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Intuit

QuickBooks

Enterprise Solutions 10.0

The Official eGuide
Copyright 2010 by The McGraw-Hill Companies. All rights reserved. Except as permitted
under the Copyright Act of 1976, no part of this publication may be reproduced or distributed in
any form or by any means, or stored in a database or retrieval system, without the prior written
permission of the publisher, with the exception that the program listings may be entered, stored,
and executed in a computer system, but they may not be reproduced for publication.
Intuit

QuickBooks

Enterprise Solutions 10.0 The Official eGuide

ISBN 978-0-07-170446-5
MHID 0-07-170446-9
Information has been obtained by McGraw-Hill from sources believed to be reliable. However, because
of the possibility of human or mechanical error by our sources, McGraw-Hill, or others, McGraw-Hill
does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible
for any errors or omissions or the results obtained from use of such information.
New York Chicago San Francisco
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New Delhi San Juan Seoul Singapore Sydney Toronto
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About the Author
Leslie Capachietti is an Advanced Certified QuickBooks ProAdvisor and a member
of Intuits Accountant Training Network. She is the Principal of Automated Financial
Solutions, an accounting systems consulting firm that specializes in helping small
business owners get the most from their QuickBooks software. Leslie is a nationally
recognized speaker and author who has trained thousands of fellow accountants
on how to better serve their QuickBooks clients. She holds an MBA from Boston
University.
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Acknowledgments
The Publisher would like to thank the following people at Intuit for their
contributions to this project, including
Alvin Lee for help with content questions and many additional items that
helped the timely flow of the project
Laura Messerschmitt for help getting software and answers
Stephenie Pang for help with branding issues and the eGuide covers
Andrew Kok for the Enterprise Solutions details
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Introduction
How to Use This Book
This eGuide is organized to match the way most businesses use QuickBooks
software. You can consult the table of contents, where youll notice that the topics
start with the tasks you perform immediately after installing the software, move on
to the tasks you perform often, and then cover the tasks you perform less
frequently.
The index guides you to specific tasks and features, so when you absolutely must
know immediately how to do something, its easy to find the instructions.
Whats Provided in This Book to Help You
There are some special elements in this book that youll find extremely useful:
Tips Give you some additional insight about a subject or a task. Sometimes
theyre shortcuts, and sometimes theyre tricks Ive learned from working with
clients.
Notes Provide extra information about a topic or a task. Sometimes they
provide information about what happens behind the scenes when you perform
a task, and sometimes they have additional information I think you might be
curious about.
Cautions Are presented to help you avoid the traps you can fall into if a task
has a danger zone.
FYI boxes Are filled with facts you dont necessarily need to perform a task,
but the information may be helpful. Some FYI boxes help you understand the
way QuickBooks thinks (all software applications have a predictable thinking
pattern); others are designed to point out the way certain procedures help you
run your business.
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You and Your Accountant
One of the advantages of double-entry bookkeeping software like QuickBooks is
that a great many simple bookkeeping tasks are performed automatically. If youve
been keeping manual books or using a check-writing program such as Quicken,
your accountant will probably have less work to do now that youre using
QuickBooks.
Many accountants visit clients regularly or ask that copies of checkbook registers
be sent to their office. Then, using the data from the transactions, a general ledger
is created, along with a trial balance and other reports based on the general ledger
(Profit & Loss Statements and Balance Sheets).
Many of the bookkeeping chores that your accountant has been performing will
now be handled by QuickBooks, which keeps a general ledger and provides reports
based on the data in the general ledger. Your accountant will check the totals and
prepare your taxes. Dont worry, your accountant wont complain about losing the
day-to-day, boring bookkeeping tasks. Most accountants prefer to handle more
professional chores, and they rarely protest when you tell them they no longer have
to be bookkeepers. Their parents didnt spend all that money on their advanced,
difficult education for that.
I N T R O D U C T I O N v
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P
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Getting Started
C
ongratulations on choosing to use QuickBooks Premier or
Enterprise Solutions to track your businesss finances. Its likely
you made this choice because of the advanced features offered in
Premier and Enterprise that are not found in QuickBooks Pro.
Taking full advantage of these features requires an understanding
of where to find them in the program and how they work. The
first part of this book will serve as your guide to the feature sets
by edition (either Premier or Enterprise) and by industry version,
such as Contractor, Retail, and Nonprofit.
Part One has two chapters. Chapter 1 introduces you to each of the
QuickBooks Premier and Enterprise Industry Solutions editions and
the features that are unique to each of them (and where in this book
you can find more information about them). In the second half of this
chapter, youll learn about whats new in the 2010 editions. Then, in
Chapter 2, youll learn how to set up your company file and all the
lists, such as customers, vendors, and the items you buy and sell in
QuickBooks.
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C
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Introducing
QuickBooks Premier
and Enterprise Editions
for 2010
I
n this chapter:
About the Premier editions and Enterprise Solutions
Whats new in QuickBooks 2010?
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QuickBooks Premier editions and Enterprise Solutions contain all the basic
functions found in QuickBooks Pro, along with a host of advanced features that
have been added to support larger or more complex businesses.
Industry-Specific Editions
Both the QuickBooks Premier edition and QuickBooks Enterprise Solutions provide
advanced features not found in QuickBooks Pro. In addition, Intuit offers industry-
specific editions that contain additional features and functions specifically designed
for the type of business youre operating. The following section lists the industry-
specific editions that are available for both Premier and Enterprise Solutions, along
with an explanation of the key features that are unique to them. While listed under
a specific edition here for convenience, keep in mind that many of these features
are also available across most editions.
Accountant Edition
The Accountant Edition was designed with the accounting professional user in
mind. Because they often support multiple QuickBooks users, the 2010 Accountant
Edition allows accounting professionals to work more efficiently with their clients
QuickBooks files. Specifically, QuickBooks Premier Accountant Edition includes all
of the features available in each of the 2010 industry-specific editions of QuickBooks
Premier: Contractor Edition, Retail Edition, Manufacturing & Wholesale Edition,
Professional Services Edition, and the Nonprofit Edition. In addition, the Premier
Accountant Edition can be toggled to the 2010 versions of QuickBooks Simple Start
and Pro and all other Premier Editions, making it easier to troubleshoot client
problems by working directly in the version they are using.
Client Data Review
Client Data Review (CDR), which is launched from the QuickBooks toolbar (look
for the Client Review icon), is a powerful tool that gives accountants (including
external accountants as described in the previous section) the ability to examine
a QuickBooks company file for problems or potential problems and fix them.
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With CDR you can do the following:
Troubleshoot general ledger account balances
Identify and resolve open items in accounts receivable and accounts payable
Identify additions and deletions made to QuickBooks lists
Identify errors in both sales and payroll tax accounts
Learn more about the external accountant and Client Data Review in Chapter 15.
Accountants Copy
An accountants copy is a version of a QuickBooks data file that can be sent to
your accountant for review; it can only be opened in the Premier or Enterprise
Accountant Edition. An accountants copy sent by a client can be opened by
selecting File | Accountants Copy | Open & Convert Transfer File. Once converted,
your accountant can make changes in the accountants copy while you continue to
work in your regular QuickBooks file. When the desired changes have been made,
your accountant sends you back the modified accountants copy, with supporting
notes if he or she wishes, which you can then simply import into your working
QuickBooks file.
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Working Trial Balance
The Working Trial Balance, available in both the Premier and Enterprise
Accountant Editions, allows you to review account balances, make adjusting
journal entries, and enter work paper references all in one window.
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Intuit Statement Writer
Intuit Statement Writer (ISW) is an Excel add-in that connects live QuickBooks
data to Excel so you can create customized financial statements for your firm or
clients (to learn more about ISW refer to Chapter 15).
Fixed Asset Manager
Built into both the Premier and Enterprise Accountant Editions, Fixed Asset
Manager (FAM) allows you to manage your (or your clients) fixed assets from
acquisition. Access FAM from the Accountant menu by selecting Manage Fixed
Assets. Fixed Asset Manager is covered in detail in the Appendix.
Contractor Edition
Available in both Premier and Enterprise, the Contractor Edition contains many
of the specialized workflows, reports, and other features considered necessary by
contracting and construction businesses.
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Repor ts
A set of Contractor-specific reports can be run from the Reports menu that allow
you to see how youre doing at each phase of a job. Some key reports are
Cost to Complete by Job Summary or Detail
Unpaid Job Bills by Vendor
Expenses Not Assigned to Jobs
Refer to Chapter 15 to learn more about running reports in QuickBooks Premier
and Enterprise Editions.
Job Costing
All job-related income and expenses (including payroll expenses) can be easily
assigned to a job. Read more about job costing in Chapter 6.
Job Costing Center
The Job Costing Center is a single window that summarizes key information about
your projects, such as least profitable and most profitable jobs and job estimates
versus actual performance to date.
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Change Order Functionality
Track, list, and show changes to existing estimates and the resulting cost impact to
you and your customers. Refer to Chapter 3 for information about using estimates
and change orders.
Multiple Billing Rates
The Multiple Billing Rates feature allows you to add different billing rates to
different employees or subcontractors to help ensure that you have an accurate
picture of a projects cost. More about Billing Rates in Chapter 2.
Contractor Char t of Accounts
The Contractor Edition comes with a preset chart of accounts that have been
developed by industry professionals. You can use this list if you wish, or you
can create your own with input from your accountant. Setting up your chart of
accounts is covered in detail in Chapter 2.
Manufacturing and Wholesale Edition
The Manufacturing and Wholesale Edition has the same core features that are
available in all Premier and Enterprise editions, but added are specialized
workflows, reports, and charts of accounts designed with manufacturers and
wholesalers in mind.
Repor ts
There is a set of additional reports that can be run from the Reports menu that
allow you to:
Track open sales orders by customer or item
Track the performance of your sales reps
Track customer returns with the Return Materials Authorization (RMA) form
Refer to Chapter 15 to learn more about running reports in QuickBooks Premier
and Enterprise Editions.
Sales Order Fulfillment Worksheet
To see all open orders in once place, open the Sales Order Fulfillment Worksheet
window by selecting Customers | Sales Order Fulfillment Worksheet.
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From here you can do the following:
Sort open sales orders by date, sales amount, or customer
Select the orders you want to ship and print pick lists, packing slips, or invoices
Sales order processing is covered in Chapter 3.
Product Availability Tracking
With Product Availability Tracking, you can configure the way QuickBooks
counts available inventory and how that item availability is used when creating
sale transactions. From one window you can see which customers have ordered
a particular product or view open purchases orders placed with vendors.
Refer to Chapters 3, 6, and 10 to learn more about this feature, including
specifics on sales order processing, purchasing, and inventory management.
Sales Order Processing
Sales Order Processing allows you to track the status of an order from entry to
fulfillment. You can use sales orders to automatically generate a purchase order,
pick list, pack list, or invoice. From there you can do the following:
View reports of all open sales orders by customer or item
Quickly see whether an order has been shipped or not
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Bill of Materials Tracking
The Bill of Material (BOM) form is used to assemble items and track their costs
(including labor and overhead) accurately.
Inventory assemblies are covered in Chapter 10.
Multiple Price Levels
The Multiple Price Levels feature allows you to establish different prices for
different types of customers or individual customers. You can create up to 100
customized price levels for any item using either a fixed percentage or dollar
amount.
Price levels are covered in Chapter 2.
Multiple Shipping Addresses for Customers
When creating a sales order, estimate, purchase order, invoice, credit memo, or
sales receipt, you can store an unlimited number of shipping addresses.
Creating and using multiple shipping addresses is covered in Chapter 2.
Nonprofit Edition
The Nonprofit Edition comes with a copy of the Unified Chart of Accounts, which
can be set up during the EasyStep Interview or imported at a later time. Other
specialized Nonprofit Edition features are listed in this section.
Customized Forms and Templates
Key templates have been created to help you capture and manage information
about your organizations finances. In addition, integration with Microsoft Word
allows you to share donor information from QuickBooks to prepare and send letters
to your donors.
Nonprofit Repor ting
Nonprofit Editions include nine reports specifically created to provide the information
nonprofits need for their boards and tax preparation purposes. Some of these reports
include the following:
Biggest Donors/Grants
Budget vs. Actual by Program/Projects
Statement of Functional Expenses (990)
For more about creating and running reports in QuickBooks, see Chapter 15.
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Professional Services Edition
The Professional Services Edition includes reports, templates, and workflows
appropriate for service businesses such as consultant, engineering, and law firms.
Specialized features include the following:
Multiple Billing Rates You can assign different billing rates to different
employees.
Integration with Microsoft Word Allows you to share QuickBooks customer
information to create letters and envelopes.
Reports Includes reports for unbilled expenses by project; billed/unbilled
hours by person, project, or activity; and billed versus proposal by project.
Retail Edition
The Retail Edition can be used as a standalone solution or in tandem with
QuickBooks Point of Sale. When used alone, the Retail Edition can be used by
a retailer to manually enter the days sales in a summarized format using the
preformatted Daily Sales Summary form. Other specialized features include the
following:
Multiple Price Levels You can create and manage up to 100 price levels for
any item or you can create customer specific price levels.
Reports Includes reports for sales tax liability, gross margin by inventory
item, and customer payments by payment item.
Additional Enterprise Solutions Features
and Functionality
Enterprise Solutions contains all the features and functions of the QuickBooks
Premier editions, with additional features and capacity to accommodate larger,
more complex businesses:
The amount of data that can be held in QuickBooks lists is enlarged to
accommodate large businesses.
Setting up user permissions to specify what each user can do and see is greatly
expanded, making it easier to hide sensitive data without limiting the day-to-
day work of each user.
More users can access the company file simultaneously (up to 30), and
Enterprise Solutions has built-in support for Windows Terminal Services
and Linux servers.
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Intuit Statement Writer is an Excel add-in that allows you to create customized,
professional reports from a QuickBooks data file.
Access to the Enterprise Suite ES, an online portfolio of business applications,
helps you extend the functionality of your QuickBooks Enterprise software.
Additional fees may apply.
New in QuickBooks 2010
For 2010 the QuickBooks Premier and Enterprise Editions offer some new features
and improvements to some existing features. The following sections provide an
overview of some of these changes.
Document Management Service
QuickBooks Document Management allows you to attach files of any type to a
QuickBooks list, record, or transaction and store themin a centralized location. You
can attach files that are local to your computer, including scanned images, or you
can attach files that have already been uploaded and saved to your Online Document
Inbox but havent yet been attached to a QuickBooks record or transaction. For
example, you might want to attach a scanned copy of a customers purchase order to
the invoice that you generate for themin QuickBooks, or maybe youll need to attach
a scanned copy of a vendors bill to the Bill Payment transaction in QuickBooks that
you used to pay that bill.
To learn more or sign up for the service (for which additional fees may apply),
select Company | Document Management | Learn About Document Management.
Once youve successfully signed up for the service, youll store and manage your
documents and files in the online Document Management Center, which you access
by selecting Company | Document Management | Document Management Center.
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A QuickBooks transaction or record that has an attachment will display a green
paper clip Attach icon, indicating that an attached file exists. Click this icon to
open the Document Management Center to view this and other files and documents
stored there.
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E-check Processing
The Intuit Check Solution for QuickBooks is an add-on service that offers two ways
to process your customers checks electronically. The first option lets you scan your
customers paper checks into QuickBooks (to use this option, youre required to
purchase one of two approved scanners: the high-speed Panini My Vision X scanner
or the general-purpose Fujitsu ScanSnap s300/s1300 scanner). Scanning your
check will save you a trip to the bank since, once scanned, the check is processed
electronically. An Internet connection on a Windows computer and Internet
Explorer 7.0 are required. Another option, which does not require a scanner, is
accepting checks over the phone and keying the check information into QuickBooks.
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To learn more or sign up for this service, select Add Electronic Check Processing
from the Customer menu.
Add/Edit Multiple List Entries
You can now make edits (or add records) to QuickBooks lists via a single table. This
new feature applies to Customers, Vendors, Employees, and Items and is designed
to save you time when updating multiple records in these important lists. From the
Lists menu, select Add/Edit Multiple List Entries. Use the List drop-down to select
and display the list you want to update.
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Add or remove columns from the grid by selecting the Customize Columns
button. From here, you can make direct edits to any cell in the table, add a new
record (click the first empty row at the end of the list), duplicate rows, copy
information in a cell down to other cells in a column, and copy and paste data from
Excel into the table.
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Customizable Company Snapshot
You can get a quick answer to the question, Hows business? in the Company
Snapshot window by choosing Company | Company Snapshot.
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This customizable window provides information on tasks you should perform,
account balances, and A/R and A/P data by customer/vendor. In addition to the
reports, lists, and graphs that appear when you first open the Company Snapshot
window, selecting the Add Content link at the top of the window allows you to add
content to your Company Snapshot window. You can then modify date ranges,
rearrange positions, or completely remove an element.
Favorites Menu
You can customize the Favorites menu (located on the QuickBooks main menu bar)
and attach menus for up to 30 of the QuickBooks tasks you use most often. This
will save you from having to continually navigate to other areas of the program to
complete your daily tasks. To add menu items, select Favorites | Customize Favorites
from the QuickBooks menu. Select a menu item, then click the Add button to add
it to your Favorites menu. Click OK when finished.
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Check Signatures
The Print Checks window now includes an option to electronically print signatures
on checks, including paychecks, froma signature file, saving you time when writing
checks.
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Online Banking Improvements
There are now two ways to view and enter online banking transactions: Side-by-
Side mode and Register mode. Using Side-by-Side mode makes it easier to see the
transactions that need to be matched as well as your account balances. If you used
online banking in previous QuickBooks versionspecifically, QuickBooks 2008
and earlierthen youre already familiar with Register mode. Here youre able to
work in a register view when matching transactions. Both modes offer the same
functionality, with the exception that the renaming rules created in the Side-by-Side
mode are not available in Register mode. Likewise, aliases created in Register mode
are not available in Side-by-Side mode. To switch between online banking modes,
choose Edit | Preferences | Checking. In the Online Banking section of the Company
Preferences tab, choose how you want to view and enter your downloaded
transactions.
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Enterprise Solutions Custom Fields
You can now define more custom fields for items and names that you can use on
forms and reports. These fields can also be formatted to accommodate the type of
information you want to track with them (dates, phone numbers, and so on).
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Setting Up Your
Company File
I
n this chapter:
Create a company file
Create a full chart of accounts
Enter data in lists
Invent your own fields to make your lists more useful
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This chapter covers tasks you should perform as you set up your company file.
Every time you enter a transaction or fill out a form, youll have to enter some basic
data at the same time. Taking the time to get the basic data into the system correctly
now will help ensure that you can work faster and more efficiently later.
Creating a Company File
You can create as many as 256 companies in QuickBooksand if youre using
QuickBooks Enterprise, you can run consolidated financial reports (Profit & Loss
statement and Balance Sheet) for all of your QuickBooks company files.
To create a new company, choose File | New Company from the QuickBooks
menu bar. If youre new to QuickBooks, when you open the software you see a
window named No Company Open, which has a button labeled Create A New
Company (which is the same as choosing File | New Company).
Use the Wizards Questions to Configure Your File
Creating a new file starts with the EasyStep Interview, a wizard that walks you
through the steps to create a company file. Click the button labeled Start Interview
to begin.
N O T E : If youre familiar with QuickBooks, you can create the company
manually by clicking the button labeled Skip Interview. This provides a quicker
way to create the company file, but you have to make sure you configure the
company properly for the features you need (because you skipped the questions
from the wizard to take care of those tasks).
Fill in the data in each wizard window, clicking Next to move through the
windows. During the interview youre asked about the type of business you have
(your industry), and youre also asked about the features you need (sales tax,
inventory, and so on).
When you select the industry that comes closest to your companys mission,
QuickBooks uses the information to create a chart of accounts for the company (the
right pane displays the accounts for the selected company type).
Saving the Company File
The wizard asks you to save the company file. QuickBooks suggests a filename
based on your company name, but you can change the filename if you wish. Click
Save to make this company a file in your QuickBooks system.
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By default, QuickBooks saves your company file in a shared (public) folder
buried deep under the User Profiles section of your drive (named Documents and
Settings in Windows XP; named Users in Windows Vista). This isnt the most
convenient location, and if youre running multiple versions (different years) of
QuickBooks, it doesnt work because you have to keep company files separated by
their versions (very important for accountants who support clients running
different versions of QuickBooks).
Its a good idea to create a folder for your QuickBooks 2010 company file(s),
such as C:\QB2010 Files. If youre running QuickBooks as a single user, or with
only a few users who share the file on a network, set permissions on the folder so
that the group named Everyone has Full Permissions. If you need more detailed
information and tips on setting up QuickBooks for multi-user access, select Help.
Support and then click the Install and Get Started tab. Youll see links to additional
information on network and multi-user setup.
After you save the file, the wizard walks you through a series of questions about
the way you want to run your business. For example, youre asked if you collect
sales tax, create estimates, print checks, and so on. As you answer the questions,
QuickBooks sets up your preferences. If youre not sure how to respond to any of the
questions, its okay to guess, because you can turn preferences on and off manually at
any time in the future (and these preferences are covered in Chapter 20).
Creating Your Lists
This section covers the lists available to you for holding important data. You can set
up your lists by entering the data manually or by importing the data.
Entering Data Manually
Entering your data directly into the QuickBooks List windows is a straightforward
method that makes sure all the data you need is available as you create transactions
in QuickBooks.
Manual data entry also provides a way to see all the available data fields in a list
(some lists have optional fields), which lets you tweak your data in ways you may
not have thought of. To enter data into lists manually, choose Lists and select the
list you want to start with.
Add/Edit Multiple List Entries
Using the Add/Edit Multiple List Entries window, you can add or edit Customer,
Vendor, Employee, and Item records to your QuickBooks file all in a single table
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format. From the Lists menu, select Add/Edit Multiple List Entries. Use the List
drop-down menu to select and display the list you want to update.
Ill 2-1
Add or remove columns from the grid by pressing the Customize Columns
button. From here, you can make direct edits to any cell in the table, add a new
record (click the first empty row at the end of the list), duplicate rows, copy
information in a cell down to other cells in a column, or copy and paste data from
Excel into the table.
Methods to Import Data from Excel
If you were keeping information in Excel, you can use the Excel Import feature to
transfer the data from your Excel spreadsheet to your QuickBooks lists.
Copying Data to Preformatted Excel Worksheets
QuickBooks provides some preformatted Excel workbooks into which you can
copy your customer list, vendor list, or item list. To copy your data from Excel into
QuickBooks, open QuickBooks and load your company file, then open your Excel
file. In QuickBooks, choose File | Utilities | Import | Excel Files. In the next window
(see Figure 2-1), select the type of data you want to import.
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QuickBooks opens its preformatted worksheet, and you can copy and paste data,
one column at a time, fromyour Excel file into this worksheet. Follow the messages
and guidelines in the preformatted worksheet to performthis task properly.
When youve finished pasting your data, QuickBooks walks you through the
remaining steps, saves the data in the preformatted workbook, and then imports
that data into QuickBooks Lists.
Using the Advanced Import Feature
You can click the Advanced Import button to import the chart of accounts in
addition to the customer, vendor, and items lists. This method gives you greater
control of the import process and allows you to fill in more of the fields for a
particular record than the preformatted option mentioned in the previous section.
To use this feature, dont open your Excel file first; instead, when the Import
A File dialog opens (see Figure 2-2), tell QuickBooks where to find your file.
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FIGURE 2-1 If youve used Excel to track your business data, QuickBooks can import some of
that data automatically.
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QuickBooks launches Excel and opens the file. Select the worksheet in your
Excel file that has the list you want to import.
The next step is to create a mapping between your file and QuickBooks.
QuickBooks has a label for each of the various fields available in a list record. For
example, there are fields in a customer record for the company name, address,
phone number, the payment terms, and so on. You may be tracking the same
information in your Excel workbook, but you dont use the same text for labels that
QuickBooks uses. Mapping is the process of linking your column labels to the
labels QuickBooks uses.
To create a mapping, click the arrow to the right of the Choose a Mapping field
and select <Add New> from the drop-down list. In the Mappings dialog that
appears (see Figure 2-3), name your mapping. Select a name that describes the type
of list youre working on, such as Customers (if youre importing your customer
list). Then select the type of list youre importing from the drop-down list in the
Import Type field. QuickBooks automatically lists the field labels it uses for the
import type you selected in the left pane of the dialog.
Select a QuickBooks label in the left pane, and then click the right pane to see
your own labels/column headings (see Figure 2-4). If your Excel file doesnt have
column headings, the column letters appear. Choose the Excel label or column that
matches the label QuickBooks uses.
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FIGURE 2-2 Use the Import A File feature to import your lists from Excel into QuickBooks.
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FIGURE 2-3 Set up your mappings to match the list youre importing.
FIGURE 2-4 Match your labels to QuickBooks labels.
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Continue to match the QuickBooks labels to your own labels (although your
Excel file probably doesnt have all the fields that QuickBooks offers). Click Save
when youve finished mapping the labels.
Click the Preferences tab (see Figure 2-5) to specify how QuickBooks should
manage the data being imported. The options are self-explanatory, and the Help
button leads to detailed explanations.
Click Import to import the data. QuickBooks offers to create a backup of your
company file, and its a good idea to accept that offer. Then import your list. If
errors occur, a dialog appears to notify you of that fact, and you can save the error
file and examine it later.
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How QuickBooks Sorts Accounts
You have to create a numbering scheme that conforms to the QuickBooks account types because
QuickBooks sorts your chart of accounts by account type. If you have contiguous numbers that
vary by account type, your reports wont appear in numerical order. QuickBooks uses the
following sort order for the chart of accounts:
Assets
Bank
Accounts Receivable
Other Current Asset
Fixed Asset
Other Asset
Liabilities
Accounts Payable
Credit Card
Other Current Liability
Long-Term Liability
Equity
Income
Cost Of Goods Sold
Expense
Other Income
Other Expense
Nonposting Accounts
(Nonposting accounts are created automatically by QuickBooks when you enable features that
use those account types, such as Estimates and Purchase Orders.)
FYI
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Creating a Full Char t of Accounts
The first list youll want to complete is your chart of accounts. QuickBooks created
some accounts for you during the initial setup of your company, but you may need
some additional accounts in order to keep books accurately. You do the chart of
accounts first because some of the other lists you create require you to link the
items in the list to accounts. For example, the items you sell are linked to income
accounts.
Using Numbers for Accounts
Many accountants (and users) prefer to use numbered accounts. Each account has a
name in addition to the number, but the primary method of sorting the account list
is by number (see the sidebar How QuickBooks Sorts Accounts). Even though the
QuickBooks default is to use names, its a simple matter to change the default and
use numbers. Your accountant will be grateful, and youll find you have far fewer
mistakes in posting to the general ledger. If you prefer to stick to names, see the
next section for some hints about creating account names.
To switch to a number format for your accounts, you just need to spend a couple
of seconds changing the QuickBooks preferences:
Choose Edit | Preferences from the menu bar to open the Preferences dialog.
Select the Accounting icon from the left pane.
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FIGURE 2-5 Avoid problems by specifying the way imported data is handled.
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Click the Company Preferences tab.
Select the Use Account Numbers check box (see Figure 2-6).
If you chose a prebuilt chart of accounts during the EasyStep Interview, those
accounts are switched to numbered accounts automatically. You may want to
change some of the numbers, and you can do so by editing the accounts (see
Editing Accounts later in this chapter). Some accounts (those you add yourself
after the initial company setup) have to be edited manually to add the account
number; QuickBooks doesnt automatically number them.
When you select the option to use account numbers, the option Show Lowest
Subaccount Only becomes accessible (its grayed out if you havent opted for account
numbers). This option tells QuickBooks to display only the subaccount on transaction
windows instead of both the parent account and the subaccount, making it easier to see
precisely which account is receiving the posting. (Subaccounts, and details about this
feature to display themalone, are discussed later in the section Using Subaccounts.)
If all your accounts arent numbered and you select Show Lowest Subaccount
Only, when you click OK QuickBooks displays an error message that you cannot
enable this option until all your accounts have numbers assigned. After youve
edited existing accounts that need numbers (any accounts that QuickBooks didnt
automatically number for you), you can return to this preferences window and
enable the subaccount option.
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FIGURE 2-6 Enable numbers for the accounts in your chart of accounts.
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After youve set up numbered accounts, you have a more efficient chart of
accounts, so you, your bookkeeper, and your accountant will have an easier time.
Numbers give you a quick clue about the type of account youre working with. As
you enter the accounts, you must use the numbers intelligently, assigning ranges of
numbers to account types. You should check with your accountant before finalizing
the way you use the numbers, but the example presented here is a common
approach.
1xxxx Assets
2xxxx Liabilities
3xxxx Equity
4xxxx Income
5xxxx Expenses
6xxxx Expenses
7xxxx Expenses
8xxxx Expenses
9xxxx Other Income and Expenses
N O T E : You can have as many as seven numbers (plus the account name)
for each account.
Notice the amount of room (unused numbers) for further breakdowns, especially
in the expenses. (Most companies need more expense categories than income
categories; however, many nonprofits need more income categories than expense
categories.)
You can, if you wish, have a variety of expense types and reserve the starting
number for specific types. Many companies, for example, use 5xxxx for sales
expenses (they even separate the payroll postings between the salespeople and the
rest of the employees), then use 60000 through 79999 for general operating
expenses, and 8xxxx for other specific expenses that should appear together in
reports (such as taxes).
Some companies use one range of expense accounts, such as 70000 through
79999 for expenses that fall into the overhead category. This is useful if you bid
on work and need to know the total overhead expenses so you can apportion them
to appropriate categories as you prepare your bid.
If you have inventory, you track cost of sales, and you can reserve a section of
the chart of accounts for those account types. Some companies use 43000 through
49999 for cost of sales; other companies use the numbers in the 50000 range.
Also, think about the breakdown of assets. You might use 10000 through 10099
for cash accounts and 11000 through 11099 for receivables and other current
assets, and then use 12000 through 12099 for tracking fixed assets such as
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equipment, furniture, and so on. Follow the same pattern for liabilities, starting
with current liabilities and moving to long term. Its also a good idea to keep all the
payroll withholding liabilities together.
Usually, you should add accounts by increasing the previous account number by
100 (or by 10 if you prefer to use four digits instead of five), so that if your first
bank account is 10000, the next bank account is 10100, and so on. For expenses
(where youll have many accounts), you might want to enter the accounts in
intervals of 50 (or 5). This gives you room to squeeze in additional accounts that
belong in the same general area of your chart of accounts when they need to be
added later.
Naming Accounts
Even if you enable account numbers, you have to give each account a name. Heres
an important rule about naming accounts: memorize it, print it out in big letters,
and post it all over the office: Create and Follow a Company Protocol for Naming
and Using Accounts.
The company protocol is a systemyou invent for naming accounts. Your protocol
must be clear, so that when everyone follows the rules, the account naming convention
is consistent. Why is this important? Because without enforced protocols, youll
probably end up with accounts with names such as the following:
Telephone Exp
Exps-Telephone
Tele Expense
Telephone
Tele
You get the idea, and youre probably not shocked to hear that every one of those
accounts had amounts posted to them. Thats because users guess at account
names and point and click on whatever they see that seems remotely related. If they
dont find the account the way they would enter the name, they invent a new
account (using a name that seems logical to them). Avoid all of those errors by
establishing protocols about creating account names, and then make sure everyone
searches the account list before applying a transaction.
Here are a few suggested protocolsyou can amend them to fit your own
situation or invent different protocols that youre more comfortable with. The
important thing is consistency, absolute consistency.
Avoid apostrophes.
Set the number of characters for abbreviations. For example, if you permit four
characters, telephone is abbreviated tele; a three-character rule produces tel.
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Decide whether to use the ampersand (&) or a hyphen. For example, is it
repairs & maintenance or repairs-maintenance?
Make a rule about whether spaces are allowed. For example, would you have
repairs & maintenance or repairs&maintenance?
Using Subaccounts
Subaccounts provide a way to post transactions more precisely using subcategories
for main account categories. For example, if you create an expense account for
insurance expenses, you may want to have subaccounts for vehicle insurance,
liability insurance, equipment insurance, and so on. Post transactions only to the
subaccounts, never to the parent account. When you create reports, QuickBooks
displays the individual totals for the subaccounts, along with the grand total for the
parent account. To create a subaccount, you must first create the parent account
(see the next section, Adding Accounts).
If youre using numbered accounts, when you set up your main (parent)
accounts, be sure to leave enough open numbers to be able to fit in all the
subaccounts youll need. For example, suppose you have the following parent
accounts:
60100 Insurance
60200 Utilities
60300 Travel
You can create the following subaccounts:
60110 Insurance:Vehicles
60120 Insurance:Liability
60130 Insurance:Equipment
60210 Utilities:Heat
60220 Utilities:Electric
60310 Travel:Sales
60320 Travel:Seminars and Meetings
The colon in the account names listed here is added automatically by QuickBooks
to indicate a parentaccount:subaccount relationshipyou only have to create the
subaccount name and number.
Adding Accounts
After youve done your homework, made your decisions, invented your protocols,
and checked with your accountant, adding accounts is a piece of cake.
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Follow these steps to add an account:
Press CTRL-A (or click the Chart Of Accounts icon on the Home page) to open
the Chart Of Accounts window.
Press CTRL-N to enter a new account. The Add New Account: Choose Account
Type dialog opens when you select the type of account.
Click Continue to open the Add New Account dialog for the account type you
selected.
The dialog for entering a new account changes its appearance depending on the
account type because different types of accounts require different information.
In addition, if youve opted to use numbers for your accounts, theres a field for the
account number. Figure 2-7 shows a blank Add New Account dialog for an expense
account.
The Description field is optional, as is the Note field (which only appears on
some account types).
Some account types (for example, accounts connected to banks) have a field for
an opening balance. Its best to not fill in that field when youre creating an account.
Rather, enter your beginning balance along with any outstanding transactions
directly in the account register.
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FIGURE 2-7 The only required entry for an account is a name, unless youve enabled account
numbers.
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As you finish entering each account, click Save & New to move to another blank
Add New Account dialog. When youre finished entering accounts, click Save &
Close, and then close the Chart Of Accounts window by clicking the X in the
upper-right corner.
Select From Examples
If you created your company file in QuickBooks 2010, some account types display a
button labeled Select From Examples in the Add New Account dialog. Clicking the
button produces a list of accounts that QuickBooks thinks you might want to
consider adding to your chart of accounts. As you can see in Figure 2-8, the list of
accounts matches the account type you selected when you started the process of
adding an account.
The accounts that are suggested are those accounts that were available for the
industry you selected when you created your company file but were not selected for
inclusion in your chart of accounts, for one of the following reasons:
If you used the EasyStep Interview to create your company file, you had an
opportunity to select accounts that were not already selected, or to deselect
accounts that QuickBooks had selected by default. Accounts that remained
unselected appear in the list you see when you click Select From Examples.
If, during the EasyStep Interview, you selected accounts for which QuickBooks
suggests subaccounts, the account appears in the list but is grayed out (because
it was selected and does not need to be added to your chart of accounts). The
suggested subaccounts are listed.
If you skipped the EasyStep Interview and did not have an opportunity to
select/deselect accounts, QuickBooks installed the accounts that were selected
by default for the industry you chose during company file setup. Accounts that
were not selected by QuickBooks appear in the list displayed when you click
Select From Examples.
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FIGURE 2-8 QuickBooks suggests accounts to add to your chart of accounts.
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If you add an account from the Select From Examples list, that account is
removed from the list. If you delete the account from your chart of accounts, it is
put back on the Select From Examples list.
If you did not select an industry during company file setup (instead, you selected
None), the Select From Examples button is grayed out and inaccessible.
The following account types do not have the Select From Examples feature:
Bank
Credit Card
Equity
Accounts Receivable
Accounts Payable
Long Term Liability
Editing Accounts
If you need to make changes to any account information (including adding a
number after you enable numbered accounts), select the accounts listing in the
Chart Of Accounts List window, and press CTRL-E. The Edit Account dialog
appears; make your changes and click Save & Close to save them.
Creating Subaccounts
To create a subaccount, you must have already created the parent account. Then
follow the same steps described in the previous section to add a new account. Enter
the account number (if youre using numbers) and the account name. Then click
the Subaccount Of check box to place a check mark in it. In the drop-down box
next to the check box, select the parent account, and click Save & Close (or Save &
New to add another account).
You can have multiple levels of subaccounts. For example, you may want to
track income in the following manner:
Income
Income:Consulting
Income:Consulting:Engineering
Income:Consulting:Training
Income:Product Sales
Creating the sub-subaccounts is as easy as creating the first level; just make sure
youve already created the first-level subaccounts (which are the parents of the sub-
subaccounts). When you fill in the New Account dialog, after you check the
Subaccount check box, select the appropriate subaccount to act as the parent
account.
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When you view the chart of accounts, subaccounts appear under their parent
accounts, and theyre indented (if theyre not indented, click the Account button
and choose Hierarchical View). When you view a subaccount in a transaction
window, it appears in the format: ParentAccount:Subaccount or
ParentAccount:Subaccount:Subaccount.
For example, if you create a parent account named Income with a subaccount
Consulting, the Account field in transaction windows shows Income:Consulting.
If youve used numbers, the Account field shows 40000-Income:40100-Consulting.
Because many of the fields in transaction windows are small, you may not be able
to see the subaccount names without scrolling through each account. This can be
annoying, and its much easier to work if only the subaccount name is displayed.
Thats the point of enabling the preference Show Lowest Subaccount Only, discussed
earlier in the section Creating a Full Chart of Accounts. When you enable that
option, you see only the subaccounts in the drop-down list when youre working in
a transaction window, which makes it much easier to find the accounts you need.
Merging Accounts
Sometimes you have two accounts that should be one. For instance, you may have
accidentally created two accounts for the same purpose (as discussed earlier in this
section) and posted transactions to both accounts. Those accounts badly need
merging.
C A U T I O N : Accounts must be of the same account type in order to be
merged.
Take the following steps to merge two accounts:
Open the Chart Of Accounts List window.
Select (highlight) the account that has the name you do not want to use.
Press CTRL-E to open the Edit Account dialog.
Change the account name and number to match the account you want to keep.
Click Save & Close.
QuickBooks displays a dialog telling you that the account number or name
youve entered already exists for another account and asks if you want to merge
the accounts. Click Yes to confirm that you want to merge the two accounts.
Customers and Jobs
In QuickBooks, customers and jobs are handled together. You can create a customer
and consider anything and everything you invoice to that customer a single job, or
you can have multiple jobs for the same customer.
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Some businesses dont worry about jobs; its just the customer thats tracked. But
if youre a building contractor or subcontractor, an interior decorator, a consultant,
or some other kind of service provider who usually bills by the job instead of at an
hourly rate for an ongoing service, you should track jobs.
Jobs dont stand alone as an entity; they are attached to customers, and you can
attach as many jobs to a single customer as you need to. If you are going to track
jobs, its a good idea to enter all the customers first (now), and then attach the jobs
second (later).
If you enter your existing customers now, when youre first starting to use
QuickBooks, all the other work connected to the customer is much easier. Its
bothersome to have to stop in the middle of every invoice you enter to create a new
customer record.
N O T E : If youve enabled the Multicurrency feature, you see additional fields
on some lists (for example, Customers, Vendors, Price Levels, and so on) where
you enter the appropriate currency.
The Customers & Jobs List
To access the Customers & Jobs List, you must open the Customer Center (seen in
Figure 2-9).
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FIGURE 2-9 The Customers & Jobs List is part of the Customer Center.
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You have several ways to get to the Customer Center:
Press CTRL-J.
Choose Customers | Customer Center from the menu bar.
Click the Customer Center icon on the QuickBooks toolbar.
Click the Customers icon on the left side of the Home page.
Entering a New Customer
If you didnt import your customer list (as explained earlier in this chapter),
entering all your existing customers into the system takes very little effort.
Follow these steps to enter a new customer:
Open the Customer Center and select the Customers & Jobs tab to display your
list of customers.
Press CTRL-N to open the New Customer window (see Figure 2-10), and fill in
the information.
(If youve enabled the Multicurrency feature, you also have a field for entering
the currency.)
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FIGURE 2-10 The customer record holds quite a lot of information.
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Address Info Tab
The New Customer window opens with the Address Info tab in the foreground. The
first field to enter information in is the Customer Name field. Consider this field a
code rather than a customer name. It doesnt appear on your invoices or other sales
transactions. (The transactions use the data in the Company Name field.)
Customer Name Field
You should develop a protocol for this Customer Name field so that youll enter
every customer in the same manner. Notice the Customer Name field you saw in
Figure 2-10. This customer code entry has no apostrophe or space, although both
are part of the company name. Avoiding punctuation and spaces in codes is a good
protocol for filling in code fields.
Each customer must have a unique entry in this field, so if you have a lot of
customers named Jack Johnson, you may want to enter themas JohnsonJackMainSt,
JohnsonJackOakRd, and so on.
Opening Balance Field
QuickBooks makes an Opening Balance field available, along with the date for
which this balance applies (by default, the current date is inserted). The field is
designed to hold the amount this customer currently owes (if an open balance
exists for the customer).
Its better to skip this field and then enter an invoice or multiple invoices to post
this customers balance to your books. If you enter an amount, youll have no
detailed records on how the customer arrived at this balance, which makes it
difficult to accept payments against specific invoices. In addition, QuickBooks
simultaneously posts any lump sum entered into this field to Accounts Receivable
and an account named Opening Bal Equity. Your accountant will want to get rid of
the balance in Opening Bal Equity, and sometimes thats a difficult job because its
hard to tell how the balance was arrived atis this the opening balance you entered
from past years? Is it from the current year? Is it a combination of both? Entering
individual transactions that represent the customers current status is far more
accurate than using the Opening Balance field.
Customer Address Info
In the Company and Addresses sections of the window, enter the company name,
optionally enter a contact, and enter the billing address. Add any other contact
information you want to track for this customer (telephone, e-mail, and so on).
Ship To Addresses
You can maintain multiple shipping addresses for your customers. Each shipping
address has a name (title), so you can select it from a drop-down list when youre
entering sales transactions. If the shipping address isnt different from the billing
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address (or if you have a service business and never ship products), you can ignore
the shipping address field, or use the Copy button to copy the address block data.
To create a shipping address, click the Add New button under the Ship To
address block to open the Add Ship To Address Information dialog.
Give this Ship To address a name and enter the address information. QuickBooks
enters the name Ship To 1, but thats merely a placeholder. Replace that text with a
name that reminds you of the address location to make it easier to select this
address from a drop-down list when you have to ship goods to this address.
Specify whether this address should be the default Ship To address, and click
OK. Then, if necessary, enter another Ship To address for this customer.
Additional Info Tab
While the information you enter in the Additional Info tab of a customer card (see
Figure 2-11) is essentially optional, prepopulating the fields with information can
help make your work go faster when youre filling out transaction windows, and
make it easier to create in-depth reports. Its worth spending the time to design
some rules for the way data is entered. (Remember, making rules ensures
consistency, without which youll have difficulty getting the reports you want.)
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FIGURE 2-11 Entering additional information makes your work in QuickBooks go faster.
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N O T E : The fields you see on the Additional Info tab may not be the same as
the fields shown in Figure 2-11. The preferences you configure (for example,
whether you track sales tax) determine the available fields.
Most of the fields you see in Figure 2-11 are also QuickBooks lists, and if you
havent already entered items in those lists, you can do so as you fill out the fields in
the customer card. Each field that is also a list has an entry named <Add New>, and
selecting that entry opens the appropriate new blank entry window.
Type
Use the Type field to sort your customers by a type you find important (or
convenient) when you create reports. QuickBooks maintains a Type list (see the
section Customer Type List later in this chapter). For example, you may want to
consider wholesale and retail customers as your customer types. To use the field,
click the arrow to select a type that you already entered, or create a new type.
Terms
Terms, of course, refers to payment terms. Click the arrow to the right of the text
box to see the terms that QuickBooks already defined, or choose <Add New> to
define a new one.
The terms in the Terms List are for both customers and vendors, and you may
need additional terms to meet your customers and vendors needs. See the section
Terms List later in this chapter to learn how to create different types of terms.
Rep
This field is the place to track a sales representative, and its useful whether you pay
commissions or you just want to know who is in charge of this customer. Sales reps
can be employees, vendors, or other names (which means the name is entered in
the Other Names List). Select a rep from the list of reps or add a new rep by
choosing <Add New>. See the section Sales Rep List for more information on
populating this list.
Preferred Send Method
This field stores the default value for the way you want to send invoices, statements,
or estimates to this customer. The choices are the following:
None, which means no special features are used to send the documents. You
print them and you mail them (the old-fashioned way).
E-Mail, which means you e-mail the documents. This feature lets you attach
the documents as PDF files to an e-mail message. The processes involved are
managed within QuickBooks, and Chapter 3 has the details.
Mail, which lets you use a QuickBooks service to mail the invoices through the
postal service. The data is reproduced on a formthat has a tear-off your customers
enclose with their payment.
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Regardless of the method you choose as your default, you can use any send
method when youre creating a transaction.
Sales Tax Information
If youve configured QuickBooks to collect sales tax, the sales tax information uses
several fields. If the customer is liable for sales tax, select the appropriate sales tax
item for this customer, or create a new sales tax item. If the customer does not pay
sales tax, select Non and enter the resale number provided by the customer (this is
handy to have when the state tax investigators pop in for a surprise audit). See
Chapter 7 for a complete discussion of sales tax.
Price Level
Price levels are a pricing scheme, usually involving special discounts that you want
to use for this customers purchases. Select an existing price level or create a new
one. See the section Price Level List to learn about creating and assigning price
levels.
Custom Fields
Custom fields provide an opportunity to invent fields (by clicking the Define Fields
button) for sorting and arranging your QuickBooks lists. See the section Using
Custom Fields later in this chapter.
Payment Info Tab
This tab (see Figure 2-12) puts all the important information about your customers
payment arrangements with you in one place.
Account No.
This is an optional field you can use if you assign account numbers to your
customers.
Credit Limit
A credit limit is a way to set a threshold for the amount of money youll extend
to a customers credit. If a customer places an order, and the new order combined
with any unpaid invoices exceeds the threshold, QuickBooks displays a warning.
QuickBooks wont prevent you from continuing to sell to and invoice the customer,
but you should consider rejecting the order (or shipping it COD).
T I P : If you arent going to enforce the credit limit, dont bother to use the
field.
Preferred Payment Method
This means the customers preferred method for payments, and a list of payment
methods, is offered in the drop-down list. You can select the appropriate item from
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the list or add a new one by selecting <Add New>. See the section Payment
Method List later in this chapter for more information.
T I P : The payment method you select automatically appears on the Receive
Payments window when you are using this customer in the transaction. You can
change the payment method at that time, if necessary.
Credit Card No.
This field is intended to contain this customers credit card number, if thats the
customers preferred payment method. Dont fill it in unless your computer and
your QuickBooks file are protected with proper security protocols. In fact, the
laws (both government and merchant-card providers) about keeping credit card
numbers on file are changing, so be sure youre up to date on current regulations.
By default, only the Admin user in QuickBooks has the ability to see the entire
credit card number entered in this field. All other users can view only the last four
digits of the card on file.
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FIGURE 2-12 Use the Payment Info tab to track details needed for this customers transactions.
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N O T E : QuickBooks provides enhanced security measures for user permissions
and user logins if you keep customer credit card information in your company file.
Its easy to set up this additional security, and the Help files provide the information
you need.
When you have finished filling out the fields, choose Next to move to another
blank customer card so you can enter the next customer. When you have finished
entering all of your customers, click OK.
Editing Customer Data
You can make changes to the information in a customer record quite easily. Open
the Customers & Jobs List (using the steps described earlier) and select the
customer record you want to change. Double-click the customers listing (or select
the listing and click the Edit Customer button in the Customer Information pane)
to open the customer card in Edit mode. Click the Notes button to open a Notepad
window thats dedicated to this customer, as shown in Figure 2-13. This is a useful
feature.
The Notepad is a great marketing tool because you can use it to follow up on
a promised order, track a customers special preferences, and notify the customer
when something special is available. When you view the Customers & Jobs List, an
Edit Notes button appears in the right pane of the Customer Center for easy access
to the Notepad. You can open the Notepad for the selected customer by clicking
that button; you dont have to open the customer record to get to the note.
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FIGURE 2-13 Each customer has a Notepad.
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You can also use the Add/Edit Multiple List Entries window (as described earlier
in this chapter) to make your edits in a window that shows all customers and all
editable fields in one place. To access this window, select Add/Edit Multiple List
Entries from the Lists menu.
Entering Jobs
If you plan to track jobs, you can enter the ones you know about during your
QuickBooks setup phase, or enter them as theyre needed in transactions. Jobs are
attached to customers; they cant stand alone. To create a job, press CTRL-J to open
the Customer Center (or click the Customer Center icon on the toolbar) and select
the Customers & Jobs tab.
Right-click the listing of the customer for whom youre creating a job, and
choose Add Job to open the New Job window, shown in Figure 2-14.
Create a name for the job (you can use up to 41 characters), and make it
descriptive enough for both you and your customer to understand.
If this job requires you to bill the customer at an address thats different from
the address you entered for this customer, or to ship goods to a different shipping
address than the one thats entered, make the appropriate changes. QuickBooks
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FIGURE 2-14 To create a new job, enter the job nameall the basic information about the
customer is already filled in.
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maintains this information only for this job and wont change the original shipping
address in the customer record.
The Additional Info tab and the Payment Info tab are related to the customer
rather than the job, so you can skip them.
Move to the Job Info tab (see Figure 2-15) to begin configuring this job. All of
the information on the Job Info tab is optional; the job may not require this data.
The Job Status drop-down list offers choices that you can change as the progress
of the job moves along. You can change the text that describes each progress level
to suit your own business.
Follow these steps to change the text:
Choose Edit | Preferences to open the Preferences dialog.
Click the Jobs & Estimates icon in the left pane.
Click the Company Preferences tab in the right pane to see the current
descriptive text for each status level (see Figure 2-16).
Change the text of any status levels if you have a descriptive phrase you like
better. For example, you may prefer Working to In Progress.
Click OK.
The new text is used on every job in your system.
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FIGURE 2-15 Track job details on the Job Info tab.
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When you finish entering all the data about this job, choose Next to create
another job for the same customer. Otherwise, click OK to close the New Job
window and return to the Customers & Jobs List. The jobs you create for a
customer become part of the customer listing.
Vendors
The vendors you purchase goods and services from have to be entered into your
QuickBooks system, and its far easier to do it now. Otherwise, youll have to go
through the process of establishing the vendor and entering all the important
information when you want to enter a vendor bill or write a check.
To get to the Vendors List, open the Vendor Center by clicking its icon on the
toolbar, or choose Vendors | Vendor Center from the menu bar. Click the Vendors
tab to display the list.
Creating Vendors
Press CTRL-N (or click the New Vendor button above the list) to open a New Vendor
card and fill out the fields (see Figure 2-17).
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FIGURE 2-16 Customize the text to match the jargon you use in your business.
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(If youve enabled the Multicurrency feature, you also have a field for entering
the currency.)
As with customers, you should have a set of rules about entering the information
in the Vendor Name field. This field doesnt appear on checks or purchase orders;
its used to sort and select vendors when you need a list or a report. Think of it as a
code. Notice that in Figure 2-17, the vendor code is a telephone number, but the
vendor is the telephone company. This is how you create separate checks for each
telephone bill you receive.
Its best to not enter data in the Opening Balance field; instead, enter a bill (or
multiple bills) to represent the current open balance, so you have details about the
transaction(s).
Vendor Address Info Tab
The Name And Address block is important if youre planning to print checks and
the vendor doesnt enclose a return envelope, making it necessary for you to put the
address on the check. You can purchase window envelopes, and when you insert
the check in the envelope, the vendor name and address block is in the right spot.
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Vendor Additional Info Tab
The Additional Info tab (see Figure 2-18) for vendors has several important
categories:
Account No. Enter your account number with this vendor (to the vendor, its
your customer number), and the number will appear in the memo field of
printed checks.
Type Select a type or create one. This optional field is handy if you want to
sort vendors by type, which makes reports more efficient. For example, you can
create vendor types for inventory suppliers, tax authorities, and so on.
Terms Enter the terms for payment this vendor has assigned to you.
Credit Limit Enter the credit limit this vendor has given you.
Tax ID Use this field to enter the social security number or EIN if this vendor
receives a Form 1099.
1099 status If appropriate, select the check box for Vendor Eligible For 1099
(which appears only if youve enabled 1099 tracking in the Preferences dialog).
Custom Fields As with customers, you can create custom fields for vendors
(see the section Using Custom Fields later in this chapter).
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FIGURE 2-18 Add data to this tab to make it easier to print checks and produce detailed
reports.
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T I P : You can also use the Add/Edit Multiple List Entries feature (as
described earlier in this chapter) to quickly fill in the vendor fields youll want
to use. Select Add/Edit Multiple List Entries from the Lists menu and select
Vendors from the List drop-down menu in the Add/Edit Multiple List Entries
window.
Vendor Account Prefill Tab
You can configure QuickBooks to pre-fill the posting account when you create a
transaction for this vendor (see Figure 2-19). You can select multiple accounts if
the vendors payment usually (or always) involves more than one account (such as
a bank loan payment which posts to both the loan liability account and the interest
expense account).
After you fill in the information, choose Next to move to the next blank card and
enter the next vendor. When youre finished, click OK.
When you view or edit a vendor card by selecting the vendors listing and
pressing CTRL-E, youll find a Notes button just like the one in the customer card,
discussed in the previous section. You can use it in the same way.
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Entering Items
If you are a service business, this is going to be a snap. If you sell a few products,
itll still be pretty easy. But if you have a large inventory, get a cup of coffee or a soda
or take a break, because this is going to take some time.
Understanding Items
Items are the things you sell (whether theyre products or a service) that appear
on your invoices when you send an invoice to a customer. Items are also what
QuickBooks uses to link the services or products you sell to the right income and
cost of goods sold accounts in your chart of accounts whenever you use them in a
transaction.
Setting up items is another chore that requires some planning, and each of your
items must have a code, a unique identifier (QuickBooks calls that the Item Name/
Number). Try to create a system that has some logic to it so your codes are
recognizable when you see them listed.
Understanding Item Types
It isnt always clear how and when some of the item types are used (or why you
must define them). Here are some guidelines you can use as you plan to enter your
items:
Service A service you provide to a customer. You can create services that are
charged by the job or by the hour.
Inventory Part A product you buy for the purpose of reselling. This item type
isnt available if you havent enabled inventory during the EasyStep Interview or
activated inventory in the Items & Inventory section of the Preferences dialog.
Non-Inventory Part A product you sell but dont track as inventory.
Other Charge Youll need this item type for things like shipping charges, or
other line items that appear on your invoices.
Subtotal This item type adds up everything that comes before it. It provides a
subtotal before you add shipping charges or subtract any discounts or prepayments.
Group This item type is a clever device. You can use it to enter a group of
items (all of which must exist in your Item List) all at once. For example, if you
frequently have a shipping charge accompanying another type of charge, you
can create a group item that includes those two items.
Assembly An assembly (available only in Premier editions and Enterprise
Solutions) is a product you assemble from parts. Its tracked as an inventory
item in QuickBooks.
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Discount You cant give a customer a discount as a line item if this item type
doesnt exist. You may have more than one item that falls within this item
typefor example, a discount for wholesale customers and a discount for a
volume purchase. When you enter the item, you can indicate a flat rate or
percentage.
Payment If you receive a prepayment (either a total payment or a partial
payment as a deposit), you must indicate it as a line item, using this item type.
Sales Tax Item Create one of these item types for each sales tax authority for
which you collect (available if sales tax is enabled).
Sales Tax Group This is for multiple sales taxes that appear on the same
invoice (available if sales tax is enabled).
T I P : This section described all of the item types in terms of their use on your
invoices, but many of them are used on your purchase orders too.
Entering the Data for Items
To put your items into the system, choose Lists | Item List from the menu bar.
When the Item List window opens, any items that were created during your
EasyStep Interview are listed.
To create a new item, press CTRL-N. The New Item window opens, displaying a
list of item types, as described in the previous paragraphs. Select an item type to
display the appropriate fields in the blank New Item window.
Figure 2-20 shows a blank New Item window for an Inventory Part. Other item
types (such as Service items) have fewer fields.
The Item Name/Number field is the place to insert a unique identifying code for
the item. When you are filling out invoices (or purchase orders), this is the listing
you see in the drop-down list.
N O T E : After youve created an inventory item, you can create subitems. For
example, if you sell shoes as an item, you can create subitems for dress shoes,
sneakers, boots, and so on. Or use subitems for a parent item that comes in a
variety of colors. Not all item types provide subitems.
Many of the rest of the fields in the New Item window change depending on the
item type you select. Most of them are self-explanatory, but some are important
enough to merit discussion:
If youre entering an inventory item, enter the account to which you post the
cost of goods (COG). Optionally, fill in the name of the vendor from whom you
purchase the item.
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N O T E : The item record window for inventory items has a field named Cost.
When completed, the number entered into this field will automatically appear as
the cost of the item when you complete a purchase order. The Cost fields value
is also used as the average cost of an item in cases where you enter a beginning
on-hand quantity for a new inventory item. Refer to Chapter 10 for more guidance
on setting up your inventory.
In the Sales Price field, you can enter a rate for those items that youve priced;
leave the rate at zero for the items you want to price when you are preparing
the invoice. Dont worrynothing is etched in stone. You can change any rate
that appears automatically when youre filling out an invoice.
In the Income Account field, link the item to an income account in your chart
of accounts and indicate whether the item is taxable (choose Tax) or not
(choose Non). (The tax option is only available if youve configured your
company to collect sales tax.)
When you complete the window, choose Next to move to the next blank New Item
window. When you finish entering items, click OK.
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FIGURE 2-20 The fields in the New Item dialog hold the information you need to use the item in
transactions, post it correctly to your general ledger, and produce accurate reports.
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T I P : You can use the Add/Edit Multiple List Entries window to add your
Service, Inventory, or Non-Inventory items. Select Add/Edit Multiple List Entries
from the Lists menu and select the appropriate item type from the List drop-down
menu in the Add/Edit Multiple List Entries window.
Entering Other Lists
There are a few items in the Lists menu that arent covered in detail. They dont
require extensive amounts of data, and you may or may not choose to use them. If
you do plan to use them, heres an overview of the things you need to know.
Some of these items are in the Lists menu, and some of them are in a submenu of
the Lists menu called Customer & Vendor Profile Lists.
Fixed Asset Item List
Use the Fixed Asset Item List to store information about fixed assets. This list is
meant to track data about the assets you depreciate. As you can see in Figure 2-21,
each assets record includes detailed information and even has fields to track the
sale of a depreciated asset.
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FIGURE 2-21 Keep information about fixed assets in the Fixed Asset Item List.
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Unless youre using Premier Accountant Edition or Enterprise Solutions
Accountant Edition, this is an inert list that doesnt provide any method for
calculating depreciation, nor does it link to any depreciation feature in QuickBooks.
Its designed to let you use QuickBooks to track your fixed assets as a QuickBooks
List instead of whatever list youre keeping outside of QuickBooks.
QuickBooks Premier and Enterprise Solutions Accountant Editions contain a
program called Fixed Asset Manager, which uses the Fixed Asset Item List to
populate the data needed to generate depreciation as part of the tax preparation
chores for your company. The Appendix covers the Fixed Asset Manager in detail.
Price Level List
This list is only available if Price Levels are enabled in the Sales & Customers
section of your Preferences (choose Edit | Preferences). The Price Level List is a
nifty, easy way to connect special pricing to customers and jobs. Each price level
has two components: a name and a formula. The name can be anything you wish,
and the formula is based on the already-entered price of items (the formula
increases or reduces that price by a percentage).
For example, you may want to give your favorite customers an excellent
discount. Name the price level something like Special or StarCustomer. Then
enter a healthy percentage by which to reduce the price of items purchased by this
customer. Or you may want to create a discount price level for customers that are
nonprofit organizations.
On the other hand, you may want to keep your regular prices steady (assuming
theyre competitive) and increase them for certain customers (perhaps customers
who dont pay in a timely fashion). Its probably politically incorrect to name the
price level Deadbeat, so choose something innocuous such as StandardPrice.
You could also use numbers for the price-level names, perhaps making the highest
numbers the highest prices.
After you create price levels, you can apply a price level to customers. Open the
Customers & Jobs List and select a customer. Press CTRL-E to edit the customer
card and select a price level on the Additional Info tab.
Per-Item Price Levels
In addition to the price levels explained in the previous paragraphs, all Premier and
Enterprise Solutions editions offer per-item price levels. Per-item price levels are
prices, not percentages, which gives you a great deal of flexibility in charging
customers for products or services. You can use per-item price levels to set multiple
prices for the same item; for example, assign a single item (a product or a service)
prices of $50.00, $40.00, and $30.00.
You can assign a specific price for the itemto a customer (or multiple customers),
or to one or more jobs. In addition, if you wish, you can assign a specific price to an
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item when youre creating an invoice. If the invoice contains an item that has price
levels assigned, a drop-down list containing all the price levels is available in the
Rate column of the invoice. Just select the price you want to charge for this item,
for this invoice.
Billing Rates Level List
This list lets you set specific rates for each service provider for any service you sell.
This means that a senior partner or journeyman who performs a service is billed
out at a different rate than a junior partner or an apprentice performing the same
service.
When you create a billing rate, you link the rate to a name (the person providing
the service) and a service. The service provider can exist in your Employee List,
Vendor List, or Other Names List.
When you invoice your customers, the appropriate billing rate levels are
automatically added to the invoice from the Time and Costs dialog thats available
in the Invoice window. You can also apply any customers percentage price level
(usually a discount) to the billing rate invoice items.
N O T E : The Billing Rates Level List is available only in the Contractor,
Professional Services, and Accountant editions of QuickBooks Premier and
Enterprise Solutions.
Sales Tax Code List
This list is available if you configured your business to collect sales tax. Most
businesses only need the two built-in sales tax codes: Tax and Non (meaning
taxable and nontaxable). You can learn more about using sales tax codes effectively
in Chapter 7.
Class List
The Class List appears in the Lists menu only if youve enabled the classes feature
(in the Accounting category of the Preferences dialog). Classes provide a method
of organizing your activities (income and disbursement transactions) to produce
reports that you need.
You can use classes to track income and disbursements by branch office,
location, subsidiary business, or any other separate entity your company needs
to track.
Some business owners find its a good idea to work with QuickBooks for a while
and then, if they feel they need a report that can only be produced with the use of
classes, they can create the class at that point. Chapter 20 covers the use of classes.
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Workers Comp List
This list, which appears if youre using QuickBooks Enhanced Payroll and have
enabled workers comp tracking, contains the workers comp codes you create. Enter
a code, optionally enter a description, and specify the rate per $100.00 of gross
wages. Also specify a start date for using the code.
Other Names List
QuickBooks provides a list called Other Names, which is the list of people whose
names come up in transactions but whose activity you dont want to track. This list
will appear when you write checks, but the names are unavailable for invoices,
purchase orders, and any other QuickBooks transaction type.
If your business is a proprietorship, put yourself on the list to make sure your
name is listed when you write your draw check. If there are several partners in your
business, use this list for the checks you write to the partners draws.
When you press CTRL-N to open a New Name window, there are fields for the
address (handy for printing checks), telephone numbers, and other contact
information.
T I P : Many people overuse this category and end up having to move these
names to the Vendor List because they do need to track the activity. Unless
youre a proprietor or partner, its totally possible to use QuickBooks efficiently
for years without using this list.
Memorized Transaction List
This list (which isnt really a list, but rather a collection of transactions) is built as
you memorize transactions. You can tell QuickBooks to memorize any transaction
at the time you create it, which adds the transaction to this list. You can learn how
to memorize specific types of transactions throughout this book in the chapters
devoted to creating transactions.
Sales Rep List
(This list appears in the submenu of Customer & Vendor Profile Lists.) By common
definition, a sales rep is a person who is connected to a customer, usually because
he or she receives a commission on sales to that customer. However, its frequently
advantageous to track sales reps for other reasons: to know which noncommissioned
person is attached to a customer (some people call this a service rep) or to track the
source of referrals.
To enter a new sales rep, press CTRL-N to open a New Sales Rep form and select
the persons name from the drop-down list. If that name doesnt already exist as an
employee, vendor, or other name, QuickBooks asks you to add the name to one of
those lists.
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Customer Type List
(This list appears in the submenu of Customer &Vendor Profile Lists.) When you
create your customer list, you may decide to use the Customer Type field as a way to
categorize the customer. This gives you the opportunity to sort and select customers
in reports, perhaps to view the total income fromspecific types of customers.
Vendor Type List
(This list appears in the submenu of Customer & Vendor Profile Lists.) See the
preceding paragraph and substitute the word vendor for the word customer.
Job Type List
(This list appears in the submenu of Customer & Vendor Profile Lists.) Use this list
to set up categories for jobs by creating job types. For example, if youre a plumber,
you may want to separate new construction from repairs.
Terms List
(This list appears in the submenu of Customer &Vendor Profile Lists.) QuickBooks
keeps both customer and vendor payment terms in one list, so the terms you need
are all available whether youre creating an invoice, entering a vendor bill, or
creating a purchase order. To create a terms listing, open the Terms List window
and press CTRL-N to open the New Terms window.
Use the Standard section to create terms that are due at some elapsed time after
the invoice date:
Net Due is the number of days allowed for payment after the invoice date.
To create a discount for early payment, enter the discount percentage and the
number of days after the invoice date that the discount is in effect. For
example, if 30 days are allowed for payment, enter a discount percentage that is
in effect for 10 days after the invoice date.
Use the Date Driven section to describe terms that are due on a particular date,
regardless of the invoice date:
Enter the day of the month the invoice payment is due.
Enter the number of days before the due date that invoices are considered
payable on the following month (but its not fair to insist that invoices be paid on
the 10th of the month if you mail themto customers on the 8th of the month).
To create a discount for early payment, enter the discount percentage and the
day of the month at which the discount period ends. For example, if the
standard due date is the 15th of the month, you may want to extend a discount
to any customer who pays by the 8th of the month.
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T I P : Date-driven terms are commonly used by companies that send invoices
monthly, usually on the last day of the month. If you send invoices constantly, as
soon as a sale is completed, its very difficult to track and enforce date-driven
terms.
Customer Message List
(This list appears in the submenu of Customer & Vendor Profile Lists.) If you like
to write messages to your customers when youre creating an invoice, you can enter
a bunch of appropriate messages ahead of time and then just select the one you
want to use. For example, you may want to insert the message Thanks for doing
business with us, or Pay on time or else.
Press CTRL-N to enter a new message to add to the list. You just have to write the
text (which cant be longer than 101 characters, counting spaces)this is one of
the easier lists to create.
Payment Method List
(This list appears in the submenu of Customer & Vendor Profile Lists.) You can
track the way payments arrive from customers. This not only provides some detail
(in case youre having a conversation with a customer about invoices and payments),
but also allows you to print reports on payments that are subtotaled by the method
of payment, such as credit card, check, cash, and so on. (Your bank may use the
same subtotaling method, which makes it easier to reconcile the bank account.)
QuickBooks prepopulates the payment methods with common payment types. If
you have a payment method that isnt listed, you can add that method to the list. To
do so, press CTRL-N to open the New Payment Method window. Name the payment
method and select the appropriate payment type.
Ship Via List
(This list appears in the submenu of Customer & Vendor Profile Lists.) You can
describe the way you ship goods on your invoices (in the field named Via), which
many customers appreciate. QuickBooks prepopulates the list with a variety of
shipment methods, but you may need to add a shipping method. To do so, press
CTRL-N to add a new Ship Via entry to the list. All you need to do is enter the name,
for example, Our Truck or Sams Delivery Service.
If you use one shipping method more than any other, you can select a default
Ship Via entry, which appears automatically on your invoices (you can change it on
any transaction where the shipping method is different). The option is in the Sales &
Customers section of the Preferences dialog (choose Edit | Preferences to get to the
dialog).
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Vehicle List
(This list appears in the submenu of Customer & Vendor Profile Lists.) The Vehicle
List lets you track mileage for vehicles used in your business. You can use the
mileage information for tax deductions for your vehicles and to bill customers for
mileage expenses. However, even if you dont bill customers for mileage or your
accountant uses a formula for tax deductions, the Vehicle List is a handy way to
track information about the vehicles (yours or your employees) used for business
purposes.
To add a vehicle to the list, press CTRL-N to open a New Vehicle dialog. The box
has two fields:
Vehicle, in which you enter a name or code for a specific vehicle. For example,
you could enter BlueTruck, MikesToyota, FordMustangConvertible, or any
other recognizable name.
Description, in which you enter descriptive information about the vehicle.
While the Description field is handy for standard description terms (such as
black or blue/white truck), take advantage of the field by entering information you
really need. For example, the VIN, the license plate number, the expiration date for
the plate, the insurance policy number, or other official information are good
candidates for inclusion. You can enter up to 256 characters in the field. You can
learn how to track mileage and bill customers for mileage in Chapter 6.
Using Custom Fields
You can add your own fields to the Customer, Vendor, Employee, and Item records.
Custom fields are useful if theres information you want to track but QuickBooks
doesnt provide a field for it. For example, if you want to keep track of your
customers contract renewal month, you can create a custom field for that in the
customer record. Or, you can create a field for items to indicate which bin in the
warehouse a particular item is stored in. If youre an Enterprise user, you have up
to 31 custom fields available to you for use on forms and reports for customers,
vendors, and items, and you can also choose which data formats (numbers, dates,
phone, multi-pick) to use with that field.
Adding a Custom Field for Names
To add one or more customfields to names, open one of the names lists (Customers &
Jobs, Vendor, or Employee).
Follow these steps to create a custom field in a Names list:
Select any name on the list.
Press CTRL-E to edit the name.
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Move to the Additional Info tab.
Click the Define Fields button.
When the Set Up Custom Fields For Names dialog opens, name the field and
indicate the list for which you want to use the new field (see Figure 2-22).
Thats all there is to it, except you must click OK to save the information. When
you do, QuickBooks flashes a message reminding you that if you customize your
templates (forms for transactions, such as invoices), you can add these fields.
(Instructions for adding fields to transaction windows are found throughout this
book in chapters covering invoices, estimates, purchase orders, and so on.) Click
OK to make the message disappear (and select the option to stop showing you the
message, if you wish). The Additional Info tab for every name in the list now shows
those fields.
To add data to the custom fields for each name on the list, select the name and
press CTRL-E to edit the name. Then add the appropriate data to the custom field.
T I P : The number of custom fields for names available to you varies
depending on whether youre using the Premier or Enterprise edition. With the
Premier version, you can list a total of 15 custom name fields for customer,
vendor, and employee records, but each individual record type (customer, vendor,
or employee) can only accommodate up to 7 custom fields. Enterprise users can
list up to 30 custom fields in the Set Up Custom Fields For Names window with a
maximum of 12 fields per individual record type. In addition, Enterprise users can
also designate the type of data that will be stored in these custom fields, such
as text only, or dates.
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Adding a Custom Field for Items
You can add custom fields to your items (except subtotal items and sales tax items)
in much the same manner as you do for names.
Follow these steps to add a custom field to an item:
Open the Item List and select any item.
Press CTRL-E to edit the item.
Click the Custom Fields button.
When a message appears telling you that there are no custom fields yet defined,
click OK.
When the Custom Fields dialog appears, it has no fields on it (yet). Choose
Define Fields.
When the Set Up Custom Fields For Items dialog opens, enter a name for each
field you want to add. You can add fields that fit services, inventory items, and
so on, and use the appropriate field for the item type when you enter data in an
items record.
Click the Use column to use the field. (You can deselect the column later if you
dont want to use the field anymore.)
Click OK.
The first time you enter a custom field on an item, a dialog appears to tell you
that you can use these fields on templates (forms such as Invoices, Purchase
Orders, or Packing Slips). Click OK and select the option to stop displaying this
message in the future.
When you click Custom Fields on the Edit Item dialog for any item, your
existing custom fields appear. If you want to add more custom fields, click the
Define Fields button to open the Define Custom Fields For Items dialog and add
the additional custom field. You can create up to five custom fields for items.
To enter data for the custom fields in an item, open the item from the Item List
and click the Custom Fields button on the Edit Item window. Then enter the
appropriate data.
T I P : The number of custom fields for items available to you varies depending
on whether youre using the Premier or Enterprise edition. With the Premier
version, you can list a total of 5 custom fields for items. Enterprise users can list
up to 15 custom fields for items. In addition, Enterprise users can also designate
the type of data that will be stored in these custom fields, such as text only, or
dates.
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Merging Records in Lists
After youve been working in QuickBooks for a while, you may find that some lists
have entries that should be combined. For example, a vendor was entered twice
(with different spellings), or you realize that several items in your chart of accounts
are covering similar expenses and should be merged. One common scenario is an
Item List thats far too large and complicated, like this example:
Cable-cut to 2ft long
Cable-cut to 3ft long
Cable-cut to 4ft long
This kind of item setup could make your Item List too long and may invite
careless errors such as users clicking the wrong item (because they all look alike at
first glance). It would be easier and smarter to have one item, named Cable, and
then enter the length as a quantity (in the Qty field) or in the Description field. You
can only merge entries from the following lists:
Chart of Accounts
Item
Customers & Jobs
Vendor
Other Names
Performing a Merge Operation
Follow these steps to merge entries within a list:
Select the list entry you want to get rid of and press CTRL-E to open the entry in
Edit mode.
Change the entrys name to match the name of the entry you want to keep.
Click OK.
QuickBooks opens a message box to tell you the name is already in use and
asks if you want to merge them. Click Yes.
All the information, including transaction data, is merged into the entry youre
keeping.
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Guidelines and Restrictions for Merging List Entries
Bear the following information in mind when you decide to merge entries:
You cannot unmergethe process is not reversible.
For accounts and items, you cannot merge entries that have subentries. Change
the subentries to parent entries by removing the Subaccount Of or Subitem Of
check mark. Merge the parent entries and then reapply the Subaccount Of or
Subitem Of check mark (all of which will now be subentries of the new single,
merged, parent entry).
You can merge subentries of the same parent (which is in fact the most
common type of merge).
You can merge jobs that are subentries of the same customer.
Now that all your lists exist and theyre fine-tuned, you can work quickly and easily
in QuickBooks transaction windows. The following chapters walk you through
those tasks.
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P
a
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Bookkeeping
P
art Two contains chapters about the day-to-day bookkeeping
chores youll be performing in QuickBooks. The chapters are filled
with instructions, tips, and explanations. Theres also a chapter
dedicated to helping you prepare information that you can pass
along to your accountant at year end.
The chapters in Part Two take you through everything you need to
know about sending invoices to your customers and recording the
payments you receive from them. Youll learn how to track and pay
the bills you receive from vendors. Theres plenty of information
about setting up your inventorybuying it, selling it, and counting
itand keeping QuickBooks up-to-date on those figures. Payroll is
also discussed, both in-house payroll systems and outside services.
All the reports you can generate to analyze the state of your
business are covered in Part Two. So are the reports you run for your
accountantand for the government (tax time is less of a nightmare
with QuickBooks). Finally, youll learn about budgets, general ledger
adjustments, and all the other once-in-a-while tasks you need to
know how to accomplish to keep your accounting records accurate
and up-to-date.
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C
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Invoicing
I
n this chapter:
Create and edit invoices
Create and edit credit memos
Print invoices and credit memos
Create sales orders
Create pick lists and packing slips
Work with estimates
Customize invoice forms
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For many businesses, the only way to get money in is to send an invoice to a customer
(the exception is retail, of course, where the customers payment is received
immediately). Creating an invoice in QuickBooks is easy once you understand
what all the parts of the invoice do and why theyre there. In addition to invoices,
you often have to create credits, packing slips, estimates, and other business
financial documents.
