QUICKBOOKS TIPS

April 15 is getting uncomfortably close.

QuickBooks, of course, can't do your taxes for you. But it helps you lay some of the groundwork. Following up on last month's column on customizing reports, we'll look at the program's tax-related reports and its powerful report-filtering options.

But first, you'll need to make sure that this output will be accurate.

Describe your company accurately
Your tax entity setting should have been established when you first set up QuickBooks, but verify that you've specified the correct one. Go to Company | Company Information. Your Report Information is in the lower left corner. Click the arrow next to Income Tax Form Used to see what's active.



Figure 1: Make sure that QuickBooks is set up for the correct tax entity.

QuickBooks automatically assigns some of your accounts to their matching lines on the 1040 and assorted forms and schedules; this is called tax line mapping. So when you create tax reports, related transactions will be grouped by these designations.

This can be a real time-saver – as long as you've specified the correct entity. If:

• was selected
• This setting is incorrect
• You're starting a business and don't know which to choose… … please contact us. If you switch entities, your existing tax line mapping will disappear and will have to be reassigned.

Dedicated tax reports
Many of QuickBooks' general financial reports provide tax-related information. But there are some that specifically relate to the numbers that will go on your return. Go to Reports | Accounting & Taxes | Income Tax Preparation. Here's an excerpt of what you'll see:



Figure 2: QuickBooks automatically assigns many accounts to the appropriate tax form lines, based on your specified tax entity.

Here, QuickBooks shows you which tax lines have been pre-assigned to your accounts. You can specify a tax form line for unassigned accounts, but this is something you should not attempt on your own. This report, though, will give you an idea of how useful your report output will be and where you'll need our assistance.

Other reports provide tax-related data. You can access them by going again to Reports | Accountant & Taxes and clicking:

• Income Tax Summary. This displays totals for each tax line that's relevant to your particular tax entity. Double-click on any number, and the Tax Line By Account report appears, detailing every transaction related to every tax-related account (you could add a column for Tax Line in Display options and make this quite a useful report).
• Income Tax Detail. This lists all individual transactions by tax form/schedule line assignment.

Paring it down
Some tax reports can be very lengthy; you may want to filter them to look at various "slices." Click Customize Report | Filters:



Figure 3: This window displays a powerful set of filtering options.

The options listed under Choose Filter are available on other reports; they help you set up incredibly complex searches using multiple filters.

Let's say you want a report that displays your installation labor costs on new residential construction from the last year (you could also throw other variables in). You'd simply choose the filters from the left pane and then select related options in the next pane (usually a list). You'd want to also click on the Display tab to make sure that the appropriate columns appear.



Figure 4: You can apply multiple filters to your reports.

QuickBooks reports can shave time off of tax preparation, and filtered views help you scrutinize your data in quite creative – and very useful – ways. The program's boilerplate reports have their place in simple examinations of your financial status, but filters are potent tools. They can facilitate the kind of deep analysis that helps you make critical business decisions.

If you have questions on this or any other QuickBooks feature, call or email us. We’re your partner and we’re here to make your business better.



If you make one resolution about improving your accounting procedures in 2012, it should be this: Make extensive use of the tools that QuickBooks offers for report modification. Comprehensive, meticulously-shaped reports that flow out of your carefully-constructed records and transactions are your reward for pounding on the keys every day, conscientiously recording income and expenses.

QuickBooks supplies you with a wide variety of pre-formatted reports whose modification options can help you do focused, critical analysis of your financial data. The right set of numbers will help you understand your history and plan for the future more effectively.

Note: The reports discussed and pictured here shows only one possible set of customization options. There are many variations. We can answer your questions.

Check your preferences
When you created your company file in QuickBooks, you chose between reporting on a cash (income and expenses are recorded when money changes hands) or accrual (recorded when you invoice or receive a bill) basis. This affects summary reports, but not those that break out individual transactions or are simply lists.

If you want to change this, click Edit | Preferences | Reports & Graphs | Company Preferences and click the desired button:



Figure 1: You can establish a preference for your summary reports' basis here.

You can set other preferences in this window that will affect your report output here, too, as you can see.

Altering the display
Open the Income by Customer Summary report (Reports | Company & Financial). Change the dates to reflect a range you'd like to see. Want the data displayed by different time increments – like week or quarter – instead of just the total? Click the arrow next to Columns and select Four week.



Figure 2: You can do some report display alterations from this toolbar; the options it offers vary by report.

By default, your report rows display alphabetically. If you want to view a column by total in ascending or descending order, select the column by hovering over the top number until the magnifying glass appears, and click on it. Click the arrow next to Sort by and choose Total, then click the AZ [down arrow] icon (in some reports, there will be other options here).

Additional options in this toolbar let you:

• Memorize the report
• Print, email or export it to Excel
• Hide or Show the Header
• Collapse or Expand the columns
• Refresh the report if you've made changes that will alter data

More display options
Click Customize Report to open this window:



Figure 3: This window outlines your report's content options.

Some of the options here duplicate what you saw in the toolbar. In addition, you can switch between Accrual and Cash for just this report, and add subcolumns in some. The latter is a complicated operation, one that you must understand well in order to glean any insight from it. We can help you with this.

Sometimes the subcolumns are generic, as shown in the screen above. In other reports, they're very specific to that group of data.

Clicking on Revert takes you back to the default format, and Advanced opens additional options specific to the current report.

More customization = more insightful results = more informed financial choices

Transaction reports have many similarities and two major differences: You can change the column order by hovering your cursor over the column label until a hand appears. Click, hold and drag the column to the desired spot and let go. You can also add or delete columns by clicking Customize Report and checking or unchecking labels.



Figure 4: In transaction – or detail – reports, you can alter the column structure.

Learn the mechanics of report display modification well, and your company's finances will come into much sharper focus, improving the wisdom of future choices. Up next month: filtering your reports for additional clarity.

If you have questions on this or any other QuickBooks feature, call or email us. We’re your partner and we’re here to make your business better.



Refunds. You probably wince at the word. Some – like customer refunds for returns – are fairly uncomplicated, thanks to QuickBooks' tools. Others, not so much. You may find yourself unable to balance your accounts receivable.

There are numerous scenarios that necessitate the use of credit memos, including overpayment, order cancellations and bad debt write-off. It's critical that these are entered correctly. If they aren't, you may lose a lot of the time that QuickBooks helped you save as you try to chase down a few dollars.



Figure 1: QuickBooks helps you identify refunds quickly.

Sending money back
Let's say a customer pays for an order but cancels before it ships. You could:

• Apply the balance to an existing invoice
• Keep it as an available credit
• Issue a refund

Click Customers | Create Credit Memos/Refunds. Select the correct customer and job (and A/R account, if you have more than one). Enter the items just as they appear on the invoice. When you're finished, click Save & New. The Available Credit window opens, displaying your options:



Figure 2: The Available Credit window displays your credit balance options.

You would select Give a refund and click OK. The Issue a Refund window opens and should already be filled in. If everything is correct, click OK. The refund check has now been entered in the checking register, ready to be processed.

WARNING: If the invoice was paid with a credit card, it gets complicated. Your instructions will depend on whether you are using Intuit Merchant Service for QuickBooks or another merchant account service. You'll also have to deal with transaction fees. We can help you deal with this.

Other refund options
If the customer has open invoices, you may want to choose Apply to an invoice in the Available Credit window. A list opens; just select the correct invoice. Or if you want to have those extra funds available for other invoices but don't want to apply them immediately, click Retain as an available credit. When you want to use them, click the Apply Credits button in the lower right corner of the invoice.



Figure 3: When issuing a refund, QuickBooks can hold those funds to be applied to invoices later.

Sometimes, customers overpay an invoice or statement charge, or make a down payment for which there is no invoice. This is easy to fix. Open the Customer Payment screen (Customer Center | Transactions | Received Payments) and double-click the related payment. In the screen's lower left corner, you'll see this:



Figure 4: Click the correct option here.

Click the correct button, then Save & Close. The Issue a Refund window opens; you'd treat it the same way you did when you dispatched a return refund.

Another use
You can also use credit memos to write off bad debt if you are using the accrual method of accounting.

If you don't already have a Bad Debt item in your item list, set up a new item as an Other Charge. Name it “Bad Debt” and match it to the correct account.

Open the Credit Memo window and select the customer, then select Bad Debt as the item. You'll get a message saying that the item is associated with an expense account; click OK. Enter the write-off amount minus sales tax if taxable (be sure the Tax column is correct) and click Save & Close.

WARNING: Enter two lines on the credit memo if it combines both taxable and non-taxable items (both charged to the Bad Debt account), one for each type. Be sure that the Tax Columns are correct.

The Available Credit window opens. Select Apply to an invoice. Put a check mark next to the correct one and click Done.

Make refunds make sense
It seemed easier in the days when you just wrote a check for a refund or made an entry in a paper ledger, didn't it? Using QuickBooks credit memos, though, helps you maintain records that follow standard accounting procedures and simplifies our understanding of your files. We'll be glad to help you make sure that this sometimes-complex task is done right from the start.


No matter which version of QuickBooks you're using, there are always ways to make your workday easier. As with any software, we tend to learn the features we need and not much more. But small changes in the way you operate can add up to significant time savings and more accurate files. If you jumped into QuickBooks without a thorough introduction, consider these tips.

Use the Open Window
list Spend some time in Preferences, and you'll be surprised to learn that you have more flexibility than you knew. QuickBooks is designed to work for a tremendously wide variety of businesses, so it comes with some features activated but many dormant.

The Open Window list is a good example. Do you tire of closing windows to find a screen that you used several tasks ago? Make sure that you're in one-window view (View | One Window), and then click View | Open Window List. Click on any entry to move to that page.



Figure 1: The Open Windows list lets you easily move among active screens.

Make account assignment mandatory
QuickBooks lets you enter transactions without assigning them to accounts. So your Chart of Accounts has two accounts labeled Uncategorized Income and Uncategorized Expenses that serve as repositories for these transactions. This means that when you run reports or prepare for taxes, you may have a hard time remembering the circumstances of those transactions and will find it difficult to assign them to accounts.

Do yourself a favor. Set up QuickBooks so that you must assign an account to every transaction. This will take extra time upfront, but not as much as if you try to recall the transaction three months from now. Go to Edit | Preferences | Accounting | Company Preferences and make sure that Require Accounts is checked. If you have questions on this, please call or email us.

Use the Account Prefill fields
Speaking of accounts, here's a little time-saving tip. If you have vendors that are always assigned to the same account(s), you can establish this constant in the vendor record. Simply open the Edit Vendor window for a client and click the Account Prefill tab. Select the appropriate selection(s) from the drop-down lists. If a payment is sometimes split between multiple accounts, you'll handle this division when you add transactions.



Figure 2: Designate vendor accounts to save time when creating transactions.

Use "Pending Sales"
Invoices, sales receipts and credit memos can be earmarked as "pending." These sales do not show up in registers or reports (except for the Pending Sales report) and can't be used for transactions where payment has already been applied. Create the transaction and click Edit | Mark [form name] As Pending. To finalize it, open the form and click Edit | Mark [form name] As Final.

This action can be useful in multiple situations, including:

• Backordered items
• Draft approvals
• Estimates
• Time-tracking for jobs
• Profit and loss reports that show the impact of pending sales (choose Either as the posting status [Non-posting or Posting] under Filters)

Figure 3: You can mark a payment as "pending" in several situations.

Be kind to your accountant: Set a closing date
Once we've worked with your QuickBooks file up to a certain date, entering, editing or deleting transactions prior to that date wreaks havoc with the balance of your books. To be safe, your administrator should password-protect the ability to do this, so that no one does this intentionally or unintentionally. Go to Edit | Preferences | Accounting | Company Preferences and enter a closing date and password. We will change the date each time we complete our work.



Figure 4: Password-protect closed periods to preserve the accuracy of your books.

These are just a few examples of ways you can customize QuickBooks to make your workdays more productive and your record-keeping safer and more reflective of your business. We can help you further tailor the software to make it a better fit.

If you have questions on this or any other QuickBooks feature, call or email us. We’re your partner and we’re here to make your business better.


As it usually does this time of year, Intuit has introduced new versions of its Pro and Premier products. QuickBooks 2012 promises to help you get better organized, save steps, and acquire more in-depth financial insights.

The new Express Start is designed for businesses that want to blast through setup and start entering customers and invoices. You have two other options, though: Advanced Setup is the old EasyStep interview that solicits more details. You can also open an existing file or convert data from Quicken or other accounting software.

Express Start requires minimal input: company name, industry, company type, tax ID, and contact information. After you save your company file, it lets you start adding or importing customers/vendors/employees, products/services, and bank accounts.



Figure 1: Express Start simplifies company setup.

An Activity-Driven Calendar
QuickBooks' Reminders keep you apprised of each day's tasks, but they don't provide any information about the past or future. QuickBooks 2012 solves this problem with its new Calendar. When you enter an appointment, to-do, or key business task (invoices, bills, purchase orders, etc.), it appears in the calendar. You can display a graphical view of the month that tallies activities for each day and lists them below. Daily and weekly views are in list form. And links open the original documents.



Figure 2: The new Calendar displays daily, weekly, and monthly views of your financial transactions.

Save Excel Formatting
Once you've formatted a QuickBooks report in Excel, it's frustrating to have to reformat it each time you run it for different time periods and/or with your ever-changing content. Excel Integration Refresh simplifies this process. You can now export a report to Excel, make formatting changes and save them, and then reapply them later to the same type of report using different date ranges and your updated QuickBooks data. Acceptable alterations include:

• Row and column header font formatting
• New formulas
• Renamed column and row headers, and report titles
• Resized columns
• Inserted columns and rows
• Inserted formula text

You can do this by opening your report in QuickBooks and clicking Update an existing worksheet, or by launching your report in Excel and clicking the QuickBooks tab on the toolbar, then the Update Report button.



Figure 3: This window opens when you click Update Report in Excel.

A New Report Community
There's always room for more report formats. QuickBooks 2012 offers a library of Contributed Reports, variations created either by Intuit or your fellow users. You can select one of these, like Customer Sales By Quantity By Item Detail and instantly populate it with your own data.

You can sort these templates by industry and rating, and view them as a list, in a grid, or in the Report Center's Carousel view.

Centralized Operations
QuickBooks 2012 also saves you time with its new Centers. The Inventory Center works similarly to those available for customers, vendors, and employees. It's a clearinghouse of item records and transactions that can be viewed and sorted. You can also do inventory housekeeping tasks here, like adding items and launching transactions.

The Lead Center helps you carefully track new leads that you either paste in from Excel or enter manually. You can add to-dos and notes to contact records, and convert them into customers.

Upgrading Can Be Tricky
Intuit has included other, smaller time-saving organizational and reporting tools in QuickBooks 2012, like One-Click Transactions, which lets you create related transactions from existing ones (i.e., invoice to credit memo) with one click.

There's nothing especially difficult about using most of QuickBooks 2012's new features. But upgrading and setup are sometimes quirky, and the Excel Integration Refresh tool has a learning curve. We're happy to help you start your company file on the right foot or get acclimated to this latest version.



Figure 4; Track your leads and convert them into customers in the new Lead Center.


QuickBooks' standard reports are critical to understanding your company's past, present, and future. But the program also offers innovative tools that can make them significantly more insightful and comprehensive.

QuickBooks offers two simple conventions that let you identify related data: classes and types. Classes are used in transactions. Types are assigned to individual customers, vendors, and jobs.

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.

Creating Classes
First, make sure that QuickBooks is set up to use 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. QuickBooks already contains a Type field in customer, vendor, and job records.

It's easy to build lists of options for both. To define classes, go to Lists | Class List. In the bottom left corner of the screen, click on Class, then select New from the menu. You'll see this:

Figure 1: To create a class, just give it a name and click OK.

Let's say that you're a contractor and you want to separate remodeling jobs into room types, like Bathroom or Kitchen. Go through the above steps again. Enter "Bathroom" in the Class Name field and click the box next to Subclass of. Open the list and choose "Remodel." Click OK.

Tip: If your class list grows lengthy and you want to tidy it up, you can make classes that you're not currently using inactive by checking the box in this window. It will remain in your QuickBooks records and can be reactivated again.

Putting Classes to Work
Now you can use classes in transactions. Open a blank invoice and select a customer. The Class field will be next to the customer name. If the entire invoice will be assigned to the same class, click the drop-down list and select it. You can also assign separate classes to individual line items:

Figure 2: You can assign different classes to individual line items in transactions.

Not all invoice templates include a column for classes. You can add this by selecting the invoice form you want to modify and clicking Customize in the toolbar.

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. Go to Lists | Class List and select a report or graph.

Figure 3: You can filter by class in QuickBooks reports.

Warning! The Balance Sheet by Class report is complicated and may produce unexpected results. Let your ProAdvisor help you work with this one. They can also help you set up a solid class structure.

A Simpler Assignment
Customer, vendor, and job types are a bit less complicated. Job types are especially useful; you can track, for example, profitability and time spent on individual projects. Customer and vendor types can produce output for things like targeted mailings and reports.

Creating types is very similar to creating classes. Go to Lists | Customer & Vendor Profile Lists, and select the type you want to work with. You'll follow the same instructions here as you did for classes. Types do not appear on transactions; they're designed for your own internal use, and they're stored in records.

Figure 4: Customer, vendor, and job types are specified in their records.

Classes and types can be used very effectively in your bookkeeping, but they require a good deal of thought and planning upfront to get accurate, meaningful reports. Let your ProAdvisor know if he/she can assist as you attempt to use these powerful forms of classification.



