountant

Price $39/mo $184 $319 $319

QuickBooks EditionsPremier Edition

Contractor

Accountant

Manufacturing & Wholesale

Non-profit

Professional Services

Retail

Accountant Edition

Includes all premier editions

(Shows File/Toggle to Another edition)

Online

Tip: Everyone I know HATES the online version

If you need to share your file online, there are better ways.

Enterprise

Too expensive

Don't get it unless you absolutely need the Enterprise features like more concurrent users.

Mac

I tried it. Too many limitations, missing features & quirks.

Simple Start

Too stripped down to be of much use.

Tip:

The enterprise editions of QuickBooks are appropriate if you need 10,000 to 100,000:- Customers- Vendors- Employees- Inventory items

QuickBooks 2013

Customer and vendor records are more flexible and thorough. You can attach to-do's to them, assign multiple contacts and store more contact options, like Facebook addresses and Twitter handles.

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QuickBooks

Getting Started

The Home Screen

Title Bar is the bar at the topMenu Bar is under the title bar

Task Bar

Icon Bar is in the middleNavigation bar is on the bottomBar is a is at the bottom

The Home Screen is arranged by function and work flow

VendorsCustomersEmployeesEtc.

Vendors Customers

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Employees Company

Banking …and other info

Live Community/Help

Tip:I've found it to be rarely helpful and usually

annoying.

Try Google!

You can disable Live Community

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You can customize the Home Page

Starting a New Company File

Tip:

Don't use the QuickBooks sample company filesas your company file! (or as a shortcut to“Create a New Company File.”)

The New Company Interview

Tip:

Create a separate folder to hold each QuickBooks company file.

(one folder per company)

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Setting up QuickBooks

Stop and Think. What is my goal?

Tax returnsFinancial management and decision makingOther reporting

Review income & expense accounts

Tip:Best option – have a good CPA or otherqualified person set up an appropriate chart ofaccounts for your business.Otherwise – carefully select only the accountsthat apply to your business (you can add morelater).

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Never, ever, ever

enter beginning balances in an account

QuickBooks uses the double-entrysystem of accounting

Every transaction must have two “sides” with equal debits and credits

If you only enter one side, what happens to the other side?

Example of Double-Entry Accounting(How Debits and Credits work)

Assets: Normal balance

(to increase)

Bank, accounts receivable, other current assets, fixed assets, other assets

Debit

Liabilities:

Accounts payable, credit cards, other current liabilities, long term liabilities

Credit

Equity:

Equity Credit

Income:

Income Credit

Cost of Goods Sold:

Cost of goods sold Debit

Expense:

Expense Debit

Example: Cash sale for $100

Bank account is Increased (debited) for $100

Income is Credited (increased) for $100

In double-entry accounting, all transactions must have equal debits and credits.

The above transaction has:Debits: $100Credits: $100

Organizing your data in QuickBooks

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Setting up QuickBooks

Stop and Think. (Again.)What is my goal?

Tax returnsFinancial management and decision makingOther reporting

Entering:- Checks- Deposits- Invoices

All are Fun!

The Real power of QuickBooks

(like all databases)

is the reports that show your data in different ways.

QuickBooks gives us multiple ways to organize our data:

Chart of accounts

Classes

Items

Refining the Chart of Accounts

Reporting Considerations

Some standard reporting needs:Income tax returnsFinancial statements for banksFinancial statements for owners/investorsReports for regulatorsReports for management to run the businessBusiness planningReports for analysis

Tip:

Assume you will be audited.You will probably be correct.

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Examples of Accounts Needed:

Income tax returns

Penalties (not deductible)Federal income taxes (not deductible)State income taxes (deductible)Travel (deductible)Meals (50% deductible)

Examples of Accounts Needed (cont'd)

Sales tax returns

Sales by type (product vs service)Sales by stateThink: ITEMS

1099 – MiscW-2 labor1099 labor

Other special needs

Reports by business locationReports by line of businessReports by partnerThink: CLASSES

What accounts are needed for yourtax return?