(If youve enabled the Multicurrency feature, youll see references to the
customers currency in the transaction windows.)
Creating Standard Invoices
QuickBooks offers several ways to open the Create Invoices window. You can select
Customers | Create Invoices from the menu bar, press CTRL-I, or click the Create
Invoices icon in the Customers section of the Home page (there are additional
methods, but three choices should be enough). Any of those actions opens the
Create Invoices window, which is a blank invoice form (see Figure 3-1).
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FIGURE 3-1 The Create Invoices window has all the fields you need to track sales and
manage all the particulars that relate to a sale.
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There are several invoice templates built into QuickBooks, and you can use any
of them (as well as create your own, which is covered later in this chapter in the
section Customizing Templates). The first thing to do is decide whether or not
the displayed template suits you. You should probably look at the other templates
before settling on the one you want to use. To do that, select another invoice
template from the drop-down list:
The Professional and Service templates are almost identical. Theres a difference
in the order of the columns, and the Service template has a field for a purchase
order number.
The Product template has more fields and different columns because it contains
information about the items in your inventory.
The Progress template, which is covered later in this chapter in the Creating
Progress Billing Invoices section, is designed specifically for progress billing
against a job estimate. It doesnt appear in the Template list unless you have
specified Progress Invoicing in the Company Preferences tab of the Jobs &
Estimates category of the Preferences dialog.
The Finance Charge template appears if you enable finance charges in the
Finance Charge category of the Preferences dialog. Information about finance
charges is in Chapter 5.
The Packing Slip template is discussed in the section Printing Packing Slips
later in this chapter.
This discussion uses the Product template, because its the most complicated. If
youre using any other template, youll still be able to follow along, even though
your invoice form lacks some of the fields related to selling products.
The top portion of the invoice is for the basic information and is called the
invoice heading. The middle section, where the billing items are placed, is called the
line item section. The bottom section, called the footer, holds the totals and other
details (such as customer messages). Each section of the invoice has fields into
which you must enter data.
Entering Heading Information
To create an invoice, start with the customer or the job. Click the arrow to the right
of the Customer:Job field to see a list of all your customers. If youve attached jobs
to any customers, those jobs are listed under the customer name. Select the
customer or job for this invoice. If the customer isnt in the system, choose <Add
New> to open a new customer window and enter all the data required for setting up
a customer. Read Chapter 2 for information on adding new customers.
If youve charged reimbursable expenses or time charges to this customer,
QuickBooks displays a message reminding you to add those charges to this invoice.
You can learn how to do that in Chapter 6.
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In the Date field, the current date is showing, which is usually appropriate. If
you want to change the date, you can either type in a new date, or click the
calendar icon at the right side of the field to select a date.
If you change the date, the new date appears automatically in each invoice you
create during this session of QuickBooks (the current date returns after you close,
and then reopen the software).
The first time you enter an invoice, fill in the invoice number you want to use as
a starting point. Hereafter, QuickBooks will increment that number for each
ensuing invoice.
The Bill To address is taken from the customer record, as is the Ship To address
thats available on the Product Invoice template. You can select another Ship To
address from the drop-down list, or add a new Ship To address by choosing <Add
New> from the list.
If you have a purchase order from this customer, enter it into the P.O. Number
field (not available on the Professional template). Optionally, you can click the
Attach icon to scan and store an online copy of the customers PO that relates to
this sale so you can easily retrieve it at a later date if the need arises. Note that there
is an additional connected service and additional fees may apply
The Terms field is filled in automatically with the terms you entered for this
customer when you created the customer record. You can change the terms for this
invoice if you wish. If terms dont automatically appear, it means you didnt enter
that information in the customer record. If you enter it now, when you save the
invoice, QuickBooks offers to make the entry the new default for this customer by
adding it to the customer record.
T I P : If you enter or change any information about the customer while youre
creating an invoice, QuickBooks offers to add the information to the customer
record when you save the invoice. If the change is permanent, click the Yes
button in the dialog that displays the offer. This saves you the trouble of going
back to the customer record to make the changes. If the change is only for this
invoice, click the No button.
The Rep field (only in the Product template) is for the salesperson attached to
this customer. If you didnt indicate a salesperson when you filled out the customer
record, you can click the arrow next to the field and choose a name from the drop-
down list.
The Ship field (only in the Product template) is for the ship date, and the data
defaults to the invoice date.
The Via field (only in the Product template) is for the method of shipping. Click
the arrow next to the field to see the available shipping choices. (See Chapter 2 for
information about adding to this list.)
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The F.O.B. field (only in the Product template) is used by some companies to
indicate the point at which the shipping costs are transferred to the buyer and the
assumption of a completed sale takes place. (That means if it breaks or gets lost, the
customer owns it.) If you use FOB terms, you can enter the applicable data in the
field; it has no impact on your QuickBooks financial records and is there for your
convenience only.
N O T E : FOB stands for Free On Board, and theres probably some
meaningful reason for the term, although it seems to have been lost in history.
Entering Line Items
Now you can begin to enter the items for which you are billing this customer. Click
in the first column of the line item section.
If youre using the Product invoice template, that column is Quantity. (If youre
using the Professional or Service invoice template, the first column is Item.) Enter
the quantity of the first item youre selling.
In the ItemCode column, an arrow appears on the right edge of the columnclick
it to see a list of the items you sell. (See Chapter 2 to learn how to enter items.) Select
the item you need. The description and price are filled in automatically, using the
information you provided when you created the item. If you didnt include the
information when you created the item, you can enter it manually now.
QuickBooks does the math, and the Amount column displays the total of the
quantity times the price. If the item and the customer are both liable for tax, the
Tax column displays Tax.
Repeat this process to add all the items that should be on this invoice. You can
add as many rows of items as you need; if you run out of room, QuickBooks
automatically adds pages to your invoice.
For line items that are inventory items, QuickBooks checks the Quantity on
Hand (QOH) and warns you if you dont have enough inventory to fill the sale. Its
a warning only; QuickBooks lets you complete the sale anyway. Its never a good
idea to sell into negative QOH; instead, record a backorder, which is covered in the
section Managing Backorders, later in this chapter.
Applying Price Levels
If youve created items in your Price Levels List (explained in Chapter 2), you can
change the amount of any line item by applying a price level. Most of the time, your
price levels are a percentage by which to lower (discount) the price, but you may
also have created price levels that increase the price.
When your cursor is in the Price Each column, an arrow appears to the right of
the price thats entered for the item on this line. Click the arrow to see a list of price
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level items, and select the one you want to apply to this item. QuickBooks has
already performed the math, so you see not only the name of your price level, but
also the resulting item price for each price level.
After you select a price level, QuickBooks changes the amount youre charging
the customer for the item and adjusts the amount of the total for this item (if the
quantity is more than 1).
The customer sees only the price on the invoice; theres no indication that youve
adjusted the price. This is different from applying a discount to a price (covered in
the next section), where a discrete line item exists to announce the discount.
N O T E : You can apply price levels as you enter a line item, or finish all the
line items and then return to the Price Each column for the items you want to
change with a price level. QuickBooks adjusts line totals and the final total as
you apply the price levels.
Entering Discounts
You can also adjust the invoice by applying discounts. Discounts are entered as line
items, so you must have created a discount item in your Items List.
When you enter a discount, its amount (usually a percentage) is applied based
on the line item immediately above it. For example, lets suppose you have already
entered line items as follows:
Qty of 1 for Some Item with a price of $100.00 for a total line item price of
$100.00
Qty of 2 for Some Other Item with a price of $40.00 for a total line item price
of $80.00
Now you want to give the customer a 10 percent discount (you created a
10 percent discount item in your Items List). If you enter that item on the next line,
QuickBooks will calculate its value as 10 percent of the last line you enteredan
$8.00 discount.
If you want to apply the discount against all the line items, you must first enter a line
itemthat subtotals those lines. To do this, use a subtotal itemtype that youve created in
your Items List. Then enter the discount itemas the next line item, and when the
discount is applied to the previous amount, that previous amount is the amount of the
subtotal. The discount is based on the subtotal. You can use the same approach if you
want to discount some line items but not others. Simply follow these guidelines:
Enter all the items youre planning to discount.
Enter a subtotal item.
Enter a discount item.
Enter the remaining items (the items youre not discounting).
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This method makes your discounts and your discount policies very clear to
the customer.
Checking the Invoice
When youre finished entering all the line items, youll see that QuickBooks has
kept a running total, including taxes (see Figure 3-2).
Check Spelling
Click the Spelling icon on the toolbar of the Create Invoices window to run the
QuickBooks spell checker. If the spell checker finds any word in your invoice form
that isnt in the QuickBooks dictionary, that word is displayed. You can change the
spelling, add the word to the QuickBooks dictionary (if its spelled correctly), or tell
the spell checker to ignore the word.
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T I P : If you check the spelling when you create an item, you eliminate the
need to worry about spelling on an invoiceeverything is prechecked before you
insert the items in the invoice form. (The spell check ignores the data in the
heading section of the invoice.)
N O T E : The spell checker is turned on by default, which you may find
annoying. If you want to control the spell checker, remove its automatic behavior
in the Spelling section of the Preferences dialog.
Add a Message
If you want to add a message, click the arrow in the Customer Message field to see all
the available messages (which you created in the Customer Message List, as described
in Chapter 2). You can create a new message if you dont want to use any of the
existing notes. To do so, choose <Add New> fromthe Customer Message drop-down
list and enter your text in the New Customer Message window. Click OK to enter the
message in the invoice and automatically save the message in the Customer Message
list so you can use it again. You can also type the message directly in the Customer
Message window, which opens a Customer Message Not Found dialog that offers you
the chance to add your new message in the Customer Message list.
Add a Memo
You can add text to the Memo field at the bottom of the invoice. This text doesnt
print on the invoiceit appears only on the screen (youll see it if you reopen this
invoice to view or edit it). However, the memo text does appear on statements, next
to the listing for this invoice. Therefore, be careful about the text you usedont
enter anything you wouldnt want the customer to see.
Choose the Method for Sending the Invoice
At the bottom of the invoice template are two options for sending the invoice: To Be
Printed and To Be E-Mailed. Select the appropriate method if youre going to print
or e-mail all your invoices after you finish entering them. If you select the e-mail
option, you have to provide more information, all of which is covered in the section
Sending Invoices and Credit Memos later in this chapter.
You can also print or e-mail each invoice as you complete it. All of the options
for printing and sending invoices are explained later in this chapter, in the section
Sending Invoices and Credit Memos.
Save the Invoice
Choose Save & New to save this invoice and move on to the next blank invoice
form. If this is the last invoice youre creating, click Save & Close to save this
invoice and close the Create Invoices window.
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Editing Invoices
If you want to correct an invoice (perhaps you charged the wrong amount or forgot
youd promised a different amount to a particular customer), you can do so. Editing
the invoice thats currently on the screen is quite easy. Click in the field or column
that requires changing and make the changes (you probably figured this out).
Editing a Previously Entered Invoice
You can open the Create Invoices window (or perhaps youre still working there)
and click the Previous button to move back through all the invoices in your system.
However, if you have a great many invoices, its faster to open the Customer Center
and select the customer linked to the invoice you want to change. The right pane of
the Customer Center displays that customers transactions and you can double-click
the invoice of interest to open it. Use the following guidelines when youre editing a
previously entered invoice:
If a previously entered invoice has been paid, dont edit the amount, date, or
items. However, its safe to edit the Memo field. If a previously entered invoice
has not been paid, but has been mailed, you shouldnt edit anything, although
its probably safe to enter or modify text in the Memo field if necessary.
If the previously entered invoice has not yet been sent to the customer, you can
make any changes you wish.
When you click Save & Close, QuickBooks displays a message dialog asking
whether you want to save the changes you made. Click Yes.
Voiding and Deleting Invoices
Theres an enormous difference between voiding and deleting an invoice. Voiding
an invoice makes the invoice nonexistent to your accounting and customer
balances. However, the invoice number continues to exist (its marked VOID) so
you can account for itmissing invoice numbers are just as frustrating as missing
check numbers.
Deleting an invoice, on the other hand, removes all traces of it from your
transaction registers and reports. Its a dangerous act (unless youre an embezzler,
in which case the ability to delete an invoice is a gift).
To void an invoice, open it and then choose Edit | Void Invoice from the
QuickBooks menu bar.
N O T E : When you void an invoice, QuickBooks marks the status of the
invoice as Paid. This means nothing more than the fact that the invoice isnt
open. If youre discussing the status of open and paid invoices with a
customer, remember that an invoice marked Paid may not really be paid; it may
be a voided transaction.
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Understanding the Postings for Invoices
Its important to understand what QuickBooks is doing behind the scenes, because
everything you do has an impact on your financial reports. Lets look at the postings
for an imaginary invoice that has these line items:
$500.00 for services rendered
$30.00 for sales tax
Because QuickBooks is a full, double-entry bookkeeping program, there is a
balanced posting made to the general ledger. For this invoice, the following
postings are made to the general ledger:
Account Debit Credit
Accounts Receivable 530.00
Sales Tax 30.00
IncomeServices 500.00
If the invoice includes inventory items, the postings are a bit more complicated.
Lets post an invoice that sold ten widgets to a customer. The widgets cost you
$50.00 each and you sold them for $100.00 each. This customer was shipped ten
widgets and was also charged tax and shipping.
Account Debit Credit
Accounts Receivable 1,077.00
IncomeSales of Items 1,000.00
Sales Tax 70.00
Shipping 7.00
Cost of Goods Sold 500.00
Inventory Asset 500.00
There are two theories on posting shipping:
Separate your own shipping costs (an expense) from the shipping you collect
from your customers (revenue).
Post everything to the shipping expense.
To use the first method, create an income account for shipping and link that
account to the shipping item you created to use in invoices.
If you use the latter method, dont be surprised at the end of the year if you find
your shipping expense is reported as a negative number, meaning that you collected
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more than you spent for shipping. You wont have a shipping expense to deduct
from your revenue at tax time, but who caresyou made money.
Using Estimates
For certain customers or certain types of jobs, it may be advantageous to create
estimates. An estimate isnt an invoice, but it can be the basis of an invoice (in fact,
you can create multiple invoices to reflect the progression of the job).
Creating an Estimate
The first (and most important) thing to understand is that creating an estimate
doesnt impact your financial records. No amounts in the estimate post to income,
accounts receivable, or any other general ledger account.
To create an estimate, click the Estimates icon on the Home page, or choose
Customers | Create Estimates from the menu bar. Either action opens the Create
Estimates form. As you can see in Figure 3-3, the form is very much like an invoice
form. Fill out the fields in the same manner you use for invoices.
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Estimates also permit you to invoice customers with a markup over cost. This is
often the approach used for time and materials on bids. Just enter the cost and
indicate the markup in dollars or percentage. Incidentally, if you decide to change
the total of the item, QuickBooks will change the amount of the markup to make
sure your math is correct.
Creating Multiple Estimates for a Job
You can create multiple estimates for a customer or a job, which is an extremely
handy feature. You can create an estimate for each phase of the job or create
multiple estimates with different prices. Of course, that means each estimate has
different contents.
When you create multiple estimates for the same job, the Estimate Active option
is checked by default for all the estimates. If a customer rejects any estimates, you
can either delete them or deselect the Estimate Active option (effectively closing the
estimate).
Duplicating Estimates
You can also duplicate an estimate, which provides a quick way to create multiple
estimates with slightly different contents. Choose Edit | Duplicate Estimate while
the estimate is displayed in your QuickBooks window (or right-click anywhere in
the estimate form and choose Duplicate Estimate from the shortcut menu). The
Estimate # field changes to the next number, while everything else remains the
same. Make the required changes, and then click Save & Close.
Memorizing Estimates
If you frequently present the same estimated items to multiple customers, you can
use the Memorize Estimate feature to create boilerplate estimates for future use.
Memorized estimates do not contain the customer name (QuickBooks removes the
name when memorizing the document).
Follow these steps to memorize an estimate:
Create an estimate, filling in the items that belong on this type of estimate.
Dont fill in amounts (quantities, prices, or both) that usually change.
Press CTRL-M to memorize the estimate.
Give the estimate a name that reminds you of its contents.
Select the option Dont Remind Me.
Click OK.
To use the new boilerplate estimate, press CTRL-T, or choose Lists | Memorized
Transaction List. Double-click the estimate, fill in the Customer:Job information,
fill in the prices, and save the transaction. The memorized estimate isnt changed;
only the new estimate is saved.
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Changing Estimates
If youre running the Contractor or Accountant Edition, you can create change orders
within existing estimates. Open an existing estimate and make whatever changes are
needed to items or prices. When you click Save &Close, QuickBooks displays a
message asking if you want to record your changes. Click Yes to bring up the Add
Change Order dialog where you can opt to mark your modifications as a change order.
Creating Progress Billing Invoices
If youve enabled estimates and progress billing in the Jobs & Estimates category of
the Edit | Preferences dialog, you can use the Progress invoice template to invoice
your customers as each invoicing plateau arrives.
Choosing the Estimated Job
Progress invoices are just regular invoices that are connected to estimates. Open the
Create Invoices window, select Progress Invoice from the Template drop-down list,
and choose the appropriate customer or job. Because youve enabled estimates in
your QuickBooks preferences, the system always checks the customer/job record to
see if youve recorded any estimates, and if so, presents them.
Ill 3-1
Select the estimate youre invoicing against and click OK. QuickBooks then asks
you to specify what to include on the invoice:
Ill 3-2
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Fill out the dialog, using the following guidelines:
You can bill for the whole job, 100 percent of the estimate. When the line items
appear, you can edit any individual items.
You can create an invoice for a specific percentage of the estimate. The
percentage usually depends upon the agreement you have with your customer.
For example, you could have an agreement that youll invoice the job in a
certain number of equal installments, or you could invoice a percentage thats
equal to the percentage of the work thats been finished.
T I P : You can use a percentage figure larger than 100 to cover overruns
(make sure your customer has agreed to permit that option).
You can create an invoice that covers only certain items on the estimate, or you
can create an invoice that has a different percentage for each item on the
estimate. This is the approach to use if youre billing for completed work on a
job that has a number of distinct tasks. Some of the work listed on the estimate
may be finished, other work not started, and the various items listed on the
estimate may be at different points of completion.
After youve created the first progress billing invoice for an estimate, a new
option is available for subsequent invoices. That option is to bill for all remaining
amounts in the estimate (it replaces the Enter Estimate (100%) option). This is
generally reserved for your last invoice, and it saves you the trouble of figuring out
which percentages of which items have been invoiced previously.
As far as QuickBooks is concerned, the items and prices in the estimate are not
etched in stone; you can change any amounts or quantities you wish while youre
creating the invoice. Your customer, however, may not be quite so lenient, and your
ability to invoice for amounts that differ from the estimate depends on your
agreement with the customer.
Entering Line Items
After you choose your progress billing method and click OK, QuickBooks
automatically fills in the line item section of the invoice based on the approach you
selected. For example, in Figure 3-4, the line items account for 50 percent of the
estimate (because half the work was done).
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Changing Line Items
If you chose to invoice for a percentage of the estimates total, the amount of every
line item on the estimate reflects that percentage. This doesnt work terribly well for
those lines that have products (its hard to sell a percentage of a physical product).
You can leave the invoice as is, because the customer will probably understand that
this is a progress invoice. Or, you can make changes to the invoice.
In addition to strange or inaccurate line items for products, the line items for
services rendered may not be totally accurate. For example, some of the line items
may contain service categories that arent at the same percentage of completion as
others.
To change the invoice and keep a history of the changes against the estimate,
click the Progress icon on the toolbar of the Create Invoices window. This opens a
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dialog that allows reconfiguration of the line items. You can change the quantity,
rate, or percentage of completion for any individual line item.
Ill 3-3
Heres how to make changes:
Select Show Quantity And Rate. The columns in the dialog change to display
the columns from the estimate, and you can make changes to any of them.
Click the Qty column for any line item to highlight the default number thats
been used to calculate the invoice.
Replace the number with the amount you want to use for the invoice. You can
also change the rate, but generally thats not recommended unless there are
some circumstances that warrant it.
Select Show Percentage to display the column that has the percentage of
completion for this and previous billings. The percentages compare the dollar
amounts for invoices against the estimated total.
Click the Curr % column to change the percentage for any line item.
Select both options if you need to make changes to one type of progress on one
line item and another type of progress on another line item. All the columns
(and all the history from previous billings, if any exists) appear in the window.
Click OK when you have finished making your adjustments. You return to the
invoice form, where the amounts on the line items have changed to match the
adjustments you made. Click Save & New to save this invoice and move on to the
next invoice, or click Save & Close to save this invoice and close the Create
Invoices window.
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Using this method to change a line item keeps the history of your estimate and
invoices intact (as opposed to making changes in the amounts directly on the
invoice form, which does not create a good history).
Issuing Credits and Refunds
Sometimes you have to give money to a customer. You can do this in the formof a
credit against current or future balances, or you can write a check and refund money
you received fromthe customer. Neither is a lot of fun, but its a fact of business life.
Creating Credit Memos
A credit memo reduces a customer balance. This is necessary if a customer returns
goods, has been billed for goods that were lost or damaged in shipment, or wins an
argument about the price of a service you provided.
The credit memo itself is usually sent to the customer to let the customer know the
details about the credit thats being applied. The totals are posted to your accounting
records just as the invoice totals are posted, except theres an inherent minus sign
next to the number. Creating a credit memo is similar to creating an invoice.
Follow these steps to create a credit memo:
Choose Customers | Create Credit Memos/Refunds from the menu bar to open
the Create Credit Memos/Refunds transaction window (see Figure 3-5).
Select a customer or job, and then fill out the rest of the heading.
Move to the line item section and enter the item, the quantity, and the rate for
the items in this credit memo. Dont use a minus signQuickBooks knows
what a credit is.
Remember to insert all the special items you need to give credit for, such as
shipping.
You can use the Customer Message field to add any short explanation thats
necessary.
Click Save & Close to save the credit memo (unless you have more credit
memos to createin which case, click Save & New).
When you save the credit memo, QuickBooks asks you to specify the way you
want to apply the credit amount. (See the next section, Applying Credit Memos.)
T I P : By default, the credit memo number is the next available invoice
number. If you change the number because you want a different numbering
system for credit memos, youll have to keep track of numbers manually.
QuickBooks will use the next number (the one after this credit memo) for your
next invoice. Therefore, its easier to use the default procedure of having one set
of continuous numbers for invoices and credit memos.
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Applying Credit Memos
When you save the credit memo, QuickBooks displays a dialog where you can
choose the way to apply this credit.
Ill 3-4
Retaining the Credit
Choose Retain As An Available Credit to let the credit amount stay with the
customer. You can apply the credit to a future invoice, or apply it to an existing
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FIGURE 3-5 The Credit Memo template has all the fields needed to provide information to the
customer about the credit.
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invoice later (depending on what the customer wants to do). When you create
invoices, or apply customer payments to existing invoices, the credit is available.
T I P : The jargon for a credit that is not yet applied to an invoice is floating
credit.
If the credit is for a job, and the job doesnt have any outstanding invoices, you
should retain the credit, because you can apply it against a different job for the
same customer.
Giving a Refund for the Credit
Choose Give A Refund to send the amount of the credit back to the customer.
When you click OK, the Issue A Refund window opens (see Figure 3-6). Use the
following guidelines to configure the Issue A Refund window:
In the Issue This Refund Via field, select Cash, Check, or a credit card from the
drop-down list.
If you choose Cash, QuickBooks assumes youre taking the money out of a cash
register and deducts the amount from the bank account. (Be sure to select the
appropriate bank accounte.g., your petty cash or cash register till account
in the Account field.)
If you choose Check, the dialog adds an option labeled To Be Printed and
selects that option.
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If you print checks, leave the check mark in the check box and click OK. The
check is added to the list of checks to be printed when you choose File | Print
Forms | Checks. (The check also appears in the bank account register with the
notation To Print.)
If you write checks manually, deselect the check mark in the To Be Printed
check box, and click OK. The check is added to your bank account register,
using the next available check number. Dont forget to write and send the
check.
If youre creating a credit card refund, use your normal credit card processing
procedure to issue the credit. (If you use the QuickBooks merchant card
service, select the option labeled Process Credit Card Refund When Saving to
open the credit card window automatically.)
Applying the Credit to an Invoice
Choose Apply To An Invoice to apply the credit to a current invoice. When you
click OK, QuickBooks displays a list of open invoices for this customer (or job, if
the credit is for a job), and automatically applies the credit against the oldest
invoice.
Ill 3-5
If the credit is larger than the oldest invoice, QuickBooks applies the remaining
amount of the credit to the next oldest invoice. If there are no additional invoices,
the remaining amount of the credit is held in the customers record and is treated as
a retained credit. Click Done to close the window.
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Creating Sales Orders
Many inventory-based businesses use sales orders as the first step in selling
products to a customer. A sales order is a tentative document, on hold until there is
sufficient inventory to fill it or until prices and discounts are approved by
management. Nothing on a sales order is posted to the general ledger.
All versions of QuickBooks Premier/Enterprise support sales orders. Sales orders
are as easy to create as invoices, and, in fact, they resemble invoices. To create a
sales order, choose Customers | Create Sales Orders to open the Create Sales Orders
window.
When you save a sales order, the transaction isnt posted to the normal accounts
(A/R, Inventory, Income, Cost of Goods, etc.). Instead, QuickBooks posts the
transaction to a special account named Sales Orders.
When youre ready to ship the products to the customer, you can turn the sales
order into an invoice automatically. Open the sales order and click the Create
Invoice icon on the toolbar.
Sales Order Reports
QuickBooks Premier/Enterprise editions offer two useful reports for tracking sales
orders (the names of the reports clearly indicate the contents):
Open Sales Orders by Customer
Open Sales Orders by Item
Both reports are available in the submenu you see when you choose Reports |
Sales.
Generate Purchase Orders from Sales Orders
Automatically
If you entered a sales order instead of an invoice because you were out of product,
you have to order the product. Instead of opening a blank purchase order
transaction window and filling in the data, you can tell QuickBooks Premier/
Enterprise editions to generate the purchase order from the sales order. This saves a
lot of time and effort, and, perhaps more importantly, avoids the possibility of
typing errors. To create the purchase order, open the sales order transaction and
click the arrow to the right of the Create Invoice icon on the toolbar. Then select
Purchase Order from the drop-down menu.
T I P : QuickBooks Premier/Enterprise editions also offer the ability to create
purchase orders automatically from estimates if you need to order products to
move on to invoicing the customer.
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Managing Backorders
QuickBooks can keep track of the inventory items you couldnt ship (and therefore
couldnt include in an invoice) because you didnt have enough of those items in
stock to fill the order.
If youre preparing a sales order, QuickBooks doesnt notify you of insufficient
quantity until you attempt to convert the sales order to an invoice, unless youre
running one of the following industry-specific editions: Manufacturing &Wholesale
Edition, Retail Edition, or Accountant Edition.
If you cant ship all the items the customer ordered, when you create the invoice
you must adjust the quantity in the Invoiced column to match the quantity youre
selling and shipping. Do this for each item in the invoice that has insufficient
quantities.
After you change the quantity in the Invoiced column, the invoice changes
depending on the Premier edition youre using.
In the Accountant, Manufacturing & Wholesale, and Retail Premier editions,
QuickBooks automatically enters the difference between the Ordered and Invoiced
columns in the Backordered column.
In all other Premier editions, no Backorder column or calculation is available.
Instead, QuickBooks saves the sales order with the number of units you invoiced
recorded in the sales order. The sales order remains open. When you view the sales
order, the products that were invoiced and shipped are marked closed (a check mark
appears in the Clsd column). The products that had insufficient quantity to ship are
not closed, and the sales order displays the original number of units ordered as well
as the number of units invoiced. When you receive new products and can fill the sales
order, convert the still-open sales order into an invoice.
QuickBooks does not have the capacity to fill backorders automatically when
product arrives in your warehouse. You need to track the status of backordered
items manually. Two reports are available to help you in the Sales section of the
Reports menu:
Open Sales Orders by Customer
Open Sales Orders by Item
The Open Sales Orders by Item report is more useful, because its sorted by item
name. When you know that product is available, go to that products section of the
report and decide which customers order to fill (if sufficient quantity to fill all open
orders didnt arrive). Double-click the sales order you want to fill to open the
transaction window, and enter the quantity to ship. Then convert the sales order to
an invoice.
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Sending Invoices and Credit Memos
You have several choices about the method you use to send invoices and credit
memos. You can print and mail them, or send them via e-mailand within those
options are other options, which are discussed in this section.
Printing Invoices and Credit Memos
You can print invoices and credit memos on blank paper, preprinted forms on a
single sheet of paper, preprinted multipart forms, or your company letterhead. You
have to set up your printer in QuickBooks, but once you complete this task you
dont have to do it again. There are several steps involved in setting up a printer,
and theyre not terribly difficult.
Setting Up the Printer for Forms
If you have multiple printers attached to your computer or accessible through a
network, you have to designate one of them as the invoice printer. If you use
multipart forms, you should have a dot matrix printer. Your printers are already set
up in Windows (or should be), so QuickBooks, like all Windows software, has
access to them.
Follow these steps to set up a printer for invoices:
Choose File | Printer Setup from the menu bar to open the Printer Setup dialog
and select Invoice from the Form Name drop-down list (youll have to perform
these steps again for credit memos).
In the Printer Setup dialog (see Figure 3-7), click the arrow next to the Printer
Name box to choose a printer if you have multiple printers available. This
printer becomes the default printer for Invoice forms (you can assign different
printers to different forms, which is a nifty time-saver).
In the bottom of the dialog, select the type of form youre planning to use for
invoices from the following options:
Intuit Preprinted Forms Templates with all your company information,
field names, and row and column dividers already printed. These forms
need to be aligned to match the way your invoice prints. You can also
purchase the forms from a company that knows about QuickBooks invoice
printing formats, and everything should match just fine. Selecting this
option tells QuickBooks that only the data needs to be sent to the printer
because the fields are already printed.
Blank Paper Selecting this option tells QuickBooks that everything,
including your company name and address, field names, etc., must be sent to
the printer. This is easiest, but it may not look as pretty as a printed form.
Some of us dont care about prettywe just want to ship invoices and collect
the payments. But if you care about image this may not be a great choice.
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Letterhead This means you print your invoices on paper that has your
company name and address (and perhaps a logo) preprinted. Selecting this
option tells QuickBooks not to print the company information when it
prints the invoice.
Setting Up Form Alignment
You have to test the QuickBooks output against the paper in your printer to make
sure everything prints in the right place. To accomplish this, click the Align button
in the Printer Setup dialog, select the invoice template youre using (e.g., Service,
Product, etc.), and then click OK. The dialog you see to set up alignment differs,
depending on the type of printer youve selected.
Aligning Dot Matrix Printers
If youre using a continuous-feed printer (dot matrix using paper with sprocket
holes), youll see a dialog that lets you perform both coarse and fine adjustments.
This is necessary because you must set the placement of the top of the page, which
you dont have to do with a page printer (laser, inkjet).
Start by clicking the Coarse button. A dialog appears telling you that a sample
form is about to be printed and warning you not to make any physical adjustments
to your printer after the sample has printed. QuickBooks provides another dialog
where you can make any necessary adjustments. Make sure the appropriate
preprinted form, letterhead, or blank paper is loaded in the printer. Click OK.
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FIGURE 3-7 Specify the printer and type of paper for invoices.
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The sample form prints to your dot matrix printer and QuickBooks displays a
dialog asking you to enter pointer line position. You can see the pointer line at the
top of the printed sample. Enter the line its on in the dialog and click OK (the
printout numbers the lines). Continue to follow the instructions as QuickBooks
takes you through any adjustments that might be needed.
If you want to tweak the alignment a bit further, choose Fine. (See the information
on using the Fine Alignment dialog in the section Aligning Laser and Inkjet Printers
that follows this section.) Otherwise, choose OK.
When the form is printing correctly, QuickBooks displays a message telling you
to note the position of the form now that its printing correctly. That means you
should note exactly where the top of the page is in relation to the print head and
the bar that leans against the paper.
T I P : The best way to note the position of the forms in your dot matrix printer
is to use a marker to draw an arrow with the word invoice (or the letter I) at
the spot on the printer where the top of the form should be.
Aligning Laser and Inkjet Printers
If youre using a page printer, youll see only the Fine Alignment dialog, where you
select the invoice template you plan to use. Then click Print Sample to send output
to your printer. With the printed page in your hand, make adjustments to the
alignment in the dialog. Use the arrows next to the Vertical and Horizontal boxes to
move the positions at which printing occurs.
Click OK, and then click OK in the Printer Setup dialog. Your settings are saved,
and you dont have to go through this again for printing invoices.
Repeat all these steps to create printer settings for credit memos.
Batch Printing
If you didnt print each invoice or credit memo as you created it, and you made sure
that the To Be Printed check box was selected on each invoice you created, youre
ready to start a print run.
Place the correct paper in your printer and, if its continuous paper in a dot
matrix printer, position it properly.
Follow these steps to print your invoices:
Choose File | Print Forms | Invoices.
In the Select Invoices To Print window, all your unprinted invoices are selected
with a check mark.
If there are any invoices you dont want to print at this time, click the check
marks to remove them.
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If you want to print mailing labels for these invoices, you must print them first
(see the next section).
Click OK to print your invoices.
The Print Invoices dialog appears, where you can change or select printing
options. Click Print to begin printing. Repeat the steps to print your credit memos.
Printing Mailing Labels
If you need mailing labels, QuickBooks will print them for you. You must print the
mailing labels before you print the invoices.
In the Select Invoices To Print window, click the Print Labels button to bring up
the Select Labels To Print dialog.
Ill 3-6
The options have been preselected to match a label run for multiple customers,
and the customers selected are those customers who have invoices waiting to be
printed. Make changes if you need to, then click OK to open the Print Labels dialog
(see Figure 3-8).
QuickBooks assumes youve loaded Avery labels into your printer. Select the
appropriate printer, specify the label format you use (if you purchased preprinted
labels from QuickBooks, theyre in the drop-down list), and click Print.
After the labels are printed, youre returned to the Select Invoices To Print dialog.
Choose OK to open the Print Invoices dialog and begin printing your invoices.
After youve finished printing invoices, check the print job to make sure nothing
went wrong (the printer jammed, you had the wrong paper in the printer,
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whatever). If anything went amiss, you can reprint the forms you need when the
following dialog appears. (Use the invoice number as the doc number.)
Ill 3-7
Click OK if there are no problems with the print job.
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FIGURE 3-8 Configure the label printing options you need.
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Printing Packing Slips
QuickBooks provides a template for a packing slip, which is basically an invoice
that doesnt display prices. The theory behind packing slips is that for the
warehouse personnel who manage and pack products, the cost of those products
falls under the category none of your business.
Print the Default Packing Slip
To print the default packing slip, complete the invoice. Then click the arrow next to
the Print icon at the top of the Create Invoices window and select Print Packing
Slip from the drop-down list. The Print Packing Slip dialog opens so you can select
your printing options (which are the same as the options described earlier for
printing invoices).
Change the Default Packing Slip
If you create your own customized packing slip template, you can select it each
time you print a packing slip. You can also make your own customized design the
default packing slip by changing the preferences for packing slips.
Follow these steps to change your packing slip preferences:
Choose Edit | Preferences to open the Preferences dialog.
Go to the Sales & Customers section and click the Company Preferences tab.
In the Choose Template For Invoice Packing Slip field, select your new packing
slip form from the drop-down list.
Click OK.
If you have multiple packing slips, you can choose any of them for printing.
With the completed invoice in the Create Invoices window, instead of selecting
Print Packing Slip from the Print buttons drop-down list, select a packing slip
template from the drop-down list in the Template field. The Create Invoices
window changes to display the packing slip you select.
Dont panic when you see prices on the packing slip youre viewing. The Packing
Slip template has one set of configuration options for the screen and another set for
the printed version (the version that omits the price columns). This is true for any
packing slip template you create, and its a handy feature, as youll learn when you
read the section on customizing templates later in this chapter.
To see what the printed version of the packing slip looks like, click the arrow
next to the Print icon on the Create Invoices window toolbar and choose Preview.
Satisfied? Close the Preview window and return to the Create Invoices window.
Now you can print the packing slip.
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E-mailing Invoices and Credit Memos
QuickBooks provides a way to e-mail invoices and credit memos to customers.
(From here on, when you see the word invoices it also means credit memos and
other customer forms.)
To e-mail an invoice, make sure the completed invoice is in the Create Invoices
window. (If you saved the invoice previously, open the Create Invoices window and
use the Previous button to move backward through saved invoices.)
If youre using Outlook Express, Windows Mail, or Outlook, QuickBooks sends
e-mail to your customers directly through your e-mail software. If you use e-mail
software other than the supported software, you can use QuickBooks Billing
Solutions, which provides a server-based e-mail service. This is a free service, but
you have to sign up for it.
If QuickBooks finds a copy of one of the supported e-mail software applications
on your computer with an active profile installed, your QuickBooks e-mail is
automatically sent using that software. (An active profile is an e-mail account
established in the software, and the software is the default e-mail software on your
computer.) In that case, the Send Forms category of the Preferences dialog shows
your e-mail software as the default e-mail method. If that option isnt displayed, you
must use the QuickBooks e-mail service.
Using Your E-mail Software
If QuickBooks is using your e-mail software to send transactions forms (or reports),
the standard Create Message window appears.
If the customers e-mail address is in the customer record, its automatically
inserted into the To: field.
If the customers e-mail address is not in the customer record, QuickBooks
searches your e-mail software address book. If the customer is found, the entry
in the To: field is underlined to indicate the name has been matched to an
existing address book entry.
If the customers e-mail address is not available in either place, when you click
Send, your e-mail software opens a dialog so you can add this customer to your
address book.
The Subject field is prefilled with the text Invoice from <YourCompanyName>
(if the file youre attaching isnt an invoice, the correct form name is automatically
inserted). The Attachment field is prefilled with the name of the PDF file of the
transaction form. The text of the message is prefilled by QuickBooks. You can
change the message by choosing Edit | Preferences | Send Forms and clicking the
Company Preferences tab. Then, change the message body text.
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Using QuickBooks Billing Solutions for E-mail
If youre not using one of the supported e-mail applications, QuickBooks fills out
the message and attaches the document in the same way described for using your
own e-mail software.
When you click Send, QuickBooks opens a browser window and takes you to
the QuickBooks Billing Solutions website. If this is the first time youre e-mailing
invoices, follow the prompts to complete the sign-up process (the service is free),
and then QuickBooks sends the e-mail. Thereafter, your e-mail is sent automatically.
T I P : If you use the QuickBooks Billing Solutions, enter your own name in the
CC: field of the message window so you have a record of the e-mail. (If you use
your own software, you have a copy in the Sent Messages folder.)
If you click Send Now to e-mail this invoice immediately, QuickBooks opens
a browser window and takes you to the Billing Solutions section, or opens your
e-mail software.
If you click Send Later, QuickBooks saves the message, along with any others
you save, until youre ready to send all of them.
When you want to e-mail all the invoices, choose File | Send Forms to open the
Select Forms To Send dialog. Here are some guidelines for working with the Select
Forms To Send dialog:
By default, all e-mails are selected. Deselect an e-mail by clicking the check
mark in the leftmost column of its listing. Click again to put the check mark
back.
You can delete any item by selecting it and clicking Remove. Youre not deleting
the invoice, youre deleting the e-mail. You can return to the invoice and send it
anytime.
To edit the message text of any e-mail, double-click its listing, or highlight it
and click the Edit E-mail button. Make your changes and click OK.
Click Send Now to e-mail all the selected items.
The Customer Side of E-mailed Invoices
When the customer receives your e-mail invoice, the invoice is a PDF attachment.
In addition to the message text you sent, below your signature, the e-mail message
includes a statement that the recipient needs Acrobat Reader to open the attached
invoice file.
If your customer doesnt have Adobe Reader installed, the message contains a
link that sends your customer to the Adobe website, where the software is available
for downloading (and its free).
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Additional Send Features for Forms
The Send drop-down list on the invoice form (and other forms) includes a choice
named Mail Invoice. This refers to a feature you can sign up for (for a fee) to let
QuickBooks print and mail your invoices. The printed form has a tear-off
remittance slip, a return envelope, and other features.
You can also add power to your e-mail delivery options by adding a pay online
feature for customers, available (for a fee) from QuickBooks.
Information about these additional services is available on the QuickBooks
website http://quickbooks.intuit.com/.
Customizing Templates
QuickBooks makes it easy to customize the forms you use to create transactions.
(Forms such as invoices, purchase orders, statements, and so on, are called
templates in QuickBooks.)
There are two customization options available when customizing templates. The
first allows you to create new template designs (choosing this option takes you
online) and allows you to save them to your template list. My focus here is on the
second option, which gives you the ability to modify the appearance and layout of
the data fields on an existing template or to create a new template based on an
existing one.
Templates can be customized in two ways:
Additional customization Customize the fields and columns that appear on
the templatethese are major changes and require you to create a new
template with a new template name.
Basic customization Change the appearance by customizing the fonts, colors,
and other output settings onlythese are minor changes (a form of window
dressing) that can be made to built-in Intuit templates.
Additional Customization of Templates
You can make major changes to templates to suit your needs as well as your taste.
QuickBooks calls this the Additional Customization feature. Start your
customization by selecting the Customize button located on the toolbar of an
existing template (like an invoice, purchase order, or estimate form). This opens the
Customize Your QuickBooks Forms window. Select the Customize Data Layout
button at the bottom of the window. The Additional Customization window opens
(see Figure 3-9).
Notice that in Figure 3-9, the name of the template includes the text BOPref,
which refers to a custom field that was created for tracking customer preferences
for back orders. This field displays on the screen version of the template (because
its a guideline for the user who is filling an order) but doesnt appear on the printed
version that is sent to the customer.
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Heres how custom fields work in transaction templates:
Custom fields you create in a Names List appear in the Header section.
Custom fields you create in the Items List appear in the Columns section.
Customizing the Template Header
The Header section of the Additional Customization dialog includes all the fields
that appear above the line items in a transaction form. You can add or remove fields
on the screen form, the printed form, or both. The Preview pane on the right is a
preview of the printed form, and as you add or remove fields from the printed form
you see the changes reflected there.
Following are some changes to the Header section that are often effected by
QuickBooks users (the data for the fields is automatically filled in using the data in
the customer or vendor record):
If you assign account numbers to your customers, display the Account Number
field (only available on the printed version).
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FIGURE 3-9 The Additional Customization dialog lets you point and click to redesign a
template.
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If you use reps, either as commissioned salespersons or as customer support
contacts, add the Rep field to both the screen and printed versions.
If youre tracking jobs for the majority of your customers, add the job name to
the form (only available in the printed version). QuickBooks uses the term
Project because thats the commonly used term in most businesses (the
exception is the construction trade, where Job is a common term). If you
refer to jobs as jobs with your customers, you can change the text.
Customizing the Template Columns
On the Columns tab of the Additional Customization dialog (see Figure 3-10), you
can add or remove columns that appear in the line item section of the transaction
form. If you created custom fields for items, theyre available for any template you
design.
If progress invoicing is turned on, another columns tab, called Prog Cols, is
available for customizing the transaction form you use when you create a progress
invoice against an estimate.
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FIGURE 3-10 Add columns to specify details of the items youre including in the transaction.
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Customizing the Template Footer
The Footer tab (see Figure 3-11) contains the elements that appear at the bottom of
the transaction form. If you want to add additional fields to this section of the
printed transaction form, youll have to use the Layout Designer to maneuver the
positioning, because you dont have a lot of space to work with.
Basic Customization of Templates
To make minor changes to an existing template, select the template from the drop-
down list in the Template field at the top right of the transaction window and click
the Customize button on the template window toolbar. Click the Customize Data
Layout option. This initially opens the Additional Customization window. Click the
Basic Customization button at the bottom of this window to toggle to the Basic
Customization window (see Figure 3-12). Basic customization offers you a number
of ways to change the appearance of the template to suit your tastes.
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FIGURE 3-11 Add fields from the footer tab to add more information to the transaction form.
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Adding a Logo to a Template
You can add your company logo to a template by selecting the Use Logo check box.
In the Basic Customization window. Then navigate to the folder that has your logo
graphic file, and select the file. Use the following guidelines to add a logo to a
template:
QuickBooks accepts most all of the common graphic formats for your logo.
However, the graphic loads when you print the template, and graphic files
saved with a BMP format tend to be larger than other formats and may take
quite some time to load each time you print. The most efficient format, in
terms of size and resolution, is JPG.
Your logo appears in the upper-left corner of the form, unless you open the
Layout Designer (covered later in this chapter) to reposition it.
You wont see the logo on the screen version of the template.
If you cant place the logo in the size and position you prefer, consider printing
stationery and using it as the paper source for the template.
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FIGURE 3-12 Change the appearance of a template in the Basic Customization dialog.
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Customizing Colors on a Template
You can change the color of the lines that appear on the template by selecting a
color scheme from the drop-down list in the Select Color Scheme field. Click Apply
Color Scheme to save the change and see its effect in the Preview pane on the right
side of the dialog.
You can also change the color of any text thats printed on the form by using the
features for changing fonts (covered next) and selecting a color for the font.
Customizing Fonts on a Template
To change the fonts for any elements on the template, select the element in the
Change Font For list and click Change Font. Select a font, size, effect (such as bold
or italic), or color.
Customizing the Company Information on a Template
You can select and deselect the text that appears in the name and address block of
your templates. The data is taken from the Company Information dialog, which you
can open by clicking Update Information, to make sure that the data exists.
Printing Status Stamps on Templates
You can select or deselect the option to print the status stamp on a transaction
template (PAID, RECEIVED, and so on). The status stamp prints at an angle across
the center of the header section of the template. If you deselect the status stamp,
you are only removing it from the printed copy of the form; the screen copy always
shows the status.
Using the Layout Designer
As you customize the printed forms, you can see the effects in the Preview pane.
QuickBooks warns you about overlapping fields, and you must fix that problem. In
addition, you might think the layout looks too crowded and want to rearrange
some of the elements. You can use the Layout Designer to reposition the elements
on the form. Click Layout Designer to open your template in the Layout Designer
window, as seen in Figure 3-13.
The Layout Designer is a powerful and complicated feature, and its beyond the
scope of this book to go into deep detail about it. To get you started, however,
following are some of the commonly used functions.
If you use window envelopes to mail your invoices, be sure the option Show
Envelope Window at the bottom of the Layout Designer is selected before you start.
The areas of the form that appear in envelope windows are highlighted in green.
This helps you avoid moving any fields into that area.
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Select any element to put a frame around it. Now you can perform an action on
the frame, as follows:
To change the size of the element, position your pointer on one of the sizing
handles on the frame, then drag the handle to resize the element.
To move an element, position your pointer inside the frame and, when your
pointer turns into a four-headed arrow, drag the frame to a different location on
the form.
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FIGURE 3-13 You can reposition the elements in the form to create your own design.
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Double-click an elements frame to see a Properties dialog that permits all sorts
of changes for the selected element.
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To change the margin measurements, click the Margins button at the bottom of
the Layout Designer.
Click the Grid button to open the Grid and Snap Settings dialog where you can
eliminate the dotted line grid, change the spacing between grid lines, or turn
off the Snap To Grid option (automatically aligns objects to the nearest point
on the grid).
Use the toolbar buttons to align, resize, and zoom into the selected elements.
Theres also an Undo/Redo button.
When you finish with the Layout Designer, click OK to move back to the
Additional Customization window. If everything is just the way you want it, save
your new template by clicking OK. This new template name appears on the drop-
down list when you create transaction forms.
T I P : You can also use this new template as the basis for other customizations.
Click Manage Templates to open the Manage Templates dialog with a list of your
existing templates in the left panethe Preview pane (on the right) displays a layout
of the template as it currently looks and displays the template name at the top.
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In the Template Name field at the top of the Preview pane, delete the current
name and replace it with the name you want for your new template. Then click OK
to return to the Basic Customization dialog.
Using Memorized Invoices
If you have a recurring invoice (most common if you have a retainer agreement
with a customer), you can automate the process of creating it. Recurring invoices
are those that are sent out at regular intervals, usually for the same amount.
Create the first invoice, filling out all the fields. If there are any fields that will
change each time you send the invoice, leave those fields blank and fill them out
each time you send the invoice. Then press CTRL-M to open the Memorize
Transaction dialog.
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The List of Templates
If youve just started using QuickBooks, the template names you see in the Templates List may
confuse you, because youll notice that several types of templates arent listed. The templates that
appear in the list depend on the preferences you set and the transactions youve created.
By default, QuickBooks installs Invoice templates, a Statement template, and a Packing Slip
template. You wont see a Purchase Order template unless you enable Inventory & Purchase
Orders and also open the built-in Purchase Order template by choosing Vendors | Create
Purchases Orders. As soon as the Create Purchase Orders transaction window opens, the
Custom Purchase Order template appears on the list (you can close the transaction window
without creating a PO if your only purpose was to add the template to the list). The same
paradigm applies to Sales Receipts, Estimates, and other QuickBooks templates.
FYI
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Fill in the fields using the following guidelines:
Change the title in the Name box to reflect what youve done. Its easiest to add a
word or phrase to the default title (which is the customer or job name), such as
Retainer. You can use up to 31 characters, including spaces, in the Name box.
Choose Remind Me and specify how and when you want to be reminded in the
How Often and Next Date fields. The reminder will appear in the automatic
QuickBooks Reminder window.
Choose Automatically Enter if you want QuickBooks to issue this invoice
automatically. If you opt for automatic issuing of this invoice, you must fill in
the fields so that QuickBooks performs the task accurately, as follows:
The How Often field is where you specify the interval for this invoice, such
as monthly, weekly, or so on. Click the arrow to see the drop-down list and
choose the option you need.
The Next Date field is the place to note the next instance of this invoice.
The Number Remaining field is a place to start a countdown for a specified
number of invoices. This is useful if youre billing a customer for a finite
number of months because you have a contract for a specified number of
years.
The Days In Advance To Enter field is for specifying the number of days in
advance of the next date you want QuickBooks to create the invoice.
Click OK when you have finished filling out the dialog. Then click Save & Close
in the Invoice window to save the transaction. Later, if you want to view, edit, or
remove the transaction, you can select it from the Memorized Transaction List by
pressing CTRL-T.
Additional Features in Some
Editions of QuickBooks
Some industry-specific editions of QuickBooks Premier and Enterprise Solutions
offer additional features to match the needs of the industries theyre designed for.
Sales Order Fulfillment Worksheet
The Sales Order Fulfillment Worksheet is designed to help you manage all your
open sales orders from one place. From the Customer menu, select Sales Order
Fulfillment Worksheet. When you open the worksheet, you see a list of all your
open sales orders at the top, arranged by the date they were entered. The bottom
half of the window provides you the details of the individual line items on the order
(Figure 3-14).
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The worksheet is designed to help you decide which open sales orders to fulfill
when you dont have enough inventory to fill all of them at once. Using the
multiple sort options available, you can arrange the list so that it displays your open
sales by, for example, those that can be completely filled first, or by the dollar
amount that can be fulfilled. The worksheet uses symbols to help you determine at
a glance whether an order can be completely filled, partially filled, or not filled at
all, or you can click the Choose For Me button to have QuickBooks choose sales
orders based on the criteria you select.
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FIGURE 3-14 The Sales Order Fulfillment Worksheet
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C
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4
Receiving Payments
I
n this chapter:
Apply customer invoice payments
Apply credits and discounts to invoices
Handle cash sales
Deposit income into your bank account
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The best part of accounts receivable chores is receiving the payments. However, you
need to make sure you apply customer payments correctly so that you and your
customers have the same information in your records.
(If youve enabled the Multicurrency feature, you see references to the customers
currency in the transaction windows, and you use the customers currency for the
transaction.)
Receiving Invoice Payments
As you create invoices and send them to your customers, theres an expectation that
money will eventually arrive to pay off those invoices. And, in fact, it almost always
works that way. In accounting, there are two ways to apply the payments that pay
off invoices:
Balance Forward This is a system in which you consider the total of all the
outstanding invoices as the amount due from the customer, and you apply
payments against that total. It doesnt matter which particular invoice is being
paid because its a running total of payments against a running total of invoices.
Open Item This is a system in which payments you receive are applied to
specific invoices. Most of the time, the customer either sends a copy of the
invoice along with the check or notes the invoice number that is being paid on
the check stub to make sure your records agree with the customers records.
Recording an Invoice Payment
When a payment arrives from a customer who has received an invoice from you,
you have to apply the payment to the customers invoice.
Follow these steps to apply a payment:
Click the Receive Payments icon on the Home page (or choose Customers |
Receive Payments from the menu bar), to bring up a blank Receive Payments
window, as shown in Figure 4-1.
Click the arrow to the right of the Received From field and select the customer
or job from the drop-down list as follows:
If the payment is froma customer for whomyoure not tracking jobs (or for an
invoice that wasnt related to a job), select the customer. The current balance for
this customer automatically appears in the Customer Balance field.
If the payment is for a job, select the job. The current balance for this job
automatically appears in the Customer Balance field.
If the payment covers multiple jobs, select the customer to see all invoices
for all jobs. The current balance for this customer automatically appears in
the Customer Balance field.
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In the Amount field, enter the amount of this payment. (You can omit this step
and let QuickBooks calculate the amount of the paymentsee the section
Calculating the Payment.)
Click the arrow to the right of the Pmt. Method field and select the payment
method:
If the payment method is a credit card, complete the Card No. and Exp.
Date fields. If you have a merchant account with the QuickBooks Merchant
Account Service, click the option Process <credit card name> Payment When
Saving to start the credit card processing function automatically after you
save the transaction.
If the payment method is a check, enter the check number in the Check #
field.
The Memo field is optional, and you can use it to attach a note about the
payment if you think its necessary.
In the Deposit To field (if it exists), select the bank account for depositing the
payment, or select Undeposited Funds if youre using that account to receive
payments (see the section Depositing Income, later in this chapter). If the Deposit
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FIGURE 4-1 The Customer Payment form has all the fields needed to apply payments
accurately.
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To field doesnt exist, youve set your Payments Preferences to deposit payments to
the Undeposited Funds account.
N O T E : You can add any additional payment methods you need by choosing
<Add New> in the Pmt. Method drop-down list (see Chapter 2 to learn about
adding items to QuickBooks lists).
Calculating the Payment
If youve enabled the Automatically Calculate Payments option in the Payments
category of the Preferences dialog, you can omit data entry in the Amount field in
the heading section and go directly to the list of invoices in the Receive Payments
window. As you select each invoice for payment, QuickBooks calculates the total
and places it in the Amount field. For some reason, when you click the first invoice
listing, QuickBooks opens a dialog asking you if youd like to turn off this option.
If you havent enabled the option to calculate payments automatically, and you
select an invoice listing without entering the amount of the payment first,
QuickBooks issues an error message. Enter the amount of the payment in the
Amount field at the top of the window.
Applying Payments to Invoices
Now you have to apply the payment against the customer invoices. By default,
QuickBooks automatically applies the payment to the oldest invoice, unless the
amount of the payment exactly matches the amount of another invoice.
You can force QuickBooks to let you apply payments to specific invoices instead
of automatically heading for the oldest invoice, or matching an invoice for an
amount equal to the payment, by changing the options in the Preferences dialog.
Choose Edit | Preferences and click the Payments icon in the left pane. On the
Company Preferences tab, deselect the option labeled Automatically Apply
Payments.
You could face several scenarios when receiving customer payments:
The customer has one unpaid invoice, and the payment is for the same amount
as that invoice.
The customer has several unpaid invoices, and the payment is for the amount
of one of those invoices.
The customer has one or more unpaid invoices, and the payment is for an
amount lower than any single invoice.
The customer has several unpaid invoices, and the payment is for an amount
greater than any one invoice but not large enough to cover two invoices.
The customer has one or more unpaid invoices, and the payment is for a lesser
amount than the current balance. However, the customer has a credit equal to
the difference between the payment and the customer balance.
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If you are not tracking invoices and are instead using a balance forward system,
just let QuickBooks continue to apply payments against the oldest invoices.
If the customer sent a copy of the invoice with the payment or indicated the
invoice number on the check or stub, you should apply the payment to that
invoice, even if it means an older invoice remains unpaid. This will ensure that
your records match your customers records. For situations in which the customers
intention isnt clear, the smart thing to do is call the customer and ask how the
payment should be applied.
If the customer payment doesnt match the amount of any invoice, check to see
whether the customer indicated a specific invoice number for the payment. If so,
apply the payment against that invoice; if not, let the automatic selection of the
oldest invoice stand.
Handling Underpayments
After you apply the customers payment, if it isnt sufficient to pay off an existing
invoice, the Receive Payments window displays a message that asks whether you want
to leave the underpaid amount as an underpayment, or write it off (see Figure 4-2).
If you opt to retain the underpayment, the invoice you selected for payment
remains as a receivable (an unpaid invoice balance), with a new balance (the
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FIGURE 4-2 You must decide how to handle the underpayment.
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original balance less the payment you applied). When you click Save & Close (or
Save & New if youre entering more customer payments), QuickBooks makes the
appropriate postings.
If you select the option to write off the underpayment, when you click Save &
Close or Save & New, QuickBooks opens the Write Off Amount dialog so you can
choose the posting account, and, if applicable, apply a class to the transaction.
Discuss the account to use for a write off with your accountant. You can create
an Income or Expense account for this purpose, depending on the way your
accountant wants to track receivables youve decided to forgive.
Applying Credits to Invoices
You can apply any existing floating credits to an open invoice, in addition to
applying the payment that arrived. A floating credit is a credit you issued and did
not apply to an existing invoice at that time. If you did apply the credit to an
invoice, that invoice is already reduced by the amount of the credit in the Receive
Payments window.
If floating credits exist, customers usually let you know how they want them
applied, and its not unusual to find a note written on the copy of the invoice that
the customer sent along with the check. To apply a credit balance to an invoice,
click the Discount & Credits button on the Customer Payment window, which
opens the Discount And Credits dialog.
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Click the Credits tab and select the credit you want to apply. Depending on the
circumstances, heres how QuickBooks handles the credits:
The Credit Total Is Equal to or Less Than the Unpaid Amount of the Oldest
Invoice This reduces the balance due on that invoice. If the customer sent a
payment that reflects a deduction for the amount of his or her credits (a common
scenario), so that the credit total is equal to the unpaid amount, the invoice has no
remaining balance.
If applying the existing credit along with the payment doesnt pay off the invoice,
the balance due on the invoice is reduced by the total of the payment and the credit.
The amount of the credit is added to the postings for the invoice. Dont worry
this change only affects the invoice balance and the accounts receivable posting; it
doesnt change the amount of the payment thats posted to your bank account.
The Credit Total Is Larger Than the Amount Required to Pay Off an Invoice
If the customer payment is smaller than the amount of the invoice, but the amount
of credit is larger than the amount needed to pay off the invoice, the balance of the
credit is available for posting to another invoice.
To apply the unapplied credit balance to another invoice, click Done and select
the next invoice in the Receive Payments window. Then click the Discount &
Credits button and apply the credit balance (or as much of it as you need) against
the invoice. Any unused credits remain available for the future.
You should send a statement to the customer to reflect the current, new invoice
balances as a result of applying the payments and the credits (even though the
customers accounting software probably reflects the facts accurately).
Applying Credits to a Dif ferent Job
You may have a situation in which a customer has already paid the invoices for a
job when the credit is created, or has paid for part of the job, exceeding the amount
of the credit. If the customer tells you to apply the credit balance to another job or
to float the credit and apply it against the next job, you have a problem.
QuickBooks does not have a way to move a credit from one job to another job.
You have the same problem if you created a credit for a customer that has one or
more jobs but you applied the credit directly to the customer instead of a job.
However, heres a workaround you can use.
If the credit balance is linked to Job A, but you want to post it to Job B, you have
to perform the following tasks:
Create an invoice for the amount of the credit for Job A.
Apply the credit linked to Job A to this invoice (which washes the amounts so
you havent added or subtracted to your Profit & Loss statement).
Create a credit memo for the same amount for Job B (which puts that amount
back into your financial records).
Apply the credit memo for Job B to the appropriate open invoice for Job B.
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Applying Discounts for Timely Payments
If you offer your customers terms that include a discount if they pay their bills
promptly (for instance, 2% 10 Net 30), you must apply the discount to the payment
if its applicable.
Figure 4-3 shows the Receive Payments window for a customer who has been
offered a discount for timely payment and has taken it by reducing the amount of
the payment. The only clue you have to explain the difference between the payment
amount and the invoice amount is the fact that the Disc. Date column shows the
date by which the invoice must be paid to receive the discount. For customers or
invoices without discount terms, that column is blank in the Receive Payments
window.
QuickBooks doesnt apply the discount automatically, for instance, by offering a
column with the discount amount and selecting that amount as part of the
payment. Instead, you must select the invoice (unless QuickBooks automatically
selected it in order to apply the payment) and click the Discount & Credits button
to see the Discount And Credits dialog connected to this invoice.
Ill 4-2
If the payment arrived by the discount date, QuickBooks inserts the amount of
the discount to use. Accept the amount of discount and enter a Discount Account
(see Posting Discounts later in this section). Click Done.
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You can change the amount of the discount, which you may want to do if the
customer only made a partial payment (less than is required to pay off the invoice
after the discount is applied) and you want to give a proportionately smaller
discount.
When you return to the Receive Payments window, youll see that QuickBooks
has changed the Amt. Due column to reflect the discount. If the Amt. Due figure
and the customer payment amount are the same, the invoice is now paid off.
Applying Discounts for Untimely Payments
Sometimes customers take the discount even if the payment arrives after the
discount date. You can apply the payment to the invoice and leave a balance due for
the discount amount that was deducted by the customer, if you wish, or you can
choose to give the customer the discount even if the payment is late, as part of
good will.
When you click the Discount Info button in that case, QuickBooks does not
automatically fill in the discount amountits too late, and accounting software is
not forgiving, generous, or aware of the need to humor customers to preserve good
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FIGURE 4-3 A discount date appears for invoices that have terms with built-in discounts.
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will. Simply enter the amount manually and then click Done to apply the discount
to the invoice.
Posting Discounts
To track the amount of money youve given away with discounts, you should create
a specific account in your chart of accounts. You could post discounts to your
standard income account(s), which will be reduced every time you apply a
discount. The math is right, but the absence of specific information about discounts
given doesnt give you the option of seeing how much youve given in discounts on
your Profit & Loss statement. Its better to create an Income account to track these
transactions, and the best name for the account is Discounts Given.
C A U T I O N : If theres an account named Discounts in the part of your
chart of accounts thats devoted to expenses or cost of goods, dont use that
account for your customer discounts. That account exists to track the discounts
you take with your vendors.
Understanding Customer Payment Postings
When you receive money in payment for customer invoices, QuickBooks
automatically posts all the amounts to your general ledger. The following tables
assume youre using the Undeposited Funds account instead of depositing monies
you receive directly into the bank account. See the section Depositing Income to
learn more about using the Undeposited Funds account.
Account Debit Credit
Undeposited Funds Total of cash receipts
Accounts Receivable Total of cash receipts
Here are the postings for a sale to a customer who has terms that permit a 1%
discount. Lets assume the sale was for $100.00. The original invoice posted the
following amounts:
Account Debit Credit
Accounts Receivable $100.00
Income $100.00
Notice that the postings are unconcerned with the discount amount. You dont
account for the discount until it occurs (the customer reduces the payment amount
by applying the discount amount).
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When the customers payment arrived, the 1% discount was deducted from the
invoice total. When you enter the customer payment, which is in the amount of
$99.00, the following postings occur:
Account Debit Credit
Undeposited Funds or Bank Account $99.00
Accounts Receivable $100.00
Discounts Given $1.00
Handling Cash Sales
A cash sale is a sale for which you havent created an invoice, because the exchange
of product and payment occurred simultaneously, or you received money for an
order youll ship to the customer.
N O T E : Dont take the word cash literally, because a cash sale can involve
a check or a credit card.
Cash sales are the same as invoiced sales insofar as an exchange of money for
goods or services occurs. The difference is that theres no period of time during
which you have money on the street.
N O T E : QuickBooks uses the term sales receipt instead of cash sale.
However, the term cash sale is the common jargon (a sales receipt is a piece of
paper a cash customer receives).
There are two methods for handling cash sales in QuickBooks:
Record each cash sale as a discrete record. This is useful for tracking sales of
products or services to customers. It provides a way to maintain records about
those customers in addition to tracking income and inventory.
Record sales in batches (usually one batch for each business day). This method
tracks income and inventory when you have no desire to maintain information
about each customer that pays cash.
To record a cash sale, click the Create Sales Receipts icon on the Home page (or
choose Customers | Enter Sales Receipts from the menu bar) to open the Enter
Sales Receipts window shown in Figure 4-4.
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Entering Cash Sale Data
If you want to track customer information, enter a name in the Customer:Job field
or select the name from the drop-down list. If the customer doesnt exist, you can
add a new customer by choosing <Add New>.
T I P : If you track customers who always pay at the time of the sale, you might
want to consider creating a customer type for this group such as Cash. You can
then separate this group for reports or for marketing and advertising campaigns.
If youre not tracking customers, invent a customer for cash sales such as Cash
Sale.
T I P : Even if you dont track individual cash customers, you can put the
customers name and address in the Bill To box. After you print and save the
transaction, QuickBooks asks if you want to change the Bill To information in the
customer record of your generic cash customer. Click No. In the future, when you
view the transactions for that generic customer, the name and address of the
specific customer for each cash sale remain in the box.
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FIGURE 4-4 Use a sales receipt when you receive payment at the time of the saleno invoice
exists.
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Every field in the Enter Sales Receipts window works exactly the way it works for
invoices and paymentsjust fill in the information. To save the record, click Save &
New to bring up a new blank record, or click Save &Close if youre finished.
Handling Batches of Cash Sales
If you sell products or services and receive instant payment on a more frequent basis,
you might want to consider batching the transactions. This works only if you dont
care about maintaining information about the customers and no customer expects a
receipt. This technique also works if you have a business in which sales and service
personnel return to the office each day with customer payments in hand.
You can make this easier by creating a customized Sales Receipt transaction
template with the following guidelines:
Name the form appropriately (for example, Batch Sales or Sales Batch).
On the Header tab, keep only the Date and Sale No. fields in the heading.
On the Fields tab, deselect all the optional fields.
On the Footer tab, remove the Message field.
N O T E : Some Premier/Enterprise editions have a batch sale template,
named Daily Sales Summary, built in. Select that template to record batch sales.
To batch-process cash sales, use the following guidelines:
Use a customer named Cash or Cash Sale.
In the line item section, use a new line for each sale, regardless of whether the
same customer is purchasing each item, each item is purchased by a different
customer, or theres a combination of both events.
Use the Save & Close button at the end of the day. If you need to close the
window during the day (perhaps youd like to get some other work done in
QuickBooks), open the Enter Sales Receipts window and click the Previous
button to find your previous sales.
Understanding Cash Sale Postings
Accounting standards treat cash sales in the simplest, most logical manner. If youve
sold a service or a product that isnt being tracked as inventory, the postings are
very straightforward:
Account Debit Credit
Undeposited Funds or Bank Account Total cash sales
Revenue Total cash sales
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If the cash sale involved inventory items, here are the postings:
Account Debit Credit
Undeposited Funds or Bank
Account
Total cash sales
Income Total cash sales
Cost of Goods Sold Total cost of items sold
Inventory Asset Total cost of items sold
Depositing Income
If you use the Undeposited Funds account, when its time to go to the bank you
have to tell QuickBooks about your bank deposit.
Understanding the Undeposited Funds Account
When you enable automatic use of the Undeposited Funds account (or manually
select that account in the transaction window), each payment you receive is entered
into the account named Undeposited Funds (QuickBooks establishes this account
automatically). Its an account type of Other Current Asset. When you finish
applying customer payments in QuickBooks, and youre ready to make your bank
deposit, you move the money from the Undeposited Funds account into a bank
account.
If you dont opt to use the Undeposited Funds account, and post each payment
you receive directly into the bank account, you dont have to take the extra step
involved in moving cash receipts from the Undeposited Funds account into the
bank account (and you dont have to read the rest of this section).
However, each payment you receive appears as a separate entry when you
reconcile your bank account. If you receive six payments totaling $10,450.25 and
take the checks to the bank that day, your bank statement shows that total amount
as the deposit; it does not show the individual payments. When you reconcile the
bank statement, each deposit you posted (one for each individual payment you
received) is listed in your bank register in the Reconcile window.
This is not an easy way to reconcile your bank account. Youll have to select each
payment individually, mark it as cleared, and make sure it matches the days
deposits on the bank statement (have a calculator handy, because you have to do
the math as you go).
Choosing the Payments to Deposit
As youve been filling out the payment and cash sales forms, QuickBooks has been
keeping a list in the Undeposited Funds account. That list remains designated as
Undeposited Funds until you clear it by depositing the funds.
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To tell QuickBooks to make a deposit, click the Record Deposits icon on the
Home page (or choose Banking | Make Deposits from the menu bar), which brings
up the Payments To Deposit window, shown in Figure 4-5.
N O T E : You may have other deposits to make, perhaps refunds, loan
proceeds, capital infusion, or some other type of deposit. Dont worryyou can
tell QuickBooks about them in the next transaction window. This window only
displays the cash receipts youve entered into QuickBooks through the Receive
Payments and Sales Receipts transaction windows.
Notice the following about the Payments To Deposit window:
The Type column displays information about the payment type for each
transactionPMT for payment of an invoice and RCPT for a cash sale.
The Payment Method column displays the specific payment method for each
transaction, such as cash, check, a specific credit card, and so on.
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FIGURE 4-5 All the income youve collected since your last bank deposit is waiting to be
deposited.
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This information is important because you should match it to the way your bank
records deposits; otherwise, bank reconciliation becomes much more complicated.
For example, your bank probably lists credit card deposits separately from a deposit
total for cash and checks, even if all the money was deposited the same day. Thats
because your credit card deposits are made directly to your bank account by your
merchant account bank. Even if you take deposit slips for credit card transactions
to the bank and hand them to the teller along with your regular (cash/checks)
deposit slip, the credit card deposits are probably listed separately on your bank
statement.
Select the Deposit Items
If you only have a few transactions to deposit, select those youre taking to the bank
(or select those you just deposited if youve already visited the bank) by clicking
their listings to place a check mark in the left column. Click Select All if you want
to select all the payments for deposit.
Separate Deposit Items by Payment Method
If you have many individual deposits, separate your deposits by payment method to
make it easier to work with this window. Select a payment method from the drop-
down list at the top of the Payments To Deposit window.
Choose Selected Types to open the Select Payment Types list and choose multiple
payment types to include in the same deposit. For example, you may use the Other
category to signify a money order or a travelers check.
The listings on the Payments To Deposit window change to include only the
deposits that match the selected payment method.
Separate Cash from Checks
QuickBooks doesnt provide separate payment methods for cash and checks.
However, if you turn in a cash bag, select only the checks and deposit them; then
start the process over to select only the cash (or do it the other way around). This is
a common practice when depositing cash, because sometimes the bank notifies you
that their automatic counting machine produced a different total from the total on
your deposit slip (you probably dont own counting machines for coins and paper
money). If that happens, you can edit the cash sales deposit item in your bank
register, and the cause of the edit will be obvious (and youll have a good audit trail
in case you have to discuss the transaction with the bank).
Separate Deposits by Bank Account
If youre depositing money into multiple bank accounts, select only the transactions
that go into the first account. After you complete the deposit, start this process
again and deposit the remaining transactions into the appropriate account.
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Credit Card Deposits
You cant deposit credit card payments until your merchant bank notifies you that
the funds have been placed in your account.
If you have QuickBooks online banking, the deposit shows up in the
QuickReport (see Chapter 16 to learn about managing online banking
transactions).
If you have online access to your merchant card account, the transfer will
appear on the activities report on the website.
If you dont have any form of online access, youll have to wait for the monthly
statement to arrive (or contact the bank periodically to see if anything showed
up in your account).
If your merchant bank deducts fees before transferring funds, learn how to
deposit the net amount in the section Calculating Merchant Card Fees, later in
this chapter.
Deselect Items to Delay Their Deposit
If you want to hold back the deposit of any income, deselect it by clicking its listing
(the check mark is a toggle). Only the items that have a check mark will be cleared
from the undeposited payments list. There are several reasons to deselect deposit
items:
You received a payment in advance from a customer and dont want to deposit
it until youre sure you can fill the order.
Youve accepted a postdated check and it cannot yet be deposited.
After you make your selections, click OK.
Filling Out the Deposit Slip
Clicking OK in the Payments To Deposit window brings up the Make Deposits
window, shown in Figure 4-6.
Select the bank account youre using for this deposit. Then make sure the date
matches the day youre physically depositing the money.
Adding Items to the Deposit
If you want to add deposit items that werent in the Payments To Deposit window,
click anywhere in the Received From column to make it accessible and select an
existing name by clicking the arrow, or click <Add New> to enter a name that isnt
in your system. If the source of the check is a bank or yourself or any other entity
that isnt a customer or vendor, use the Other Name classification for the type of
name. If you dont care about tracking the name, leave the column blank (a system
that works well for monies received for rebates).
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Press TAB to move to the From Account column and enter the account to which
youre posting this transaction. For example, if the check youre depositing
represents a bank loan, use the liability account for that bank loan (you can create
it here by choosing <Add New> if you didnt think to set up the account earlier). If
the check youre depositing represents an infusion of capital from you, use the
owners capital account in the Equity section of your chart of accounts. If the check
is a refund for an expense (perhaps you overpaid someone, and theyre returning
money to you), use the vendors name, and post the deposit to that expense. Use
the TAB key to move through the rest of the columns, which are self-explanatory.
Calculating Merchant Card Fees
If your merchant card bank deposits the gross amount of each transaction and
charges your bank account for the total fees due at the end of the month, you dont
have to do anything special to deposit credit card payments. You can deal with the
fees when you reconcile your bank account.
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If your merchant card bank deducts fees from transactions and deposits the net
proceeds to your account, you have to track credit card charges and deposit the
correct amount.
Follow these steps to deduct credit card charges:
Select the credit card transactions in the Payments To Deposit window. These
are gross amounts.
Click OK to move the deposits to the Make Deposits window.
In the first empty line, click the Account column and select the expense
account to which you post merchant card fees.
Move to the Amount column and enter the fee as a negative number.
The net matches the amount that is deposited in the bank.
Getting Cash Back from Deposits
If youre getting cash back from your deposit, you can tell QuickBooks about it
right on the virtual deposit slip, instead of making a journal entry to adjust the total
of collected payments against the total of the bank deposit.
N O T E : If youre keeping the money for yourself and your business isnt a
corporation, use the Draw account to post the cash back. If your business is a
corporation, you cant keep the money for yourself.
In the field labeled Cash Back Goes To, enter the account to which youre
posting the cash (usually a petty cash account), and enter the amount of cash you
want back from this deposit. Even though you can put the cash in your pocket, you
must account for it, because these are business funds. As you spend the cash for
business expenses, post the expense against a petty cash account with a journal
entry.
C A U T I O N : Many banks will not cash checks made out to a company, so
your ability to get cash back may be limited to checks made out to you,
personally.
Printing Deposit Slips
If you want to print a deposit slip or a deposit summary, click the Print button in
the Make Deposits window. QuickBooks asks whether you want to print a deposit
slip and summary, or just a deposit summary.
If you want to print a deposit slip that your bank will accept, you must order
printable deposit slips from QuickBooks. The QuickBooks deposit slips are
guaranteed to be acceptable to your bank. You must have a laser printer or inkjet
printer to use them. When you print the deposit slip, theres a tear-off section at the
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bottom of the page that has a deposit summary. Keep that section for your own
records and take the rest of the page to the bank along with your money.