Next to payroll, paying bills is probably your least favorite task in QuickBooks. You don't have to use this feature – you can keep stacking bills on your desk, scrawling the due dates on a paper calendar, and writing checks.

If you're still operating this way, though, you're missing out on the numerous tools that QuickBooks offers to track your accounts payable, including the ability to:

• Enter bills as they come in
• Set reminders for bills due
• Pay bills easily • Locate a bill or payment quickly
• Enter bills as (or after) you receive items
• Link bills to purchase orders
• Have instant access to a bill's status

Receiving the goods
When an expense bill comes in (from a utility company, for example), click the Enter Bills icon on the home page, or Vendors | Enter Bills. A window like the one displayed above opens. Select the vendor and fill in the blanks. Make sure that the Expenses tab below is selected and the appropriate account number and amount fields are completed. If it's a bill for an item that already has a related Item Receipt (the shipment preceded the bill), QuickBooks instructs you to use Vendor | Enter Bill for Received Items. Follow the prompts.

Note: Dealing with incoming inventory is complex. Consult with us if you plan to use this feature.

If the bill came simultaneously with items, click Vendors | Receive Items and Enter Bill. When you select the vendor from the list, this box opens (if you have sent a purchase order):

Figure 2: QuickBooks is telling you that you have open orders with this vendor.

Click Yes. The Open Purchase Orders box opens, containing a list of open POs. Select the one(s) you want and click OK. The bill form opens, containing the details of that purchase order. Change quantities if they don't match the shipment, and edit other fields as necessary. Save the bill.

Settling your debts
It's good to set reminders for bills. Go to Edit | Preferences and click Reminders. Make sure that that Show Reminders List… box is checked, then click Company Preferences. Find the Bills to Pay row and enter the advance notice you'd like. Indicate whether you want to see a list or a summary, then click OK.

When bills are due, click the Pay Bills icon or select Vendors | Pay Bills. A window opens displaying all outstanding bills. You can pare this down by selecting a date in the Due on or beforefield and filtering by vendors. The screen will look something like this:

Figure 3: You can easily select the bills you want to pay.

Enter a check mark next to the bills you're paying, and change the amount in the Amt. To Pay field at the end of the row if necessary. At the bottom of the screen, you can set the payment date and type, use any discounts or credits, and make sure the correct payment account is selected. When you're done, click Pay Selected Bills.

Tip: You can have credits and discounts automatically applied by going to Edit | Preferences | Bills.

After You've Paid Up
There are a number of places where your bills appear in QuickBooks, including:

• The Unpaid Bills Detail report
• The A/P Aging Detail report
• The Vendor Center
• QuickReports
• In the Recent Transactions pane of some forms
• On the bills themselves

Figure 4: QuickBooks displays the Paid status of bills.

QuickBooks also lets you void and delete bills, and copy and memorize them. Check with us before voiding and deleting, as this can make some complicated changes in your accounts.

You can just pay bills by using Banking | Write Checks or Enter Credit Card Charges. But the payoff for tracking bills is instant access to your accounts payable status, better relations with vendors, and a more insightful accounting of your company's cash flow.

Data entry and modifications in QuickBooks can be tedious. Beginning with QuickBooks 2010 Pro Edition and above, that job got a lot easier. The Add/Edit Multiple List Entries tool does just what its name implies: It lets you add entries to your lists of customers, vendors, services, inventory parts, and non-inventory parts. It also makes changing one or several of them quick and easy.

Using this feature, you can: 

• See customized views of your list data 
• Enter missing information 
• Create new entries from duplicates of existing ones 
• Do a mass change of a whole column 
• Copy and paste records from Excel

There are myriad applications for this tool. You could use it, for example, when you're changing Preferred Vendors for a group of items and you don't want to have to edit each individual item record. Or when the area code for select customers or vendors has changed. You could use it if you're adding an inventory item that's just slightly different from another, or when your accountant tells you to change the name of an account.

Building the perfect view
To get started, click Lists | Add/Edit Multiple List Entries. In the screen that opens, click the arrow next to the List box and select the type of data you want to see, like Customers. Then select the group that you want displayed by dropping the View list down. Click the Customize Columns button. This window opens:



Figure 1: Make sure your columns are correct and in the right order.

The list on the left represents all possible column labels. To make the list on the right reflect what you want to see in your table, highlight the correct item and use the Add or Remove buttons and the Move Up or Move Down buttons. When you're satisfied, click OK. The table will change to display those columns in that order.

TIP: You may have a lot of empty space between columns. To close those gaps, put your cursor on the faint vertical line that separates two column names. A cross-like symbol will appear. Drag it left or right until the columns are positioned well.

Let's say that a customer commissions a new job. Since so much information will remain the same as in previous jobs, you can duplicate her record. Highlight the last entry in her list of jobs and right-click. Select Duplicate Row. The new entry will contain her default information, except the name will change to DUP (NAME OF PREVIOUS JOB). Change that phrase to the name of the new job and click Save Changes if you're done.



Figure 2: It's easy to duplicate an entry's information.

Mass changes
You may occasionally want to make the same change to a subset of records. Say a city's zip code changed and you want to find the customers affected. You'd open the Customers list, click on the View arrow and select Custom Filter. Then:

• In the Search list, choose from All, Active, etc. 
• In the For box, enter the common attribute, like the zip code.
• Click on the arrow next to the in box, and tell QuickBooks where you want to search (address fields, all common fields, etc.). 

Figure 3: You can search for a group of entries that share a common characteristic.

• Click Go. QuickBooks will display a list of all of the matching entries.
• Make your change to the entry at the top of the list, then right-click on it. You'll see this menu:

Figure 4: The Copy Down command changes all entries in a column to match the top one.

When you select Copy Down, all of the entries duplicate the first one in the list.

Some housekeeping
Anything you change in these views – as long as you click Save Changes – will be reflected throughout QuickBooks, wherever that record appears. If you've made an error, like using a dollar sign, you'll get a message telling you to fix it.

You can use Add/Edit Multiple List Entries in other ways. For example, it's a good way to see how thorough your recordkeeping is. Take a look at your lists occasionally to spot missing data. Or say you were at a trade show and signed up new customers, but you didn't have QuickBooks on your laptop so you entered them in Excel. Once you've made sure that your column names and order in Excel match those displayed in Add/Edit Multiple List Entries, you can just copy and paste the new customers in.

This feature is easy to use, but be cautious. We can help with complex modifications. Add/Edit Multiple List Entries is one of the ten best features QuickBooks has incorporated in recent years. It's an easy way to get a birds' eye view of your lists, and a great time-saver.

Does your business have clients whose work sometimes requires multiple steps drawn out over weeks or months, like remodeling projects or court cases? If so, and you're not using QuickBooks' Jobs features, you're missing out on the opportunity to track and evaluate the financial impact of these complex tasks.

You can, of course, just send an invoice out to these customers. But if you do, you're not taking advantage of what QuickBooks' job tools can do. If you create and track these projects faithfully, you'll have valuable insight that you wouldn't otherwise.

Simple definitions
Before you create jobs, you'll need to make sure that QuickBooks is set up properly. Click on Edit | Preferences and then on the Jobs & Estimates and Company Preferencestabs. You'll see this window:

Figure 1: It's important to set up Jobs options before you begin.

There are just a few preferences to set here, but you need to make any necessary changes before you launch into job creation. Also, if you track time, scroll down on the list on the left to Time & Expenses. Be sure time-tracking is turned on, as this will likely be an important element of your jobs.

Before you can attach jobs to customers, you'll have to define your Job Types. Go to Lists | Customer & Vendor Profile Lists | Job Type List. A small window opens with command bars at the bottom. Open the Job Type tab and click New. Let's say you're a building contractor. You might type Remodel in the Job Type Name box, then OK.

Repeat until you've entered all of your job types. If you want to build subtypes, click New again and enter the name of the subtype, like Kitchen. Click Subtype of and click the arrow to drop down the list. Select the parent type and click OK.

Figure 2: It's easy to build a list of your job types and subtypes.

Outlining your jobs
Of course, you'll be attaching jobs to customers, though each Customer:Job will exist as an individual entity. So start by opening the Customer Center. Right-click on a customer who needs a job tracked and select Add Job. The New Job window opens, which should already contain your customer's profile. Click on the Job Info tab. In the Job Name field, enter Main Home Kitchen Remodel, and skip over the Opening Balance field.

Click the arrow to open the Job Status list and select Awarded from the options offered (None, Pending, Awarded, In Progress, Closed, Not Awarded). Select the Start Date and Projected End Date. Type a brief description in the Description field and select the correct job type. Your window will look something like this:

Figure 3: You can lay out simple details about each job on this screen.

Click OK to save this job. It's now available for use in transactions and reports. When you're creating an invoice or estimate for a specific job, for example, or filtering a report, you'll need to make sure that you select the correct job, and not just the customer. Otherwise, your bookkeeping will not be accurate.

Estimates and progress invoicing
If you do many jobs that take weeks or months, you may find yourself in a bit of a cash flow crunch. Rather than billing for everything at the end, companies in this position often deal with that by creating estimates and dispatching progress invoices. You don't even have to send estimates to customers; they're helpful, though, for gauging your projected income and expenses.

To build a progress invoice partway through a job, create the estimate and click Create Invoice. This window will open, offering three billing options:

Figure 4: QuickBooks gives you three options when you're creating a progress invoice.

Select the one you want and click OK. Your invoice will appear, billed according to your instructions.

In-depth reports
Insightful, detailed reports are your reward for all of this meticulous bookkeeping. QuickBooks' job definitions may be fairly simple, but the reports they make possible give you tremendous insight into how cost-effective your projects are. 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

QuickBooks' job-tracking tools are not overly difficult to use, but you may want our help in getting your jobs set up and preparing progress invoices. Once you get more than a few jobs in the pipeline, you're going to want to be very confident in your ability to keep up with these procedures. But if you do, you'll have a deeper awareness of how all of your inventory and labor and other expenses are working together to complete projects profitably.

Every month, we provide information on how to better use QuickBooks. By implementing the best methods for managing your accounting data, you can actually improve your financial bottom line.

But all of your careful work is for naught if a malicious hacker gets into your computers, or if you experience identity theft by an employee. Social security and credit card numbers, home phone numbers and addresses, an excruciatingly detailed profile of your company – all can be lost in the time it takes to realize that it’s gone.

Are you guarding all of that precious data? QuickBooks provides ways to help you. Some are automatic, but you have to initiate others.

Control cyberspace

QuickBooks displays some screens using Internet Explorer; the browser opens when you access certain features.  It’s important that you set the security level correctly so that you’re not exposed to shady outside influences.

To check your configuration, launch IE and go to Tools | Internet Options. This window opens:



Figure 1: Be sure that your Internet zone in Internet Explorer is set to Medium.

Click on Security, then on Internet, and move the slider bar to Medium (Intuit recommends this). Click OK and close IE.

Your best defense is a good antivirus program. If you’ve hesitated to buy one because of the price or the software’s intrusiveness, consider Microsoft Security Essentials. It’s free, it’s good, it can be used in businesses that have up to ten PCs, and it guards against viruses, spyware, and other malicious software (malware).

Limit access

If you have QuickBooks on a network, or multiple people sign in and out on the same PC, you will want to limit the access of employees to only their work areas. Go to Company | Set Up Users and Passwords | Set Up Users, and you’ll see the User List window. Click Add User, and enter a user name and password in the next window (if you’ve already set up passwords but not permissions, highlight a name and click Edit User). Click Next.

Unless the person should have full access, choose Selected Areas of QuickBooks and click Next. You’ll see this:

 

Figure 2: As you go through each module, you’ll select an access level for the current employee.

You’ll work through a series of windows, including Inventory; Checking and Credit Cards; and Payroll and Employees, indicating how much access should be granted. When employees sign in, they will only see the allowed screens.

Payroll a special case

Be very careful when you assign Payroll permissions. Employee social security numbers are stored there, and anyone granted full access can see them. If you’ve assigned Selective Access to an employee for creating and printing payroll transactions and reports, he or she will still be able to view them on printouts and in reports.

To prevent this, go to Edit | Preferences and click the Payroll & Employees tab, then Company Preferences. At the bottom of the window, you’ll see a line that reads, Display employee social security numbers in headers on reports. Make sure this is checked only if you want the numbers to appear.

And of course, you may not want social security numbers printed on paycheck stubs and vouchers (though you may not have a choice; the state of California, for one, requires it). In this same window, click on Pay Stub & Voucher Printing to make your wishes known. You’ll see this:


 
Figure 3: Do not check the box next to Employee social security number unless you want it printed on paycheck vouchers.

Intuit and you

Intuit, publisher of QuickBooks, works hard to keep your data safe. The company:

• uses a data encryption technology similar to that used by major financial institutions for QuickBooks’ online banking and online vendor payment tasks
  
  
• does not know your passwords
  
  
• offers a subscription-based, automatic online backup service, so that your files are safe in case of loss or damage (QuickBooks 2011 only; QuickBooks Online Backup works with all versions)
  
  

Figure 4: Regular backup is more than a good idea. It could save your business someday.

But it’s important that you do your part. Use passwords wherever offered, make them complex, and change them frequently. Maintain regular backup files on your own if you don’t subscribe to Intuit’s service. Cross-train employees so that if you experience a disaster, more than one employee knows the ropes. Know a lot about who is managing your network.

To be doubly safe, ask us to evaluate your whole system’s security profile. We can help you if your business suffers a breach, but better to try to avoid it ahead of time.

There aren’t that many different types of forms to keep straight in QuickBooks, but you likely don’t use all of them. You probably use invoices and purchase orders frequently, and may fill out the occasional sales receipt or credit memo or estimate.

But what about sales orders? You may find that they could make your bookkeeping more accurate and easier. There are only a few situations where they’re needed, but they’re the appropriate form to use at those times.

A happy problem

If you’re lucky (or a good businessperson), you have customers who place orders frequently. It’s not practical to invoice them every time they order, but you want to make sure everything is recorded. A sales order (which you’ll eventually turn into an invoice) is the correct choice for these customers.

Warning: You must use a sales order from the beginning of the selling process; you can’t switch gears part-way through.

To get started, click Customers | Create Sales Orders. A blank form like this one will open.
 


Figure 1: To create a sales order, you simply fill in the blanks and select from drop-down lists, just as you would with an invoice.

Would you send a sales order out to a customer in a multi-order situation, or wait until you have enough sales to dispatch an invoice? That’s up to you. It’s a good idea if you want them to be aware of the costs that are piling up.

Looking good

Before you begin entering data on the sales order form, check the fields to make sure they’re all needed, or if you’re missing any. The Template field in the upper right corner should display Custom Sales Order; change it if not. Should you want to add or delete fields, click the arrow next to Customize, then Customize Design and Layout.

If you’ve just been sending out the default forms that QuickBooks offers, you should consider adding some personalization. Click Create new design if you want to upload a logo and select fonts, colors, etc. Once you’ve decided on a theme, QuickBooks can apply it to all of your forms.

To add or delete fields, click Customize data layout. By checking and unchecking boxes, you can alter the content of your sales orders.
 


Figure 2: It’s easy. Just check or uncheck boxes to have field labels appear (or not) onscreen and in print. You can also change the label text, reorder columns, and designate text for a footer.

Halfway there

Another situation where you might want to send a sales order is when you’re doing partial invoicing; that is, when you don’t have enough items to fulfill the order as it came in.

In a case like this, go ahead and complete a sales order as if you had everything in stock. When you’re done, save the sales order, then find it and open it again. Click the arrow next to Create Invoice, then click Invoice. You’ll see this dialog box.
 


Figure 3: This dialog box lets you create an invoice for all items on a sales order or just a subset.

Click Create invoice for selected items, then OK. The Specify Invoice Quantities for Items on Sales Order(s) window opens. Items on the sales order you created are listed here, with additional columns for number available and number you ordered, number previously invoiced, and the unit of measured used (if applicable).  

There’s a check box next to Show quantity available instead of quantity on hand. Here, you can opt to display the number of each item that’s truly available; that is, the number actually in inventory minus those reserved, either on other sales orders or for building inventory assembly items. Or you can request the number that’s physically in inventory.

Using this information about availability, you’ll enter the number of items you want to invoice from this sales order in the To Invoice column.  It would look something like this:
 


Figure 4: When you convert a sales order into an invoice, you can select which items should be included.

Click OK, and your invoice appears. Do any editing necessary, and dispatch the invoice.

Tip: You can choose whether to have the items with a quantity of zero display on your invoice by going to Edit | Preferences and clicking on the Sales & Customers tab.  

Tracking it all

There are several places in QuickBooks where you can view your sales orders. The best way to keep track of those partially filled is through two reports, Open Sales Orders by Customer and Open Sales Orders by Item. You can also see them, of course, in the Customer Center, and in the balance and transaction history found next to transaction forms.

Sales orders can help you better track sales, speed up receivables with partial invoices, and maintain communications with frequent buyers. But partial invoices require extra attention to inventory. Before working with them, it’d be best to schedule a session with us; we can help you keep things straight.

How do you let customers know they owe you money? Probably by sending invoices. And how’s that working for you? If your customers are all conscientious and pay on time, maybe that’s all you need to do.

But perhaps you need to consider doing at least part of your billing by dispatching statements. These forms have their drawbacks. For example, you can’t include sales tax or discounts on them. You can’t group related charges and subtotal them. And your customization options are weaker than in invoices.