Depends on:Your IndustryYour Entity type

Schedule C Sole-proprietor/single-member LLCForm 1120S S-CorporationForm 1120 CorporationForm 1065 Partnership/multi-member LLC

Schedule C is used by sole proprietors and single-member LLCs

Sample accounts:

• Sales• Advertising• Insurance (other than

health)• Interest

• Mortgage• Other

• Legal and professional• Office expenses• Repairs and

maintenance

Form 1065 is used by partnerships and multi-member LLCs

Sample accounts:

• Sales• Salaries• Guaranteed

payments to partners

• Taxes and licenses• Interest• Other

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Tip:

Don't create more accounts than you really needDo split up accounts with large balances (could help avoid an audit)Look for other ways to get your information rather than creating new accounts

Think: ITEMS!Think: CLASSES!

Tip:Many people choose entities that limit their

liabilityThat limitation will be compromised if you mix

business and personal expensesKeep business & personal separate!

QuickBooks Account types

BankAccounts receivableCurrent assetsFixed assetsAccounts payableCurrent liabilities

Credit cardsEquityIncomeCost of goods soldExpenseLong term liabilities

QuickBooks Account typesAssets: Normal balance

(to increase)Bank, accounts receivable, other current assets, fixed assets, other assets

Debit

Liabilities:Accounts payable, credit cards, other current liabilities, long term liabilities

Credit

Equity:Equity CreditIncome:Income CreditCost of Goods Sold:Cost of goods sold DebitExpense:Expense Debit

Account Numbering

Examples of numbering schemes:

1001000100001000 - MD

Suggested Account Numbering

1000 Assets2000 Liabilities3000 Equity4000 Revenues5000 Costs of sales6000 Expenses9000 Other income9500 Other expenses

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Account Types - Bank

1100 – 1199Example:

1110 - Checking1120 – Savings1130 – Petty cash1140 - PayPal1190 - CDs

Checking Accounts with Multiple Check Sequences

If you use different sequences of checks in youraccount (Manual checks, payroll checks, checksprinted from QuickBooks) you can create sub-checking accounts to hold them.

When reconciling, reconcile the parent (main)account.

GAAP

Accounting principles generally accepted in the United StatesVaries by industry

Account Ordering Basics

GAAP generally requires listing accounts from most current to least current.

Example: • Checking (demand deposit)• Certificate of Deposit (time deposit

w/restricted availability)• Loan to owner

GAAP: Accounting principles generally accepted in the United States

Varies by industry

“Current”

A current asset is an asset and can either be converted to cash or used to pay current liabilities within 12 months.

Current liabilities are all liabilities of the business that are expected to be settled with 12 months.

Account Types – A/R

1200 – 1299

Example:1210 – Accounts receivable1290 – Allowance for doubtful accounts*

* Required by GAAP

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Account Types – Other Current Assets

1300 – 1699

Example:1300 – Inventory1400 – Prepaid expenses1500 – Deferred income taxes1600 – Other current assets

Account Types – Fixed Assets

1700 – 1799Example:

1710 – Office equipment1720 – Furniture & fixtures1730 – Machinery1740 – Vehicles1750 – Leasehold improvements1760 – Land1790 – Accumulated depreciation

General IRS Rule – Fixed Assets

All fixed assets over $100.00

(Yes it's crazy. Don't blame me.)

Internal Revenue bulletin 2012-14, V, D De-minimis rule

Tip:

The depreciable cost of a fixed asset is:The cost of the assetSales taxDeliveryInstallation by sellerInstallation by your staffAccessories required to put the asset into useInspections.

Tip:

Fixed Asset or RepairPut vs. Keep Test

If the expenditure is to put the asset into useable condition, it is a FIXED ASSET.

If the expenditure is to keep the asset in working order, it is a REPAIR.

Put vs. Keep Test Example

You buy a truck that is up on blocks with no tires.The depreciable cost of the vehicle is the cost of the

vehicle and the cost of the tires.When you need to replace the tires, that is a repair.

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Tip: Splitting the cost of multiple assets

Example: You go to Best Buy and buy a computer for $1,000 and a

printer for $250.Your 2 items ($1,000 & $250 = $1,250) will cost $1,325 at

checkout (sales tax!)When entering the check or credit card charge, enter a split

transaction and show each item (computer and printer) on a separate line.

DO NOT include a separate line for sales tax.

The cost of the computer should be $1,060.The cost of the printer should be $265.

This split is easy. In a more complicated transaction with multiple items or additional charges like delivery, just make an approximate allocation of the costs to the individual assets.

Don't worry about the split if it's close and the total comes out tomatch the bill.

Tip:

Income statement accounts hold a balance for thecurrent year only.