If you dont have QuickBooks deposit slips, select Deposit Summary Only and fill
out your bank deposit slip manually. Be sure to fill out the payment method field
(cash or check) or QuickBooks wont print the deposit slip. A Print dialog appears
so you can change printers, adjust margins, or even print in color. Choose Print to
send the deposit information to the printer. When you return to the Make Deposits
window, click Save & Close to save the deposit.
Handling the Over and Shor t Problem
If you literally take cash for cash sales, when you count the money in the till at the
end of the day, you may find that the recorded income doesnt match the cash you
expected to find in the till. Or you may find that the money you posted to deposit
to the bank doesnt match the amount of money you put into the bag you took to
the bank.
One of the problems you face is how to handle this in your bookkeeping system.
QuickBooks is a double-entry bookkeeping system, which means the left side of the
ledger has to be equal to the right side of the ledger. If you post $100.00 in cash
sales but only have $99.50 to take to the bank, how do you handle the missing
50 cents? You cant just post $100.00 to your bank account (well, you could, but
your bank account wont reconcile).
The solution to the Over/Short dilemma is to acknowledge it in your bookkeeping
procedures. Track it. Youll be amazed by how much it balances itself outshort
one day, over another. (Of course, if youre short every day, and the shortages are
growing, you have an entirely different problem, and the first place to look is at the
person who stands in front of the cash register.) To track Over/Short, you need to
have some place to post the discrepancies, which means you have to create some
new accounts in your chart of accounts.
Follow these steps to create two new accounts:
Click the Chart Of Accounts icon on the Home page (or press CTRL-A) to open
the Chart Of Accounts list.
Press CTRL-N to create a new account.
In the Add New Account window, select an account type of Income.
If youre using numbered accounts, choose a number thats on the next level
from your regular Income accounts; for example, choose 42900 if your regular
Income accounts are 40000, 40100, and so on.
Name the account Over.
Click Save & New and repeat the processes, using the next number and naming
the account Short.
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If you want to see a net number for Over/Short (a good idea), create three
accounts: name the first account (the parent account) Over-Short, and then make
the Over and Short accounts subaccounts of Over-Short.
In addition, you need items to use for your overages and shortages (remember,
you need items for everything thats connected with entering income).
Follow these steps to create these new items:
Choose Lists | Item List to open the Item List.
Press CTRL-N to create a new item.
Create an Other Charge item named Overage.
Dont assign a price.
Make it nontaxable.
Link it to the account (or subaccount) named Over that you just created.
Click Next to create another new, Other Charge item.
Name this item Shortage and link it to the account (or subaccount) named
Short.
Click OK to close the Item List window.
Now that you have the necessary accounts and items, use the Over and Short
items right in the Enter Sales Receipts window to adjust the difference between the
amount of money youve accumulated in the cash-sale transactions and the amount
of money youre actually depositing to the bank. Its your last transaction of the day.
Remember to use a minus sign before the figure when youre using the Short item.
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C
h
a
p
t
e
r
5
Tracking Accounts
Receivable
I
n this chapter:
Run A/R aging reports
Set up finance charges
Send customer payment reminders
Print customer statements
Use the Customer Centers
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Collecting the money owed to you can be one of the largest headaches in running a
business. You have to track whats owed and who owes it, and then expend time
and effort to collect it. All of the effort you spend on the money your customers
owe you is called tracking accounts receivable (or, more commonly, tracking A/R).
(If youve enabled the Multicurrency feature, youll see references to the
customers currency in most of the transaction windows and reports.)
Running Aging Repor ts
Aging reports are lists of the money owed you by your customers. You run them
whenever you need to know the extent of your receivables. Many companies run an
aging report every morning, just to keep an eye on the amount of money on the
street (on the street is business jargon for uncollected receivables).
QuickBooks provides two standard aging reports, which you can open by
choosing Reports | Customers & Receivables, and then choose either the A/R Aging
Summary report or the A/R Aging Detail report. You can also customize an aging
report to match the information you want to see.
A/R Aging Summary Report
The quickest way to see how much money is owed to you is to select A/R Aging
Summary, which produces a listing of customer balances (see Figure 5-1).
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A/R Totals
The total amount of A/R is the value of your A/R asset. It can be an important asset, and, in fact,
banks often use the A/R balance as part of the collateral when providing you with a line of credit
or a loan.
When your accountant visits, you can bet one of the things he or she will ask to see is a report
on your receivables (an aging report). Another safe bet is that youll receive a request to see the
amount posted to A/R in your general ledger. The general ledger A/R balance and the total on
the aging report must be the same (for the same date)not close, not almost, but exactly the
same. If the figures are not identical, your general ledger isnt proved (jargon for, Im sorry,
we cant trust your general ledger figures because they dont audit properly).
If your A/R account balance doesnt prove to your A/R report, youve messed up some
transactions. Most of the time, this means you incorrectly used the A/R account in a journal entry,
or accidentally dated an A/R transaction in the future. You or your accountant, or both of you,
must find the bad entry and correct it, because your A/R report total must match the A/R account
balance.
FYI
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A/R Aging Detail Report
If you choose Aging Detail from the Accounts Receivable reports menu, you see a
much more comprehensive report, because the individual transactions for each
customer appear.
Customizing Aging Detail Reports
If you dont use (or care about) all of the columns in the Aging Detail report, or
youd prefer to see the information displayed in a different manner, you can
customize the report. Start by clicking the Modify Report button on the report to
see the Modify Report window shown in Figure 5-2.
Customizing the Columns
The most common customization is to get rid of any column you dont care about.
For example, if you use the classes feature but dont care about that information in
your aging report, get rid of the column. Or you might want to get rid of the Terms
column since it doesnt impact the totals. To remove a column, scroll through the
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FIGURE 5-1 A summary report provides totals for each customer, broken down by aging
periods.
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Columns list and click to remove the check mark. The column disappears from the
report when you close the Modify Report dialog.
While youre looking at the list of column names, you may find a column
heading thats not currently selected but that contains information youd like to
include in your report. If so, click that column listing to place a check mark next to
it. The column appears on the report and the data linked to it is displayed.
T I P : If youve enabled the Multicurrency feature, add the Foreign Amount
column to your report; you might also want to add the Currency column.
Filtering Information
If you want to produce an aging report for a special purpose, you can easily filter
the information so it meets criteria important to you. To filter your aging report,
click the Filters tab (see Figure 5-3).
Select a filter and then set the conditions for it. (Each filter has its own specific
type of criteria.) For example, you can use this feature if you want to see only those
customers with receivables higher than a certain figure or older than a certain aging
period.
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FIGURE 5-2 Customize aging reports to get exactly the information you need.
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C A U T I O N : If you filter the report in a way that affects the amounts, your
report total will not match your A/R account balance. Use this type of filter only
to get certain types of information for yourself, not for an official aging report.
Configuring Header/Footer Data
You can customize the text that appears in the header and footer of the report by
making changes in the Header/Footer tab shown in Figure 5-4. Youll probably find
that your decisions about the contents of the header and footer depend on whether
youre viewing the report or printing it. And, if youre printing it, some stuff is more
important if an outsider (a banker or your accountant) will be the recipient of the
report, rather than the employee responsible for collecting receivables.
For example, the date and time of preparation is more important for outsiders
than for you. Incidentally, on the Header/Footer tab, the Date Prepared field has a
meaningless datedont panic, your computer hasnt lost track of the date. That
date is a format, not todays date. Click the arrow to the right of the field to see the
other formats for inserting the date. The Page Number field also has a variety of
formats to choose from.
You can eliminate a Header/Footer field by removing the check mark fromthe
fields check box. For fields you want to print, you can change the text. You can also
change the layout by choosing a different Alignment option fromthe drop-down list.
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FIGURE 5-3 Filters let you specify criteria for displaying data.
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Customizing the Appearance
Click the Fonts & Numbers tab to change the format of the report. You can change
the way negative numbers are displayed, and you can change the fonts for any or all
the individual elements in the report.
When you close the report window, QuickBooks may ask if you want to
memorize the report with the changes you made (if you told QuickBooks to stop
asking, you wont see the message). Click Yes so you dont have to go through all
the modifications again. If QuickBooks doesnt ask, memorize the report using the
instructions in the next section.
Memorizing Aging Reports
If youve customized a report and have the columns, data, and formatting you need,
theres no reason to reinvent the wheel the next time you need the same information.
Instead of going through the customization process again next month, memorize the
report as you designed it. Then you can fetch it whenever you need it.
Click the Memorize button in the report window. When the Memorize Report
window appears, enter a new name for the report, optionally save it within a report
group, and click OK.
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FIGURE 5-4 Specify the text you want to display on the top and bottom of the report.
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From now on, this report name will be on the list of memorized reports you can
select from when you choose Reports | Memorized Reports from the menu bar.
N O T E : When you memorize a report, only the criteria and formatting are
memorized. Each time you open the report, the data is generated from the
QuickBooks transaction records, so you get current, accurate information.
Exporting and Importing Memorized Reports
If youre using a Premier/Enterprise edition of QuickBooks, you can export a
memorized report (all versions of QuickBooks can import a memorized report).
This is useful if youve designed a great report that you want to use in another
company file you maintain in QuickBooks. If youre an accountant using a Premier
edition, this means you can create and memorize a report that has exactly what you
need, laid out exactly the way you need it. Then you can send the memorized
report to your client. You can open the report when you visit the client or have the
client open the report, and then export the contents to Excel and send it to you.
When you export a memorized report, the exported document is called a template.
The template can be imported into any edition of QuickBooks 2010.
Follow these steps to export a report:
Choose Reports | Memorized Reports | Memorized Report List.
Click the Memorized Report button at the bottom of the window, and select
Export Template to open the Specify Filename For Export dialog.
Navigate to the drive or folder where you want to store the template file, and
click Save.
When you import a report template, the process of importing it converts the
template into a memorized report thats added to the currently open company file.
Follow these steps to import a template:
Choose Reports | Memorized Reports | Memorized Report List.
Click the Memorized Report button at the bottom of the window, and select
Import Template to open the Select File To Import dialog.
Navigate to the drive or folder that contains the template file you received, and
double-click its listing.
In the Memorize Report dialog, enter a name for the report or accept the displayed
name (which is the name used by the person who exported the template).
Printing Reports
Whether youre using the standard format or one youve customized, youll
probably want to print the report. When youre in a report window, click the Print
button at the top of the window to bring up the Print Reports window. If the report
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is wide, use the Margins tab to set new margins, and use the options on the Settings
tab to customize other printing options.
Running Customer and Job Repor ts
Customer and job reports are like aging reports, but theyre designed to give you
information about the selected customers and jobs instead of providing information
on the totals for your business. There are plenty of customer reports available from
the menu that appears when you choose Reports | Customers & Receivables:
Customer Balance Summary Report Lists current total balance owed for each
customer.
Customer Balance Detail Report Lists every transaction for each customer
with a net subtotal for each customer.
Open Invoices Report Lists all unpaid invoices, sorted and subtotaled by
customer and job.
Collections Report A nifty report for nagging. Includes the contact name and
telephone number, along with details about invoices with balances due. Youre
all set to call the customer and have a conversation, and you can answer any
questions about invoice details.
Accounts Receivable Graph Shows a graphic representation of the accounts
receivable. For a quick impression, theres nothing like a graph.
Unbilled Costs By Job Tracks job expenses you havent invoiced.
Transaction List By Customer Displays individual transactions of all types
for each customer.
Online Received Payments Shows payments received from customers who
pay you online (if youve signed up for online payments through QuickBooks).
Customer Phone List Displays an alphabetical list of customers along with
the telephone number for each (if you entered the telephone number in the
customer record).
Customer Contact List Displays an alphabetical list of customers along with
the telephone number, billing address, and current open balance for each. Give
this list to the person in charge of collections.
Item Price List Lists all your items with their prices and preferred vendors.
Finance Charges
One way to speed up collections is to impose finance charges for late payments.
The amount of time spent tracking, analyzing, and chasing receivables is
substantial, and in all businesses time is money, so imposing finance charges can
be a way to help offset the time and resources needed to collect past due balances.
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Configuring Finance Charges
To use finance charges, you have to establish the rate and circumstances under
which theyre assessed. Your companys finance charges are configured as part of
your company preferences. Choose Edit | Preferences to open the Preferences
window. Then click the Finance Charge icon in the left pane and select the
Company Preferences tab (see Figure 5-5).
Here are some guidelines for filling out this window:
In the Annual Interest Rate field, replacing the default data (0.00%) with any
positive number enables the Finance Charges feature. The dialog does not have
an Enable check box.
Notice that the interest rate is annual. If you want to charge 1.5 percent a
month, enter 18% in the Annual Interest Rate field.
You can assess a minimum finance charge for overdue balances. QuickBooks
will calculate the finance charge, and if its less than the minimum, the amount
will be rolled up to the minimum charge you specify here.
Use the Grace Period field to enter the number of days of lateness you permit
before finance charges are assessed.
During setup, QuickBooks probably created an account for finance charges. If
so, select it. If not, enter (or create) the account you want to use to post finance
charges (this is an income account).
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FIGURE 5-5 Configure the way in which youll impose finance charges on overdue balances.
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The issue of assessing finance charges on overdue finance charges is a sticky one.
In fact, this calculation method may be illegal in your state, so check with the
appropriate agency before implementing. Selecting this option means that a
customer who owed $100.00 last month and had a finance charge assessed of
$2.00 now owes $102.00. As a result, the next finance charge is assessed on a
balance of $102.00 (instead of on the original overdue balance of $100.00).
Specify whether to calculate the finance charge from the due date or the
invoice date.
QuickBooks creates an invoice automatically when finance charges are assessed
in order to have a permanent record of the transaction. By default, these
invoices arent printed; theyre just accumulated along with the overdue
invoices so theyll print as a line item on a monthly statement. You can opt to
have the finance charge invoices printed, which you should do only if youre
planning to mail them to nudge your customers for payment.
Click OK to save your settings after youve filled out the window.
Assessing Finance Charges
You should assess finance charges just before you calculate and print customer
statements. Click the Finance Charges icon on the Home page (QuickBooks adds
the icon when you turn on the feature), or choose Customers | Assess Finance
Charges from the menu bar. The Assess Finance Charges window opens (see
Figure 5-6) with a list of all the customers with overdue balances.
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FIGURE 5-6 QuickBooks automatically assesses finance charges as of the assessment date
you specify.
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Choosing the Assessment Date
Change the Assessment Date field (which displays the current date) to the date on
which you want the finance charge to appear on customer statements. Its common
to assess finance charges on the last day of the month. When you press TAB to move
out of the date field, the finance charges are recalculated to reflect the new date.
Selecting the Customers
You can eliminate a customer from the process by clicking in the Assess column to
remove the check mark. QuickBooks, unlike many other accounting software
packages, does not have a finance charge assessment option on each customer
record. Therefore, all customers with overdue balances are included when you
assess finance charges.
N O T E : Some customers on the list may display a zero balance. These
customers have an A/R balance, but the balance isnt older than the grace
period you specified when you configured finance charges. QuickBooks
automatic selection (a check mark) excludes these customers.
It can be time consuming to deselect each customer, so if you have only a few
customers for whom you reserve this process, choose Unmark All, then reselect the
customers you want to include. Of course, this means you have to know off the top
of your head which customers are liable for finances charges and which arentor
you have to keep a list near your desk.
Changing the Amounts
You can change the calculated total if you wish (a good idea if there are credit
memos floating around that youre not ready to apply against any invoices). Just
click the amount displayed in the Finance Charge column to activate that column
for that customer. Then enter a new finance charge amount. If you need to calculate
the new figure (perhaps youre giving credit for a floating credit memo), press the
equal sign (=) on your keyboard to use the QuickBooks built-in calculator.
Checking the History
To make sure you dont assess a charge that isnt really due, you can double-check
by viewing a customers history from the Assess Finance Charges window. Select a
customer and click the Collection History button to see a Collections Report for the
selected customer. Your mouse pointer turns into a magnifying glass with the letter
z (for zoom) in it when you position it over a line item. Double-click any line
item to display the original transaction window if you need to examine the details.
Saving the Finance Charge Invoices
Click Assess Charges in the Assess Finance Charges window when all the figures
are correct. When you create your customer statements, the finance charges will
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appear. If youve opted to skip printing, theres nothing more to do. (If you chose to
print the finance charges, see the next paragraph.)
Selecting Printing Options
If you want to print the finance charge invoices (they really are invoices because
they add charges to the customer balance), be sure to select the Mark Invoices To
Be Printed check box in the Assess Finance Charges window. You can send the
printed copies to your customers as a nagging reminder. If you just want the
customer to see the finance charge on the monthly statement (the common method
for most businesses), deselect the printing option.
To print the finance charge invoices, choose File | Print Forms | Invoices. The list
of unprinted invoices appears, and unless you have regular invoices you didnt print
yet, the list includes only the finance charge invoices. If the list is correct, click OK
to continue on to the printing process. Chapter 3 has detailed information about
printing invoices.
Sending Statements
On a periodic basis, you should send statements to your customers. (Most businesses
send statements monthly.) They serve a couple of purposes: they remind customers
of outstanding balances, and they ensure that your records and your customers
records reflect the same information.
If youre coming to QuickBooks from a manual system, or a system in which
you tracked invoices and payments in a spreadsheet, statements will seem like
a miraculous tool. Creating statements from manual customer cards, or cells in
a spreadsheet, is a nightmare. As a result, companies without real accounting
software generally dont even bother to try.
Entering Statement Charges
Before creating statements, you should create any transactions that should appear
on the statements. Invoices and payments appear automatically, but you may want
to add statement charges. A statement charge is a charge you want to pass to a
customer for which you dont create an invoice. You can use statement charges for
special charges for certain customers, such as a general overhead charge, or a charge
you apply instead of using reimbursements for expenses incurred on behalf of the
customer.
You can also use statement charges for discounts for certain customers, such as
reducing the total due by a specific amount, instead of creating and applying
discount rates or price levels. Some companies use statement charges instead of
invoices for invoicing regular retainer payments.
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You must add statement charges before you create the statements (or else the
charges wont show up on the statements). Statement charges use items from your
Item List, but you cannot use any of the following types of items:
Items that are taxable, because the statement charge cant apply the tax
Items that have percentage discounts, because the statement charge cant look
up the discount percentage (and therefore cant apply it)
Items that represent a payment transaction, because those are negative charges,
which a statement charge doesnt understand
Statement charges are recorded directly in a customers register or in the register
for a specific job. You can reach the register to enter a statement charge in either of
two ways:
Click the Statement Charges icon on the Home page (or choose Customers | Enter
Statement Charges fromthe menu bar), and then select the customer or job in the
Customer:Job field at the top of the register that opens. (By default, QuickBooks
opens the register for the first customer in your Customer:Job list.)
Press CTRL-J to open the Customer Center, right-click the appropriate customer
listing on the Customers & Jobs tab, and choose Enter Statement Charges from
the shortcut menu. QuickBooks opens the register for the selected customer.
When the Customer:Job register opens, it looks like Figure 5-7.
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FIGURE 5-7 Statement charges are entered directly in a customer or job register.
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Use the TAB key to move through the register line as you enter data.
Follow these steps to enter the statement charge:
Select the item for the statement charge from the Item drop-down list (or use
<Add New> to create a new item).
Enter a quantity in the Qty field if the item is invoiced by quantity.
Enter a rate (or accept the default rate if one exists) if youre using the Qty field.
Enter the amount charged if the Qty and Rate fields arent used (if they are, the
total amount is entered automatically).
Optionally, edit the item description.
Enter the billed date, which does not have to match the transaction date in the
first column of the register. Postdating or predating this field determines which
statement it appears on.
Enter the due date, which affects your aging reports and your finance charge
calculations.
Click Record to save the transaction.
If your statement charges are recurring charges, you can memorize them to have
QuickBooks automatically create them. After you create the charge, right-click its
listing in the register and select Memorize Stmt Charge from the shortcut menu.
This works exactly like memorized invoices (covered in Chapter 3).
Creating Statements
Before you start creating your statements, be sure that all the transactions that
should be included on the statements have been entered into the system. Did you
forget anything? Applying credit memos? Applying payments? Assessing finance
charges? Entering statement charges? When all customer accounts are up-to-date,
click the Statements icon on the Home page (or choose Customers | Create
Statements from the menu bar) to open the Create Statements window, as shown
in Figure 5-8.
Selecting the Date Range
The statement date range determines which transactions appear on the statement.
The printed statement displays the previous balance (the total due before the
From date) and includes all transactions that were created within the date range.
The starting date should be the day after the last date of your last statement run. If
you do monthly statements, choose the first and last days of the current month; if
you send statements quarterly, enter the first and last dates of the current quarter
and so on.
If you choose All Open Transactions As Of Statement Date, the printed statement
just shows unpaid invoices and charges and unapplied credits. You can narrow the
criteria by selecting the option to include only transactions overdue by a certain
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number of days (which you specify). However, this makes the printed statement
more like a list than a standard statement.
Selecting the Customers
Its normal procedure to send statements to all customers, but if thats not the plan,
you can change the default selection.
If you want to send statements to a group of customers, click the Multiple
Customers option to display the Choose button next to it. Then click the Choose
button to bring up a list of customers and select each customer you want to
include. You can manually select each customer or select Automatic and then enter
text to tell QuickBooks to match that text against all customer names and select the
matching customers. (The automatic match option isnt efficient for multiple
customers because it only matches exact text, not partial text, and therefore only
matches one customer at a time.)
Click OK when all the appropriate customers are selected.
If youre sending a statement to one customer only, select One Customer, and
then click the arrow next to the text box to scroll through the list of your customers
and select the one you want.
To send statements to customers who are designated with a specific customer
type, select the Customers Of Type option, and then select the customer type you
want to include from the drop-down list. This works, of course, only if you created
customer types as part of your QuickBooks setup.
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FIGURE 5-8 Configure the specifications for selecting customers who receive statements.
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T I P : If you want to send statements to certain customers only, thats a good
reason in itself to create a customer type for statement recipients (name the
type Stmnts).
Filtering for Send Methods
If your customers vary in the way you send them statements (the option selected in
the Preferred Send Method field of the customer record), you can opt to handle
your statement delivery in batches, using one delivery method per batch. To do
this, select the Preferred Send Method option, and then select the send method for
this batch from the drop-down list that appears:
E-mail Sends the statements by e-mail (discussed in Chapter 3).
Mail Sends the statements to QuickBooks services, where the invoice is
created with a tear-off slip that the customer can use to pay the invoice.
QuickBooks mails the invoice. (This is a fee-based service.)
None Means no special handling. You print the statements, put them in
envelopes, and mail them.
Specifying the Printing Options
You can specify the way you want the statements to print using the following
criteria and options in the Select Additional Options section:
You can print one statement for each customer, which lists all transactions for
all that customers jobs, or you can print a separate statement for each job.
You can opt to show invoice item details instead of just listing the invoice on
the statement. If your invoices have a lot of line items, this could make your
statements very long (possibly too many pages to get away with a single
postage stamp). Theres probably no particular reason to select this option,
because most customers have copies of the original invoicesif they dont,
theyll call you with questions and you can look up the invoice number and
provide details (or reprint the invoice and send it).
Printing statements in order by ZIP code is handy if youre printing labels that
are sorted by ZIP code. This option is also important if you have a bulk mail
permit, because the post office requires bulk mail to be sorted by ZIP code.
By default, the original due date for each transaction listed on the statement is
displayed on the statement. If you have some reason to hide this information
from your customers you can deselect the option.
Specifying the Statements to Skip
You may want to skip statement creation for customers who meet the criteria you
set in the Do Not Create Statements section of the dialog. If statements are the only
documents you send to customers (you dont send the individual invoices and
credits you create), selecting any of these options makes sense.
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If, however, you use statements to make sure you and your customers have
matching accounting records, you should create statements for all customers except
inactive customers.
Last Call for Finance Charges
If you havent assessed finance charges and you want them to appear on the
statements, click the Assess Finance Charges button. The Assess Finance Charges
window opens, showing customers who have been selected for finance charges.
If youve already assessed finance charges, QuickBooks will warn you that
finance charges have already been assessed as of the selected date. If you go ahead
and allow QuickBooks to assess a finance charge here, youll be adding another
round of finance charges. Therefore, this window is useful only if you dont assess
finance charges as described earlier in this chapter.
Previewing the Statements
Before you commit the statements to paper, you can click the Preview button to get
an advance look. This is not just to see what the printed output will look like; its
also a way to look at the customer records and to make sure that all the customers
you selected are included.
Use the Zoom In button to see the statement and its contents close up. Click the
Next Page button to move through all the statements. Click Close to return to the
Create Statements window.
Printing the Statements
When everything is just the way it should be, print the statements by clicking the
Print button in either the Print Preview window or the Create Statements window.
If you click Close in the Preview window, you return to the Create Statements
windowclick Print to open the Print Statement(s) window. Change printing
options as needed, then print the statements.
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C
h
a
p
t
e
r
6
Entering Accounts
Payable Bills
I
n this chapter:
Enter vendor bills
Track reimbursable expenses
Enter inventory item purchases
Use purchase orders
Enter vendor credit memos
Enter recurring bills
Manage mileage costs
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Entering your bills into QuickBooks, and then paying themin a separate transaction,
is accrual accounting. That means an expense is posted to your Profit & Loss
statement when you enter the bill, not when you actually pay the bill. The total of
unpaid bills is the total amount posted to the Accounts Payable account.
However, if your taxes are filed on a cash basis, which means an expense isnt
posted until you actually pay the bill, be assured (and assure your accountant) that
QuickBooks understands how to report your financial figures on a cash basis. (See
Chapter 15 for information on financial reports.)
Some businesses dont use A/P, they dont enter vendor bills at all. They pay bills
using direct disbursements, which means using the Write Checks feature.
Most businesses use a combination of bills and direct disbursements. They enter
bills when they receive a physical bill from a vendor and use a direct disbursement
to pay vendors that dont send bills (such as rent, COD delivery charges, petty cash,
and so on).
(If youve enabled the Multicurrency feature, youll see references to the vendors
currency in most of the transaction windows and reports.)
Recording Vendor Bills
When the mail arrives, after you open all the envelopes that contain checks from
customers (which most people do first), you should tell QuickBooks about the bills
that arrived. Dont worryQuickBooks doesnt automatically pay them. You decide
when to do that.
To enter your bills, choose Vendors | Enter Bills from the menu bar. When the
Enter Bills window opens (see Figure 6-1), you can fill out the information from
the bill you received.
The window has two sections: the heading section, which contains information
about the vendor and the bill, and the details section, which records the data
related to your general ledger accounts. The details section has two tabs: Expenses
and Items. This section covers bills that are posted to Expenses; entering items is
covered later in this chapter in the section, Managing Inventory Item Purchases.
N O T E : The A/P Account field (and accompanying drop-down list of accounts)
appears at the top of the Enter Bills window only if you have multiple Accounts
Payable accounts.
Depending on the bill, you may be able to assign the entire bill to one expense
account, or you may have to split the bill among multiple expense accounts. For
example, your utility bills are usually posted to the appropriate utility account
(electric, heat, and so on). However, credit card bills may be split among numerous
expenses, and loan repayments are split between interest (an expense account) and
principal (a liability account).
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Easy One-account Posting
In the Vendor field, click the arrow to choose this vendor from the list that
appears. If the vendor isnt on the list, choose <Add New> to add this vendor
to your QuickBooks vendor list. Then enter the details.
Follow these steps to fill out the bill:
Enter the bill date. The due date then fills in automatically, depending on the
terms you have with this vendor. You can change this date if you wish. If you
didnt set up terms for this vendor, the due date is automatically filled out using
the default number of days for paying bills. QuickBooks sets this at ten days,
but you can change the default by choosing Edit | Preferences and going to the
Bills section.
Enter the vendors invoice number in the Ref. No. field.
Enter the amount due.
In the Terms field, click the arrow to display a list of terms and select the one
you need. If the terms you have with this vendor arent available, choose <Add
New> to create a new Terms entry. The due date changes to reflect the terms.
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FIGURE 6-1 The Enter Bills window has a heading section and a details section.
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To enter the posting accounts, click in the Account column in the Expenses tab
at the bottom of the window, and then click the arrow to display your chart of
accounts. Select the account to which this bill should be assigned. QuickBooks
automatically assigns the amount you entered in the Amount Due field to the
Amount column.
If you wish, enter a note in the Memo column.
In the Customer:Job column, enter a customer or job if youre paying a bill that
you want to track for job costing or if this bill is a reimbursable expense. See
the discussions on tracking and charging customers for reimbursable expenses
in the section Invoicing Customers for Reimbursable Expenses.
If youre tracking classes, a Class column appears; enter the appropriate class.
When youre finished, click Save & New to save this bill and bring up another
blank Enter Bills window. When youve entered all your bills, click Save &
Close.
Splitting Expenses Among Multiple Accounts
Some bills arent neatly assigned to one account in your general ledger; instead,
theyre split among multiple accounts. The most common example is a credit card
bill.
N O T E : You can also manage credit card charges with the use of a Credit
Card account in your chart of accounts, instead of entering bills or writing
checks. Chapter 11 has more information on this feature.
Follow these steps to split expenses among multiple accounts:
Follow the first four steps in the instructions for entering bills in the previous
section.
Click in the Account column to display your chart of accounts.
Select the first account to which you want to assign some portion of this bill.
If youve entered an amount in the Amount Due field in the heading section of
the bill, QuickBooks automatically applies the entire amount of the bill in the
Amount column. Replace that data with the amount you want to assign to the
account you selected.
Click in the Account column to select the next account and enter the
appropriate amount in the Amount column.
As you add each additional account to the column, QuickBooks assumes that the
unallocated amount is assigned to that account (see Figure 6-2). Repeat the process
of changing the amount and adding another account until the split transaction is
completely entered.
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Understanding the Postings for Vendor Bills
When you enter a vendor bill, QuickBooks makes the following postings to your
general ledger:
Account Debit Credit
Accounts Payable Total Amount of Bill
Expense (or other account
type) you entered on a line
Amount linked to this line
item on the bill
Other accounts (if applicable)
you entered on a line
Amount linked to this line
item on the bill
As you can see, no real money is posted; your bank account is ignored. If you
have terms with this vendor that include a discount, thats ignored too. Those
postings occur when you pay the bill.
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FIGURE 6-2 QuickBooks keeps recalculating, so the last account posting entry automatically
has the correct amount.
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Reimbursable Expenses and Job Costing
A reimbursable expense is one that you incurred on behalf of a customer. Even
though you pay the vendor bill, theres an agreement with your customer that youll
send an invoice to recover your costs. There are two common types of reimbursable
expenses:
General expenses, such as long-distance telephone charges, parking and tolls, and
other incidental expenses, are incurred on behalf of a client. Those portions of
the vendor bill that apply to customer agreements for reimbursement are split out
when you enter the bill.
Specific goods or services (which you track as items) are purchased on behalf of
the customer.
Often, you may want to track the expense without sending an invoice for
reimbursement to the customer. You just want to know how much it cost you to
provide services to the customer. This is called job costing, and its a powerful
QuickBooks feature.
Options for Managing Reimbursable Expenses
You have two ways to manage reimbursable expenses:
Post the charge to an expense account, and then let QuickBooks automatically
post the customers reimbursement to the same expense account. This cancels
the original expense and reduces the expense total in your Profit & Loss
statements.
Pay the bill and then let QuickBooks automatically post the customers
reimbursement to an income account thats created for posting reimbursements.
This lets you track totals for both the original expense and the reimbursement.
You may want to discuss these choices with your accountant. Many businesses
prefer the second optiontracking the expenses and reimbursements separately
just because its more accurate when youre analyzing your expenses and income.
The following section explains the steps you have to take to configure
reimbursement tracking. You can ignore the instructions if you prefer to reduce
your expense totals by posting reimbursements to the expense account you used
when you entered the vendors bill.
Configuring Reimbursement Tracking
To track reimbursed costs from customers, you need to enable reimbursement
tracking in QuickBooks, and you must also create income accounts that are used
for collecting reimbursements.
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Enable Reimbursement Tracking
To tell QuickBooks that you want to track reimbursable costs, you must enable the
feature in the Preferences dialog.
Follow these steps to enable reimbursement tracking:
Choose Edit | Preferences to open the Preferences dialog.
Select the Time & Expenses icon in the left pane.
Click the Company Preferences tab.
Click the check box next to the option labeled Track Reimbursed Expenses As
Income to put a check mark in the box.
Click OK.
N O T E : Youll notice a field to enter a markup percentage right below the
option to Track Reimbursed Expenses As Income. See the section Marking Up
Reimbursable Expenses later in this chapter to learn about the markup feature.
As a result of enabling this option, QuickBooks adds a new field to the dialog
you use when you create or edit an expense account. As you can see in Figure 6-3,
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FIGURE 6-3 You can configure an expense account to post reimbursements to an income
account.
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you can configure an expense account to post reimbursements to an income
account. Whenever you post a vendor expense to this account and also indicate
that the expense is reimbursable, the amount you charge to the customer when you
create an invoice for that customer is automatically posted to the income account
thats linked to this expense account.
Set Up Income Accounts for Reimbursement
You may have numerous expense accounts that you want to use for reimbursable
expenses; in fact, thats the common scenario. Portions of telephone bills, travel
expenses, subcontractor expenses, and so on are frequently passed on to customers
for reimbursement.
The easiest way to manage all of this is to enable those expense accounts to track
reimbursements and post the income from customers to one account. After all, its
only important to know how much of your total income was a result of reimbursements
(separating that income from the income you generate as the result of sales).
QuickBooks insists on a one-to-one relationship between a reimbursable expense
and the reimbursement income from that expense. As a result, if you have multiple
expense accounts for which you may receive reimbursement (a highly likely
scenario), you must also create multiple income accounts for accepting reimbursed
expenses.
This is a one-time chore, however, so when youve finished setting up the
accounts, you can just enter transactions, knowing QuickBooks will automatically
post reimbursed expenses to your new income accounts.
Because you probably only care about totals for income received as reimbursement,
the best way to set up the income accounts youll need is to use subaccounts. That
way, your reports will show the total amount of income due to reimbursed expenses,
and you can ignore the individual account totals unless you have some reason to
examine a number.
Depending on the company type you selected during the EasyStep Interview,
QuickBooks may have already created a Reimbursed Expenses account in the
Income section of your chart of accounts. If so, you already have a parent account,
and you can skip this section on setting up the account and move directly to the
instructions for creating subaccounts.
Follow these steps to set up your reimbursement accounts:
Open the chart of accounts by clicking the Accnt icon on the toolbar, or by
pressing CTRL-A.
Press CTRL-N to open a New Account window.
Select Income as the account type. Click Continue.
Enter an account number (if you use numbers) and name the account
Reimbursed Expenses (or something similar).
Click Save & Close.
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Youve created the parent accountnow create the subaccounts as follows:
Press CTRL-N to open the New Account window.
Select Income as the account type.
If youre using numbered accounts, use the next sequential number after the
number you used for the parent account. Also enter a name for the account,
such as Telephone Reimbursements.
Select the Subaccount check box and link it to the parent account you created.
Click Save & New to create the next account.
Repeat this process as many times as necessary (click Save & Close instead of
Save & New when youre finished). For example, your chart of accounts could have
the following accounts for this purpose:
40400 Reimbursed Expenses (Parent Account, never post to this account)
40410 Equip Rental Reimbursements (subaccount)
40420 Telephone Reimbursements (subaccount)
40430 Travel Reimbursements (subaccount)
40440 Subcontractor Reimbursements (subaccount)
Your reports show the individual account postings, and QuickBooks
automatically calculates the total of all the subaccounts and displays that total in
the parent account.
Dont forget to edit your existing expense accounts if youll be invoicing
customers for reimbursements for those accounts. Select the check box to track
reimbursed expenses and enter the appropriate income account.
Recording Reimbursable Expenses
If you want to be reimbursed by customers for expenses you incurred on their
behalf, you must enter the appropriate data while youre filling out the vendors bill.
After you enter the account and the amount, click the arrow in the Customer:Job
column and select the appropriate customer or job from the drop-down list.
Entering data in the Customer:Job column automatically places a check mark in
the check box in the Billable column. The check mark indicates you want to bill the
customer for the expense.
Sometimes, a vendors bill is for an amount thats not entirely chargeable to a
customer. Some of the amount may be your own responsibility, and it may also be
that multiple customers owe you reimbursement for the amount. (This is often the
case with telephone expenses when your customers reimburse you for long-
distance charges.)
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Follow these steps to enter the transaction:
Select the expense account, and then enter the portion of the bill that is your
own responsibility.
In the next line, select the same account, and then enter the portion of the bill
you are charging back to a customer.
Enter an explanation of the charge in the Memo column. (When you create the
invoice for reimbursement, the text in the Memo column is the only
description the customer sees.)
In the Customer:Job column, choose the appropriate customer or job.
Repeat Steps 2 through 4 to include any additional customers for this expense
account.
When youre finished, the total amount entered should match the amount on the
vendors bill.
Tracking Expenses for Job Costing
If youre tracking expenses for the purpose of job costing, use the same steps
described in the previous section for entering reimbursed expenses.
Click the check box in the Billable column to remove the check mark. This
disables the reimbursement feature, but the expense is still associated with the
customer (which is how you track job costing).
T I P : You can enter both billable and nonbillable expenses in the same vendor
bill, by selecting or deselecting the check mark appropriately.
Invoicing Customers for Reimbursable Expenses
When you save the vendor bill, the amounts you linked to a customer are saved in
the customer file. If you placed a check mark in the Billable column, you can
collect the money by adding those amounts to the next invoice you create. In fact,
youre free to create an invoice specifically for the purpose of collecting
reimbursable expenses.
Chapter 3 has complete information about creating invoices for customers, but
this section covers the particular steps you take when you want to create an invoice
that includes costs for which youre seeking reimbursement.
Adding Reimbursable Costs Automatically
As soon as you select a customer in the Invoice window, QuickBooks checks to see
if that customer has any outstanding billable time or costs. If so, youre notified of
that fact.
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If you select the option to select the outstanding costs for this invoice,
QuickBooks displays the Choose Billable Time And Costs dialog, where you can
place a check mark in the first column of each listing to use the reimbursable cost
in the invoice (see Figure 6-4).
If you dont automatically add the reimbursable costs and change your mind
later, click the Add Time/Costs button in the Create Invoices window to open the
Choose Billable Time And Costs dialog.
If you select multiple reimbursable costs, QuickBooks enters an item called
Reimb Group, lists the individual items, and enters the total for the reimbursable
items on the invoice (see Figure 6-5).
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FIGURE 6-4 Select the reimbursable expenses you want to add to the invoice youre
preparing.
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Keep in mind that the description of the reimbursable items is taken from the
text you entered in the Memo column when you entered the vendors bill. If you
dont use that Memo column, you can enter text manually, as needed, in the
Description column of the invoice, if you want to give your customer additional
information about the amounts being charged back to them.
Adding Taxes to Reimbursable Expenses
If an item is taxable and the customer is not tax exempt, choose the option Selected
Expenses Are Taxable. When the items are passed to the invoice, the appropriate
taxes are applied. If you select the taxable option and the customer is tax exempt,
QuickBooks wont add the sales tax to the invoice.
If some items are taxable and others arent, you have to separate the process of
moving items to the invoice. First, deselect each nontaxable item by clicking its
check mark to remove it (its a toggle). Click OK to put those items on the invoice.
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FIGURE 6-5 QuickBooks creates a group item for reimbursable charges and displays the total
on the invoice.
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Then return to the Choose Billable Time And Costs window, put a check mark next
to each nontaxable item, deselect the Selected Expenses Are Taxable option, and
click OK.
Omitting the Details on the Invoice
If you have multiple reimbursable items, you can combine all of them into a single
line item on the invoice. Choose the option Print Selected Time And Costs As One
Invoice Item. When you click OK and view the results in the invoice, you still see
each individual item. Dont panicthe screen version of the invoice continues to
display the individual items. However, when you print the invoice, youll see a line
item named Total Reimbursable Expenses with the correct total in the Amount
column.
T I P : You can preview the printed invoice by clicking the arrow next to the
Print icon on the invoice window and choosing Preview.
QuickBooks changes the format of the printed invoice to eliminate the details
but doesnt change the data in the onscreen version of the invoice. This means you
can open the invoice later and see the detailed items, which is handy when the
customer calls to ask, Whats this reimbursable expense item on my bill?
Excluding a Reimbursable Expense
If you have some reason to exclude one or more expenses from the current invoice,
just avoid putting a check mark in the Use column. The item remains in the system
and shows up on the Choose Billable Time And Costs window the next time you
open it. You can add the item to the customers invoice in the future.
Removing a Reimbursable Expense from the List
As explained earlier, when youre entering a vendors bill and assigning expenses to
customers and jobs, you can track the expense but not invoice the customer for it
by clearing the check mark in the Billable column. Leaving the check mark in the
column automatically moves the expense to the category reimbursable.
But suppose when its time to invoice the customer, you decide that you dont
want to ask the customer to pay this expense; youve changed your mind. The
Choose Billable Time And Costs window has no Delete button and no method of
selecting an item and choosing a delete function. You could deselect the check
mark in the Use column, but afterwards, every time you open the window, the item
is still thereits like a haunting.
The solution lies in the Hide column. If you place a check mark in the Hide
column, the item is effectively deleted from the list of reimbursable expenses that
you see when youre preparing invoices (but the amount is still in your system for
job costing purposes). This means you wont accidentally invoice the customer for
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the item, but the link to this expense for this customer continues to appear in
reports about this customers activity for job costing.
Changing the Amount of a Reimbursable Expense
Youre free to change the amount of a reimbursable expense. To accomplish this,
select (highlight) the amount in the Amount column of the Billable Time And Costs
window, and enter the new figure.
If you reduce the amount, QuickBooks does not keep the remaining amount on
the Billable Time And Costs window. You wont see it again, because QuickBooks
makes the assumption youre not planning to pass the remaining amount to your
customer in the future.
You may want to increase the charge for some reason (perhaps to cover
overhead), but if youre increasing all the charges, its easier to apply a markup
(covered next) than to change each individual item.
Marking Up Reimbursable Expenses
You can mark up any expenses youre invoicing, which many companies do to
cover any additional costs incurred such as handling, time, or general aggravation.
To apply a markup, select the items you want to mark up by placing a check mark
in the Use column in the Choose Billable Time And Costs window. Then enter a
markup in the Markup Amount or % field in either of the following ways:
Enter an amount.
Enter a percentage (a number followed by the percent sign).
Specify the account to which youre posting markups. You can create an account
specifically for markups (which is a good idea because it lets you analyze the source
of all income) or use an existing income account.
The item amounts and the total of the selected charges dont change when you
apply the markup; the change is reflected in the amounts for Total Expenses With
Markup and Total Billable Time And Costs.
When you click OK to transfer the reimbursable expenses to the customers
invoice, youll see the reimbursable expenses and the markup as separate items (see
Figure 6-6).
Although it would be unusual for you to be marking up items without having
discussed this with your customer, if you dont want your customer to see the
markup amounts, select the Print Selected Time And Costs As One Invoice Item
option. Youll see the breakdown on the screen version of the invoice, but the
printed invoice will contain only the grand total.
One big difference between using the markup function and just changing the
amount of the reimbursable expense in the Amount column is the way the amounts
are posted to your general ledger. If you use the markup function, the difference
between the actual expense and the charge to your customer is posted to the
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markup account. If you change the amount of the expense, the entire amount is
posted to the income account you linked to the reimbursable expense account.
Using the Invoice for Time And Expense Window
Because youre using either the Premier or Enterprise version of QuickBooks, you
have access to the Invoice for Time & Expenses window, which allows you to view
unbilled time and expenses for customers and select which customers you want to
generate an invoice for. The Time & Expenses feature first needs to be turned on
via Preferences (select Edit | Preferences and then click the Time & Expenses icon).
To open the Invoice For Time & Expenses window (see Figure 6-7) select
Invoice For Time & Expenses from the Customers menu. Once opened, you can
select a date range for the time and expenses you want to invoice the customer for.
Simply select the customer or job you want to create an invoice for and then click
the Create Invoice button.
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FIGURE 6-6 The markup is clearly indicatedit has its own line item.
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Managing Inventory Item Purchases
If the vendor bill youre recording is for inventory items, you need to take a
different approach, because the accounting issues (the way you post amounts) are
different. Two transactions are involved when you buy items for your inventory:
You receive the inventory products.
You receive the bill for the inventory products.
Once in a while, the bill comes before the products, and sometimes both events
occur at the same time. (In fact, you may find the bill pasted to the carton or
included inside the carton.) This section covers the possible scenarios, including
how to track purchase orders.
N O T E : To use the Inventory and Purchase Order features, you must enable
them in the Items & Inventory category of Preferences (choose Edit | Preferences
to open the Preferences dialog).
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FIGURE 6-7 The Invoice For Time & Expenses window displays all the unbilled time and
expenses for your customers.
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Using Purchase Orders
You can use purchase orders to order inventory items fromyour suppliers. Its not a
great idea to use purchase orders for goods that arent in your inventory, such as office
supplies or consulting servicesthats not what purchase orders are intended for.
Creating and saving a purchase order has no effect on your financial records. No
amounts are posted, because purchase orders exist only to help you track what
youve ordered against what youve received.
T I P : When you enable the Inventory and Purchase Order features and create
your first Purchase Order, QuickBooks creates a nonposting account named
Purchase Orders. You can double-click the accounts listing to view and drill down
into the purchase orders youve entered, but the data in the register has no
effect on your finances and doesnt appear in financial reports.
Follow these steps to create a purchase order:
Choose Vendors | Create Purchase Orders from the menu bar to open a blank
Create Purchase Orders window.
Fill in the purchase order fields, which are easy and self-explanatory (see
Figure 6-8).
Click Save & New to save the purchase order and move on to the next blank
purchase order form, or click Save & Close if you have created all the purchase
orders you need right now.
T I P : If youre purchasing something on behalf of a customer, you can use the
Customer column to treat the purchase as a reimbursable transaction when you
enter the vendors bill for this purchase.
You can print the purchase orders as you create them by clicking the Print
button as soon as each purchase order is completed. If youd prefer, you can print
them all in a batch by clicking the arrow to the right of the Print button on the last
purchase order window and selecting Print Batch. If you want to print them later,
be sure the option To Be Printed is selected on each PO. When youre ready to
print, choose File | Print Forms | Purchase Orders.
You can also e-mail the purchase orders as you create them, or e-mail them as a
batch by selecting Send Batch from the drop-down list next to the E-mail icon on
the transaction windows toolbar.
T I P : Many companies dont send purchase orders; instead, they notify the
vendor of the purchase order number when they place the order over the
telephone, via e-mail, or by logging into the vendors Internet-based order
system.
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When the inventory items and the bill for them are received, you can use the
purchase order to automate the receiving and vendor bill entry processes.
Receiving Inventory Items
Since this chapter is about accounts payable, it covers the steps involved in paying
for the inventory items. However, you dont pay for items you havent received, so
the processes involved in receiving the items without receiving the bill also merit
attention.
If the inventory items arrive before you receive a bill from the vendor, you must
tell QuickBooks about the new inventory, so the items can be brought into the
inventory asset account and become available for sales.
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FIGURE 6-8 A purchase order looks like a vendor bill, but you dont incur any accounts
payable liability.
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Follow these steps to receive inventory items:
Choose Vendors | Receive Items to open a blank Create Item Receipts window.
Enter the vendor name, and if open purchase orders exist for this vendor,
QuickBooks notifies you:
Ill 6-2
If you know a purchase order exists for this shipment, or if youre not sure,
click Yes. QuickBooks displays all the open purchase orders for this vendor so
you can put a check mark next to the appropriate PO (or multiple POs if the
shipment that arrived covers more than one PO). If no PO for this shipment is
listed on the Open Purchase Orders list for this vendor, click Cancel on the
Open Purchase Orders window to return to the receipts window and fill in the
data manually.
If you know there isnt a purchase order for this particular shipment, click No,
and just fill out the Create Item Receipts window manually.
If a PO exists and you select it, QuickBooks fills out the Create Item Receipts
window using the information in the PO (see Figure 6-9). Check the shipment
against the PO and change any quantities that dont match.
Click Save & New to receive the next shipment into inventory, or click Save &
Close if this takes care of all the receipts of goods.
QuickBooks posts the amounts in the purchase order to your Accounts Payable
account as an Item Receipt type. When the bill arrives with the actual costs, the
Accounts Payable account will be updated accordingly. The process for recording
the bill after youve received an item is detailed in the following section.
Recording Bills for Received Items
After you receive the items, eventually the bill comes from the vendor. To enter the
bill, do not use the regular Enter Bills icon in the Vendors Navigator window, which
would cause another posting to Accounts Payable.
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Follow these steps to record bills for received items:
Choose Vendors | Enter Bill For Received Items to open the Select Item Receipt
window. Choose the vendor, and you see the current items receipt information
for that vendor.
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FIGURE 6-9 Line items are auto-filled from the data in the PO, and the Memo field
automatically reminds you that the bill hasnt arrived yet.
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Select the appropriate listing and click OK to open an Enter Bills window. The
information from the items receipt is used to fill in the bill information.
Change anything that needs to be changed: a different cost per unit, taxes and
shipping costs that were added, and so on. If you make any changes, you must
click the Recalculate button so QuickBooks can match the total in the Amount
Due field to the changed line item data.
Click Save & Close.
Whether or not youve made changes to the amounts, QuickBooks displays a
message warning you that the transaction is linked to other transactions and asking
if youre sure you want to save the changes. Say Yes. Even if you didnt make
changes to the line items, youve changed the transaction from a receipt of goods
transaction to a vendor bill transaction, and QuickBooks replaces the original
posting to Accounts Payable that was made when you received the items.
Receiving Items and Bills Simultaneously
If the items and the bill arrive at the same time (sometimes the bill is in the
shipping carton), you must tell QuickBooks about those events simultaneously. To
do this, choose Vendors | Receive Items And Enter Bill. This opens the standard
Enter Bills window, and when you enter the vendors name you see a message
telling you an open PO exists for the vendor.
The message dialog asks if you want to receive these goods (and the bill) against
an open PO. Click Yes to see the open POs for this vendor and select the appropriate
PO. The line items on the bill are filled in automatically, and you can correct any
quantity or price difference between your original PO and the actuals. When you
save the transaction, QuickBooks receives the items into inventory in addition to
posting the bill to A/P.
Understanding the Postings
QuickBooks makes the same postings no matter how, or in what order, you receive
the items and the bill. For example, suppose you receive $400.00 worth of items
and fill out the Receive Items window:
Account Debit Credit
Accounts Payable $400.00
Inventory $400.00
Notice that the amount is posted to Accounts Payable, even if the bill hasnt been
received. The entry in the Accounts Payable register is noted as a receipt of items
with a transaction type Item Receipt.
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When the vendor bill arrives, as long as you remember to use Vendors | Enter
Bill For Received Items, the amount isnt charged to Accounts Payable again;
instead, the A/P register entry is changed to reflect the fact that it is now a bill (the
item type changes to BILL). If you made changes to any amounts, the new amounts
are posted, replacing the original amounts.
C A U T I O N : If you use the standard Enter Bills transaction, QuickBooks
warns you that this vendor has receipts-pending bills and instructs you to use the
correct command if this bill is for that receipt. If you ignore the listing, and the
bill is indeed for items already received into QuickBooks, youll have double
entries for the same amount in your Accounts Payable account.
Recording Vendor Credits
If you receive a credit from a vendor, you must record it in QuickBooks. Then, you
can apply it against an open vendor bill or let it float until your next order from the
vendor. (See Chapter 7 for information about paying bills, which includes applying
vendor credits to bills.)
QuickBooks doesnt provide a discrete form for vendor credits; instead, you can
change a vendor bill form to a credit form with a click of the mouse.
Follow these steps to record vendor credits:
Choose Vendors | Enter Bills from the menu bar to open the Enter Bills window.
Select the Credit option, which automatically deselects Bill and changes the
available fields in the form (see Figure 6-10).
Choose the vendor from the drop-down list that appears when you click the
arrow in the Vendor field.
Enter the date of the credit memo.
In the Ref. No. field, enter the vendors credit memo number (if one exists).
Enter the amount of the credit memo.
If the credit is not for inventory items, use the Expenses tab to assign an
account and amount to this credit.
If the credit is for inventory items, use the Items tab to enter the items, along
with the quantity and cost, for which you are receiving this credit.
Click Save & Close to save the credit (unless you have more credits to enter
in which case, click Save & New).
N O T E : If youve agreed that the vendor pays the shipping costs to return
items, dont forget to enter that amount in the Expenses tab.
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Here are the postings to your general ledger when you save a vendor credit:
Account Debit Credit
Inventory Asset Amount of returned items
Applicable expense account(s) Amounts of expenses in the credit
Accounts Payable Total credit
amount
T I P : Dont use an RA (Return Authorization) number you received on the
telephone as the basis for your credit. Wait for the credit memo to arrive and use
its transaction number, so your records and the vendors records match. This
makes it much easier to settle disputed amounts.
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FIGURE 6-10 When you select the Credit option, the Enter Bills transaction window changes
the fields for terms and due date disappear.
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Entering Recurring Bills
You probably have quite a few bills that you must pay every month. Commonly, the
list includes your rent or mortgage payment, payments for assets you purchased
with a loan (such as vehicles or equipment), or a retainer fee (for an attorney,
accountant, or subcontractor).
You can make it easy to pay those bills every month without entering a bill each
time. QuickBooks provides a feature called memorized transactions, and you can put
it to work to make sure your recurring bills are covered.
Creating a Memorized Bill
To create a memorized transaction for a recurring bill, first open the Enter Bills
window and fill out the information.
T I P : If the recurring bill isnt always exactly the sameperhaps the amount
is different each month (your utility bills, for instance)its okay to leave the
Amount Due field blank. You can fill in the amount each time you use the
memorized bill.
Before you save the transaction, memorize it. To accomplish this, press CTRL-M
(or choose Edit | Memorize Bill from the menu bar). The Memorize Transaction
window opens.
Use these guidelines to complete the Memorize Transaction window:
Use the Name field to enter a name for the transaction. QuickBooks
automatically enters the vendor name, but you can change it. Use a name that
describes the transaction (such as Rent) so you dont have to rely on your
memory.
Select Remind Me (the default) to tell QuickBooks to issue a reminder that this
bill must be put into the system to be paid.
Select Dont Remind Me if you want to forego getting a reminder and manage
the recurring bill yourself.
Select Automatically Enter to have QuickBooks enter this bill as a payable
automatically, without reminders. Specify the number of Days In Advance To
Enter this bill into the system. At the appropriate time, the bill appears in the
Select Bills To Pay List you use to pay your bills (covered in Chapter 7).
Select the interval for this bill from the drop-down list in the How Often field.
Enter the Next Date this bill is due.
If this payment is finite, such as a loan that has a specific number of payments,
use the Number Remaining field to specify how many times this bill must be paid.
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C A U T I O N : When you select the reminder options for the memorized bill,
the reminders only appear if youre using reminders in QuickBooks. Choose Edit |
Preferences and click the Reminders category icon to view or change reminders
options.
Click OK in the Memorize Transaction window to save it, and then click Save &
Close in the Enter Bills window to save the bill.
T I P : If you created the bill only for the purpose of creating a memorized
transaction and you dont want to enter the bill into the system for payment at
this time, after you save the memorized transaction, close the Enter Bills window
and respond No when QuickBooks asks if you want to save the transaction.
Using a Memorized Bill
If youve opted to enter the memorized bill yourself (either by asking QuickBooks
to remind you to do this, or by trusting your memory), you must bring it up to
make it a current payable.
To use a memorized bill, press CTRL-T (or choose Lists | Memorized Transaction
List from the menu bar). This opens the Memorized Transaction List window.
Double-click the appropriate listing to open the bill in the usual Enter Bills
window with the next due date showing.
If the amount is blank, fill it in. Click Save & Close to save this bill so it becomes
a current payable and is listed as a bill that must be paid when you write checks to
pay your bills. (See Chapter 7 for information about paying bills.)
Creating Memorized Bill Groups
If you have a whole bunch of memorized transactions to cover all the bills that are
due the first of the month (rent, mortgage, utilities, car payments, whatever), you
dont have to select them for payment one at a time. You can create a group and
then invoke actions on the group (automatically invoking the action on every bill
in the group).
Follow these steps to create a memorized bill group:
Press CTRL-T to display the Memorized Transaction List.
Right-click any blank spot in the Memorized Transaction window and choose
New Group from the shortcut menu. In the New Memorized Transaction
Group window, give this group a name (such as FirstOfMonth).
Fill out the fields to specify the way you want the bills in this group to be
handled.
Click OK to save this group.
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Now that youve created the group, you can add memorized transactions to it as
follows:
In the Memorized Transaction List window, select the first memorized
transaction you want to add to the group.
Right-click and choose Edit Memorized Transaction from the shortcut menu.
When the Schedule Memorized Transaction window opens with this
transaction displayed, select the option named With Transactions In Group.
Then select the group from the list that appears when you click the arrow next
to the Group Name field.
Click OK and repeat this process for each bill in the list.
As you create future memorized bills, select the same With Transactions In
Group option to place these new bills in the appropriate groups.
If you have other recurring bills with different criteria (perhaps theyre due on a
different day of the month, or theyre due annually), create groups for them and add
the individual transactions to the group.
Now that all of your vendor bills are in the system, you have to pay them.
Chapter 7 covers everything you need to know about accomplishing that task.
Tracking Mileage Expense
QuickBooks provides a way to track the mileage of your vehicles. You can use the
mileage information to track the expenses connected to vehicle use, to use mileage
as part of your job-costing efforts, or to bill customers for mileage expenses.
T I P : Your accountant may be able to use the vehicle mileage data on your
income tax return. You can either deduct the actual mileage expense or your
other vehicle expenses; you cant deduct both. Your accountant, working with the
figures you provide as a result of mileage tracking, will make the decision.
To track a vehicle, you must add that vehicle to your Vehicle List (covered in
Chapter 2). Once the vehicle is in your QuickBooks system, you can begin tracking
its mileage. Of course, you also need to make sure that everyone who uses a vehicle
for business is tracking the odometer. Create and print a form for this purpose, with
the following categories to fill in:
Trip Start Date
Trip End Date
Starting Odometer
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Ending Odometer
Customer:Job
Entering Mileage Rates
To track the cost of mileage, you must make sure you have accurate mileage rates in
your system. These change frequently, so youll have to keep up with the latest IRS
figures. QuickBooks calculates the cost of mileage based on the information you
enter. To get the current rate, check with the IRS (www.irs.gov) or ask your
accountant.
Follow these steps to enter the rate:
Choose Company | Enter Vehicle Mileage to open the Enter Vehicle Mileage
window.
Click the Mileage Rates button on the toolbar to open the Mileage Rates
window.
Select a date from the calendar as the Effective Date.
Enter the IRS rate for that date.
Click Close.
Notice that you can continue to add dates and rates and QuickBooks will use the
appropriate rate, based on the date of your mileage entry, to calculate costs.
Creating a Mileage Item
If you plan to use mileage expenses for job costing, or to bill customers for mileage,
you must create an item (call it mileage, travel, or something similar). Use a Service
type item for this feature. This is the item you select when youre filling in a
mileage window.
Attach an income account to the item (for example, Mileage Invoiced). You
could create another reimbursement income account to attach to this item because
youre collecting reimbursements for travel expenses. However, dont create an
expense account for mileage and link the reimbursement account to it, because you
dont enter accounts payable expenses for mileagethis mileage item is just one
part of your existing vehicle expenses (such as vehicle fuel, travel, and so on).
Its important to understand that the mileage rate you entered in the Mileage
Rates window (described in the previous section) is not automatically transferred to
the item you create for mileage. Therefore, you must independently fill in the rate
for the item and update it when the IRS rate changes. You can use the same rate you
used in the Mileage Rates window or enter a different rate to create a markup (or a
markdown, if you wish to take that approach).
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Entering Mileage
Follow these steps to enter mileage:
Choose Company | Enter Vehicle Mileage to open the Enter Vehicle Mileage
window.
Select the vehicle from the drop-down list in the Vehicle field.
Enter the dates of the trip.
Enter the odometer readingsQuickBooks calculates the total miles.
If you want to bill the customer for mileage, place a check mark in the Billable
check box and select the Customer:Job, the item you created for mileage, and
the Class (if youre tracking classes).
If you dont want to bill a customer but you want to track job costs, select the
Customer:Job, the item you created for mileage, and the Class (if youre
tracking classes). Do not place a check mark in the Billable check box.
Optionally, enter a note.
Click Save & New to enter another trip, or click Save & Close if youre finished
entering mileage.
To add the billable mileage to a customers invoice, follow the instructions for
recovering reimbursable expenses earlier in this chapter.
Creating Mileage Reports
QuickBooks includes four vehicle mileage reports, which you can access by
choosing Reports | Jobs, Time & Mileage and selecting the appropriate mileage
report from the submenu. If youre working in the Enter Vehicle Mileage dialog
box, the reports are available from either the drop-down list you see if you click the
arrow next to the Mileage Reports button, or the Vehicle List window.
Mileage By Vehicle Summary
Use the Mileage By Vehicle Summary report to see the total miles and the mileage
expense for each vehicle youre tracking. You can run this report for any date range
that you want to check, which is a way to determine whether vehicles need
servicing. For example, you may need to change the oil and filter every 6,000 miles,
or schedule a 50,000-mile checkup. If you deduct mileage expenses on your income
tax form, use the entire year as the date range.
Mileage By Vehicle Detail
Use the Mileage By Vehicle Detail report to view details about each mileage slip you
created. For each vehicle, the report displays the following information:
Trip End Date
Total Miles
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Mileage Rate
Mileage Expense
No customer information appears in the report, but you can double-click any
listing to open the original mileage slip, which shows you whether the trip is linked
to a job and whether its marked billable.
Mileage By Job Summary
Use the Mileage By Job Summary report to view the total number of miles linked to
customers or jobs. The report displays total miles for all customers or jobs for
which you entered an item and displays billable amounts for any mileage entries
you marked billable.
Mileage By Job Detail
Use the Mileage By Job Detail report to see the following information about each
trip for each customer or job:
Trip End Date
Billing Status
Item
Total miles
Sales Price
Amount
To gain more knowledge, you can modify the report by clicking the Modify
Report button on the report window to open the Modify Report dialog. In the
Display tab, select additional columns to reflect what you want to see in this report.
For example, you may want to add the Mileage Rate or Mileage Expense (or both).
Memorize the report so you dont have to repeat the modifications next time.
Reimbursing Employees and Subcontractors
for Mileage
You can use the vehicle mileage-tracking feature to reimburse employees,
subcontractors, and yourself. Enter each persons car in the Vehicle List (use
the persons name for the vehicle) and have everyone keep mileage logs.
If youre doing your own payroll, QuickBooks cannot transfer this money
directly to paychecks the way the system can transfer time, but you can run reports
to reimburse everyone.
Follow these steps to reimburse mileage:
Open the Mileage By Vehicle Detail report.
Enter the date range for which youre reimbursing individuals.
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Click the Modify Report button to open the Modify Report dialog box.
In the Filters tab, select the first persons car from the drop-down list in the
Vehicle field.
Click OK to return to the report window, which now displays information
about that persons mileage only.
Memorize the report, naming it person mileage (substitute the real name for
person).
Repeat the process for each remaining person.
Print each persons report and attach it to the reimbursement check.
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C
h
a
p
t
e
r
7
Paying Bills
I
n this chapter:
Choose bills to pay
Apply discounts and credits
Write checks
Using the Write Checks Window and the Bank Register
Manage sales tax
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In QuickBooks paying bills is a somewhat different function than simply writing
checks. While you can let QuickBooks do the writing part by buying computer
checks and printing them, there are some steps you need to take beforehand to
ensure that the software is accurately keeping track of who youve paid and what
you still owe to your vendors.
(If youve enabled the Multicurrency feature, youll see references to the vendors
currency in most of the transaction windows and reports.)
Choosing What to Pay
You dont have to pay every bill thats entered, nor do you have to pay the entire
amount due for each bill. Your current bank balance and your relationships with
your vendors have a large influence on the decisions you make.
Viewing Your Unpaid Bills
Start by examining the bills that are due. The best way to see that list is in detailed
form instead of a summary total for each vendor. To accomplish this, choose
Reports | Vendors & Payables | Unpaid Bills Detail. In the report window, set the
Dates field to All to make sure all of your outstanding vendor bills are displayed
(see Figure 7-1).
Double-click any entry to drill down to the bill you entered, including all line
items and notes you made in the Memo column.
You can filter the report to display only certain bills. To accomplish this, click
Modify Report and go to the Filters tab in the Modify Report dialog. Use the filters
to change the display in any of the following ways:
Filter for bills that are due today (or previously), eliminating bills due after
today.
Filter for bills that are more or less than a certain amount.
Filter for bills that are more than a certain number of days overdue. Print the
report, and if youre short on cash, work on a formula that will maintain good
relationships with your vendors.
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Selecting the Bills to Pay
When youre ready to tell QuickBooks which bills you want to pay, choose Vendors
| Pay Bills. The Pay Bills window appears (see Figure 7-2), and you can begin to
make your selections using the following guidelines.
Due On Or Before Displays all the bills due within ten days by default, but you
can change the date to display more or fewer bills. If you have discounts for timely
payments with any vendors, this selection is more important than it seems. The due
date isnt the same as the discount date. Therefore, if you have terms of 2%10Net30,
a bill that arrives on April 2 is due on May 2 and wont appear on the list if the due
date filter you select is April 30. Unfortunately, the discount date is April 12, but
you wont know because the bill wont appear. If you want to use a due date filter,
go out at least 60 days. (See the section Applying Discounts later in this chapter.)
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FIGURE 7-1 Check the current unpaid bills.
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Show All Bills Shows all the bills in your system, regardless of when theyre due.
This is the safest option, because you wont accidentally miss a discount date. On
the other hand, if you dont get discounts for timely payment (usually offered only
by vendors who sell inventory products), its probably not the best choice because
the list can be rather long.
A/P Account If you have multiple A/P accounts, select the account to which the
bills you want to pay were originally posted. If you dont have multiple A/P accounts,
this field doesnt appear in the window.
Sort By Determines the manner in which your bills are displayed in the Pay Bills
window. The choices are
Due Date (the default)
Discount Date
Vendor
Amount Due
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FIGURE 7-2 Paying bills starts in the Pay Bills window.
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Filter By Use this drop-down list to filter outstanding bills by a particular vendor.
Payment Date This is the date that appears on your checks. By default, the
current date appears in the field, but if you want to predate or postdate your
checks, you can change that date. If you merely select the bills today and wait until
tomorrow (or later) to print the checks, the payment date set here still appears on
the checks.
T I P : You can tell QuickBooks to date checks using the day of printing by
choosing Edit | Preferences and changing the configuration in the Checking
category.
Payment Method The drop-down list displays the available methods of payment:
Check and Credit Card are listed by default, but if youve signed up for QuickBooks
online bill payment services, that payment method also appears in the list.
If you are paying by check and QuickBooks prints your checks, be sure the To Be
Printed option is selected. If youre using manual checks, select Assign Check
Number, and when you finish configuring bill payments, QuickBooks opens the
Assign Check Numbers dialog so you can specify the starting check number for this
bill paying session in the Check No. column.
Payment Account The checking or credit card account you want to use for these
payments.
If you made changes to the selection fields (perhaps you changed the due date
filter), your list of bills to be paid may change. If all the bills displayed are to be
paid either in full or in part, youre ready to move to the next step. If there are still
some bills on the list that youre not going to pay, you can just select the ones you
do want to pay. Selecting a bill is simplejust click the leftmost column to place a
check mark in it.
If you want to pay in full all the bills that are listed in the Pay Bills window and
there arent any credits or discounts to worry about, the easiest thing to do is to
click the Select All Bills button at the bottom of the window. This selects all the
bills for payment (and the Select All Bills button changes its name to Clear
Selections, so you have a way to reverse your action).
After youve selected the bills you want to pay, and youre paying each of those
bills in full, QuickBooks makes the following postings to your general ledger:
Account Debit Credit
Accounts Payable Total bill payments
Bank Total bill payments
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Many users ask why they dont see the expense accounts when they look at the
postings for bill paying. The answer is that the expenses were posted when they
entered the bills. Thats a major difference between entering bills and then paying
them, or writing checks without entering the bills into your QuickBooks system
(called direct disbursement). If you just write checks, you enter the accounts to
which youre assigning those checks. For that system (the cash-based system) of
paying bills, the postings debit the expense and credit the bank account. See the
section Using the Write Checks Window and the Bank Register later in this
chapter for more information.
Making a Par tial Payment
If you dont want to pay a bill in full, you can easily adjust the amount.
Follow these steps to make a partial payment:
Click the check mark column on the bills listing to select the bill for payment.
Click in the Amt. To Pay column and replace the amount thats displayed with
the amount you want to pay. The total will change to match your payment
when you save the window.
When the transaction is posted to the general ledger, the amount of the payment
is posted as a credit to your bank account and as a debit to the Accounts Payable
account (the unpaid balance remains in the Accounts Payable account).
Applying Discounts
Bills that have terms for discounts for timely payment display the Discount Date (in
the Disc. Date column). Bills that have no data in that column do not have discount
terms.
Select the bill by clicking the check mark column, and the discount is
automatically applied. You can see the amount in the Disc. Used column, and the
Amt. To Pay column adjusts accordingly.
If the discount isnt applied automatically, check the date in the Due On Or
Before field, which must be equal to or earlier than the discount date. (If its too
late, dont worry, take the discount anywaysee the next section, Taking Discounts
After the Discount Date.)
If youre making a partial payment and want to adjust the discount, click the Set
Discount button to open the Discount And Credits window, and enter the amount
of the discount you want to take. Click Done, and when you return to the Pay Bills
window, the discount is applied and the Amt. To Pay column has the correct
amount.
Taking Discounts After the Discount Date
Many businesses fill in the discount amount even if the discount period has
expired. The resulting payment, with the discount applied, is frequently accepted
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by the vendor. Businesses that practice this protocol learn which vendors will
accept a discounted payment and which wont (most will). Seeing that the discount
you took has been added back in the next statement you receive is a pretty good
hint that youre not going to get away with it.
To take a discount after the discount date, use the same steps explained in the
preceding section for applying a discount. When you click the Set Discount button
to open the Discount And Credits window, the amount showing for the discount is
zero. Enter the discount you would have been entitled to if youd paid the bill in a
timely fashion, and click Done.
Understanding the Discount Account
Notice that the Discount tab of the Discount And Credits window has a field for the
Discount Account. This account accepts the posting for the amount of the discount.
If you dont have an account for discounts taken (not to be confused with the
account for discounts given to your customers), you can create one now by clicking
the arrow to the right of the field and choosing <Add New>.
The account for the discounts you take (sometimes called earned discounts) can
be either an income or expense account. Theres no right and wrong here, although
sometimes accountants get into heated debates defending a point of view on this
subject. If you think of the discount as income (money youve brought into your
system by paying your bills promptly), make the account an income account. If you
think of the discount as a reverse expense (money youve saved by paying your bills
promptly), make the account an expense account (it posts as a minus amount,
which means it reduces total expenses).
If the only vendors who offer discounts are those from whom you buy inventory
items, you should put the discount account in the section of your chart of accounts
that holds the Cost Of Goods Sold accounts. In fact, the most efficient way to do
this is to have a parent account called Cost Of Goods Sold and then create two
subaccounts:
Cost Of Goods
Discounts Taken
Youll be able to see the individual amounts on your financial reports, and the
parent account will report the net COGS.
T I P : QuickBooks may have created a Cost Of Goods Sold account
automatically during your company setup. If not, create one and then create the
subaccounts.
Heres what posts to your general ledger when you take a discount. For example,
suppose the original amount of the bill was $484.00 and the discount was $9.68;
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therefore, the check amount was $474.32. (Remember that the original postings
when you entered the bill were for the total amount without the discount.)
Account Debit Credit
Accounts Payable $484.00
Bank $474.32
Discounts Taken $9.68
Applying Credits
If the list of bills includes vendors for whom you have credits, you can apply the
credits to the bill. Select the bill and, if credits exist for the vendor, the amount of
the credit appears in the Credits Used column, and the Amt. To Pay column is
adjusted.
If you dont want to take the credit against this bill, click Set Credits to open the
Discount And Credits window. Make the appropriate changes (deselect the credit)
and click Done to change the Amt. To Pay column in the Pay Bills to reflect your
adjustments.
If your total credits with the vendor are equal to, or exceed, the bill you select,
QuickBooks displays a message telling you no check will be created, because the
bill is paid in its entirety with credits.
Saving the Pay Bills Information
There are two ways to save information about paying bills: save as you go or save at
the end. You can select a bill, make adjustments (make a partial payment, apply a
discount or a credit), and then click Pay Selected Bills to save that bill payment.
That bill disappears from the list if its paid in total and reappears with the balance
owing if its partially paid. You can also select multiple bills (or all the bills) and
make any adjustments needed.
When you finish selecting the bills to pay, click Pay Selected Bills. QuickBooks
transfers all the information to the general ledger and fills out your checkbook
account register with the payments. If you selected the option to print checks, the
Payment Summary dialog appears (see Figure 7-3), offering several choices for your
next step:
Choose Pay More Bills to return to the Pay Bills window and select other bills
to pay (youll print these checks later). Use this choice to pay bills without
printing checks, such as sending payments to vendors youve configured for
online payments.
Choose Print Checks to print your checks now.
Click Done to close the Payment Summary dialog and close the Pay Bills
window, and print your checks later.
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When you defer printing, the checks are posted to the bank account register with
the notation To Print. Choose File | Print Forms | Checks to print your checks.
If you selected the Assign Check Number option because you manually write
checks, QuickBooks displays the Assign Check Numbers dialog.
If you select the option Let QuickBooks Assign Check Numbers, QuickBooks
looks at the last check number in the bank register and begins numbering with
the next available number.
If you select the option Let Me Assign The Check Numbers Below, enter the
check numbers in the dialog.
If youre paying bills online, select the Online Payment option. QuickBooks
retains the information until you go online. You can only use this option if youre
signed up for online banking with a bank that can accept online bill payments
when you use online bankingyour bank must offer Direct Connect online
banking. (See Chapter 16 to learn about online banking.)
Sending the Payments to Vendors
After youve paid the bills in QuickBooks, the bills arent really paid; your vendors
wont consider them paid until they receive the checks. You can write manual
checks or you can print checks.
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FIGURE 7-3 You can print checks now, or wait until later.
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Writing Manual Checks
If youre not printing checks, you must make sure the check numbers in the register
are correct. In fact, its a good idea to print the register and have it with you as you
write the checks. To accomplish that, with the register open in the QuickBooks
window, click the Print icon at the top of the register window. When the Print
Register dialog opens, select the date range that encompasses these checks (usually,
theyre all dated the same day), and click OK to open the Print Lists dialog, where
you can select print options before clicking Print to print. Then, as you write the
checks, use the check numbers on the printout.
Printing Checks
Printing your checks is far easier and faster than using manual checks. Before you
can print, however, you have some preliminary tasks to take care of. You have to
purchase computer checks and set up your printer.
Purchasing Computer Checks
Computer checks can be purchased for page printers (laser and inkjet) and even
dot matrix printers (the check forms have sprocket holes) from Intuit, the company
that makes QuickBooks, at www.intuitmarket.com. Your local office supply store or
business forms store also likely sells QuickBooks check stock. Almost all check
makers know about QuickBooks and offer a line of checks that are designed to
work perfectly with the software.
Computer checks come in several varieties (and in a wide range of colors and
designs). For QuickBooks, you can order any of the following check types:
Plain checks
Checks with stubs (QuickBooks prints information on the stub)
Checks with special stubs for payroll information (current check and year-to-
date information about wages and withholding)
Wallet-sized checks
Setting Up the Printer
Before you print checks, you have to go through a setup routine. Take heart: you
only have to do it once. After you select your configuration options, QuickBooks
remembers them and prints your checks without asking you to reinvent the wheel
each time.