Still, you may want to send statements when you’re billing on a regular basis for services, or when a client has built up numerous charges, some of which are past due. Statements lay out the customer’s current financial obligation to you, including finance charges, should you choose to impose them.

Outlining the charges

To get started, click on the Statement Charges icon on the desktop. (If there’s no icon and you want one, click Edit | Preferences, then Desktop View | Company Preferences, then click in the box next to Statements and Statement Charges.)  Or you can just click Customers | Enter Statement Charges.


 
Figure 1: Click on Edit | Preferences to add Statement Charges and Statements icons to your desktop.

The customer register opens. Select the customer you want to create a charge for by clicking the down arrow next to Customer:Job. If you are in the middle of more than one job for the customer, make sure you make the correct one active.

Go down to the first blank line and change the date if necessary. Tab to the Item field, and drop the list to select the relevant product or service. Tab and enter the Quantity. The Rate and Amt Chrg should be filled in (if not, go back to Lists | Item List and edit the record).  QuickBooks will have entered STMTCHG in the Type field. Tab to the Description field and complete it if it’s blank, and select a Class if you’d like. Your window will look something like this:



Figure 2: It’s very easy to enter statement charges in QuickBooks.

If you have another charge for that job, go ahead and enter it. When you’re done with charges for that job, click Record.

Build a statement

When you’ve entered all of the charges, you can easily convert them to statements. From the Home page, click on the Statements icon. This window opens:



Figure 3: You’ll select options from this window when you’re building a statement run.

If the window contains an A/R field, that means that you have more than one receivables account. Be sure to select the appropriate one. Verify, too, that the date is correct. This will appear in the customer’s register as the Billed Date.

Here, too, you can choose a range of transaction dates for your statement(s), or simply opt to create forms for all customers with open transactions (in the latter case, you can limit it to transactions that are more than 30 days past due). You must also indicate whether you want statements sent to all customers or a subset. You can manually choose one or many customers, or select by Type (commercial, residential) or Preferred Send Method (E-mail or Mail).

QuickBooks gives you some control over your statements’ layout; click Customize if you want to explore this. Next, you can indicate whether you want to create one statement per customer or per job. The other options here are self-explanatory, but be sure to go through them every time you create statements.

Another decision

Will you be wanting to assess finance charges on the past due charges? This is a decision you may want to talk over with us. It’s a complex issue. Should you want to do so, though, clicking on Assess Finance Charges will open the Assess Finance Charges window.

When you’re satisfied with your choices, you can Preview your statements. Here’s an example:
 


Figure 4: Statements lay out all transaction activity within a given period.

Statements don’t take over the role of invoices, but they can be an effective way to let your customers—and you—get a comprehensive view of their financial interaction with you. If you’re still unclear on how these forms can fit into your accounting workflow, we can help.

Just about every QuickBooks user relies on the Report Center and Reports menu, but if you’re like most, you have a small handful of reports that you tend to rely on. In this article we’ll go off the beaten path and explore ten reports that many users overlook. Even if you are using some of these reports, we’re sure you’ll find a few more to add to your repertoire.

1. Profit & Loss Summary Prev Year Comparison:  To access this report, choose Reports, Company and Financial, and then Profit & Loss Summary Prev Year Comparison. Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting—as well as how fast expenses are rising.

2. Balance Sheet Prev Year Comparison: You’ll find this report also within the Company and Financial section of the Reports menu.  As with your income statement, it’s important to compare where certain balances stand now versus last year:
• Cash
• Accounts Receivable
• Inventory
• Accounts Payable
• Other Liabilities, such as lines of credit or short term loans

3. Statement of Cash Flows: As with the two preceding reports, you’ll find the Statement of Cash Flows in the Company & Financial section of the Reports menu. Profit & Loss reports enable you to see what you earned, while Balance Sheet reports help you determine what you have—as well as what you owe. However, neither report necessarily provides a clear picture of where cash is coming from, or going to. As shown in Figure 1, you’ll be able to see:

• How much cash you’ve taken in from sales and spent on expenses

• Cash inflows or outflows from borrowing, repayment, or investing activities
In short, this report shows you exactly what caused your bank balance to increase or decrease during a given report period.



Figure 1: The Statement of Cash Flows report explains changes in your bank account balance.

4. Collections Report: Tricky economic times mean it is more important than ever to keep track of your collections.  Fortunately QuickBooks makes it easy to contact customers with overdue invoices: choose Reports, Customers & Receivables, and then Collections Report. As shown in Figure 2, the report provides a phone list and shows all overdue invoices. However, you can also use this report to quickly e-mail copies of overdue invoices to your customers.  To do so, double-click on a transaction within the Collections report to view the invoice, and then click the Send button at the top of the invoice form to display the Send Invoice form shown in Figure 3. You can modify the wording shown to be more direct, such as a subject line of “Overdue Invoice”or perhaps e-mail text along the lines of “I’ve attached a copy of your overdue invoice. If there’s a problem with our products or services, please let me know immediately, otherwise I trust that you’ll remit payment promptly.” To change the default e-mail text, choose Edit, Preferences, and then choose Send Forms. Select Invoice from the Change Default For list, make your changes, and then click OK.




Figure 2: The Collections Report gives you a jump start on dunning overdue customers.




Figure 3: You can adjust the wording of an overdue invoice e-mail for one customer at a time or change the default text.

5. A/P Aging Summary: Although it’s key to make sure that your customers are paying in a timely fashion, it’s just as important to pay your vendors, too. Unpaid bills can result in phone calls, e-mails, and other unnecessary interruptions. Choose Reports, Vendors & Payables, and then A/P Aging Summary to display the report shown in Figure 4. As with most reports in QuickBooks, you double-click on amounts to ultimately drill down to the original transaction.



Figure 4: The A/P Aging Summary helps you determine when bills are slipping into overdue status.

6. Trial Balance: Many business owners overlook the Trial Balance report, since it’s one of the few reports in QuickBooks that uses the terms Debit and Credit. However, it’s a helpful report, as it shows you all account balances in a concise format. If anything looks out of order, simply double-click on the amount to view the underlying detail. Choose Reports, Accountant  & Taxes, and then Trial Balance to view this report.

7. Voided/Deleted Transactions Summary: It’s no surprise that small businesses are much more prone to fraud than large businesses. Small business employees usually wear multiple hats, so it’s often impossible to separate financial duties (bigger businesses can do this with ease). Fortunately QuickBooks makes it hard for perpetrators to cover their tracks: choose Reports, Accountant & Taxes, and then Voided/Deleted Transactions Summary. As shown in Figure 5, you’ll be able quickly identify any transactions that have been deleted from QuickBooks. Granted, this isn’t an end-all solution by any means, but it is a helpful management tool. Plus, if a transaction ends up “vanishing” from QuickBooks, you can use this report to see who deleted it!



Figure 5: The Voided/Deleted Transactions Summary enables you to find transactions that appear to have vanished.

8. Audit Trail: The audit trail was an optional feature in earlier versions of QuickBooks, but is permanently enabled in recent versions of QuickBooks. This provides a complete record of every entry made in QuickBooks, as shown in Figure 6. The downside to that is that you can end up with a massive report. Don’t worry, as it’s easy to filter this report and narrow your search. To do so, choose Reports, Accountant & Taxes, and then Audit Trail. Once the report appears, click the Modify button, and then click on the Filters tab. You can filter by date range, amount, or dozens more fields.



Figure 6: The audit trail shows every transaction—including modifications—in QuickBooks.

9. Previous Reconciliation: It’s a good practice to always print at least the summary report once you’ve reconciled a bank or credit card account. Someone else could edit a reconciled transaction, which could cause the reconciliation to be out of balance. A printed copy of the report shows that the account reconciled as of the report date, although you will still have to untangle the edited transaction. However, if you close out the reconciliation screen, you have a second chance to print your report: choose Reports, Banking, and then Previous Reconciliation. As shown in Figure 7, you can choose from multiple reports.




Figure 7: The Previous Reconciliation report option allows you to reprint missing account reconciliation reports.

10. Transaction History: Think of this as a “report within a report”, as you can only run it in certain circumstances. As shown in Figure 6, you must have a transaction open on the screen or single-click on a transaction within a report. You can then choose Reports, and then Transaction History. As shown in Figure 8, QuickBooks will display a report that shows the entire history for a given transaction.




Figure 8: The Transaction History report provides shows all activity related to a given transaction.

Did You Know?

The Microsoft web site offers hundreds of free spreadsheet and word processing templates. Options range from timesheets to analysis tools to contract documents. Visit http://office.microsoft.com/templates, and then search for a template by use (home, office, school), collection (real estate, small business, wedding), or keyword. Indeed, if you’ve created a template that you rely on, you can submit it to the site and share your work with others!

Changing the prices of your company’s services and inventory items can solve one of two problems, depending on why you’re looking for a solution. Say your materials suppliers have upped their prices. You may choose to increase your affected products to maintain your profit margin. Or maybe an item or service has not been moving well. A drop in price might trigger improved sales.

Those examples, of course, are simplifications of what needs to be a thoughtful, studied process. They’re critical business decisions that should be made with the guidance from your trusted ProAdvisor. We are experts that don’t just know QuickBooks: We understand the flow of profit and loss, and we can be valuable allies in your march towards continued growth.

We’ll explore the tools that QuickBooks offers to help simplify price changes once your decisions have been made. They’re not overly difficult to use, but we can help ensure that your intentions are carried out accurately. And there are related inventory issues that may be impacted by your modifications.

First Steps

First, you must make sure that QuickBooks is set up to accommodate price levels. Click Edit | Preferences and select Sales & Customers in the left vertical pane. Then click the Company Preferences tab. You’ll see the window shown in Figure 1.



Figure 1: Before attempting price level changes, be sure the Use price levels box is checked.

If it’s not already checked, click on the box next to Use price levels. Then click OK.

Multiple Options

QuickBooks offers options related to item price changes. You can simply alter the cost of one item, or you can modify several at once. Your adjustments can be in the form of either percentages or of fixed amounts.

There are two ways to get to the price-changing window. You can click the Customers menu, then Change Item Prices. Or you can select the Items & Services icon from the home page. If you do the latter, simply open the Activities menu at the bottom of the screen and select Change Item Prices to see a window similar to the one shown in Figure 2.



Figure 2: The Change Item Prices window displays lists of your products.

By opening the drop-down list below Item Type, you can select the desired type of product: Service, Inventory Part, Inventory Assembly, Non-Inventory Part, or Other Charges.

Targeting Your Changes

Once you’ve selected the right type, click in the column next to the item(s) you want to change. A check mark will appear. If you want to increase or decrease the prices of all of them, click next to Mark All at the bottom of the screen, as pictured in Figure 3.



Figure 3: Click the box next to Mark All if you want to change the prices of all entries.

Based on your discussions with us, you should now know how you want to adjust the selected price(s). You may have just decided on a new price, in which case you can simply enter it in the New Price column.

Here’s an alternative. In the box to the right of Adjust price of marked items by (amount or %), enter either an individual number to increase by that amount, or a number with a % sign after it to up it by that percentage. To decrease the cost, enter a negative number.

The next step is a little trickier. If you simply want to alter the price of an entry based on its current sales price, leave the Current Price option showing in the next box. But if you want to change it based on its Unit Cost, you’ll have to consult us or do some digging to learn what that is.

If you want the resulting numbers to be rounded up, click the arrow next to Round up to nearest. When you’re satisfied with your work, click Adjust to see your changes reflected in the New Price column. Make any desired modifications, then click OK.

One Exception

Of course, no existing transactions will be altered. But if any of your newly priced items or services occur in memorized transactions, you’ll have to edit them. Go to Lists | Memorized Transaction List. Highlight the affected transaction, then right-click and delete it. Enter a new transaction and memorize it again. If you know only that transaction will be affected, you can select Edit Memorized Transaction instead of deleting it.

Don’t know where all of those items occur? Go to Edit | Find to locate them as shown in Figure 4.



Figure 4: You can easily find items in memorized transactions using the Find tool.

Making price changes in QuickBooks—even global ones—isn’t terribly difficult, but it involves a business decision that’s best made in conjunction with us. It can lead to increased profitability no matter which direction you go, as long as you take into account the issues and potential outcomes involved.

The reasons for putting off tax preparations are endless – and understandable. So tax filing deadlines may become the culmination of marathon sessions with your records, which can make mistakes more likely.

Conscientious daily work habits—including a constant eye on tax issues—can help prevent this painful scenario. QuickBooks offers many built-in tools to help you minimize the tax-time terrors.

Stay on Top of Your Receivables in QuickBooks 2011

Even if your sales are up, slow customer payments may be damaging your cash flow. If you often come up short when it’s time to pay your tax obligations, it may be that you’re not chasing down your receivables adequately.

QuickBooks Pro and Premier 2011 added a number of features to help with this. The new Customer Snapshot gives you instant access to key customer information; things like open balance, number of days to pay, and recent invoices and payments.

A new vertical pane next to transaction forms displays an overview of your interaction with the customer or vendor. Beyond saving the time you used to spend looking up historical information, this feature can alert you to collection opportunities. A new Collections Center also automates e-mailed collection notices.



Figure 1: QuickBooks Pro and Premier 2011 display vertical panes next to transactions to help you catch unbilled items and open balances.

If you’ve got any questions about these newer versions of QuickBooks, give our office a call.

Older Versions’ Cash Flow Tools

Previous versions of QuickBooks also help you maximize customer payments. Enter an invoice for a customer who has outstanding time charges and/or costs, and a dialog box reminds you of that.



Figure 2: If you’re invoicing a customer who already owes you money, QuickBooks will remind you – and include the past due balance in your current form.

Also, QuickBooks’ integration with Microsoft Word makes short work of collection letters. Open the Customer Center, then click Word | Prepare Collection Letters and follow the wizard. The Payment Snapshot (Company Snapshot | Payments) is a page you should visit daily; its tables and graphs spell out who needs nudging.

Intuit also offers solutions that let you accept payments online, so you don’t have to wait for checks to arrive in the mail. Talk to us about which one might be best for you and how to get started with it.

Keep Documents Close

However you store receipts and other tax-related paper, it can be frustrating to match paper to QuickBooks data. QuickBooks 2010 introduced the ability to attach scanned documents to any screen that has the Attach icon. Using this tool faithfully will reduce the time and frustration associated with your tax preparation. Prices start at $9.95/month for one attachment per list item or transaction; 30-day free trial.



Figure 3: Click on this icon to attach a scanned paper document to a QuickBooks item.

Use “Classes”

QuickBooks uses the accounts assigned to your transactions to categorize your tax-related data. You can also slice your data in additional ways by using classes to break out account balances by filters, like by departments, consultants, or locations.  You must use it faithfully for it to be effective.  You should also check with us before embarking on this new classification system.

First, make sure that QuickBooks is equipped to handle classes. Click on Edit | Preferences, then click the Accounting tab and Company Preferences. Click on the box next to Use class tracking if it isn’t already checked, and on Prompt to assign classes if you want QuickBooks to remind you before you save an unclassified transaction.



Figure 4: Make sure your Company Preferences are set to accommodate class tracking.

Go to Lists | Class List,  and then click the Class tab in the lower left corner. Select New.  Type your new class name in the field that appears and check the Subclass of box if you want to make this a subclass. Assign these classes in transactions where appropriate, and you’ll have neatly categorized data for the Profit & Loss by Class, Profit & Loss Unclassified, and (new in 2011) Balance Sheet by Class reports. Classes can also be displayed in other reports.

Built For Tax Reporting

QuickBooks can’t prepare your taxes for you, but these tools and more help shape your data to make tax deadlines less stressful and your returns more accurate than the days of pencil and paper.

It does so in the background by, for example, assigning your transactions to the appropriate accounts, so your reports tell the right story. Other assistance is more obvious; QuickBooks helps you print 1099s, W-2s and W-3s.

QuickBooks’ design encourages you to look at tax-related issues every day, which can be a very good thing come filing time. Take advantage of this—along with the expert advice of our offices—and you can be more confident and less frantic during your periodic interaction with the IRS.

We know. When you first cracked your copy of QuickBooks, you wanted to dive in and start generating invoices. Fortunately, QuickBooks is intuitive enough that you were able to do just that. And its help system is so robust that you were able to get procedural questions answered quickly and easily.

But there’s a lot to be said for backing up a bit and taking advantage of the myriad educational tools that QuickBooks offers. Even if you’ve been using the program for months, you may want to explore them. You’ll not only save time with the help system, but you may find better ways of performing tasks.

Learn By Watching

The QuickBooks Learning Center, one of the first things you saw when you installed the program, is always available by clicking Help | Learning Center Tutorials. It consists of numerous multimedia tutorials and links to additional help. As shown in Figure 1, the tutorials are worth a look before you take on a thorny topic like Payroll.



Figure 1: QuickBooks’ myriad tutorials help you absorb the basics of processes like Payroll.

Though you can use QuickBooks’ functions entirely from the menus, the program’s home page is built to guide you through core accounting processes. If you’re very new to QuickBooks and/or accounting, you can use the Coach function to better understand the flow. Click on Show Coach Tips in the vertical pane to the right of the main screen.

As shown in Figure 2, you’ll see a small “i” next to some icons. Click on one, like the one next to Purchase Orders. Related icons light up, and numbers representing their logical order appear next to them. Mouse over one of the icons to read a brief description of the function. When you’re done, click Hide Coach Tips to make them disappear.



Figure 2: QuickBooks’ Coach tool lays out the workflow for primary accounting processes.