(Income statement accounts close to retainedearning at year-end. The beginning balance atthe start of the new year is $0.)

Balance sheet accounts never close. They contain a running balance from “the beginning.”

Some balance sheet accounts will contain “zillions” of transactions. (ex: Bank, A/R, A/P)

Many balance sheet accounts are infrequently used. (ex: Vehicles, notes payable)

When possible, minimize the activity in the seldom used balance sheet accounts.

That will make it easier for you when you are reviewing account balances.

Example:

You have a contractor build a bathroom for your office for $10,000 payable in 4 installments.

Instead of using the check writing screen and posting the 4 checks individually to “Leasehold Improvement,” enter a bill from the contractor for the full amount. (You can change the bill amount later if it changes.)

Now you can look in the history for Leasehold Improvements and see the one entry showing $10,000 for the cost of the bathroom.

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Opening Balances

Never enter an opening balance for:

AccountsCustomersVendorsInventory items

Never let QuickBooks make an adjustment when a bank reconciliation doesn't balance.

Account Types – Other Assets

1800 – 1999Example:

1800 – Non-current notes receivable1900 – Non-current assets – other

Examples of other assets:Franchise rightsNon-compete agreementsGoodwillPatentsAccumulated amortization

Account Types – Accounts Payable

2200 – 2249Example:

2210 – Accounts payable.

(Note: There is rarely a need to have more than 1 A/R account)

Account Types – Credit Card

2250 – 2299

Example:2250 – American Express2260 – Visa, Bank of America

Account Types – Other Current Liabilities

2300 – 2799Example:

2300 – Accrued expenses2400 – Payroll payables2500 – Income taxes payable2600 – Deferred income taxes2700 – Other current payables

Account Types – Long-Term Liabilities

2800 – 2999

Example:

2800 – Non-current notes2900 – Non-current other

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Account Types – Equity

3000 - 3999Equity Accounts for

CorporationsCommon stock

Preferred stock

Additional paid-in capital

Distributions

Tax distributions

Retained earnings

Member's equity – Edgar

Beginning equity

Investments

Distributions

Earnings

Equity Accounts for Partnerships, LLC's, Sole-Proprietorship’s

Accounts in Blue on the previous slide should be zeroed out (“closed”) every year on the first day of the next year.

They should show only the current year activity.

For corporations, close to retained earnings.

For other entities, close to the beginning equity account

Account Types – Retained Earnings

Not an appropriate account for non-corporations, but QuickBooks leaves you no other choice.

Account Types – Revenues (Income)

4000 – 4999

Example:4010 – Sales

Rarely is more than 1 sales account needed.Think: ITEMS

Account Types – Costs of Sales

5000 – 5999“Costs of sales” or “Costs of goods sold”

Direct costs attributable to the production of the goods or services.

Costs of SalesPurchases (physical product that is

part of the sale)

Costs of labor

Other costs:

SubcontractorsDirect rentDirect utilities

Costs of Goods SoldPurchases

Costs of labor

Other costs:

Factory rentFactory utilitiesSubcontractorsWarehousingTransportation-in

Account Types – Expenses

6000 – 8999Example:

6100 – Labor costs6500 – Occupancy7000 – Variable expenses7500 – General business expenses8000 – Discretionary8500 – Owner's compensation

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Expenses6100 - Labor Costs

WagesPayroll taxesEmployee benefitsPayroll service fees

6500 - Occupancy

Rent

Utilities

Repairs (to office)

Condo fees

Office cleaning

7000 - Variable Expenses

Expenses that vary depending on level of production or sales volume.

8500 - Owner's Compensation

Salary

Commissions

Benefits (medical, retirement, etc).

8000 - Discretionary

TravelMealsEntertainmentContributionsBusiness gifts

7500 - General Business Expenses

“Everything else”

Account Types – Other Income

9000 – 9499

Example:Interest incomePurchase discounts (optional)Gains on sales of assets

Account Types – Other Expenses

9500 – 9999

Example:Interest expenseLosses on sales of assetsDepreciation

Tip:

Most lists allow you to group items into Parent-Child groups.

Sub Accounts

- Check (or uncheck) subaccount of _________box- Pick parent account

Collapse/Expand Financial Statements

Collapse – “hides” sub-accounts and shows the total of the sub accounts in the parent account.

Expand – shows all accounts and sub accounts.

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Tip:

Consider using Accounts/sub accounts to help see the “big picture.”