Your printer needs to know about the type of check youre using, and you supply
the information in the Printer Setup window. To get there, choose File | Printer
Setup from the menu bar. Select Check/PayCheck as the form. Choose the printer
name and type that match the printer youre using for checks. Your Printer Setup
window should look similar to Figure 7-4.
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Choosing a Check Style
You have to select a check style, and it has to match the check style you purchased,
of course. Three styles are available for QuickBooks checks, and a sample of each
style appears in the window to show you what the style looks like.
Voucher checks These have a detachable section on the check form.
QuickBooks prints voucher information if you have voucher checks, including
the name of the payee, the date, and the individual amounts of the bills being
paid by this check. The voucher is attached to the bottom of the check. The
check is the same width as the standard check.
Standard checks These are just checks. Theyre the width of a regular business
envelope (usually called a #10 envelope). If you have a laser printer, there are
three checks to a page. A dot matrix pin-feed printer just keeps rolling, since the
checks are printed on a continuous sheet with perforations separating the checks.
Wallet checks These are narrower than the other two check styles (so they fit
in your wallet). The paper size is the same as the other checks (otherwise,
youd have a problem with your printer), but theres a perforation on the left
edge of the check so you can tear off the check.
Adding a Logo
If your checks have no preprinted logo and you have a file of your company logo, select
Use Logo or click the Logo button to open the Logo dialog. Click the File button to
locate the graphics file. Theres also a selection box for printing your company name
and address, but when you buy checks, you should have that information preprinted.
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FIGURE 7-4 Set up your printer for check printing.
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Collate
When printing multiple copies of a set of checks, selecting the Collate option prints
the checks in batches while maintaining their original check order.
Check Signatures
Use this option to electronically print signatures on checks, including paychecks,
froma signature file.
C A U T I O N : Dot matrix printers cant handle graphics printing, so dont
bother choosing a logo if youre using a dot matrix printer for your checks.
Changing Fonts
Click the Fonts tab in the Printer Setup window to choose different fonts for the
check information, such as the spelled-out amounts or the payees address block.
Click the appropriate button and then choose a font, a font style, and a size from
the dialog that opens.
C A U T I O N : Before you change fonts, make a note of the current settings.
No Reset or Default button exists in the Fonts tab. If you make changes and they
dont work properly, without knowing the original settings youll have to mess
around with fonts for a long time to get back to where you started.
Handling Par tial Check Pages on Laser and Inkjet Printers
If youre printing to a laser or inkjet printer, you dont have the advantage that a
pin-feed dot matrix printer providesprinting a check and stopping, leaving the
next check waiting in the printer for the next time you print checks. QuickBooks
has a nifty solution for this problem, found on the Partial Page tab (see Figure 7-5).
Click the selection that matches your printers capabilities.
Printing the Checks
After your printer is configured for your checks, click OK in the Printer Setup
window to save the configuration data. Now you can print your checks. Choose
File | Print Forms | Checks from the menu bar to bring up the Select Checks To
Print window.
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By default, all the unprinted checks are selected for printing. The first time you
print checks, the first check number is 1; just replace that number with the first
check number in the printer (QuickBooks remembers the numbering from now
on). When everything is correct, click OK to open the Print Checks window.
If youre not using a dot matrix printer, fill in the number and place the page
with leftover blank checks in the manual feed tray (QuickBooks prints those checks
first). Then let the printer pull the remaining check pages from your standard letter
tray. If you indicate there are three checks on the page, printing starts with the
checks in the standard letter tray. Click Print to begin printing your checks.
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FIGURE 7-5 The Partial Page solution is based on the way your printer handles envelopes.
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T I P : Voucher checks for laser and inkjet printers are one to a page, so you
dont have to worry about using remaining checks on a page.
Reprinting After a Problem
Sometimes things go awry when youre printing. The paper jams, you run out of
toner, the ribbon has no ink left, the dog chews the paper as it emerges, the paper
falls off the back tray and lands in the shredderall sorts of bad things can occur.
QuickBooks knows this and checks the print run before it finalizes the printing
process displaying the Print Checks Confirmation dialog.
If everything is fine, click OK. If anything untoward happened, select the first
check(s) that got messed up. Put more checks into the printer (unless youre using
a dot matrix printer, in which case you dont have to do anything). Then click OK
and choose File | Print Forms | Checks. Your unprinted checks are listed in the
Select Checks To Print dialog, and the first check number is the next available
check number.
After your checks have printed properly, put them in envelopes, stamp them, and
mail them. Now you can say your bills are paid.
Using the Write Checks Window
and the Bank Register
Writing and printing a check in QuickBooks or recording a check entry in the bank
register (without having first entered a bill) is considered a direct disbursement. If youve
decided not to enter vendor bills, this is how youll pay your vendors. However, even if
you are entering vendor bills, there are some payments you dont enter as a bill because
you didnt actually receive a bill (such as rent). Also, you sometimes need to write
a quick check without going through the process of entering the vendor bill, selecting
it, paying it, and printing the checkfor example, when the UPS delivery person is
standing in front of you waiting for a COD check and doesnt have time for you to go
through all those steps.
Never use the Write Checks window to pay a vendor bill thats been entered in
your company file. This action will cause the following undesirable effects:
QuickBooks will continue to think that the bill is still outstanding.
The expense account you posted the bill to receives another posting when you
enter the check, thus doubling your expenses (on an accrual accounting basis).
To avoid these outcomes, QuickBooks issues a warning when you enter the name
of a vendor that has bills in the system, but this warning appears only if youre
using the Write Checks window; you wont see a warning if you use the bank
account register to create the check.
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If its too late and youve already used the register to record a direct disbursement
check instead of using the Pay Bills feature, there are two options, depending on how
youre running your business. If youre running it on a cash basis (check with your
accountant or tax preparer to be sure), you can simply void or delete the unpaid bill
in question. If youre running your business on an accrual basis, you can fix the
problem by editing the account designated on the check in question to Accounts
Payable (rather than an expense account like Utilities, for example). Also, in the
Customer:Job column on the check, select the vendor in question (see Figure 7-6).
Editing the check in this way creates a credit to the vendors account so you can use
the Pay Bills window to apply this credit directly to the original bill (refer to the
section Applying Credits earlier in this chapter).
Recording Manual Checks
If you write checks manually, you can write your checks and then tell QuickBooks
about it later, or you can bring your checkbook to your computer and enter the
checks in QuickBooks as you write them. You have two ways to enter your checks
in QuickBooks: in the bank register or in the Write Checks window.
Using the Register
To use the bank register, open the bank account register with either of the following
actions:
Open the Chart Of Accounts window and double-click the bank accounts listing.
Choose Banking | Use Register from the menu bar and choose your bank
account from the Select Account drop-down list.
When the account register opens, you can enter the check on a transaction line.
Follow these steps to create a check in the bank register:
Enter the date.
Press the TAB key to move to the Number field. QuickBooks automatically fills
in the next available check number.
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Press TAB to move through the rest of the fields, filling in the name of the
payee, the amount of the payment, and the expense account youre assigning to
the transaction.
Click the Record button to save the transaction.
Repeat the steps for the next check and continue until all the manual checks
youve written are entered into the register.
You cannot use the register if youre writing a check to purchase an item, or if
you need to track classes. The register doesnt offer fields for those postings, so you
must use the Write Checks window.
Using the Write Checks Window
The Write Checks window presents a graphical way to tell QuickBooks about a check
you manually prepared. To get there, click the Write Checks icon on the Home page,
or press CTRL-W. When the Write Checks window opens (see Figure 7-7), select the
bank account youre using to write the checks.
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FIGURE 7-6 You can edit a check to correct an overstatement in expenses and accounts
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The next available check number is already filled in unless the To Be Printed
option box is checked (if it is, click it to toggle the check mark off and put the
check number in the window). QuickBooks warns you if you enter a check number
thats already been used (unfortunately, the warning doesnt appear until youve
filled in all the data and attempt to save the check).
Fill out the check, posting amounts to the appropriate accounts. If the check
is for inventory items, use the Items tab to make sure the items are placed into
inventory. When you finish, click Save & New to open a new blank check. When
youre through writing checks, click Save & Close to close the Write Checks
window. All the checks you wrote are recorded in the bank account register.
Printing Checks
If you print checks, you can create and print a check immediately after you create it
or create all the checks you need and then print all of them in a batch.
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FIGURE 7-7 Fill out the onscreen check the same way youd fill out a paper checkthey look
the same.
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Follow these steps to print a single check:
Click the Write Checks icon on the Home page, or press CTRL-W to open the
Write Checks window. Make sure the To Be Printed option is selected.
Fill in the fields in the check and when everything is ready, click Print.
A small Print Check window opens to display the next available check number.
Make sure that number agrees with the number of the check youre loading in
the printer, and then click OK.
When the Print Checks window opens, follow the instructions for printing
described earlier in this chapter.
When you return to the Write Checks window, click Save & New to write
another quick check, or click Save & Close if youre finished printing checks.
Printing Checks in Batches
If you have multiple checks to write, you can print checks in a batch instead of one
at a time. To do so, open the Write Checks window and make sure the To Be
Printed option is selected.
Follow these steps to print checks in a batch:
Fill out all the fields for the first check and click Save & New to move to the
next blank Write Checks window.
Repeat Step 1 for every check you need to print.
Print the checks using one of the following methods:
Click Save & Close when you are finished filling out all the checks, and
then choose File | Print Forms | Checks from the menu bar.
In the last Write Checks window, click the arrow to the right of the Print
button at the top of the Write Checks window, and choose Print Batch.
Postings for Recorded Checks
The postings for recorded check transactions are quite simple:
Account Debit Credit
Bank account Total of all checks written
An expense account Total of all checks assigned
to this account
Another expense account Total of all checks assigned
to this account
Another expense account Total of all checks assigned
to this account
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Managing Sales Tax
If you collect sales tax from your customers, you have an inherent accounts payable
bill because you have to turn that money over to the state taxing authorities. (The
same is true for payroll withholdings.)
N O T E : Even if youve enabled multicurrency, sales tax is tracked only in your
home currency.
In order to print reports on sales tax (so you can fill out your state sales tax
forms), you have to configure your sales tax collections in QuickBooks. If you
collect multiple sales taxes, that configuration effort can be a bit more complicated.
While the following sections often use the termstate, your tracking and reporting
needs may not be limited to state-based activities. In recent years many states have
created multiple sales tax authorities within the state (usually a specific location such
as a county or a group of ZIP codes, each having its own tax rate). Businesses in those
states may have to remit the sales tax they collect to both the state and the local sales
tax authority (or to multiple local sales tax authorities). As a result, tracking sales tax
properly (which means in a manner that makes it possible to fill out all the forms for all
the authorities) has become a very complicated process.
Configuring Sales Tax Settings
If you collect and remit sales tax, you need to configure the sales tax features in
QuickBooks. You must set up tax codes to link to your customers, so you know
whether a customer is liable for sales tax. You must also set up tax items, so you
can set a rate (a percentage rate) and link the item to a taxing authority.
Start your sales tax setup by choosing Edit | Preferences from the menu bar.
Click the Sales Tax icon in the left pane and select the Company Preferences tab to
see the window shown in Figure 7-8.
If you didnt enable the sales tax feature during the EasyStep Interview, do it now
by selecting the Yes option in the section labeled Do You Charge Sales Tax? The
following sections cover the other options in this dialog.
Sales Tax Payment Basis
There are two ways to remit sales tax to the taxing authorities, and theyre listed in
the When Do You Owe Sales Tax section of the Sales Tax Preferences dialog:
As Of Invoice Date, which is accrual-based tax reporting.
Upon Receipt Of Payment, which is cash-based tax reporting.
Check with your accountant (and the taxing authority) to determine the method
you need to select. Each state has its own reporting rule.
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Sales Tax Payment Dates
You must indicate the frequency of your remittance to the taxing authority in the
When Do You Pay Sales Tax section of the Preferences dialog. Your sales tax
licensing agency indicates the schedule you must use.
Default Sales Tax Codes
QuickBooks has two discrete entities for configuring sales tax: tax codes and tax
items. Lots of people get them confused, so lets clarify their definitions and use,
starting with definitions:
A tax code indicates tax liability, which means the entity to which its linked (a
customer or an item) is deemed to be taxable or nontaxable, depending on the
code. This is really a yes or no answer to the question, Is this taxable? In
addition, if you take the trouble to do so, you can have tax codes that explain
why an entity is taxable or nontaxable. Tax codes contain no information about
the tax rate or the taxing authority (the payee for the check you write when
you remit the sales tax you collected).
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FIGURE 7-8 Set your sales tax preferences.
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Tax items contain information about the tax rate and the taxing authority to
which you remit taxes and reports. Like all other items, they appear on sales
forms, and the tax is calculated when you add the tax item to the taxable line
items (products and services) on an invoice or sales receipt.
Linking a sales tax code to customers and items lets you (and the QuickBooks
sales feature) know whether sales tax should be calculated for that item for this
customer. If a customer is liable for sales tax, it doesnt mean that every item you
sell the customer is taxable, because some items arent taxable. If an item is taxable,
its taxable only to customers whose tax code indicates they are liable for sales tax.
When you create items in your company file, you indicate whether the item is
taxable under your state tax laws. If the item is taxable, the rate thats applied is
connected to the customer, not to the item. Technically, a customers sales tax liability
is like a light switch; its either on or off (techies call this scenario Boolean, which
means the only possible answers or definitions are On/Off or Yes/No). In the spirit of
Boolean mathematics, QuickBooks prepopulates the Sales Tax Preferences dialog with
the following two tax codes:
Tax Means liable for sales tax
Non Means not liable for sales tax
For many businesses, thats enough; they dont need any additional tax codes for
customers or for items. They can move on to creating tax items so their rates are
calculated on sales forms. However, for some companies, those two tax codes arent
enough. Their state rules governing sales tax reports, and state reporting forms,
may require more information.
For nontaxable customers, some states want to know why a nontaxable
customer isnt charged sales tax. Is a customer nontaxable because its out of state
and the rules say you dont have to collect taxes for out-of-state sales? Is a customer
nontaxable because its a nonprofit organization? Is a customer nontaxable because
its a government agency? Is a customer nontaxable because its a wholesale
business and collects sales tax from its own customers? (The last definition may
describe your business, and your suppliers have you configured as nontaxable.) If
your state requires this information, you must create tax codes to match the
reporting needs (covered in the next section, Creating Sales Tax Codes).
For taxable customers, you may want to use tax codes to specify customers as
taxable in another state (if you collect taxes from out-of-state customers and remit
those taxes to that states taxing authority).
States that have instituted multiple tax rates depending on a customers location
want to know which location within the state the customer occupies, because that
location determines the tax rate. Your reports on sales taxes have to subtotal your
collections by location. In fact, in some states, you have to send individual sales tax
reports to individual local tax authorities. If your state operates in this manner, you
should solve this with tax items, not tax codes, because part of your configuration
task is the tax rate (which isnt part of a tax code, its only part of a tax item).
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Creating Sales Tax Codes
Its not difficult to create codes to track customer sales tax status in a manner more
detailed than taxable and nontaxable. You just add new sales tax codes to fit
your needs.
Follow these steps to add a new sales tax code:
Choose Lists | Sales Tax Code List.
Press CTRL-N to open the New Sales Tax Code window.
Enter the name of the new code, using up to three characters.
Enter a description to make it easier to interpret the code.
Select Taxable if youre entering a code to track taxable sales.
Select Non-taxable if youre entering a code to trace nontaxable sales.
Click Next to set up another tax code.
Click OK when youve finished adding tax codes.
This procedure works nicely for specifying different types of nontaxable
customers. For example, you could create the following tax codes for nontaxable
categories:
NPO for nonprofit organizations
GOV for government agencies
WSL for wholesale businesses
OOS for out-of-state customers (if you arent required to collect taxes from out-
of-state customers)
For taxable customers, the permutations and combinations are much broader, of
course. If youre required to collect and remit sales tax for some additional states,
make sure the customers configuration indicates taxable, and create codes for
customers in those states using the postal abbreviations for each state.
Sales Tax Items
A sales tax item is a collection of data about a sales tax, including the rate and the
agency to which the sales tax is remitted. QuickBooks uses sales tax items to
calculate the Tax field at the bottom of sales forms and to prepare reports for tax
authorities. The Sales Tax Preferences dialog has a section named Set Up Sales Tax
Item, and you can create sales tax items here or in the Item List (see the section
Creating Sales Tax Items).
Most Common Sales Tax
The Sales Tax Preferences dialog has a field named Your Most Common Sales Tax
Item, and you must enter a sales tax item in that field. Of course, to do that, you
must first create at least one sales tax item. This item becomes the default sales tax
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item for any customers you create hereafter, but you can change any customers
default sales tax item.
Creating Sales Tax Items
You can create a sales tax item in either of the following ways:
In the Sales Tax Preferences dialog, click the Add Sales Tax Item button.
Choose Lists | Item List from the menu bar to open the Item List. Then press
CTRL-N.
Both actions open the New Item dialog.
Follow these steps to create a sales tax item:
Select Sales Tax Item as the item type.
Enter a name for the item. If youre in a state that has codes for each county,
ZIP code, or other regional tax area, use the states code for the specific sales tax
rate and taxing authority.
Optionally, enter a description.
Enter the tax rate. QuickBooks knows the rate is a percentage, so it
automatically adds the percent sign to the numbers you type (for instance,
enter 6.5 if the rate is 6.5 percent).
Select the tax agency (a vendor) to which you pay the tax from the drop-down
list, or add a new vendor by choosing <Add New>.
Click OK.
Creating Tax Groups
In some states, the tax imposed is really two taxes, and the taxing authority collects
a single check from you but insists on a breakdown in the reports you send. For
example, in Pennsylvania, the state sales tax is 6 percent, but businesses in
Philadelphia and Pittsburgh must charge an extra 1 percent. The customer pays
7 percent, a check for 7 percent of taxable sales is remitted to the states revenue
department, but the report that accompanies the check must break down the
remittance into the individual taxesthe total for the 6 percent state tax, and the
total for the 1 percent local tax. In other states, the customer pays a single tax, but
the portion of that tax that represents the basic state sales tax is remitted to the
state, and the locally added tax is remitted to the local taxing authority.
The challenge is to display and calculate a single tax for the customer and report
multiple taxes to the taxing authorities. Tax groups meet this challenge. A tax
group is a single entity that appears on a sales transaction, but it is really multiple
entities that have been totaled. QuickBooks creates the tax amount by calculating
each of the multiple entries and displaying its total (the customer is being charged
the combo rate). For example, in Pennsylvania, a Philadelphia business would
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use a tax group (totaling 7 percent) that includes the 6 percent state sales tax and
the 1 percent Philadelphia sales tax.
To create a tax group, you must first create the individual tax items, and then
add those items to the group item.
Follow these steps to create a tax group:
Open the Item List by clicking the Item icon on the toolbar, or by choosing
Lists | Item List.
Press CTRL-N to open the New Item dialog.
Select Sales Tax Group as the Type.
Enter a name for the group.
Enter a description (which appears on your sales forms).
In the Tax Item column, choose the individual tax code items you need to
create this group. As you move to the next item, QuickBooks fills in the rate,
tax agency, and description of each tax you already selected. The calculated
total (the group rate) appears at the bottom of the dialog (see Figure 7-9).
When youve added all the required tax code items, click OK.
Select this item for the appropriate customers when youre creating sales
transactions. QuickBooks will offer to replace the current tax item for the customer
(if a different tax item exists) with the new tax group.
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FIGURE 7-9 This sales tax group applies multiple taxes to sales transactions.
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Assigning Codes and Items to Customers
By default, QuickBooks assigns the tax code to all customers, as well as the tax item
you specify as the default in the Sales Tax Preferences dialog. These fields are on the
Additional Info tab of the customers record, and you can edit each customers
record to make changes to either field. Most of the time, its the default tax item
(not the tax code) for a customer that requires changing, especially if youre in a
state that bases tax rates (and perhaps taxing authorities) on the delivery location
for customers.
If you already created a great many customers, opening each record to make
changes can be onerous. Instead, you can use the Add/Edit Multiple List Entries
window to assign or change the tax items or codes for multiple customers (you may
have to customize the columns in this window to bring these fields into view). You
might also want to wait until you use a customer in a sales transaction. Then, in the
transaction window, select a new tax code or tax item (or both) from the drop-
down list in the appropriate field. When you save the transaction, QuickBooks
cooperates with this approach by asking you if you want to change the customers
tax information permanently. The customer record changes, and hereafter the new
tax information appears in any transaction window for this customer.
Running Sales Tax Reports
At some interval determined by your taxing authority, you need to report your total
sales, your nontaxable sales, and your taxable sales, along with any other required
breakdowns. Oh, yes, you also have to write a check to remit the taxes.
Sales Tax Liability Repor t
QuickBooks has reports to help you fill out your sales tax forms. Choose Vendors |
Sales Tax | Sales Tax Liability. Use the Dates drop-down list to select an interval that
matches the way you report to the taxing authorities. By default, QuickBooks
chooses the interval you configured in the Preferences dialog, but that interval may
only apply to your primary sales tax. If you collect multiple taxes, due at different
intervals, you must create a separate report with the appropriate interval to display
those figures. Figure 7-10 shows a Sales Tax Liability report for a monthly filer.
Tax Code Repor ts
If you have to report specific types of taxable or nontaxable sales, you can obtain
that information by creating a report on the tax code you created to track that
information. Choose Lists | Sales Tax Code List and select (highlight) the tax code
for which you need a report. Press CTRL-Q to see a report on the sales activity with
this tax code.
You dont have to create these reports one code at a time; you can modify the
report window so it reports all of your tax codes, or just those you need for a
specific tax authoritys report. In fact, you can modify the report so it reports totals
instead of every sales transaction.
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Follow these steps to modify this report:
Click the Modify Report button on the report window.
In the Display tab, use the Columns list to deselect any items you dont require
for the report (for example, the Type, Date, and Number of an invoice/sales
receipt, and the contents of the Memo field).
In the Filters tab, choose Sales Tax Code from the filter list.
Click the arrow to the right of the Sales Tax Code field and select the
appropriate option from the drop-down list, using the following guidelines:
All Sales Tax Codes, which displays total activity for the period for every code.
Multiple Sales Tax Codes, which opens the Select Sales Tax Code window,
listing all codes, so you can select the specific codes you want to report on.
All Taxable Codes, which displays total activity for the period for each
taxable code.
All Nontaxable Codes, which displays total activity for the period for each
nontaxable code.
Click OK to return to the report window, where your selections are reflected.
Unless you want to take all these steps again when you need this report, click
the Memorize button to memorize the report.
Remitting the Sales Tax
After you check the figures (or calculate them, if you have multiple reports with
different standards of calculation), its time to pay the tax.
Follow these steps to remit the sales tax:
Choose Vendors | Sales Tax | Pay Sales Tax to open the Pay Sales Tax window.
Select the bank account to use if you have more than one.
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Check the date thats displayed in the field named Show Sales Tax Due
Through. It must match the end date of your current reporting period (for
instance, monthly or quarterly).
Click in the Pay column to insert a check mark next to those youre paying
now. If youre lucky enough to have the same reporting interval for all taxing
authoritiesalthough it hardly ever seems to work that wayjust click the Pay
All Tax button (the name of which then changes to Clear Selections).
If youre going to print the check, be sure to select the To Be Printed check box
at the bottom of the dialog. If you write the check manually, or if you remit
sales tax online using an electronic transfer from your bank, deselect the To Be
Printed check box. (For electronic payment, open the bank account register
and change the check number QuickBooks inserted automatically to ACH or
another code indicating an electronic transfer.)
Click OK when youve completed filling out the information. The next time
you print or write checks, the sales tax check is in the group waiting to be
completed.
N O T E : QuickBooks doesnt ask for a start date because it uses the period
duration defined in your Sales Tax Preferences.
Adjusting Sales Tax Amounts
If you need to adjust the amount of sales tax due, select the appropriate sales tax
item and click the Adjust button to open the Sales Tax Adjustment dialog.
Ill 7-3
Specify the amount by which to reduce or increase the tax amount. Specify an
Adjustment Account (you can create a specific account for this adjustment), and
click OK to return to the Pay Sales Tax window, where the amount has been
changed to reflect your adjustment.
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C
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8
Running Payroll
I
n this chapter:
Choose a payroll service
Set up payroll
Set up employee information
Enter historical data
Issue payroll checks
Use the Employee Center
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If you plan to do your own payroll rather than employ a payroll service, the
information you need to set up and run payroll is in this chapter.
QuickBooks Do-It-Yourself Payroll Services
QuickBooks offers a variety of do-it-yourself payroll services, and if you want to do
your payroll in-house, heres a brief overview of the offerings:
Basic Payroll, which provides tax tables and automatic calculations of paycheck
deductions and employer expenses for up to three employees. No tax forms are
included, so you either need to work with your accountant on tax filings or
prepare your tax forms manually. QuickBooks makes it easy to prepare tax
forms manually by providing detailed reports in Excel (covered in Chapter 9).
Enhanced Payroll, which adds tax forms and e-filing for both federal and state
reporting.
Assisted Payroll, which lets you run payroll and then turns the job of
depositing withholdings, paying employer contributions, and printing and
filing government forms over to QuickBooks.
Additional plans are available based on these payroll offerings such Intuits Online
Payroll service and Enhanced Payroll for Accountants, which lets you prepare payroll
for up to 50 companies (including preparation of Federal and State forms) and includes
After The Fact payroll data entry capability.
Direct Deposit
With any of the payroll services, you can purchase direct deposit services for your
employees. Employees must sign a form giving permission for direct deposit, and
you can print those forms directly from your QuickBooks software (QuickBooks
provides a link to display and print the forms during the sign-up process). Employees
can opt to deposit their entire paychecks into one bank account or split the amount
between two bank accounts.
N O T E : Unless youve signed up for QuickBooks payroll services, no
calculations occur against the gross amount of any paycheck you create. No
withholding appears, no amounts are posted to employee and employer liability
accounts, and there is no net amount. You can, if you wish, use your own printed
tax table (Employers Circular E from the IRS), calculate the deductions manually,
and then issue a paycheck for the net amount to each employee. If you dont
want to face that, you must sign up for payroll services.
Signing Up for Payroll Services
To learn about the QuickBooks payroll offerings, choose Employees | Payroll and
then, from the submenu, choose either Learn About Payroll Options or Order
Payroll Service (both menu choices produce the same result).
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After youve used the links on the Payroll Services website to learn about all the
payroll offerings, follow the prompts to sign up.
When the sign-up process is completed, you download the files you need to run
payroll. The new files are automatically added to your QuickBooks system; you
dont have to do anything to install them. In addition to the payroll software, the
current tax table is added to your system. After payroll is installed, your Employees
menu has all the commands you need to run payroll.
Configuring Payroll Elements
To produce accurate paychecks, you need to complete setup tasks, including adding
accounts to your chart of accounts, creating payroll items (salary, wages, and so
on), identifying the payroll taxes you have to withhold, the payroll taxes you have
to pay as an employer, and the deductions or company contributions for benefits.
And you also need to set up tax information for each employee, such as dependents
and deductions.
You can set up payroll in either of two ways:
Manually
Using the Payroll Setup Wizard
The following sections cover all the elements and components involved in
setting up payroll manually, and later in this chapter theres a walk-through of the
Payroll Setup Wizard. You can read both to decide the way you want to approach
setup.
Accounts
You may need to create new accounts in your chart of accounts for payroll. If you
want to use a bank account specifically for payroll instead of using your main bank
account (generally a good idea), you must open the account at your bank and also
add the new bank account to your chart of accounts. In addition, youll need at
least the following accounts:
Payroll Liabilities, which tracks the deductions from paychecks
Payroll Expenses, which tracks company payroll expenses (company Social
Security, Medicare, pension, medical, and so on)
QuickBooks automatically adds the Payroll Liabilities and Payroll Expenses
accounts when you enable payroll. You can use each account for all payroll
transactions or create subaccounts to track individual payroll liabilities and
expenses.
You should use subaccounts for payroll liabilities and payroll expenses, because
its much easier to determine the current status of individual liabilities and expenses
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(see Figure 8-1). Link your payroll items to the subaccounts and never post to the
parent account. (When you create reports, any balances in the subaccount are
totaled in the parent account.)
Vendors
Running payroll creates liabilities for payroll taxes, other deductions that your
company must remit, and possibly employer benefits that must be paid. To be able
to send the money you owe to the appropriate vendors, set up those vendors before
you set up payroll items so that you can assign the payroll items to the proper
vendors. (Payroll items are discussed in the next section.)
For withholding of federal income taxes, Medicare, FICA, and the matching
employer Medicare and FICA payments, the vendor you use depends on the way
you transmit the funds. If you use electronic transfer of funds, the vendor is the
United States Treasury Department. If you use a physical check (along with
coupons provided by the IRS), the vendor is the bank that has the checking account
for your payroll checks.
For local and state income tax, unemployment, disability, workers comp, and
deductions for benefits such as health insurance, set up a vendor for each agency
you need to pay. Most states now offer electronic payments for payroll remittances
on their websites, but if you use checks you probably have forms or coupons for the
required payment interval (usually monthly or quarterly).
Payroll Items
A QuickBooks payroll item is any element that is part of a payroll check. The
number of individual elements that go into a paycheck may be more than you
thought. Consider this list, which is typical of many businesses:
Salaries
Wages (hourly)
Overtime (time and a half)
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Double-time
Federal tax withholdings (including FIT, FICA, and Medicare)
State tax withholdings
State unemployment and disability withholdings
Local tax withholdings
Pension plan deductions
Medical insurance deductions
Life insurance deductions
Garnishes
Union dues
Reimbursement for auto expenses
Bonuses
Commissions
Vacation pay
Sick pay
Advanced Earned Income Credit
And dont forget that you also have to track company-paid payroll items, such as
matching FICA and Medicare, employer contributions to unemployment (both state
and federal), state disability funds, pension and medical benefit plans, and more!
You can view your payroll items and create new payroll items by choosing Lists |
Payroll Item List to open the Payroll Item List seen in Figure 8-2. QuickBooks adds
some items to the list automatically when you enable payroll services. Usually, local
taxes, medical benefits deductions, and other payroll items are missing (and the
items that do exist may be missing information about the vendor, so youll have to
edit them to add that information).
To add a new payroll item, press CTRL-N to open the Add New Payroll Item
Wizard shown in Figure 8-3.
The two options presented on the first wizard window dont offer full
explanations of their differences, so Ill explain what happens with each option.
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EZ Setup of Payroll Items
If you select the EZ Setup option, when you click Next you see a list of payroll item
types. The descriptions are brief, but essentially you can create any type of pay,
deduction, or company benefit, including payroll items that are paid in full by the
company, deducted in full from employees, or paid by both the company and the
employee. The only types of payroll items you cannot create in the EZ Setup are
state and local payroll taxes, including state unemployment and/or disability taxes.
When you use the EZ Setup option, after you select the type of item, QuickBooks
loads the Payroll Setup Wizard and then displays the Add New dialog from that
feature. (The Payroll Setup Wizard is an alternate method of setting up all the
elements in your payroll systemsee Using the QuickBooks Payroll Setup
Wizard later in this chapter.)
The questions and explanations you see in the Payroll Setup Wizard are more
basic than the questions youre asked if you select the Custom option for setting up
a payroll item. You need less knowledge of accounting jargon to complete the setup,
but youll spend more time moving through more wizard windows, because most of
the data you provide is entered one wizard window at a time. Most of the wizard
windows ask one question or require a single answer.
This does not mean you can set up a payroll item accurately if you know nothing
about deductions, benefits, or about the accounting and legal issues involved with
payroll benefits and deductions; it merely means the explanations you see when
youre asked to provide information are rather user-friendly.
For example, if youre setting up a benefit such as health insurance, pension
benefit, or any form of a benefit in a cafeteria plan, the wizard asks you if the
benefit cost is borne entirely by the company, entirely by the employee, or shared
between both parties. Depending on your answer, the wizard moves through the
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ensuing windows to set up the necessary payroll item (or multiple items if you
require the employee deduction and the employer contribution). If the employee
contributes some or all of the cost, you have to know whether its a pre-tax or after-
tax deduction, and you have to know how the deduction affects the employees W-2
form. This means that even if you choose the EZ Setup option you cant do this
properly if you have no information about payroll issues; it is imperative that you
discuss the payroll items required for your company with your accountant.
Custom Setup of Payroll Items
If you select the Custom Setup option, the list you see when you click Next is all
inclusive, because you can set up all the payroll item types offered in the EZ Setup
list of payroll types, and you can also set up state and local payroll items.
When you select a payroll item type, the wizard moves through information
windows without asking the kind of easy-to-understand questions the EZ Setup
presents; on the other hand, each window contains all the fields for the required
information instead of walking you through multiple windows to answer questions
and fill out a single field.
For example, if you have a health benefit with costs shared between the
company and the employee, the wizard isnt going to remind you that you have to
set up two items, one for the company payment and another for the employee
deduction. You just have to know that both tasks must be completed (they are
separate items). In the second wizard window, you select Deduction and establish
the employee contribution (and you have to know which types of deductions are
pre-tax and which are after-tax, and whether it affects the W-2 form). Then you
have to start the wizard again to select Company Contribution in the second wizard
window to set up the company side of the health benefits item. If you have detailed
instructions from your accountant, the Custom option is a quicker way to set up all
your payroll items.
Use the wizard to create all the payroll items you need.
Setting Up Employees
The information about your employees must be accurate; otherwise, you may find
yourself having to adjust payroll information inside of QuickBooks and then having
to report these changes to the IRSwhich means more work for you and potential
confusion with the IRS about your payroll withholding data.
Create an Employee Template
There is a great deal of information to fill out for each employee, and some of it is
probably the same for all or most of your employees. For example, you may have
many employees who share the same type of pay (salary or hourly wage) or the
same deductions for medical insurance.
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To avoid entering the same information over and over, you can create a template
and then apply the information to all the employees who match that data. Youll
save yourself lots of time, even if you have to edit one or two entries for some
employees because their data differs from the template.
To get to the template, you have to open the Employee Center by choosing
Employees | Employee Center from the menu bar.
Click the button labeled Manage Employee Information at the top of the
window, and choose Change New Employee Default Settings from the submenu
that appears. This opens the Employee Defaults window, where you can enter the
data that applies to most or all of your employees.
Ill 8-1
The information you put into the template is automatically added to the Payroll Info
tab for each employee you create hereafter (discussed in the next section, Creating
Employees). You can skip any field for which there isnt a common payroll item.
Click in the Item Name column of the Earnings box, and then click the arrow
to see a list of earnings types that youve defined as Payroll Items. Select the one
that is common enough to be suitable for a template.
In the Hourly/Annual Rate column, enter a wage or salary figure if theres one
that applies to most of your employees. If theres not, just skip it and enter each
employees rate in the individual employee record later.
Use the arrow to the right of the Payroll Schedule field and select a schedule (if
youve established payroll schedules). See the section Payroll Schedules later
in this chapter for more information.
Select a pay frequency (if you created schedules and selected one, QuickBooks
automatically uses that schedule to fill in the Pay Frequency field).
Use the Class field if youve enabled classes to track data.
If youre using QuickBooks time-tracking features to pay employees, you also
see a check box labeled Use Time Data To Create Paychecks. Put a check mark
in the check box to enable the feature.
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If all or most of your employees have the same additional adjustments (such as
insurance deductions, 401(k) deductions, or reimbursements for car expenses),
click in the Item Name column in the Additions, Deductions, And Company
Contributions box, and then click the arrow to select the appropriate adjustments.
Click the Taxes button to open the Taxes Defaults dialog, and select those taxes
that are common and therefore suited for the template. The State tab and the
Other tab (usually local payroll taxes) contain tax data that probably applies to
all or most of your employees.
Click the Sick/Vacation button to set the terms for accruing sick time and
vacation time if your policy is similar enough among employees to include it in
the template.
When you are finished filling out the template, click OK to save it.
Creating Employees
Now youre ready to tell QuickBooks about your list of employees. Open the
Employee Center and click New Employee to open a New Employee form.
The New Employee form opens with the Personal Info tab selected in the
Change Tabs drop-down list at the top of the form. This selection displays three
tabs: Personal, Address And Contact, and Additional Info.
Additional tab sets exist, and you use the drop-down list in the Change Tabs
field at the top of the window to access them. The following tab categories are
available in the drop-down list:
Personal Info A three-tab dialog where you enter personal information about
the employee.
Payroll And Compensation Info Where you enter information about
earnings, taxes, deductions, and other financial data.
Employment Info Where you enter information about the employees hiring
date and other employment history.
Workers Compensation Only available if you signed up for Enhanced
Payroll. If so, workers comp is automatically enabled (you can disable it in the
Payroll & Employees category of the Preferences dialog).
All of these tabs are covered in the following sections.
Personal Info Tab Set
The Personal Info tab set (see Figure 8-4) is the place to record personal
information about this employee. It has three tabs because the information is
divided into three categories.
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Personal Tab Enter the employees name, social security number, and the way
the name should be printed on paychecks. Enter the gender and/or date of birth if
you have a company policy of recording this information, or if any tax or benefits
agency requires it. For example, your state unemployment form may require you to
note the gender of all employees; your medical or life insurance carrier may require
the date of birth.
Address And Contact Tab Use this tab to record the employees address, as well
as information about contacting the employee (phone number, e-mail, fax, and so
on). The address is required for W-2 forms.
Additional Info Tab Use this tab to enter the employee number (if your company
uses employee numbers). This tab also contains a Define Fields button, so you can
create custom fields for employee records.
Payroll And Compensation Info Tab Set
This tab set has only one tab, and it contains the information QuickBooks needs to
pay employees (see Figure 8-5). Where the employees payroll items and amounts
match information already filled in from the default template, just accept the items.
Otherwise, make additions and changes as necessary for this employee.
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If the amount of the earnings or the deduction is the same every week, enter an
amount. If it differs from week to week, dont enter an amount on the employee
card. Instead, youll enter that information when you create the payroll check.
Employee Tax Information Click the Taxes button to open the Taxes dialog,
which starts with Federal tax information, as seen in Figure 8-6. Fill in any data
that wasnt automatically filled in from the Employee Template, and modify data
that is different for this employee.
Move to the State tab and configure the employees status for the state. This
varies from state to state, of course, and you should check with your accountant if
you arent sure of something you find there.
N O T E : QuickBooks has built in a great deal of state information. Depending
on the state, you should see the appropriate withholdings and company-paid
items. For example, states that dont deduct SUI from employees have a check
box for SUI (Company Paid); while states that collect disability funds from
employees will display the appropriate check box.
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FIGURE 8-5 Enter information about this employees compensation and deductions (excluding
tax deduction).
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In the Other tab, apply any local payroll tax that applies to this employee. If you
havent already configured that tax in the Payroll Item List, you can click <Add
New> in the Item column to enter it now.
Click OK to save the tax status information and return to the Payroll Info tab.
Sick and Vacation Pay Information Click the Sick/Vacation button and enter
the configuration for this employee (which may include data from the Employee
Template). When you are finished, click OK to return to the employee card.
Direct Deposit The Payroll Info tab has a Direct Deposit button, which you can
use to establish direct deposit of the employees paycheck to his or her bank
account. If you havent signed up for direct deposit, the window that opens offers
the chance to enroll.
Employment Info Tab Set
Select Employment Info in the Change Tabs drop-down list to see the Employment
tab, which lets you track the following information about the employee:
Hire date
Release date (fill this in when an employee leaves your company)
Employee type
For more information on employee types, see the section Understanding
Employee Types.
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FIGURE 8-6 Configure the employees tax information.
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Workers Compensation Tab Set
For Enhanced Payroll subscribers, if you havent disabled workers comp tracking in
the Payroll & Employees category of the Preferences dialog, choose Workers
Compensation from the Change Tabs drop-down list. Assign the workers comp
code that applies to the employee, or select Exempt if this employee is exempt from
workers comp.
Understanding Employee Types
The Type field on the Employment Info tab offers four choices, which are explained
in this section. The selection you make has an impact on the way your tax returns
are prepared. You must check with your accountant if you have any questions about
the type you should assign to any employee.
Regular Employee
A Regular employee is a person you hired for whom you deduct withholdings, issue
a W-2, and so on. Its important to have every employee fill out a W-4 form every
year (dont accept I did that last year, nothing has changed).
T I P : If you need extra W-4 forms, you can download them from the IRS at
www.irs.ustreas.gov. Go to the forms section, select W-4, and print or download
the form and print as many copies as you need.
Of ficer Employee
An officer is someone who is an officer of a corporation. If your business isnt
incorporated, you have no officers. On federal corporate tax returns, you are
required to report payroll for officers of the corporation separately from the regular
payroll amounts. Selecting Officer as the type has no impact on running your
payroll (calculations, check printing, and so on); it only affects reports.
Statutory Employee
A statutory employee is someone who works for you that the IRS has decided
qualifies as an employee instead of as an independent contractor. The list of the job
types that the rules cover and the definition of independent contractor is the subject
of much debate (especially in IRS audit hearings). The IRS has a list of criteria that
must be met in order to qualify as an independent contractor (which means you
dont have to put that person on your payroll, you dont have to withhold taxes, and
you dont have to pay employer taxes). The rules that govern this change frequently,
so its important to check the rules in Circular E or with your accountant.
Owner Employee
Owner and Employee are mutually exclusive terms to the IRS. If you own a
company, that means the company is a proprietorship; its not a corporation
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(a corporation doesnt have owners; it has officers and directors). The same thing is
true of a partnership, which has multiple owners. You cannot put yourself on the
payroll; when you draw checks, they cannot be paychecks. Post the checks against
a Draw account in the Equity section of your chart of accounts.
QuickBooks puts this type in the list in case its too late and youve already listed
the proprietor or partners in the Employee List. The QuickBooks payroll program
wont perform payroll tasks for any employee of this type. If you did add a
proprietor or partner name to the Employee List, delete it rather than assign this
type.
Entering Historical Data
If youre not starting your use of QuickBooks at the very beginning of the year, you
must enter all the historical information about paychecks. This is the only way to
perform all of the required year-end tasks. You cannot give your employees two W-2
forms, one from your manual system and another from QuickBooks, nor can you
file your annual tax reports on a piecemeal basis.
No matter what your fiscal year is, your payroll year is the calendar year. Even
though you can start using payroll for the current period before you enter the
historical data, remember that the absence of historical data may affect some tax
calculations. If there are withholding amounts that cease after a certain maximum
(perhaps your state only requires SUTA/SUI for the first $8,000.00 in gross payroll),
youll have to adjust the deductions on the current paychecks manually. If the
historical data is entered, QuickBooks can calculate the maximum deduction
properly and stop deducting these amounts.
T I P : To make historical data entry easier, go live with payroll at the beginning
of a calendar quarter.
Understanding Historical Data
The historical data is the payroll you issued before the date on which you let
QuickBooks take over your payroll chores (which is called the go live date). Starting
with the go live date, youll be entering payroll checks in QuickBooks; those checks
are not part of the historical data. Its important to understand how the go live date
affects the task of entering historical data, so here are some guidelines:
Payroll records are summarized quarterly, because your 941 reports are due
quarterly.
You cant enter summarized data for the quarter thats current (the quarter that
the go live date falls in). Instead, for the current quarter, you must enter data
for each individual pay period (weekly, biweekly, semimonthly, or monthly).
For previous quarters, you can enter quarterly totals.
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If your go live date is any date in the first quarter, you have to enter historical
data for each pay period, because you dont have a full quarter to summarize.
If your go live date is in the second quarter, enter a quarterly total for the first
quarter and then enter the individual pay period numbers for the second
quarter, up to the go live date.
If your go live date is in the third quarter, enter quarterly totals for the first two
quarters and then enter each pay period up to the go live date.
If your go live date is in the fourth quarter, you can follow the same pattern,
but it might be just as easy to wait until next year to begin using QuickBooks
payroll.
Entering the History Manually
The truth is, payroll is so easy to do if everything is set up properly that entering
each historical payroll run individually isnt difficult, and its great training for
creating payroll checks. For the first couple of pay periods, stop to look at the
details (the postings to general ledger accounts) after you enter historical totals,
and compare them to your manual records. This gives you an opportunity to
understand what QuickBooks is doing, in addition to checking accuracy.
However, if its close to the end of the year, this is a lot of work. You can enter the
history in batches, using the secret Payroll History feature (secret because its
not documented in QuickBooks but a lot of accountants know about it), or use the
QuickBooks Payroll Setup Wizard (covered in the section, Using the QuickBooks
Payroll Setup Wizard), which walks you through all payroll setup processes,
including payroll history, using easy-to-understand wizard windows.
Manually Entering Payroll History in Batches
Heres an undocumented shortcut for entering year-to-date payroll information (you
must have created all your employees to use it).
Choose HelpAbout QuickBooks to display the Product Information window.
Then press the keyboard combination CTRL-SHIFT-Y. The Setup YTD Amounts
Wizard opens to walk you through the steps of entering year-to-date summary
information for each employee (see Figure 8-7).
Click Next to begin. The wizard replicates the historical balance entry information
that the QuickBooks Payroll Setup Wizard offers, but most people find this easier to
use, especially if theyve chosen to enter basic components manually.
The wizard asks you to specify three dates:
The date your payroll liability and expense accounts are affected. That means,
When should the data youre entering be posted to liability and expense
accounts that are associated with payroll items?
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The date your payroll bank accounts are affected. That means, When should
the net paycheck amounts be posted to your payroll bank account?
The check date of the first paycheck youll create using QuickBooks payroll.
This paycheck posts to all relevant accounts; there are no historical balances.
The correct dates might not be the same for all three categories. Following are
some examples of possible scenarios that should help you understand how to enter
the dates in these categories. For the purpose of these explanations, lets assume
youre entering historical information as of the end of April; your first QuickBooks-
produced paychecks will be the first payday in May.
If youve been doing payroll manually or through an outside service, and youve
remitted your liabilities and expenses, those amounts should have been posted
when you set up your opening QuickBooks balances. You dont want QuickBooks
to post the liabilities, expenses, and net check amounts again; instead, youre
entering historical data for the purpose of producing accurate reports and W-2
forms. Tell QuickBooks that the first date of your liability, expense, and bank
accounts is the day of your first May paychecks. Enter the first quarter payroll totals
for each employee, and then enter the individual payroll data for April (so you have
running totals for your quarterly reports). Your first paycheck using QuickBooks
date is the first payday in May.
If youve been using an outside payroll service, youve certainly posted the
payroll totals to the bank account you use for payroll, but you might not have been
posting liabilities and expenses to date, because the payroll service was taking care
of it and you wait for the quarterly reports to post amounts. Your last journal entry
for liabilities and expenses was at the end of the quarter (March 31). Your first
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FIGURE 8-7 This is a quick way to use your manual payroll records to summarize year-to-date
payroll information.
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posting of liabilities and expenses should be April 1, and your first posting of bank
account amounts should be May (the date of the first QuickBooks-produced
paycheck). Your first paycheck using QuickBooks date is the first payday in May.
These rules for entering historical payroll totals also apply when you use the
QuickBooks Payroll Setup Wizard.
Using the QuickBooks Payroll Setup Wizard
QuickBooks provides assistance for setting up payroll in the form of a wizard. You
can use the wizard to set up all the components required for payroll, or set up your
payroll items and employees manually and then use the wizard to enter your
historical data.
Regardless of whether you use the Payroll Setup Wizard to set up all your
components or to enter historical data only, be sure to set up all the vendors and
accounts you need to remit payroll withholding and employer payroll expenses
before using the wizard.
To use the wizard, choose Employees | Payroll Setup fromthe QuickBooks menu bar.
The wizard window opens with all the tasks listed in the left pane (see Figure 8-8).
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FIGURE 8-8 The QuickBooks Payroll Setup Wizard is divided into logical sets of tasks.
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If youre using the wizard to set up your payroll from scratch (you didnt
preconfigure any of the components as described in the previous sections of this
chapter), the setup process can take more time than it takes to perform those tasks
manually, but the wizard is rather user-friendly, demanding no knowledge of
accounting jargon, so you may prefer to use it. The wizard has a Finish Later
button, which you can click if you have to do other work, get tired, or get bored.
When you open the wizard again, you pick up where you left off.
The first few wizard screens are informational, indicating the data you need to
complete the wizard (the same information about employees, payroll items, deductions,
etc., discussed earlier in this chapter). The real work starts with Section 2, where the
wizard starts configuring payroll for your company.
Company Setup for Payroll
In the Company Setup section, the wizard starts with compensation, which means
payroll items that are compensationsalary, hourly wages, and so on. When youve
finished with that section, the wizard moves on to other payroll item types.
If youve configured payroll items manually, they appear in the wizard window,
and you can click Edit to view or change the settings.
If you havent yet set up payroll items, click Add New to open a mini-wizard that
walks you through the process (the same process initiated if you choose EZ Setup
of Payroll Items, which is covered earlier in this chapter).
The types of payroll items the wizard offers to set up include the following:
Types of compensation, such as salary, hourly wages, overtime, bonuses,
commissions, tips, and so on.
Benefits, such as insurance, pension, and so on. For each benefit you select,
you configure the employee/employer contribution rates.
Paid time off, such as sick leave and vacations. You can configure your formulas
for calculating vacation time and sick time (if you let employees accrue time
according to time worked).
Other additions and deductions, such as workers comp, auto expense
reimbursement, garnishments, union dues, and so on.
Setting Up Employees in the Wizard
In Section 3, the wizard moves on to the task of setting up employees. If you didnt
set up your employees manually, you can add each employee in the wizard, moving
through a series of windows in which you enter information about the employees
personal information, pay structure, and tax status. For each employee, you
designate the taxes and benefits that affect the employee.
When you finish entering your employee information, the wizard displays the
list of employees. If any employee is missing information, the wizard indicates the
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problem (if you entered your employees manually, the wizard automatically finds
the employee records and displays the same list if problems exist).
Some missing information isnt critical to issuing paychecks (for example, the
hire date), but QuickBooks requires the information in the employee record. If any
employee in the list has the notation Fix This Error Now, it means critical information
is missing, and the system either wont be able to issue a paycheck or wont be able
to issue a W-2 form at the end of the year. Regardless of whether the missing
information is critical or not, select the employee and click Edit to move through
the wizard and fix the problem.
Incidentally, if you use the wizard to set up employees, when you fail to fill in
required information the wizard displays a reminder, something that doesnt happen
when you set up employees manually.
Setting Up Payroll Taxes in the Wizard
In Section 4, you tell the wizard about the federal, state, and local taxes youre
responsible for. These are payroll items, so if you havent set up all these items
beforehand, you can use the wizard.
If youre setting up your taxes in the wizard, as you finish each section, the
wizard displays a list of all the taxes for that section. If you set up your taxes as
payroll items manually, the wizard finds those entries and uses them to populate
the list.
If the wizard finds anything amiss in your setup of any tax, the problem is
displayed in the Description column. Choose Edit to make the needed changes.
Entering Payroll History in the Wizard
In Section 5, you enter your historical payroll data. The wizard presents a set of
windows, starting with a window that asks if youve issued paychecks this year
(meaning outside of QuickBooks, of course). If you answer Yes, the next window
displayed is the Payroll Summary window, where you have access to three
preformatted tables into which youll enter the following year-to-date information:
Paychecks (monthly totals for each employee)
Payroll tax payments
Nonpayroll tax payments (company contributions to benefits, and so on)
Payroll Checkup
Step 6 is the Data Review, which you can run if you choose. QuickBooks asks if
youd like to go over your payroll settings, and if you select Yes, the wizard runs a
payroll checkup. You can also run a Payroll Checkup whenever you make changes
to your payroll components (employees, taxes, etc.) by choosing Employees | My
Payroll Service | Run Payroll Checkup.
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The QuickBooks Payroll Checkup is a wizard that walks through all the elements
required for running payroll (a task list). Each section of the wizards task list is
checked for errors. The errors the checkup may find include missing information,
invalid information (the format of an EIN number or state reporting number may
be incorrect), or any other data that doesnt match the standards built into the
QuickBooks payroll feature.
The program displays a report on the integrity of the data for prior quarters
(unless youre working in the first quarter, of course), and then, separately, the
integrity of the data for the current quarter.
Then, the program asks you about the federal and state forms youve filed to
remit withholdings and pay employer taxes. After youve filled in the information,
the program reconciles the totals against the payroll totals you entered previously.
If there are errors, the specifics are displayed, and you can correct the problem and
re-run the checkup.
Payroll Schedules
A payroll schedule is a way to separate different payroll intervals. For example, if your
company pays salaried employees and officers on a weekly basis and pays hourly
workers on a biweekly basis, you can run payroll by selecting the appropriate
schedule in order to make sure you pay the right employees on the right dates.
When you create a payroll schedule, you define how often you pay your
employees (weekly, biweekly, semimonthly, and so on), the pay period (the
workdays covered by the paycheck), the date on the paycheck, and the date you
prepare the payroll.
N O T E : The date you prepare the payroll differs from the paycheck date if
youre using direct deposit, which requires you to transfer payroll information two
days before the paycheck date.
The number of payroll schedules you have to create depends on the manner in
which you issue paychecks; following are some common scenarios:
If all your employees are paid on the same frequency, and all of them receive
physical paychecks, you dont need payroll schedules.
If all your employees are paid on the same frequency, and all of them have
signed up for direct deposit, you dont need payroll schedules.
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If all your employees are paid on the same frequency but some are signed up
for direct deposit and others receive physical paychecks, you may want to set
up two payroll schedules (because preparation for direct deposit is two days
earlier than the date on which youd normally print paychecks). On the other
hand, you can omit payroll schedules, print the paychecks early while youre
preparing the direct deposit checks, and put the paychecks away until payday.
If your employees are paid on different frequency sets (for example, some
weekly, some monthly), you can eliminate the need to select/deselect the
appropriate employees for a given pay date by creating payroll schedules.
Creating a Payroll Schedule
To create a payroll schedule, choose Employees | Add Or Edit Payroll Schedules. When
the Payroll Schedule List window opens, press CTRL-N to create a new payroll schedule.
In the New Payroll Schedule dialog, fill out the required information as follows:
A name for this schedule. Use descriptive text if youre setting up
multiple payroll schedules, such as weekly-checks, weekly-DirDep,
CommissionsOnly, and so on.
The pay period frequency for this schedule.
The next pay period end date. This is the time period covered by the paycheck,
which often is not the same as the paycheck date. For example, you may issue
paychecks on Thursday for the period ending the previous Friday.
The next paycheck date.
If your payroll is monthly or semimonthly, the dialog includes additional fields.
For example, if you issue paychecks semimonthly, you can select specific dates,
such as the 10th and the 25th, or you can select one midmonth date and then select
Last Day Of Month for the second check in that month.
After you create the schedule, QuickBooks offers to assign the schedule
automatically to any employees who are configured for the same pay frequency
as the new schedule.
Assigning Payroll Schedules to Employees
Each employee record has a field for the applicable payroll schedule in the Payroll
and Compensation Info tab. When you link the payroll schedule to the appropriate
employees, those employees appear when you select the schedule on the day youre
preparing paychecks.
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Special Payroll Runs
QuickBooks offers a way to issue a paycheck, or multiple paychecks, outside of the
schedules you create. When you choose Employees | Pay Employees, in addition to
the subcommand Scheduled Payroll, you see two commands you can use for special
payroll runs:
Unscheduled Payroll
Termination Check
Unscheduled Payroll Select this special payroll category if you need to create
bonus checks, commission checks, or any other type of paycheck that differs from a
regularly scheduled payroll run. You also have the option of adding the additional
compensation to a regular paycheck instead of running an unscheduled payroll.
Termination Checks Selecting this special payroll type, the use of which is rather
obvious from its name, opens the Enter Payroll Information dialog. Select the
terminated employee (put a check mark in the column to the left of the employee
name), the pay period ending date, the check date, the termination date, and the
hours (or amount if the employee is salaried). Click Continue, approve or change
the paycheck details; then print the check, assign a check number for a manual
check, or issue a direct deposit check.
Running Payroll
Its payday. All the historical data is entered. Its time to run the payroll. Begin
creating payroll checks as follows:
If you dont use payroll schedules, choose Employees | Pay Employees to open
the Enter Payroll Information dialog seen in Figure 8-9.
If you have payroll schedules, choose Employees | Pay Employees | Scheduled
Payroll to open the Employee Center with the Payroll tab selected (the Pay
Employees function appears in the right pane). Select the appropriate schedule
and click Start Scheduled Payroll to open the Enter Payroll Information dialog,
which looks the same as Figure 8-9, but only lists the employees linked to this
payroll schedule.
Select the employees to pay. If all the employees are receiving paychecks (the
usual scenario), click Check All.
For hourly employees who are configured for automatic payroll amounts using
timesheets, the number of hours is prefilled.
For hourly employees who are not paid from timesheets, you must fill in the
number of hours for this paycheck.
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Changing Paycheck Data
If you want to make changes to the paycheck, click the employees name to open
the Preview Paycheck dialog. You can add a payroll item such as a bonus, assign the
paycheck to a customer or job, or add a deduction such as a repayment of a loan or
garnishment. Click Save & Next to move to the next employee or click Save &
Close to return to the Enter Payroll Information dialog. (Theres also a Save &
Previous button in case you think you should go back to a previous check.)
Reviewing the Payroll Run
Click Continue in the Enter Payroll Information dialog to display the Review And
Create Paychecks window (see Figure 8-10), which displays all the financial
information for this payroll run. If anything is amiss, click Back to reconfigure the
paychecks or make other needed corrections.
Fill out the options for producing the paychecks (print the checks or
automatically assign check numbers in the bank account register for manual
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FIGURE 8-9 Begin configuring paychecks in the Enter Payroll Information dialog.
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checks), and then click Create Paychecks. QuickBooks creates the checks and
displays the Confirmation And Next Steps dialog.
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FIGURE 8-10 The details for each paycheck have been entered.
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If youre printing paychecks you can click Print Paychecks, or you can wait and
print them from the Print Forms command in the File menu (in case you have
another payroll schedule to process today, and you want to load the payroll checks
and process them in one fell swoop).
If you have direct deposit employees, click Print Pay Stubs. When the pay stubs
are printed, click the Send Payroll Data button on the Confirmation And Next Steps
dialog. This opens the Send Center window, and you can upload the direct deposit
data to Intuit for processing.
If you have another payroll schedule to run today (perhaps both weekly and
biweekly employees are paid today), repeat all the processes enumerated here.
The Employee Center
The Employee Center, seen in Figure 8-11, contains all the information about your
payroll components and also provides links to all the functions in the payroll
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FIGURE 8-11 The Employee Center is the repository of all payroll information and functions.
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system. Its a central location for everything you need to do or need to know. To
open this window, choose Employees | Employee Center.
N O T E : Users who do not have QuickBooks permissions to see payroll or
other sensitive information do not see payroll financial information when they
open the Employee Center.
If you subscribe to a QuickBooks payroll service, the left pane of the Employee
Center contains three tabs: Employees, Transactions, and Payroll. If you dont have
a payroll plan subscription, the pane lacks a Payroll tab.
Employee Tab
When you select an employee on the Employees tab, QuickBooks displays
information from the employees record on the top part of the right pane and
displays transaction information for that employee on the bottom part of the right
pane. You can change the choices in the Show and Date fields to filter the
transactions information.
You can open any listed transaction by double-clicking its listing. For example, if
you open a paycheck you can see the original check along with a summary of the
financial information. If you need to check any of the details, click Paycheck Detail
to see all the calculated amounts.
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Net to Gross Calculations for Enhanced
Payroll Subscribers
If you subscribe to Enhanced Payroll, you can enter the net amount of a check and let QuickBooks
calculate the gross amount. This is useful for bonus checks or another special payroll check for
which you need to make sure the employee receives a net check of a certain amount.
During the payroll run (either a regular payroll, or a special payroll for this individual
paycheck), select the employee for this payroll run. In the Preview Paycheck window, select the
option Enter Net/Calculate Gross, and then enter the net amount for this paycheck. QuickBooks
automatically calculates the gross amount and the deductions to arrive at the net amount you
entered.
FYI
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Transactions Tab
The Transactions tab (see Figure 8-12) lists all payroll-related transaction types.
Select a type to display the transactions youve created. You can use the Date field to
narrow the breadth of information.
Payroll Tab
The Payroll tab provides a one-stop center for all your payroll tasks (see Figure 8-13).
You can view transactions, create transactions, and generate the payroll forms you
need. Visit this tab periodically to make sure you dont miss any deadlines.
Customizing the Employee Center
You can tailor the way the Employee Center displays information. Resize the panes by
moving your mouse pointer over the edge of any pane; when the pointer changes to a
vertical bar with right and left arrows, drag the pane in either direction.
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FIGURE 8-12 Use the Transactions tab to view transactions of the selected type.
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You can customize the columns that QuickBooks displays in the left pane of the
Employees tab by right-clicking anywhere on the list and choosing Customize
Columns.
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FIGURE 8-13 The Payroll tab is the place to access the tasks involved in payrollthe links and
messages change depending on the QuickBooks Payroll Service you purchased.
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You can also customize the information displayed in the right pane when you
select an employees name in the Employees tab. Right-click anywhere in the right
pane and select Customize Columns.
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Of course, after you create and deliver paychecks to employees, you have to send
the government agencies, insurance companies, and other vendors the money
youre holding for them. Instructions for those tasks are in Chapter 9.
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C
h
a
p
t
e
r
9
Payroll Reports
and Remittances
I
n this chapter:
Confirm payroll liability payment schedules
Remit liabilities
Prepare quarterly and annual returns
Print W-2 forms
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Doing payroll in-house means having a lot of reports to print, forms to fill out, and
checks to write. Theres a logical order to these tasks, although the logic differs
depending on the state and municipality youre in. The procedures, in the order in
which most businesses have to perform the tasks, are covered in this chapter.
Confirming Payroll Remittance Schedules
QuickBooks provides a method of tracking due dates for all the payroll liabilities
and employer expenses that accumulate during payroll runs. You can use this
payment schedule to make sure you remit your payroll obligations on time. Most of
the information required for scheduling payments is probably already in your
system as a result of the information you provided when you set up payroll items.
To view the schedule, and correct any problems, choose Employees | Payroll Taxes
And Liabilities | Edit Payment Due Dates/Methods.
This action opens the Schedule Payments window, and if any data is missing or
does not match the content or format the payroll system expects, the wizard
highlights the listing with a problem (see Figure 9-1).
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Double-click the errant listing so you can edit its configuration to correct the
problem. QuickBooks usually provides a hint about the problem in the window that
opens for editing. For example, in Figure 9-1 there are problems with two listings:
the format of the account numbers for state unemployment and withholding in
California. QuickBooks knows that the account number has to follow a specific
format, and this data was originally entered in the wrong format.
Using the Scheduled vs. Using
the Unscheduled Liabilities Window
In the following sections covering payroll remittances, you have a choice of
methods for performing the each task:
For liabilities that have a schedule configured, choose Employees | Payroll
Taxes And Liabilities | Pay Scheduled Liabilities. Select the payments to remit
from the schedule that displays.
For liabilities that dont have a schedule configured, choose Employees | Payroll
Taxes And Liabilities | Create Custom Liability Payments. Select the paycheck
date range you need, and then select the payments to remit. All your liabilities
(both scheduled and unscheduled) are included in the list.
If you set up a schedule for most liabilities, but one or more of your payments
didnt match the options available in the schedule, its easier to use the Create
Custom Liability Payments command than to use the scheduled liabilities
command and then use the unscheduled liabilities command.
Remitting Liabilities
When you create payroll checks, QuickBooks tracks the liabilities you accrue as a
result of those checks. To see your scheduled liabilities, choose the appropriate
command (as described in the preceding section). QuickBooks displays the
currently owed liabilities (see Figure 9-2).
Select the liability you want to pay and click View/Pay. The first time you pay
liabilities, QuickBooks asks you to select the right bank account (if you have more
than one bank account).
Ill 9-1
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The payment transaction window opens, as seen in Figure 9-3.
Continue to view and pay until all the current liabilities are remitted. The
following sections cover the details involved in remitting common payroll liability
payments.
Sending Federal Tax Payments
Payments to the federal government involve two payroll taxes:
941/944/943 taxes, which cover withholding, social security, and Medicare
940 taxes, which are the federal unemployment taxes
N O T E : This section is specific to liabilities payments made by companies
that file Form 941/943 on a quarterly basis. If you use Form 944, you file
annually.
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FIGURE 9-2 QuickBooks tracks your payroll liabilities automatically.
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941/943 Payments
The federal government requires you to deposit the withheld amounts, along with
the matching employer contributions, at a specified time. That time period is
dependent upon the size of the total withholding amount youve accumulated. You
may be required to deposit monthly, semimonthly, weekly, or within three days of
the payroll. Check the current limits with the IRS or your accountant.
Theres a formula for determining the size of the 941/943 paymentits the sum
of the following amounts for the period:
Federal withholding
FICA withholding
Medicare withholding
FICA matching contribution from employer
Medicare matching contribution from employer
You dont have to do the mathQuickBooks does it for you. But its a good idea
to know what the formula is so you can check the numbers yourself (and make
sure you have sufficient funds in your bank account to cover the next payment).
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Creating a Check for 941/943 Payments
If you write or print the 941/943 payment check and deposit it at the bank in which
you have your payroll account, use the coupons the federal government sent you
(Form 8109). Fill out a coupon and take it, along with your check, to the bank in
which you have your payroll account. Make the check payable to the bank. Dont
forget to fill in the little bullets on the coupon: one to indicate the type of deposit
(941 or 943), the other to indicate the quarter for which this payment is remitted.
E-Paying 941/943 Payments
If you remit your payments electronically (either through QuickBooks Enhanced
Payroll or by using the Electronic Federal Tax Payment System (EFTPS) operated
by the IRS), the payee is the IRS. The payment appears in your bank register as an
e-payment, either automatically (if youre using QuickBooks e-pay), or manually (if
you use EFTPS).
Employers who e-pay directly through EFTPS usually enter text in the check
number field such as ACH, which is the method the IRS uses to take the payment
out of your bank account. ACH stands for Automated Clearing House, which is a
network operated by the Federal Reserve and the Electronic Payments Network
that provides a way for financial institutions to exchange funds electronically. You
can also leave the check number field blank.
940 Payments
The Federal Unemployment Tax Act (FUTA) provides unemployment compensation to
workers who have lost their jobs, usually after the workers state benefits have been
exhausted. The FUTA tax is paid by employers; no deductions are taken fromemployee
wages. Companies must make FUTA payments if either of the following scenarios exist:
During this year or last year you paid wages of at least $1,500 in any calendar
quarter.
During this year or last year you had one or more employees for at least part of
a day for a period of 20 weeks (the weeks do not have to be contiguous).
If you print the check, use Form 8109 (the same coupon you use to deposit
federal withholding and employer matching contributions for Form 941/943) and
mark the coupon for 940 Tax and the quarter in which you are making your
deposit. You dont have to make the deposit until you owe the entire amount, but
you can make deposits until you reach that amount if you wish.
C A U T I O N : Always use a separate coupon and check for FUTA; dont mix
the payment with your other federal liabilities payment.
Technically, FUTA tax is 6.2 percent of gross wages up to $7,000.00 per employee,
but the federal government gives employers a 5.4 percent credit for paying their
state unemployment taxes. Therefore, unless you deliberately ignore your state
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unemployment payments, you can calculate FUTA at the rate of .8 percent of gross
wages (.008 $7,000.00), which is $56.00 per employee who reaches the $7,000.00
goal. QuickBooks assumes youre paying your state unemployment taxes and
calculates your FUTA liability accordingly.
Remitting State and Local Liabilities
Your state and local payroll liabilities vary depending upon where your business is
located and where your employees live (and pay taxes). Besides income taxes, you
may be liable for unemployment insurance and disability insurance.
Remitting State and Local Income Taxes
Most states have some form of an income tax, which might be calculated in any one
of a variety of ways:
A flat percentage of gross income
A sliding percentage of gross income
A percentage based on the federal tax for the employee
Local (municipal or county) taxes are also widely varied in their approach:
Some cities have different rates for employees of companies that operate in the
city. There may be one rate for employees who live in the same city and a
different rate for nonresidents.
Your business might operate in a city or town that has a payroll head tax (a
once-a-year payment that is a flat amount per employee).
You may have a head tax for the town in which your business operates and still
be required to withhold local taxes for employees who live in another city.
QuickBooks Enhanced Payroll supports most state forms; however, state and
local taxing authorities provide coupons or forms or an online service for remitting
income tax withholding. The frequency with which you must remit might depend
on the size of your payroll, or it might be quarterly, semiannual, or annual,
regardless of the amount. Some municipal authorities have e-pay available.
Remitting Other State Liabilities
If your state has SUI or SDI or both, you have to pay those liabilities when theyre
due. Commonly, these are quarterly payments.
T I P : Its a good idea to create different vendor names for SUI, SDI, and state
income tax withholding to make sure you dont accidentally send checks for the
wrong component and to prevent QuickBooks from issuing a single check for
the grand total. The vendor record for each vendor name may have the same
payee (State Department of Revenue), but the vendor names are different.
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Not all states have SUI or SDI, and some have one but not the other. Some states
collect SUI and SDI from the employee and the company; some collect only from
the company. Check the rules for your state.
Remitting Other Payroll Liabilities
The rules for remitting the paycheck deductions and employer contributions for
other reasonssuch as health benefits, pension, and workers compensationare
specific to your arrangements with those vendors.
There are a great many ways to handle the way these payments are posted, and
you have to decide what makes sense to you (or to your accountant). For example,
if you pay a monthly amount to a medical insurer, you may want to post the
employee deductions back to the same expense account you use to pay the bill.
That way, only the net amount is reported as an expense on your taxes.
Workers Comp
QuickBooks Enhanced Payroll offerings include workers comp, and the setup
options are available in the Payroll & Employees category of the Preferences dialog.
Click Workers Compensation on the Company Preferences tab to open the Workers
Comp Preferences dialog. Select Track Workers Comp to enable the feature.
When workers comp is enabled, you can also opt to see reminder messages to
assign workers comp codes when you create paychecks or timesheets. In addition,
you can select the option to exclude an overtime premium from your workers comp
calculations (check your workers comp insurance policy to see if you can calculate
overtime amounts as regular pay).
Preparing Your 941/943 Form
Unless youve been notified that youre a Form 944 filer, you must file a 941 or 943
form every quarter to report the total amount you owe the federal government for
withheld taxes, FICA, and Medicare. If you have been paying the deposits regularly,
no check is remitted with the 941/943. Instead, its a report of amounts due and
amounts paid, and they should match so that Line 12 is $0.00.
If you underpaid, use the payment voucher to send your check for the
underpaid amount. The vendor for the check is United States Treasury (you do
not take this check to the bank; only deposits accompanied by Form 8109 are
deposited at your bank). Use the address provided on the form instructions
(QuickBooks prints the instruction page).
If you overpaid, you can select the option to take a credit toward the next
941/943, or you can select the option for a refund.
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The 941/943 is concerned with the following data:
Gross wages paid
Federal income tax withholding
FICA (social security) withholding and matching employer contributions
Medicare withholding and matching employer contributions
Creating a 941/943 Form
QuickBooks will prepare your 941/943 report using the information in your
QuickBooks registers.
If QuickBooks isnt preparing your federal forms (either because youre doing
payroll manually or you subscribed to the QuickBooks Basic Payroll service), you
can prepare your forms manually with the use of Excel worksheets that QuickBooks
provides. See the section Tax FormWorksheets in Excel at the end of this chapter.
Creating the form is quite easy.
Follow these steps to create a 941/943 form:
Choose Employees | Payroll Tax Forms & W-2s | Process Payroll Forms.
In the Select Form Type dialog, select Federal Form and click OK.
In the Select Payroll Form dialog, select (highlight) Quarterly Form 941 or
Annual Form 943.
Select the filing period and click OK.
The Payroll Tax Form window opens with Form 941 or 943 selected. This
process is a wizard, so you fill out information and click Next to move through all
the steps in the process. The first window is an interview; enter the appropriate
data (see Figure 9-4) and click Next to continue.
N O T E : Schedule B is the Employers Record of Federal Tax Liability. If you
are a semiweekly depositor or your payroll tax liability on any day in the quarter
exceeds the standard amount for a monthly depositor, you must file Schedule B
with Form 941/943.
Move through the wizard, following the prompts and using the guidelines
presented in the following sections.
Filling in Blank Fields
To enter information in a blank field, click your cursor in the field to activate it,
then type the data. The typed text appears blue, but thats just a signal to you that
the data was entered manually; QuickBooks doesnt print the form in color.
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Editing Prefilled Data
Follow these steps to edit data:
Right-click the field and choose Override from the menu that appears.
Enter the replacement data in the Override box, and press the TAB key.
The new data replaces the original data in the field, and its green (to remind
you that you manually replaced the data that was exported from QuickBooks).
If you change your mind and decide that the data automatically supplied by
QuickBooks should remain in the form, right-click in the field and choose Cancel
Override.
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Data You Cannot Change
Do not edit the following types of data on the 941 form (or on any payroll tax form
for that matter):
Federal Employer Identification Number (EIN)
Filing period (if youre trying to change the filing period, start the process again
and select the appropriate date range)
Totals (these are calculated by QuickBooks; if a total is wrong, edit the
erroneous number and QuickBooks will recalculate the total)
Checking for Errors
Before you finalize the contents of Form 941/943, click the Check For Errors
button. QuickBooks examines the content and displays any errors in the Errors box
that opens at the top of the form. If there arent any problems, the Errors box
reports this.
Click the error to move automatically to the field thats causing the problem, and
correct the information:
If the problem is in a field you filled out, correct the data and press TAB.
If the problem is in a field that was prefilled, but you changed the content by
overriding the data, right-click the field and select Cancel Override.
When you press TAB to replace the data in the field, the error listing should
disappear from the Error box. If it doesnt, you have to do some homework to figure
out whats wrong with the data in the affected field and then correct it.
Close the Error box by clicking the Close Errors button.
Saving and Re-opening an Unfinished Form
If you get interrupted or confused while youre preparing your 941, 943, or 940
form, you can save the form with the data you already filled in, so you dont have to
start from scratch when you resume your work. Click Save and Close to save the
form with its current contents. To return to work on the saved form, go through the
steps enumerated earlier in this section to select the form and its date range.
QuickBooks asks if you want to use the saved draft.
If you open a saved draft, QuickBooks does not examine your files and refresh
the data, so if you made changes to payroll data, you have to start a new form
instead of opening a saved draft. Changes could include an additional paycheck
being issued within the date range for some reason, or a payment you made to the
bank or IRS as a remittance deposit for this report period.
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Printing Form 941/943
You can print the form from QuickBooks and send it to the IRS if you use these
printing criteria:
The form must be printed with black ink on white or cream paper.
The paper must be 8"11" or 8.5"11".
The paper must be 20-lb. weight or heavier.
The printed report doesnt look exactly like the blank form you received, but its
close. More importantly, its perfectly acceptable to the government. Print two
copies: one to mail and one for your files.
N O T E : You could also use the information in the printed report to fill in the
blank 941/943 form you receive if you dont want to send the QuickBooks
printout. Save the printed report as your file copy.
If youre signed up for e-payments, you can e-file your 941/943. Save the printed
report as your file copy.
N O T E : If you subscribe to an Enhanced Payroll service, you can archive a
copy of the form as a PDF file by clicking the Save As PDF button on the form.
This is handy for people who believe that using computers creates a paperless
environment and therefore use the hard drive as a file cabinet. This works if
those people are religious about backing up every day to an external drive.