Other Support Options

No matter how much you study and prepare, you may still run into situations where you need an expert’s hand. We can be a real resource here as we have the expertise to walk you through installation and setup, processes that are critical to your effective ongoing relationship with QuickBooks. And we can also pitch in when you’re facing other daunting accounting hurdles.

Another option for expert help is Intuit. The company offers a support plan that may or may not be in your budget, but it’s certainly something to consider if you anticipate needing to have frequent questions answered. The best value is the Annual Support Plan ($349 for first year; $299 thereafter). You get 24x7 phone support, data backup and recovery services, and learning tools only available with the Support Plan.

Intuit also hosts an in-depth online support presence. Click Help | Support to get to the main page as shown in Figure 3. Installation, troubleshooting (with guides to error messages), company and data file management, general procedures–they’re all covered there. You can search the support database or browse by topic. These and other resources are available within QuickBooks’ embedded browser (you must have Internet access to reach it, as with many other features of the program – click Help | Internet Connection Setup if you’re not already set up).



Figure 3: Intuit’s online support for QuickBooks can help when you’re stumped.

Interactive Help

If you haven’t yet visited QuickBooks’ interactive forum, you should. Click on the Live Community tab at the top of the far right vertical pane if it’s not already displayed (the pane toggles between it and Help). As shown in Figure 4, you can enter questions here and get answers from other users and/or Intuit pros.



Figure 4: Intuit included interaction in its QuickBooks palette of help tools. Live Community features questions from users and accompanying answers from users and Intuit pros.

For the expanded Intuit community, click on the Visit the Intuit Community link at the bottom of the Live Community pane.

Of course, don’t forget the core of QuickBooks’ help scheme: the Help pane.  You can get a lot of your questions answered here. This pane constantly changes to display content relative to the current screen. This content provides explanations of concepts as well as step-by-step instructions.

So don’t throw up your hands in defeat when what you’re attempting in QuickBooks isn’t working. Remember how much help is available from Intuit, QuickBooks itself, and experts like us. Some additional schooling may just be in order.

Turn over a new leaf. Make a New Year’s Resolution. Make a fresh start. Get your ducks in a row. All familiar clichés, but their message is valid: At this time of year, you probably feel like renewing your commitment to running a more successful, productive business.

There are numerous ways to do this, but you might consider adopting the concept of best practices (if you haven’t already). Most industries have them, primarily larger businesses. Best practices are a set of operational guidelines that are expected to produce a favorable outcome. Run your business using these techniques or methods, and you’re likely to be more successful.

Accounting has best practices. While they’re not carved in stone, sticking with some tried-and-true, common-sense procedures will likely lead to increased efficiency. Perhaps adopting some or all of them will make a difference in your business. QuickBooks can help.

The Three I’s

Let’s look at the three stages you’ll encounter when you decide to apply best practices to your company.

Identify.

What problems are you trying to solve? Where are your bottlenecks? Are collections a problem? Cash flow? Timely, accurate payroll? Have you seen a reduction in your customer base? Are your bills being paid late? Having trouble keeping up with inventory?

Bring your employees in on this process. They’re on the front lines, and will have insight into where your systems are breaking down. They’ll be pleased to be asked, and they may have ideas that will evolve into best practices.
 


Figure 1. When you’re formulating ideas that could evolve into best practices, use your best resource: your employees.

Implement.

Turn your ideas into policies, and formalize them. Make a big deal out of introducing them to all staff related to accounting, and explain the rationale behind them. They’re intended to improve your company’s financial bottom line, which should translate into a positive outcome for everyone. Don’t turn your presentation into a critique of past performance; emphasize the constructive nature of the changes. Put it in writing, too.

Here are some examples of best practices that other businesses have implemented.

• Invoice at the time of service/shipment, instead of once or twice monthly.
  
  
• Set a specific time interval to deal with collections, like once a week. If you’re running QuickBooks 2011, you can use the Collections Center. Previous versions have numerous helpful reports, like A/R Aging Detail, Open Invoices, and Collections Report.

 


Figure 2. QuickBooks 2011 features the automated Collections Center.

• Estimate your income tax obligation monthly, not just quarterly. When payments come due, there won’t be any major surprises.
  
  
• Make sure everyone who works with accounting has a backup person who can fill in. Consider having us do the training.
  
  
• If you don’t have a merchant account—which QuickBooks supports—get one, and encourage customers to pay in this fashion. Pay your bills the same way wherever possible. Use all of the technology that makes sense for you.
  
  
• When it’s logistically possible, have employees who incur billable time use a timer. A few minutes lost here and there adds up. QuickBooks has a built-in timer; remote employees can use Time Tracker.

 


Figure 3. Have employees time billable activities whenever possible.

• When was the last time you looked at your pricing structure? Are you building in enough profit? Evaluate your selling ratios on a schedule. Run inventory reports regularly.

See? It’s not rocket science. It’s a matter of emulating the practices of the most successful businesses. You might network with other companies to see how they handle this formalizing of processes. Talk to us, too.

Insure.

Don’t leave it at that. Evaluate the effectiveness of the new best practices by scheduling follow-up meetings with employees. What’s working, and what isn’t? Do you need to tweak your methods?

This step is absolutely critical. You might want to appoint a compliance officer who follows up with individual employees and departments. If your business is small and informal, you could bring in lunch one day a month for follow-up – and for the development of new best practices.

Not just for mega-companies

You may already know something about best practices, but have always assumed that the concept was designed for big business. While it may be more of an imperative for large companies, even a sole proprietor with a bookkeeper can benefit. It’s really just a matter of putting the most effective work processes into place and maintaining them. Implementing best practices can be a good first step towards a more successful 2011. Call this office if you have any questions.

Filling out invoices the first time can be a pain, especially if they’re lengthy. But doing the same thing repeatedly if the identical invoice recurs regularly? No need.

QuickBooks can memorize a variety of transaction types, including invoices, purchase orders, and bills. After you’ve memorized them, you can edit, reschedule, and delete them, as well as group them if more than one will be dispatched on the same day. Here’s how.

A familiar start

Let’s say you’re starting a new job providing regular training for a client; it’s always four hours, every Monday, for 12 weeks. First, find or create the invoice.

After you’ve found (or created) the invoice, then click Edit | Memorize Invoice. This window opens:

 

Figure 1: You’ll define the terms of your memorized transaction in this window.

The client’s name will already be filled in. You’ll first have to decide whether you want to just be reminded every week (the tickler will appear in your Reminders list) or whether you want QuickBooks to automatically enter the transaction. Click the appropriate button, or Don’t Remind Me if you have another way to remember.

Drop down the list next to How often, and select Weekly. Enter the first date of training. Put 11 in the box next to Number Remaining to represent the balance of the 12 weeks, and 0 next to Days In Advance To Enter. Click OK.

Retrieving your work

It’s easy to find your memorized transactions when you need to alter or delete them. Click Lists | Memorized Transaction List (or Ctrl+T). Highlight the entry you want to change in the list that appears. At the bottom of the window, click Memorized Transaction. This window will pop up:
 




Figure 2: This window displays your options for managing Memorized Transactions.

Click Edit Memorized Transaction. The window you used to specify the original options (as displayed above, in the very first figure) will open. Make the desired changes and click OK.

Tip: To save time, when the list of memorized transactions first appears, put your cursor on the targeted entry and right-click. The Memorized Transaction menu will appear.

Of course, if you want to remove an ongoing transaction, just highlight it, right-click, and select Delete Memorized Transaction.

Customizing your view

You can change the way your list displays by right-clicking on an empty space in the Memorized Transaction List and clicking Customize Columns. A window like this will appear:

 


Figure 3: It’s easy to customize the screen that displays your list of memorized transactions.

To add a column to the Memorized Transaction list, highlight it in the box of available columns on the left and click Add. It will move over into the box on the right and be inserted into your table. Similarly, to get rid of a column, highlight it in the box on the right and click Remove.

You can also change the order in which columns appear by highlighting one and clicking Move Up or Move Down.

More tools

If you’ve gotten a reminder that it’s time to pay a bill, you can go straight to the Memorized Transaction screen by right-clicking the item in the Reminders screen and selecting Recall Transaction. The correct transaction should be highlighted. At the bottom of the screen, click Enter Transaction (or right-click it) to display, edit and/or save it.

Sometimes your memorized transactions will occur on the same day. To save time, you can group them. Open the Memorized Transaction list and right-click in an empty part of the screen. Select New Group. Enter a name for it in the Name box, and set your reminder and frequency options like you did with the transactions themselves (you’ll be seeing the same dialog box as you did then). Click OK.

Right-click on the first entry that you want to add to the group, then select Edit Memorized Transaction. Click next to With Transactions in Group, then drop down the list next to Group Name and grab the correct one. Click OK. Now you can use your group just as you’d use an individual memorized transaction.





Figure 4: Once you’ve named and defined a group, you can add individual memorized transactions to it.

Memorizing transactions in QuickBooks isn’t exactly rocket science, but you can find yourself with late bill payments, items not invoiced, and/or inventory not ordered if you don’t do it exactly right. Triple-check your work and consult with Us until you’re confident. Once you are, you may find your financial ship sailing more smoothly than ever. If you have any questions about memorized transactions, call us.

Some of the financial crystal ball-types are telling us there are signs that the recession may be drawing some of its last breaths. But those bills are still coming in, and you may have had a long, dry summer and less income that you can use to meet those business obligations.

The desktop versions of QuickBooks can help. They can’t magically make more money appear in your coffers, but they can help you manage your bills so you’re always aware of what’s coming up and don’t get any nasty surprises. This keeps both you and your vendors happy, and minimizes the chance of affecting your credit report adversely. You can also maximize cash flow by being hyper-aware of when each bill is due and timing them appropriately.

(These bill-paying tools are available in all QuickBooks versions above Simple Start.)

Enter first, then pay
Of course, you can mimic your old manual method of bill paying by simply using QuickBooks’ check-writing convention. But if you do this, you risk paying the bill twice.  If you follow the process shown in Figure 1 by entering and the then paying, you’ll ensure that you record the expense in the same period it occurred.

To start, click the Enter Bills or Vendors/Enter Bills icon. The Enter Bills dialog box opens as shown in Figure 2. If you received a bill, be sure that box in the upper right is checked, and that the Bill radio button is filled in.

Figure 1: You’ll find these icons on QuickBooks’ graphical flow chart.

Figure 2: The Enter Bills dialog box.

Next, click the arrow next to the Vendor line to select an existing vendor or add a new vendor. Change the date if necessary, and enter a reference number (this may avoid confusion later). Then, enter the amount due.

When you initially set up vendors, you either set up terms for each vendor or accepted the default. So the Terms field should already be filled in, and will generate the correct bill due date. Enter a descriptive memo in that field if you’d like.

Tip: Use the right-click menu when you’re entering bills to see more options.

Since this was an expense, you’ll want to record it as such. Make sure the Expenses tab is highlighted, and click in the Account field. Click the arrow that appears to drop down the list, and select the appropriate expense type. Fill in the rest of the field on the line, making sure to check the Billable box if this is something you can bill back to a customer. If the expense needs to be split into separate categories, create a new line and amount for each. Your bill now looks something like Figure 3.

Click the Items tab and fill out the fields there if your expense involves products. You must have Inventory turned on to do this. Click Save & Close or Save & New. QuickBooks now works in the background, increasing Accounts Payable and dropping the bill into several reports.

Figure 3: Make sure your completed bill entry screen is as complete as possible.

Paying your debts
When it’s time to pony up, click on the Pay Bills icon, or click Vendors/Pay Bills. You’ll see a screen similar to Figure 4. Check the radio button next to the correct preference to view all bills, or to limit the list to those on or before a specific date. Put a check mark next to the bill(s) you want to pay. The correct amount should fill in by default, but you can change this to make a partial payment.

If you want to view the bill, take a discount, or use credits, click on those buttons. Select a payment date, method (check or credit card), and toggle to the correct account if it’s not showing.

Figure 4: The Pay Bills dialog box. Make sit easy to finish the job.

Once you’ve paid a bill, your Accounts Payable and checkbook balances decrease, and the vendor balance and reports are updated. QuickBooks stamps a PAID watermark on the bill to avoid confusion later on.

Tip: To find bills you’ve already paid, go to the Vendor Center.

So stop stacking your bills on an old spindle and ruffling through them every day to see what’s due. You’ll find that there are numerous benefits to using QuickBooks’ bill-paying features, such as an improved credit rating, a dearth of past-due notices, and better cash flow.

Do you have a business plan? If you don’t, even if you’re a sole proprietor, you should. Business plans can be a good barometer for the health of your finances as a way to gauge whether or not you’re on the right path. If you don’t have a business path (or if yours is less than organized or polished), you can use QuickBooks’ tools to create or fine-tune one. We’ll show you how to use these tools to get the job done quickly and easily.

The game plan
To get started, select Company > Planning & Budgeting > Use Business Plan Tool and you’ll see what’s displayed in Figure 1. QuickBooks’ business plan tool uses a convention that other Intuit products use frequently: a lengthy wizard that walks you through the entire process. This tool supplies information and asks questions about what’s needed on each screen. You fill in the answers (or select from options) and the business plan wizard works in the background to place the data in the correct place.

The first topic you’ll be asked about is your company.  If you’re a new business, you’ll have to estimate in some areas, like the percentage of your sales that will come through credit. In other cases, you’ll be better able to answer in concrete terms. For example, what will your customer payment terms be? When do you want your business plan and financial projection to start?

Figure 1: QuickBooks walks you through the process of creating a business plan with an easy-to-use interface.

What’s coming in?
Your income is up next, and this will take some figure-pulling (and maybe some hair-pulling). You can either fill in a spreadsheet manually, adding up to 20 categories, or use the Income Projection Wizard, as pictured in Figure 2. If you’ve already been working with your data in QuickBooks, the latter is certainly recommended. These numbers will be scrutinized very carefully, perhaps put under the microscope more than any other element of your business plan. Make sure you can back them up.

Figure 2: The QuickBooks Income Projection Wizard.
If you’re projecting manually, be prepared to calculate the Cost of Goods Sold (COGS).  This number contains three pieces:

• Material: What percentage of each dollar pays for the cost of product(s)? If you’re a service company, enter the associated materials costs.

• Labor: What percentage of each dollar is tied to the employee costs associated with goods production?

• Other: What percentage of each dollar goes into other costs?

Business expenses and more
You have the same two choices when you’re entering your expenses. You can enter them manually or use the Expenses Projection Wizard. If you do the latter, your projections can be based on either the last 12 months of history or an average from the last 12 months.

In the Interview section, you’ll need to have numbers available, including:

• Beginning account balances
• Assets you own or need to buy
• Cash available to invest (if applicable)
• Amortization and depreciation

As in other areas of the business planning tool, existing data in QuickBooks will be automatically filled, such in Figure 3.

You’ll also answer questions here about inventory (i.e., fixed or variable, minimum balance), vendor financing,  lines of credit, and your total credit limit.

Figure 3: The business planning tool pulls in existing data from QuickBooks.

Writing your plan
Now it’s time to write, but don’t panic thinking you’ll face a blank screen. The Plan section is divided into three sections, and you can toggle between them. You can view the actual plan outline tree, which is a window that provides tips and examples, as well as a text entry window, as shown in Figure 4.

Though this is primarily a text-based section including information about things like your company background, products and services, and the competition, you’ll supply some numbers, too, and the rationale for arriving at them.

Figure 4: The Plan section is divided into three main sections.

Once you’ve completed all of the sections, you simply preview and print your plan. QuickBooks assembles it with all of the text, tables, graphs, and charts in the right place, and presents you with a professional business plan that you can take to the bank, or simply revisit from time to time to make sure you’re on course.

Unfortunately, your work with QuickBooks doesn’t end just because it’s summer, the weather’s great, and school’s out. But there are ways to minimize your time spent managing your money and maximize your time at the beach. Memorizing transactions is one such way. When you memorize a transaction, QuickBooks remembers all of the relevant details and either processes it automatically or reminds you that it’s due.

A memorized transaction could be bills that show up in the same amount every month, like your Web-hosting payment, or obligations that change regularly, like your utility bill. You can specify the amount due if it’s static, or leave the amount open if it regularly changes, making this feature very flexible and easy to set up.

Jog your memory
Once you start teaching Quickbooks to memorize transactions, you’ll wonder why you didn’t use this handy feature before.  Say you want to automate your electric bill. First, create a transaction without an amount, like the one shown in Figure 1. Click the Edit menu, and then click Memorize Bill. The dialog box shown in Figure 2 opens.

Figure 1: To memorize a bill payment that changes regularly, fill out the transaction form minus the amount.

Figure 2:  When you click Edit/Memorize Bill, this dialog box opens.

The vendor’s name appears in the Name field. If you want a more descriptive name so you’ll recognize it in a list, change it here. You have a few decisions to make in order to set up the repetitive transaction:

• Do you want QuickBooks to remind you in advance of the bill’s due date? Click Remind Me.  If not, click Don’t Remind Me. And if it’s a bill whose amount remains the same every time, you can click Automatically Enter. If the transaction is a part of a group you’ve created, click the With Transactions in Group button.

• How often do you pay this bill? Generally, it will be monthly, but QuickBooks gives you several options.

• Check the Number Remaining box if you have a transaction with a finite number of payments, such as paying off a company vehicle.

• How much warning do you want? Enter a number in the Days In Advance To Enter field.

• If you’ve created a group and you want this transaction to be a part of it, select the name from the drop-down list.