Example:6100 – Labor Costs (parent account)6110 – Wages (sub account)6120 – Commissions(sub account)6130 – Payroll taxes (sub account)

When collapsed, only Labor Costs will appear on the Profit & Loss statement (showing the total of the parent and all sub accounts).

Tip:In the previous example6100 – Labor costs6110 – Wages6120 – Commissions6130 – Payroll taxesWhen entering a transaction, if you select the parent account it

will show on the Profit & Loss statement as follows6100 – Labor costs6110 – Wages6120 – Commissions6230 – Payroll taxes6100 – Labor costs – other

Tip:Don't rename or delete the system accounts that

QuickBooks automatically creates:Retained earningsSales tax payableCost of goods soldEstimatesInventory AssetsPayroll liabilitiesPayroll expensesPurchase ordersUndeposited funds

Classes

Classes

Classes provide a way to group Profit & Loss transactions by:

DepartmentOfficeLocationPartnerAnything else you want to track.

You can print the P & L by class (in separate columns)Better than cluttering the Chart of Accounts.

P & L by Class

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You might use classes to, for example, separate transactions that relate to different departments or locations or types of business.

A construction company might want to track classes using New Construction, Remodel, and Overhead.

Your customer types might help you isolate groups by characteristics like Industry or Geographical Location.

Tip:For amounts that can't be efficiently split among classes,

create a class to hold those entries and allocate periodically by journal entry.

Example 1: If you have 2 partners and want to allocate income and expense items between them, create 4 classes as follows:

Example 2: If you have 2 properties and want to allocate income and expense items between them, create 3 classes as follows:

Partner Partner Allocate Allocate

1 2 Equally By Sales

Property Property

1 2 Allocate

Creating Classes

Go to Edit | Preferences | Accounting | Company Preferences.

Make sure that Use class tracking is checked. If you want to be prompted for a class designation

in transactions, check that box, too.

Class Reports

QuickBooks comes with two reports specially designed for tracking class-based transactions:

Profit & Loss by Class and Balance Sheet by Class

(both can be found in the Reports menu, under Company & Financial).

Of course, you can filter other reports to include a class column. You can also create a QuickReport for individual classes.

You can filter by class in QuickBooks reports.

Jobs

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Job Preferences Create The Job Type

Create the Job

Open the Customer Center.

Right-click on a customer who needs a job tracked and select Add Job

Job Reports

You'll learn how each job is doing in terms of things like:

• Profitability • The accuracy of your estimates • Time and mileage • Unbilled costs • Job status

Lists

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Customers & Jobs

Jobs are a “sub-account” of Customers

Example:Customer

- Job 1- Job 2- Job 3

Tip:

You can only create invoices for Customers or Jobs

Vendors

Everyone you pay

Except payment to employees for payrollFor non-payroll payments to employees, set

them up as vendors with a unique name.

Tip:

You can only track A/P or issue 1099's to Vendors.

Other Names List

Optional – You can just use one of the other name lists

- customers- vendors- employees

Tip:

You can move other names to:- customers- vendors- employees

YOU CANNOT UNDO THE CHANGE OR CHANGE OTHER NAME TYPES.

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Tip:

Some people use the other names for one-time use (ex: a vendor you will only every use once or very infrequently).

It usually works better to just make the payee a vendor and mark it as “inactive.”

Inactive Items

Tip:Some lists give you the option to show inactive

entries.If “ABC Company” is inactive, by default it will not

show up when using the drop-down list on the enter-check screen.

If you type “ABC Company” QuickBooks will give you the option to: - Use it this time (keep inactive)- make it active

Tip:

Creative use of lists are a good way to tweak QuickBooks.

For ExampleIf you don't use sales reps but want to track sales by

referral source, you could set up the sources as sales reps.

Working with Lists

You can:AddModifyDeleteMergeMark in active

Tip:

Merging List Entries1) Edit the item2) Change the name to be the EXACT as another

item3) QuickBooks will ask you if you want to merge

the items

Price Levels List

You may find that you have to offer a standard discount to one or more customers, use the price level feature, so that you don’t have to remember to include a discount item on each invoice:

QuickBooks Pro users can only establish Fixed % price levels, which are applied globally to all products. QuickBooks Premier users also have the option to create Per Item discounts, where you can selectively discount only certain items.

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Price levels allow you to apply automatic discounts to everything a

customer purchases.