Preparing Annual Returns
All taxing authorities want annual returns. The feds, state, and local folks need
reports in the formof coupons or longer forms. Some of themwant money; some just
want reports because the remittances were made earlier in the year. You can get all the
information you need fromQuickBooks; all the standard QuickBooks payroll reports
work just fine, as long as you remember to set the Dates field to the entire year.
Preparing State and Local Annual Returns
The state and local taxing authorities usually send you a form that asks for a
reconciliation for the year. You may have to present quarterly totals as you fill out
the form, which you can accomplish by changing the date range in the QuickBooks
payroll reports. For example, if your state returns require totals for each quarter,
run payroll reports for Jan 1 through March 31, followed by April 1 through June 30,
and so on.
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Finish your State Unemployment annual report or 4th Quarter report as soon as
possible, because the payments you make to the state are relevant to the Federal
Unemployment report (Form 940). In many states, the year-end or 4th Quarter
report doesnt require a check because theres a limit to the wages that are eligible
for applying the unemployment contribution rate, and its common to meet that
limit fairly early in the year.
Preparing the 940 Form
The 940 Form (FUTA) is filed annually; there are no quarterly forms to file. To
create your Form 940, choose Employees | Payroll Tax Forms & W-2s | Process
Payroll Forms from the QuickBooks menu bar. Select Federal Form, then select 940
and fill in the year.
The Payroll Tax Form window (its the first window of a wizard) opens with the
Form 940 Interview. The top section of the interview window asks about your state
and federal unemployment payments. Your answers determine whether you can use
Form 940EZ.
Below that section are a series of questions aimed at determining whether any of
your payroll expenses covered exempt payment types. Exempt payments are wages
you paid that are exempt from FUTA taxes. QuickBooks checks your payroll items
to track several categories of exempt payments, and if youve used these payroll
items QuickBooks fills in the amounts. If you had any exempt payments that are
not in the payroll items that QuickBooks automatically checks, select them from
the drop-down lists, and fill in the amount. The drop-down list is long and can be
complicated. Check the IRS rules for preparing Form 940, or check with your
accountant.
Click Next to see the form itself. Fill out any fields that arent automatically
prefilled by QuickBooks from your payroll records. Continue to click Next and
follow the instructions that appear on the screen.
Preparing the 944 Form
If you were notified by the IRS that you should file Form 944 instead of Form 941,
follow the instructions in the previous sections to open the federal form list and
select Form 944. You can remit your liabilities when you send the form, or, if you
wish, you can make deposits against your 944 liability by using the deposit coupon
(8109), filling in the circle for Form 944, and taking the check to the bank.
You cannot use Form 944, even if you qualify financially, unless youve been
notified by the IRS that you are a Form 944 filer. This form is shorter than Form
941, has no additional schedules, and has an annual filing frequency, all of which
combine to make this a desirable filing method. If you think you qualify financially,
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but you didnt receive a notification to use Form 944, you can contact the IRS to
request a notification at 800-829-0115.
C A U T I O N : If the IRS notified you to file Form 944, use it even if your
payroll liabilities exceed the Form 944 threshold. The IRS will notice and will
switch you back to Form 941/943. You cannot make the decision on your own.
Printing W-2 Forms
You must print W-2 forms for your employees, the government agencies, and your
own files. You start by selecting the form and the employees, and then move to the
process of creating and printing the forms.
Follow these steps to produce W-2 forms:
Choose Employees | Payroll Tax Forms & W-2s | Process Payroll Forms to open
the Select Form Type dialog.
Select Federal Form and click OK (if you subscribe to an Enhanced Payroll
service, state forms are also listed).
In the next dialog, make sure the filing period year is correct, select Annual
Form W-2/W-3, and then click OK.
Ill 9-2
The Select Employees For Form W-2/W-3 window opens, listing all your
employees (see Figure 9-5). By default all employees are selected, and the current
status of the W-2 printing process is noted.
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Click Review/Edit to display the Payroll Tax Form window, which explains the
steps youll go through as you step through the wizard (see Figure 9-6). Click Next
to move through the wizard.
Each employees W-2 formis presented on the screen. If there is nonfinancial data
missing (such as an address or ZIP code), you must fill it in. If prefilled information
is incorrect, right-click the appropriate field and select Override. Enter the correct
information, and press TAB to put that information into the field.
N O T E : Changes you make to nonfinancial information are not written back
to the employee record. You must make the same changes there.
Because the financial information is prefilled from your payroll records, there
should be no reason to make changes to those fields.
Click Check For Errors to see if anything is amiss on any employees form. If
errors appear in the Error Box at the top of the form, click the errors listing and
QuickBooks automatically takes you to the appropriate field to correct the
information.
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When everything is correct, load your W-2 forms in the printer and click Submit
Form to open the Print Form dialog. The Print W-2s window opens so you can
choose a printer and print the forms. Click OK and click Print.
You must also print the W-3 form, which is a summary of your W-2 forms. It
must be in the package you send to the IRS when you transmit the W-2 forms.
N O T E : The IRS requires e-filing of W-2/W-3 forms if you have 250 or more
employees, which is not common in small businesses. However, some states are
now requiring e-filing for a much smaller number of employees. Check with your
states revenue department to determine the number of employees that kicks off
the e-filing requirement.
All these payroll reports are time consuming, but you have no choice: these tasks
are legally necessary. At least its easier because QuickBooks keeps the records and
does the math.
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Tax Form Worksheets in Excel
If QuickBooks isnt preparing your payroll forms (either because youre doing
payroll manually or you subscribed to the QuickBooks Basic Payroll service), you
can prepare your forms manually with the use of Excel worksheets that are
available from QuickBooks.
To access the worksheets, choose Reports | Employees & Payroll | More Payroll
Reports In Excel | Tax Form Worksheets. Because this Excel file has macros
(programming code to accomplish the required tasks), you might have to tell Excel
to let the macros run (depending on how youve configured Excels security
options):
In Excel 2003 and earlier, if you see a dialog warning you that the file contains
macros, click Enable Macros to open the file with macros enabled. Depending
on your version of Excel, you may have to choose Always Trust Macros From
This Source before the Enable Macros button becomes available.
In Excel 2007, the file opens without a warning dialog. However, if you havent
changed the default Excel setting which disables all macros, a Security Warning
message bar appears under the toolbar to tell you that macros have been
disabled. Click Options and enable macros for this worksheet.
When the QuickBooks Tax Worksheets dialog appears, select the form and date
range you need.
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Setting Report Options
Click Options/Settings on the QuickBooks Tax Worksheets dialog to configure the
report using the guidelines discussed in the following sections.
Ill 9-4
Configuring Worksheet Headers
By default, the option to update headers is selected. This means that the header of a
printout of the worksheet contains the company name and address information, as
well as the date range of the report (the date range you selected in the previous
dialog). If you are planning to print the report, its important to know the date
range, so make sure this option is selected.
Configuring the Level of Detail
By default, the option Hide Detailed Data Returned From QuickBooks is selected,
which means that the workbook displays only the information connected to the
report you selected. For example, Figure 9-7 displays a workbook with a single
worksheet (the 941 report).
If you deselect the option to hide the detail, you must choose the detail level you
want to see, as explained next.
Return Full Transaction Detail from QuickBooksFor
Troubleshooting
If you select this option, QuickBooks adds a second worksheet named Data to the
workbook. This worksheet contains all detailed information about the employees
(every field on the employee record), the payroll items, and the job costing links (if
you use timesheets to do job costing for payroll, which is discussed in Chapter 19).
This is an enormous amount of information and should be used only if you need
to troubleshoot the numbers you saw when you produced a report without detailed
data. In fact, most of the information is available through other QuickBooks reports,
such as the detail reports available in the Employees & Payroll section of the
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Reports menu. Details on the employee records are available by customizing the
Employee Contact List report available in the List section of the Reports menu (add
additional columns to the report to display detailed information).
Minimize Detail from QuickBooksFor Speed
in Excel and Large QuickBooks Files
If you select this option, QuickBooks adds a second worksheet named Data to the
workbook. This worksheet contains detailed information about the paychecks
involved in the date range you selected.
The detail data includes the details of payroll items and the amount of each
payroll item in each individual paycheck.
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FIGURE 9-7 Hide detailed data to produce only the report.
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C
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Setting Up Inventory
I
n this chapter:
Set up inventory options
Create inventory items
Create assemblies
Deal with physical inventory counts
Adjust inventory numbers
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Tracking inventory can be complicated and time consuming. You can make dealing
with inventory issues easier by setting up the QuickBooks inventory feature
carefully and using the appropriate functions to track purchases and sales.
What Is an Inventory Item?
An inventory item is a product you purchase, manufacture, or assemble for the
purpose of selling it to a customer. The hallmark of an item that is configured as an
inventory part is that it is purchased or made solely for the purpose of resale.
Businesses that typically track inventory are manufacturers (who may use inventory
parts to create other inventory parts), wholesale distributors, and retailers.
Setting Up QuickBooks
for Inventory Tracking
To track inventory, you must enable the inventory function in QuickBooks (which
you might have done during the EasyStep Interview when you set up your
company file). In addition, QuickBooks adds accounts to your chart of accounts
that are earmarked for tracking inventory.
Enabling Inventory Tracking
To enable inventory tracking, choose Edit | Preferences and select the Items &
Inventory category in the left pane. Move to the Company Preferences tab (see
Figure 10-1) to see the inventory options.
When you turn on the inventory feature, you also turn on the purchase order
feature (although you dont have to use purchase orders to use the inventory feature).
You can also opt to be warned if you use a PO number thats already in use.
Configuring Inventory Availability
You can configure the way QuickBooks counts available inventory and the way that
available number is used when youre creating sales transactions.
The option labeled When Calculating Quantity Available tells QuickBooks what
to take into consideration before warning you about insufficient quantities when
you create a sales transaction (if you select a warning option). The available options
vary depending on the QuickBooks edition youre using. The options displayed in
Figure 10-1 appear in the following Premier and Enterprise editions:
Accounting
Manufacturing & Wholesale
Retail
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All other editions lack the option labeled Quantity Reserved For Pending Builds.
You can enable warning messages about insufficient quantity and also choose the
scenario that kicks off a warning. If you select the option to be warned when the
quantity on hand is insufficient, QuickBooks counts the number of items in stock.
If you select the option to be warned when the quantity available is insufficient,
QuickBooks uses the guidelines you set for calculations to determine the quantity
available for sale.
Configuring Unit of Measure
The Unit of Measure feature lets you set up a system of buying goods in one
manner and selling them in a different manner. For example, you may buy soda by
the case and sell it by the bottle. In this case, youd set the U/M to bottle. If you sell
the soda by the six-pack, then the six-pack is your U/M. If you sell the soda both
ways, you need to set up two U/Ms for your soda (called Multiple U/Ms). In fact,
you could use Multiple U/M settings to add a half-case unit of sale. You can also use
a U/M for the services you sell if you want to provide services in units of minimum
numbers of hours or in days.
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FIGURE 10-1 Enable inventory and set the protocols to use for inventory tracking.
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Here are the basic guidelines for using the Unit of Measure feature:
Dont use U/M for products that are bought and sold in identical units.
Dont use U/M for services you sell by the hourinstead, set the hourly rate for
the service item and use the Qty column in sales transactions.
Enabling Unit of Measure
To enable U/Ms, choose Edit | Preferences and select the Items & Inventory
category in the left pane. Move to the Company Preferences tab and click the
Enable button. In the Unit Of Measure dialog (see Figure 10-2), select the U/M
method you want to use.
For your edition, the Multiple U/M option may be grayed out and inaccessible.
Not all editions of QuickBooks provide multiple U/Ms, and Table 10-1 displays the
type of U/M supported by each edition.
Click Finish to return to the Preferences dialog, and then click OK. QuickBooks
adds the U/Mfield to all the following itemtypes so you can begin establishing U/Ms:
Inventory Part
Inventory Assembly
Non-inventory Part
Service
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FIGURE 10-2 Choose the U/M you need for the products and services you sell.
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Creating Units of Measure
N O T E : Multiple U/Ms work by creating a base U/M and then creating
multiple conversions of that base U/M for sales of different quantities.
To create one or more U/Ms, open the Item List and double-click the item for
which you want to create a U/M. It doesnt matter which item you select to create a
U/M (this works similarly to setting up custom fields; the entries you create can be
used for all items). You need to create enough U/Ms to cover all the scenarios for
items you want to sell by U/M.
In the U/M field, select <Add New> from the drop-down list to open the Unit of
Measure Wizard, and follow the prompts in the wizard to set up the U/M. The
choice you make depends on the way you usually buy, store, and sell the item. For
example, a product might be purchased by the case with each case containing 48
individual units. If most customers buy some number of widgets, and the number
of units per sale varies greatly, create a base U/M of each. However, if these
products come in a case of 48 that is packed with four cartons of 12, you might
offer the product for sale in the quantity of a dozen.
For service items, its common to create U/Ms based on time, because services are
usually sold by the hour or by the day. Some professionals have a minimum10-minute
or 12-minute time block, so you should create a U/Mfor that minimumunit.
The unit of measure you create becomes available for every itemthat can be sold
via a U/M. Its probable that not all items are able to use this U/M, so you must repeat
this process to create additional U/Ms until youve designed sufficient variations to
cover all the items and itemtypes you want to sell by U/M. If you create U/Ms that are
fairly generic, you probably only have to create a handful of U/Ms.
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E d i t i o n U / M S u p p o r t e d
Premier (not industry specific) Single U/M only
Professional Services Single U/M only
Nonprofit Single U/M only
Accountant Both multiple and single U/M
Contractor Both multiple and single U/M
Manufacturing & Wholesale Both multiple and single U/M
Retail No U/M available
TABLE 10-1 Support for Unit of Measure for Premier/Enterprise Editions
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Assigning a U/M to Items
After youve created the U/Ms you need, you can assign a U/M to every item that
you want to sell by U/M.
C A U T I O N : For a single U/M, each item can only be linked to one U/M. If
you want to be able to sell an item from a choice of U/Ms, you must use the
Multiple U/M feature, if its available in your edition of QuickBooks.
Open each item and select the appropriate U/M from the drop-down list. If you
find an item for which you havent created an appropriate U/M, select <Add New>
and create the U/M you need.
Selling an Item with a U/M
When you select an item that has been assigned a single U/M in a sales transaction,
the U/M automatically appears on the line in which youve selected the item. You
cant switch between it and any other U/M. For multiple U/Ms, you can select
another U/M measurement when youre selling the item.
Creating Inventory Items
To create an inventory item, open the Item List (choose Lists | Item List from the
menu bar). Then press CTRL-N to open the New Item dialog and select Inventory
Part from the drop-down list as the item type.
Fill in the information using the guidelines that follow (Figure 10-3 is an
example of an inventory item record):
The Item Name/Number is your code for the item. This field must be unique in
your Item List.
The Manufacturers Part Number (useful if youre a distributor or retailer) lets
you include the part number on your purchase orders. If you purchase from a
distributor instead of a manufacturer, enter the distributors part number. This
makes creating an accurate purchase order much easier.
The text you enter in the Description On Purchase Transactions field
automatically appears when you create a purchase order. The text you enter in
the Description On Sales Transactions field automatically appears in sales
transaction forms, such as invoices, estimates, and sales receipts.
You can enter a cost, but its really a convenience for creating purchase orders
(the cost appears automatically in the PO, which is useful if the cost doesnt
change often). QuickBooks does not use this figure for posting cost of goods
sold; instead, it uses the average cost of this item based on your item receipt
and inventory adjustment transactions (all covered later in this chapter).
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If you enter a sales price, that amount is automatically entered when you create
sales transactions (and you can change the price on an individual sales
transaction).
Choose the tax code for this item, which indicates whether the item is taxable
to customers.
Select the appropriate posting accounts for Cost of Goods and Income.
Enter a number in the Reorder Point field that reflects the minimum quantity
you want to have in stock. When this quantity is reached, QuickBooks will
issue a reminder about reordering if youve enabled the Reminders feature. To
turn on the Reminders feature, choose Edit | Preferences and click the
Reminders category. On the My Preferences tab, check Show Reminders List
When Opening A Company File check box. On the Company Preferences tab,
choose either Show Summary or Show List For The Inventory To Reorder
option.
Dont enter anything in the On Hand or Total Value fields, because the data
wont provide the accurate financial trail your accountant needs. Instead, let
QuickBooks track these values as you receive items into inventory and/or use
the inventory adjustment feature. (Inventory adjustments are covered later in
this chapter.)
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FIGURE 10-3 An inventory item record contains all the information you need to use it in
transactions.
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Chapter 6 has information about receiving items into inventory from your
vendors so that your costs of goods sold numbers are accurate.
Using Subitems
Subitems are useful when there are choices for items and you want all the choices
to be part of a larger hierarchy so you can sell them easily and track them efficiently.
For instance, if you sell widgets in a variety of colors, you may want to create a
subitem for each color: red widget, green widget, and so on. Or perhaps you sell
shoes and want to separate your products by type, such as sandals, sneakers,
loafers, dress shoes, and so on.
Creating the Parent Item for a Subitem
In order to have a subitem, you must have a parent item. Figure 10-4 shows the
record of an item that has been specifically created as a parent item (using the
Inventory Part type in the Type drop-down list).
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FIGURE 10-4 This item isnt sold to customersit exists only as a parent item.
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Here are some guidelines for creating an inventory item thats designed to be a
parent:
Use a generic name for the item; the details are in the subitem names.
Dont enter a description, save that for the subitems.
Dont enter the cost.
Dont enter the price.
Dont enter a reorder point.
Dont enter the quantity on hand.
Enter the Inventory Asset, COGS, and Income accounts because they are
required fields for all inventory items.
Creating Subitems
Having created the parent item, subitems are easy to create. Open a blank New Item
window (press CTRL-N).
Follow these steps to create a subitem:
In the Item Name/Number field, enter the code for this item. It can be a color, a
size, a manufacturer name, or any other code that makes this subitem unique
when compared to other subitems under the same parent item.
Check the box named Subitem Of, and then select the parent item from the
drop-down list that appears when you click the arrow to the right of the field.
Enter the Manufacturers Part Number (for creating purchase orders).
Optionally, enter any descriptions you want to appear on purchase orders and
sales transactions.
Optionally, enter the cost and price.
Enter the general ledger account information (Inventory Asset, Cost of Goods
Sold, and Income accounts).
Enter the reorder point if youre using that feature.
Click Next to enter another inventory item, or click OK if youre finished.
Inventory Assemblies
Assemblies are products you create using existing items (usually inventory items).
Creating an assembly item that you can sell involves two tasks: creating the
assembly item and building the assembly item.
Create the Assembly Item This means putting together the components that go
into the assembly (the component list is called the Bill of Materials and is usually
abbreviated BOM). This action is performed in the New Item dialog. Creating an
assembly item doesnt make it available for sale; its just the design phase. What you
have is a BOM, not an item.
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Build the Assembly Item This means taking the components out of inventory
and putting them into the assembly item. This action is performed in the Build
Assemblies dialog.
After an assembly item has been created and built, you can sell it. Details about
all these steps are in the following sections.
Creating an Assembly Item
To create an assembly, choose Lists | Item List to open the Item List window, and
then press CTRL-N to open the New Item dialog. Select Inventory Assembly as the
type of item, and the New Item dialog displays all the fields you need to create an
assembly (see Figure 10-5).
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FIGURE 10-5 The New Item dialog holds all the information you need for assemblies.
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The assembly must have a Cost of Goods Sold account, an Inventory Asset
account, an Income account, and a tax code (if youve enabled the sales tax
feature). QuickBooks autofills the COGS and Inventory Asset account.
The Cost field in the middle of the dialog is optional. You can use it to create a cost
for the assembly and use that amount to determine the price. The data you enter in
this field does not affect the postings to your COGS account, which continues to post
the real cost (the total cost of the items in the Bill of Materials List).
Fill in the Sales Price field if you always charge the same amount for this
assembly item, or you can enter a price when you sell the item.
N O T E : The dialog has a field for entering a vendor from whom you purchase
this assembly, which you probably wont use. If you subcontract the work to a
vendor, you purchase the completed item the way youd purchase any other item,
which would make it an item, not an assembly.
In the Bill Of Materials section, select the component items that this assembly
contains and enter the quantity for each component.
Using Non-inventory Items in an Assembly
By default, QuickBooks wont let you add any item that isnt an inventory part to
the Bill of Materials for an assembly. Thats because the items in the Bill of Materials
each carry a cost, and the total cost becomes the posting to Cost of Goods when
you sell the assembly.
You can edit the records of non-inventory items that you want to add to the
assembly so that those items have a cost attached (or create new non-inventory items
specifically for this purpose). To create or edit a non-inventory itemso it can be used
in an assembly, select the option with a label that begins This itemis used in
assemblies... (the remainder of the label text changes depending on the itemtype).
When you select that option, the items record changes to include information
about cost (see Figure 10-6).
N O T E : When you use a non-inventory item in a build, QuickBooks treats the
item as if it were an inventory item. The cost is included when the build is posted
to the inventory asset account and is applied to COGS when you sell the
assembly.
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The following itemtypes can be used in assemblies if theyre properly configured:
Service Useful for adding the cost of labor. Create a service item thats
suitable for this if your Item List doesnt already contain one.
Non-inventory part Useful for adding the cost of parts that you dont track as
inventory items. This could include boxes, tape, consumable goods (such as
nails, screws, etc.), or other things involved in putting an assembly together.
Other Charge Another item type thats useful for adding the cost of almost
anything, and you can choose this type instead of a non-inventory part.
Building an Assembly
After your assembly item is in your Item List, you can build it. During this process,
the component inventory items are removed from inventory, and the finished
assembly item is received into inventory.
Choose Vendors | Inventory Activities | Build Assemblies to open the Build
Assemblies dialog, and then select the assembly item. The Build Assemblies window
opens and displays the Build Assembly Template. QuickBooks automatically fills in
the components required for the assembly item, along with the Quantity on Hand
(QOH) for each inventory component (see Figure 10-7).
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FIGURE 10-6 Configure a non-inventory item so it can be used in an assembly.
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N O T E : Enterprise Solutions users can modify the line items of the Build
Assembly template from within the template. In addition, custom fields for items
can be added to the Build Assembly template as headers and columns.
The Qty Needed column remains at zero for each component until you indicate
the number of builds youre creating. The dialog displays the maximum number of
builds you can create with the current QOH of inventory parts.
N O T E : You can build more than the maximum number you have component
parts for, but builds that are missing parts are recorded as pending builds (see
the section Managing Pending Builds).
Enter the quantity to build, and press TAB. The data in the Qty Needed column is
increased to match the number of builds you indicated.
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FIGURE 10-7 QuickBooks automatically provides QOH data for the assembly and for the
inventory component parts.
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Click Build & New if you want to build another assembly, or click Build & Close
if youre finished. The Qty On Hand column is decremented for the components,
the assembly is moved into inventory, and you can sell it.
Managing Pending Builds
If you dont have enough of the components to build the number of assemblies you
need, you can continue with the build process, but the build is marked Pending.
You finalize pending builds when all the components are available.
Creating a Pending Build
When you specify a number of builds that exceeds the available quantity of
components, QuickBooks displays a dialog to warn you that you dont have enough
components (see Figure 10-8).
Click Cancel to return to the Build Assemblies window and reduce the number
of builds to match your available components.
Click Make Pending if you want to leave the number of builds as is. The build
is marked pending, and you can finalize the build when the missing components
arrive.
The entire build is marked pending. No assemblies are brought into inventory,
and no components are decremented from inventory (even if sufficient quantities of
some of the components exist to complete a fewer number of builds). You can think
of this as backordering from yourself.
Keep an eye on the items that are received into inventory so you know when the
components you need to complete a pending bill are available. In addition, keep an
eye on your list of pending builds so you can grab the components that arrived to
complete your builds. To see a report on the current pending bills, choose Reports |
Inventory | Pending Builds.
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FIGURE 10-8 You can either make this a pending build or cancel the build.
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Finalizing a Pending Build
When you receive the components that are missing in a pending build, you can
finalize the build and put the assembly item into your inventory. Open the pending
build by opening the Pending Builds report (Reports | Inventory | Pending Builds)
and double-clicking the listing for the build youre ready to finalize.
When the window opens, the current QOH of components is displayed, and the
maximum number you can build is updated to match the component availability.
If you now have sufficient quantities of components to build the assemblies, the
Remove Pending Status button at the bottom of the window is activated. (The
button is grayed out and inaccessible if the components arent available.)
Click Remove Pending Status to finalize the build, and close the window.
QuickBooks asks you to confirm that you want to save your changes. Click Yes. The
assembly item is moved into your inventory, and the inventory item components
are removed from inventory.
Disassembling an Assembly
You can disassemble a built assembly item, which automatically returns the
inventory components to inventory and removes the assembly from inventory. The
quickest way to do this is to open the original build transaction window, and
choose Edit | Delete Build from the QuickBooks menu bar. If the build is finalized,
QuickBooks readjusts your inventory appropriately. If the build is pending, no
adjustments need to be made and the build just goes away.
Running Inventory Repor ts
Youll probably find that you run reports on your inventory status quite often. For
many inventory-based businesses, tracking the state of the inventory is the second
most important set of reports (right behind reports about the current accounts
receivable balances).
QuickBooks provides several useful, significant inventory reports, which you can
access by choosing Reports | Inventory. The available reports are discussed in this
section.
N O T E : Very few customization options are available for inventory reports
you can change the date range and the headers/footers, and some reports let
you filter some of the items. You cant add or remove columns.
Inventory Valuation Summary Report
This report gives you a quick assessment of the value of your inventory. By default,
the date range is the current month to date, but you can change that to suit your
needs. Each item is listed with the following information displayed in columns.
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Item Description The description of the item, if you entered a description for
purchase transactions.
On Hand The current quantity on hand, which is the net number of received
items and sold items. Because QuickBooks permits you to sell items you dont have
in stock (usually, you really do have them but you havent used a QuickBooks
transaction to bring them into stock), its possible to have a negative number in this
column.
U/M U/M information (if it exists).
Avg Cost QuickBooks uses the totals from each transaction for receipt of
inventory to calculate this figure.
Asset Value The value posted to your Inventory account in the general ledger.
The value is calculated by multiplying the number on hand by the average cost.
% of Tot Asset The percentage of your total inventory assets that this item
represents.
Sales Price The price youve set for this item. This figure is obtained by looking
at the items configuration window. If you entered a price when you set up the item,
that price is displayed. If you didnt enter a price (because you chose to determine
the price at the time of sale), $0.00 displays. QuickBooks does not check the sales
records for this item to determine this number, so if you routinely change the price
when youre filling out a customer invoice, those changes arent reflected in this
report.
Retail Value The current retail value of the item, which is calculated by
multiplying the number on hand by the retail price (if the retail price is set).
% of Tot Retail The percentage of the total retail value of your inventory that this
item represents.
Inventory Valuation Detail Report
This report lists each transaction that involved each inventory item. The report
shows no financial information about the price charged to customers, because your
inventory value is based on cost. You can double-click any sales transaction line to
see the details of that transaction (including the amount you charged for the item).
Inventory Stock Status
There are two Stock Status reports: Inventory Stock Status By Item and Inventory
Stock Status By Vendor. The information is the same in both reports, but the order
in which information is arranged and subtotaled is different. You can use these
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Stock Status reports to get quick numbers about inventory items, including the
following information:
The preferred vendor
The reorder point
The number currently on hand
A reminder (a check mark) for ordering items that are below the reorder point
The number currently on order (a purchase order exists but the order has not
yet been received)
The next delivery date (according to the data in the purchase orders)
The average number of units sold per week
Physical Inventory Worksheet
This is the report you print when its time to take an inventory count. See the
section Counting Inventory, later in this chapter, for more information.
Inventory QuickReports
QuickBooks provides a reporting feature called QuickReports that provides sales
and purchase information about an individual inventory item. QuickReports are
available from the Item List window.
In the Item List window, select an item and press CTRL-Q to open a QuickReport
that shows you the bills (purchases) and sales transactions. You can change the date
range for the report, and you can double-click any transaction line to drill down to
the transaction details.
Counting Inventory
No matter how careful you are with QuickBooks transactions, no matter how
pristine your protocols are for making sure everything that comes and goes is
accounted for, its not uncommon to find that your physical inventory does not
match your QuickBooks figures.
To make sure your inventory records are correct, you must periodically count
your inventory. Once a year is mandatory, but if you have a high volume of
inventory activity, counting inventory quarterly is a good idea.
Printing the Physical Inventory Worksheet
The first thing you must do is print a Physical Inventory Worksheet (see Figure 10-9),
which is one of the choices on the Inventory reports submenu. This report lists your
inventory items and subitems in alphabetical order, along with the current quantity on
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hand, which is calculated fromyour QuickBooks transactions. In addition, theres a
column thats set up to record the actual count as you walk around your warehouse
with this printout (and a pen) in hand.
C A U T I O N : The Physical Inventory Worksheet displays only the inventory
items that are active. If you made any items inactive and you think (or know)
there are units in stock, make the items active before creating this report.
If you have a large number of inventory items, you may have some problems
with this worksheet:
You cannot change the way the worksheet is sorted, so you cannot arrange the
items to match the way youve laid out your warehouse.
If you use bins, rows, or some other physical entity in your warehouse,
QuickBooks has no feature to support it, so you cannot enter or sort on the
location on this worksheet.
The Pref Vendor column, which usually isnt needed (or even useful) for a
physical count, cant be removed. However, if you drag the diamond to the right
of the column all the way to the left, you can close the column so it wont print.
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the physical count.
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Click the Print button in the worksheet window to bring up the Print Reports
window. In the Number Of Copies box, enter as many copies as you need.
T I P : If the report fills multiple pages, you dont have to give every person
who is counting a full reportcut the report apart to give each person the pages
he or she needs, and keep one full copy to use as a master.
Planning the Physical Count
QuickBooks doesnt have an automatic freeze feature you can turn on while
youre completing your physical count, but you can perform this action manually.
After you print the worksheet (which you dont do until youre ready to start
counting), be sure that all sales transactions will be handled differently until after
the inventory count is adjusted. There are a number of ways to do this:
Print an extra copy of each invoice and save the copies in a folder. Dont pick
and pack the inventory for the invoices until after the count.
Prepare a form for salespeople to fill out the name and quantity of inventory
items sold during the freeze, and delay picking and packing the inventory until
after the count.
Delay entering invoices until after the count is over. (This is not a good idea if
counting takes a couple of days.)
Dont receive inventory in QuickBooks (dont fill out a Receive Items or Enter
Bill for Received Items form) until after the count.
If inventory arrives in the warehouse during the count, dont unpack the boxes
until after the count.
When you start counting the inventory, be sure theres a good system in place.
The most important element of the system is having somebody in charge. One
person, with a master inventory worksheet in hand, must know who is counting
what. When each counter is finished, his or her sheet should be handed to the
person in charge and the numbers should be copied onto the master inventory
worksheet. (This is why you print multiple copies of the worksheet.) Note the date
and time the count was reported.
After the count, bring in any inventory thats arrived during the count. Then start
picking and packing your orders so you can generate income again.
Making Inventory Adjustments
After youve finished counting the inventory, you may find that the numbers on the
worksheet dont match the physical count. In fact, its almost a sure bet that the
numbers wont match.
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Most of the time the physical count is lower than the QuickBooks figures. This is
called shrinkage. Shrinkage is jargon for stuff went missing for an unexplained
reason (like customer or employee theft). Another reason for shrinkage is
breakage, but most of the time thats reported by employees, and you can adjust
your inventory because you know about it.
Adjusting the Count
You have to tell QuickBooks about the results of the physical count, and you
accomplish that by choosing Vendors | Inventory Activities | Adjust Quantity/Value
On Hand. The Adjust Quantity/Value On Hand window opens, which is shown in
Figure 10-10.
N O T E : Inactive items appear on the Adjust Quantity/Value On Hand window.
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FIGURE 10-10 Correct the quantity to match the physical count.
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Here are the guidelines for filling out this window:
Enter the date (usually inventory adjustments are made at the end of the
month, quarter, or year, but theres no rule about that).
Use an optional reference number to track the adjustment.
In the Adjustment Account field, enter the inventory adjustment account in
your chart of accounts. (See the section About the Inventory Adjustment
Account for important information about the type of account.)
The Customer:Job field is there in case youre sending stuff to a customer but
didnt include the items on any invoices for that customer or job. This is a way
to effect a transfer of the inventory; the inventory count is changed and the cost
is posted to the customer or job.
If youve enabled the class tracking feature, a Class field appears.
This window doesnt differentiate between parent items and subitems. The
parent items have a current quantity of zero, but some subitems might also
have a zero count. Be careful about the item youre adjusting.
Use either the New Qty column or the Qty Difference column to enter the
count (depending on how you filled out the worksheet and calculated it).
Whichever column you use, QuickBooks fills in the other column
automatically.
Anything you enter in the Memo field appears on your Profit & Loss Detail
report, which eliminates the question, Whats this figure? from your
accountant.
When you complete the entries, the total value of the adjustment you made is
displayed below the Qty Difference column. That value is calculated by using the
average cost of your inventory. For example, if you received ten widgets into
inventory at a cost of $10.00 each and later received ten more at a cost of $12.00
each, your average cost for widgets is $11.00 each. If your adjustment is for minus
one widget, your inventory asset value is decreased by $11.00.
You can use the inventory adjustment window anytime you need to adjust either
the quantity or the value; this is not just for correcting quantities after a physical
count. For example, if you send a sample to a customer or you donate an item to a
charitable organization, you can use the inventory adjustment feature.
Adjusting the Value
You can be more precise about your inventory valuation; in fact, you can override
the average cost calculation and enter a true value when you fill out this transaction
window.
Click the Value Adjustment check box at the bottom of the window. Two
new columns named Current Value and New Value appear in the window (see
Figure 10-11).
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The value of the total adjusted count is displayed for each item, and you can
change the value to eliminate the effects of averaging costs up to this point
(although as you continue to receive inventory items, QuickBooks continues to use
average costing taking this new value into consideration). You can change the
current value of any item.
Of course, in order to enter the correct total value, you must have the
information you need and then make the appropriate calculations. To obtain the
information, choose Reports | Purchases | Purchases By Vendor Detail. This report
presents a history of your purchases so you can make the necessary calculations.
Return to the Adjust Quantity window and enter the data. When youve finished
making your changes, click Save & Close to save your new inventory numbers.
QuickBooks does not support FIFO (first in, first out) or LIFO (last in, first out)
costing for inventory. Essentially, when you use current figures to update the cost,
youre updating the current average cost, you are not creating FIFO/LIFO inventory
costing.
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FIGURE 10-11 Adjust the costs of inventory to reflect actual purchases.
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About the Inventory Adjustment Account
QuickBooks automatically creates an expense account named Inventory
Adjustment when you enable inventory tracking. However, most accountants prefer
to have the Inventory Adjustment account configured as a cost of goods sold
account, not as an expense account. Check with your accountant, and if you need
to change the account type, edit the account to change the Account Type field to
Cost of Goods Sold. If youre using account numbers, change the number to reflect
the numbers youre using for COGS.
If you use a COGS account when you use the Adjust Quantity/Value On Hand
window, QuickBooks issues a warning message when you enter your adjustment
account in the Adjustment Account field.
Ill 10-1
Ask your accountant about the account type for your inventory adjustments, and
if he or she wants you to use a cost of goods account, be sure to select the option to
stop showing this message before you click OK to continue working in this
window.
Most of the accountants who dont agree with this paradigm are especially
emphatic about not posting an increase in inventory value to an income account.
They explain that while an adjustment of inventory may increase or decrease profit,
that is not the same thing as recorded income from selling the inventory and
shouldnt be posted as such (some call it unrealized income and unrealized
expense). In addition (and terribly important), if your local government imposes a
gross receipts tax, posting an inventory adjustment as if it were income will
increase your taxable gross receipts without any real sales-based income being
received.
T I P : If you adjust inventory quantity to reflect sending a sample to a potential
customer, you can use a Marketing or Advertising expense account as the
adjustment account. Similarly, sending an item to a charity would use the
Charitable Contributions expense account. Check with your accountant before
making the decision.
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Understanding the Postings
When you adjust the inventory count, youre also changing the value of your
inventory asset. After you save the adjustment, the inventory asset account register
reflects the differences for each item.
But this is double-entry bookkeeping, which means there has to be an equal and
opposite entry somewhere else. For example, when you sell items via customer
invoices, the balancing entry to the decrement of your inventory account is made to
cost of goods sold. When youre adjusting inventory, however, there is no sale
involved (nor is there a purchase involved). In this case, the balancing entry is
made to the inventory adjustment account, which must exist in order to adjust
your inventory.
If your inventory adjustment lowers the value of your inventory, the inventory
asset account is credited and the adjustment account receives a debit in the same
amount. If your adjustment raises the value of your inventory, the postings are
opposite.
Making Other Adjustments to Inventory
You can use the Adjust Quantity/Value On Hand window to make adjustments to
inventory at any time and for a variety of reasons unconnected to the periodic
physical count:
Breakage or other damage
Customer demo/sample units
Gifts or bonuses for customers or employees
The important thing to remember is that tracking inventory isnt just to make
sure that you have sufficient items on hand to sell to customers (although thats
certainly an important point). Equally important is the fact that inventory is a
significant asset, just like your cash, equipment, and other assets. It affects your
companys worth in a substantial way.
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C
h
a
p
t
e
r
1
1
Managing Cash
and Credit Card
Transactions
I
n this chapter:
Learn how to make deposits that arent from customers
Transfer funds between accounts
Deal with bounced checks
Void disbursements
Manage cash
Balance credit card statements
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Before you started using accounting software, you likely entered your check and
deposit transactions manually into your checkbook register and may have fallen
prey to math errors, missed transactions, and ultimately an incorrect register
balance. If so, relax; QuickBooks can take care of all of those problems.
Making a Deposit Thats
Not from a Customer
Even though QuickBooks takes care of depositing money into your bank account
when you receive money from customers (covered in Chapter 4), there are times
when you receive money thats unconnected to a customer payment.
Entering a deposit (one thats not a customer payment) into your QuickBooks
check register isnt much different from entering a deposit into a manual checkbook
register. Actually, its easier because you dont have to make any calculations
QuickBooks takes care of that.
Press CTRL-A to open the chart of accounts and double-click the bank account
you want to work with.
Ill 11-1
Fill in the date, delete the check number if one automatically appears, and then
click in the Deposit column to enter the amount. Assign the deposit to an account.
You should use the Memo field for an explanation because your accountant will
probably ask you about the deposit later. Click the Record button. Thats it!
You can, if its necessary, enter a payee name in the Payee column, but
QuickBooks doesnt require that. Most of the time, you use this method of direct
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entry to record deposits that are unconnected to customers for whom you need to
track activity. For example, you may receive a rebate on a purchase you made.
If you want to enter a payee that doesnt exist in any of your name lists, QuickBooks
displays a Name Not Found message offering you the following selections:
Quick Add, which lets you enter a name without any additional information
Set Up, which lets you create a new name using the regular New Name window
Cancel, which returns you to the account register so you can either choose
another name or delete the nonexistent Payee entry
If you select Quick Add or Set Up, youre asked which type of name youre adding:
Vendor, Customer, Employee, or Other. Unless this payee will become a Vendor or
Customer (we can eliminate Employee fromthis procedure), choose Other.
If youre depositing your own money into the business, thats capital; you should
post the deposit to a capital account (its an equity account). If youre depositing the
proceeds of a loan (from yourself or from a bank), post the deposit to the liability
account for the loan (you may have to create the liability account). If youre making
a deposit thats a refund from a vendor, you can post the amount to the expense
account that was used for the original expense.
When in doubt, post the amount to the most logical place and call your
accountant. You can always edit the transaction later or make a journal entry to
post the amount to the right account.
T I P : QuickBooks provides an account named Ask My Accountant, which is
a good place to park entries when youre not sure what the posting account
should be. After your accountant answers your question, edit the transaction to
put the money into the right account.
Transferring Funds Between Accounts
Moving money between bank accounts is a common procedure in business. If you
have a bank account for payroll, you have to move money out of your operating
account into your payroll account every payday (actually, you usually do this the day
before payday). Some people deposit all the customer payments into a money market
account (which pays interest) and then transfer the necessary funds to an operating
account when its time to pay bills. Others do it the other way around, moving money
not immediately needed fromthe business operating account to a money market
account. Lawyers, agents, real estate brokers, and other professionals have to
maintain escrow accounts and move money between themand the operating account.
The difference between a regular deposit and a transfer isnt clear if you think
about the end result as being nothing more than money was disbursed from one
account and deposited into another account. However, thats not the way to think
about it. When you work with accounting issues, every action has an effect on your
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general ledger, which means theres an effect on your financial reporting (and your
taxes). A transfer isnt a disbursement (which is an expense thats assigned to a
specific account), and it isnt a regular deposit (income received). A transfer has no
effect on your profit and loss. If you dont use the transfer protocol, you run the risk
of posting a deductible expense or taxable income to your profit and loss reports.
Follow these steps to transfer funds between bank accounts:
Choose Banking | Transfer Funds from the menu bar to open the Transfer
Funds Between Accounts dialog (see Figure 11-1).
Fill out the fields.
Click Save & Close (or Save & New if you have another transfer to make).
QuickBooks posts the transaction (youll see it marked as TRANSFR in both
bank accounts if you open their registers) without affecting any totals in your
financial reports. All the work is done on the balance sheet, but the bottom line of
your balance sheet doesnt change as the following postings are made to the general
ledger:
Account Debit Credit
Sending Bank Account Amount of Transfer
Receiving Bank Account Amount of Transfer
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FIGURE 11-1 Its very easy to transfer money between bank accounts.
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Handling Bounced Checks
Customer checks sometimes bounce. When that happens, you face the following
tasks:
Configuring items to manage bounced checks and service charges.
Deducting the amount of the bounced check from your checking account.
Recovering the money from the customer, including any service charge you
incurred from your bank.
Recording any bank service charges you incurred as a result of the bounced
check.
The following is a straightforward method you can use to accomplish these tasks.
Configuring Items to Manage Bounced Checks
With this method you need to create items to use in the transactions you create to
notify the customer and attempt to collect the money still owed to you.
For the amount of the check, create an Other Charge item named NSF Check
(NSF stands for NonSufficient Funds, the banks term for a bounced check). The
item is nontaxable and is linked to the bank account into which you deposit
customer checks (instead of using an income account). Dont enter an amount;
when you create a transaction, you use the amount of the bounced check.
Ill 11-2
N O T E : If you want to see a history of bounced checks and the customers
that bounced them, just select this item in the Item List and press CTRL-Q to see
a quick report on the transactions attached to this item.
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You also have to have an itemto use when you charge the customer for the service
charge fromyour bank. Use an Other Charge itemnamed NSF BankServChg, with
the description Service Charge for Returned Check. Use the bank service charges
expense account as the income account.
Create an Invoice to Recover the Amounts Owed
Create an invoice (service or professional works best) that includes the items you
created to handle bounced checks (see Figure 11-2). When (or if) the payment
arrives, you use Receive Payments to record the amounts.
When you enter the NSF item on the invoice, it credits the bank account, which
washes the amount of the original deposit of the check. It also provides both
transactions in the Reconcile window when your statement arrives, so you can
select the original deposit (if thats all that shows up on your statement) or both
transactions (if all of these transactions occurred in time to appear on the
statement).
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FIGURE 11-2 An invoice for a bounced check takes care of all the postings you need to adjust
your accounting totals.
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The amount you enter for the service charge item can be larger than the amount
your bank charged (check your states laws on this matter). If you have a lot of
customers who bounce checks, you could end up with a negative expense total for
the bank service charge accountnothing wrong with that.
Record the Bank Charge
If your bank imposed a charge for the returned check, you have to enter that charge
in your bank register. The easiest way to do that is to open the register and enter
the amount in the Payment column. Post the transaction to your bank charges
expense account. You dont need a check number or a payee. The charge will appear
in the reconciliation window when you reconcile your account.
The bank charge included in the invoice you created credited your bank charges
expense account. This entry in the register debits the account and also puts the
charge in the reconciliation window.
T I P : Consider using the Intuit Check Solution for QuickBooks, an add-on
service (for an additional fee) that allows you to scan a customers paper check
into QuickBooks or take check payments over the phone. The Intuit Check
Solution for QuickBooks also includes a check verification service that can help
reduce your risk of accepting a bad check. To learn more about or sign up for this
service, select Customers | Add Electronic Check Processing.
Voiding Disbursements
Sometimes you have to void a check that youve written. Perhaps you decided not
to send it for some reason, or perhaps it was lost in the mail. Whatever the reason,
if a check isnt going to clear your bank, you should void it.
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Redepositing Bounced Checks
As part of your process for managing bounced checks you also must decide whether youre
going to redeposit the check. Most banks permit you to redeposit a bounced check, but only
onceyou cannot keep depositing against the hope that the customers bank balance will grow
large enough to cover the check.
Many business owners dont redeposit bounced checks; instead, they insist on receiving a new
check, a certified check, or an envelope filled with cash. If your bank charges a service fee for
bounced checks, its probably not a good idea to redeposit the check and risk incurring another
charge you may not be able to collect from your customer.
FYI
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The process of voiding a check is quite easy, and the only trouble you can cause
yourself is deleting the check instead of voiding it. Deleting a check removes all
history of the transaction, and the check number disappears into la-la land. This is
not a good way to keep financial records. Voiding a check keeps the check number
but sets the amount to zero.
To void a check, open the bank account register and click anywhere on the
checks transaction line to select the transaction. Right-click to open the shortcut
menu and choose Void Check. The corresponding posting in the account (or
multiple accounts) to which the check was written is automatically adjusted. Click
Record to save the transaction.
Tracking Cash
ATMs are everywhere. Its so easy to take cash out of your bank account in the
course of a dayand its so easy to forget to enter the transaction in your account
register!
Many businesses also maintain a petty cash box from which to dispense cash to
employees (or owners) who need cash to recover money theyve spent for the
company or as an advance against future expenditures.
When you take cash, whether its cash from the petty cash box or a withdrawal
via an ATM machine, you have to account for it. That means you have to account
for the portion of it you spend and the portion thats still in your pocket. The cash
belongs to the business. This section covers the accounting procedures involved
with petty cash transactions.
Creating a Petty Cash Account
If you spend cash for business expenses, your chart of accounts should have a petty
cash account. This account almost functions like a cash register till: you put money
in it, then you account for the money thats spent, leaving the rest in the till until it
too is spent. Then you put more money into the till. The petty cash account doesnt
represent a real bank account; it just represents that portion of the money in the
real bank account that moved into the till.
Follow these steps to create a petty cash account:
Click the Chart Of Accounts icon on the Home page, or press CTRL-A.
When the Chart Of Accounts window appears, press CTRL-N to open a blank
New Account window.
Fill in the account information using the following guidelines:
The Account Type is Bank.
If you number your accounts, use a number that places your new petty cash
account near the other (real) bank accounts in your chart of accounts.
Leave the opening balance at zero.
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Putting Cash into Petty Cash
You have to put money into your petty cash till, both literally (get cash) and
figuratively (record a withdrawal from your bank account to your petty cash
account). Most of the time youll write a check for petty cash using the following
guidelines:
Create a name in the Other Names list for the payee (usually the name is
cash).
Post the check to the petty cash account.
You can use the Write Checks window to accomplish the task, or enter the
transaction directly in the bank account register.
T I P : Dont post a petty cash check to an expense, nor to a class. Those
postings are recorded when you account for the spent funds, not for the moment
at which you withdraw the cash (see Recording Petty Cash Disbursements).
Recording ATM Withdrawals
When you withdraw money from your bank account with your ATM card, its not
an expense, its just cash. Youve put cash into a till (even if the till is your pocket,
to QuickBooks its a petty cash container). It becomes an expense when you spend
it (remember to get a receipt so you can enter the expense into your system).
Bring the ATM receipt (and receipts for any stuff you purchased with the ATM
cash) back to the office. Now youre ready to perform the procedures necessary to
track the cash you took and the part of it you spent.
The first thing you have to do is take the cash out of your QuickBooks bank
account, because you stood in front of an ATM dispenser and took cash out of your
actual bank account. However, this is double-entry bookkeeping, and there has to
be an equal and opposite posting to another account. Thats what the petty cash
account is for. You have a choice of methods for performing this task: transfer the
funds between accounts, or enter a transaction in your bank account.
Follow these steps to transfer funds between the bank account and the petty
cash account:
Choose Banking | Transfer Funds.
In the Transfer Funds Between Accounts window, fill out the information
needed: the two accounts and the amount you withdrew.
Click Save & Close.
Follow these steps to enter the withdrawal as a transaction:
Open the bank account register and enter the transaction date.
Delete the check number QuickBooks automatically enters in the Number field.
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Skip the Payee field.
Enter the amount of the transaction in the Payment column.
In the Account field, post the transaction to the petty cash account.
QuickBooks automatically assigns the type TRANSFR to the transaction.
Some bookkeepers are uneasy about skipping the Payee field. If you fall in that
category, create a payee named PettyCash in the Other Names list and use that
name for petty cash transactions.
Recording Petty Cash Disbursements
As you spend the cash youve obtained, you must record those expenditures in the
petty cash register. Use the receipts youve collected to post the petty cash
transactions.
T I P : Dont let anyone take money out of the petty cash till without a receipt.
If the money is an advance against a purchase instead of payment for a receipt,
use an IOU. Later, replace the IOU with the purchase receipt.
N O T E : If you spent less than the amount of cash you withdrew from the till,
the balance stays in the petty cash account while its in your pocket. Youll
probably spend it later, and at that point youll repeat this task to account for
that spending.
Recording Petty Cash Expenses in the Bank Register
If you want to enter each receipt separately, posting it to a specific expense account,
and you dont have to post anything to a class, or link it to a customer, its easiest to
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ATM Withdrawals vs. ATM Payments
The discussion on using an ATM card to withdraw cash, and tracking that cash through a petty
cash account, refers to the action of withdrawing cash (literally). If you use the company ATM
card to purchase something for your business, you dont move the payment to petty cash; instead
you treat the purchase as a check. You can use the Write Checks window or the bank account
register to enter the amount and the expense account. Optionally, enter a vendor name (if youre
tracking the place of purchase as a vendor, which isnt really necessary unless this is a vendor for
whom you track bills and payments). Do not enter a check number; either leave the Chk # field
blank or enter a code (such as ATM).
FYI
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use the petty cash bank register. Delete the check number QuickBooks
automatically inserts in the Number field (if you leave the number there, its okay,
because youll never reconcile the petty cash account). You can either skip the
Payee field or use a payee named PettyCash (in the Other Names list).
Recording Petty Cash Expenses with a Check
If you want to enter a group of receipts that post to a variety of expense accounts,
or you have to post the expense to a class, or link it to a customer, its easiest to use
the Write Checks window (CTRL-W).
Select the petty cash bank account at the top of the Write Checks window. You
dont have to enter a payee, just enter the amounts and post them to the appropriate
account, class, and customer (see Figure 11-3).
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FIGURE 11-3 Enter your petty cash expenses quickly in the Write Checks window.
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Managing Your Credit Cards
When you use a business credit card, you have a number of choices for tracking
and paying the credit card bill. You can either pay the entire bill every month, or
pay part of the bill and keep a running credit card balance. QuickBooks can
accommodate either of the following approaches:
Treat the credit card bill as an ordinary vendor and enter the bill when it
arrives.
Treat the credit card bill as a liability and enter each transaction as its made,
then reconcile the entries against the bill that arrives.
Treating Credit Cards as Vendors
You can set up your credit card as an ordinary vendor (instead of a liability
account) and enter the bill into QuickBooks when it arrives, or use the Write
Checks function to create a direct disbursement. Most of the time, the expenses are
posted to multiple accounts, so the credit card bill transaction is a split transaction
(see Figure 11-4).
If you dont pay off the card balance, each month youll have a new bill to enter
that has interest charges in addition to your purchases. Post the interest charges to
an interest expense account.
If you enter the bill in the Enter Bills window, and then use the Pay Bills window
to write the checks, enter the amount you want to pay against each bill in the
system. Always start bill payments with the oldest bill, making a partial payment
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Dont Enter Payees/Vendors for Petty Cash Expenses
Most of the time, the store in which you spent the cash doesnt have to be entered in the
transaction (Joes Hardware Store, Marys Office Supplies, and so on). If you dont have a
real vendor relationship with the recipient of your cash, leave the vendor field blank. Otherwise,
your company file grows larger than it needs to because the system is carrying the weight of all
these vendors. These vendors end up appearing in all your vendor reports, crowding those
reports with extraneous names that nobody has any interest in tracking.
Reserve vendors for those payees from whom you receive bills or to whom you disburse checks
and for whom you want to track activity. If its so important to know that you spent a buck eighty
for a screwdriver at Joes Hardware Store, enter that information in the Memo field.
FYI
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or paying it in full. Then move to the next oldest bill, making a partial payment or
paying it in full.
Treating Credit Cards as Liability Accounts
You can also treat credit cards as liability accounts, tracking each transaction
against the account as it occurs. Then when the bill arrives, you match the
transactions against the bill and decide how much to pay. Your running balance is
tracked specifically against the credit card, instead of being part of your Accounts
Payable balance.
Creating a Credit Card Account
To use credit cards in this manner, you must have an account for each credit card in
your chart of accounts. If you dont have such an account as a result of the EasyStep
Interview, you can create one now, using an account type of Credit Card. Check out
Chapter 2 for information about adding items to your chart of accounts.
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FIGURE 11-4 Credit card bills are usually posted to multiple accounts.
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C A U T I O N : QuickBooks arranges the chart of accounts by account types.
If youre using numbers for your accounts, the numbering is ignored in favor of
account types. To make sure your credit card accounts are displayed in the right
order, use account numbers that fit into the right section of the chart of
accountscredit card accounts come right after accounts payable accounts.
Entering Credit Card Charges
If you want to track your credit card charges as theyre assumed, instead of waiting
for the bill, you have to treat your credit card transactions like ATM transactions
enter them as you go. QuickBooks offers two methods to accomplish this:
Set up your credit card account for online banking and download the
transactions (covered in Chapter 16).
Enter transactions manually, using the receipt you get at the time of purchase.
If your credit card account is enabled for online banking, these are not mutually
exclusive methods. You can enter the transactions manually and download data
from your credit card server to match those transactions. Or, you can download the
transactions and then add each transaction to the credit card register (instructions
are in Chapter 16).
To enter credit card charges manually, choose Banking | Enter Credit Card
Charges to open the Enter Credit Card Charges window shown in Figure 11-5.
Select the appropriate credit card account and then use the store receipt as a
reference document to fill in the transaction. Here are some guidelines for making
this transaction easy and quick to complete:
You can skip the Purchased From field or you can create a vendor named Credit
Card Purchase (or something similar). Then use the Memo field for each
transaction to note the name of the real vendor, if that information is important
to you. If you type a vendor name in the Purchased From field, QuickBooks
will force you to add the vendor to your vendor list and youll end up with a
very long list of vendors with whom you dont have a real vendor relationship
(they dont send you bills and you never need to discuss A/P balances with
them), and you wont be able to delete them from your QuickBooks file because
they have transactions. Keep in mind that in this instance your vendor is your
credit card.
If the transaction is a return, be sure to select the Refund/Credit option at the
top of the window.
Enter the receipt number in the Ref No. field.
Enter the date of the purchase.
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Use the Expenses tab for general expenses; use the Items tab if you used the
credit card to buy inventory items for resale.
If you use the credit card for an expense or an item for a customer, enter the
customer information so you can bill the customer for reimbursement (see
Chapter 6 for details about entering reimbursable expenses).
Click Save & New to save the record and move to another blank credit card
entry window to enter another credit card transaction, or click Save & Close if
youre finished entering credit card charges.
T I P : You can also enter these charges directly in the register of your credit
card account. (Some people find it faster to work in the register than in a
transaction window.)
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FIGURE 11-5 To track credit card charges as liabilities, enter each transaction.
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Reconciling the Credit Card Bill
Eventually, the credit card bill arrives, and you have to perform the following
chores:
Reconcile the bill against the entries you recorded.
Decide whether to pay the entire bill or just a portion of it.
Write a check.
Choose Banking | Reconcile from the QuickBooks menu bar to open the Begin
Reconciliation window. In the Account field, select the credit card from the drop-
down list. In the Begin Reconciliation dialog, enter the following data:
The ending balance from the credit card bill
Any finance charges on the bill in the Finance Charge box, along with the date
on which the charges were assessed
The account you use to post finance charges (create one if you dont have
oneits an expense)
N O T E : The first time you do this, the beginning balance is zero.
Click Continue to open the Reconcile Credit Card window, which displays the
purchases you entered into QuickBooks and the payments you made. Click the
check mark column for each transaction on your window that has a matching
transaction on the credit card bill (make sure the amounts match, too). That
includes payments, credits, and charges.
T I P : If the list of transactions is very long, select the option Hide
Transactions After The Statements End Date. This removes transaction listings
past that date, none of which could have cleared.
Add any transactions you forgot to enter by opening the credit card register and
entering the transactions. (To find the receipts, search your pockets, desk, pocketbook,
the floor of your car, and the kitchen junk drawer.) When you return to the Reconcile
Credit Card window, the new transactions are automatically added and you can check
themoff. (You can also click the Go To button to open the Enter Credit Card Charges
window, if you prefer to work in that window.)
T I P : Finance charges for businesses are tax deductible; the finance charges
you incur for your personal credit cards, or for personal expenses, arent.
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Now look at the box at the bottom of the window where the totals are displayed.
If the difference is $0.00, congratulations! Everythings fine. Click Reconcile Now.
If the difference is not $0.00, you have to figure out the problem and make
corrections. Read Chapter 12, which is dedicated to the subject of reconciling bank
accounts, to learn how to troubleshoot reconciliations.
Paying the Credit Card Bill
When you finish working in the reconciliation window, QuickBooks moves on to
pay the bill by asking you whether you want to write a check now, or create a
vendor bill that youll pay the next time you pay your bills.
Select the appropriate response and click OK. QuickBooks offers congratulations
and also offers to print a reconciliation report (see Chapter 12 to learn about
printing reconciliation reports). Select the report type you want, or click Cancel to
skip the report.
If you opted to pay the bill, a transaction window that matches your response to
paying the bill opens, so you can either enter a vendor bill or write a check. Fill in
all the fields and save the transaction.
T I P : All the detailed information you need to create vendor bills is covered in
Chapter 6, and information about paying bills and printing checks is in Chapter 7.
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C
h
a
p
t
e
r
1
2
Reconciling Bank
Accounts
I
n this chapter:
Get ready to reconcile
Use the QuickBooks reconciliation windows
Adjust the beginning balance for your first reconciliation
Troubleshoot differences in the beginning balance
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Reconciling bank accountsaka balancing your checkbookis one of the most
important tasks connected with financial record keeping.
Getting Ready to Reconcile
After your bank statement arrives, you must find some uninterrupted moments to
compare it to the information in your QuickBooks account register.
If your bank sends your canceled checks in the envelope along with the
statement (many banks dont include the physical checks), you can arrange the
checks in numerical order before you start this task.
However, instead of sorting and collating the physical checks, its much easier to
use the list of check numbers that appears on your statement. An asterisk or some
other mark usually indicates a missing number. The missing number is usually a
check that hasnt cleared yet (which includes any checks you voided), or a check
that cleared previously.
Checking the Register
Open the register for the bank account youre about to reconcile by pressing CTRL-R
to open the Use Register dialog and selecting the account. Then compare the bank
register to the statement.
Review your bank statement: if it shows deposits or checks (or both) that are absent
fromyour bank register, add themto the register before you get started. If you see any
other missing transactions after you start the reconciliation, dont worry; you can add
transactions to the register while youre working in the Reconcile window, but its
usually quicker to get this task out of the way before you start the reconciliation
process.
Interest payments and bank charges dont count as missing transactions because
the bank reconciliation process treats those transactions separately. Youll have a
chance to enter those amounts in the bank reconciliation windows.
Adding Missing Disbursements to the Register
The way you add missing disbursements to the register depends on whether the
checks were payments of vendor bills you entered into your QuickBooks file or
direct disbursements.
To enter a bill payment, use the Pay Bills command on the Vendors menu.
To enter a direct disbursement, use the Write Checks window (press CTRL-W)
or enter the check directly into the register.
Adding Missing Deposits to the Register
Check for payments that were deposited to the Undeposited Funds account (when
you received customer payments) which you neglected to move to the bank
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account. Choose Banking | Make Deposits from the menu bar and select any
deposits that appear on your statement. If you have multiple transactions listed,
deposit the funds in amounts (batches of transactions) that match the statement.
For example, your bank statement may show a deposit of $145.78 on one date
and another deposit for $3,233.99 on another date. Both deposits appear in the Make
Deposits window. Select one of the deposits, process it, and then repeat the procedure
for the other deposit. That way, when you reconcile the account, your transactions in
QuickBooks will match the way they appear on your bank statement.
If a missing deposit isnt in the Undeposited Funds account, youll have to create
the deposit now. For customer invoice payments or cash sales, fill out the appropriate
transaction window. If you deposit the proceeds to the Undeposited Funds account,
dont forget to take the additional step to deposit the funds in the bank so the
transaction appears in the reconciliation window. If you deposit the proceeds directly
to the bank, the transaction appears in the reconciliation window automatically.
If you made deposits unconnected to customers and earned income, such as
putting additional capital into your business or depositing the proceeds of a loan, the
fastest way to enter the transaction is to work directly in the bank accounts register.
Enter the deposit amount and post the transaction to the appropriate account.
Reconciling in QuickBooks
Most of the time, performing a bank reconciliation in QuickBooks is easy and
straightforward. You dont have a lot of data entry, because most of the data you
need is already in your bank register. The following sections explain the steps.
The Begin Reconciliation Window
Reconciling your bank account starts with the Begin Reconciliation window, which
you open by choosing Banking | Reconcile (see Figure 12-1). If you have more than
one bank account, or you have credit card accounts you reconcile in addition to
bank accounts, select the account you want to reconcile from the drop-down list in
the Account field.
Enter the statement date from your bank statement and then check the
Beginning Balance field in the window against the beginning balance on the bank
statement. (Your bank may call it the starting balance.). If this is the first time youre
reconciling the bank account in QuickBooks, your beginning balance field in
QuickBooks will automatically be zero. Enter the ending balance from your
statement in the Ending Balance field in the Begin Reconciliation window.
If the beginning balances dont match and this is not the first time youre
reconciling the bank account in QuickBooks, read the section Troubleshooting
Differences in the Beginning Balance later in this chapter, and then return to this
section of the chapter to perform the reconciliation.
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Enter Interest Income and Service Charges
Your bank statement lists interest and bank service charges if either or both are
applicable to your account. Enter those numbers in the Begin Reconciliation
window and choose the appropriate account for posting. The bank charges you
enter here should only be the standard charges banks assess, such as monthly
charges that may be assessed for failure to maintain a minimum balance. Do not
include special charges for bounced checks, fees for electronic bank transfers, or
any purchases you made that are charged to your account (such as the purchase of
checks or deposit slips). Those should be entered in your bank register as discrete
transactions (using the Memo field to explain the transaction), which makes them
easier to find in case you have to talk to the bank about your account.
If you have online banking and the interest payments and bank charges have
already been entered into your register as a result of downloading transactions, do
not enter them again in the Begin Reconciliation windowtheyll be in the register
list you see in the next window, and you can clear them the way you clear checks
and deposits.
Clearing Transactions
After youve filled out the information in the Begin Reconciliation dialog, click
Continue to open the Reconcile window, shown in Figure 12-2.
Configuring the Reconcile Window
You can configure the way transactions are displayed to make it easier to work in
the window by changing the way the data is displayed.
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FIGURE 12-1 The first window summarizes bank activity.
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Sor ting the Data
By default, QuickBooks sorts transactions by date, with a subsort by transaction
number. For example, in the Checks And Payments pane, if multiple checks have
the same date, those checks are sorted in numerical order.
Reconciling is easier if you sort the data to match the way your bank arranges
the statement. For instance, if you have a lot of electronic payments in addition to
checks, and your bank lists the electronic payments separately from checks, click
the Chk # column to list withdrawals without check numbers separately from
checks.
Eliminating Future Transactions
If the list is long, you can shorten it by selecting the option Hide Transactions After
The Statements End Date. Theoretically, transactions that werent created before the
ending date couldnt have cleared the bank. Removing them from the window
leaves only those transactions likely to have cleared. If you select this option and
your reconciliation doesnt balance, deselect the option so you can clear the
transactions in case one of the following scenarios applies:
You issued a postdated check and the recipient cashed it early. Since its rare for
a bank to enforce the date, this is a real possibility.
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FIGURE 12-2 Uncleared transactions appear in the Reconcile window.
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You made a mistake when you entered the date of the original transaction. You
may have entered a wrong month or even a wrong year, which resulted in
moving the transaction date into the future.
Clearing Transactions
Now you must tell QuickBooks which transactions have cleared. All the transactions
that are on your bank statement are cleared transactions. If the transactions are not
listed on the statement, they have not cleared.
In the Reconcile window, click each transaction that cleared. If this is your first
bank reconciliation in QuickBooks, on the Deposits and Other Credits side of the
Reconcile window youll see a deposit transaction that represents the beginning
bank balance you (or your accountant) entered either via a journal entry (read
Chapter 14 to learn more about journal entries) or directly in the check register
when you set up your QuickBooks data file. Youll need to clear this transaction
during your first reconciliation. When you clear a transaction in the Reconcile
window, a check mark appears in the leftmost (Cleared) column to indicate that the
transaction has cleared the bank. If you clear a transaction in error, click again to
remove the check markits a toggle.
Use the following shortcuts to speed your work:
If all, or almost all, of the transactions have cleared, click Mark All. Then
deselect the transactions that didnt clear.
Mark multiple, contiguous transactions by dragging down the Cleared column.
If the account youre reconciling is enabled for online access, click Matched to
automatically clear all transactions that were matched in the QuickStatements
youve downloaded over the month. QuickBooks asks for the ending date on
the statement and clears each previously matched transaction up to that date.
As you check each cleared transaction, the Difference amount in the lower-right
corner of the Reconcile window changes. The goal is to get that figure to 0.00.
Adding Transactions During Reconciliation
While youre working in the Reconcile window, if you find a transaction on the
statement that you havent entered into your QuickBooks software (probably one of
those ATM transactions you forgot to enter), you dont have to shut down the
reconciliation process to remedy the situation. You can just enter the transaction
into your register.
To open the bank account register, right-click anywhere in the Reconcile window
and choose Use Register from the shortcut menu. When the account register opens,
record the transaction. Return to the Reconcile window, where that transaction is
now listed. Pretty nifty! Check it off as cleared, of course, because it was on the
statement.
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You can switch between the Reconcile window and the register for the account
youre reconciling all through this process. You can use the Window menu on the
QuickBooks Menu bar to move between them or have QuickBooks display the
Open Windows List: select View | Open Window List.
Adding Undeposited Funds During Reconciliation
If the statement shows a deposit that doesnt appear in your Reconcile window, dont
add the deposit to your register until you check the Payments To Deposit window
(choose Banking | Make Deposits). Most of the time youll find the payments listed
there, still awaiting deposit, even though you obviously went to the bank and deposited
those checks. Select the payments that match the total shown on the bank statement
and go through the Make Deposits function. When youre finished, the deposit appears
in the Reconcile window. If the deposit isnt in the Payments To Deposit window, then
you forgot to enter a transaction. Enter the transaction now, using the appropriate
transaction window. Make sure you deposit it into the bank account, to have it appear
in the Reconcile window.
Deleting Transactions During Reconciliation
Sometimes you find that a transaction that was transferred from your account
register to this Reconcile window shouldnt be there. This commonly occurs if you
entered an ATM withdrawal twice. Or perhaps you forgot that youd entered a
deposit, and a couple of days later you entered it again. Whatever the reason,
occasionally there are transactions that should be deleted.
To delete a transaction, double-click its listing in the window, which opens the
original transaction. Then, right-click and select Delete (QuickBooks asks you to
confirm the deletion). The transaction disappears from the Reconcile window and
the bank register.
Editing Transactions During Reconciliation
Sometimes youll want to change some of the information in a transaction. For
example, when you see the real check, you realize the amount you entered in
QuickBooks is wrong. You might even have the wrong date on a check. (These
things only happen, of course, if you write checks manually; they dont happen to
QuickBooks users who let QuickBooks take care of printing checks.)
Whatever the problem, you can correct it by editing the transaction. Double-click the
transactions listing in the Reconcile window to open the original transaction window.
Enter the necessary changes and close the window. Answer Yes when QuickBooks asks
if you want to record the changes, and youre returned to the Reconcile window where
the changes are reflected.
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Resolving Missing Check Numbers
Most bank statements list your checks in order and indicate a missing number with
an asterisk. For instance, you may see check number 1234 followed by check
number *1236 or 1236*. When a check number is missing, it means one of three
things:
The check cleared in a previous reconciliation.
The check is still outstanding.
The check number is unused and is probably literally missing.
If a missing check number on your bank statement is puzzling, you can check its
status. To see if the check cleared in the last reconciliation, open the Previous
Reconciliation report (discussed later in this chapter) by choosing Reports |
Banking | Previous Reconciliation.
To investigate further, right-click anywhere in the Reconcile window and choose
Missing Checks Report from the shortcut menu. When the Missing Checks dialog
opens, select the appropriate account (if you have multiple bank accounts). Youll
see asterisks indicating missing check numbers, as seen in Figure 12-3.
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If the check number is listed in your Missing Checks Report, its truly missing; it
doesnt exist in the register. Investigate the following possible causes:
You deleted the check that was assigned that number.
The check is physically missing (usually because somebody grabbed one or
more checks to carry around).
Checks jammed while printing, and you restarted the print run with the
number of the first available check (QuickBooks doesnt mark checks as void in
that case; it just omits the numbers in the register so they show up in the
Missing Checks Report).
Finishing the Reconciliation
If this isnt the first reconciliation youre performing, theres a good chance that the
Difference figure at the bottom of the Reconcile window displays 0.00. If this is the
first reconciliation and you changed the opening balance in the account register (as
explained earlier in this chapter), you probably also see 0.00 as the difference.
Click Reconcile Now and read the section Printing the Reconciliation Report
later in this chapter. If the Difference amount is an amount other than 0.00, read
the following sections.
Pausing the Reconciliation Process
If the account doesnt reconcile (the Difference figure isnt 0.00), and you dont have the
time, energy, or emotional fortitude to track down the problemat the moment, you can
stop the reconciliation process without losing all the transactions you cleared.
Click the Leave button in the Reconcile window and do something else for a
while. Have dinner, play with the cat, go to the movies, whatever. When you restart
the reconciliation process, all the entries you made are still there.
Finding and Correcting Problems
When youre ready to investigate the cause of a difference between the ending
balance and the cleared balance, follow the guidelines presented here to find the
problem.
Count the number of transactions on the bank statement. Then look in the
lower-left corner of the Reconcile window, where the number of items you have
marked cleared is displayed. Mentally add another item to that number for each of
the following:
A service charge you entered in the Begin Reconciliation box
An interest amount you entered in the Begin Reconciliation box
If the numbers differ, the problemis in your QuickBooks records; theres a transaction
you should have cleared but didnt, or a transaction you cleared that you shouldnt have.
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If youre sure you didnt make any mistakes clearing transactions, do the following:
Check the amount of each transaction against the amount in the bank statement.
Check your transactions and make sure a deposit wasnt inadvertently entered
as a payment (or vice versa). A clue for this is a transaction thats half the
difference. If the difference is $220.00, find a transaction that has an amount of
$110.00 and make sure its a deduction if its supposed to be a deduction (or the
other way around).
Check for transposed figures. Perhaps you entered a figure incorrectly in the
register, such as $549.00 when the bank clears the transaction as $594.00.
A clue that a transposed number is the problem is that the reconciliation
difference can be divided by nine.
If you find the problem, correct it. When the Difference figure is 0.00, click
Reconcile Now.
T I P : You might want to let somebody else check over the statement and the
register, because sometimes you cant see your own mistakes.
Permitting an Adjusting Entry
If you cannot find the problem, you can tell QuickBooks to make an adjusting entry
to force the reconciliation to balance. The adjusting entry is placed in the bank
account register and is offset in an expense account named Reconciliation
Discrepancies (the account is created automatically the first time you encounter
this problem). If you ever figure out what the problem is, you can make the proper
adjustment transaction and delete the adjusting entry.
To force a reconciliation, click Reconcile Now, even though theres a difference.
A message appears to offer the opportunity to make an adjusting entry. Click Enter
Adjustment.
Printing the Reconciliation Report
When you have a balanced reconciliation (even if it results from an adjusting
entry), QuickBooks offers congratulations and also offers to print a reconciliation
report. (The dialog has a Close button to skip the report, but you should keep a
copy of all your reconciliation reports.)
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Ill 12-1
QuickBooks saves the report whether you print it, view it, or cancel it. You can
view it in the future by choosing Reports | Banking | Previous Reconciliation.
Deciding on the Type of Report
QuickBooks offers two reconciliation report types: Detail and Summary. Here are
the differences between them:
The Detail Report shows all the transactions that are cleared and all the
transactions that havent cleared (called in transit transactions) as of the
statement closing date. Any transactions dated after the statement closing date
are listed as new transactions.
The Summary Report breaks down your transactions in the same way, but it
doesnt list the individual transactions; it shows only the totals for each
category: Cleared, Uncleared (in transit), and New.
Selecting the Detail Report makes it easier to resolve problems in the future. You
have a list of every check and deposit and when it cleared.
Print vs. Display
You also have to decide whether to print or to display the report. Make your
decision according to how you think you might use the report.
Printing a Reconciliation Repor t
If you opt to print both reports, the Print Reports dialog opens so you can select the
printer. If you select either the Summary or Detail Report, the Print Reports dialog
offers options, as follows:
Print the report to the selected printer. You can file the printout in case you
ever need to refer to it.
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Print the report to a file. The file option offers several formats in a drop-down
list, so you can load the resulting file into the software of your choice. This
gives you the opportunity to store multiple reports in one application (or even
one file) and sort the data as you wish. The following file options are available:
ASCII text Is straight, unformatted text.
Comma delimited Automatically puts a comma between each field
(column). Select this option if you want to use the file in a spreadsheet or
database program capable of importing comma-delimited files. Most
spreadsheet software can handle comma-delimited files.
Tab delimited Is the same as comma delimited, but the field delimiter is a
tab marker instead of a comma. All spreadsheet and database software can
handle tab-delimited files.
When you print a report to a disk file, QuickBooks opens a Create Disk File
window with the folder that holds your QuickBooks software as the target folder.
The file extension matches the file type you selected.
You can change the container to any other folder in the systemyou might want
to create a subfolder in your My Documents folder to hold these files. Hereafter,
that folder becomes the default container for your reconciliation reports. Be sure to
save each months reconciliation report file with a unique namethe date and the
account name (if you reconcile more than one bank account) are good selections
for filenames.
Displaying the Reconciliation Repor t
If you choose to display a report (or both reports), you see the usual QuickBooks
report format. You can modify the report to change the font, the columns, and so
on. In addition, you can click the Export icon at the top of the report window and
send the report to Excel, where you can manipulate the data to match your needs.
Troubleshooting Dif ferences
in the Beginning Balance
If this isnt the first time youve reconciled the bank account, the beginning balance
thats displayed on the Begin Reconciliation window should match the beginning
balance on the bank statement. That beginning balance is the ending balance from
the last reconciliation, and nothing should change its amount.
If the beginning balance doesnt match the statement, you have to find out why.
Search your memory, because you probably performed one of the following actions
(by the way, these are all things you or your bookkeeping staff should never do once
a reconciliation has been completed):
You changed the amount on a transaction that had previously cleared.
You voided a transaction that had previously cleared.
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You deleted a transaction that had previously cleared.
You removed the cleared check mark from a transaction that had previously
cleared.
You manually entered a cleared check mark on a transaction that had not
cleared.