When you want to use a memorized transaction, click the Lists menu, then Memorized Transactions List to open the dialog box shown in Figure 3. You can also “memorize” repetitive reports. Open the report you want to work with by clicking, for example, Reports/Company & Financial/Profit & Loss YTD Comparison. A dialog box like the one in Figure 4 opens. Accept the name presented, or change it to one that you’ll more easily recognize. If you want to save reports in groups you’ve created, like Accountant, select the group from the drop-down list.

Figure 3: The Memorized Transactions List allows you to customize to your preference.

Figure 4: The Memorize Report dialog box…

Thanks for the memories
Memorized transactions and reports can not only save you time for more summer adventures: They provide another way for QuickBooks to give you a quick look at what you owe and are owed, and how your company is performing overall.

Day-to-day transactions like receiving payments from customers or paying vendors occur so frequently that most QuickBooks users do them automatically. However, from time to time you may encounter an infrequent transaction that will stop you in your tracks. In this article we'll discuss several common tricky transactions and offer advice on how to handle them.

Security Deposits

Security deposits, such as for a rental space or to a utility company, require special tracking so that you can be sure to get the money back later. It's best to maintain a separate account for each security deposit so that you can track each individually. If you have numerous security deposits, consider creating individual subaccounts for each deposit:

1. Choose Lists, and then Chart of Accounts (or press Ctrl-A).

2. Click the Account button, and then choose New (or press Ctrl-N).

3. As shown in Figure 1, choose Other Account Type, Other Current Asset, and then click Continue.

4. Assign an Account Name such as Contributions from Owner, (and account number if applicable). If necessary, click Subaccount Of, and specify the Deposits account. Click Save and Close to save the new account.



Figure 1: An easy way to manage security deposits is to post them to a new Other Current Asset account.

Refunds from utility companies, insurance companies, or other sources

Choose Banking, and then Make Deposits. Specify the vendor, and then choose the account. In the case of deposit refunds, you should have an asset account that you'll apply the money against, as shown in Figure 2. For other types of refunds, use the expense account from which you originally paid the money.



Figure 2: Apply utility deposit refunds back to the deposit account on your balance sheet.

Owner Contributions

This is a situation where an owner of the company invests money into the firm. The owner does so in hopes of making a return on their investment, but does not have a specific timetable in mind for repayment of the loan.  If you don't already have a Contributions from Owner account, follow these steps described previously for creating a new account, but choose Equity and name the account Contributions from Owner.

Distributions to Owner

Distributions allow an owner to take profits out of the company on a non-salary basis. Distributions can be paid through payroll or on a separate check. Your chart of accounts should already include a Distributions to Owner account, but if it doesn't, you can establish this new Equity account, which you can then use in either of these types of transactions.

• Payroll: Distributions require special treatment in payroll because they're not subject to income or payroll taxes in QuickBooks. The owner settles the income tax due when filing their annual return. Before you can pay distributions through payroll you must establish a payroll item. To do so, follow these steps:

1. Choose Employees, Manage Payroll Items, and then New Payroll Item.

2. Choose Custom Setup, and then click Next.

3. Choose Addition, and then click Next.

4. Enter the word Distribution and then click Next.

5. Choose the Distributions to Owner account from your chart of accounts, and then click Next.

6. Choose None for the Tax Tracking type, and then click Next.

7. Leave all of the taxes unselected, and then click Next.

8. Choose Calculate This Item Based on Quantity and then click Next when the Calculate Based on Quantity screen appears.

9. Accept the default choice of Gross Pay and then click Next.

10. Leave the Default Rate and Limit fields at zero and then click Finish.

Next, select the employee in the Employee Center, and then choose Edit Employee. Choose Payroll and Compensation Info from the Change Tabs list, and then add Distributions to the Additions, Deductions, and Company Contributions list, as shown in Figure 3. You can fill in the distribution amount now if you know the ongoing amount, or you can fill it in on the fly during the payroll process. Simply display the Paycheck Detail during the payroll process to access this field and enter the distribution amount.



Figure 3: Add Distributions to the Additions, Deductions, and Company Contributions section.

• Separate check: A much simpler approach is to write a separate check to the owner. To do so, choose Banking, and then Write Checks. Choose the Distributions to Owner account and fill in the amount.

Loans to the Company

From time to time the owner may need to make a loan to the company. If the owner expects this money to be repaid, establish a Loan account on the chart of accounts and record the deposit of the loan to this new account.

Company Loans Money to Others

Sometimes your company may make a salary advance to an employee, or the firm may loan money to an affiliate. In such cases it's important to always establish a separate Current Asset account for such transactions so that you can easily track the outstanding balance. Such accounts can be a subaccount of a general Loans Receivable account, as shown in Figure 4.  As shown in Figure 5, you'll code the check to that subaccount.



Figure 4: Make sure to create individual subaccounts for loans to employees or other parties.



Figure 5: Be sure to use the proper subaccount when issuing an employee loan.

Loan Payments

Many users struggle with loan payments because there are usually three different scenarios:

• Interest only payment: In this case there's only one account to charge, which will be Interest Expense, as shown in Figure 6.

• Interest and principal payment: If you're amortizing the loan over time—your payments include principal and interest— then you'll have to charge two accounts on the transaction, both the Interest Expense and the Loan account itself, as shown in Figure 7. These amounts will be different each month. Your lender can provide an amortization table, or you can search for one for free on the Internet. Simply use the search term "amortization table" to uncover a variety of free resources, or use this search term to locate an Excel-based solution:  "amortization table site:microsoft.com"

• Extra principal payment: Extra principal payments being submitted on a separate check should be applied directly to the Loan account.



Figure 6: Interest-only loan payments post directly to the Interest Expense account.



Figure 7: Make sure to break out principal and interest when a loan payment reduces the outstanding balance.

Expert tip: You can use the QuickBooks Account Reconciliation feature to reconcile your loan balance with the periodic statement that you receive from your lender. This ensures that your financial statements are correct, and helps you confirm that the lender is applying your principal payments correctly.

Petty Cash

Many offices keep a small amount of cash on hand to simply accounting for activities like running to the post office to buy stamps or make small purchases for the office. To establish a petty cash fund, you first write a check to Cash, which you then exchange for money at your bank. Let's say that you establish a $100 petty cash account, and need to replenish it to cover three purchases:

• Lunch for the office: $24.72
• Postage stamps: $44.00
• Office supplies: $23.18

In QuickBooks, you would choose Banking, Write Checks, and then write another check to Cash, and code it to the corresponding expense accounts for the three purchases.

Expert tip: Petty cash is easily subjected to abuse, so be sure to require receipts for all petty cash transactions.

You're accustomed to using your mouse to navigate your way through QuickBooks, but you may not realize that there are faster ways to get your work done in QuickBooks. Typically your hands are already on the keyboard, so take advantage of the shortcuts built into the application to save you time. Using this technique might also help minimize wear-and-tear on your wrists. In this article we'll explore a variety of ways that you can quickly carry out tasks in QuickBooks.

Shortcut #1: Edit fields in a flash

Typically you use the Tab key to move between fields, but it might be more efficient to change the setting and use the Enter key instead. To do so, choose Edit, Preferences, and then General. Select Pressing Enter Moves Between Fields, as shown in Figure 1. Keep in mind that if you change this setting, you'll have to either press Ctrl-Enter to save a record, or navigate to the Save & New button and then press the Enter. While setting that option, make sure to also choose Automatically Open Drop-Down Lists When Typing. This will allow you to type the first couple letters of a list item, and then use the arrow keys and Enter key to choose the desired item.



Figure 1: You can set QuickBooks to use the Enter key to move between fields.

Sometimes you may need to make revisions in within a field, such as a description. You can navigate from word to word within a field by using Ctrl-Left Arrow or Ctrl-Right Arrow. You can also press the End key to jump to the end of a field, or the Home key to jump to the beginning.

Most other shortcut keys that you'll use with fields are contained on the Edit menu, as shown in Figure 2.



Figure 2: The Edit menu contains a veritable treasure trove of keyboard shortcuts.

Shortcut #2: Speed up everyday tasks

Press Ctrl-W to display the Write Checks window, or Ctrl-I to display the Invoice window. Within a transaction window, press Ctrl-N to create a new transaction, or Ctrl-P to print. Ctrl-Q allows you to create a QuickReport on a selected transaction or list item. Ctrl-J will display the Customer Center, although for some reason the Vendor and Employee centers don't currently warrant their own keyboard shortcuts. As you work in QuickBooks, you may encounter a stack of open transaction, list, and report windows, as shown in Figure 3—simply press Esc repeatedly to clear the decks.



Figure 3: Overrun with QuickBooks windows? Press the Esc key as needed to close extraneous windows.

Shortcut #3: Try these Register tricks

Press Ctrl-R to display the Use Register window, and then press Alt-Down Arrow to display the full list. If you simply press the Down Arrow, then your cursor will jump to the OK button. Within a register, press Ctrl-PgUp to move to the first previous month in the register, or Ctrl-PgDn to move to the next month in the register. Press Ctrl-O to copy an entire transaction within a register, and then press Ctrl-V to paste a duplicate of copy. Or, press Ctrl-E to edit a transaction in the register. Conversely, Ctrl-D allows you to delete transactions.

You can also press Ctrl-G for certain transfer transactions to view the register of the corresponding account. QuickBooks doesn't maintain a register for income and expense accounts, but you can use this to follow transfers between bank accounts, for instance. Similarly, you can press Ctrl-H on certain transactions to view their transaction history, as shown in Figure 4, or press Ctrl-Y to display a transaction journal. This is a report that shows you the debits and credits that comprise the transaction, as shown in Figure 5.



Figure 4: Press Ctrl-H within a register to view transaction history.



Figure 5: The Transaction Journal displays the debits and credits that make up a transaction.

Shortcut #5: Level your lists

Only two lists have their own shortcuts: Ctrl-A for the Chart of Accounts, and Ctrl-T for the Memorized Transaction List. You can use Ctrl-PgUp and Ctrl-PgDn to navigate to the top or bottom of a list. Press Ctrl-E to edit a record within a list, or Ctrl-P to print the entire list. As with transactions, Ctrl-D will delete a list item—you'll receive the warning shown in Figure 6 if you attempt to delete an account that has a balance, though.



Figure 6: Accounts with open balances cannot be deleted.

Shortcut #5: Make a date

Incremental dates (and check or invoice numbers, too) can be moved up or down by pressing the and – keys. Even better, laptop users can press the = key, instead of Shift-Equal to access the sign. Navigate forward and backward in time by keeping these three words in mind: week, month, and year. Press W to move back one week, or K to move forward one week. Do the same with M or H and Y or R to move forward or back one month or year at a time. Within a date field, press Alt-Down Arrow to display the calendar without having to click with your mouse. Other date tricks you may find helpful are pressing [ or ] (the square bracket keys) to move to the same date in the previous or next week, or ; and ' (the semicolon and apostrophe keys) to move to the same date in the previous or next month. If all of these date tricks are making your head spin, just press T in a date field to return to today's date.

Shortcut #6: Customize your start-up

Usually QuickBooks automatically opens the last company that you accessed, but it won't do so if you hold down the Ctrl key while you open QuickBooks. Also, if you share a computer with a coworker that frequently leaves many windows open, hold down the Alt key while you open QuickBooks to start with a clean desktop. You can also press the F2 key to display a dizzying array of data about your QuickBooks company, as shown in Figure 7.



Figure 7: Press F2 to display a wide array of technical details regarding your QuickBooks company.

Do you know how to detect and protect yourself from fraud? Most of us want to naively believe it will never happen to us. In reality, fraud impacts small and mid-size businesses far more often than large corporations. Why? Smaller businesses tend to take fewer precautionary measures to prevent fraudulent behavior. Also, fraud is often perpetrated by a family member, long time employee, or friend that’s been given too much freedom with too few controls. However, you must not be naïve when it comes to your business. Fraud is very much a reality that can happen in your business. In this article we’ll discuss how fraud happens, how to identify if fraud is happening, and what to do if you discover fraud has happened. We’ll also discuss some measures that you can take within QuickBooks to limit your exposure.

Why does fraud happen?

A combination of three aspects usually set the stage for fraud:

Opportunity: Companies often unknowingly present opportunities for fraud. In particular, small businesses are more prone to these because it’s harder to separate duties when you have a small staff.

Pressure: Personal pressures can put people over the edge and cause irrational thinking. Someone you know may be under duress due to medical and/or financial issues, or any of a number of other personal situations that influence their judgment.

Rationalization: The perpetrator believes they can rationalize their behavior, i.e. they need the money more then the company, the company won’t ever notice, or other insidious thoughts. Indeed, fraud often starts as a “loan”, with the perpetrator fully intending to “pay it back”.

Fraudsters will go to extreme measures to cover their tracks. Many small business owners believe it could never happen to them, as their employees are like family. However, it is critical that you separate your thoughts with regard to what happens at work versus what happens outside the four walls of your business. No business is 100% safe.

What are five popular types of fraud?

1. Claiming additional payroll hours or falsifying an employee.
2. Stealing merchandise or cash.
3. Giving unauthorized discounts to friends and family.
4. Selling private business information to outsiders.
5. Exaggerating on expense reports.

Although it’s often enticing to delegate tasks to subordinates, you should keep a hand in as many of your business practices as you can, even if it’s on a random basis. Fortunately there are some simple ways you can do so:

Payroll: Hand-deliver the paychecks, and use this as an opportunity to thank your employees for their work. This will help identify any “false” employees, as well as foster good will among your team. Further, a process for tracking hours will help to minimize extra hours appearing on anyone’s time card. You might have a manager sign off on subordinate’s time sheets, or install a modern time clock that uses swipe cards or biometric identification.

Theft of cash or merchandise: Separate duties to the extent possible. Ideally those who receive money should be different than those who that generate invoices. You should also try to separate inventory duties, and implement checks and balances for purchase orders, receiving and invoicing. Don’t rule out video surveillance of warehouse areas, even if it feels like “Big Brother.”

Unauthorized discounts: Track discounts given to customers. In QuickBooks:

a. Choose Reports, Sales, and then Sales By Item Detail.
b.  Click the Modify Report button, and then click the Filters tab.
c. As shown in Figure 1, choose Items from the Choose Filter List.
d. Select Multiple Items from the Item list, and then choose all discount and bad debt items.
e. Click OK twice to view your report. If you find this report helpful, click the Memorize button and assign a benign name, such as Accounting Review.

Figure 2 demonstrates another filtering technique for the Sales by Item report. Clear the Item filter, and specify Amount, and then >=0. This will display any negative or zero amounts listed on a customer invoice, as well as credit memo items. It may seem counterintuitive to look for amounts that are greater than or equal to zero, but in accounting jargon, invoice amounts should always be credits to an account, which means they’ll be less than zero. Negative items or discounts on an invoice post to your books post as debits, or positive amounts, which will be greater than zero.
 


Figure 1: You can filter the Sales by Item report to track discounts and other write-offs.
 


Figure 2: It’s also helpful to search for amounts that are equal to or greater than zero.

Selling private information: This is particularly difficult to guard against. One level of defense to require employees to sign confidentiality agreements at the time of hire that discuss what the company considers confidential and the consequences of violating said agreement. Computer systems and paper work should also be protected with passwords, lock and key and whatever other measures may be warranted to minimize unnecessary access.

In QuickBooks, choose Company, Users, and then Set Up Users and Roles to assign unique log in names and passwords. As shown in Figure 3, QuickBooks offers predefined roles that automatically limit access to specified areas, but you can easily tweak a user’s role to meet their exact needs. You should also require users to change their passwords periodically, and whenever possible, have your IT specialist restrict access to the folder where your QuickBooks data resides. However, do be aware that anyone can purchase a password recovery tool for $45 from www.lostpassword.com.
 


Figure 3: Use passwords in QuickBooks to limit employee access on a need-to-know basis.

Expense Reports: Always require receipts on all reports for reimbursement with no exceptions. You should also establish guidelines so that employees know when to seek approval so that they avoid the risk of unreimbursed expenses.

Unfortunately there’s no magic cloak that you can place over your business to protect it from fraud. Your best defense is to limit opportunities and remain vigilant. Fraud perpetrators have seemingly limitless imagination, so be sure that you’re always keeping a hand on the tiller of your business.

In these trying economic times it’s more important than ever to keep a close rein on your accounts receivable. Seemingly no one is immune to sudden changes in financial circumstances, so be sure to monitor your outstanding invoices closely. There’s an inverse relationship between the age of an invoice and your ability to collect on it, but fortunately QuickBooks can help you manage your credit risk:

#1: Set Reminders

As shown in Figure 1, QuickBooks can display a reminder window when you open your QuickBooks company:

Choose Company, Reminders, and then click the Set Preferences button.

Choose the My Preferences tab, and then click the Show Reminders List When Opening a Company File on the My Preferences tab.

Click the Company Preferences tab, and choose Show List for Overdue Invoices. As shown in Figure 2, you can enter a negative number to be notified of overdue invoices before they reach their due date. Click OK to save your changes.




Figure 1: QuickBooks can show you a list of overdue invoices whenever you open your company.




Figure 2: Enter -3 in the Days after Due Date field to be notified when invoices are within 3 days of their due date or later.

#2: Monitor Customer Balances

In addition to tracking overdue invoices, you should also stay abreast of how much credit you’ve extended to each of your customers. One way to do this is to use the Customer Center whenever you create new invoices:

Choose Customers, and then Customer Center (you can also click the Customer Center toolbar icon or press Ctrl-J).

As shown in Figure 3, the customer center lists the Balance total for each customer. You can use this information to determine whether you want to sell additional products or services. You can quickly create an invoice from the Customer Center: select a customer name, and then press Ctrl-I (as in I for invoice).

As also shown in Figure 3, you can add an Open Balance column to the transaction list. To do so, right-click on the transaction list, and then choose Customize Columns. Choose Open Balance from the Available Columns list, and then click the Add button.




Figure 3:  The Customer Center makes it easy to monitor open invoices.

Expert trick: To sort customer open balances in descending order, click twice on the Balance Total column.

#3: Create an Overdue Watermark

An attention getting messages, such as “OVERDUE!” or “PLEASE PAY!” can add impact to follow-up copies of invoices that you send out. It’s easy to add a watermark to your invoices:

Choose Customers, and then Create Invoices to display the Create Invoices window.

Click the Customize button on the toobar, and then click the Manage Templates button.

Select an existing invoice, such as Intuit Product Invoice, and then click the Copy button.

Use the Template name field shown in Figure 4 to assign a name like Overdue Intuit Product Invoice, instead of Copy of: Intuit Product Invoice.

Click OK to close the Manage Templates window, and then click the Layout Designer button in the Basic Customization window.

Click the Add button on the toolbar, and then choose Text Box.

Enter the message you want to add in the Text field, such as OVERDUE!

Click the Font button, and then make these changes:

• Set the Font Name to Arial Black
• Set the Font Style to Bold
• Set the Font Size to 60
• Change the Font Color to Silver

Once you’ve set the font settings, click OK to close the Font dialog box, and then click the Border tab. Unclick Top, Left, Right, and Bottom, and then click OK.

Resize and reposition the text box on your invoice, such as in the center of the body section, as shown in Figure 5.

Right-click on the text box and choose Order, and then Send Backward.




Figure 4: Assign a meaningful name to your new template.




Figure 5: You can add an OVERDUE! Watermark to a customized QuickBooks invoice template.

Going forward, you can choose this template from the list anytime you wish to follow-up on an overdue invoice.

#4: Send e-mail follow-ups

A friendly note can sometimes shake a payment loose on an overdue invoice. For instance, you can choose Reports, Customers & Receivables, and then A/R Aging Detail. Double-click on the invoice in question to display it onscreen, and then click the Send button on the toolbar, which looks like an envelope with a green arrow. As shown in Figure 6, you can change customize the body of the e-mail to your liking. If you typically mail print copies of your original invoices, then consider changing the default text of the e-mail to make your collections easier. To do so, click the Edit Default Text button and then make any changes that you like. Do note that these changes won’t appear in the Send Invoice window until you close it and click the Send button again. Click the Send Now button to e-mail the invoice copy to your customer.




Figure 6: Customize the default e-mail text to simplify invoice follow-ups.

#5: Use Statements

QuickBooks makes it easy to send statements to one or more customers. Choose Customers, and then Create Statements. Set the desired options, including which customer or customers to contact, and then choose Print or Email to generate the statements.

#6: Tweak the Collections Report

When calling on an overdue invoice, it’s helpful to make sure that your customer is aware of all pending invoices. You can easily tweak this report so that it lists all open invoices:

Choose Reports, Customers & Receivables, and then Collections Report.

Click the Modify Report button, and then click on the Filters tab.

As shown in Figure 7, click on the Date filter, and then choose Remove Selected Filter. Do the same for the Aging and Due Date filters, and then click OK.

As shown in Figure 8, the Collections Report now displays all open invoices. You can click the Memorize button to save this report for future use.




Figure 7: Modify the Collections Report filters to add helpful information to this report.




Figure 8: The resulting report shows all open invoices, as well as contact names and telephone numbers.

#7: Accept credit cards

Many business owners avoid accepting credit cards due to the fees involved, which can top 3%. However, 97% of an overdue invoice is far better than 0%, or having to wait even longer to collect. You can learn about QuickBooks Merchant Services by choosing Add Credit Card Processing on the Customers menu in QuickBooks. Or, consider a payment service like PayPal (www.paypal.com), which offers a free Request Money with QuickBooks wizard. Look under the Merchant Services section of your PayPal business account.

You’ll likely be closing the books on 2008 soon and your records will become the basis for your tax return. It’s critical that your QuickBooks records for a given year match the corresponding tax return, so consider setting a closing date in QuickBooks so that no one inadvertently changes the supporting documents for your tax return:

1. Choose Edit, and then Preferences.

2. Choose Accounting, and then click on the Company Preferences tab.  As shown in Figure 1, you can use this window to determine if a closing date has been set.

3. Click Set Date/Password, and then enter a closing date. Although optional, you should then set a password. If you set a date without a password, then the prompt shown in Figure 2 will appear when someone attempts to enter or modify a transaction dated on or before the closing date. Conversely, the prompt shown in Figure 3 asks for the closing date password.




Figure 1: The Company Preferences Accounting tab displays the current closing date for your company.




Figure 2:  Users can bypass this warning prompt if you don’t set a closing date password.




Figure 3:  Set a closing date password to ensure that users can’t modify prior year transactions without permission.

It’s generally best to set the closing date once you’ve completed all of your year-end reconciliations, printed W-2s and 1099s, and other year-end tasks. In fact, an ideal time is when you send the books out to have your tax return prepared.

Eliminating Uncategorized Income and Expenses

Unless you set a specific preference, users can enter transactions without specifying a revenue or expense account. Such transactions appear on the Profit & Loss Statement as Uncategorized Income or Uncategorized Expenses, as shown in Figure 4. If these items appear on your Profit & Loss Statement its an easy fix. Simply double-click on the amount, and then double-click on each of the transactions in the resulting transaction report. Assign accounts to each of the underlying transactions, and then click the Refresh button to see the effect on your report.

Fortunately you can set a preference in QuickBooks to ensure that no uncategorized transactions will ever slip through:

1. Choose Edit, and then Preferences.

2. Choose Accounting, and then click on the Company Preferences tab.

3. As shown in Figure 5, ensure that Require Accounts is checked, and then click OK to save the preference.



Figure 4: QuickBooks places transactions that don’t have account numbers into Uncategorized Income and Expenses.




Figure 5: The Require Accounts preference prevents uncategorized income and expense transactions.

Note: Setting this preference won’t clear up existing uncategorized transactions, but will prevent them from occurring in the future.

How to Print W-2s and 1099s from QuickBooks

If you process payroll in QuickBooks, you’ll soon need to print W-2 for your employees. The recipient copies of these forms must be postmarked by January 31, 2009, while you’ll need to submit the government copies by February 28, 2009. QuickBooks can print on blank perforated W-2 forms or preprinted W-2 forms.  But before you embark on printing W-2 forms, make sure that you have the latest payroll update:

1. Choose Employees, and then Get Payroll Updates.

2. Click the Update button, and then follow the on-screen prompts to download the latest payroll updates and forms for your version of QuickBooks.

Once you’ve installed the payroll updates, you’re now ready to print your W-2 forms:

1. Choose Employees, Payroll Tax Forms & W-2s, and then Process Payroll Forms.

2. Choose Federal Form, and then click OK.

3. As shown in Figure 6, choose Annual Form W-2/W-3 – Wage and Tax Statement/Transmittal, and then specify the year for which you’re printing W-2s.




Figure 6: You can print W-2 forms directly from QuickBooks on preprinted or blank forms.

4. When the Select Employees for Form W-2/W-3 window appears, click Review/Edit to display a preview of each form to be printed. You’ll walk through an interview, copies of the W-2 forms, the summary W-3 form, and then printing instructions.

5. Click Submit Form to display the dialog box shown in Figure 7. You then use this window to print the various copies of forms W-2 and W-3.




Figure 7: QuickBooks makes it simple to generate W-2 forms at the end of the year.

It’s just as easy to print Form 1099 from QuickBooks. You may not realize that there are over a dozen different versions of the ignoble 1099 form. However, most users only need Form 1099-MISC, which QuickBooks allows you to generate, as well as the transmittal Form 1096. 1099 must be postmarked by the same dates discussed previously for W-2s. Here’s how to print 1099s in QuickBooks:

1.  Choose Vendors, and then Print 1099s/1096. If this option does not appear, choose Edit, Preferences, and then Tax: 1099. Choose Yes on the Company Preferences tab, and then click OK.

2. When the 1099 and 1096 Wizard appears, click the Run Report button for step 1. When the Vendor 1099 Review report appears, carry out these steps:

• Scroll down and ensure that all vendors that require a 1099 have a Yes in the Eligible for 1099 field. Check with your tax advisor if you’re unclear as to whether any of your vendors should receive a 1099 form.

•  If you find any misclassified vendors, double-click on the vendor name, and then choose the Additional Info tab, and then set or clear the Vendor Eligible for 1099 checkbox. Filter the report to show only 1099 vendors, so that you can confirm that every 1099 vendor has a proper address and tax ID number entered in QuickBooks. To do so, click the Modify Report button, and then click the Filters tab. Scroll down to the Eligible for 1099, and then choose Yes, as shown in Figure 8. Click OK, and then confirm that all vendors have tax IDs and addresses.




Figure 8: Simplify your 1099 review by displaying only vendors that require 1099s. Ensure that each vendor has a proper tax ID and address lists.

3. Return to the 1099 and 1096 wizard, and then click the Map Accounts button. Most 1099 vendors are classified as subcontractors, so ensure that Box 7 matches the account where you posted subcontractor income.

4. Click the Run Report button on the 1099 wizard. As shown in Figure 9, the report shows amounts that will appear on a 1099, as well as amounts you paid that won’t be included. Be sure to double-click each amount in the Uncategorized column. QuickBooks only allows you to map a single account to a given box on Form 1099, so you may need to change the account on one or more uncategorized transactions to ensure that the 1099 reports the proper amount. Keep in mind that reimbursed expenses are not typically included on Form 1099.




Figure 9: Double-click on uncategorized amounts to determine whether they should be included on Form 1099.

5. Once you’ve reviewed the summary report, click Print 1099s. Confirm the date range to use, and then use the Select 1099s to Print window shown in Figure 10 to preview and then print your forms.




Figure 10: This window allows you to print copies of Forms 1099 and 1096.

Although it may seem like drudgery, reconciling your bank account is a critical accounting task that you should carry out each month. Doing so helps ensure the integrity of your financial reports, since most of your accounting transactions ultimately affect cash in some fashion. Further, QuickBooks is a much more powerful tool for your business if you use it to its fullest extent.  Most likely you’ve been reconciling your bank account all along, so in this article we’ll discuss the tricks and techniques you need to know to streamline the process.

If you’re new to QuickBooks, you start the bank reconciliation process by having your bank statement in hand, and then choose Banking, and then Reconcile. The Reconciliation screen shown in Figure 1 appears. In most cases, you enter the ending balance from your bank statement, add any interest or fees, and then click Continue. You mark transactions as cleared, as shown in Figure 2, and then click Reconcile Now. However, it’s not always that simple, so read on to learn how to sail over any hurdles that may appear.

Figure 1: The QuickBooks Begin Reconciliation window.

Figure 2: The QuickBooks Reconcile window.

1. Locate discrepancies
As shown in Figure 1, click the Locate Discrepancies button to display the Locate Discrepancies window shown in Figure 3. From there, click the Discrepancy Report button to display the report, as shown in Figure 4. This identifies any edited or deleted transactions that may affect your reconciliation.

Figure 3: QuickBooks can help you identify edited transactions that may disrupt your reconciliation.

Figure 4: Ideally your discrepancy report should never have any transactions listed.


 
2. Confirm your beginning balance
Your beginning balance should always tie to your bank statement, but if it doesn’t, click the Undo Last Reconciliation button until you reach a point where the beginning balance matches your bank statement. You must then redo the reconciliations to bring your books current and resolve the discrepancy.

3. Don't forget interest and fees
Be sure to record any interest and fees in the window shown in Figure 1. Alternatively you can record deposit and check transactions to record interest and fees, or the very savvy can use journal entries. If you go this route, be sure to debit cash and credit interest income for interest earnings or credit cash and debit bank charges for any fees incurred. 

4. Double-check your ending balance
Always double-check your ending balance input when you start the reconciliation. A simple transposition or other error here can make it appear that you’ve missed a transaction.

5. Look for transpositions
Sometimes you’ll mark all transactions as cleared, but still have a difference. In such cases, divide the difference by 9—if it divides out evenly, then there's a good chance that you transposed a number on a transaction. For instance, a $63 dollar difference divided by 9 returns 7 could mean that a transaction was entered incorrectly. As shown in Figure 5, you can right-click on an amount, and then choose Edit Transaction to fix the error.

Figure 5: Right-click on an amount and choose Edit Transaction to correct a mistake.

6. Pick a side, any side
Don’t mix and match deposits and withdrawals. Reconcile your Deposits and Other Credits first, and then confirm that the total items you marked cleared ties to the amount shown on the Reconcile window. Then reconcile Checks and Payments — doing one side a time limits your search area for missing or misposted transactions.
 
7. Clear the decks
If you get tangled up in a reconciliation, click the Unmark All button shown in Figure 2 to start over.
 
8. Enter missing transactions
You can add missing transactions without closing the reconciliation window. Simply choose a command from the menu across the top or from the Home screen. Saved transactions will instantly appear in the reconciliation window.
 
9. Check undeposited funds
Choose Banking, and then Make Deposits. If the window shown in Figure 6 appears, you must complete the deposit process for these transactions.

Figure 6: Undeposited funds can pose problems with your reconciliation.

10. Hide unnecessary transactions
Click the Hide Transactions after the Statement’s End Date check box shown in Figure 2 to have fewer transactions to sift through.

11. Void old transactions
Old, uncleared transactions can linger on forever—locate such transactions within your register, choose Edit, and then Void. The banking system generally considers checks to be stale after six months. Such lingering transactions are often duplicates of a transaction that cleared.

12. Clear voided transactions
Always clear transactions with a zero balance as these won’t affect your reconciliation, but do clutter up the Reconcile window.

13. Bank online
Some institutions allow you to synchronize your records with your online statement. This involves a matching process that automatically clears transactions that match, and makes it easy to quickly post new transactions.

14. Use your keyboard
Rather than using your mouse to click on each transaction that you wish to clear, use the arrow keys on your keyboard to move up and down. Press the spacebar to toggle a transaction as cleared or uncleared.

15. Walk away and come back later
If you just can't seem to get the unreconciled difference down to zero, the best thing to do is click the Leave button shown in Figure 2, and then resume the reconciliation tomorrow. A fresh eye can do wonders.

16. Reconcile More Frequently
If you can access your bank account online, you can reconcile your bank statement as often as you wish. Consider reconciling accounts with heavy volume weekly or twice a month.

Over time, your QuickBooks company can grow in size to the point that it becomes difficult to find specific transactions. For instance, let’s say that you hire a new employee, and want to order another desk to match the ones in your office. You vaguely remember the last time that you ordered a desk, but can’t remember which vendor, or how much you paid. In this article we’ll discuss seven ways that you can search QuickBooks to find transactions such as this, or when necessary, determine if a transaction was deleted.

#1: Registers

QuickBooks maintains a register for each account on your balance sheet, which includes bank accounts, inventory, accounts receivable, and other assets. There are also registers for accounts payable, loan accounts, and owners’ equity. Depending upon what you’re looking for, a register might be a fast way to find what you’re looking for, such as that desk we mentioned at the start:

1. Choose Edit, and then Use Register (or press Ctrl-R). Alternatively, you can choose Banking, and then Use Register.

2. As shown in Figure 1, choose your Furniture account from the list, and then click OK. QuickBooks will then present a window similar to Figure 2.



Figure 1: Every balance sheet account—not just cash accounts—has a register.

3. As also shown in Figure 2, you can use the Go To button to search the register. This can help you narrow your search within a register that contains many transactions.





Figure 2: The register displays a searchable listing of all transactions within a balance sheet account.

Keep in mind that registers are just one way to find transactions in QuickBooks, and won’t always be appropriate for every situation. For instance, income and expense accounts don’t have a register—in those cases you need to take another approach.

#2: Simple Find

Think of the Simple Find feature as an expanded version of the Go To feature within a QuickBooks register. Choose Edit, and then Find (or press Ctrl-F) to display the window shown in Figure 3. If necessary, click the Simple tab at the top of the window. You can then carry out searches based on transaction type, such as Invoice, Estimate, Bill, Check, and so on:

1. Choose a transaction type from the list.

2. Optionally limit your search by completing the Customer/Job, Date, Transaction #, and Amount. It’s not necessary to complete these additional fields, however without doing so you’ll return a list of all transactions of a given type, which may or may not be helpful.



Figure 3: Simple Find allows you to search within a single transaction type.

Once your list of transactions appears on the screen, you have several options:

• Double-click on a transaction to view it, or click once on the transaction and then click the Go To button.

• Click the Report button to display a Find report onscreen. As we’ll discuss later in this article, you can then click the Modify Report button to further refine the results of the Find report.

• Click the Export button to export the results to a comma-separated values (CSV) file or Excel spreadsheet.

#3: Advanced Find

This feature, shown in Figure 4, is akin to the Simple Find on steroids. You can search QuickBooks based on any combination of dozens of criteria. For instance, Figure 4 shows a search on customers in the city of Middlefield who bought appliances costing $500 or more. To use Advanced Filter, simply choose a field from the Filter column, and then set the desired criteria. Your input choices will vary based on the field that you choose.