You have to figure out which one of those actions you took after you last
reconciled the account, and luckily, QuickBooks has a tool to help you. Click the
Locate Discrepancies button on the Begin Reconciliation window to open the
Locate Discrepancies dialog seen in Figure 12-4.
Viewing the Discrepancy Report
Click Discrepancy Report to see if any transactions that were cleared during a past
reconciliation were later changed or deleted.
This report shows you the details of the transactions that cleared during a
previous reconciliation if any changes were made to those transactions since that
reconciliation. If the Reconciled Amount column shows a positive number, the
original cleared transaction was a deposit; a negative number indicates a
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FIGURE 12-4 You have tools to help you track down the reason for an incorrect starting
balance.
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disbursement. The Type Of Change column provides a clue about the action you
must take to correct the unmatched beginning balances.
Uncleared Means you removed the check mark in the Cleared column of the
register (and you persisted in this action even though QuickBooks issued a
stern warning about the dangers).
Deleted Means you deleted the transaction.
Amount Means you changed the amount of the transaction. The difference
between the amount in the Reconciled Amount column and the amount in the
Effect Of Change column is the amount of the change.
This report doesnt offer a Type Of Change named Void, so a voided transaction
is merely marked as changed, and the text in the Type Of Change column is Amount.
A transaction with a changed amount equal to and opposite of the original amount
was almost certainly a transaction you voided after it cleared.
Correcting Opening Balance Differences
Use the information in the Discrepancy Report to correct the problems you created
by changing previously cleared transactions.
Correcting Changed Transactions
If you cleared or uncleared a transaction manually, open the bank register and undo
your erroneous action. If you changed the amount of a transaction that had cleared,
and the transaction still exists in the register with an amount (its not marked
VOID), change the amount back to the original amount for that transaction.
Replacing Voided or Deleted Cleared Transactions
If the beginning balance is incorrect because you removed a transaction that had
cleared (either by voiding or deleting it), you have to put the transaction back into
your register. You can get the information you need from the Discrepancy Report.
If a transaction is there but marked VOID, re-enter it, using the data in the
reconciliation report. That transaction wasnt void when you performed the last
reconciliation, it had cleared. Therefore, it doesnt meet any of the reasons to
void a transaction.
If a transaction appears in the reconciliation report but is not in the register, it
was deleted. If it cleared, it cant be deleted. Re-enter it, using the data in the
reconciliation report.
Check the amounts on the printed check reconciliation report against the data
in the register to see if any amount was changed after the account was reconciled.
If so, restore the original amount.
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Making these changes is safe because youre undoing your own mistake. You
cant justify changing a cleared transactiona transaction that cleared cannot have
the amount changed, be voided, be deleted, or be uncleared.
If you re-enter a transaction that was voided or deleted after it cleared, and you
put a check mark into the Cleared Column (the column with a check mark as the
column title), QuickBooks adds it to your Reconcile window, with a check mark
already in place; this action does not adjust your opening balance on the Begin
Reconciliation window, but it does readjust the math so the current reconciliation
works and next months opening balance will be correct.
T I P : You dont have to be in the Begin Reconciliation window to see a
Discrepancy Report. You can view the contents at any time by choosing Reports |
Banking | Reconciliation Discrepancy.
Viewing the Last Reconciliation Report
Even if you dont display or print a reconciliation report after you reconcile an
account, QuickBooks saves the report. If youre trying to track down a discrepancy
in the beginning balance, viewing the last reconciliation report may be helpful.
Click Previous Reports to open the Select Previous Reconciliation Report dialog,
and select the options for the type and format of the report you want to see.
T I P : You can view the Previous Reconciliation Report at any time by choosing
Reports | Banking | Previous Reconciliation.
Undoing the Last Reconciliation
QuickBooks lets you undo the last reconciliation, which means that all transactions
cleared during the reconciliation are uncleared. This is a good way to start over if
youre mired in difficulties and confusion during the current reconciliation, and the
problems seem to stem from the previous reconciliation (especially if youd forced
reconciliation by having QuickBooks make an adjusting entry).
Click the Undo Last Reconciliation button on the Begin Reconciliation dialog.
QuickBooks suggests you click Cancel and back up your company file before
continuing, which is an excellent idea (just in case this process doesnt work
properly, so you can restore the data in its reconciled state). Then, begin
reconciling, click Undo Last Reconciliation, and click Continue.
QuickBooks performs the following actions:
Removes the cleared status of all transactions you cleared during the last
reconciliation.
Leaves the amounts you entered for interest and bank charges (so dont re-enter
them).
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When the process completes, QuickBooks displays a message to describe those
actions and tell you they were performed. Click OK to clear the message and return
to the Begin Reconciliation dialog.
If QuickBooks made an adjustment entry during the last reconciliation (which
almost certainly is the case; otherwise, you wouldnt have to undo and redo the
reconciliation), click Cancel to close the Begin Reconciliation dialog. Open the
accounts register and delete the adjustment entryits the entry posted to the
Reconciliation Adjustment account. Hopefully, this time the reconciliation will
work and you wont need another adjusting entry.
Start the reconciliation process again for the same month you just undid.
When the Begin Reconciliation window opens, the data that appears is the same
data that appeared when you started the last reconciliationthe last reconciliation
date, the statement date, and the beginning balance are back.
Enter the ending balance from the bank statement. Do not enter the interest and
bank charges again; they were not removed when QuickBooks undid the last
reconciliation. Instead, find them in the Reconcile window and clear them (theyre
not labeled, so you have to look for the appropriate date and amount).
Good luck!
Giving Up the Search for a Reason
You may not be able to find a reason for the difference in the beginning balances.
Theres a point at which it isnt worth your time to keep looking, so just give up and
perform the reconciliation. If your bank account doesnt balance, QuickBooks will
make an adjusting transaction at the end of the reconciliation process that will post
to an expense account that QuickBooks automatically creates for you called
Reconciliation Discrepancies. If you ever learn the reason for the difference, you
can remove the adjustment and post the correct transaction.
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C
h
a
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t
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1
3
Budgets & Planning
I
n this chapter:
Configure a budget
Report on budgets versus actual figures
Export budgets
Other forecasting and planning tools
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A budget is a tool for tracking your businesss progress against your plans. A well-
prepared budget can also help you decide when its best to make a major purchase
for your business, hire additional staff, or draw money out of your business.
How QuickBooks Handles Budgets
Before you begin creating a budget, you need to know how QuickBooks manages
budgets and the processes connected to budgets. This section presents an overview
of the QuickBooks budget features, so you can understand them and bear them in
mind when you create your budgets.
Types of Budgets
QuickBooks offers several types of budgets:
Budgets based on your Balance Sheet accounts
P&L budgets based on your income and expense accounts
P&L budgets based on income and expense accounts and a customer or job
P&L budgets based on income and expense accounts and a class (if youve
enabled class tracking)
P&L budgets can be created from scratch or by using the actual figures from the
previous year. The latter option, of course, only works if youve upgraded to
QuickBooks 2010 from an earlier version.
Budget Data Is Saved Automatically
In QuickBooks, a budget is the data you enter in a budget window. Once you begin
creating a budget, the data you record is more or less permanently ensconced in the
budget window and reappears whenever you open that budget window. You create a
budget by choosing Company | Planning & Budgeting | Set Up Budgets.
You can only create one of each type of budget. For example, if you create a P&L
budget, enter and record some figures, and then decide to start all over by launching
the Create New Budget Wizard, you cant create a new P&L budget. Instead of
creating a new budget, the wizard displays the data you already configured. You can
change the figures, but the changes replace the original figures. Youre editing a
budget; youre not creating a new budget document.
Creating Multiple Budgets
Once youve created your first budget, regardless of type, the next time you select
Company | Planning & Budgeting | Set Up Budgets, the budget window opens with
the last budget you created.
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If the budget is a P&L or Balance Sheet budget, you cannot create a second
budget of the same type. However, you can create a budget of a different type (P&L
Customer:Job or P&L Class). To do so, click the Create New Budget button in the
budget window and go through the wizard to select different criteria (Customer:Job
or Class).
After youve created a Customer:Job budget or a Class budget, you can create
another budget using a different customer or job, or a different class. See the
sections Customer:Job Budgets and Class Budgets for instructions on creating
multiple budgets of those types.
Deleting a Budget
QuickBooks lets you delete a budget. This means if you want to create multiple
budgets of the same type, you have a workaround to the no two budgets of the
same type rule. In fact, you can export the original budget to Excel and then delete
the original budget and start the process again. See the section Exporting Budgets,
later in this chapter.
To delete a budget, choose Edit | Delete Budget from the QuickBooks menu bar
while the budget window is open.
Understanding the Budget Window
Before you start entering figures, you need to learn how to manage your work using
the buttons on the budget window.
Clear Deletes all figures in the budget windowyou cannot use this button
to clear a row or column.
Save Records the current figures and leaves the window open so you can
continue to work.
OK Records the current figures and closes the window.
Cancel Closes the window without any offer to record the figures.
Create New Budget Starts the budget process anew, opening the Create New
Budget Wizard. If youve entered any data, QuickBooks asks if you want to
record your budget before closing the window. If you record your data (or have
previously recorded your data with the Save button), when you start anew, the
budget window opens with the same recorded data.
The other buttons in the budget window are used when youre entering data, and
are covered later in this chapter in the section Entering Budget Data.
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Tasks to Perform Before You Start Your Budget
Before you create a budget, you need to check the following details:
The accounts you need must be available; you cannot add accounts while
youre working in a budget.
Make sure all the accounts you want to include on the budget are active;
inactive accounts are not available.
The first month thats displayed in the budget window must be the first month
of your fiscal year, or your budget wont work properly. If you dont run your
company on a calendar year (or if you want to create a budget thats not based
on your fiscal year), you must make sure your company configuration has the
correct starting month. Choose Company | Company Information to view and
edit the first month of your fiscal year.
P&L Budgets
The most common (and useful) budget is based on your income and expenses.
After youve set up a good chart of accounts, creating a budget is quite easy.
Create the Budget and Its Criteria
To create a P&L budget, choose Company | Planning & Budgeting | Set Up Budgets.
If this is the first budget youre creating, the Create New Budget Wizard opens to
walk you through the process. (If youve already created a budget, the Set Up
Budgets window appears with your existing budget loadedclick Create New
Budget to open the Create New Budget Wizard.) Enter the year for which youre
creating the budget and select the P&L budget option.
Ill 13-1
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N O T E : If youre not operating on a calendar year, the budget year field spans
two calendar years, for instance 201011, to accommodate your fiscal year.
Click Next to select any additional criteria for this budget. You can include
customers (and jobs) or classes in your budget.
Ill 13-2
(This discussion covers regular P&L budgetsunconnected to customers or
classesand the following sections explain how to budget for customers and jobs
and for classes.)
Click Next to choose between creating a budget from scratch or from the figures
from last years activities (this discussion is about creating a budget from scratch).
Click Finish to open the budget window, where all your income and expense
accounts are displayed (see Figure 13-1).
Entering Budget Data
To create budget figures for an account, select the account and then click in the
column of the first month you want to budget. Enter the budget figure, press TAB to
move to the next month, and enter the appropriate amount. Repeat until all the
months for this account have your budget figures. As you enter each monthly
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amount and press TAB, QuickBooks automatically calculates and displays the
annual total for the account (see Figure 13-2).
Using Budget Entry Shortcuts
To save yourself from contracting a case of terminal ennui, QuickBooks provides
some shortcuts for entering budget figures.
Copy Numbers Across the Months
To copy a monthly figure from the current month (the month where your cursor is)
to all the following months, enter the figure and click Copy Across. The numbers
are copied to all the rest of the months of the year.
You can perform this shortcut as soon as you enter an amount (but before you
press TAB), or you can return to the month you want to designate the first month by
clicking its column (useful if youve entered figures for several months and then
remember this shortcut).
This is handier than it seems at first glance. Its obvious that if you enter your
rent in the first month and choose Copy Across, youve saved a lot of manual
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FIGURE 13-1 All active income and expense accounts are available for your budget.
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data entry. However, suppose your landlord sends you a notice that your rent is
increasing beginning in July? To adjust the JulyDecember budget figures, just
move your cursor to July, enter the new rate, and click Copy Across.
The Copy Across button is also the way to clear a row. Delete the figure in the
first month (or enter a zero) and click Copy Across. The entire row is now blank
(or filled with zeros).
Automatically Increase or Decrease Monthly Figures
After youve entered figures into all the months on an accounts row (manually, by
using the Copy Across button, or by bringing in last years figures), you can raise or
lower monthly figures automatically. For example, you may want to raise an income
account by an amount or a percentage starting in a certain month because you
expect to sign a new customer or a new contract.
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FIGURE 13-2 QuickBooks takes care of tracking the running totals.
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Select the first month that needs the adjustment and click Adjust Row Amounts
to open the Adjust Row Amounts dialog.
Ill 13-3
Choose 1st Month or Currently Selected Month as the starting point for the
calculations.
You can choose 1st Month no matter where your cursor is on the accounts row.
You must click in the column for the appropriate month if you want to choose
Currently Selected Month (you can click the first month to make that the
currently selected month).
To increase or decrease the amount in the selected month and all the months
following by a specific amount, enter the amount.
To increase or decrease the amount in the selected month and all columns to
the right by a percentage, enter the percentage rate and the percentage sign.
Compound the Changes
If you select Currently Selected Month, the Adjust Row Amounts dialog adds an
additional option named Enable Compounding.
Ill 13-4
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T I P : Although the Enable Compounding option appears only when you select
Currently Selected Month, if your cursor is in the first month and you select the
Currently Selected Month option, you can use compounding for the entire year.
When you enable compounding, the calculations for each month are increased
or decreased based on a formula starting with the currently selected month and
taking into consideration the resulting change in the previous month.
For example, if you entered $1,000.00 in the current month and indicated a
$100.00 increase, the results differ from amounts that are not being compounded.
Compounding
Enabled?
Current
Month
Original
Figure
Current
Month
New
Figure
Next
Month
Next
Month
Next
Month
Next
Month
Yes 1,000.00 1,000.00 1,100.00 1,200.00 1,300.00 1,400.00
No 1,000.00 1,100.00 1,100.00 1,100.00 1,100.00 1,100.00
Create a Budget from Last Years Data
If you used QuickBooks last year, you can create a budget based on last years
figures. To use last years real data as the basis of your budget, open the Create
New Budget Wizard by choosing Company | Planning & Budgeting | Set Up
Budgets. When the Create New Budget Wizard opens, enter the year for which
youre creating the budget, and select the P&L budget option. In the next
window, select any additional criteria, such as a customer, job, or class. In the
next window, select the option to create the budget from the previous years actual
figures, and click Finish.
The budget window opens with last years actual data displayed (see Figure 13-3).
For each account that had activity, the ending monthly balances are entered in the
appropriate month.
You can change any figures you wish using the procedures and shortcuts
described earlier in this chapter.
Customer:Job Budgets
If you have a customer or a job that warrants it, you can create a P&L budget to
track the financials for that customer or job against a budget. Usually, you only do
this for a project that involves a substantial amount of money and/or covers a long
period of time.
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Creating the First Customer:Job Budget
To create your first budget for a customer or a job, choose Company | Planning &
Budgeting | Set Up Budgets. (This discussion assumes youre creating the budget
from scratch, not from last years P&L figures for the selected customer/job.)
If you already created another budget of a different type (P&L or Class), the
budget window opens with the last budget you created. Click the Create New
Budget button in the budget window to launch the Create New Budget Wizard.
If this is your first-ever budget, the Create New Budget Wizard appears
automatically.
Select the year for your budget and choose P&L as the type. In the next wizard
window, select the option Customer:Job. Specify whether you want to create the
budget from scratch, or by using last years financial data (this discussion assumes
youre creating a budget from scratch).
When you click Finish, the budget window opens and displays an additional
field labeled Current Customer:Job. Select the Customer:Job for this budget from
the drop-down list.
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FIGURE 13-3 Start your budget by looking at last years figures.
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Select the account, or multiple accounts, for which you want to budget this job
these will probably be only expense accounts (the anticipated income is usually already
known). The expenses you track depend on the scope of the job. For example, you may
only want to budget the cost of outside contractors or supplies, so if prices rise you can
have a conversation with the customer about overruns.
You can enter a monthly budget figure for each account or for each month the
project exists, or enter a total budget figure in the first month. The latter option lets
you compare accumulated data for expenses against the total budgeted figure by
creating modified reports (where you change the report date to reflect the elapsed
time for the project and filter the report for this job only).
If the project is lengthy, you may budget some accounts for some months and
other accounts for other months. For example, if you have a project that involves
purchases of goods, followed by installation of those goods, or training for the
customers employees, you might choose to budget the purchases for the first few
months and then the cost of the installation or training (either by tracking payroll
or outside contractors) for the months in which those activities occur.
If you want to track payroll costs against a job, use the QuickBooks Time and
Billing features that are discussed in Chapter 18. If you do your own payroll, also
read Chapter 19 to learn how to move the Time and Billing features to your payroll
computations. Its nerve-wracking to attempt payroll job-costing manually.
C A U T I O N : Customer:Job budgets dont work unless youre faithful about
assigning transactions to the customer or job. If youve only been filling in the
Customer:Job fields when the customer is billable, you wont have accurate
budget-to-actual reports.
Creating Additional Customer:Job Budgets
After youve created one budget based on a customer or job, creating a budget for a
different customer or job requires different steps.
To create a budget for another customer immediately while the Customer:Job
budget you just created is still in the budget window, select another customer from
the drop-down list. Begin entering data and click Yes when QuickBooks asks if you
want to record the budget you just finished.
Class Budgets
You can link your budget to any class youve created (if youre using class tracking).
This works well for certain types of classes and not for others. If youre using
classes to track branch offices, company divisions, or company departments, you
can create useful budgets. If, on the other hand, youre using classes to divide your
transactions in some esoteric way, budgeting may not work well.
Look at your class-based reports, and if you find yourself asking, Arent those
expenses higher than they should be? or Why is one class less profitable than the
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other classes?, you might want to budget each month to get a handle on where and
when expenses got out of hand. Also, if you ask, Is this department contributing
the income I expected?, include income accounts in your budget. You can use
income accounts in class budgets to provide incentives to your employees
perhaps a bonus to a manager if the reality is better than the budget.
To create a class-based budget, use the steps described earlier to create a budget
and choose Class in the Additional Profit And Loss Budget Criteria Wizard window.
When the budget window opens, a Current Class field appears. Select the class for
which youre creating a budget from the drop-down list. Then begin entering data.
To create additional class budgets (for other classes, of course), use the same
approach discussed in the previous section on creating additional customer or job
budgets.
Budget Repor ts
QuickBooks provides a number of budget reports you can use to see how youre
doing. To get to the reports, choose Reports | Budgets & Forecasts and then select
one of the following reports:
Budget Overview
Budget vs. Actual
Profit & Loss Budget Performance
Budget vs. Actual Graph
Each report has a short wizard that lets you select the budget you want to examine.
Budget Overview
This report shows the accounts you budgeted and the amounts you budgeted for
each month. Accounts that you didnt include in the budget arent displayed.
Profit & Loss Budget Overview
If you created a P&L budget, select Profit & Loss By Account in the first Budget
Report window and click Next. In the next window, youre asked to select a report
layout, but the only option available in the drop-down list is Account By Month.
Click Next, and then click Finish. The report opens and looks like the P&L budget
report in Figure 13-4. Essentially, the Overview report type produces the display
youd see if the window you use to create a budget had a button labeled Print
The Budget.
If you use subaccounts in your budget, you can click the Collapse button at the
top of the report window to see only the parent account totals. The button name
changes to Expand, and clicking it puts the subaccount lines back into the display.
To condense the numbers, use the Columns drop-down list to select a different
interval. The default is Month, but you can choose another interval and QuickBooks
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will calculate the figures to fit. For example, you might want to select Quarter to
see four columns of three-month subtotals.
If you want to tweak the budget, or play what if games by experimenting with
different numbers, click the Export button to send the report to Microsoft Excel.
Balance Sheet Budget Overview
If you created a Balance Sheet budget, select Balance Sheet By Account in the first
window, and then click Next. QuickBooks displays a graphical representation of the
reports layout (its a monthly layout similar to the layout for the P&L budget).
Click Finish to see the report.
Customer:Job Budget Overview
If you created one or more budgets for a customer or a job, select Profit & Loss By
Account And Customer:Job in the first window, and then click Next. Select a report
layout from the drop-down list (as you select each option from the list, QuickBooks
displays a diagram of the layout). The following choices are available:
Account By Month Lists each account you used in the budget and displays
the total budget amounts (for all customer budgets you created) for each
month that has data. No budget information for individual customers appears.
Account By Customer:Job Lists each account you used in the budget and
displays the yearly total for that account for each customer (each customer has
its own column).
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FIGURE 13-4 The P&L Budget Overview is an easy-to-read display of your budget.
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Customer:Job By Month Displays a row for each customer that has a budget
and a column for each month. The budget totals (for all accountsindividual
accounts are not displayed) appear under each month. Under each customers
row is a row for each job that has a budget.
T I P : The name of each layout choice is a hint about the way it displays in the
report. The first word represents the rows, and the word after the word by
represents the columns.
Class Budget Overview
If you created a Class budget, select Profit & Loss By Account And Class in the first
window and click Next. Select a report layout from the drop-down list. You have
the following choices:
Account By Month Lists each account you used in the budget and displays
the total budget amounts (for all Class budgets you created) for each month
that has data. No budget information for individual classes appears.
Account By Class Lists each account you used in the budget and displays the
yearly total for that account for each class (each class has its own column).
Class By Month Displays a row for each class that has a budget and a column
for each month. The total budget (not broken down by account) appears for
each month.
Budget vs. Actual
This reports name says it allyou can see how your real numbers compare to your
budget figures. For a straight P&L budget, the report displays the following data for
each month of your budget, for each account:
Amount posted
Amount budgeted
Difference in dollars
Difference in percentage
The choices for the budget type are the same as the Budget Overview, so you can see
account totals, customer totals, or class totals to match the budgets youve created.
The first thing youll notice in the report is that all the accounts in your general
ledger are listed, regardless of whether or not you included them in your budget.
However, only the accounts you used in your budget show budget figures. You can
change that by customizing the report to include only your budgeted accounts.
Click the Modify Report button at the top of the budget report window. In the
Modify Report window, click the Advanced button to open the Advanced Options
window. Click the option labeled Show Only Rows And Columns With Budgets.
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Click OK to return to the Modify Report window, and then click OK again to
return to the Budget Vs. Actual Report window. The data thats displayed is only
that data connected to your budgeted accounts.
You can also use the options in the Modify Report window to make other changes:
Change the report dates.
Change the calculations from Accrual to Cash (which means that unpaid
invoices and bills are removed from the calculations, and only actual income
and expenses are reported).
You should memorize the report so you dont have to make these modifications
the next time you want to view a comparison report. Click the Memorize button at
the top of the report window and then give the report a meaningful name. Only the
formatting changes you make are memorized, not the data. Every time you open
the report, it displays current data. To view the report after you memorize it, choose
Reports | Memorized Reports from the QuickBooks menu bar.
Profit & Loss Budget Performance
This report is similar to the Budget vs. Actual report, but its based on the current
month and the year to date. For that time period, the report displays your actual
income and expenses compared to what you budgeted.
By default, the date range is the current month, but you can change that to see last
months figures or the figures for any previous month. This report is also available for
all types, as described in Budget Overview, earlier in this section, and can also be
modified to customize the display.
Budget vs. Actual Graph
This report just opens; you have no choices to select first. All the choices are in the
graph that displays, in the form of buttons across the top of the report window.
Merely click the type of report you want to see.
Expor ting Budgets
If you need to manipulate your budgets, export them to other software applications.
However, you cant select specific budgets to exportits all or nothing.
You can export the budgets to any software program that supports documents
that contain delimited fields (this usually means spreadsheet or database programs).
Follow these steps to export a budget:
Choose File | Utilities | Export | Lists To IIF Files fromthe QuickBooks menu bar.
When the Export dialog opens, it displays all the QuickBooks lists. Select the
item named Budgets and click OK.
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Another Export dialog opens (this one looks like the Save dialog youre used to
seeing in Windows software). Select a folder in which to save this exported file,
or leave it in your QuickBooks folder (the default location). Its best to change
the folder to the location where you keep files for the program youre going to
use for the exported file (usually, My Documents).
Give the exported list a filename (for example, 2010 Budgets). QuickBooks will
automatically add the extension .IIF to the filename.
Click Save. QuickBooks displays a message telling you that your data has been
exported successfully. Click OK.
Importing Budgets Back into QuickBooks
The only circumstances under which youd import budgets back into QuickBooks is
to copy a budget to another year. If you wanted to edit figures, youd work in the
QuickBooks budget window. To play what if games or to sort the budget differently,
youd work in the appropriate software (such as Excel) because QuickBooks doesnt
provide those features.
If you changed the dates to next year, import the file so you can use the data in
budget reports, or edit data right in the QuickBooks budget window.
Follow these steps to import a budget back into QuickBooks:
Choose File | Utilities | Import | IIF Files from the menu bar.
When the Import dialog opens, locate and double-click the file you saved.
QuickBooks displays a message to tell you the import was successful. Click OK.
You can view the imported budgets in any budget report or in the budget
window. QuickBooks checks the dates and changes the budgets name to reflect the
dates. Budget names start with FYxxxx, where xxxx is the fiscal year.
When you select a budget report or choose a budget to edit in the budget
window, the available budgets include both the budgets you created in QuickBooks
(FY2010) and the budgets you imported after changing the date (FY2011). Next
year, you can delete the FY2010 budgets.
Other Forecasting & Planning Tools
In addition to creating budgets, there are other tools available in QuickBooks that
can help you analyze your QuickBooks data and use it for planning purposes. Like
the budget tool, these additional tools are accessed via the Company menu.
Set Up Forecast
Creating a forecast requires essentially the same steps as setting up a budget. Like
budgets in QuickBooks, forecasts allow you to make predictions about future
income and expenses. Forecasts are limited, however, to a Profit & Loss format
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only, and there are fewer reports available to view your forecast data. To open the
Forecast Setup window select Company | Planning & Budgeting | Set Up Forecast.
Cash Flow Projector
The Cash Flow Projector is another tool that you can use to predict future cash
flow. The Cash Flow Projector is more comprehensive and flexible than the Cash
Flow Forecast Report in that it allows you to fine-tune the factors, from within the
wizard, that affect your cash flowsuch as cash on hand, projected receipts, and
expenses. To launch the wizard, select Company | Planning & Budgeting | Cash
Flow Projector. This opens the Welcome page (see Figure 13-5). From here you can
view a sample cash flow or learn more about what youll need in order to get the
most benefit from the tool.
Business Plan Tool
The QuickBooks Business Planner is a step-by-step wizard that will help you create
a business plan that you can use for internal planning purposes and to obtain
financing. As shown in Figure 13-6, the Business Planner is organized using six
distinct tabs: Welcome, Company, Income, Expenses, Interview, and Plan.
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FIGURE 13-5 The Welcome page of the Cash Flow Projector can help you prepare to use the
tool effectively.
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In the Company section, the wizard features a step-by-step interview that gathers
information about your company, such as its name, the tax form you file for your
business, and your start date. The Income and Expenses tabs allow you to enter
income and expense projections for up to 60 months. This data can be based on
actual data pulled from QuickBooks. Growth rates, along with manual overrides,
can be applied to the wizard to give you maximum control over your forecasts. The
Interview section contains a series of questions designed to gather detailed information
about your business assets, liabilities, and equity, while the Plan tab is a writing
screen that is split into three windows: Outline, Topic Guide/Example, and Text
Entry. Youll use this section of the planning tool to write and assemble and print
your business plan.
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FIGURE 13-6 You can access all six areas of the Business Planner from the Welcome page.
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Using Journal Entries
I
n this chapter:
The QuickBooks journal entry window
Enter the opening trial balance
Make adjustments to the general ledger
Depreciate fixed assets
Journalize outside payroll services
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As you work in QuickBooks, the amounts involved in the transactions you
complete (like invoices and bills) are transferred to your general ledger. In addition
to transaction data, numbers can be placed into the general ledger directly. This
action is called a journal entry.
Journal entries shouldnt be used without a specific purpose, and usually that
purpose is to enter figures that cannot be added to an account via a standard
transaction. The most common reason to create a journal entry is to adjust existing
numbers for some purpose. Check with your accountant when you think you need
to adjust numbers with a journal entry.
N O T E : The standard jargon for this transaction type is journal entry, usually
abbreviated JE. However, QuickBooks refers to this transaction type as a general
journal entry. The abbreviation well use in this chapter is GJE.
The QuickBooks Journal Entry Window
For journal entries, QuickBooks provides the Make General Journal Entries
window, seen in Figure 14-1. This window is accessed from the Company menu.
The format of the transaction window matches the standard approach to viewing
the general ledger: columns for accounts, debit amounts, and credit amounts. In
addition, QuickBooks provides columns you can use to link the GJE to customers
and classes and also enter a memo.
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FIGURE 14-1 The QuickBooks Make General Journal Entries window has extra columns so you
can track additional information about your entry.
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Follow these steps to create a journal entry:
Choose Company | Make General Journal Entries. QuickBooks displays a
message telling you that automatic numbers are now assigned to journal
entries. (Select the option Do Not Display This Message In The Future, and
then click OK.)
Click in the Account column, and then click the arrow to see a drop-down list
of your chart of accounts. Choose the account you need.
Move to the Debit or Credit column (depending on the data youre entering)
and enter the amount for that account.
Repeat for all the accounts in the journal entry.
As you enter each amount, QuickBooks presents the offsetting total in the next
line. For example, if the line items youve entered so far have a higher total for the
credit side than the debit side, the next entry presents the balancing offset (see
Figure 14-2).
Here are the guidelines for using the columns QuickBooks adds to a traditional
journal entry window:
Use the Memo column to write a comment about the reason for the journal entry.
By default, QuickBooks Premier and Enterprise Solutions editions automatically
copy the text you enter in the first line to all the other lines in the JE. The memo
text appears in the entry of the accounts register and on reports, so you can see the
explanation of this transaction no matter which account register youre viewing.
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FIGURE 14-2 QuickBooks tracks the arithmetic to make sure your GJEs balance.
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Use the Name column to assign a customer, vendor, employee, or other name
to the amount on this line of the entry, if youre linking the entry to a name. If
the account youre posting to is an A/R or A/P account, an entry in the Name
column is required.
The Billable? column means that the amount is billable to the name in the
Name column. Click the column to insert the Billable icon if you are using an
expense account and you enter a customer name in the Name column.
If youre using the Class feature, a Class column is present, and you can link
the entry to a class. (See Chapter 20 for information about classes.)
The Premier/Enterprise Accountant Editions have a different GJE window with
additional features. See the section, Additional GJE Power in the Accountant
Editions, later in this chapter.
Opening Trial Balance
If you opted to skip entering opening balances during your EasyStep Interview, or
when you created new accounts, you need to enter the opening balances for your
accounts. All thats necessary is the opening balances for the balance sheet
accounts. Then you can add all the transactions that took place since the beginning
of the year to create a thorough history of transactions.
Entering the Opening Balances
QuickBooks does not have an item or feature called the opening balance, per se.
However, every account register is sorted by date, so using the first day of your
fiscal year creates an opening balance automatically.
Confer with your accountant to determine your opening balances, and then
enter them as journal entries. Some of the accounts in the balance sheet cant be
entered in a QuickBooks journal entry, and the next section explains the problems
and offers some workarounds.
T I P : Create a separate equity account for your previous retained earnings
(name it Previous Retained Earnings); and create a GJE to move the current
retained earnings amount into that account at the end of the year. QuickBooks
will post profit (or loss) to the retained earnings equity account during the next
year, but youll have historical numbers in the Previous Retained Earnings
account.
Workarounds for QuickBooks Limitations
There are a couple of limitations when using QuickBooks journal entries that you
should be aware of.
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In QuickBooks, a journal entry can contain only one accounts payable (A/P) or
accounts receivable (A/R) account; you cannot use both of those accounts in the
same journal entry, nor can a journal entry contain more than one line that uses
either of these types of accounts. Youll get an error message that says, You cannot
use more than one A/R or A/P account in the same transaction. Unfortunately,
QuickBooks doesnt issue the error message until after you enter all the data and try
to save the journal entry (and an opening balance GJE, for example, can contain a
great many rows).
This restriction does not have its roots in accounting standards. Its an arbitrary
rule built into the QuickBooks software.
Another problem is that QuickBooks insists you attach a single customer or
vendor name to the entry if youre making a journal entry that involves either the
A/R or the A/P account. You cant just enter an A/R or A/P balance against your
previous equity (or against income or expenses, for that matter). If youre keeping
customer info outside of QuickBooks (perhaps you have a retail business and keep
customer charges elsewhere), youre out of luck.
If you decide thats okay, and youre willing to enter customer opening balances
in your GJE, you have another problem: you cant enter A/R for more than one
customer in the GJE. QuickBooks wont permit more than one A/R line in the
journal entry, and that A/R line has to have one customer (the same restrictions
apply to A/P).
One approach is to enter the opening balance when you create a customer or
vendor record. Both the New Customer and New Vendor windows have a field for
this purpose. Those totals are posted to A/R and A/P as of the date you enter, which
should be the first day of the fiscal year if youre trying to create an opening trial
balance. Be aware, however, that when you use this method QuickBooks uses the
Opening Bal Equity account as the offset account. Thats not a standard equity
account; its another QuickBooks account thats needed because the software needs
on offset account for the opening balances when you create customers, vendors,
and accounts.
The best method when entering opening balances is to enter your opening trial
balance without the A/R and A/P entries (and always avoid entering an opening
balance when you set up customers and vendors).
Then, enter the open invoices for customers and the open bills from vendors,
using your opening balance date for the transactions, and let QuickBooks post the
totals to the general ledger.
You can create one comprehensive invoice for the entire open balance per
customer/vendor and pay it off if you dont want to bother with the individual
invoices that created the opening balance.
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Making Journal Entries for Changed
or New Accounts
After youve used QuickBooks for a while, you may find that you want to track
income differently. Instead of one income account, you may decide to create
separate income accounts that are more specific. For example, having an income
account for consulting fees and another income account for products sold makes
business analysis easier.
This transaction is quite simple. Create the new account and then take the
appropriate amount of funds out of the original account and put it into the new
account. Revenue is a credit-side item, so that means
Debit the original account for the amount that belongs in the new account.
Credit the new account for that same amount.
Then, of course, youll have to go to the items list and change the necessary
items to reflect the new income account so you dont have to keep making journal
entries.
The same decision is frequently made about expenses, as business owners decide
they want to track more details about their expenses. Perhaps you feel your insurance
accounts should be separated for car insurance, equipment insurance, building
insurance, malpractice insurance, and so on.
For expense accounts, the journal entry goes to the opposite side of the ledger
because expenses are a debit-side item, so do the following:
Credit the original expense account for the amount youre taking out of it and
putting into the new account(s).
Debit the new account(s) for the appropriate amount(s).
This logic also applies to a fixed-asset account named Vehicles that you want to
divide into more specific accounts (to track the truck separately from the car, for
instance, especially if they were purchased in different years). This means you can
also separate out any accumulated depreciation so its assigned to the correct asset.
(You can get that information from your tax returns, or ask your accountant.)
Making Depreciation Entries
Depreciation is a way to track the current value of a fixed asset that loses value as it
ages. The basis of an assets depreciation from an accounting point of view is
determined by a complicated set of rules. The IRS makes these rules, and the rules
change frequently.
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Depreciation is a journal entry activity. Most small businesses enter the depreciation
of their assets at the end of the year, but some companies performdepreciation tasks
monthly or quarterly.
Depreciation is a special journal entry because the accounts involved are very
restrictedthis is not a free choice where you can use whichever account strikes
your fancy. The account that is being depreciated must be a fixed asset. The offset
entry is to an account named Depreciation in the expense section of your chart of
accounts.
Creating Accounts for Tracking Depreciation
This discussion assumes that youve created your fixed-asset account and that the
assets youve purchased have been posted there. You might have multiple fixed-
asset accounts if you want to track different types of fixed assets separately. (For
instance, your chart of accounts may have three fixed-asset account sections:
Equipment, Furn & Fixtures, and Vehicle.)
When it comes to accounting procedures that have a direct bearing on your taxes
and for which you might need information at a glance (especially if youre called on
to explain it), you should be very explicit in the way you enter transactions. Therefore,
for every fixed-asset account in your chart of accounts, create families of accounts
for depreciation; using a parent (account) and children (subaccounts) for each type
of fixed asset. For example, the fixed-asset section of a chart of accounts might look
like this:
Parent Accounts Subaccounts
Equipment Assets
Equipment Purchases
AccumDepr-Equipment
Furn & Fixtures Assets
Furn & Fixtures Purchases
AccumDepr-Furn & Fixtures
Vehicle Assets
Vehicle Purchases
AccumDepr-Vehicles
If you use numbers for your chart of accounts, create a numbering system that
makes sense for this setup. For example, if Equipment is 1600, the subaccounts
start with 1601; Furn & Fixtures starts with 1620, and the subaccounts start with
1621; Vehicle starts with 1640, and so on.
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Dont post to the parent account. Post asset purchases to the Purchases
subaccount, and make the journal entry for depreciation in the AccumDepr
subaccount. There are several reasons for this:
Both the purchase subaccount and the depreciation asset subaccount are
pure. You can look at either one to see a running total instead of a calculated
net total.
Tracing the year-to-year depreciation is easy: just open the depreciation asset
subaccount registereach line represents a year.
Its easier and quicker to open the depreciation asset subaccount if youre asked
about the depreciation total (handy if you sell the asset and have to add back
the depreciation).
Your Balance Sheet report shows the details and displays the total of the
subaccounts next to the parent account.
You can further refine by creating subaccounts for specific fixed assets. For
instance, you may want to create a subaccount for each vehicle asset and its
accompanying accumulated depreciation. Or, you might want a subaccount for all
cars and a different subaccount for all trucks.
If your equipment falls under a variety of depreciation rules (for example,
manufacturing equipment vs. computer equipment), you may want to have a set of
subaccounts for each type.
Creating a Depreciation Entry
To depreciate fixed assets, you must first have a depreciation offset account in the
Expense section of your chart of accounts.
Follow these steps to make your depreciation entry:
Choose Company | Make General Journal Entries from the menu bar.
Choose the first asset depreciation subaccount.
Enter the depreciation amount in the Credit column.
Choose the next asset depreciation subaccount and enter its depreciation
amount in the Credit column. (QuickBooks automatically puts the offsetting
amount in the Debit column, but just keep moving to the Credit column as you
work.)
Continue until all your depreciation figures are entered in the Credit column.
Choose the Depreciation Expense account. The total amount of the credits is
automatically placed in the Debit column.
Click Save & Close.
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For example, heres a typical journal entry for depreciation:
Account Debit Credit
Equipment:AccumDepr-Equip 5,000.00
Furn & Fix:AccumDepr-Furn & Fix 700.00
LeaseholdImprov:AccumDepr-LeasImprov 1,000.00
Depreciation Expense 6,700.00
Notice the colon in the account names for the asset accountsthats the
QuickBooks indication of a subaccount.
Reversing Entries
Your accountant may enter, or tell you to enter, reversing entries. These are general
journal entries that are applied on one date and then reversed on another (later)
date. For example, on 12/31/10, you may have a journal entry that adjusts an account,
and on 1/1/11, the entry has to be reversed. When both journal entries are saved,
the totals you see are dictated by the dates selected in report windows.
To create a reversing entry, enter the first (earlier) GJE and then click the Reverse
icon on the GJE window. QuickBooks creates another journal entry and automatically
enters the first day of the following month as the reversal date, but you can change
that date if you have some reason to do so.
Journalizing Outside Payroll Services
If you have an outside payroll service, you have to tell QuickBooks about the
payroll transactions that took place. You get a report from the service, so all the
numbers are available. Its just a matter of entering them.
Its common for businesses to perform this task via a journal entry. Like all other
journal entries, this one is just a matter of entering debits and credits. There are
three parts to recording payroll:
Transferring money to the payroll account
Entering the payroll figures
Entering the employer expense figures
Transferring Money to the Payroll Account
Its a good idea to have a separate bank account for payroll if you have an outside
payroll servicein fact, a separate payroll account is a good idea even if you do
your own payroll. Having a separate account makes it easier to record, keep track
of, and reconcile payroll-related transactions.
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To transfer the money you need to cover the transactions in your payroll
account, choose Banking | Transfer Funds. Then, transfer the money from your
regular operating account to your payroll account. Be sure to transfer enough
money for the gross payroll plus the employer payroll expenses, which include the
following:
Employer-matching contributions to FICA and Medicare
Employer-matching contributions to pension plans
Employer-matching contributions to benefits
Employer state unemployment assessments
Employer FUTA
Any other government or benefit payments paid by the employer
Recording the Payroll
Running your payroll produces a fairly complicated set of debits and credits. Many
businesses record a journal entry for the run, then a separate journal entry for the
employer expenses when theyre transmitted.
If your payroll service takes care of remitting employer expenses, you can
journalize the payments. If you do the employer reports yourself and send the
checks directly, your check-writing activity will record the payments, so you dont
need a journal entry for that part of your payroll tasks.
Its possible that you dont have all the expenses shown in this list (for instance, not
all states have employee unemployment assessments). And you may have additional
withholding categories such as union dues, garnishments against wages, and so on. Be
sure youve created a liability account in your chart of accounts for each withholding
category you need and a vendor for each transmittal check. Table 14-1 shows a typical
template for recording the payroll run as a journal entry.
Recording Employer Payments
You need to journalize the employer remittances if your payroll service is taking
care of them for you (if you do it yourself, just write the checks from the payroll
account and each item will post to the general ledger correctly). Table 14-2 is a
sample journal entry for recording payroll remittances.
The entry involving the transmittal of withholdings is posted to the same
account you used when you withheld the amounts. In effect, you wash the
liability accounts; youre not really spending money, youre remitting money youve
withheld from employees.
You can have as many individual employer expense accounts as you think you
need, or you can post all the employer expenses to one account named payroll
expenses.
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Create Your Own Payroll Entry Template
You can save a lot of time and effort by creating a template for the payroll journal
entries. Open a Make General Journal Entries window and fill out the Account
column only. Enter the first account, then press the Down arrow and enter the next
account, and keep going until all accounts are listed. QuickBooks automatically
inserts 0.00 as you skip the Debit and Credit columns.
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A c c o u n t D e b i t C r e d i t
Salaries and Wages (Expense) Gross payroll
FWT (liability) Total federal withheld
FICA (liability) Total FICA withheld
Medicare (liability) Total Medicare withheld
State Income Tax (liability) Total state tax withheld
Local Income Tax (liability) Total local tax withheld
State SDI (liability) Total state SDI withheld
State SUI (liability) Total state SUI withheld
Benefits Contrib. (liability) Total benefits withheld
401(k) Contrib. (liability) Total 401(k) withheld
Other Deductions (liability) Total other deductions withheld
Payroll Bank Account (asset) Total of net payroll
TABLE 14-1 Typical Journal Entry to Record Payroll by an Outside Service
A c c o u n t D e b i t C r e d i t
Federal Payroll Expenses (expense) Employer FICA and Medicare
Federal Withholdings (liability) All federal withholding
State and Local Withholdings (liability) All local withholding
SUTA (expense) Employer SUTA
FUTA (expense) Employer FUTA
Employer Contributions (expense) All employer benefits,
pension, etc.
Payroll Bank Account (asset) Total of checks written
TABLE 14-2 Typical Journal Entry for Employer-side Transactions
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When all the accounts are listed, press CTRL-M to open the Memorize Transaction
dialog. Name the memorized transaction Payroll (or something similar) and select
the option Dont Remind Me (the reports from the payroll company are your
reminder).
Ill 14-1
Close the Make General Journal Entries window. QuickBooks displays a message
asking if you want to save the transaction you just created. Click No (you dont
have to save a GJE to memorize it). Do the same thing for the journal entry you
create to record employer remittances.
When youre ready to record payroll, open the memorized transaction, fill in the
correct date and figures, and save it.
Reconciling the Payroll Account
When you use journal entries to enter your payroll, the reconciliation process is a
bit different. You dont have a record of the check numbers and payees so when you
open the payroll account in the Reconcile window, you see the journal entry totals
instead of the individual checks.
Reconciling Outside QuickBooks
You have the report from the payroll service, and it lists each check number. You
can therefore reconcile the account outside of the Reconcile window (using a
manual system or using your spreadsheet software).
T I P : See if your payroll service can send you a file containing check#/payee/
amount information that can be opened in spreadsheet or database software.
A tab-delimited file is the best file type.
Entering Fake Payroll Checks in QuickBooks
If you want to perform the reconciliation in QuickBooks, you can enter the checks
and post them back to the payroll account. (The journal entry took care of all the
real postings.) You have a little bit of setup to do, and then you can perform this
task every payday.
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Create a name in the Other Names list, and name the new entity Payroll. You can
use this name for every check (and put the employees name in the memo field).
Alternatively, you can create a name for each employee in the Other Names list,
using initials, last name only, or some other name that isnt the same as the original
employee name. The reason you have to create these fake names is that QuickBooks
will not let you write a check directly to an employee. Employee checks can be
written only via the real Payroll feature.
Now that you have a payee name for the payroll checks, grab the report from the
payroll service and enter the individual checks.
Use the following steps to enter the checks:
Press CTRL-A to open the chart of accounts and double-click the Payroll account
to open the register.
On the next available transaction line, enter the payroll check date.
Tab to the Number field and enter the first check number on the payroll service
report.
Enter the payee Payroll (unless youve entered all your employee names as
Other Names, in which case enter the appropriate name).
Enter the amount of the net paycheck.
In the Account field, choose the Payroll account (the account youre currently
working in). QuickBooks will flash a message warning you that youre posting
the payment to the source account.
Click OK (because thats what you want to do in order to wash the
transaction), and then click the check box that tells QuickBooks to omit this
warning in the future.
Click the Record button to save this check, and then enter the next check.
You can also enter the checks the payroll service wrote to transmit your
withholdings or pay your taxes. As long as each entry you make was entered into
the journal entry, you can post everything back to the payroll account. Youre washing
every transaction, not changing the balance of the account. Then, when you want
to reconcile the payroll account, the individual checks are in the Reconcile window.
The fact is, this procedure is quite easy and fast, and you have to do it only on
payday (or once a month if you want to wait until the bank statement comes in).
Additional GJE Power
in the Accountant Editions
The Premier and Enterprise Solutions Accountant Editions offer additional features
for journal entries.
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GJE Reports in the Transaction Window
When you open a GJE transaction window, the bottom of the window displays
existing GJEs. By default, the window displays the previous months transactions,
but you can change the selection to match your needs (last year, all, and so on).
This provides access to earlier GJEs without the need to click the Previous button
multiple times. Selecting a GJE from the list moves it into the transaction window if
you need to make changes.
If you dont want to see the previous transactions, click Hide List Of Entries (the
buttons name changes to Show List Of Entries so you can reverse your decision).
Ill 14-2
T I P : Hiding the previous transactions enlarges the transaction window youre
working on, which makes it easier to see all your entry lines when youre creating
a large GJE.
GJE Adjusting Entries
Frequently, a GJE is an adjustment, made to correct a problem, or clean up an
account. However, when you examine account registers and see a GJE, you have to
rely on your memory for the reason behind the entry. Sometimes, even the text you
put into the Memo field doesnt jog your memory sufficientlyit made sense when
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you wrote it, but not anymore. If you cant remember, you have to use all those
extra keystrokes to open the original transaction window, and even then, you may
not find enough information to determine the reason for the transaction.
Some GJEs are easy to figure out later; an entry in a fixed asset is almost certainly
a depreciation or amortization entry. You dont even have to bother opening the
original transaction window, because you know youll find a depreciation expense
account among the listings.
But what if the entry affects an income or expense account? Was this an
adjustment, or did it represent some major change in the way books are kept? Most
accountants want to know (and an auditor definitely wants to know).
In the Premier Accountant edition, you can specifically mark a GJE as an
adjusting entry, via a check box available at the top of the GJE window. In fact, the
Adjusting Entry check box has a check mark in it by default (because the majority
of GJEs are created to make an adjustment).
To make this feature even more efficient, the Accountant Editions have a report
named Adjusting Journal Entries (in the Accountant & Taxes Reports submenu).
As youd expect, its a display of the adjusting GJEs you created.
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C
h
a
p
t
e
r
1
5
Running Financial
Reports
I
n this chapter:
Trial balance
Balance Sheet
Profit & Loss statement
Accountants copy
Consolidating financial reports for multiple company files
Intuit Statement Writer
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The real value in accounting software is the reporting power. The reports you create
in QuickBooks are reports youd have to spend hours generating if you were using a
manual bookkeeping system or tracking amounts in a spreadsheet. Additionally, in
QuickBooks you can change, customize, and manipulate these reports to get all
sorts of information about your business.
Trial Balance
A trial balance is a list of all your general ledger accounts and their current
balances. Its a quick way to see whats what on an account-by-account basis.
To see a trial balance, choose Reports | Accountant & Taxes | Trial Balance. Your
companys trial balance is displayed on your screen and looks similar (in form, not
content) to Figure 15-1. You can scroll through it to see all the account balances.
The bottom of the report has a total for debits and a total for credits, and theyre
equal. Click the Print button on the reports button bar to print the report.
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FIGURE 15-1 A trial balance reports the current balance of every account.
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Configuring the Trial Balance Report
You can change the way the trial balance report displays information using the
configuration options available for this report. Click the Modify Report button on the
reports button bar to bring up the Modify Report windowshown in Figure 15-2. If you
make changes that dont work as you thought they would, click the Revert button that
appears on each tab of the Modify Report windowto reset all options to their default state.
N O T E : The modifications discussed for the trial balance report are available
for all basic financial reports.
Accrual vs. Cash Trial Balance
One important control in the Display tab of the Modify Report window is the
Report Basis selection. QuickBooks can show you your balances on an accrual basis
or on a cash basis.
Accrual numbers are based on your transaction activity. When you invoice a
customer, that amount is considered to be revenue. When you enter a vendor
bill, youve entered an expense.
Cash numbers are based on the flow of cash. Revenue isnt real until the customer
pays the bill, and your vendor bills arent expenses until you pay them.
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FIGURE 15-2 Modify the report by changing configuration options.
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By default, QuickBooks, like most accounting software, displays accrual reports.
Accrual reports are generally more useful for analyzing your business. However,
unless you pay taxes on an accrual basis (most small businesses dont), your
accountant may want to see a cash basis trial balance.
In the Columns section of the Display tab, you can select the sort criterion. For
the trial balance the choices are
Default, which sorts the accounts in the usual order (assets, liabilities, and
so on)
Total, which sorts the accounts depending on the current balance (rather
useless for this report)
N O T E : The report window itself has a field labeled Sort By, which you can
use to change the sorting scheme.
Setting Advanced Options
Click the Advanced button on the Display tab to see the Advanced Options window,
where you have two choices for changing the criteria for displaying information
and a choice for determining the calendar basis of the report.
The two display choices (Rows and Columns) change the criteria for displaying
information.
Select Active to display only those accounts in which financial activity
occurred. This includes accounts that have current balances of $0.00, because
they had financial activity during the time period selected in the date range.
Select All to see all accounts, irrespective of whether they had activity or have a
balance of $0.00.
Select Non-Zero to see only those accounts that had activity and have a balance
other than $0.00.
C A U T I O N : The term Active has nothing to do with the accounts status
as active or inactive (hidden). Accounts marked Inactive always appear on the
report, because their balances are part of your trial balance.
T I P : Most accountants want to see zero-balance accounts, because its a
way to see all the accounts in your system and because sometimes the fact that
an account has a zero balance is significant.
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The Reporting Calendar option determines the calendar basis of the report. You
can change the option if your company preferences are not set for a fiscal and tax
year that coincides with the calendar year:
Fiscal Year sets the reporting calendar to start at the first month of your
companys fiscal year.
Calendar Year sets the reporting calendar to start at January 1.
Income Tax Year sets the reporting calendar to start on the first day of the first
month of your companys tax year.
Click OK to return to the Modify Report window.
Filtering the Data
Click the Filters tab in the Modify Report window to filter the contents of the
report (see Figure 15-3). Select a filter from the list in the Choose Filter section and
decide how it should be displayed. Different categories have different filtering
criteria. For instance, you can filter amounts that are less or greater than a certain
amount.
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FIGURE 15-3 Change whats reported by filtering the data to meet your criteria.
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C A U T I O N : Once you start filtering accounts and amounts, you probably
will have a trial balance that no longer balances. At that point, you cant call it a
trial balance; youre merely creating a list of certain account balances.
Changing the Header and Footer
You can customize what appears on the header and footer of your report by
changing the options on the Header/Footer tab, shown in Figure 15-4.
The options you configure here have no bearing on the figures in the report; this
is just the informational stuff. Most of the fields are self-explanatory, but the Date
Prepared field may confuse you. The date you see in this tab has nothing to do with
the current date; its just a sample format. Click the arrow to the right of the field to
see other formats for displaying the date.
Changing the Fonts and Number Display
The Fonts & Numbers tab, shown in Figure 15-5, lets you change the font you use
for the various elements in the report. Select any part of the report from the list on
the left side of the dialog and click Change Font. Then select a font, a style (bold,
italic, etc.), a size, and special effects such as underline.
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FIGURE 15-4 Configure the top and bottom of the report page in the Header/Footer tab.
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On the right side of the dialog, you can configure the way numbers display and
print on your report. Select a method for showing negative numbers. If you wish,
you can also select a method for displaying all the numbers on the report:
Divided By 1000 reduces the size of the numbers by showing them as multiples
of 1000. This is useful for companies that report seven- and eight-digit
numbers.
Except Zero Amounts removes all instances of $0.00 and leaves the entry
blank.
Without Cents eliminates the decimal point and the two digits to the right of
the decimal point from every amount. Only the dollars show, not the cents.
QuickBooks rounds the cents to the nearest dollar.
Memorizing a Customized Report
You may find that its useful to glance at the trial balance report occasionally, just to
see what certain totals are. Calling up the trial balance to view five or six account
balances is faster than opening five or six accounts individually to see the current
balance. You may want to see only the accounts that have a balance; your
accountant, on the other hand, likes to see all the accounts.
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FIGURE 15-5 Change the appearance of the data in the report.
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T I P : Balance Sheet accounts (assets, liabilities, and equity) display their
current balances in the Chart Of Accounts List window, so you dont have to print
a report to view those numbers.
The solution to providing both you and your accountant with the desired report
without going through all the modifications discussed in the previous sections is to
memorize each modified version of the report. After youve configured the report to
display the information you want in the manner in which you want it, click the
Memorize button on the reports button bar. The Memorize Report window appears
so you can give this customized format a name.
Ill 15-1
T I P : Be sure to use a reference to the report type in the memorized name. If
you use a name such as My Report, youll have no idea what the report displays.
Open a memorized report by choosing Reports | Memorized Reports from the
QuickBooks menu bar and selecting the report name from the submenu.
Balance Sheet
QuickBooks offers several Balance Sheet reports, and each of them is explained in
this section. Select the one you want to see by choosing Reports and selecting the
Balance Sheet you want to see from the Company & Financial menu.
A Balance Sheet report is specifically designed to show only the totals of the
Balance Sheet accounts (assets, liabilities, and equity) from your chart of
accountsthat is, information thats critical to understanding your businesss
financial health.
When you generate a Balance Sheet report, the equity number is a calculated
number, not an account balance thats stored. Heres how the equity is calculated:
All the income accounts are added up.
All the expense accounts are added up.
The expense total is subtracted from the income total.
The result of the calculation in Step 3 is the current equity thats displayed in
the Balance Sheet.
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If you have more expenses than you have income, youre operating at a loss;
consequently, its a negative number that is combined with the existing equity
accounts.
Balance Sheet Standard Report
The Balance Sheet Standard reports the balance in every Balance Sheet account
(unless the account has a zero balance) and subtotals each account type: asset,
liability, and equity. The report is automatically configured for year-to-date figures,
using your fiscal year and the current date. (The fiscal year is the same as the
calendar year for most small businesses.)
Balance Sheet Detail Report
This report displays every transaction in every Balance Sheet account. By default,
the report covers a date range of the current month to date. Even if its early in the
month, this report is lengthy. If you change the date range to encompass a longer
period (the quarter or year), the report goes on forever.
If you want to see a Balance Sheet only to get an idea of your companys financial
health, this is probably more than you wanted to know.
Balance Sheet Summary Report
This report is a quick way to see totals, and its also the easiest way to answer the
question, How am I doing? All the Balance Sheet accounts are listed and
subtotaled by type, as shown in Figure 15-6.
Balance Sheet Prev Year Comparison Report
The comparison Balance Sheet is designed to show you what your financial
situation is compared to a year ago. There are four columns in this report:
The year-to-date balance for each Balance Sheet account
The year-to-date balance for each Balance Sheet account for last year
The amount of change between last year and this year
The percentage of change between last year and this year
If youve just started using QuickBooks this year, theres little reason to run this
report. Next year, however, itll be interesting to see how youre doing compared to
this year.
Customizing and Memorizing a Balance Sheet
When your Balance Sheet is on the screen, you can use all of the customization
features covered earlier in this chapter for the trial balance report. Then, when you
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have the configuration you need, memorize the report by clicking the Memorize
button in the report window.
Profit & Loss Statement
Your P&L report is probably the one youll run most often, because its natural to
want to know if youre making any money. A P&L report is sometimes called an
income report. It shows all your income accounts (and displays the total), all your
expense accounts (displaying the total), and then puts the difference between the
two totals on the last line. If you have more income than expenses, the last line is
a profit.
All of the P&L reports are available by choosing Reports | Company & Financial
and are explained in this section.
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FIGURE 15-6 Check your financial health with the Summary Balance Sheet.
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Profit & Loss Standard Repor t
The standard P&L report is a straightforward document, following the normal
format for an income statement:
The income is listed and totaled.
The Cost of Goods Sold accounts are listed (if any exist), and the total is
deducted from the income total in order to show the gross profit.
The expenses are listed and totaled.
The difference between the gross profit and the total expenses is displayed as
your Net Ordinary Income (or Loss).
N O T E : If you dont sell inventory items, you probably dont have a Cost of
Goods Sold section in your P&L.
While the format is that of a normal income statement, the date isnt. The default
date range for the QuickBooks standard P&L is the current month to date. This is
not a year-to-date figure; it uses only the transactions from the current month, and
its almost certainly not what you want to see. Click the arrow to the right of the
Dates field and change the date range to This Fiscal Year-To-Date. The resulting
display is what you want to seea normal income statement for your business so
far this year.
Profit & Loss Detail Repor t
The Profit & Loss Detail report is for terminally curious people. It lists every
transaction for every account in the P&L format. It goes on and on.
This report is almost like an audit trail, and its good to have if you notice some
numbers that seem not quite right in the standard P&L. Its probably not the
report to run when you just need to know if youre making money.
Profit & Loss YTD Comparison Repor t
The YTD (year-to-date) comparison report compares the current months income
and expense totals with the year-to-date totals. Each income and expense account is
listed.
Profit & Loss Prev Year Comparison Repor t
If youve been using QuickBooks for more than a year, this is a great report! If you
recently started with QuickBooks, next year youll say, This is a great report!
This is an income statement for the current year to date, with a column that
shows last years figure for the same period. This gives you an instant appraisal of
your business growth (or ebb). So that you dont have to tax your brain doing the
math, there are two additional columns: the difference between the years in dollars
and in percentage.
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Profit & Loss By Job Repor t
This report presents a year-to-date summary of income and expenses posted to
customers and jobs. In effect, its a customer P&L. Each customer or job gets its
own column, and the bottom row of each column is the net income (or loss) for
this customer or job.
Profit & Loss By Class Repor t
If youve enabled class tracking, this report appears on the Reports menu. Each
class is subtotaled for its own P&L. If you use classes for branch offices or company
divisions, this is the way to get a separate P&L for each class.
Profit & Loss Unclassified Repor t
If youve enabled class tracking, you should run the Profit & Loss Unclassified
report, which displays a P&L generated from transactions that had no class
assignment. Even if you think you dont care about assigning classes to these
transactions, you should examine the report and drill down (double-click the
listing) to view the individual transactions. If any transaction should have been
assigned a class, you can add the class and click Yes when QuickBooks asks if you
want to save the changes you made to the transaction.
T I P : Because this report uses filtered accounts and transactions, instead of
all the transactions in your system, it isnt really a P&L, and you can ignore the
bottom line profit/loss figure.
Customizing and Memorizing P&L Reports
Use the QuickBooks Customize features discussed earlier in this chapter to tailor
P&L reports so they print exactly the way you want to see the information. You
might want to customize several formats: for you, for your accountant, and perhaps
for your bank (if you have a loan or line of credit, or are applying for either, your
bank probably wants to see both your Balance Sheet and P&L reports). Then, when
a report is perfect, memorize it.
Voided and Deleted Transactions Repor ts
QuickBooks offers two reports you can use to track voided and deleted transactions.
Both reports are available by choosing Reports | Accountant & Taxes and then
selecting either of these reports: Voided/Deleted Transactions Summary or Voided/
Deleted Transactions Detail.
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Voided/Deleted Transactions Summary Report
This report displays a summary of all voided and deleted transactions in the
selected period (the default period is Last Month). The report shows the current
state (void or deleted) and the original state (including the amount) of each
affected transaction.
Voided/Deleted Transactions Detail History Report
This report provides more information about both the original transaction and the
change. In addition to the information provided by the Voided/Deleted Transactions
Summary report, this report displays the credit and debit postings and the posting
accounts. If items (including payroll items) were involved in the transaction,
theyre also displayed.
Expor ting Memorized Repor t Templates
QuickBooks Premier and Enterprise Solutions editions offer an Export function
for memorized reports. This enables the use of your perfectly designed customized,
memorized report template in another company file. From the Reports menu,
select Memorized Reports | Memorized Report List. Highlight the report template
that you wish to export and then click the Memorized Report button at the bottom
of the list. Select Export Template to save the template to a location of your choice.
If youre an accountant, it means that after you develop memorized reports that
provide the information you need, exactly the way you need it, you can export
those report templates to a file, and e-mail the file to your clients (with instructions
on how to import the report, of course). If youre a bookkeeper, you can travel to
client sites with the memorized report templates youve created on a flash drive and
import them into your clients files (the exported report files are quite small).
The real beauty of this feature is that all QuickBooks editions can import the
exported memorized reports (only the Export feature, not the Import feature, is
limited to Premier/Enterprise editions). Because the Import Memorize Report
feature is a standard QuickBooks function, clients running QuickBooks Pro (and, of
course, Premier or Enterprise Solutions) can add these reports to their Memorized
Reports list with the click of a mouse.
T I P : Memorized reports are templates and contain no data, so each
QuickBooks installation that imports your exported reports will produce reports
that use local data but are based on the format, filters, and sorting designs you
memorized and exported.
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Accountants Copy
Many accountants support QuickBooks directly, which means they have a copy of
QuickBooks on their own computer systems, and they understand the software.
At various times during the year, your accountant might want to look at your books.
There might be quarterly reports and adjustments, a physical inventory that resulted
in serious changes in your Balance Sheet, expenses that should be posted to different
accounts, or any of a hundred other reasons to examine your transactions. This is also
part of the end-of-year process as your accountant prepares your tax return.
To work on your company file, your accountant could come to your office and
sit at your computer, making the necessary changes, moving this, reversing that, and
generally making sense out of your daily transaction postings (putting transaction
postings into categories that fit your tax reporting needs).
Some accountants ask for a copy of the company file, a backup of your company
file (which they restore), or a portable company file (covered in Chapter 21). While
the accountant has the file and is tweaking transactions or making journal entries,
you cant do any work. If you continue to work, the transactions you enter wont be
in the company file you restore when your accountant returns it to you, because it
overwrites the company file youd continued to use.
QuickBooks has a better solution. Give your accountant a specially designed
copy of your company file called the accountants copy. Let your accountant do the
work back at his or her office, while you continue to work in your copy. When
the file comes back to you, with the accountants changes, QuickBooks can merge
the changes into your copy of the company file, which means you dont lose the
work you did while the accountant was working in your company file.
When you create the accountants copy, QuickBooks imposes restrictions on the
type or extent of transactions you and your accountant can perform (to make sure
you dont work at cross purposes). All of this is discussed in this section.
N O T E : All editions of QuickBooks can create an accountants copy; however,
only the Accountant Edition can use the accountants copy.
Creating an Accountants Copy
QuickBooks provides two methods for delivering an accountants copy to your
accountant:
Send the File to Your Accountant You can save an accountants copy on removable
media (CD, DVD, or flash drive) and send or deliver it to your accountant. Depending
on the size limits imposed by your ISP and your accountants ISP, you can e-mail
the file, but sometimes accountants copies are too large to e-mail.
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Upload the File to a QuickBooks Secure Server You can upload an accountants
copy to a secure server provided by QuickBooks and have your accountant download
the file (this is a free service). QuickBooks notifies the accountant of the existence
of the file by e-mail and the e-mail message provides a link to download the file.
N O T E : Only the Admin user can create an accountants copy, and the
company file must be operating in Single-User mode to accomplish this task.
Saving the Accountants Copy on Removable Media
To create an accountants copy and save it on removable media, choose File |
Accountants Copy | Save File to open the Create Accountants Copy dialog. Be sure
the option labeled Accountants Copy is selected.
Click Next to move to the window in which you set the dividing date for this
accountants copy (see the section Choosing the Dividing Date for more information
about the significance of the dividing date).
Click Next to save the file in the Save Accountants Copy dialog. The default
filename incorporates your company filename as well as the date and time of the
files creation and has the file extension .QBX. Thats an excellent filename and
theres no reason to change it.
By default, QuickBooks saves the accountants copy to your desktop. You can
change the location of the saved file from the desktop to a folder of your own
choosing, and QuickBooks will remember the new location for future accountant
copy files you create.
If youre sending the file on a flash drive, change the location by choosing the
flash drive in the Save In field at the top of the dialog. If youre planning to send the
file on a CD or DVD, save the file to your hard drive and then transfer the file to the
CD/DVD.
C A U T I O N : You must tell your accountant the Admin password so your
accountant can open the file.
Sending an Accountants Copy
to the QuickBooks Server
To create an accountants copy that is uploaded to a secure server maintained by
QuickBooks, from which your accountant can download the file, choose File |
Accountants Copy | Send To Accountant, which opens the Send Accountants Copy
dialog that explains the process. Step through the wizard, clicking Next to move
through the windows.
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The first step is to select the dividing date (covered in the next section,
Choosing the Dividing Date).
In the next window, enter your accountants e-mail address (twice, to confirm the
data), your name, and your e-mail address. If an e-mail address exists in the e-mail
field of the Company Info dialog (in the Company menu) window, that address is
automatically entered in this dialog, but you can change the e-mail address if you
need to.
In the next window (see Figure 15-7), enter a password for the upload/download
of this file. This is not the password your accountant needs to open the company
file; its a password required to download the file from the server. It must be a strong
password, which means it contains at least seven characters, mixes letters and
numbers, and at least one letter is in a different case from the other letters (usually
this means one letter is uppercase).
You can also enter a message for your accountant that will appear in the body of
the e-mail message notifying your accountant that youve uploaded the file. E-mail
text is not encrypted as it travels around the Internet, so dont use this message to
give your accountant the password.
Click Send to upload the file to the server. QuickBooks displays a message telling
you it must close all windows to create an accountants copy; click OK to continue.
When the accountants copy has been created and uploaded, QuickBooks displays a
success message.
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Ill 15-2
If youve password-protected your QuickBooks data file, you must give your
accountant the Admin password (in addition to providing the required password to
download the file). If your Admin password is a strong password, as defined earlier
in this section, you can use the same password for both purposes.
QuickBooks sends an e-mail to your accountant (to say that your file is available
and explain what to do next) and to you (to confirm that your file has been
successfully uploaded).
Choosing the Dividing Date
The text in the Set The Dividing Date window (see Figure 15-8) explains that your
accountant works on transactions on or before the dividing date, and you work on
transactions that are dated after the dividing date. You and your accountant should
discuss the date you select.
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FIGURE 15-8 The dividing date establishes boundaries and limits for the type of work you and
your accountant can perform.
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The dividing date you select should be the period for which you need your
accountant to examine your books and make needed changes, which is usually a
year-end date.
Some people, however, send an accountants copy with a dividing date matching
the date of a report they need for a special reasonsuch as an income statement
and/or balance sheet the bank wants to see because of an existing or potential line
of credit. Other users may need an accountant-approved detailed report of
transactions for the companys partners or a nonprofit associations board (usually a
month, quarter, or year-end date).
T I P : To give your accountant a period in which to insert changes such as
adjusting journal entries or reversing journal entries, set the dividing date about
two weeks after the end date you need. For example, if the report you need is as
of the end of the last quarter, set the dividing date for two or three weeks after
the last quarter end date.
Merging the Accountants
Changes into Your File
The file your accountant sends back is not a complete QuickBooks company file; it
contains only the changes made by your accountant. The file is encrypted so it can
only be imported into the company file you used to create it.
Follow these steps to import the accountants copy:
Be sure the company file from which you created the accountants copy is open.
Choose File | Accountants Copy | Import Accountants Changes.
Navigate to the location where you saved the file your accountant sent and
double-click the file listing; the file has the naming format <CompanyName>
(Acct Changes).QBY.
The Incorporate Accountants Changes window opens so you can preview the
changes that will be merged into your company data file and read any notes
your accountant wrote. (Before you import the changes, you can save the report
as a PDF file or print it).
N O T E : The printed report and PDF includes the accountants notes.
Click Incorporate Accountants Changes. QuickBooks walks you through the
process of backing up your current file before importing the changes and then
merges the changes into your company data file.
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After the changes have been incorporated into your file, QuickBooks displays a
report that looks like the Incorporate Accountants Changes report that was
displayed before you selected the option to incorporate the file (except the window
indicates that the transactions are incorporated instead of pending). If any
transactions failed to merge with your company file, a message appears to inform
you of the failure. QuickBooks also automatically creates a PDF file after the
changes are incorporated.
The report window has buttons you can click to save or print the report. Its a
good idea to print the report so you know where to look in your file to see the
changes. QuickBooks then displays a message asking if youd like to set a closing
date and password-protect the closed period, as of the dividing date you set.
If the dividing date on this accountants copy was the last day of the previous
fiscal year, this is a good idea, so click Yes; but if not, it depends on your own
judgment. (You can learn about setting a closing date to protect data in the previous
fiscal year in Chapter 20.)
QuickBooks opens your company file, the text on the title bar changes back to
its normal contents (instead of displaying a notice that an accountants copy is
outstanding), and you can work in the file with no restrictions.
T I P : After youre up and running again normally, you can delete the file your
accountant sent you, and you can also delete the accountants copy file you
created and saved.
Canceling the Accountants Copy
If youre not going to get a file back from your accountant, you can cancel the
accountants copy in order to work normally in your company file.
Sometimes accountants report that they have no changes to make; sometimes
accountants send you e-mail to notify you of a small change and ask you to enter
the transaction manually; and sometimes you decide you made the accountants
copy in error and dont want to wait for a file to come back (dont forget to tell the
accountant about your decision).
T I P : Another reason to cancel the accountants copy is because you dont
want to import the changes you saw in the Import Accountants Changes window.
Call your accountant and discuss the problem. If the end result is that you prefer
not to import the changes, close the Import Accountants Changes window
without importing the changes, and cancel the accountants copy.
To return everything to normal, choose File | Accountants Copy | Remove
Restrictions. QuickBooks asks you to confirm your decision. Select the option
labeled Yes, I Want To Remove The Accountants Copy Restrictions, and click OK.
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Using the Accountants Copy (for Accountants)
An Accountants Copy can only be opened in the Accountant Editions. The file has
to be opened (as a transfer file) and then saved (as a working file). The working file
is loaded in the QuickBooks window so you can begin using it.
Follow these steps to open an accountants copy:
Choose File | Accountants Copy | Open & Convert Transfer File. QuickBooks
displays a window that provides an overview of the way the accountants copy
works.
Click Next to see an explanation of the permitted transactions. The message
includes the statement that if you want to do more than the accountants copy
permits, you can convert the Transfer File to a full company file and do
anything you wish.
Click Next and navigate to the folder that contains the file you received from
the client.
Double-click the files listing. QuickBooks displays a message explaining that
the file is about to be converted to an accountants copy working file. Click OK.
Click Save to have QuickBooks save the file in the same folder you selected to
retrieve the file. By default QuickBooks retains the filename, changing the
extension to .QBA.
QuickBooks converts the file, which takes a few minutes, and then opens the
file. If the file contains users and passwords, the Login dialog appears with the
Admin user entered in the User Name field. You must enter the Admin
password to continue.
QuickBooks displays another message reminding you that this is an
Accountants Copy. Click OK to begin working.
The title bar of the QuickBooks window displays the company filename along
with the parenthetical text Acct Copy, Div Date DD/MM/YYYY. You can begin data
entry according to the can do/cannot do rules.
As soon as you begin working in a transaction window or a dialog, QuickBooks
displays a message explaining how the transaction windows appear in order to let
you know what you can and cannot do (see Figure 15-9).
After the file has been converted to an accountants copy working file, you
can close and open it as needed. To open the file, choose File | Open or Restore
Company, and click Next. Navigate to the folder that contains the file and open it.
Creating the Accountants Copy Change File
While youre working in the accountants copy, you can review the work youve
done by choosing File | Accountants Copy | View/Export Changes For Client.
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When youve completed your work and youre ready to send the file back to your
client, open this window and click Create Change File For Client.
The Save Accountant Change File To dialog opens, offering to save the file to the
desktop (you can change the location if you wish). The file is renamed with the
format <CompanyFileName> (Acct Changes).QBY. QuickBooks issues a success
message when you save the file. Send the file to your client via e-mail (its a small
file) or on a CD.
T I P : Save the working file until you make sure the client has received and
successfully imported the file. If theres a problem, you can work with the file
and resend the corrected merge file.
Company Snapshot
You can get a quick answer to the question, Hows business? in the company
snapshot window (see Figure 15-10). Choose Company | Company Snapshot to
open this window.
In addition to displaying an easy-to-understand summary of the money thats
moved in and out, this customizable window provides information on tasks you
should perform, account balances, and A/R and A/P data by customer/vendor. In
addition to the reports, lists, and graphs that appear when you first open the
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FIGURE 15-9 Its easy to tell which part of a transaction window can accept data that takes
and will be merged into your clients file.
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Company Snapshot window, selecting the Add Content link at the top of the
window allows you to add content to your dashboard. Once selected, you can
modify date ranges, rearrange positions, or completely remove elements.
To view more detail, double-click an element in this window to see the
particulars. For example, to see details about a customers A/R balance, click the
listing to display an Open Balance report for that customer, sorted and totaled by
job (see Figure 15-11).
The data displayed in the Company Snapshot window is always appropriate for the
permissions granted to the current user. If the user does not have permission to see
sensitive financial data, no bank balances appear in the Account Balances section of
the window. Additionally, the Income And Expense Trend Graph section has no data;
instead, the user sees a message explaining that he or she needs permission to view
the area. Various elements of the window are displayed or hidden depending on
the current users permissions. (Learn about configuring users and permissions in
Chapter 20.)
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FIGURE 15-10 View a summary of your financial status.
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Client Data Review
Client Data Review (see Figure 15-12) provides a central place for investigating
problems, or potential problems, in a company file. Your accountant can use the
Client Data Review tool to drill down into the data postings and troubleshoot data
entry problems.
The Client Data Review command is available from the Company menu, but if
you are running QuickBooks Premier/Enterprise Solutions Accountant Edition, the
command also exists in the Accountant menu.