For instance, if you click on Name City, you can enter a single city. Conversely, you can make multiple selections when you choose a field like Item or Account. Keep adding new filters as needed. You can craft some very elaborate searches in this fashion. To eliminate a filter, click once on the item within the list on the right, and then hit the Delete key. Alternatively, the Reset button will also clear the decks for you.




Figure 4: Advanced Find allows you to specify criteria for dozens of available fields.

#4: Search

Current versions of QuickBooks feature a Search command on the Edit menu. You may be prompted to enable Google Desktop the first time that you choose this command. Doing so will allow you to use the same search terms and conventions that you use on the Internet to locate transactions within QuickBooks. As shown in Figure 5, this feature is not automatically enabled, and doing so may cause minor performance degradation on your computer. As shown in Figure 6, Google Desktop automatically groups transactions by type, and you can choose to sort by date.



Figure 5: You must enable Google Desktop Search within QuickBooks.




Figure 6: Google Desktop search automatically groups transactions by type.

Indexing required: Google Desktop initially runs an indexing process on your QuickBooks data. The length of time required for this varies, based upon the size of your QuickBooks company. You’ll get the best results from your search if you wait until Google Desktop has completed its initial index. New transactions will automatically be indexed after this one-time process completes.

#5: Customized Lists

By default, QuickBooks customer and vendor lists only display names and balance totals. You may not realize that you can add additional columns, such as phone number, and that each column is sortable:

1. Choose Customers, and then Customer Center (or press Ctrl-J).

2. Right-click on the customer list, and then choose Customize Columns.

3. As shown in Figure 7, you can add as many additional fields as you wish to the list, as well as move fields up and down within the list. Click OK once you’ve made your changes.



Figure 7: You can add or remove columns from list windows in QuickBooks.

4. As shown in Figure 8, you can resize the columns within the list. Place your mouse between field names, and then drag to the left or right to resize the field.




Figure 8: QuickBooks list columns are resizable and sortable.

5. Click the name of a field within the list to sort based on that column. As shown in Figure 8, you can use this technique to search for a customer simply based on telephone number.

#6: Report Filters

Some QuickBooks reports are like a fire hose of data, giving you far more information than you really need. Fortunately, every report has a Modify Report button in the upper-left-hand corner of the screen, which enables you to pare down the results of the report. As shown in Figure 9, you can click the Filters tab of the Modify Report window and make the same choices that we discussed previously in the Advanced Filter dialog box.



Figure 9: Most QuickBooks reports allow you to apply filters to limit the amount of data shown.

#7: Audit Trail: If you’ve exhausted all of the previous methods to find a transaction in QuickBooks, one final place to look is the audit trail. Someone could have deleted the transaction, either on purpose, or accidentally. The audit trail formerly was an optional feature in QuickBooks, but starting with the 2006 versions and onward, it’s always on, so you’ll always have a searchable record of every transaction ever entered in QuickBooks. You cannot view the details of deleted transactions in the audit trail, but at least you’ll know why it didn’t appear through any of the other search methods:

1. Choose Reports, Accountant & Taxes, and then Audit Trail.

2. Once the report appears on screen, you can change the date range to pick a broader range if necessary. You can also click the Modify Report button and apply any filters that you wish. As shown in Figure 10, any deleted transactions will be marked as such.

Summary

Hopefully you now have at least a couple of new ways to retrieve transactions or contact information from QuickBooks. Not every technique is appropriate for every search, but understanding these seven ways to search QuickBooks can broaden your skills, and help you retrieve information about anything within your accounting records.

Did You Know?

There are hundreds of add-on products available for QuickBooks that may be able to help you streamline business processes that you currently carry out by hand. Visit http://marketplace.intuit.com to search the list of available products by industry or business need. Many applications are certified by QuickBooks, and most products include customer product ratings. Free trials are often available, so you can try products before you buy. The web site also includes a list of developers, so you can have a custom application written for you if can’t find an existing tool to meet your needs.

Does the mere mention of accounting ratios put your teeth on edge, and bring back bad memories of Accounting 101?  It shouldn’t, as ratios can help you quickly determine how your business compares against others. Banks often use ratios to analyze your financial statements as part of the loan approval process, so it’s helpful to know in advance how you’ll be measured. Even better, ratios allow you to compare your business against your peers since many trade groups publish lists of average ratios within an industry. Although ratios may have made you drowsy during accounting class, they can be a fascinating way to measure your company’s financial performance.

Gross Profit Margin

Simply put, gross profit margin—sometimes referred to as gross margin—is your revenues less your cost of sales. For some industries, this is a very meaningful metric, while it won’t mean as much to others. For instance, manufacturers, restaurants, and retailers often treat gross profit as a key performance indicator.  In such environments, one typically purchases inventory at one price, and ideally sells it to someone else at a higher price. The spread between these two numbers is the gross profit margin. Let’s say that you buy $40 of pine straw (we’re trying to avoid the accounting class term widget) and sell it for $60. In this case, $20 of gross margin divided by $60 of sales yields a gross margin percentage of 33%. Thus, one-third of your sales are available to put toward overhead items, such as office supplies, payroll, rent, taxes, and so on. Ideally, your gross margin is high enough to cover your overhead and leave you with a profit. With that example in mind, let’s see how you can calculate your own gross profit margin.

Caveat: Gross profit margin isn’t meaningful to everyone. For instance, if you’re a self-employed service provider, you may not have any cost of sales. Your salary is arguably all or most of your profit. You can certainly count your salary as cost of sales and compute a gross profit margin, but you might not find much value in the result.

To begin, choose Reports, Company and Financial, and then Profit & Loss Standard. As shown in Figure 1, look for the Gross Profit amount, and then divide this by Total Income. 

 

Figure 1: The Profit and Loss Standard report provides the figures you need to calculate gross profit.

In this case, $30,953.20/$51,241.16 shows a gross profit margin of 60.4%. Is that good? Is it bad? Very often the answer is “it depends”, which is why you should try to compare yourself to similar companies in your industry. However, let’s consider the restaurant industry. Many owners strive to keep their gross margin at around 63%, which means a cost of goods sold percentage of 37%.  The gross profit ratio enables you to track this key measurement, but you must ensure that your transactions are being recorded in the proper accounts. The percentages can skew if, let’s say a telephone bill, is miscoded to Food Costs, instead of Telephone. Similarly, your cost of goods sold might look great only because someone miscoded food costs into an overhead account, such as Supplies.

Profit Margin

Profit margin is another commonly used ratio that you can derive from the Profit & Loss Standard report by dividing Net Income by Total Income. In essence, this is the percentage of sales that the owner of a business gets to keep—before Uncle Sam gets his share. Profit margins vary widely by industry. For example, a grocery store chain may have profits of $2 billion, but a profit margin of just 2.6%. An oil company may have staggering profits in dollars, but their profit margin is often just 10%. Conversely, some software companies have a profit margin of 28% or more. As with gross profit, the best way to determine whether a profit margin is reasonable is by comparing the result to one’s peers. The construction company shown in Figure 1 has Net Income for the period of $13,123.48, which when divided by Total Income of $51,241.16 returns a profit margin of 25.6%.

Inventory Turnover Ratio

This ratio illustrates how many times a year you’re selling your entire inventory. This can help you gauge whether you may be holding too much inventory, or not enough. This ratio is based on cost of goods sold divided by average inventory. As you’ve seen, cost of goods sold appears on the Profit and Loss Standard report—look for Total COGS—but you’ll have to perform a quick calculation to determine average inventory. To do so, divide the sum of your beginning inventory plus ending inventory by 2. Although you can use several different reports in QuickBooks to determine the beginning and ending balance of your inventory, try this first: choose Reports, Company and Financial, and then Balance Sheet Prev Year Comparison. Change the report date to This Fiscal Year, and then look for the inventory account balance, as shown in Figure 2. The ending balance for last year is also the beginning balance for this year.

If you need beginning and ending balances for a shorter period, such as a quarter, choose Reports, Accountant and Taxes, and then General Ledger. Set the report dates to the period of your choice, and then use the beginning and ending balances for your inventory account.
 


Figure 2: The Balance Sheet Prev Year Comparison can provide beginning and ending inventory balances.

Average Collection Period

This ratio helps you determine how long it takes your customers to pay their invoices. The formula is a little more complex than some of the other ratios: number of days multiplied by average accounts receivable balance, divided by credit sales. For instance, let’s say that your average accounts receivable balance is $30,000, and you had total sales of $400,000 for the year.  365 multiplied by 30,000 is 10,950,000. This amount divided by our total sales of $400,000 is 27.38, meaning that on average your customers pay their invoice in just under 30 days. Be sure to monitor your average collection period, as your cash flow can tighten quickly if that ratio increases. If you typically invoice your customers, then you can use the Total Income figure from your Profit & Loss Standard report.

Keep in mind: Average collection period won’t be of interest if your customers pay on the spot, such as in a retail store or restaurant.

Although QuickBooks doesn’t directly provide a figure for average accounts receivable, you can quickly customize a report to aid in this calculation:

1. Choose Reports, Company and Financial, and then Balance Sheet Standard.

2. Click the Modify report button, and then set the From and To dates to match the period shown on your Profit & Loss report. As shown in Figure 3, change the Display Columns By to Months, and then click OK.
 


Figure 3: Change Display Columns By to Months when you want a month-by-month report.

When QuickBooks displays the 12-month report, as shown in Figure 4, click the Export button, and then click OK to send the report to Microsoft Excel.


 
Figure 4: You can convert the Balance Sheet Standard report into a twelve-month format.

As shown in Figure 5, row 9 contains the Accounts Receivable figures. In cell R9, enter this formula to calculate your average accounts receivable balance:  =AVERAGE(F9:R9).


 
Figure 5: Use the Accounts Receivable figures to calculate your average accounts receivable balance.

As you can see, the average collection period ratio enables you to determine how long it takes your customers to honor your invoices, which, in turn, has a direct impact on your cash flow.

Other Common Ratios

Current Ratio: Divide current assets by current liabilities to determine a firm’s liquidity.

Quick Ratio: Subtract inventory from current assets, and then divide by current liabilities to apply a more severe liquidity measurement.

Debt Ratio: Divide total debt by total assets to determine how much of the company is financed by debt.

Return On Assets: Banks often add net income plus interest expense together, and then divide this by total assets to determine the firm’s return on assets. This figure typically needs to exceed the interest rate of a loan that you may be contemplating.

Compare Yourself to Others

Now that you understand how to calculate ratios based on your financial results, the next step is to compare yourself to your peers. You may belong to a trade group that makes benchmarks available to its members. If not, a good first step is the BizStats web site, at www.bizstats.com. Your line of business may be included in their free offerings, but even more information is available on a subscription basis. You can find even more resources by searching the Internet search for the term “industry benchmarks”.

Did You Know?

You can send your thoughts about QuickBooks to Intuit directly from within QuickBooks. To do so, choose Help, Send Feedback Online, and then one of these choices:

• Product Suggestion, as shown in Figure 6

• Bug Report

• Help System Suggestion

Any of these links will display an online form in your web browser so that you can submit your thoughts directly to the QuickBooks development team. QuickBooks frequently updates its’ products, so before you send a bug report, choose Help, and then Update QuickBooks. Click the Update Now button to ensure that you have the latest patches and fixes for your version of QuickBooks.
 


Figure 6: Submit your wish-list items directly to the development team from within QuickBooks.

The price of gasoline is just one of many factors putting pressure on our economy as a whole. Now it’s more important than ever to keep a close eye on your company’s performance. Many business owners compare financial results to an annual budget. If you don’t have your budget in place yet, we’ll show you how to get started. Even if you have, we’ll show you how to use last year’s results as a measuring stick with comparative financial reports. Once you understand these techniques, we’ll explain why you should create a monthly appointment with yourself to ensure that your results continue to measure up—and take action if they don’t.

TIP: Keep in mind that tough financial years do have a silver lining—you’ll likely pay less in income taxes. If revenues are down or expenses are up, don’t forget to trim your withholding or estimated tax payments accordingly. Doing so enables you to boost your cash flow now, rather than waiting around on a tax refund next spring.

Budget Basics
The QuickBooks Planning & Budgeting menu gives you the ability to create budgets and forecasts. In reality, both features work the same way, so we’ll use creating a budget as our example. But which one should you use? You might find it helpful to use the Forecast feature as an alternate budget and as a best-case scenario, while the Budget feature offers a better expectation of reality. Either way, here’s how to create a budget in QuickBooks:

1. Choose Company, Planning & Budgeting, and then Set Up Budgets.

2. When the Set Up Budgets window appears, click the Create New Budget button in the upper right-hand corner.

3. Select the year that you’d like to create a budget for (such as 2008 or 2009), select Profit and Loss, and then click Next.

Balance sheet budgeting: QuickBooks offers the ability to create a budget for balance sheet accounts, such as planning for expected levels of cash, inventory, accounts receivable, liabilities, and so on. However, most small business owners find that just a Profit and Loss budget is sufficient for their needs.

4. Most users will choose No Additional Criteria on the next screen. However, QuickBooks does provide the option for a more granular budget that you break down to the customer, job, or class level. Click Next once you make a selection.

5. The next screen asks if you want to start with a blank budget from scratch or if you want to use last year’s actual data as a starting point. Most users will find it helpful to use the previous year as a starting point. Click Finish after you make a choice.

6. At this point you’re presented with a screen similar to Figure 1. You won’t see any numbers if you chose the From Scratch option in step 5.


Figure 1: Starting with prior-year actual numbers can jumpstart your budget process.

7. Proceed with entering or updating your budget. Click the Save button as needed to preserve your work as you go, and then click the OK button when you’re finished.

Budget Tips: The Copy Across button enables you to copy the same amount across all twelve months. As shown in Figure 2, the Adjust Row Amounts button provides a quick way to adjust existing numbers up or down by either a percentage or dollar amount. You can edit your budget at any time: choose Company, Planning & Budgeting, and then Set Up Budgets. Choose your budget from the Budget list, and then make changes as needed.



Figure 2: The Adjust Row button makes it easy to quickly increase or decrease budget figures by a dollar amount or percentage.

Budget Reports
QuickBooks offers four budget and two forecast reports. You’ll use these steps to run most of these reports:

1. Choose Reports, Budget & Forecasts, and then the report of your choice.

2. A three-screen wizard appears, asking you first which budget or forecast you wish to use. Once you’ve made a selection, click Next.

3. The next screen asks which report layout to use — you may only one choice, Account by Month — click Next after you confirm your choice.

4. Click Finish to display your report:
• Budget Overview – As shown in Figure 3, this report provides a twelve-month view of your budget.
• Budget vs. Actual – This 52 column report can be tricky to navigate, as the default format shows these columns for each month, as well as a 12-month total.




Figure 3: Budget overview gives you a birds-eye view of your 12-month budget.

Report Taming Tips: There are a couple of ways to bring this report down to size. First, most users can eliminate the % of Budget column. To do so, click the Modify Report button, and then deselect % of Budget in the Add Subcolumns For section. Next, you can shrink the width of the columns. To do so, drag the diamond between the first actual and budget columns to the left, as shown in Figure 4. When you release the left mouse button, choose Yes when asked if you want to resize all of the columns. Alternatively, click the Export button to send the report to Excel.



Figure 4: Narrow column widths can condense particularly wide reports.

• Profit & Loss Budget Performance – This report compares your month and year-to-date actuals to the budgeted amounts, and also displays the 12-month budget. Although this report doesn’t display dollar or percentage variances, you can easily add these columns. Click the Modify Report button, and then select $ Difference and/or % Of Budget in the Add Subcolumns For section, as shown in Figure 5.



Figure 5: It’s easy to add or remove columns on any QuickBooks report.

• Budget vs. Actual Graph – This report doesn’t enable you to choose a budget — the current year budget is displayed automatically. As shown in Figure 4, this report enables you to get a graphic view of how your results measure up to your budget. You can choose between different budget views:

o P&L By Accounts – This view compares your Profit & Loss accounts, also known as income and expense, to the corresponding budgets. The report automatically sorts variances by difference, and you can view up to six accounts at a time.

o P&L By Accounts and Jobs – This view compares your P&L accounts on a job-by-job basis. Jobs with the largest total variance from budget will be presented first, and as with accounts, you can view six at a time.

o P&L By Accounts and Classes – This view compares your P&L accounts on a class basis. As with the other views, you can view up to six classes at a time. This button appears even if you haven’t set the Enable Class Tracking preference.

Class Tracking: Classes allow you to you track costs by department, project, or other categories. To enable class tracking, choose Edit, Preferences, and then Accounting. On the Company tab, select Enable Class Tracking.

Graph Printing limitation: You cannot print more than one page of the budget graphs at a time, so you’ll have to click Next Group and then click Print to create a hard copy of each report group. QuickBooks doesn’t provide a way to print all of the graphs in one fell swoop. You also can’t modify the graph format, other than to choose a different date range.

Comparative Reports
Regardless of whether you use budgets in QuickBooks or not, it’s always helpful to compare this year’s results to last year. Doing so enables you to see trends in your data, such as how automobile expenses have increased. Such a report is just a couple clicks away:

1. Choose Reports, Company and Financial, and then Profit & Loss Prev Year Comparison.

2. By default you’ll see this year compared to last year. However, you can easily create a multi-year comparison:

a. Click the Modify Report button.

b. In the Columns section, choose Year from the Display Columns By drop-down list, and then click OK.

c. On the report screen, choose a date range, such as 1/1/04 through 12/31/08, and then click the Refresh button. As shown in Figure 6, a multi-year comparison will appear onscreen. If you find this format helpful, click the Memorize button to save this report for later use.