Additionally, if you are running QuickBooks Pro, QuickBooks Premier (not
Accountant Edition), or Enterprise Solutions (not Accountant Edition) and have
logged in as an External Accountant, the command is located on the Company
menu. See the section External Accountant for information about setting up this
special type of user.
In the Client Data Review (CDR) Center, listings that display the CDR tool icon
are CDR tools, providing functions that are only available in the CDR utility.
Listings that dont display the CDR icon provide convenient access to existing
QuickBooks functions and reports (eliminating the need to open those functions
from the Menu bar).
Some of the tools provide a way to correct existing transactions that were created
incorrectly, such as remitting sales tax or payroll liabilities through a regular
check instead of using the Pay Liabilities functions. Other tools provide a way to
link existing transactions, such as applying credits to customer invoices or bills.
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FIGURE 15-11 Its easy to see the details behind the figures in the Company Snapshot; and you
can continue to drill down for more details.
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External Accountant
An External Accountant is a type of user that the QuickBooks Admin can create.
The External Accountant user type has the same rights as the QuickBooks Admin
except the following:
The External Accountant cannot create, edit, or remove users.
The External Accountant cannot view customer credit card numbers if the
QuickBooks Credit Card Protection feature is enabled (covered in Chapter 20).
When a user configured as an External Accountant logs in to the company file,
the Client Data Review command is available on the Company menu, regardless of
the QuickBooks edition. (The Client Data Review command is only available in the
Accountant Edition from the Accountant menu unless an External Accountant is
logged in.)
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FIGURE 15-12 Review existing data to make sure financial information is correct.
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T I P : Even if youre running Accountant Edition, create an External Accountant
user so that changes made by this user are differentiated from changes made by
the Admin in the Audit Trail report.
Creating an External Accountant
To create a user who is an External Accountant, log in to your company file as
Admin (only the QuickBooks Admin can create users).
Follow these steps to create an External Accountant user:
Choose Company | Set Up Users And Passwords | Set Up Users.
In the User List dialog, select Add User.
Enter the User Name and Password and click Next.
Select External Accountant and click Next.
QuickBooks asks you to confirm this actionclick Yes.
Click Finish to create the External Accountant.
Editing a Current User to Become an External Accountant
Many companies have already set up user names for their accountants. You can edit
your accountants user account to convert it to an External Accountant to add the
Client Data Review feature to the company file.
Select the accountants user account and click Edit User. Skip the user name and
password data, and click Next. In the next window, select External Accountant and
follow the prompts to save this user name as an External Accountant.
Consolidated Repor ts
for Multiple Companies
This feature is only available in QuickBooks Enterprise Solutions editions.
If you have separate QuickBooks company files for multiple companies (or to
track multiple locations, divisions, and so on in discrete company files), use the
Combine Reports feature to get a consolidated view of all the data files. You can
create the following reports as consolidated reports:
Balance Sheet Standard
Balance Sheet Summary
Profit & Loss Standard
Statement of Cash Flows
Trial Balance
The configuration of the consolidated reports is performed in QuickBooks
(selecting the companies and selecting the report types). However, the data is sent
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to Microsoft Excel for consolidation, so you must have Excel installed on your
computer to use this feature.
Intuit Statement Writer
The Intuit Statement Writer (ISW) gives you the power to customize financial
statements that are directly linked to a clients QuickBooks data. You dont have to
export the data to other programs to create a customized statement; instead, you
can produce exactly what you want immediately. QuickBooks includes ISW in all
editions of QuickBooks Enterprise Solutions. ISW can be purchased separately to
run in conjunction with QuickBooks Premier Accountant Edition. ISW requires
Microsoft Office 2003 or later.
Overview of Features
The Intuit Statement Writer is a program that runs inside Microsoft Excel and adds
additional commands and capabilities to control the importation of QuickBooks
data into the Excel spreadsheet for manipulation.
ISW includes the ability to perform the following tasks, all of which provide
more control of your financial statements than is provided with standard
QuickBooks reports:
Start from any of the preformatted Financial Statement templates, including
Balance Sheets, Income Statements, and Budget-to-Actual Statements.
Customize statements by inserting columns or rows to show prior year
balances, percentages, and variances between other columns, subtotals, and
more.
Use your customized statements for any client.
Format the statement any way you want using familiar Excel spreadsheet
capabilities.
Save your financial statements for each client to separate file locations.
Insert rows for subtotals, group accounts in any way that you want, or add
blank rows for spacing.
Update your clients statement for the following period in seconds.
Create custom appearances that specify all of the font characteristics (name,
size, bold, italic, and so on) for each element of your financial statement. These
appearances can then be used across all of your financial statements to produce
a customized statement look.
N O T E : With the Intuit Statement Writer, you can create a standard set of
financial statements that are in accordance with Generally Accepted Accounting
Principles (GAAP).
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ISW and QuickBooks Data Files
As a built-in program, you open ISWfromwithin QuickBooks by choosing Reports |
Intuit Statement Writer or Accountant | Intuit Statement Writer. The data in the
currently open QuickBooks company file is automatically connected to ISW, so be
sure the company file you want to work with is open before you launch ISW.
Your statement data is always connected to the source. This means updating
financial statements is easy and efficient, because the balances update automatically
when the file is opened. While youre viewing an ISW financial statement, you can
use the QuickZoom feature to view and/or edit the details of a source transaction.
When you return to the financial statement, your ISW statement can be updated
instantly by clicking the Refresh button on one of the ISW toolbars.
Creating and Opening Financial Statements
The first couple of dialog boxes that appear upon the ISW launch will guide you
through creating a new financial statement or opening an existing statement. From
there, youll be able to perform the following tasks:
Create a new set of financial statements.
Edit saved financial statements.
View the list of available financial statement templates.
Select a template for the new financial statement (see the section ISW
Templates).
Select a period for which a statement needs to be generated.
Set the statement basis.
By default, each new financial statement that is created will be saved in a
directory that is specifically created and associated with the currently open
company file. If desired, you may use the normal Excel Save As command to save
the statement to the location of your choosing.
ISW Templates
ISW comes with a large selection of customizable financial statement templates.
Choose from a wide variety of balance sheets, income statements, and budget-to-
actual reports (see Figure 15-13).
While you can create a financial statement from scratch, its quicker to use one of
the financial statement templates as your starting point. You can easily make changes
to the template to customize it for your clients needs or your own preferences. Give
your altered template a new name so you can use it in the future.
Editing Financial Statements
Once a financial statement has been created or opened, the contents are displayed
within the Excel spreadsheet. In addition, ISW provides add-in components to
Excel to provide additional QuickBooksspecific functionality.
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ISW Menu ISW inserts an additional special Statement Writer menu into the
Excel menu toolbar. This menu provides direct access to ISW-specific functionality.
ISW Toolbars In addition to the Statement Writer menu, ISW inserts its own
toolbar into the Excel toolbar area. This toolbar provides specific Save, Insert, and
Save As commands (since ISW files are slightly different from normal Excel files),
plus Roll Up, Refresh, QuickZoom, and Help buttons. There is also a button to
force the redisplay of the Action Panel in case it is accidentally (or intentionally)
closed during operation.
Document Action Panel The Intuit Statement Writer Action Panel will appear
to the side of the Excel spreadsheet with the title bar Document Actions (Figure 15-14).
This panel can be moved to either side of Excel, or it can be detached and allowed to
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float freely. This panel consists of five different sections: Report Properties, Statement
Properties, Row Properties, Column Properties, and Cell Properties. You can use these
properties panels to quickly view or change the properties for a particular area of the
financial statement. If the properties you want to view do not appear in the Properties
panel, click the arrows to expand the section.
The Statement Properties section allows you to view or alter the overall date
range and reporting basis for the current financial statement.
The Row Properties section is used primarily to view and edit which accounts
are assigned to which rows of the report. ISW will initially assign all accounts to
their respective locations within the report, based on the selected statement
template. If you wish to display more or less detail in your statement, you may
combine multiple accounts into a single row by selecting the rows in Excel, then
pressing the Combine Accounts (Roll Up) button in the ISW toolbar. Inversely,
individual accounts may be split out from an existing row via the Split Out button
in the Row Properties section to display more detail in the statement.
The Column Properties are used to set the date range for account balances
displayed in that column. For example, you can configure one column for the prior
period balances and the next column for the current period balances.
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Use Cell Properties to identify a cell type (place your cursor on the cell that you
want to ID). You can use the button in the Actions area to modify the date or insert
a field.
The Edit Appearance function allows you to specify the overall look of your
financial statement from a font and size perspective. These appearances can then be
saved and used across multiple statements to provide a common professional look
and feel for your companys financial statements.
Excel Spreadsheet The Excel spreadsheet displays the account descriptions,
balances, report headers and footers, column headers, and the results of the
formulas youve entered. This lets you customize statements by inserting columns
or rows to show prior year balances, percentages, and variances between other
columns and subtotals. You can also insert rows for subtotals to group accounts in
any way you prefer, or add blank rows for spacing.
Previewing and Printing Financial Statements
You can preview and print all of your financial statements using the normal
capabilities of Microsoft Excel.
Export Financial Statements
Your ISW financial statements are contained in an Excel file, along with additional
information that is only accessible to ISW. If you wish to create a normal Excel
(XLS) file, you can export your financial statements to a plain Excel format. The
plain Excel file (XLS) will not contain any of the ISW information, such as which
accounts are contained in each row, and all of the numbers contained in the
document will be static; that is, they cannot be updated at the push of a button
from the QuickBooks company file.
E-mailing Financial Statements
ISW gives you the convenience of e-mailing financial statements to another
accountant, just by using the normal Microsoft Excel e-mail facilities.
Supporting Documents
ISW offers the ability to create supporting documents to accompany your financial
statements. A number of predefined Microsoft Word document templates are
available, and you can customize them to meet your needs. To access this feature,
click the Insert Docs button on the ISW Toolbar. You can choose from the available
templates or choose a document that youve already created.
ISW fills the merge field definitions with the clients company name, your firm
name, the statement date, and other client and accountant data that is available to
auto-fill fields in the template. This makes it easy to create title pages and cover
letters to accompany your financial statements.
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C
h
a
p
t
e
r
1
6
Using Online Banking
Services
I
n this chapter:
Understand online banking
Set up online bank accounts
Download account activity into QuickBooks
Use renaming rules to match payee names
Create online payments to vendors
Transfer funds between banks electronically
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You can use your Internet connection to access a wide range of online services that
QuickBooks offers to financial institutions, including the following:
Transaction download, which means you can view the status of your bank
accounts, see which transactions have cleared, and generally keep an eye on
your accounts via your Internet connection.
Online payments, which means you send vendor checks through your bank,
directly from QuickBooks, instead of writing checks.
Another online service is access to your credit card accounts, so you can
download credit card transactions and enter them in your credit card account
register. To take advantage of online credit card tracking, you must set up your
credit cards as credit card accounts in your chart of accounts (all of which is
discussed in Chapter 11). Some financial institutions offer online banking for
liability accounts youve established in QuickBooks, such as lines of credit.
Understanding Online Banking
With the online banking feature you use the Internet to move funds and access
information about your accounts from your financial institution. The financial
institutions computer is a server, configured for secure exchange of data, that
provides information and services related to your accounts. QuickBooks supports
two methods for online banking services, and your financial institution selects the
method it wants to use:
Web Connect This is the method you use when your financial institution
doesnt provide a way to connect your QuickBooks data directly to the data on
their own server. Instead, theres a page on its website that lets you view and
download your transactions and import the downloaded file into QuickBooks.
Direct Connect Your financial institution exchanges data interactively with
QuickBooks. This allows you to take advantage of all types of additional online
banking services, such as transaction data downloads directly into your
QuickBooks bank register, transfers between bank accounts, electronic
messages between you and the financial institution, and online bill payments
(optional at some financial institutions). Some financial institutions charge a
fee for some or all of the services available through Direct Connect.
N O T E : Some financial institutions offer both Web Connect and Direct Connect
so you can choose the method you prefer. Usually, banks that offer both methods
charge a fee for Direct Connect.
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Setting Up Online Banking
To use online banking, your bank must support at least one QuickBooks online
access feature. There are three online banking services available:
Transaction download
Online bill paying
Online credit card services
You can sign up for any or all of these services. If your bank supports only online
account access and doesnt support online bill paying or online credit card services,
you can work directly with the QuickBooks online banking services. See Using the
QuickBooks Bill Pay Service later in this chapter.
The process of enabling online banking has three steps (all of which are covered
in this section):
Apply for online services with your bank.
Receive a personal identification number (PIN) or password from your bank to
make sure your online account is secure.
Enable a QuickBooks account (or multiple accounts) for online services.
Once a QuickBooks bank account is enabled for online banking, you can download
transaction information fromyour bank and match it to your bank register.
To get started, choose Banking | Online Banking from the menu bar. The
submenu has five commands related to online banking services:
Set Up Account For Online Services
Participating Financial Institutions
Import Web Connect File
Change Online Banking Mode
Learn About Online Bill Payment
Finding Your Bank Online
If you havent signed up for (or discussed) online services with your bank, and
youre not sure if your bank has online services, choose Participating Financial
Institutions to see if your bank participates. QuickBooks may display a dialog
telling you it has to open a browser to travel to the Internet. Click OK, and when
youre connected to the Internet, you see the Financial Institutions Directory
website (see Figure 16-1).
The four choices at the top of the left pane determine the contents of the
Financial Institutions Directory list that QuickBooks displays. The window opens
with the choice labeled Any Services preselected, and all the banks listed provide
some type of online service.
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If youre interested in a particular online service (for example, you only care
about bank account access to download transactions), select that option, and the
list of banks changes to those banks that offer the selected service.
Scroll through the list to find your bank and click its listing. The right pane of
the Financial Institutions Directory window displays information about your banks
online services (see Figure 16-2). If your bank isnt listed, you cannot set up any
QuickBooks online banking services.
Click the Apply Now button if you want to start the application process here and
now. If no Apply Now button exists, follow the instructions for setting up online
services at the bankusually the bank displays a phone number. If online applications
are available, fill out the form and submit the information. Your bank will send
you information about using its online service, a login name (sometimes called a
company ID), and a PIN or a password. This is the information you need to enable
the bank account for online access.
N O T E : Most banks that support Direct Connect provide a PIN (a four-digit
number), and most banks that support Web Connect use a password.
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FIGURE 16-1 Select the type of online service you want, and then scroll through the list to see
if your bank is included.
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After youve completed the paperwork at your bank and received your login ID
and a PIN or a password, QuickBooks walks you through the process of enabling
your bank account for online banking in QuickBooks.
Those steps differ depending on whether your bank uses Direct Connect or Web
Connect. The following sections cover both scenarios.
N O T E : Banks that are enabled for online access have a symbol that looks
like a lightning bolt in the Online Access column of your chart of accountsthe
column heading doesnt say Online Access, it just has the lightning bolt
symbol.
Enabling Online Access for Direct Connect
After you receive your ID and PIN, you can enable a bank account for online access
with Direct Connect in any of the following ways:
Choose Banking | Online Banking | Setup Account For Online Services and
select the bank account you want to configure for online services in the Set Up
Account For Online Services dialog.
Open an existing bank account (select the account in the Chart of Accounts
List and press CTRL-E) and click Set Up Online Services.
Click Yes in the Setup Online Services dialog that appears when you create a
new bank account.
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FIGURE 16-2 This bank has Direct Connect.
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QuickBooks opens the Set Up Account For Online Services For <Name you used
for your bank account in the chart of accounts> dialog seen in Figure 16-3. Select
your bank from the drop-down list of participating financial institutions. (You dont
have to scroll through the list; instead, as you type the characters for the name of
your bank, QuickBooks moves to the appropriate listing.)
N O T E : If your bank has a nationwide presence with regional headquarters,
after you select the bank you may see a second dialog asking you to select the
appropriate bank region. For example, if your bank is BigAsTheNation, you may have
to select BigAsTheNation-Pennsylvania-NJ if the bank you use is part of that division.
QuickBooks contacts the bank over the Internet (to determine the information
your bank requires to configure your bank account for online access), and then
displays information about the banks online access. As you can see in Figure 16-4,
this bank requires a PIN (it offers Direct Connect). QuickBooks reminds you that if
you signed up for your banks own website-based online banking features, the User
ID and password required to enter that website may be different from the User ID
and PIN/password required for access via QuickBooks (your financial institution
sets these rules).
Click Next and use the information the bank sent you to fill in the fields for your
Customer ID and PIN/password (see Figure 16-5). Depending on the way your
bank maintains account information to configure online services, you may be asked
to enter a routing number for the bank and the account number for your bank
account instead of only the Customer ID and PIN.
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FIGURE 16-3 The first step is to select your bank.
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Click Sign In to access your bank account online. QuickBooks contacts the bank
over the Internet and downloads the transactions for your bank account, displaying a
dialog that tells you how many transactions were downloaded. Click Finish to open
the Online Banking Center automatically, where you can view the downloaded
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FIGURE 16-4 This bank requires a PIN for Direct Connect.
FIGURE 16-5 Enter the data the bank mailed to you.
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transactions (using the Online Banking Center and matching transactions are covered
later in this chapter in the section Using the Online Banking Center).
Enabling Online Access for Web Connect
After you receive your login information from your bank, you can enable a bank
account for online access with Web Connect in any of the following ways:
Choose Banking | Online Banking | Setup Account For Online Services and
select the bank account you want to configure for online services.
Open an existing bank account (select the account in the Chart of Accounts list
and press CTRL-E) and click Set Up Online Services.
Click Yes in the Setup Online Services dialog that asks you whether you want
to enable this new account for online services.
QuickBooks opens the Set Up Account For Online Services For <Name you used
for your bank account in the chart of accounts> dialog. Select your bank from the
drop-down list. You dont have to scroll through the list; instead, as you type the
characters for the name of your bank, QuickBooks moves to the appropriate listing.
Click Next to have QuickBooks travel to your banks website to check the banks
type of online services (which will be Web Connect). QuickBooks displays the
dialog seen in Figure 16-6.
Click the button labeled Go To My Banks Web Site. QuickBooks opens its Help
files with instructions, information, and explanations about connecting to banks
that offer Web Connect.
If you see a message telling you that QuickBooks must launch a browser and
travel to the Internet, click OK (no, wait, click the option labeled Do Not Display
This Message In the Future, then click OK).
When QuickBooks connects to your banks website, use the login information
the bank gave you when you signed up for online services. Depending on the type
of software the bank uses, you may be asked for a company ID and a User ID (or
both), as well as a password. Some bank software doesnt present the password field
on the same web page as the sign-in IDs; instead, you must click Continue or Next
to move to the web page that asks for your password.
Click the button or link that connects you to your account transactions. The
label might be Reports, Reporting, Download Statements, Download Transactions,
Exports, or any other terminology that indicates, Get a report on the transactions
that have passed through your bank account.
In the options or criteria page, select a QuickBooks File as the report type. Your
bank may have several choices for QuickBooks files, for instance, according to the
version (year). Some banks use a file named QBO file instead of QuickBooks File.
Your bank probably displays criteria selections for a date range (yesterday, today,
or a From DateTo Date range of dates) and may also offer an option labeled Since
Last Download (which you can select after this initial download).
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After you make your selections and click the appropriate button (Generate,
Download, or some other similar label), your bank generates the file and displays a
File Download dialog asking whether you want to open the file or save it to your
computer.
If you click Save, QuickBooks downloads the file to your computer and saves it
in a folder you select. When youre ready to import the file and view it in the
Online Banking Center, choose File | Utilities | Import | Web Connect Files and
select the file you saved.
If you click Open, QuickBooks asks if you want to import the file into your
bank account now, or save it and import it later.
Ill 16-1
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FIGURE 16-6 To enable a bank account for Web Connect online services, you must download a
transactions file from the banks website.
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The first time you import your Web Connect file into QuickBooks, you must
link the file to a QuickBooks bank account.
Ill 16-2
If youve already created this bank account in QuickBooks, select the option
Use An Existing QuickBooks Account, and select the account from the drop-
down list. Click Continue and QuickBooks enables the account for online
access.
If you havent created this bank account in QuickBooks, select the option
Create A New QuickBooks Account, and then click Continue. QuickBooks
creates a new bank account automatically, naming it Checking At <Name of
Bank> and enables the account for online access.
QuickBooks displays a message telling you the data has been imported.
Click OK to open the Online Banking Center (covered next) so you can view the
downloaded data and match it to your bank register. Hereafter, you use the Online
Banking Center to download your transaction data.
Using the Online Banking Center
To connect to your financial institution, choose Banking | Online Banking | Online
Banking Center to open the Online Banking Center window.
As discussed in the previous section, if youve just enabled an account for online
banking and downloaded transactions for the first time, the Online Banking Center
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opens automatically and you can skip the beginning of this section that tells you
how to effect a transaction downloadgo right to the section on viewing the
downloaded transactions. Hereafter, youll both download and view transactions
from the Online Banking Center.
If you have online banking at more than one financial institution, select the
appropriate one from the drop-down list in the Financial Institution field at the top
of the window. For example, you may have online bank account access at one
financial institution and online credit card access at another.
N O T E : If your financial institution supports Web Connect, you can only
download transactions; all the other functions covered in this section (such as
exchanging electronic messages, making online payments within QuickBooks,
and so on) are available only for Direct Connect.
Downloading Transactions
To download transactions from your bank, open the Online Banking Center and
click Send/Receive Transactions.
For Direct Connect, QuickBooks opens the Access To <Name of Bank> dialog.
Enter your PIN and click OK. QuickBooks automatically downloads new
transactions.
For Web Connect, QuickBooks travels to the banks website, where you must
log in and then select a QuickBooks download (as described earlier in this
chapter).
Viewing the Downloaded Transactions
When your data has been downloaded, the Online Banking Center dialog displays a
summary of the items received from your bank in the Items Received section.
There are two ways to view and enter transactions: Side-by-Side mode (as shown in
Figure 16-7) and Register mode. If you used online banking in previous QuickBooks
versions, specifically QuickBooks 2008 and earlier, then youre already familiar with
Register mode. In Register mode, you can see your full register when matching
transactions. Both modes offer the same functionality with the exception that the
renaming rules created in the Side-by-Side mode are not available in Register mode.
Likewise, aliases created in Register mode are not available in Side-by-Side mode.
To switch between online banking modes, choose Edit | Preferences | Checking.
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In the Online banking section of the Company Preferences tab, choose how you
want to view and enter your downloaded transactions.
Ill 16-3
The rest of this section describes the process of viewing and matching
transactions using the default, Side-by-Side mode.
N O T E : After the first time you download transactions, QuickBooks checks
your company file to see which transactions were already downloaded, and only
downloads transactions not downloaded previously. This means you dont have
to worry about duplicate transactions.
Matching Transactions
To match downloaded transactions to your QuickBooks bank register, click the
button labeled Add Transactions To QuickBooks and select the account.
QuickBooks displays the downloaded transactions (see Figure 16-7).
QuickBooks automatically tries to match the transactions in the file to the
transactions in your register and marks the status of each transaction with one of
the following conditions:
Matched Means the downloaded transaction matches a transaction in the register.
Unmatched Means no match was found in your register for the downloaded
transaction.
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By default, only the unmatched transactions are listed in the left pane of the
window. The top of the left pane displays the number of matched transactions but
doesnt display the details. If you have matched transactions and want to see the
details, youll see a link labeled Show, and QuickBooks displays the matched
transactions. To hide the matched transactions listings, click the Hide link that
appears at the top of the window. (Since you dont need to do anything with matched
transactions, its easier to work with the list of those transactions removed.)
The top of the left pane also displays the number of transactions matched via
Renaming Rules (see Using Renaming Rules to Match Online Transactions later
in this chapter).
If all the downloaded transactions are matched, you have nothing else to do.
QuickBooks inserts a lightning bolt in the Cleared column of your bank register
(the column with a check mark heading) for every matched transaction, indicating
the fact that the transaction has cleared the bank. Whenever you open the register,
you know which transactions have been matched with downloaded transactions:
A check mark indicates a transaction has been through bank reconciliation.
A lightning bolt indicates a transaction has been downloaded as cleared, but
has not been through a bank reconciliation.
(Chapter 12 covers the topic of bank reconciliations.)
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FIGURE 16-7 All the downloaded transactions are available in the Online Banking Center.
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Adding Transactions to the Bank Register
Many users (those that dont print checks in QuickBooks) dont bother to enter all
transactions in the bank register. They use the download file to accomplish the
task. This isnt a good way to keep accounting records, because you dont know
which transactions are outstanding.
Even if you enter all your checks and customer receipts in QuickBooks, sometimes
you have to wait for your bank to tell you whether the transaction has cleared to learn
the amount of the transaction (such as merchant card receipts, or payments taken out
of your bank automatically by a vendor).
To add an unmatched transaction to the bank register, select its listing in the Add
Transactions To QuickBooks window (as shown previously in Figure 16-7). Depending
on the type of transaction (payment or deposit), the right pane displays options for
adding the transaction to the bank register (see Figure 16-8).
Adding a Downloaded Payment to the Register
When you select an unmatched payment, QuickBooks opens the Record An
Expense window in the right pane (see Figure 16-8).
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FIGURE 16-8 A downloaded payment is assumed to be an expense.
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If the vendor exists in your company file, select the vendor from the drop-down
list in the Payee field. If the vendor name does not exist, select <Add New> to add
the name.
If the payment is posted to multiple accounts, or should be linked to a customer
(or both), click the link Show splits, memo, date, number to open an entry
window that looks like Figure 16-9.
If the downloaded payment represents a check or online payment you created to
pay a vendor bill that is entered in your system, click the link More matching
options and select the option Select Open Bills To Pay In QuickBooks.
In the Vendor/Payee field, select the vendor with an open A/P bill that this
downloaded payment is linked to. QuickBooks displays the open bills for the
vendor.
Select the bill to pay with this transaction, and change the paid amount if the
transaction represented a partial payment. You can also select multiple bills for this
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FIGURE 16-9 Enter the payment with the details you need.
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vendor, if you paid more than one bill with this payment. QuickBooks does some
quick arithmetic to make sure that all the bills you select total up to match the
downloaded amount.
Adding a Downloaded Deposit to the Register
When you select a downloaded deposit, the right pane of the online banking center
displays the Record A QuickBooks Deposit window, which could have either or
both of the following tabs:
Undeposited Funds, which contains all the current transactions waiting for
deposit (the transactions you see when you open the Make Deposits window).
If no entries exist in Undeposited Funds, the tab isnt displayed.
Open Invoices, which lists all the current open invoices in your company file.
If no open invoices exist, the tab isnt displayed.
Choose the appropriate tab, and then choose the matching transaction (or
multiple transactions that total up to the amount of the downloaded transaction).
If the merchant card company deducts fees before depositing the sale, the downloaded
transaction amount is lower than the amount received for the sale. To match the
amount, enter those fees in this window, in the next blank row. Click the From
Account column and select the merchant account fees expense account. Then, in
the Amount column, enter the difference between the original transaction and the
downloaded deposit (its a minus amount). The net amount matches the downloaded
transaction, and you can deposit it into your account by clicking the Add To
QuickBooks button at the bottom of the window.
Using Renaming Rules to Match Online Transactions
You can use a renaming rule to match the payee name on a downloaded electronic
payment to a vendor name in your QuickBooks company file, when the names
dont match. (In previous versions of QuickBooks, this feature was called Creating
an Alias.)
When you download transactions, QuickBooks checks the payee name only for
electronic payments. For regular checks, the payee name isnt compared because
the payee name isnt recorded when checks clear your bank. Instead, you see the
word Check in the Payee section of the downloaded transaction file, and
QuickBooks uses the check number and amount to match the downloaded
transaction against your check register.
Use renaming rules to let QuickBooks know how to match a downloaded
transaction when you did not enter the transaction in your bank register or your
credit card account register, and the payee name doesnt match an existing vendor
name when you select the option to add the transaction to QuickBooks.
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Understanding How and When Payee Names Dif fer
Its not uncommon for the payee name on a downloaded electronic payment to
differ from the vendor name youre using in your company file. For example, you
may have a vendor named BigBank that automatically deducts payments from your
account, but the bank uses BB4445 (representing your loan account number) when
creating online payments. In that case, you have two options for matching (or
adding) the transaction in the Online Banking Center dialog:
Use a renaming rule to create an alias to match BB4445 to BigBank when a
payment appears in a downloaded file. You can create additional renaming rules
for any other loans or other types of payments made to this vendor.
Close the online banking center and change the name of the vendor to BB4445
in your QuickBooks file. This works if the only payments to this bank are for
this loan. If you have multiple loans from the bank (or other types of payments
to the bank), and youre tracking them in different accounts, using a loan
number as the vendor name doesnt work, so you must create a renaming rule.
The first option is easier and quicker.
The same problem occurs when the difference in the payee name is inadvertent.
For example, you may have a vendor named Backstroke, with a company name
Arthur Backstroke, but when you create the vendor on your banks online payment
website, you may fill in the payee name as Art Backstroke, or Artie Backstroke. If
you arent consistent about the way you fill in payee names when you create online
vendor accounts, creating a renaming rule for the payee means that transactions are
matched (although a better solution is to be careful about the way you enter data).
In the future, when you download transactions with this payee name, QuickBooks
recognizes the renaming rule and matches the transaction if it exists in the register.
If the transaction doesnt exist in the register, select the downloaded transaction and
click Add To QuickBooks. QuickBooks automatically adds it to the register, using
the renaming rule to link the transaction to the right vendor name.
Creating a Renaming Rule
You cannot create a renaming rule in QuickBooks the way you can create other
components in your company file (by adding it to a list). The QuickBooks online
banking center lets you create the renaming rule when you run into a problem
matching or adding an online transaction thats been downloaded. Even if you
know that your vendor named BigBank is automatically taking money out of your
checking account every month, and you also know the loan number the bank uses
as Payee, you cant set this up ahead of time. You have to wait for the first
unmatched transaction to create the rule.
One commonly encountered need for a renaming rule is the downloaded
transaction you see when you remit taxes (especially payroll or sales tax) on the tax
authoritys website, using an ACH transfer from your bank account. For example, in
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Figure 16-10, a payroll liability transaction doesnt match the vendor name in the
company file.
Select the vendor to whom this transaction should be linked. QuickBooks
automatically fills in the account, based on your configuration settings for that
vendor, but you can change the account if necessary. When you click Add To
QuickBooks, the renaming rule is automatically saved.
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FIGURE 16-10 Create a naming rule by selecting the transaction in the left pane and selecting
the QuickBooks vendor name in the right pane.
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Managing Renaming Rules
You can view, edit, and delete renaming rules by clicking the Renaming Rules link
at the top right of the Online Banking Center or the Add Transactions To
QuickBooks window.
Ill 16-5
If downloaded transactions from a vendor have differing payee names for
individual transactions, you can create a special renaming rule instead of creating
multiple renaming rules for that vendor. For example, suppose you have monthly
auto-payments from a vendor that includes a unique internal reference as part of
the payee name on each transaction. (Some companies include the invoice number
of the invoice being paid by electronic transfer in the payee name.)
In the Renaming Rules window, specify the way you want QuickBooks to
examine the name, and enter the appropriate text in the name field. Then click
Save.
The following choices for creating a wildcard are available, and for each vendor
you should select the choice thats appropriate to the way the vendor names the
payee:
Begins With
Ends With
Contains (this is the default matching specification)
Exactly Matches
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Skipping Renaming Rules
You dont have to create or use a renaming rule for an unmatched transaction.
Ignoring this feature can be helpful if your unmatched downloaded payments
always fall into one of three categories:
The payee is your bank (service charge) or your credit card merchant bank (the
monthly sweep of your account to collect the fees). You dont really need to
track these payees as vendors; you dont create vendor reports for them and you
dont care if the vendor doesnt appear on the vendor list in the Vendor Center.
The only thing you care about is the account to which the transaction is posted
(which is where you can get a report on the totals posted).
The payee is one that changes the payee name with every payment. Its silly to
create a renaming rule for every downloaded name, because the payee name
wont ever appear again. Some debit card transactions include the name of the
store and the date in the payee name, some delivery/courier services add the
invoice number to the payee name, and so on and so on. These payee names,
because theyre based on a unique transaction, will never appear in the future;
therefore, theres no point in collecting a slew of renaming rules that will never
be used again.
To post a downloaded transaction without creating a renaming rule, merely fill in
the posting account in the Record An Expense dialog in the right pane of the Add
Transactions To QuickBooks window and click Add To QuickBooks. Later, you
can edit the transaction in the register to add a payee name, or you can leave the
transaction payee-less if its your bank, merchant card account, or another expense
you dont track by vendor.
Although youll have transactions in your bank register that have no payee name,
that omission doesnt interfere with keeping accurate books and getting the reports
you need. The reason this all works so efficiently is that QuickBooks only requires
two things to create a direct transaction (a direct transaction is one that isnt
posting to A/R or A/P):
An amount
An account
This makes perfect sense in terms of business bookkeeping, because sometimes
the only thing you care about for certain transactions is the posting account.
Deleting Unmatched Transactions
Sometimes the download file contains transactions that cant be matched. This
usually occurs when you dont download transactions frequently, and some of the
transactions you download have already been cleared during a reconciliation. (After
the first time you download transactions, QuickBooks omits cleared transactions.)
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You should delete these transactions; otherwise, theyll be there waiting for you
every time you download new transactions. Click the button labeled Select Items To
Delete at the bottom of the left pane. QuickBooks opens the Select Items To Delete
dialog, where you can get rid of the transactions you dont want to see again.
The top of the dialog offers two options:
Select Individual Transactions, which leaves the selection check boxes
unchecked until you manually click each box to delete its transaction.
Select All Download Transactions Older Than <Date>, which automatically
adds check marks to the check boxes of transactions that are older than the
specified date.
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Vendors and Renaming Rules for Credit Card
Downloads: Are They Necessary?
The QuickBooks support documentation (Help files or website articles) often explains the
advantage of creating renaming rules by using downloaded credit card transactions as
examples. For instance, suppose you use your credit card at your local famous gourmet coffee
shop? The downloaded transaction has a payee name similar to CoffeePlace 098, where 098
is the store number. The vendor CoffeePlace doesnt exist in your system (unless youve opened a
charge account at the store and they send you monthly bills). QuickBooks wants you to add the
vendor when you match the transactions to your credit card register.
A couple of days later you use your credit card at the same coffee chain, but a different store
(Store #876), and the downloaded transaction has a payee name like CoffeePlace 876, so you
create an alias for the vendor you created.
Given the fact that this chain may have six or seven stores between your house, your office,
and the local football stadium where you have season tickets, you can add a renaming rule for
each store as it appears in the credit card download file and eventually every downloaded
transaction will be matched with one of the rules.
Heres a question to ask yourself: Is it necessary to enter the coffee place as a vendor and
creating renaming rules? The credit card company is the vendor; you do not have a customer-
vendor relationship with the store that accepts your credit card. Adding the stores where you use
your credit card as vendors unnecessarily takes up a vendor slot (remember, except for the
Enterprise editions, QuickBooks permits a finite number of names in the Names lists). Unless
you have some reason to track these transactions by linking them to a vendor, enter the vendors
name in the Memo field, dont create the vendor or renaming rule.
FYI
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C A U T I O N : The Select Items To Delete dialog includes matched
transactions, so pay attention to the Status column to avoid deleting
transactions youve matched.
Paying Bills Online
With online bill payments, you save the costs of checks, envelopes, and stamps,
and, if you dont print checks in QuickBooks, you save the time and energy
required to write a check.
Today, most banks offer online bill payments either on their websites or by
supporting online bill payments directly through QuickBooks:
If your bank supports Direct Connect for QuickBooks and offers online bill
payment as part of its Direct Connect feature, you can enter checks in
QuickBooks and send them to your bank electronically via the Online Banking
Center.
If your bank supports Web Connect for QuickBooks (offering a download file
instead of interacting directly with your QuickBooks bank account register),
you can use your banks website online bill payment feature (if one exists).
If your bank doesnt support online payments of checks created in QuickBooks,
and you want to enter checks in QuickBooks and have them automatically
transfer to an electronic bill payment service, you can sign up for the
QuickBooks Bill Pay service (covered later in this chapter).
Some vendors (almost always large companies) accept payments via electronic
transfers. These vendors are registered in a database, and that database is checked
when an online payment is being processed. If the vendor is in the database, with
e-pay information, the online payment service electronically transfers the funds
directly into the vendors bank account instead of writing and mailing a check.
QuickBooks Bill Pay vs. Bank Website Bill Pay
If your bank supports bill payment through Direct Connect, you can enter checks
in QuickBooks (in the Pay Bills window or the Write Checks window) and mark
them as online bill payments so they are automatically uploaded to your bank.
Detailed instructions for performing this task appear later in this chapter in the
section, Paying Bills Online in QuickBooks.
Banks that support QuickBooks Direct Connect almost always also provide
website features for paying bills online. You can go to the banks website, create
online vendors, and initiate online checks to those vendors from the website.
If your bank offers both methods of paying bills online, you have to determine
whether you want to create your online payments in QuickBooks and upload them, or
go to the banks website, enter the payments, and then add themto your QuickBooks
file (either manually, or by adding themduring a direct connect download).
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Setup Processes are the Same for QuickBooks
and Bank Website Payments
For both methods, you have to set up the vendor for online payments. This means
the vendor information has to include the vendor name (the payee), address,
telephone number, and your account number with that vendor (in QuickBooks,
your account number is entered in the Additional Info tab of the vendor record).
For both methods, if the payee is registered in the database of e-pay recipients,
the online payment is automatically sent electronically instead of mailing a check.
The reason you have to provide your customer account number with the vendor
is that the payment the vendor receives doesnt come from you or your bank
account. It comes from the banks bank account. The payment includes your
customer account number so the vendor knows which account to credit with the
payment. (See the section, Following the Money Trail: How Online Payments
Work, later in this chapter for a complete explanation.)
Now that you know whats the same, lets look at whats different. You can decide
which of the differences are pros and which are cons as you decide how you want
to manage online payments.
Data Entry Considerations
Using QuickBooks means you only have to enter check data once. Using the banks
website means you enter the amount while youre connected to the bank, and then
you have to enter the check in QuickBooks (not as an online payment). If you fail
to enter the check in QuickBooks, you wont have an accurate running balance
until you download transactions and see the payment, and then youll have to enter
it in the bank register anyway, using the Add To QuickBooks function described
in the previous section of this chapter. If you dont add the transaction when its
downloaded, youll have to add it when your statement arrives or your reconciliation
fails. This is double work, but once the vendor exists in your QuickBooks file, you
only have to enter the date and amount when you duplicate the online transaction.
Elapsed Time Considerations
Using the banks website means the bank begins processing the payment almost
immediately (unless you configure the payment for a future date).
Using QuickBooks means a delay in processing because QuickBooks gives the
bank several days to process the payment and additional days to create and mail
the check. For example, if you enter a check dated July 27, as soon as you select
the Online Payment option QuickBooks changes the processing date to July 31
(which means the bank wont even look at the uploaded check until that date), and
changes the check date to August 3 (which is the date the bank will use to send the
payment).
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Paying Vendors Electronically
Many banks let you convert any payee youve created on the banks website to an
e-pay vendor, so you can transfer funds electronically for every transaction when
you use the banks website to create the online payment. To do this, you must
provide the bank with the vendors bank information (routing number, bank
account number, and bank account name). Most banks have a form for this.
QuickBooks only sends e-payments to vendors registered in the official e-pay
database.
In addition, many banks are equipped to handle ACH files for the transfer of
funds directly from your bank account to the bank accounts of all the payees in the
ACH file (this is the technology QuickBooks uses for payroll direct deposits).
N O T E : ACH stands for Automated Clearing House, which is a payment
transfer system that connects all financial institutions in the United States. The
ACH network is the central clearing facility for all Electronic Fund Transfer (EFT)
transactions. ACH transfer files are text files that contain all the information
required to move money from an account in one financial institution to an
account in another financial institution. The data in an ACH file must follow strict
rules about layout and formatting to ensure accuracy.
Following the Money Trail:
How Online Payments Work
When you send your own checks to vendors, the money isnt removed from your
bank account until the check is presented to your bank for payment by the payees
bank. This means the payee has received, endorsed, and deposited the check.
When you create an online payment (either in QuickBooks or on your banks
website), the money is immediately removed from your checking account and
placed into the banks checking account.
The bank sends the check to the payee, and after the vendor deposits it in its
own bank account, the check is sent to the banks checking account for payment
and clearance. No notification is sent to you when the check is presented for
payment.
When you download bank transactions, you see the deduction for the online
payment. However, unlike deductions you see for the checks you create and send,
this doesnt mean that the vendor has received and deposited your payment;
instead, it means the bank has moved the money from your account to its account.
N O T E : If you create an online payment that is an e-payment, the same
process applies; that is, the money is removed from your account before the
e-payment is transmitted.
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When you get your statement from the bank, you dont see physical checks or
pictures of checks (depending on the way your bank sends you checks with the
statement) that were online payments. Those checks are sent to, and retained by,
the bank (because its the banks checking account that processed the check).
N O T E : You can determine the current status of an online payment you
uploaded from QuickBooks by choosing Banking | Online Banking | Inquire About
Online Banking Payment. The message you see tells you whether the payment is
in process (which means the bank has it but has not yet created the check) or
has been processed (the check has been created and mailed). This information
does not tell you whether the check has been deposited by the payee, or whether
it has cleared the banks bank account.
Paying Bills Online in QuickBooks
You can pay your bills in QuickBooks, then use the Online Banking Center to send
the payments to the payees. You can either use your own bank (if it provides Direct
Connect and also offers QuickBooks online payments), or use the QuickBooks Bill
Pay service. In this section, when you see the word bank, you can mentally
substitute the QuickBooks Bill Pay service instead of your own bank, if thats
what youre using. (See the section, Using the QuickBooks Bill Pay Service, later
in this chapter.)
If the vendor is set up to receive electronic payments (the company appears in
the national e-pay database), the money is transferred directly from your bank
account to the vendors bank account. If the vendors account is not accessible for
online payments, your bank writes a check and mails it.
There are three methods for creating the transaction in QuickBooks, explained in
detail in this section.
Using the Write Checks Transaction
Form for Online Payments
If theres no bill in the system for this vendor and youre preparing a direct
disbursement in the Write Checks window, complete the check as usual, and then
select the option labeled Online Payment.
N O T E : If you have multiple bank accounts, you must select the bank
account thats enabled for online bill payments from the drop-down list in the
Bank Account field at the top of the Write Checks window. If the selected bank
account is not enabled for online bill payments, the Online Payment option
doesnt appear on the check form.
If you usually print checks, the To Be Printed option is preselected, and you
must deselect it by clicking the check box to remove the check mark in order to
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make the Online Payment check box available. As soon as you deselect the To Be
Printed option, QuickBooks inserts the next available check number in the No.
field.
When you select the Online Payment option, QuickBooks displays a message
about the date of your check. Remember, the processing date (when the bank is
notified of the transaction) is delayed, and the check date (when the check is
actually mailed) is delayed until after the processing date. (If the vendor is in the
national e-pay vendor database, the date is changed to three days from the current
date.)
When you click OK, QuickBooks makes the following changes to the Write
Checks window:
Displays a lightning bolt symbol in the top-left corner of the check.
Replaces the check number with the word SEND (later, when the payment is
sent to the bank from the Online Banking Center, the word SEND is replaced
with a check number that QuickBooks chooses).
Replaces the label on the Date field from Date to Delivery Date.
Replaces the label on the Memo from Memo to Transmit Memo and puts a
check box next to the field.
Places your account number with this vendor at the bottom of the check
(where the signature line would be for a regular check).
If you want to add a memo to the transaction, select the Transmit Memo check
box and enter the text you want to include on this check. If you use this option,
your payment can only be delivered as a voucher or stub attached to a physical
check. This means that your payment will not be made electronically if the vendor
is able to accept electronic payments. Instead, a check is sent, which delays the
payment.
Click Save & Close or Save & New (if you have another check to write) to save
the payment. QuickBooks displays a message telling you that youve created an
online payment that will appear in the Online Banking Center. (See the section
Uploading Online Payments to learn how to transfer the payment to your bank.)
Using the Pay Bills Window for Online Payments
If this vendor has a bill in your system, you must use the Pay Bills function to
create the payment, not the Write Checks transaction. Select the appropriate bill,
and then choose Online Bank Pmt from the drop-down list in the Payment Method
field.
N O T E : If you have multiple bank accounts, you must select the bank
account thats enabled for online bill payments from the Payment Account field at
the bottom of the Pay Bills window. If the selected bank account is not enabled
for online bill payments, the Online Bank Pmt option doesnt appear in the
Payment Method drop-down list.
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When you choose the online payment option, QuickBooks automatically
changes the date in the Payment Date field at the bottom of the window as
described earlier for the Write Checks window.
When you click Pay Selected Bills, QuickBooks displays the usual Payment
Summary dialog message, where your payment is noted as an online bank payment.
(See the section Uploading Online Payments to learn how to transfer the payment
to your bank.)
Using the Bank Register for Online Payments
You can use the register for the bank account you use for online payments instead
of the Write Checks transaction form to create an online payment.
Follow these steps to create an online payment:
Open the register and go to the next blank line to create the payment.
The Date field has the current date, which you should accept.
Press TAB to move to the Number field and enter the text SEND.
Finish filling out the check information and click Record.
QuickBooks displays a message telling you that youve created an online payment.
Uploading Online Payments
To send your online payments to your bank, open the Online Banking Center
(choose Banking | Online Banking | Online Banking Center). In the Online Banking
Center window, you can see your payments in the Items Ready To Send section,
along with the request to download bank transactions.
You can performany of the following actions on the online payments that are listed:
Select the payment transaction type (Online Checks or Bill Payment, for
example) to view the payment transactions to be sent.
You can choose to edit the transaction or deselect it to prevent the payment
from being uploaded (you can select it for upload another time).
Select the payment and click Delete to remove the payment fromyour system
(clicking Delete doesnt just delete the payment fromthe upload, it deletes the
transaction fromyour company file). QuickBooks asks you to confirmyour action.
Click Send/Receive Transactions to begin uploading your payments along with
the request for a download transaction file.
Sending Electronic Messages to the Bank
If your bank supports Direct Connect, you can send a message to your bank by
choosing Banking | Online Banking | Create Online Banking Message. QuickBooks
opens the Online Banking Message transaction window where you can enter your
message.
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The message appears in the Online Banking Center in the list of items to be
uploaded.
Using the QuickBooks Bill Pay Service
If your bank doesnt participate in online bill payment services directly from
QuickBooks, and you want to pay your bills online using QuickBooks, you can sign
up for online payments directly with QuickBooks. This is a fee-based service.
From the Online Banking submenu, choose Participating Financial Institutions.
When the Financial Institutions list is displayed in your browser window, scroll
through the list to find QuickBooks Bill Pay Service in the left pane.
Youll see two listings:
QuickBooks Bill PayNew!, which is the listing you should select
QuickBooks Bill Pay-TM, which is the listing for existing customers of this
older service (for users of older versions of QuickBooks) and doesnt provide
online signup anymore
When you select QuickBooks Bill PayNew!, the right pane displays
information about this service (see Figure 16-11).
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FIGURE 16-11 If your bank doesnt offer online bill paying within QuickBooks, you can sign up
with QuickBooks Bill Pay.
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To sign up, click Apply Now. Follow the prompts and instructions to complete
the enrollment process. QuickBooks will send you the information you need to
begin using the service for online bill payments.
Transferring Money Between
Accounts Online
If you have multiple accounts at your financial institution, and the financial
institution uses Direct Connect, you can transfer money between those accounts
within QuickBooks. For example, you may have a money market account for your
business in addition to your checking account.
To transfer money online, you must have applied at your financial institution for
online banking for both accounts. Youll probably have a unique PINfor each account.
(To make your life less complicated, you should make changes while youre online to
ensure both accounts have the same PIN, so you dont inadvertently enter the wrong
PIN). In addition, you must have enabled both accounts for online access within
QuickBooks.
There are two methods you can use to transfer funds between online accounts:
the transfer funds function or direct data entry in the register for either account.
Using the Transfer Funds Function
The simplest way to move money between your online accounts is to use the
QuickBooks Transfer Funds Between Accounts window, which you reach by
choosing Banking | Transfer Funds from the menu bar.
Specify the sending and receiving accounts (remember, both must be enabled for
Direct Connect online access) and enter the amount you want to transfer. Be sure to
select the option for Online Funds Transfer. Click Save &Close. Then choose Banking |
Online Banking Center, make sure the transaction has a check mark, and click Go
Online.
Using the Bank Register to Transfer Funds
You can enter a transfer directly into the account register of the bank account from
which you are sending the money. The significant data entry is the one in the
Check Number column; instead of a check number, type the word SEND. Dont
enter a payee; enter the amount, and enter the receiving bank account in the
Account field. Then choose Banking | Online Banking | Online Banking Center,
make sure the transaction is listed in the Items To Send section and has a check
mark, and click Send/Receive Transactions.
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Receiving Customer Payments Online
Besides the online activities that permit you to track your own bank account
activity, transfer money, and pay your own bills, QuickBooks offers multiple ways
for your customers to pay you online.
QuickBooks Billing Solution
If you sign up for this service (for which additional fees apply), you can notify your
customers about this feature by e-mailing the invoice with the online service URL
in the cover note, or by snail-mailing the invoice and sending an e-mail message
with the online service URL. The customer clicks the link to the URL to travel to
the QuickBooks website and arrange for payment (usually by filling out a form with
a credit card numberthe site is secure).
QuickBooks notifies you when the payment is made, and you can download the
payment into your bank register using the standard online banking procedures. To
learn more about this service, select Company | Advanced Service Administration,
or to sign up, go to http://quickbooks.intuit.com/product/add_ons/getting_paid_
faster.jsp.
Electronic Check Processing
The Intuit Check Solution for QuickBooks is an add-on service that offers two ways
to process your customers checks electronically. With the first option, if you
receive a paper check from your customer for payment, you can scan it into
QuickBooks using a special scanning device (to use this option, youre required to
purchase one of two approved scanners: the high speed Panini My Vision X scanner
or the general-purpose Fujitsu ScanSnap s300/s1300 scanner). Scanning your check
will also save you a trip to the bank since, once scanned, the check is processed
electronically. An Internet connection on a Windows computer and at Internet
Explorer 7.0 or higher are required. Another option, which does not require a
scanner, is to take a check over the phone and key the check information into
QuickBooks. To learn more or sign up for this service, select Add Electronic Check
Processing from the Customers menu.
Accept Credit Cards
When you sign up for a QuickBooks Merchant account, you can process credit card
payment directly through QuickBooks and set up recurring charges customers from
whomyou accept regular payments from. To sign up or learn more about QuickBooks
Merchant Services, select Add Credit Card Processing from the Customers menu.
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Year-end Procedures
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Run reports on your financial condition
Print 1099 forms
Make year-end journal entries
Get ready for tax time
Close the books
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The end of the year brings with it several inevitable tasksand thats true for major
corporations as well as for small businesses. There is so much to do: so many reports
to examine, corrections to make, entries to create, adjustments to applywhew!
You can relax a bit. You dont have to show up at the office on January 1 (or the
first day of your new fiscal year if youre not on a calendar year). Everything doesnt
have to be accomplished immediately. QuickBooks is date-sensitive, so you can
continue to work in the new year. As long as the dates of new transactions are after
the last day of your fiscal year, the transactions wont work their way into your year-
end calculations.
Running Year-end Financial Repor ts
The standard financial reports you run at year-end provide a couple of services for
you:
You can see the economic health of your business.
You can examine the report to make sure everything is posted correctly before
you organize your financial information in preparation for preparing and
paying your taxes.
To run financial reports, click the Reports menu listing. For year-end reports,
youll need to access several types of reports (see Chapter 15 for information about
modifying and customizing the standard financial reports).
Dont forget that reports have date ranges like current year and last fiscal
year. If you perform these tasks before the end of your fiscal year, youre still in the
current year. However, if youre working after the last date of your fiscal year, the
current year isnt the year of interest.
Year-end P&L Report
Start with a Profit & Loss Standard report (also called an income statement), by
choosing Reports | Company & Financial | Profit & Loss Standard. When the report
opens, change the date range to the entire fiscal year (last year, if youre doing this
after your fiscal year-end date).
The report displays the year-end balances for all the income and expense
accounts in your general ledger that had any activity this year. Examine the report,
and if anything seems out of whack, double-click the line to see the postings for
that account. If the data you see doesnt reassure you, double-click any of the
posting lines to see the original transaction.
If theres a transaction that seems to be in error, you can take corrective action. You
cannot delete or void a bill you paid or a customer invoice for which you received
payment, of course. However, you might be able to talk to a customer or vendor for
whomyouve found a problemand work out a satisfactory arrangement for credits. Or
you may find that you posted an expense or income transaction to the wrong general
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ledger account. If so, make a journal entry to correct it (see Chapter 14 for information
on creating journal entries). Then run the year-end P&L report again and print it.
Year-end Balance Sheet
Your real financial health is demonstrated in your Balance Sheet. To run a year-end
balance sheet, choose Reports | Company & Financial | Balance Sheet Standard.
Whats more, your year-end Balance Sheet figures can lead to a list of chores.
Review your Balance Sheet and perform a reality check with the balances that
QuickBooks shows for your bank accounts, for example, with your banks records.
Do your accounts payable and accounts receivable need some housekeeping? Does
QuickBooks still show some open customer invoices or vendor bills that youre sure
have been paid?
Issuing 1099 Forms
If any vendors are eligible for 1099 forms, you need to print and mail the forms to
them. First, make sure your 1099 setup is correct by choosing Edit | Preferences
and selecting the Tax: 1099 icon. Click Company Preferences to see your settings
(see Figure 17-1).
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FIGURE 17-1 Make sure your 1099 options are configured correctly.
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Check the latest IRS rules and make any changes to the threshold amounts for
the categories you need. Also assign an account to each category for which youll be
issuing Form 1099 to vendors. You can assign multiple accounts to a 1099 category,
but you cannot assign any accounts to more than one 1099 category.
For example, if you have an expense account subcontractors and an expense
account outside consultants, both of the accounts can be linked to the same 1099
category (Nonemployee Compensation). However, once you link those accounts to
that category, you cannot use those same accounts in any other 1099 category.
To assign a single account to a category, click the category to select it. Click the
text in the Account column (it probably says None), and then click the arrow to
select the account for this category.
To assign multiple accounts to a category, instead of selecting an account after
you click the arrow, choose the Multiple Accounts option (at the top of the list). In
the Select Account dialog, click each account to put a check mark next to its listing.
Click OK to assign all the accounts you checked. Then click OK to close the
Preferences dialog.
Run a 1099 Report
Before you print the forms, you should print a report on your 1099 vendors. To do
this, choose Reports | Vendors & Payables and select one of the following 1099
reports:
1099 Summary, which lists each vendor eligible for a 1099 with the total
amount paid to the vendor.
1099 Detail, which lists each transaction for each vendor eligible for a 1099.
You can make adjustments to the original transactions, if necessary, to make
sure your 1099 vendors have the right totals. For example, if you mistakenly
posted a subcontractors payment to an expense account not linked to the 1099
setup, change the account (dont change the amount or the link to a customer/
class if that data exists).
Print 1099 Forms
To print the 1099 forms, choose Vendors | Print 1099s/1096. QuickBooks opens a
wizard that walks you through the process to make sure every step is covered and
every amount is correct (see Figure 17-2).
This isnt a standard wizard, because you dont walk through a series of windows.
Instead, as you check each item in the window, QuickBooks opens the appropriate
system window so you can check and, if necessary, change the data. When you
close the window, youre returned to the wizard window.
When all the data is correct, click Print 1099s in the wizard window. The wizard
asks you to confirm the year for which youre printing (usually youre performing
this task in January of the next year).
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Click OK to move to the Select 1099s To Print dialog. QuickBooks displays the
vendors for whom you should be printing 1099s.
Ill 17-1
Click Preview 1099 to see what the form will look like when it prints. Zoom in
to make sure your company name, address, and EIN number are correct, and also
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FIGURE 17-2 The 1099 and 1096 Wizard makes it easy to issue end-of-year forms to 1099
vendors.
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check the vendors information. Click Close on the Print Preview window to return
to the Select 1099s window.
Then load the 1099 forms into your printer and click Print 1099. If youre using
a laser or inkjet printer, set the number of copies at three. Dot matrix printers use
three-part forms.
When the forms are printed, click Print 1096 in the Select 1099s To Print dialog.
Enter the name of the contact person in your company that can answer questions
about these forms (the name is printed on the 1096 form). Print two copies of the
1096, so you have one for your files.
Send each vendor a copy of his or her 1099 by January 31. Send the government
a copy of each 1099, along with a 1096 Transmittal Form.
Making Year-end Journal Entries
Your accountant may want you to make some journal entries before you close your
books for the year:
Depreciation entries
Prior retained earnings moved to a different account or retained earnings
moved to owner or partner equity accounts
Any adjustments needed for cash versus accrual reporting (these are usually
reversed on the first day of the next fiscal year)
Adjustment of prepaid expenses from asset accounts to expense accounts
N O T E : See Chapter 14 for detailed information about creating journal
entries.
You can send the P&L and Balance Sheet reports to your accountant by
exporting the reports to Excel. Ask your accountant for journal entry instructions.
You can also send your accountant an accountants copy of your company data
and let your accountant make the journal entries. You import the changes when the
review copy is returned. (See Chapter 15 to learn how to use the Accountants Copy
feature.)
Running Tax Repor ts
Most small businesses turn over the tax preparation chores to their accountants,
but some business owners prepare their own taxes manually or by using a tax
software program like TurboTax.
No matter which method you choose for tax preparation, you should run
the reports that tell you whether your QuickBooks data files are ready for tax
preparation. Is all the necessary data entered? Do the bottom-line numbers call
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for some special tax planning or special tax considerations? Even if your taxes are
prepared by your accountant, the more organized your records are, the less time the
accountant spends on your return (which makes your bill from the accountant
smaller).
Check Tax Line Information
If youre going to do your own taxes, every account in your chart of accounts that is
tax related must have the right tax form in the accounts tax line assignment. To see
if any tax line assignments are missing, choose Reports | Accountant & Taxes |
Income Tax Preparation. When the report appears, all your accounts are listed,
along with the tax form assigned to each account. If you created your own chart of
accounts, instead of accepting a chart of accounts during company setup, the
number of accounts that lack a tax form assignment is likely to be quite large.
Before you can prepare your own taxes, you must edit each account to add the
tax information. To do so, open the chart of accounts and select an account. Press
CTRL-E to edit the account and select a tax form from the Tax-Line Mapping drop-
down list.
Your selections vary depending upon the organizational type of your company
(proprietorship, partnership, S corp, C corp, and so on).
N O T E : Be sure the Income Tax Form Used field is filled out properly on your
Company Information dialog (on the Company menu). If its blank, you wont see
the tax information fields on any accounts.
Calculate Other Important Tax Information
There are some taxable numbers that arent available through the normal
QuickBooks reports. One of the most common is the report on company officer
compensation if your business is incorporated.
If your business is a C corporation, you file tax form 1120, while a Subchapter S
corporation files tax form 1120S. Both of these forms require you to separate
compensation for corporate officers from the other employee compensation. You
have to calculate those totals from payroll reports (either QuickBooks payroll or an
outside payroll service).
You can avoid the need to calculate this by creating a separate Payroll item called
Officer Compensation and assigning it to its own account (which youll also have
to create). Then open the Employee card for each officer and change the Earnings
item to the new item. Do this for next year; its probably too late for this years end-
of-year process.
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Using TurboTax
If you purchase TurboTax to do your taxes, you dont have to do anything special in
QuickBooks to transfer the information. Open TurboTax and tell it to import your
QuickBooks company file.
Almost everything you need is transferred to TurboTax. There are some details
youll have to enter directly into TurboTax (for example, home-office expenses for a
Schedule C form). You can learn more about TurboTax at www.turbotax.com.
Closing Your Books
After all the year-end reports have been run, any necessary journal entries have
been entered, and your taxes have been filed (and paid), its traditional to go
through the exercise of closing the books. Typically, closing the books occurs some
time after the end of the fiscal year, usually within the first couple of months of the
next fiscal year, as soon as your business tax forms have been filed.
The exercise of closing the books is performed to lock the books, so no user can
add, remove, or change any transactions. After taxes have been filed based on the
information in the system, nothing should ever be changed. Its too late. This is it.
The information is etched in stone.
Understanding Closing in QuickBooks
QuickBooks doesnt use the traditional accounting software closing procedures. In
most other business accounting software, closing the year means you cannot post
transactions to any date in that year, nor can you manipulate any transactions in the
closed year. Closing the books in QuickBooks does not set the information in cement;
it can be changed and/or deleted by users with the appropriate permissions.
QuickBooks does not require you to close the books in order to keep working in the
software. You can work forever, year after year, without performing a closing process.
However, many QuickBooks users prefer to lock a years transactions as a way to
prevent any changes to the data except by users with the appropriate permissions.
Closing the Year
In QuickBooks, you close the year by entering a closing date. This inherently does
nothing more than lock users out of the previous years transactions. At the same
time, you can configure user rights to enable or disable a users ability to see or
manipulate closed transactions.
Follow these steps to enter a closing date:
Choose Edit | Preferences to open the Preferences dialog.
Click the Accounting icon.
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Select the Company Preferences tab.
Click the Set Date/Password button to open the Set Closing Date And Password
dialog.
Enter the closing date, which is the last date of the prior fiscal year (see
Figure 17-3).
T I P : If your fiscal year is different from a calendar year, dont worry about
payroll. The payroll files and features (including 1099s) are locked into a
calendar year configuration, and closing your books doesnt have any effect on
your ability to work with payroll transactions.
Preventing Access to Closed Books
To prevent users from changing transactions in the closed year and to permit
certain users to access those transactions when needed, assign a password for
manipulating closed data. Click Set Date/Password and enter the password in the
Set Closing Date And Password dialog. Press TAB and enter it again in the Confirm
Password field.
C A U T I O N : If youve set up users and passwords for access to your
QuickBooks data file, only the QuickBooks administrator can set the closing date
and password.
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FIGURE 17-3 Entering the closing date is the first step in locking down the previous years
data.
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Creating a Year-end Backup
After all the numbers are checked, all the journal entries are made, and the books
have been closed by entering a closing date as described in the previous section, do
a separate backup in addition to your normal daily backup. Burn this backup to a
new, unused CD/DVD disk, label it Year-end Backup 2010, and put it in a safe
place. See Chapter 21 to learn about backing up your QuickBooks files.
Closing Date Exception Repor t
If you have discrepancies in the closing balances for a prior year, QuickBooks
Premier editions and Enterprise Solutions editions offer a Closing Date Exception
Report, which lists all transactions that were added or changed after the closing
date. (A transaction that was changed shows the date and amount of the modification,
as well as the date and amount of the original transaction.) If your QuickBooks
configuration includes user logins, the report displays the login name of the user
who created the transaction.
To view the Closing Date Exception Report, choose Reports | Accountant &
Taxes | Closing Date Exception Report. Any transactions that occurred after the
closing date appear in the report.
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Tracking Time
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ost service businesses sell time; its the most important commodity
they have. Even businesses that are product-based might need to
track time for employees or outside consultants.
Part Three of this book covers all the steps you need to take to set
your system up for tracking time with maximum efficiency and
accuracy.
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Using Time Tracking
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Configure time tracking
Fill out timesheets
Edit timesheets
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QuickBooks includes a time-tracking feature that lets you record the amount of
time you and your staff spend completing a project, working for a customer, or
working for your company (administrative tasks). You can use that information to
invoice customers for time.
In addition to tracking billable time, you can also use this information to analyze
your business. For example, if you charge retainer fees for your services, time
tracking is a terrific way to figure out which customers may need to have the
retainer amount raised.
Configuring Time Tracking
When you create a company in QuickBooks, one of the EasyStep Interview
windows queries you about your desire to track time. If you say yes, QuickBooks
turns on the time-tracking features. If you opt to skip time tracking, you can turn it
on later if you change your mind. In fact, if you turn it on, you can turn it off if you
find youre not using it.
If youre not sure whether you turned on time tracking when you installed your
company, choose Edit | Preferences from the QuickBooks menu bar. Select the
Time & Expenses icon and click the Company Preferences tab. Make sure the Yes
option is selected. The top section of the dialog contains the options for tracking
time. (The bottom section is concerned with invoicing for that time, and those
tasks are covered in other chapters in this book.)
Configuring Your Workweek
By default, QuickBooks assumes your workweek starts on Monday. However, if
your business is open every day of the week, you might want to use a Sunday-to-
Saturday pattern for tracking time.
If youre tracking time for employees and you plan to use the timesheets for
payroll, its a good idea to match the workweek to the week your pay period covers.
Of course, this only works if your pay periods are weekly.
Configuring Workers
You can track time for your employees, outside contractors, or yourself; however,
everybody who must keep track of his or her time has to exist in the system. In
addition, each person must fill out timesheets.
Tracking Employee Time
If youre running the QuickBooks payroll feature, you already have employees in
your QuickBooks system. You can track the time of any employee who fills out a
timesheet (timesheets are covered later in this chapter).
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You can also use the timesheet data to pay an employee, using the number of
hours reported in the time-tracking system to determine the number of hours for
which the employee is paid. For this to work, however, the employee must be
linked to his or her timesheet. This means you have to modify employee records to
link timesheets to paychecks.
Follow these steps to link employees to time tracking:
Open the Employee Center by choosing Employees | Employee Center.
Click the Employees tab to display the list of employees.
Double-click the listing of the employee you want to link to time tracking.
In the Change Tabs field at the top of the window, select Payroll And
Compensation Info from the drop-down list.
Select the Use Time Data To Create Paychecks check box (see Figure 18-1).
Click OK.
You dont have to link employees to time tracking in order for them to use the
timesheets to record their timethe time-tracking configuration for the employee
is required only if you want to create the paychecks automatically using timesheets.
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FIGURE 18-1 Link employees to time tracking if you want to use timesheets to prepare
paychecks.
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If you do link an employee to time tracking, while that employee is filling out
timesheets, a QuickBooks message may appear saying that the activity the employee
is reporting is not linked to an hourly rate. QuickBooks will report the rate at
$0.00/hour, which is fine (especially if your employees are on salary).
Tracking Vendor Time
Any vendor in your system who is paid for his or her time can have that time
tracked for the purpose of billing customers. Most of the time, these vendors are
outside contractors or subcontractors. You dont have to do anything to the vendor
record to effect time tracking; you merely need to record the time used as the
vendor sends bills.
Tracking Other Worker Time
You may need to track the time of people who are neither employees nor vendors.
The word employee means you have enabled do-it-yourself payroll in QuickBooks.
If you have employees but you dont use QuickBooks payroll, theyre not employees
to your QuickBooks software.
QuickBooks provides a system list called Other Names, and you can use this list
to collect names that dont fit in the other QuickBooks lists. Following are some
situations in which youll need to use the Other Names list:
You have employees and use QuickBooks payroll, but you are not an employee
because you take a draw instead of a paycheck. In this case, you must add your
name to the Other Names list if you want to track your own time.
You have employees and are not using QuickBooks payroll, so there is no
Employees list in your system. You must add each employee name to the Other
Names list to track employee time.
You have no employees and your business is a proprietorship or a partnership.
Owner or partner names must be entered into the Other Names list in order to
track time.
Configuring the Tasks
Most of the tasks you track already exist in your system as service items. These are
the items you use when you invoice customers for services. However, because you
can use time tracking to analyze the way people in your organization spend their
time, you may want to add service items that are relevant to noncustomer tasks.
For example, if you want to track the time people spend performing administrative
tasks for the business, you can add a service item called Administrative to your
items list. If you want to be more specific, you can name the particular administrative
tasks you want to track (for example, bookkeeping, equipment repair, new sales
calls, public relations, and so on).
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To enter new items, click the Items & Services icon on the Home page (or
choose Lists | Item List from the menu bar). When the Item List window opens,
press CTRL-N to open a new item form. Select Service as the item type (only service
items are tracked in timesheets) and name the new item. Here are some guidelines
for administrative items:
If youre specifying administrative tasks, create a service item named
Administration, and then make each specific administrative task a subitem of
Administration.
Dont put an amount in the Rate box. Youre not charging a customer for this
service, and you can calculate the amount youre paying the recipient when you
make the payment (via payroll or vendor checks).
Because QuickBooks insists that you assign an account to a service, choose or
create an innocuous revenue account (such as Other Revenue or Time Tracking
Revenue). Dont worry, no money is ever posted to the account because you
dont ever sell these services to customers.
The option to configure the item for subcontractors, owners, or partners isnt
important if youre creating a service for the purpose of tracking time, because
youre entering time on the timesheets; youre not entering amounts.
N O T E : When you actually pay a subcontractor, owner, or partner for work,
you must create specific accounts for those payments. For subcontractors, you
post payments to an expense account that is linked to your 1099 configuration
(covered in Chapter 17). For owners and partners, payments must be posted to a
draw account (which is an equity account).
Because time tracking can be linked to customers, in order to track
administrative work, you must also create a customer for the occasions when no
real customer is being tracked (those administrative tasks). The easiest way to do
that is to create a new customer to represent your company. For example, you may
want to create a customer named House or InHouse.
Configuring User Permissions
If youre using user and password features in QuickBooks, you must make sure
each user who uses timesheets has permission to do so. See Chapter 20 for detailed
information about setting user permissions.
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Using Timesheets
QuickBooks offers two methods for recording the time you spend on tasks: Single
Activity and Weekly Timesheet.
Single Activity is a form you use to enter what you did when you performed a
single task at a specific time on a specific date. For example, a Single Activity
form may record the fact that you made a telephone call on behalf of a
customer, you repaired some piece of equipment for a customer, or you
performed some administrative task for the company.
Weekly Timesheet is a form in which you indicate how much time and on
which date you performed work. Each Weekly Timesheet entry can also include
the name of the customer for whom the work was performed.
Your decision about which method to use really depends on the type of work
you do and how often you intend to generate customer invoices based on your
employees time.
T I P : When you fill out a Single Activity form, every time you open a Weekly
Timesheet form, any single activity within that week is automatically inserted into
the Weekly Timesheet.
Tracking a Single Activity
To track one event or task with a Single Activity form (see Figure 18-2), click the
Enter Time icon on the Home page and choose Time/Enter Single Activity from the
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FIGURE 18-2 Fill out the details to indicate how you spent your time.
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menu that appears, or choose Employees | Enter Time | Time/Enter Single Activity
from the menu bar. Use the guidelines in this section to fill out the form.
The Date field is automatically filled in with the current date. If this activity took
place previously, change the date.
Click the arrow to the right of the Name field and select the name of the person
who performed the work from the list that appears (usually, the person who is
filling out the form). The list contains vendors, employees, and names from the
Other Names list. (You can use <Add New> to add a new name.)
If this time was spent working on a task for a customer rather than performing
an administrative task, select the customer in the Customer:Job field. Do this
whether or not the customer is going to be billed for the time. If the task is specific
to a job, select the job instead of the customer.
In the Service Item field, select the task, and in the Duration box, enter the
amount of time youre reporting, using the format hh:mm.
If this time is billable to the customer, the Billable check box should be marked
(it is by default). If the time is not going to be billed to the customer, click the box
to remove the check mark.
If the Payroll Item field appears, select the payroll item that applies to this time
(for example, salary or hourly wages). This field appears only if the name (in the
Name field) is an employee, and the employee record has been linked to the time-
tracking system (explained earlier in this chapter).
Use the Notes box to enter any comments or additional information you want to
record about this activity.
When you finish creating the activity, click Save & New to fill out another Single
Activity form, or click Save & Close to finish.
N O T E : If an employee is not configured for using time data to create
paychecks, QuickBooks asks if youd like to change that configuration. If the
employee is just tracking time for job-costing purposes and is not paid from
these timesheets, click No.
Using the Stopwatch
You can let QuickBooks track the time youre spending on a specific task. Click the
Start button in the Duration box of the Activity window when you begin the task.
QuickBooks tracks hours and minutes as they elapse.
To pause the counting when youre interrupted, click Pause.
To pick up where you left off, click Start.
To stop timing, click Stop. The elapsed time is displayed.
You can set the format for reporting time, both on the activity sheet and in the
stopwatch window. Some companies prefer the hh:mm format; others prefer a
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decimal format (such as 1.5 hours). To establish a default based on your preference,
choose Edit | Preferences and click the General category. Then select the Company
Preferences tab and use the options in the Time Format section of the dialog to
select the appropriate format.
Ill 18-1
Using Weekly Timesheets
A Weekly Timesheet records the same information as the Single Activity form,
except that the information is recorded in week-at-a-time blocks. To use this form,
click the Enter Time icon on the Home page, and choose Use Weekly Timesheet (or
choose Employees | Enter Time | Use Weekly Timesheet from the menu bar). The
Weekly Timesheet window opens (see Figure 18-3).
Follow these steps to fill out the timesheet:
Select your name from the list that appears when you click the arrow to the
right of the Name field. (If youre filling out a timesheet for a subcontractor
who reported time to you, select the subcontractors name.)
If you want to enter time for a different week, click the calendar button and
enter the first day of any week for which you want to enter activities. (The first
day of your company workweek is set in Edit | Preferences | Time & Expenses,
as explained earlier in this chapter.)
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Click in the Customer:Job column to display an arrow that you click to see the
Customer List. Select the customer connected to the activity (or select the in-
house listing if youre performing administrative work unconnected to a
customer).
Enter the service item that describes your activity.
If youre an employee whose paycheck is linked to your timesheets, select the
Payroll Item that fits the activity. If your name is attached to the Other Names
or Vendor List, or youre an employee who is not paid from the timesheets, you
wont see a Payroll Item column.
In the Notes column, enter any comments you feel are necessary.
Click the column that represents the day for which you are entering this
activity and enter the number of hours worked on this task. Repeat for each day
that you performed this activity. If youre linking the activity to a customer, all
the days you indicate must be for this activity for this customer.
Move to the beginning of the next row to enter the next timesheet entry
(a different activity, or the same activity for a different customer), repeating
until youve accounted for your time for the week.
For each row, indicate whether the time is billable in the rightmost column.
By default, all time entries linked to a customer are billable. Deselect the
Billable check box if the time on this row is not billable.
Click Save & New to use a timesheet for a different week, or click Save & Close
if youre finished entering time.
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FIGURE 18-3 You may find it easier to enter information on a weekly basis.
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Copying Previous Timesheets
You can copy the previous weeks timesheet by clicking the Copy Last Sheet button
after you enter the current date in the timesheet window and select a name. This is
useful for employees who have similar timesheet data every week, a description that
frequently applies to your office staff. Because many staff tasks arent charged
against a customer or job, the timesheet may be identical from week to week. For
many staff employees, the only entry is the administrative service you created for
in-house work, and the only customer is your own company. The only reason to fill
in the data is to make sure every hour worked is transferred to the payroll data.
T I P : If timesheets are similar, but not identical, from week to week, its
efficient to copy the previous weeks timesheet and then make adjustments.
Repor ting Timesheet Information
Before you use the information on the timesheets to bill customers or pay workers,
check the data on the timesheet reports. You can view and customize reports, edit
information, and print the original timesheets.
Running Timesheet Reports
To run reports on timesheets, choose Reports | Jobs, Time & Mileage. Youll see a
long list of available reports, but the following reports provide information on time
tracking:
Time By Job Summary Reports the amount of time spent for each service on
your customers and their jobs.
Time By Job Detail Reports the details of the time spent for each customer
and job, including dates and whether or not the time was marked as billable
(see Figure 18-4). A billing status of Unbilled indicates the time is billable but
hasnt yet been transferred to a customer invoice.
Time By Name Reports the amount of time each user tracked.
Time By Item Provides a quick analysis of the amount of time spent
performing services your company is providing and to whom.