Figure 6: You can convert the Profit & Loss Prev Year Comparison into a multi-year report.

Summary
In this article we discussed how you can use the budget and forecast feature in QuickBooks to plan the future of your business. As each month rolls by, you can compare your plan to actual results. In addition, you can compare this year’s results to last year, or even the last several years.

Did you know?
Did you know that an accountant’s copy of a QuickBooks file can be converted to a normal QuickBooks company, i.e. a .QBW file? There are limited circumstances where you’d want to do so, because it’s not possible to merge two .QBW data files together. However, let’s say that you lose access to your QuickBooks company because your hard drive crashes or someone steals your laptop. These are situations where a converted accountant’s copy would be better than starting from scratch. If you need to do this, ask your accountant to carry out these steps in their version of QuickBooks:

1. Choose File, Utilities, and then Convert Accountant’s Copy to Company File (QBW).

2. Choose the Accountant’s Copy to convert.

3. Click OK on the prompt shown in Figure 7.

4. Assign a name to the new company file, and then click Save.

A final warning prompt will appear to confirm that this copy will overwrite any existing client copy of the books.



Figure 7: Converting an accountant’s copy to a working QuickBooks company can serve as a disaster recovery method.

Of course, the best defense is to make frequent back-ups of your QuickBooks data on removable media, such as the USB flash drives that often cost less than $10. These easily allow you to carry your QuickBooks back-up offsite, such as in your purse or briefcase. But, it’s good to know that your accountant might be able to provide a working QuickBooks company —as long as you recently sent your accountant’s copy along to them.

This feature is available in QuickBooks 2004 and later, and enables you to generate numerous payroll reports in Excel with just a couple of mouse clicks.  Keep in mind that the mix of reports that you see may vary, based on your version of QuickBooks.  In addition, the Excel-based reports take two different formats:

• Pivot table-based:  Excel's pivot tables feature summarizes rows of date into a concise format.  In this case, the rows of data are in QuickBooks, so the resulting spreadsheet becomes an extension of QuickBooks.  In general, pivot tables offer several special benefits:
  
  - You can rearrange the pivot table by dragging and dropping fields.
  
  - You can double-click on any number within the pivot table to drill down to the underlying detail.
  
  - Certain fields in the pivot table include drop-down lists, from which you can exclude certain items or employees.
  
  - You can set the pivot table to put a page break between each employee or item, which enables you to easily print a separate report to share with each person on your team.
  
  
• Worksheet-based:  The worksheet-based reports that QuickBooks generates are static in nature, meaning you can't double-click on any numbers to view the underlying detail.  These reports are similar in nature to reports that are generated when you use the Send to Excel feature to analyze any of QuickBooks built-in reports.  You can, however, copy and paste portions of the reports into other workbooks, or modify the reports to meet your needs.

You don't have to return to QuickBooks if you decide that you want to generate a different tax form worksheet, or perhaps change the report dates.  The steps differ slightly, depending upon your Excel version:

• Excel 2003 or earlier: Choose Get QuickBooks Data or Update Tax Worksheet from the floating QuickBooks Link or QuickBooks Tax Link toolbars, respectively.  These toolbars are easy to restore if you inadvertently close them: right-click on any of your Excel toolbars, and then choose QuickBooks link or QuickBooks Tax link.
  
  
• Excel 2007: Click on the Add-Ins tab of the ribbon, choose QB Payroll Summary Reports in the Custom Toolbars section, and then choose either Get QuickBooks Data to update the payroll summary, or Update Tax Worksheet to update a tax form.

Note: If you simply change the dates for the payroll summary or a tax form, your existing worksheet will be overwritten.  However, if you choose a different tax form, an additional worksheet will appear within your workbook.

If you’re like most QuickBooks users, you rely on the Profit & Loss Standard report to monitor how your business is doing. However, you may have overlooked an even more valuable report: the Statement of Cash Flows. The Profit & Loss Standard (P&L) report is important in its own right, but it only provides partial insight into the health of your business. While the P&L shows what you earned and spent, the Statement of Cash Flows shows you where the cash came from and went to, also known as sources and uses. As you’ll see in this article, you can use the Statement of Cash Flows to determine the how various activities increased or decreased your cash balance during a given report period.

Cash versus Accrual
Unlike some accounting packages, QuickBooks allows you to run most reports on either the cash or accrual basis. Cash-basis means that transactions don’t appear on your Profit & Loss statement until either your customer pays their invoice or you pay a vendor (or employee). So, if you enter a bill in QuickBooks to be paid later, the expense won’t immediately appear on a cash-basis P&L. Similarly, invoices that you send to customers won’t immediately appear on a cash-basis P&L. The expense appears when you write a check to the vendor, and the revenue appears when the customer honors their invoice. Accordingly, cash-basis reports don’t necessarily report a company’s true financial performance. You could have a stellar looking Profit & Loss Report, but a list full of unpaid bills in QuickBooks. Accordingly, many accountants prefer that business owners use accrual-basis reports.

Accrual-basis reports recognize the effect of every transaction on your P&L immediately. Customer invoices appear on accrual-basis P&L reports as soon as you save the transaction, as do unpaid vendor bills. You can easily see the significance of these differences in Figures 1 and 2.
 
 


Figure 1: Cash-basis reports only reflect paid transactions.



Figure 2: Accrual-basis reports include all transactions – both paid and unpaid.

Accrual-basis reports provide a much better picture of where the business stands, but can make it harder to understand your current cash position. However, a cash-basis P&L isn’t a panacea for managing cash flow, as your business has many transactions that don’t affect the P&L. For instance, loan payments, owner distributions, and owner contributions affect your balance sheet, which tracks assets, liabilities, and equity. Fortunately, the Statement of Cash Flows reflects these types of transactions and more, so it’s a great companion to both cash-basis and accrual-basis P&L reports.

Set Your Preference
You can instruct QuickBooks to always display your reports on either cash or accrual basis:

1. Choose Edit, and then Preferences.

2. Choose Reports & Graphs, and then Company
Preferences.

As shown in Figure 3, specify either Cash or Accrual, and then click OK.

 


Figure 3: You can set either cash or accrual as your default report format.

Of course, at any time you can change a report to the other format. For instance, if your preference is set to accrual, but you may sometimes want to view a cash basis P&L:

1. Choose Reports, Company & Financial, and then Profit & Loss Standard.

2. Click the Modify Report button, and then choose Cash in the Report Basis section, as shown in Figure 4.



Figure 4: You can change the accounting method for your P&L on the fly.

NOTE: Most, but not all, reports in QuickBooks allow you to change between cash and accrual. When a report is onscreen, choose Modify Report. If you don’t see the Report Basis section, shown in Figure 5, then you’ll know that you can’t toggle the report basis. Now that you understand the ins-and-outs of running cash and accrual basis reports, let’s explore the Statement of Cash Flows.

The Statement of Cash Flows
Let’s say that your cash balance at the beginning of your fiscal year was $100,000, and today it is $75,000. The net income figure on your P&L won’t give you the full details on why your cash balance decreased, but the Statement of Cash Flows will. To do so, choose Reports, Company & Financial, and then Statement of Cash Flows.

Report periods: As shown in Figure 5, this report automatically defaults to This Fiscal Year-To-Date, but you can choose another time period if you wish. To do so, make a choice from the Dates drop-down list, or modify the From and To dates, and then click the Refresh button.

 

Figure 5: The Statement of Cash Flows defaults to the current fiscal year.

Your Statement of Cash Flows report will include up to three major sections:

• Operating Activities
• Investing Activities
• Financing Activities

Don’t worry if your report only includes one or two of these sections — sections only appear when you had relevant transactions during the report period. Let’s explore each of these sections individually.

Operating Activities
The Operating Activities section of the Statement of Cash Flows recaps activities related to running your business. This section will always start with Net Income, followed by an adjustments section. The adjustments reconcile your net income with the net cash provided by the operating activities. For instance, refer to Figure 5. Net income s $112,999 but the Net Cash Provided by Operating Activities is $42,584. Accordingly, the statement of cash flows identifies the $70,415 difference. Let’s investigate a couple of the items:

Accounts Receivable (-$71,759): During the report period we sent invoices to our customers, of which $31,503.08 remain unpaid. These unpaid invoices are reflected in the Net Income figure, so QuickBooks deducts these because we haven’t received this cash yet.

Inventory Asset (-$17,354): Amounts that we spend on inventory don’t become part of Net Income until we’ve sold the items. At that point QuickBooks posts the expense to cost of good sold, and reduces our inventory account accordingly. Purchasing inventory is a use of cash, so it appears as a negative amount on our Statement of Cash Flows.

Remember: The purpose of the Statement of Cash Flows is to reconcile our net income with the actual change in our cash account. Thus non-cash activities, such as unpaid customer invoices or amortized prepaid expenses get subtracted or added from Net Income, so that you can get a clear picture of where cash went during the report period.

Employee Advances (-$62): We paid $62 to an employee as an advance, which has not yet been repaid. This amount isn’t included in Net Income, but is a use of cash, so the amount is deducted. When our employee repays the advance, our Statement of Cash Flows will reflect a positive amount, since at that point we’ll have a $100 source of cash.

Prepaid Insurance ($893): During the report period we amortized, or used up, $893 of prepaid insurance. This expense is included in our Net Income figure, but we didn’t write a check for it during this report period, so QuickBooks adds this expense back.

Accounts Payable ($13,537): We’ve entered bills into QuickBooks totaling $13,537 that we haven’t paid yet. In effect, we’re temporarily borrowing this money from our vendors, so it’s a source of cash. Later, our Statement of Cash Flows will show a use of cash when we pay the vendor bills. This same treatment applies to credit cards and other liabilities.

As you look through the Statement of Cash Flows, you may also see Investing and Financing activities. Investing activities may include owner contributions as a source of cash, or in the case of the report in Figure 5, the purchase of $11,500 in furniture as a use of cash. Financing activities will show borrowing on a line of credit or other loan as a source of cash, while loan repayments (net of interest) will appear as uses of cash. In the end, you’ll see exactly what caused your cash balance to increase or decrease during the report period.

Research: You can easily investigate why amounts appear on your Statement of Cash Flows. As shown in Figure 6, the QuickZoom icon appears when you hover over an amount. Double-click to display a detailed report, as shown in Figure 7.

 

Figure 6: The QuickZoom icon indicates that you can drill-down within a QuickBooks report.




Figure 7: A detailed report appears when you double-click on an amount within a QuickBooks report.

Organizing the Statement of Cash Flows
QuickBooks makes an educated guess at what accounts in your chart of accounts should appear on the Statement of Cash Flows. However, you may encounter instances where activities appear in the wrong section, or don’t appear at all on the report. You can easily remedy such situations:

1. Choose Edit, and then Preferences.

2. Choose Reports & Graphs, and then Company Preferences.

3. Click the Classify Cash button, shown in Figure 3.

As shown in Figure 8, place a checkbox in the appropriate column. You cannot remove balance sheet accounts from the statement, but you can optionally include income and expense accounts. However, keep in mind that this is not a typical need, and you should only proceed under the guidance of your accountant or tax advisor.

 

Figure 8: QuickBooks allows you to classify accounts as operating, financing, or investing activities.

Did You Know?
QuickBooks has a Product Information window that can provide a dizzying array of information. Press Ctrl-1 to display the window shown in Figure 9. Some key elements on this screen include the product number shown at the top. Each QuickBooks user in your office should have the same release number. The size and location of your QuickBooks file is shown in the File Information section, while you can use the List Information section to determine how many customers and vendors you have in QuickBooks.



Figure 9: Press Ctrl-1 to view the Product Information window.

Just about every QuickBooks user relies on the Report Center and Reports menu, but if you’re like most, you have a small handful of reports that you tend to rely on. In this article we’ll go off the beaten path and explore ten reports that many users overlook. Even if you are using some of these reports, we’re sure you’ll find a few more to add to your repertoire.

1. Profit & Loss Summary Prev Year Comparison:  To access this report, choose Reports, Company and Financial, and then Profit & Loss Summary Prev Year Comparison. Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting—as well as how fast expenses are rising.

2. Balance Sheet Prev Year Comparison: You’ll find this report also within the Company and Financial section of the Reports menu.  As with your income statement, it’s important to compare where certain balances stand now versus last year:
• Cash
• Accounts Receivable
• Inventory
• Accounts Payable
• Other Liabilities, such as lines of credit or short term loans

3. Statement of Cash Flows: As with the two preceding reports, you’ll find the Statement of Cash Flows in the Company & Financial section of the Reports menu. Profit & Loss reports enable you to see what you earned, while Balance Sheet reports help you determine what you have—as well as what you owe. However, neither report necessarily provides a clear picture of where cash is coming from, or going to. As shown in Figure 1, you’ll be able to see:

• How much cash you’ve taken in from sales and spent on expenses

• Cash inflows or outflows from borrowing, repayment, or investing activities
In short, this report shows you exactly what caused your bank balance to increase or decrease during a given report period.



Figure 1: The Statement of Cash Flows report explains changes in your bank account balance.

4. Collections Report: Tricky economic times mean it is more important than ever to keep track of your collections.  Fortunately QuickBooks makes it easy to contact customers with overdue invoices: choose Reports, Customers & Receivables, and then Collections Report. As shown in Figure 2, the report provides a phone list and shows all overdue invoices. However, you can also use this report to quickly e-mail copies of overdue invoices to your customers.  To do so, double-click on a transaction within the Collections report to view the invoice, and then click the Send button at the top of the invoice form to display the Send Invoice form shown in Figure 3. You can modify the wording shown to be more direct, such as a subject line of “Overdue Invoice”or perhaps e-mail text along the lines of “I’ve attached a copy of your overdue invoice. If there’s a problem with our products or services, please let me know immediately, otherwise I trust that you’ll remit payment promptly.” To change the default e-mail text, choose Edit, Preferences, and then choose Send Forms. Select Invoice from the Change Default For list, make your changes, and then click OK.




Figure 2: The Collections Report gives you a jump start on dunning overdue customers.




Figure 3: You can adjust the wording of an overdue invoice e-mail for one customer at a time or change the default text.

5. A/P Aging Summary: Although it’s key to make sure that your customers are paying in a timely fashion, it’s just as important to pay your vendors, too. Unpaid bills can result in phone calls, e-mails, and other unnecessary interruptions. Choose Reports, Vendors & Payables, and then A/P Aging Summary to display the report shown in Figure 4. As with most reports in QuickBooks, you double-click on amounts to ultimately drill down to the original transaction.



Figure 4: The A/P Aging Summary helps you determine when bills are slipping into overdue status.

6. Trial Balance: Many business owners overlook the Trial Balance report, since it’s one of the few reports in QuickBooks that uses the terms Debit and Credit. However, it’s a helpful report, as it shows you all account balances in a concise format. If anything looks out of order, simply double-click on the amount to view the underlying detail. Choose Reports, Accountant  & Taxes, and then Trial Balance to view this report.

7. Voided/Deleted Transactions Summary: It’s no surprise that small businesses are much more prone to fraud than large businesses. Small business employees usually wear multiple hats, so it’s often impossible to separate financial duties (bigger businesses can do this with ease). Fortunately QuickBooks makes it hard for perpetrators to cover their tracks: choose Reports, Accountant & Taxes, and then Voided/Deleted Transactions Summary. As shown in Figure 5, you’ll be able quickly identify any transactions that have been deleted from QuickBooks. Granted, this isn’t an end-all solution by any means, but it is a helpful management tool. Plus, if a transaction ends up “vanishing” from QuickBooks, you can use this report to see who deleted it!



Figure 5: The Voided/Deleted Transactions Summary enables you to find transactions that appear to have vanished.

8. Audit Trail: The audit trail was an optional feature in earlier versions of QuickBooks, but is permanently enabled in recent versions of QuickBooks. This provides a complete record of every entry made in QuickBooks, as shown in Figure 6. The downside to that is that you can end up with a massive report. Don’t worry, as it’s easy to filter this report and narrow your search. To do so, choose Reports, Accountant & Taxes, and then Audit Trail. Once the report appears, click the Modify button, and then click on the Filters tab. You can filter by date range, amount, or dozens more fields.



Figure 6: The audit trail shows every transaction—including modifications—in QuickBooks.

9. Previous Reconciliation: It’s a good practice to always print at least the summary report once you’ve reconciled a bank or credit card account. Someone else could edit a reconciled transaction, which could cause the reconciliation to be out of balance. A printed copy of the report shows that the account reconciled as of the report date, although you will still have to untangle the edited transaction. However, if you close out the reconciliation screen, you have a second chance to print your report: choose Reports, Banking, and then Previous Reconciliation. As shown in Figure 7, you can choose from multiple reports.




Figure 7: The Previous Reconciliation report option allows you to reprint missing account reconciliation reports.

10. Transaction History: Think of this as a “report within a report”, as you can only run it in certain circumstances. As shown in Figure 6, you must have a transaction open on the screen or single-click on a transaction within a report. You can then choose Reports, and then Transaction History. As shown in Figure 8, QuickBooks will display a report that shows the entire history for a given transaction.




Figure 8: The Transaction History report provides shows all activity related to a given transaction.

Did You Know?

The Microsoft web site offers hundreds of free spreadsheet and word processing templates. Options range from timesheets to analysis tools to contract documents. Visit http://office.microsoft.com/templates, and then search for a template by use (home, office, school), collection (real estate, small business, wedding), or keyword. Indeed, if you’ve created a template that you rely on, you can submit it to the site and share your work with others!