If youve made it a practice to encourage people to enter comments in the Notes
section of the timesheet, you should customize the report format so it includes
those comments. You can do this only in the Time By Job Detail report, which you
must modify to select Notes in the Columns list
To make sure you always see the notes, you should memorize this report. Click
the Memorize button on the report button bar to open the Memorize Report dialog,
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and enter a name for the report (such as Time by Job with Notes). Hereafter, it will
be available in the Memorized Reports list.
Editing Entries in a Report
While youre browsing the report, you can double-click an activity listing to see the
original entry, an example of which is seen in Figure 18-5. You can make changes in
the original entry, such as selecting or deselecting the billable option or changing
the note field by adding a note or editing the content of the existing note.
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FIGURE 18-4 Generate a report to check everything before billing customers or entering payroll
information.
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If you make changes, when you click Save & Close to return to the report
window, QuickBooks displays a message asking whether you want to refresh the
report to accommodate the changes. Click Yes to see the new, accurate information
in the report. In fact, its a good idea to select the option to stop asking you the
question, because any time you make changes in transactions that you accessed
from a report window, you want to see the effect on the report.
Editing the Original Timesheets
Before you use the timesheets for customer billing or payroll, make sure you
examine them and make any needed corrections. In fact, you may want to take this
step before you view any of the Time reports.
The most common revision is the billable status. If you have outside contractors
or employees filling out timesheets, its not unusual to have some confusion about
which customers receive direct time billings. In fact, you may have customers to
whom you send direct time bills only for certain activities and provide the
remaining activities as part of your basic services.
To check timesheets, just open a new weekly timesheet (choose Employees |
Enter Time | Use Weekly Timesheet from the menu bar). Enter the name of the
person connected to the timesheet you want to inspect. Use the Previous or Next
arrow at the top of the timesheet window, or click the calendar button to the right
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FIGURE 18-5 You can open any entry listed on the report to view the details.
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of the Week Of field to move to the timesheet you want to inspect. Then edit the
information as necessary:
You can change the number of hours for any activity item.
Click the check box in the Billable column (the last column) to reverse the
current status (its a toggle).
To view (and edit if necessary) any notes, first click in any of the weekday
columns to activate the Edit Single Activity icon at the top of the timesheet
window. Click that icon to see the entry as a single activity, with the entire note
available for viewing or editing.
C A U T I O N : If youve already used the timesheet data to create an invoice
for the customer or to pay the employee, the changes you make are useless. Its
too late. Customer invoices and payroll records are not updated with your edits.
Printing the Weekly Timesheets
Its a common practice to have employees print their Weekly Timesheets and deliver
themto the appropriate management people. Usually that means your payroll person
(or the person who phones in the payroll if you use an outside payroll service) or a
personnel manager. However, instead of having each user be responsible for handing
in the timesheet, its a good idea to designate someone (such as your payroll manager)
to performthis task. That way, all the timesheets are printed and available in a timely
manner.
To print timesheets, choose File | Print Forms | Timesheets from the QuickBooks
menu bar to open the Select Timesheets To Print window shown in Figure 18-6.
Change the date range to match the timesheets you want to print.
By default, all timesheets are selected. To remove a timesheet, select its listing
and click the column with the check mark to deselect that listing. You can click
Select None to deselect all listings, then select one or more specific users.
To see any notes in their entirety, select the Print Full Activity Notes option.
Otherwise, the default selection to print only the first line of any note is
empowered.
The Select Timesheets To Print dialog has a Preview button, and clicking it
displays a print preview of the selected timesheets. If you click the Print button in
the Preview window, the timesheets are sent to the printer immediately, giving you
no opportunity to change the printer or any printing options. Clicking the Close
button in the Preview window returns you to the Select Timesheets To Print dialog,
where clicking OK brings up the Print Timesheets dialog. Here you can change the
printer or printing options. You should change the number of copies to print to
match the number of people to whom youre distributing the timesheets.
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One thing you should notice about printed (or previewed) timesheets is the last
column, which indicates the billing status. The entries are codes, as follows:
B Billable but not yet invoiced to the customer
N Not billable
D Billable and already invoiced to the customer
After youve configured QuickBooks to track time, you can create customer
invoices for billable time. Chapter 3 explains how to create invoices, and Chapter 6
covers the functions available for invoicing reimbursable expenses and time
charges.
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FIGURE 18-6 Print the timesheets for every person who tracks time.
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C
h
a
p
t
e
r
1
9
Using Timesheets for
Payroll Job Costing
I
n this chapter:
Configure payroll from timesheets
Configure services and reports for job costing
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When you turn on time tracking (covered in Chapter 18), you can connect it to
your QuickBooks payroll functions. You just move the information about each
employees time into the employees paycheck. In addition to speeding up the
process of creating paychecks, this means you can improve job costing by tracking
your payroll expenses against jobs.
Setting Up Payroll Data
If you want to link employee time to payroll or job costing, you must configure
your QuickBooks system for those features.
Configuring the Employee Record
To link an employee to time tracking, select the time-tracking option on the Payroll
Info tab of the employee record.
Follow these steps to link an employee to time tracking:
Open the Employee Center by clicking the Employees icon on the left side of
the Home page, or by clicking the Employee Center icon on the toolbar.
Select the Employees tab to display the Employee list.
Double-click the listing for an employee you want to link to time tracking (or
select the listing and click the Edit Employee button in the right pane).
In the Change Tabs drop-down list, choose Payroll And Compensation Info.
Select the option Use Time Data To Create Paychecks.
Click OK to close the employee record and return to the Employee list.
Opting to link paychecks to time-tracking data doesnt mean that the employees
paycheck is absolutely and irrevocably linked to the employees timesheets. It
means only that when you prepare paychecks, QuickBooks checks timesheets
before presenting the employees paycheck form. You have total control over the
final hours and pay rate for the paycheck.
For hourly workers, if the employees payroll information includes the hourly
rate (and, optionally, the overtime hourly rate), that information is automatically
inserted in that employees timesheet.
If you havent configured the employees hourly rate during the data entry
process in the timesheet, QuickBooks displays a message that no hourly rate exists,
so the system will use a rate of $0.00. You can enter a rate when youre creating
paychecks, or you can go through the employee information and set a rate for each
hourly worker.
For salaried workers, the QuickBooks message about the lack of an hourly rate
isnt fixable. In fact, while the link to time tracking is advantageous for creating
paychecks for hourly workers, the only reason to link salaried employees to time
tracking is to track job costing.
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Configuring Payroll Preferences for Job Costing
If your time tracking is just as important for job-costing analysis as it is for making
payroll easier, you can configure your payroll reporting for that purpose.
Follow these steps to configure payroll preferences:
Choose Edit | Preferences from the menu bar.
Click the Payroll &Employees icon, and then click the Company Preferences tab.
At the bottom of the window (see Figure 19-1), be sure the option Job Costing,
Class And Item Tracking For Paycheck Expenses is selected. (QuickBooks
preselects the option as the default setting.)
If youre using classes, specify the way to assign a class (see the next section,
Using Classes for Payroll Job Costing).
Click OK to save your preferences.
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FIGURE 19-1 Configure QuickBooks to track payroll for job costing and class tracking.
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Using Classes for Payroll Job Costing
If youve established classes, you may be able to use those classes for the payroll
expenses youre tracking as part of your job costing. The class feature wont work
for payroll unless your classes match the available options in the Payroll &
Employees Preferences dialog. QuickBooks makes the following choices available:
Entire Paycheck Means you assign a class to all payroll expenses on a check
(including company-paid taxes) instead of assigning a class to individual
payroll items.
Earnings Item Means you can assign a class to each payroll item (in the
Earnings section of the paycheck) thats used in the paycheck.
If your classes provide a tidy way to fit each employee into a class, the entire
paycheck option will work. For example, if you have branch offices, each of which
is a class, you can assign the paychecks according to the location of the employee.
If your classes divide your company by the products or services you provide, then
youll have to track classes by payroll earnings items to produce useful reports.
Using Timesheets Efficiently
If your employees only keep timesheets to indicate the billable work they do, thats
not going to do much to automate the payroll process. Few employees fill every
hour of their workday with billable activity, and youll have to fill in the remaining
information manually when you create the paycheck.
Create at least one payroll item to cover nonbillable work. You can call it
Administration, In-Office, or any other designation. The customer attached to
this work is your own company (create a customer named InHouse or
something similar).
Make sure employees account for every hour of the day and every day of the
week.
Have employees fill in days for sick pay or vacation pay on their timesheets.
Those items are probably already part of your payroll items.
Running Payroll with Timesheet Data
When its time to run the payroll, you can use the data fromthe timesheets to create
the paychecks. Choose Employees | Pay Employees | Scheduled or Unscheduled
Payroll to open the Enter Payroll Information window, which displays the number
of hours that employees accounted for in their timesheets (see Figure 19-2). If the
timesheet data that is transferred to the paycheck doesnt account for all the time the
employee is entitled to, youll have to fill in the hours by adding administrative items.
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Follow these steps to fill in the hours on a paycheck:
Select the employee in the Enter Payroll Information window by clicking in the
check mark column to enter a check mark next to the name.
Click Open Paycheck Detail.
Click the Item Name column in the Earnings section, and enter a nonbillable
(administrative) payroll item.
In the Rate column, enter this employees pay rate.
In the Hours column, enter the number of hours needed to complete this
employees workweek.
Click Save & Close.
Changes you make in the payroll window are not updated on the timesheet. If
you want accurate historical timesheets to match against this payroll run in the
future, exit the payroll window, open the timesheets, and fill them in. Then start the
payroll run again. Chapter 8 has all the information you need to create paychecks.
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FIGURE 19-2 Paychecks are created automatically for employees who fill out time sheets
properly.
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Running Payroll Repor ts
for Cost Information
When you use time tracking, you can see reports on your payroll expenses as they
relate to customers and jobs. One of the most comprehensive is the Payroll
Transaction Detail report. To get to it, choose Reports | Employees & Payroll |
Payroll Transaction Detail. When the Payroll Transaction Detail report appears,
enter the date range you want to examine.
This report may even contain more information than you really need, but the
customer and job data is there. By clicking the Modify Report button, you can start
customizing the report.
Follow these steps to customize the Payroll Transaction Detail report:
On the Display tab, make the following changes in the Columns section:
Deselect the Wage Base column, because its not important.
Make sure both Name (the customer) and Source Name (the employee) are
selected.
Change the way the data is sorted by clicking the arrow next to the Sort By text
box and selecting a different category. Sorting by Name and Source Name and
are both useful views.
Click the Filters tab, and in the Filter list, select Payroll Item.
Click the arrow to the right of the Payroll Item field and choose Multiple
Payroll Items.
Select the payroll items you want to track for customers and jobs (Salary,
Hourly Rate, and Overtime Hourly Rate can be particularly useful).
Click OK twice to return to the report window with its new configuration (see
Figure 19-3).
Click the Memorize button to make this configuration permanent, giving it a
name that reminds you of why you need the report (for example, Payroll Job
Costing).
You can use the Sort By drop-down list on the report to change the Sort By
selection every time you use the memorized report, to see totals by employee
(Source Name) or totals by customer (Name).
Use similar customization steps to create a payroll report that sorts each
employees payroll expense by class (see Figure 19-4):
In the Columns list, select Class (and, if you wish, eliminate Name).
In the Filters list, select Payroll Items as described above.
N O T E : When you create a P&L by Class report, you see your payroll
expenses totaled on a class basis.
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FIGURE 19-3 This customized report presents a quick view of payroll job costs.
FIGURE 19-4 This report presents class information for employee payroll costs.
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P
a
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Managing QuickBooks
A
ll software needs TLC, and accounting software needs regular
maintenance to ensure its accuracy and usefulness.
In Part Four of this book, youll learn how to customize
QuickBooks so it works more efficiently. The chapters in Part Four
cover the features and tools you can use to make QuickBooks even
more powerful. In addition, youll learn how to maintain the file
system, create additional company files, and use QuickBooks in
network mode (so more than one person can work in QuickBooks at
the same time). This part also covers backing up your data, which is
perhaps the most important maintenance task.
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C
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Customizing
QuickBooks
I
n this chapter:
Configure preferences
Manage users
Create classes
Customize the QuickBooks window
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QuickBooks out of the box is set to run efficiently, providing powerful bookkeeping
tools that are easy to use. However, you may have specific requirements because of
the way you run your company, the way your accountant likes things done, or the
way you use your computer. No matter what your special requirements are, its likely
that QuickBooks can accommodate you.
Configuring Preferences
The preferences you establish in QuickBooks have a great impact on the way data is
kept and reported. Its not uncommon for QuickBooks users to change or tweak
these preferences periodically. In fact, the more you use QuickBooks and understand
the way it works, the more comfortable youll be about changing preferences.
You can reach the Preferences dialog by choosing Edit | Preferences from the
QuickBooks menu bar. When the dialog opens the first time, the General category
is selected (see Figure 20-1). However, if youve used the Preferences dialog previously,
it opens to the category you were using when you closed the window.
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FIGURE 20-1 Configure QuickBooks to work the way you prefer.
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Each category in the Preferences dialog is accessed by clicking the appropriate
icon in the left pane. No matter which category you view, you see two tabs: My
Preferences and Company Preferences.
The My Preferences tab is where you configure your preferences as a QuickBooks
user. Each user you create in QuickBooks can set his or her own preferences.
QuickBooks will apply the correct preferences as each user logs into the
software. (Many categories lack options in this tab.)
The Company Preferences tab is the place to configure the way the QuickBooks
accounting features work for the current company, regardless of which user
logs in. You must be logged into QuickBooks as the QuickBooks administrator
to make changes in the Company Preferences tab.
As you select options and move from one category of the Preferences window to
another, youll be asked whether you want to save the changes in the section you
just left.
General Preferences
Since the Preferences dialog starts us in the General section, lets begin there.
Setting My Preferences for the General Category
The My Preferences tab of the General category offers a number of options you can
select. Theyre all designed to let you control the way QuickBooks behaves while
youre working in transaction windows.
Pressing Enter Moves Between Fields
This option exists for people who constantly forget that the default (normal, usual)
key for moving from field to field in Windows software is the TAB key. Of course,
when they press ENTER instead of TAB, the record theyre working on is saved even
though they havent finished filling out all the fields. Rather than force you to get
used to the way Windows works, QuickBooks lets you change the procedure.
Automatically Open Drop-down Lists When Typing
This is a handy option thats used when youre making selections from drop-down
lists. When you begin typing the first few letters of the listing you need, the drop-
down list appears and you move to the first listing that matches the characters you
typed.
Beep When Recording A Transaction
If you dont want to hear sound effects as you work in QuickBooks, you can deselect
the option. On the other hand, you can configure the sounds so that some actions
produce sound effects and other actions dont. You can even specify which sound
you want for the actions that youve configured to play sounds. To learn how to
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change the sound schemes, see the section Desktop View Preferences, later in this
chapter.
Automatically Place Decimal Point
This is a handy feature once you get used to it. When you enter monetary characters
in a field, a decimal point is placed automatically to the left of the last two digits
when you enable this feature. Therefore, if you type 5421, when you move to the
next field the number changes to 54.21. If you want to type in even dollar amounts,
type a period after you enter 54, and QuickBooks will automatically add two zeros
to the right of the period (or you can enter the zeros, as in 5400, which automatically
becomes 54.00).
Warn When Editing A Transaction
This option, which is selected by default, tells QuickBooks to flash a warning
message when you change any transaction and try to close the transaction window
without explicitly saving the changed transaction. This means you have a chance
to abandon the edits. If you deselect the option, the edited transaction is saved as
changed, unless it is linked to other transactions (in which case, the warning
message explaining that problem appears).
Bring Back All One Time Messages
One-time messages are those informational dialogs that include a Dont Show This
Message Again option. If youve selected the Dont Show option, select this check
box to see those messages again (and you can once again select the Dont Show
option for those messages you dont need).
Turn Of f Pop-up Messages For Products And Services
Selecting this option stops pop-up messages from QuickBooks that are connected to
products and services available from Intuit. For example, when creating checks,
Intuit displays a pop-up message explaining that you can buy checks at the Intuit
Marketplace.
Show ToolTips For Clipped Text
This option (enabled by default) means that if there is more text in a field than you
can see, hovering your mouse over the field causes the entire block of text to display.
Very handy!
Warn When Deleting A Transaction Or Unused List Item
When selected, this option produces a warning when you delete a transaction or
a list entry that has not been used in a transactionits a standard message asking
you to confirm your action.
If you try to delete an item or a name that has ever been used in a transaction,
QuickBooks wont permit you to complete the deletion.
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Automatically Recall Information
Select the option Automatically Remember Account Or Transaction Information to
have QuickBooks prefill the data for a transaction. Enabling this option tells
QuickBooks to prefill information in a transaction window, based on previous
transactions for the same name. If this option is enabled, you can choose either of
the suboptions:
Automatically Recall Last Transaction For This Name, which duplicates the
information in the last transaction. This preference works with bills, checks,
credit card charges, invoices, and sales receipts.
Pre-Fill Accounts For Vendor Based On Past Entries, which examines the history
of transactions for the current vendor. If the same information appears in all or
most of the historical transactions, QuickBooks autofills the transaction window
(same as the previous option). If historical transactions differ, QuickBooks does
not prefill the transaction window, saving you the trouble of removing the data if
it doesnt match this transaction.
T I P : In addition to these memory tricks that QuickBooks provides for
creating transactions, you can prefill accounts for vendors right in the vendor
record, which is a really nifty feature. See Chapter 2 for details.
Default Date To Use For New Transactions
Use this option to tell QuickBooks whether you want the Date field to show the
current date or the date of the last transaction you entered, when you open a
transaction window. If you frequently enter transactions for the same date over a
period of several days (for example, you start preparing invoices on the 27th of the
month, but the invoice date is the last day of the month), select the option to use
the last entered date so you can just keep going.
Keep Custom Item Information
When Changing Item In Transactions
The selection you make for this option determines what QuickBooks does when you
change the description text or the price for an itemyou insert in a sales transaction
form, and then change the item. For example, you select an itemnamed Widget, and
then in the Description field, you type text to describe this widget, changing the
default description that displayed when you selected the item. Or, perhaps the item
had no default description, and you entered text to correct that omission. Then, you
realize that you didnt really mean to sell the customer a Widget, you meant a Gadget,
and the descriptive text you just typed was meant for the itemnamed Gadget (which
you thought youd selected in the Itemcolumn). You return to the Itemcolumn (on
the same line), click the arrow to see your itemlist, and select Gadget. Now, you
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think you have to type all that descriptive text again, because Gadget has its own
descriptive text, and it will automatically replace your work.
This option prevents that work going to waste. If you select Always, QuickBooks
will keep the descriptive text you wrote, even though you changed the item. This
descriptive text is linked to this different item only for this invoice; no changes are
made to any items record.
If you select Never, QuickBooks just fills in the description that goes with the
new item you selected.
If you select Ask, as soon as you change the item, QuickBooks asks if you want
to change only the item and keep your customized description on the invoice. You
can answer Yes (or No), and you can also tell QuickBooks to change this Preferences
option permanently to match your answer.
The same thing happens if you entered a different price (instead of, or in
addition to, the description), and then changed the item.
Setting Company Preferences for the General Section
The Company Preferences tab in the General section has four choices, explained
here.
Time Format Select a format for entering time, choosing between decimal (for
example, 11.5 hours) or minutes (11:30).
Always Show Years As 4 Digits If you prefer to display the year with four digits
(01/01/2010 instead of 01/01/10), select this option.
Never Update Name Information When Saving Transactions By default,
QuickBooks asks if you want to update the original information for a name when
you change it during a transaction entry. For example, if youre entering a vendor
bill and you change the address, QuickBooks offers to make that change back on
the vendor record. If you dont want to be offered this opportunity and want the
record to remain as is, select this option.
Save Transactions Before Printing The rule that a transaction must be saved
before its printed is a security device. This thwarts one of the most often used
employee schemes to purloin products (employees print an invoice and packing
slip to have products shipped to friends or relatives and no record exists if the
software doesnt insist on saving first). Almost all accounting software provides this
safeguard, but QuickBooks permits you to turn off this option.
Accounting Preferences
Click the Accounting icon on the left pane of the Preferences dialog to move to the
Accounting category. The My Preferences tab offers the option Autofill Memo In
General Journal Entry, which means that the text you enter in the Memo column of
a GJE is repeated on every line of the transaction.
The Company Preferences tab has a number of options, as seen in Figure 20-2.
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Use Account Numbers
Choose this option if you want to use numbers for your chart of accounts in addition
to names. Chapter 2 has detailed information about using account numbers.
Show Lowest Subaccount Only
This option, which is available only if you use account numbers, is useful because it
means that when you see an account number in a drop-down list (in a transaction
window), you only see the subaccount. If the option is not selected, you see the
parent account followed by the subaccount, and since the field display doesnt show
the entire text unless you scroll through it, its hard to determine which account has
been selected.
Require Accounts
When enabled, this option means that every item and transaction you create in
QuickBooks has to be assigned to an account. If you disable this option, transaction
amounts that arent manually assigned to an account are posted to Uncategorized
Income or Uncategorized Expense. Its almost impossible to produce a tax return or
a report that analyzes your business if you dont post transactions to accounts.
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FIGURE 20-2 Set basic configuration options for performing all those accounting tasks.
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Use Class Tracking
This option turns on the Class feature for your QuickBooks system (which is
discussed later in this chapter in the section Configuring Classes). The Prompt
To Assign Classes suboption for this setting is to have QuickBooks prompt you to
fill in the Class field whenever you close a transaction window without doing so.
Automatically Assign General Journal Entry Number
With this option selected, every time you create a general journal entry,
QuickBooks automatically assigns the next available number to it.
Warn When Posting A Transaction To Retained Earnings
By default, QuickBooks issues a warning if you use the Retained Earnings account
in a general journal entry. It doesnt stop you from performing this action; it just
issues a warning.
Date Warnings
Having QuickBooks warn you if a date is 90 days in the past or 30 days in the
future is a good way to avoid problems due to typos. The wrong date on a
transaction has a big impact on your financial reports.
Closing Date
Enabling this option lets you set a password-protected closing date for your
QuickBooks data file. Once you set the date and create a password, users cant
manipulate any transactions that are dated on or before the closing date unless they
know the password. See Chapter 17 to learn about closing your company file.
Bills Preferences
In the Bills category, you have the opportunity to set options for the way you enter
and pay vendor bills. If you get discounts for timely payment (usually only offered
in manufacturing and distribution companies), you can tell QuickBooks to take
them automatically. Be sure to enter the account in which you post those discounts.
Checking Preferences
This category has options in both the My Preferences and Company Preferences tabs.
On the My Preferences tab you can select default bank accounts for different types of
transactions. You can skip these options if you only have one bank account.
The Company Preferences tab (see Figure 20-3) offers several options concerned
with check printing, which are described in the following paragraphs.
Print Account Names On Voucher
This option is useful only if you print your checks and the check forms you
purchase have vouchers (stubs). If so, selecting this option means that the text
on the stub will display posting accounts.
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Change Check Date When Check Is Printed
Selecting this option means that at the time you print checks, the current date
becomes the check date. If you dont select this option, the check date you specified
when you filled out the check window is used (even if that date has already passed).
Star t With Payee Field On Check
Enabling this option forces your cursor to the Payee field when you first bring up
the Write Checks window. If the option is not enabled, the Bank Account field is
the first active field. If you always write checks from one specific bank account,
enable the option to save yourself the inconvenience of pressing TAB.
Warn About Duplicate Check Numbers
This option means that QuickBooks will warn you if a check number youre filling
in already exists.
Autofill Payee Account Number In Check Memo
Most vendors maintain an account number for their customers, and your account
number can be automatically printed when you print checks. In order for this to
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FIGURE 20-3 Specify default settings to make working in QuickBooks more efficient.
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occur, you must fill in your account number in the Vendor card (on the Additional
Information tab). The printout appears on the lower-left section of the check.
Select Default Accounts To Use
You can set the default bank accounts for different types of payroll transactions.
Then, when you print these checks, you dont have to select the bank account from
a drop-down list in the transaction window.
Online Banking
If you use Online Banking you can choose how you want to view and enter
transactions. Side-by-Side mode allows you to see, in one window, your account
balances and the transactions that need to be processed and categorized. If you
select Register Mode, the work of processing and categorizing your transactions
happens while in a register view. This is the method used in QuickBooks 2008 and
earlier versions.
Desktop View Preferences
This is where you design the way the QuickBooks window looks. The My Preferences
tab (see Figure 20-4) contains basic configuration options.
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FIGURE 20-4 Configure the look and behavior of the QuickBooks window.
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In the View section, you can specify whether you always want to see one
QuickBooks window at a time or view multiple windows.
Choose One Window to limit the QuickBooks screen to showing one window
at a time, even if you have multiple windows open. The windows are stacked
atop each other, and only the top window is visible (you cannot resize any
window). To switch between multiple windows, use the Window menu.
Choose Multiple Windows to make it possible to view multiple windows on
your screen. Selecting this option activates the arrangement commands on the
Window menu item, which allow you to stack or arrange windows so that more
than one window is visible at a time.
In the Desktop section, you can specify what QuickBooks should do when you
close the company file, choosing among the following options:
Save When Closing Company Means that the state of the desktop is
remembered when you close the company (or exit QuickBooks). Whatever
QuickBooks windows were open when you left will reappear when you return.
You can pick up where you left off. If you select the option Show Home Page
When Opening A Company File, that option overrides this option, so if you
close the company file after closing the Home page, the Home page appears on
top of any open windows when you open the company file.
Save Current Desktop Displays the desktop as it is at this moment every
time you open QuickBooks. Select this option after youve opened or closed the
QuickBooks windows you want to see when you start the software. If you select
the option Show Home Page When Opening A Company File, that option
overrides this option if you close the Home page.
Dont Save The Desktop Tells QuickBooks to display an empty QuickBooks
desktop (unless you enable the Show Home Page When Opening A Company
File option) when you open this company file or when you start QuickBooks
again after using this company file. The desktop isnt really emptythe menu
bar, Icon Bar, and any other navigation bars are on the desktop, but no
transaction or list windows are open.
Keep Previously Saved Desktop Available only when you select Save Current
Desktop, this option tells QuickBooks to display the desktop as it was the last
time you used the Save Current Desktop option.
Show Home Page When Opening A Company File Tells QuickBooks to
display the Home page when you open the company file. When this option is
selected, the option to display the Coach works (select Show Coach Window
And Features).
Show Coach Window And Features If youre new to QuickBooks and want some
extra help learning how to navigate the programand use the features available to
you, consider turning on the QuickBooks Coach. When you become a more
experienced user, you can return to this preference page and turn this option off.
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Show Live Community Tells QuickBooks to open a Help File window with a
tab named Live Community whenever you open a company file. The Live
Community tab has links to a QuickBooks user forum (see the sidebar on Live
Community), and displays forum messages connected to the current open
QuickBooks window. You can also open the Live Community window at any
time by selecting the Live Community command from the Help menu.
Detach The Help Menu Select this option if you want the QuickBooks Help
menu to open as a separate, floating window that you can move to any part of
your screen rather than attached to the window that youre currently working in.
In the Color Scheme section, you can select a scheme from the drop-down list.
In addition, buttons are available to configure Windows Settings for Display and
Sounds. Clicking either button opens the associated applet in your Windows
Control Panel. The display and sounds configuration options you change affect
your computer and all your software, not just QuickBooks.
In the Company Preferences tab, you can customize the contents of the Home
page. If you want to add an icon on the home page for a particular feature (such as
Estimates), this tab shows you whether that feature has been enabled in your
company file. If the feature hasnt been enabled, click the features name to open its
category in the Preferences dialog. Turn the feature on (which adds the features
icon to the Home page), and then click the Desktop View icon to return to this
window.
Finance Charge Preferences
Click the Finance Charge icon (which has only Company Preferences available) to
enable/disable and configure finance charges. Finance charges can get complicated,
so read the complete discussion about this topic in Chapter 5.
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QuickBooks Live Community
The QuickBooks Live Community is a user forum where QuickBooks users can ask questions and
get answers from other users (and sometimes from Intuit experts). You can read all the questions
and answers without joining the community, but if you want to post a question or answer, you
must join. Joining is free, and all you have to do is provide a user name and your e-mail address.
FYI
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Integrated Applications Preferences
You can let third-party software have access to the data in your QuickBooks files.
Click the Integrated Applications icon and move to the Company Preferences tab to
specify the way QuickBooks works with other software programs. You can give
permission to access all data, no data, or some data.
Items & Inventory Preferences
The Company Preferences tab for this category has configuration options for
managing inventory (see Figure 20-5).
Inventory And Purchase Orders Are Active
Select this option to tell QuickBooks that you want to enable the inventory features;
purchase orders are automatically enabled with that action, but using POs is optional.
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FIGURE 20-5 Set up inventory management options.
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Warn About Duplicate Purchase Order Numbers
When this option is enabled, any attempt to issue a purchase order with a PO
number that already exists will generate a warning.
Calculating Quantity Available
If some units of an inventory item are on sales orders, you can choose to have
QuickBooks take those orders into consideration when calculating the quantity
available as you create a sales transaction. If you disable this option, QuickBooks will
report the physical quantity on hand (QOH) when you create an invoice or a sales
receipt (and the person who created the sales order may be out of luck when its
time to turn the sales order into an invoice and ship the product). An additional
option to take the quantity needed for pending builds into consideration appears in the
following Premier/Enterprise editions:
Accountant
Manufacturing & Wholesale
Retail
Warn If Not Enough Inventory To Sell
This option turns on the warning feature that is useful during customer invoicing.
If you sell ten widgets but your stock of widgets is fewer than ten, QuickBooks
displays a message telling you theres insufficient stock to fill the order. You can still
complete the invoiceits just a message, not a functional limitationbut you
should order more widgets immediately.
You can enable warning messages about insufficient quantity, and also choose the
scenario that kicks off a warning. If you select the option to be warned when the
quantity on hand is insufficient, QuickBooks counts the number of items in stock.
If you select the option to be warned when the quantity available is insufficient,
QuickBooks uses the guidelines you set for calculations (whether to consider sales
orders or pending builds) to determine the quantity available for sale.
Configuring Units of Measure
Units of measure (U/M) is a feature that lets you set up a system of buying goods in
one manner, and selling them in a different manner. For example, you may buy
items by the case and sell each item as an individual unit. Information on setting up
and using units of measure is in Chapter 10.
Jobs & Estimates Preferences
Use the Company Preferences tab to configure the way your estimates and invoices
work, as shown in Figure 20-6. The options are self-explanatory. Read Chapter 3 to
learn about creating estimates and invoices.
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Multiple Currencies Preferences
This is where you enable the ability to do business in multiple currencies (see
Chapter 2 for an overview of this new feature). The available options are Yes and
No, but if you select Yes, QuickBooks prompts you to make a backup of your
company file before finalizing your decision.
Ill 20-1
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FIGURE 20-6 Set up and configure estimates.
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Even if youre sure you want to work in multiple currencies in QuickBooks,
make a backup, and use a name for the backup file that indicates what youre doing
(such as <Company Name>PreMulticurrency.QBB). Then, if you decide you dont
want to use this feature, you can restore your backup file and proceed as before.
Payments Preferences
Use these preferences to learn more about or to sign up for one of three Intuit
Payment Solutions: Credit Card Processing, Paper Check Processing, and Electronic
Check Processing. In the Receive Payments section, youll find three options.
Automatically Apply Payments
This option tells QuickBooks to apply payments automatically to open invoices.
If the payment amount is an exact match for an open invoice, it is applied to that
invoice. If the payment amount is smaller than any open invoice, QuickBooks
applies the payment to the oldest invoice. If the payment amount is larger than any
open invoice, QuickBooks applies payments, starting with the oldest invoice, until
the payment amount is used up.
Without this option, you must manually apply each payment to an invoice.
Thats not as onerous as it may sound, and in fact, is quite common because the
customers check almost always indicates the invoice the customer wants to pay
(even if the check doesnt cover the entire amount of that invoice). Sometimes
customers dont mark the invoice number on the check and instead enclose a copy
of the invoice in the envelope. Read Chapter 4 to learn about receiving and
applying customer payments.
Automatically Calculate Payments
When this option is enabled, you can begin selecting invoices to pay in the Receive
Payment window before entering the amount of the customers payment check.
When youve finished selecting invoices, either paying them entirely or applying a
partial payment, the amounts youve applied should equal the amount of the check
you received.
This is efficient if a customer has many invoices (some of which may have
credits or may have an amount in dispute) and has attached instructions about the
way to apply the checks.
Use Undeposited Funds As A Default Deposit To Account
Selecting this option automates the process of depositing all cash received into the
Undeposited Funds account. If the option isnt selected, each cash receipt
transaction window (customer payment and sales receipt) offers the choice of
depositing the cash into a bank account or into the Undeposited Funds account.
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Payroll & Employees Preferences
Use the Company Preferences tab of this category to set all the configuration
options for payroll. Read Chapter 8 to understand the selections in this dialog.
Reminders Preferences
The Reminders category of the Preferences dialog has options on both tabs. The My
Preferences tab has one option, which turns on the Reminders feature. When the
Reminders feature is enabled, QuickBooks displays a Reminders list when you open
a company file.
The Company Preferences tab enumerates the available reminders, and you can
select the ones you want to use (see Figure 20-7).
For each reminder, decide whether you want to see a summary (just a listing and
the total amount of money involved), a complete detailed list, or nothing at all. You
can also determine the amount of lead time you want for your reminders.
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N O T E : If you choose Show Summary, the Reminders List window has an
Expand All button you can click to see the details.
Reports & Graphs Preferences
This is another section of the Preferences window that has choices on both tabs, so
you can set your own user preferences and then set those options that affect the
current company.
The My Preferences tab configures performance issues for reports and graphs, as
described here.
Prompt Me To Modify Repor t Options
Before Opening A Repor t
If you find that almost every time you select a report you have to customize it, you
can tell QuickBooks to open the Modify Report window whenever a report is
brought to the screen. If you find this feature useful, click the check box next to
Prompt Me To Modify Report Options Before Opening A Report.
Repor ts and Graphs Settings
While youre viewing a report or a graph, you can make changes to the format, the
filters, or to the data behind it (by opening the appropriate transaction window and
changing data). Most of the time, QuickBooks automatically changes the report/
graph to match the changes. However, if there is anything else going on (perhaps
youre also online, or youre in a network environment and other users are
manipulating data thats in your report or graph), QuickBooks may not make
changes automatically. The reason for the shutdown of automatic refreshing is to
keep your computer running as quickly and efficiently as possible. At that point,
QuickBooks has to make a decision about when and how to refresh the report or
graph. You must give QuickBooks the parameters for making the decision to refresh.
Choose Prompt Me To Refresh to see a message asking you whether you want
to refresh the report or the graph after youve made changes to the data behind
it. When the reminder appears, you can click Yes to refresh the data in the
report.
Choose Refresh Automatically if want up-to-the-second data, and dont want to
bother to click the Refresh button. If you work with QuickBooks across a
network, this could slow down your work a bit because whenever any user
makes a change to data thats used in the report/graph, it will refresh itself.
Choose Dont Refresh if you want to decide for yourself, without any reminder
from QuickBooks, when to click the Refresh button on the report window.
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Graphs Only
Give QuickBooks instructions about creating your graphs, as follows:
Choose Draw Graphs In 2D (Faster) to have graphs displayed in two dimensions
instead of three. This doesnt impair your ability to see trends at a glance; its
just not as high-tech. The main reason to consider this option is that the 2-D
graph takes less time to draw on your screen.
Choose Use Patterns to draw the various elements in your graphs with black-
and-white patterns instead of colors. For example, one pie wedge may be
striped, another speckled. This is handy if you print your graphs to a black-
and-white printer.
Move to the Company Preferences tab of the Reports & Graphs category to set
company preferences for reports (see Figure 20-8).
Summary Repor ts Basis
Specify whether you want to see summary reports as accrual-based or cash-based.
Youre only setting the default specification here, and you can always change the
basis in the Modify Report dialog when you actually display the report.
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FIGURE 20-8 Set the default options for reports.
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Aging Repor ts
Specify whether you want to generate A/R and A/P aging reports using the due date
or the transaction date.
Repor tsShow Accounts By
Specify whether you want reports to display account names, account descriptions,
or both.
Setting Repor t Format Defaults
You can set the default formatting for reports by clicking the Format button and
making changes to the default configuration options for parts of reports that arent
data related but instead control the look of the reports. Use this feature if you find
yourself making the same modifications to the formats over and over. See Chapter 15
for information on creating and customizing reports.
Configuring the Cash Flow Repor t
A cash flow report is really a complicated document, and before the days of accounting
software, accountants spent many hours creating such a report (and charged a lot of
money for doing so). QuickBooks has configured a cash flow report format that is used
to produce the cash flow reports available in the list of Company &Financial reports.
You can view the format by clicking the Classify Cash button, but you shouldnt
mess around with the selections in the window that appears until you check with
your accountant. You can learn about cash flow reports in Chapter 15.
Sales & Customers Preferences
You can set options in the Sales & Customers category on both the My Preferences
and Company Preferences tabs.
On the My Preferences tab, set the options for invoicing customers for reimbursable
expenses and billable time.
Prompt For Time/Costs To Add
Choosing this option tells QuickBooks to open a dialog that displays the current
reimbursable expenses whenever you create an invoice or sales receipt for a
customer with outstanding reimbursable costs. This is the option to select if you
always (or almost always) collect reimbursable costs from customers.
Dont Add Any
Selecting this option prevents the automatic display of any dialogs about reimbursable
expenses when you create a sales transaction. Choose this option if you rarely
(or never) seek reimbursement from your customers. If you do want to collect
reimbursable expenses during invoice creation, you can click the Add Time/Costs
button on the sales transaction form.
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Ask What To Do
Select this option to tell QuickBooks to ask you what you want to do whenever you
create a sales transaction for a customer with outstanding reimbursable costs.
Depending on your selection in that dialog (discussed in the next section), you can
add the costs to the sales transaction or omit them. You can learn how to bill
customers for expenses and time in Chapter 6.
On the Company Preferences tab, set the default options for sales transactions as
described next.
Usual Shipping Method
Use this to set the default shipping method, if you use the same shipping method
most of the time. This saves you the trouble of making a selection from the drop-
down list unless youre changing the shipper for a particular invoice.
Usual FOB
Set the FOB language for invoices. FOB (Free On Board) is the location from which
shipping is determined to be the customers responsibility. This means more than
just paying for freight; its a statement that says, At this point you have become the
owner of this product. The side effects include assigning responsibility if goods are
lost, damaged, or stolen. FOB settings have no impact on your financial records.
(Dont let the size of the text box fool you; youre limited to 13 characters.)
Warn About Duplicate Invoice Numbers
This option tells QuickBooks to warn you if youre creating an invoice with an
invoice number thats already in use.
Choose Template For Invoice Packing Slip
Select a default packing slip to use when you print packing slips. If youve created
customized packing slips, you can make one of them the default.
Use Price Levels
This option turns on the Price Level feature, which is explained in Chapter 2.
Sales Orders
Use this section of the dialog to turn on the sales orders feature. Once enabled, you
can opt to be warned about duplicate sales order numbers and specify whether zero
amounts on sales orders are transferred to the invoice you create by converting the
sales order. You can learn about creating sales orders and converting them into
invoices in Chapter 3.
Dont Print Items With Zero Amounts
When Conver ting To An Invoice
When creating an invoice from a sales order, select this check box if you dont want
line items that have zero amounts to print on your invoices.
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Choose Templates for Sales Order Documents
Specify the templates you want to use to print a packing slip and a pick list.
Sales Tax Preferences
If you collect sales tax, you must set your sales tax options. These options are easy
to configure because most of the selections are predefined by state tax laws and
state tax report rules. Check with your accountant and read the information that
came with your state sales tax license. For more information about managing sales
taxes (a very complicated issue in many states), see Chapter 7.
Send Forms Preferences
If you send transactions to customers via e-mail, the My Preferences tab offers the
opportunity to automatically select the To Be E-mailed option on a sales transaction
if the current customer is configured for e-mail as the preferred send method.
On the Company Preferences tab, you can design the message that accompanies
the e-mailed document.
Service Connection Preferences
If you use QuickBooks services on the Internet, use this category to specify the way
you want to connect to the Internet for those services.
The My Preferences tab contains options related to online banking if your bank
uses the Web Connect method of online access. (Chapter 16 has detailed information
about online banking services.)
Give Me The Option Of Saving A File Whenever I Download Web Connect
Data Select this option if you want QuickBooks to provide a choice to save
Web Connect data for later processing instead of automatically processing the
transactions. QuickBooks provides the choice by opening a dialog that lets you
choose whether to import the data immediately, or save it to a file so you can
import it later (you have to supply a filename). The QuickBooks dialog also
includes an option to reset this option. This option only works when you select
Open on the File Download dialog. If you disable this option, the data is
automatically imported into QuickBooks.
If QuickBooks Is Run By My Browser, Dont Close It After Web Connect Is
Done Selecting this option means that when QuickBooks is launched
automatically when you download Web Connect data from your Financial
Institution (after selecting Open on the Download dialog), QuickBooks remains
open after you process the data. If you deselect this option, QuickBooks closes
automatically as soon as your data is processed.
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The following connection options are available on the Company Preferences tab
(these dont apply to online banking or payroll services):
Automatically Connect Without Asking For A Password Lets all users log
into the QuickBooks Business Services network automatically.
Always Ask For A Password Before Connecting Forces users to enter a login
name and password in order to access QuickBooks Business Services.
Allow Background Downloading Of Service Messages Lets QuickBooks
check the Intuit website for updates and information periodically when youre
connected to the Internet.
Spelling Preferences
The Spelling section presents options only on the My Preferences tab. This is where you
control the way the QuickBooks spell checker works. You can instruct QuickBooks to
check spelling automatically before saving or printing any form. In addition, you can
specify those words you want the spelling checker to skip, such as Internet addresses,
numbers, and solid capital letters that probably indicate an abbreviation.
Tax:1099 Preferences
Use the Company Preferences window to establish the 1099 form options you need.
For each type of 1099 payment, you must assign an account from your chart of
accounts. See Chapter 17 for more information about configuring and issuing 1099
forms.
Time & Expenses Preferences
Use the Company Preferences tab to turn on Time Tracking and to tell QuickBooks
the first day of your workweek (which becomes the first day listed on your
timesheets). Read all about tracking time in Chapter 18.
Managing Users
Many businesses have multiple users accessing their QuickBooks company files.
You can have multiple users who access QuickBooks on the same computer (taking
turns using QuickBooks) or in a multi-user network environment.
Creating, Removing, and Changing User Information
The steps involved in setting up and managing users varies depending on whether
youre using the Premier or Enterprise Editions. When you want to create or modify
users in QuickBooks Premier, start by choosing Company | Set Up Users and Passwords
| Set Up Users. In Enterprise Solutions, choose Company | Users | Set Up Users and
Roles fromthe QuickBooks menu bar. You must be logged in to QuickBooks as the
administrator to manage all the user tasks.
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The administrator determines who can use the various features in QuickBooks,
adding, deleting, and configuring permissions for users. Its a good idea to leave the
administrators name as Admin. To password-protect the administrators login, move
to the Administrators Password box and enter a password. Enter the same password
in the Confirm Password box to confirm it. You wont see the text youre typing;
instead, the system shows asterisks as a security measure (in case someone is
watching over your shoulder). You dont have to use a password, but omitting this
step could put your QuickBooks files at risk because an intruder could examine or
manipulate your files.
T I P : Creating a challenge question can be a big help if you forget the
administrators password. Otherwise, you can call QuickBooks support and
arrange to have them recover the passwordfor a fee.
Creating a New User in the Premier Editions
To add a new user to the User list, choose Company | Set Up Users And Passwords |
Set Up Users from the QuickBooks menu bar. This opens the User List.
Follow these steps to create a user:
Select Add User.
Enter the user name, which is the name this user must type to log into
QuickBooks.
If you want to establish a password for this user (its optional), enter and
confirm the users password.
If you need to add a QuickBooks license to accommodate this new user, select
the option labeled Add This User To My QuickBooks License. (To see how
many licenses youve purchased, press F2 in QuickBooks and look for the
number of licenses in the upper left of the Information window. If you need
another license, choose Help | Manage My License, where youll find all the
utilities you need to purchase and synchronize your licenses.)
Click Next to set up the users access to QuickBooks features. The next section,
Setting User Permissions, gives you the details you need to decide the level of
access your QuickBooks users should have.
T I P : Make a note of all user passwords and keep that list in a secure
(hidden and locked) place. Inevitably, a user will come to you because he or she
cannot remember a password.
Setting User Permissions
When youre adding a new user or editing an existing user, the wizard walks you
through the steps for configuring the users permissions. Click Next on each wizard
window after youve supplied the necessary information.
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The first permissions window asks if you want this user to have access to
selected areas of QuickBooks or all areas. If you give the user full permission to do
everything, when you click Next, youre asked to confirm your decision, and theres
no further work to do in the wizard. Click Finish to return to the User List window.
N O T E : In Accountant Edition, you have the option to select External
Accountant in addition to the options for all or selected areas of QuickBooks.
An External Accountant automatically has full permissions to everything except
sensitive customer data (such as credit card information). Your accountant can
create this user when loading your company file into Accountant Edition, which
makes it easier to work on your file.
If you want to limit the users access to selected areas of QuickBooks, select that
option and click Next. The ensuing wizard windows take you through all the
QuickBooks features (Accounts Receivable, Check Writing, Payroll, and so on) so
you can establish permissions on a feature-by-feature basis for this user. You should
configure permissions for every component of QuickBooks. Any component not
configured is set as No Access for this user. For each QuickBooks component, you
can select one of the following permission options:
No Access The user is denied permission to open any windows in that
section of QuickBooks.
Full Access The user can open all windows and perform all tasks in that
section of QuickBooks.
Selective Access The user will be permitted to perform tasks as you see fit.
N O T E : With credit card protection enabled, when you set up users and give
them Full Access to the Sales And Accounts Receivable area, those users are
not given permission to view customer credit card information unless you
specifically select that option. Users who do not have permission to view credit
card information see only the last four numbers of the credit card when they
open the Payment Information tab of a customers record.
If you choose to give selective access permissions, youre asked to specify the
rights this user should have. Those rights vary slightly from component to
component, but generally youre asked to choose one of these permission levels:
Create transactions only
Create and print transactions
Create transactions and create reports
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T I P : You can select only one of the three levels, so if you need to give the
user rights to more than one of these choices, you must select Full Access
instead of configuring Selective Access.
Configuring Special Areas of QuickBooks
There are two wizard windows for setting permissions that are not directly related
to any specific area of the software: sensitive accounting activities and sensitive
financial reports.
Sensitive accounting activities are those tasks that arent directly related to
QuickBooks transactions, such as
Making changes to the chart of accounts
Manipulating the register for any balance sheet account
Using online banking
Transferring funds between banks
Reconciling bank accounts
Creating journal entries
Preparing an accountants review
Working with budgets
Sensitive financial reports are those reports that reveal important financial
information about your company, such as
Profit & Loss reports
Balance Sheet reports
Budget reports
Cash flow reports
Income tax reports
Trial balance reports
Audit trail reports
Configuring Rights for Existing Transactions
If a user has permissions for certain areas of QuickBooks, you can limit his or her
ability to manipulate existing transactions within those areas. This means the user
cant change or delete a transaction, even if he or she created it in the first place.
When you have finished configuring user permissions, the last wizard page
presents a list of the permissions youve granted and refused. If everything is
correct, click Finish. If theres something you want to change, use the Back button
to back up to the appropriate page.
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Deleting a User in Premier
If you want to remove a user from the User List, select the name and then click the
Delete User button. QuickBooks asks you to confirm your decision. You cant delete
the administrator.
Editing User Information
You can change the configuration options for any user. Select the user name in the
User List window and click Edit User. This launches a wizard similar to the Add
User Wizard, and you can change the user name, password, and access permissions.
Creating Users and Roles in Enterprise Solutions
Enterprise Solutions offers roles so you can set up users and define permissions
by assigning roles to them. Enterprise Solutions comes with 14 predefined roles.
You can use them as they are, or modify them to match your needs. You can even
copy an existing role, change the permissions, and give it a new name to create
your own new role. To create a new user in Enterprise Solutions, choose Company |
Users | Set Up Users And Roles from the Enterprise menu bar. This opens the Users
And Roles List.
Follow these steps to create a user:
Select New.
Enter the user name, which is the name this user must type to log into
QuickBooks.
If you want to establish a password for this user (its optional), enter and
confirm the users password.
Select one or more roles from the Available Roles list and then click the Add
button to assign that role to the user.
The roles concept makes it much easier to set up and maintain permissions for a
larger number of users. Users can be assigned multiple roles to make sure their
permissions match their tasks, and a single role can be assigned to multiple users to
reduce the effort of defining permissions. The following predefined roles are built
into Enterprise Solutions:
Accountant
Accounts Payable
Accounts Receivable
Admin
Banking
Finance
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Full Access
Inventory
Payroll Manager
Payroll Processor
Purchasing
Sales
Time Tracking
View-Only
The Role List Roles provide tighter security levels, which is necessary as
companies grow and have employees in more specialized roles. Its important to
be able to limit users access to only the areas they need to perform their job. The
increased permissions granularity in the Roles feature in Enterprise Solutions gives
you much more control over customized access levels for each employee, because
you can specify distinct access levels (view, create, modify, delete, print, and so on).
For example, a user could be given create and print access to sales orders, but view-
only access to invoices. You can use roles to control access to individual bank
accounts (for example, a user could be given access to the operating account but
not the payroll account).
To access the Role List, select Company | Users | Set Up Users And Roles. From
the Users And Roles List, select the Role List tab. Highlight each of the roles to
display a description of who the role is appropriate for. To view the specific default
permissions associated with a role, click the View Permission button, highlight that
role, and click Display. If youd like to edit the specific permissions associated with
a role, click the Edit button. This opens the Edit Role window, which shows the areas
in Enterprise Solutions this role has access to (see Figure 20-9 on the next page).
An empty circle indicates that this role does not have access to the indicated area
or activity, a partially filled circle indicates selective access to an area or activity, and
a completely shaded circle indicates full access. To see (and modify) the specific
activities within each area that are allowed with this role, click the plus sign to the
left of the area. Click OK to save your changes.
Summary of the QuickBooks
Credit Card Protection Feature
QuickBooks provides security functions for companies that store customer credit
card data in the company file. These functions are designed to meet the requirements
set by the payment card industry (PCI) that are known as Payment Application Best
Practices (PABP). If you configure your company file to meet the PABP security
standards, you can meet PCI requirements for the security standards required for
the handling and storage of credit card information.
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The QuickBooks credit card protection feature is designed to secure customer
credit card information with security safeguards that meet the Payment Application
Best Practices standards of the Payment Card Industries. The following basic
safeguards are implemented in QuickBooks:
All users who have permission to view full credit card detail in the customer
record must set up a complex password (see the section, Managing Complex
Passwords).
The password must be changed every 90 days. Users who dont change their
passwords cannot open the file. If the Admin fails to change his or her password,
the credit card protection feature is disabled (and you see messages about your
failure to comply with the rules set for businesses that accept credit cards).
Users cannot reuse any of the last four passwords.
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If a user enters an incorrect password three times (users sometimes guess
different passwords when they cant remember their password), the company
file closes for that user.
Only the user named Admin can configure the functions in this feature.
The QuickBooks credit card security audit log tracks all actions that involve
credit cards (including viewing customer credit card information).
Enabling Credit Card Protection
To enable the credit card protection feature, choose Company | Customer Credit
Card Protection. Select Enable Protection and follow the prompts to set up a
complex password (covered next) for the QuickBooks administrator. Any user
given permission to view or use customer credit card data will automatically be
forced to create a complex password the next time he or she logs into QuickBooks.
Managing Complex Passwords
Complex passwords (sometimes called strong passwords) are passwords that cant
easily be discovered by hacker software that uses permutations and combinations of
letters and numbers to break into password-protected files. This software plays the
odds that it can break the password.
The more complex a password is, the higher the odds are against breaking in.
For example, a password that contains seven characters and includes one uppercase
letter and six lowercase letters is harder to break than a password that is entirely
uppercase or lowercase (the odds are somewhere in the range of one in many
millions). When you mix numbers with letters, and at least one letter is in a
different case than the others, the odds grow even longer. If you add characters
(such as insisting on a password that is at least nine characters long), and insist that
at least two of those characters are numbers, and at least two of the letters are in a
different case than the other letters, the odds of breaking in grow to astronomical
levels (in the range of one in many billions).
Another hallmark of software (or an operating system) that requires strong
passwords is the requirement to change the password periodically, to limit access by
an intruder in case another person learns the current password.
Of course, the more complicated a password is, the harder it is to remember.
In fact, in a system that requires you to mix letters, numbers, and case and also
requires you to invent a new password periodically, its very difficult to remember
your password. Therefore, users write them down and store them. A note pinned to
a monitor or lying on a desk or placed in an unlocked desk draw that says, My
QuickBooks password MyNaMeisJoe99 is an obviously ludicrous way to make a
password secret and secure, but thats what happens in many businesses. Make it an
absolute rule that password notes have to be kept in a locked drawer.
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Configuring Classes
QuickBooks provides a feature called Class Tracking that permits you to group
items and transactions in a way that matches the kind of reporting you want to
perform. Think of this feature as a way to classify your business activities. To use
classes, you must enable the feature, which is listed in the Accounting section of
the Preferences window.
Some of the common reasons to configure classes include
Reporting by location if you have more than one office
Reporting by division or department
Reporting by business type (perhaps you have both retail and wholesale
businesses under your company umbrella)
You should use classes for a single purpose; otherwise, the feature wont work
properly. For example, you can use classes to separate your business into locations
or by type of business, but dont try to do both. If you need to further define a class
or narrow its definition, you can use subclasses.
When you enable classes, QuickBooks adds a Class field to transaction forms.
For each transaction or each line of any transaction, you can assign one of the
classes you created.
Creating a Class
To create a class, choose Lists | Class List from the QuickBooks menu bar to display
the Class List window. Remember that you must enable the feature in the Accounting
Preferences dialog to have access to the Class List menu item.
Press CTRL-N to add a new class. Fill in the name of the class in the New Class
window. Click Next to add another class, or click OK if you are finished.
T I P : Its a good idea to create a class called Other. This gives you a way to
sort reports in a logical fashion when a transaction has no link to one of your
real classes.
Creating a Subclass
Subclasses let you post transactions to specific subcategories of classes, and they
work similarly to subaccounts in your chart of accounts. If you set up a subclass,
you must post transactions only to the subclass, never to the parent class. However,
unlike the chart of accounts, classes have no option to force the display of only the
subclass when youre working in a transaction window. As a result, if youre using
subclasses you must keep the name of the parent class short, to lessen the need to
scroll through the field to see the entire class name.
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You create a subclass using the same steps required to create a class.
Follow these steps to create a subclass:
Choose Lists | Class List from the QuickBooks menu bar.
Press CTRL-N to open the New Class dialog box.
Enter a name for the subclass in the Class Name box.
Click the check box next to the option Subclass Of to insert a check mark.
Click the arrow next to the field at the bottom of the dialog and choose the
appropriate parent class from the drop-down list.
Editing, Deleting, and Merging Classes
You can change, remove, and merge classes right from the Class List window, which
you open by choosing Lists | Class List.
To edit a class, double-click the class listing you want to modify. You can enter a
new name, turn a parent class into a subclass, turn a subclass into a parent class, or
mark the class Inactive.
To delete a class, select its listing in the Class List window and press CTRL-D. If
the class has been used in transactions or has subclasses, QuickBooks wont let you
delete it. (If the problem is subclasses, delete the subclasses and then you can delete
the class.)
To merge two classes, start by editing the class you want to get rid of, which you
do by double-clicking its listing. Change the name to match the name of the class
you want to keep. QuickBooks displays a message telling you that the name is in
use and asking if you want to merge the classes. Clicking Yes tells QuickBooks to go
through all transactions that contain the now-removed class and replace the Class
field with the remaining class.
Using a Class in Transactions
When youre entering transactions, each transaction window provides a field for
entering the class. For example, the invoice form adds a Class field at the top (next
to the Customer:Job field) so you can assign the entire invoice to a class. However,
you can instead link a class to each line item of the invoice (if the line items require
links to separate classes).
Reporting by Class
There are two types of reports you can run for classes:
Individual class reports
Reports on all classes
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Repor ting on a Single Class
To report on a single class, open the Class list and select the class you want to
report on. Then press CTRL-Q to open a QuickReport on the class. When the Class
QuickReport appears, you can change the date range or customize the report as
needed.
Repor ting on All Classes
If you want to see one report in which all classes are used, open the Class list and
click the Reports button at the bottom of the list window. Choose Reports On All
Classes and then select either Profit & Loss By Class, Profit & Loss Unclassified, or
Graphs. The Graphs menu item offers a choice of an Income & Expenses graph or a
Budget Vs. Actual graph.
Profit & Loss By Class Repor t
The Profit & Loss By Class report is the same as a standard Profit & Loss report,
except that each class uses a separate column. The Totals column provides the
usual P&L information for your company. This report is also available on the
submenu under Reports | Company & Financial.
Profit & Loss Unclassified Repor t
This report displays P&L totals for transactions in which items were not assigned to
a class. You can drill down to the transactions and add the appropriate class to each
transaction. (This is likely to be a rather lengthy report if you enable class tracking
after youve already begun using QuickBooks.)
Graphs That Use Class Data
You can also display graphs for income and expenses sorted by class, or one that
compares budget versus actual figures sorted by class.
The Favorites Menu
The Favorites menu gives you the flexibility to list up to 30 of the QuickBooks
tasks and lists that you use most often, saving you from having to navigate to other
areas of the program to complete your daily tasks. To add menu items to your
Favorites menu, select Favorites | Customize Favorites from the QuickBooks menu.
The Customize Your Menus window opens, as shown in Figure 20-10.
Select a menu item then click the Add button to add it to your Favorites menu.
Click OK when you finish selecting items.
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Customizing the Icon Bar
QuickBooks put icons on the Icon Bar, but the icons QuickBooks chose may not
match the features you use most frequently. Putting your own icons on the Icon Bar
makes using QuickBooks easier and faster.
To customize the Icon Bar, choose View | Customize Icon Bar to open the
Customize Icon Bar dialog, which displays a list of the icons currently occupying
your Icon Bar.
Ill 20-2
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T I P : If you log into QuickBooks, either because a single computer is set
up for multiple users, or because youre using QuickBooks on a network, the
settings you establish are linked to your login name. You are not changing the
Icon Bar for other users.
Changing the Order of Icons
You can change the order in which icons appear on the Icon Bar. The list of icons in
the Customize Icon Bar dialog reads top to bottom, representing the left-to-right
display on the Icon Bar. Therefore, moving an icons listing up moves it to the left
on the Icon Bar (and vice versa).
To move an icon, click the small diamond to the left of the icons listing, hold
down the left mouse button, and drag the listing to a new position.
Changing the Icon Bar Display
You can change the way the icons display in several ways, which are covered in this
section.
Display Icons Without Title Text
By default, icons and text display on the Icon Bar. You can select Show Icons Only
to remove the title text under the icons. As a result, the icons are much smaller
(and you can fit more icons on the Icon Bar). Positioning your mouse pointer over
a small icon displays the icons description as a Tool Tip.
Change the Icons Graphic, Text, or Description
To change an individual icons appearance, select the icons listing and click Edit.
Then choose a different graphic (the currently selected graphic is enclosed in a
box), change the label (the title), or change the description (the Tool Tip text).
Separate Icons
You can insert a separator between two icons, which is an effective way to create
groups of icons (after you move icons into logical groups). The separator is a gray
vertical line. In the Customize Icon Bar dialog, select the icon that should appear
to the left of the separator bar and click Add Separator. QuickBooks inserts the
separator on the icon bar and (space) in the listing to indicate the location of
the separator.
Removing an Icon
If there are any icons you never use or use so infrequently that youd rather use the
space they take up for icons representing features you use a lot, remove them.
Select the icon in the Customize Icon Bar dialog and click Delete. QuickBooks does
not ask you to confirm the deletion; the icon is just zapped from the Icon Bar.
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Adding an Icon
You can add an icon to the Icon Bar in either of two ways:
Choose Add in the Customize Icon Bar dialog.
Automatically add an icon for a window (transaction or report) youre currently
using.
Using the Customize Icon Bar Dialog to Add an Icon
To add an icon fromthe Customize Icon Bar dialog, click Add. If you want to position
your new icon at a specific place within the existing row of icons (instead of at the
right end of the Icon Bar), first select the existing icon that you want to sit to the
left of your new icon. Then click Add to display the Add Icon Bar Item dialog.
Ill 20-3
Scroll through the list to select the task you want to add to the Icon Bar. Then
choose a graphic to represent the new icon. If you wish, you can change the label
(the title that appears below the icon) or the description (the text that appears in
the Tool Tip when you hold your mouse pointer over the icon).
Adding an Icon for the Current Window
If youre currently working in a QuickBooks window, and it strikes you that it
would be handy to have an icon for fast access to this window, you can accomplish
the deed quickly. While the window is active, choose View | Add Name Of Window
To Icon Bar (substitute the name of the current window for Name Of Window).
A dialog appears so you can choose a graphic, name, and description for the new icon.
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C
h
a
p
t
e
r
2
1
Managing Your
QuickBooks Files
I
n this chapter:
Delete a company file
Back up and restore company files
Use a portable company file
Clean up data
Use the audit trail
Update QuickBooks software
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In addition to performing bookkeeping chores in QuickBooks, you need to take
care of some computer file housekeeping tasks. Its important to keep your software
up-to-date and to make sure your data is accurate and available.
Deleting Company Files
Sometimes you have a valid reason to get rid of a company file. Perhaps you created
a company file to experiment with and you no longer use it, or you sent a copy of
the local community associations file to another QuickBooks user who is taking
over your job as treasurer.
QuickBooks doesnt have a way to delete a company file within the software; that
is, theres no command that will remove the file from your hard drive, remove
attendant files and folders connected to that company file, and automatically
remove the file from the previously opened file list and the list that appears in the
No Company Open dialog when you close the file you were working on.
You can delete the file from your hard drive through My Computer, but that may
present some problems the next time you use QuickBooks. This section explains
how to avoid trouble when you delete a company file.
How QuickBooks Loads Company Files
QuickBooks automatically opens the company file that was loaded when you last exited
the software. If it cant find that file it gets confused, and when software gets confused it
sometimes slows down or stops working properly. Even if QuickBooks accepts the fact
that the file its trying to open is missing and displays the No Company Open dialog, its
cleaner to make sure you dont have the about-to-be-deleted company file loaded when
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Force QuickBooks to Open with
No Company File Loaded
Sometimes you need QuickBooks to open without loading the last-used company file. This helps
avoid delays and error messages if you deleted a company and you arent sure whether it was
the company file that was loaded when you last closed QuickBooks and also avoids delays and
error messages when the last-used file is damaged and wont open.
To force QuickBooks to open without any company file (the software opens with the No
Company Open dialog displayed), press and hold the CTRL key and then launch QuickBooks
(using your desktop shortcut or the listing on the Programs menu). Continue to hold the CTRL key
until QuickBooks opens.
FYI
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you close QuickBooks. Use File | Open Or Restore Company or File | Open Previous
Company to select another company file.
Deleting a Company File
To delete a company file, open My Computer or Windows Explorer and navigate to
the folder that holds your company files. Then delete the file companyname.QBW, as
well as the files named companyname.ND and companyname.TLG.
You can also delete the file while youre working in QuickBooks, as long as the file
you want to delete isnt the currently open file. To accomplish this, choose File | Open
Or Restore Company and click through the wizard to get to the Open A Company
dialog. Click the files listing to highlight it, and press the Delete key. QuickBooks asks
you to confirmyour action. Then, fromthe same Open A Company dialog, open the
company file you want to work on.
Eliminating Deleted Files from the Company File List
QuickBooks tracks the company files youve opened and lists the most recently
opened files on the File menu to make it easier to open those files. You dont have
to open a dialog to select one of those files; you just point to the appropriate listing
on the submenu under the File | Open Previous Company command. The submenu
lists the company files youve opened starting with the most recent (its a duplicate
of the listing displayed in the No Company Open dialog).
After you delete a company file, if its listing appears on the submenu, or in the
No Company Open dialog, a user could inadvertently select it, which produces a
delay followed by an error message.
To eliminate this possibility, open another company file and then choose File |
Open Previous Company | Set Number Of Previous Companies. Change the data for
the number of companies to list from 4 (or whatever number is there; 4 is the
default) to 1, and click OK.
Ill 21-1
The current company file is the only file thats listed in the Open Previous
Company menu and in the No Company Open dialog. The next time you open
QuickBooks, repeat these steps and change the number back to 4, or to any other
number thats efficient (depending on the number of companies you work with).
QuickBooks begins tracking your work to rebuild the list.
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Backing Up and Restoring Files
Backing up your QuickBooks data is an incredibly important task and should be
done on a daily basis. When QuickBooks performs a backup, it doesnt just copy
your company file, it copies other important files linked to your company file.
Backing Up
To create a backup of the company file currently open in QuickBooks, choose
File | Save Copy Or Backup. This opens the Save Copy Or Backup window seen in
Figure 21-1. Select Backup Copy and click Next.
In the next window, choose Local Backup and then click the Options button to
set the location of the backup in the Backup Options dialog seen in Figure 21-2.
Use the guidelines in the following sections to select options in this dialog.
N O T E : If you select the option Online Backup, QuickBooks opens a browser
and takes you to a website with information about the QuickBooks online backup
service (a fee-based service). You can sign up for the service on the website.
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FIGURE 21-1 Select the type of copy you want to createin this case, its a backup.
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Selecting a Location for the Backup
Click the Browse button to select the location for this backup. The optimum
location is a USB drive (either an attached stand-alone hard drive or a USB flash
drive), or a drive on another computer on your network (if you have a network).
(The location shown in Figure 21-2 is a stand-alone network drive attached to a
remote computer on the network, and the folders on that drive are burned to CDs
daily and taken offsite).
If you select the same local drive on which your QuickBooks company file is
located QuickBooks issues a warning message when you click OK:
Ill 21-2
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FIGURE 21-2 Configure the options for this backup.
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Unless youre saving the file to a folder on this computer that is going to be
backed up later in the day or at night, heed the warning. Putting a backup on your
hard drive could have dire consequences if your hard drive experiences a
catastrophic failure.
Adding Time Stamps to Backup Filenames
You can select the option to append a date/time stamp to the filename, which lets
you tell at a glance when the backup file was created. The backup filename has the
following format:
CompanyFilename(Backup Jun 01,2010 04 36 PM).QBB
If you select the time stamp option, you can also create multiple backups in the
same location, but can limit the number of backups you save in a specific location.
Multiple backups over continuous days provide an option to restore a backup from
two days ago (or longer) if you think the backup you made yesterday may have
some corrupted data. During backup, QuickBooks notes the number of backups
you opted to keep and when a backup is made that exceeds that number,
QuickBooks deletes the extra backup (always choosing the oldest backup as the
one to delete).
Setting Backup Reminders
You can ask QuickBooks to remind you about backing up when you close a
company file by selecting that option and then indicating the frequency.
Choosing File Verification Options
If you wish, you can ask QuickBooks to verify the data in your company file before
backing up (by selecting either verification option). This can increase the amount
of time it takes to complete the backup, so if youre performing a quick backup
because you want to make configuration changes in your file, or youre about to
perform some other action that makes you think you want a safety backup, select
the option No Verification.
You can also verify your data file by selecting File | Utilities | Verify Data. See the
section Verifying and Rebuilding a Company File, later in this chapter, for more
information on verification.
Choosing When to Save the Backup
Click OK to close the Options dialog, and then click Next to choose when to create
this backup. You have three choices:
Save It Now
Save It Now And Schedule Future Backups
Only Schedule Future Backups
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The second and third choices are concerned with scheduling automatic and
unattended backups, a subject thats covered later in this chapter in the section
Scheduling Backups.
Assuming youre creating a backup now (the option chosen by default), click
Next. QuickBooks opens the Save Backup Copy dialog with your location selected,
and the backup filename in the File Name field. Click Save.
Backing Up to a CD
If youre using QuickBooks on a computer running Windows XP, Windows 2003
Server, or Windows Vista, you can select your CD drive as the backup target
(assuming your CD drive is capable of writing CDs).
QuickBooks actually saves the backup to the default folder on the hard drive that
holds files waiting to be written to a CD, and the software displays a message telling
you your data has been backed up successfully to that location. When you click
OK, QuickBooks displays a dialog in which you can choose to burn the CD using
the Windows CD Wizard (Burn Now), or using your own CD burning software
(Burn Later).
N O T E : In fact, you can burn the CD later through the Windows CD Wizard;
you dont have to use CD burning software.
If you choose Burn Now, QuickBooks creates the backup in the folder Windows
uses to save files for CD transfers (a subfolder in your user profile reserved for this
task). A balloon appears over the notification area of your taskbar, telling you that
files are waiting to be written to the CD (the standard notification when you burn
CDs in Windows). You dont have to click the balloon to open the folder that holds
the file, because the QuickBooks backup feature automatically opens the Windows
CD Writing Wizard, where you click Next to copy the file to the CD.
If you choose Burn Later, QuickBooks creates the backup file in the folder
Windows uses to save files for CD transfers (look in the folders under your name
in C:\Documents and Settings). You can open your CD burning software or the
Windows CD Writing Wizard and direct it to that location to create the backup.
Scheduling Backups
QuickBooks offers both automatic backups and unattended backups (which are
also automatic). You can schedule either or both of these types of backups from the
same wizard that walks you through the backup process (described in the previous
sections). Click through the wizard windows until you get to the window titled
Save Copy Or Backup:
Select Save It Now And Schedule Future Backups if you want to create a
manual backup and also set up automatic and/or unattended backups.
Select Only Schedule Future Backups if you just want to set up automatic and/
or unattended scheduled backups.
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Clicking Next after either selection brings you to the wizard window shown in
Figure 21-3.
Configuring Automatic Backups
An automatic backup is one that takes place when you close the company file, an
action that can take place under any of the following circumstances:
You open another company file.
You choose File | Close Company (or File | Close Company/Logoff if youve set
up users for the company).
You close QuickBooks with this company file loaded.
Set the frequency of automatic backups to match the way you use QuickBooks
and the way you work in this company file. For example, if you open QuickBooks
with this company file loaded in the morning and keep QuickBooks open all day
without changing companies, set a frequency of 1 to make sure you have at least
one backup each day (and you can also set up another scheduled backup for that
evening). The automatic backup is created using the settings, including the
location, you configured in the Options dialog.
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FIGURE 21-3 Set up automatic backup procedures to make sure your data is always safe.
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Configuring Scheduled Backups
You can configure QuickBooks to perform a backup of your company files at any
time, even if youre not working at your computer. This is a cool feature, but it
doesnt work unless you remember to leave your computer running when you leave
the office. Before you leave, make sure QuickBooks is closed so all the files are
available for backing up (open files are skipped during a scheduled backup).
To create the configuration for an unattended backup, click New to open the
Schedule Backup dialog seen in Figure 21-4.
You can give the backup a descriptive name (its optional), but if youre going to
create multiple unattended backup configurations, its a good idea to identify each
by name. For example, if youre backing up to a USB stick drive thats had its drive
letter assigned as F:, a good description of a backup scheduled for 10 P.M. is 10PM
to F.
Enter a location for the backup file. In Figure 21-4, the location is a mapped
network drive, but another backup scheduled later at night is sent to a local USB
flash drive.
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FIGURE 21-4 Configure the specifications for an unattended backup.
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C A U T I O N : Be sure the target drive is availableinsert the Zip, USB, or
other removable drive before leaving the computer; or be sure the remote
network computer youre using for backup storage isnt shut down at night.
If you dont want to overwrite the last backup file every time a new backup file
is created, select the option Number Of Backup Copies To Keep, and specify the
number. QuickBooks saves as many discrete backup files as you specify, each time
replacing the first file with the most recent backup and copying older files to the next
highest number in the filename. These backup files are saved with the filename
pattern SBU_0_<CompanyFilename><Date/Time Stamp>. If you specify two backup
files in the Number Of Backup Copies To Keep field, the second filename starts with
SBU_1_. This pattern continues for the number of backups you specified.
Create a schedule for this unattended backup by selecting a time and a
frequency. For example, create a daily schedule to make sure a backup is made
every night.
If youre on a network, QuickBooks displays the Store Windows Password
dialog. The password in question is not to your QuickBooks user and password
configuration; its your Windows logon name and password, or the logon name and
password of a user on the remote computer (if your user name isnt already set up
on the remote computer).
You can create multiple unattended backups and configure them for special
circumstances. For instance, in addition to a nightly backup, you may want to
configure a backup every four weeks on a Saturday or Sunday (or during your
lunch hour on a weekday) to create a backup on a removable drive that is
earmarked for off-site storage. Be sure to bring the office backup media to the office
on that day and take it back to the off-site location when the backup is finished.
Mapped drives are unique to your Windows login name. If you log off of
Windows before you leave the office (not the same as shutting down the computer,
which would prevent the backup from running), you cannot use a mapped drive to
create your backup. While its not common to take the trouble to log off of Windows,
if you do normally log off, use the full path to the remote folder youre using as the
target location instead of the mapped drive letter. The format of the full path (called
Universal Naming Convention or UNC) is
\\ComputerName\ShareName
Restoring a Backup
If your computer or hard drive crashes, or if you update your equipment by buying a
new computer, or if your QuickBooks file isnt working properly (or at all), youll need
to restore your last backup to get back to work in QuickBooks. (If you buy a new
computer, you have to install QuickBooks, and then update to the current release.)
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Follow these steps to restore a backup file:
Start QuickBooks. If the opening window tells you theres no company open
and suggests you create one (this happens if this is a new installation of the
software), ignore that message.
If you backed up to removable media, put the media that contains your last
backup into its drive. If you backed up to a network share, be sure the remote
computer is running. If you purchased the QuickBooks Online backup service,
be sure youve configured your Internet connection in QuickBooks.
Choose File | Open Or Restore Company from the QuickBooks menu bar to
start the wizard that walks you through file backups and restores.
Choose Restore A Backup Copy and click Next.
Select Local Backup if your backup files are on removable media or on a remote
computer on the network. Select Online Backup if you subscribe to that
QuickBooks service. Then click Next. (If you use the QuickBooks online
backup service, at this point follow the prompts to restore your backup.)
If you selected Local Backup, the Open Backup Copy dialog appears. Navigate
to the folder or drive where your backup is stored.
Select the backup fileif you store multiple backups with time stamps
embedded in the filename, select the most recent backup.
Click Open, and then click Next to continue with the Restore Wizard.
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The QuickBooks Transaction Log and Backups
QuickBooks keeps a transaction log file that tracks changes to the data in your company file data
since the last good backup. The filename is <YourCompanyFilename>. TLG. The transaction file is
in the same folder as your company file (the QBW file).
Because the verification process can make the backup process much longer (depending on
your file size), many users deselect the Verify option when they create a manual backup. If you
have an apparently successful backup with Verify deselected, and you ever need to restore your
files, you could very well be restoring from a backup that contains corrupted data.
If youve deselected the Verify option during backup, which helps prevent the log file from
growing too large, be sure to verify the integrity of your company file on a regular basis
(monthly, for example) by choosing File | Utilities | Verify Data. If everything is fine, then the
automatic and scheduled backups youre creating are fine. If QuickBooks finds problems with the
data, you can check the QuickBooks support site, or call technical support to get information
about fixing the problems. However, you still have to perform a verified manual backup
periodically to reset the TLG file.
FYI
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In the Save Company File As dialog, select the folder to which youre restoring
the file and click Save.
If youre restoring to an existing company (because the problem was a corrupt
data file), QuickBooks asks if you want to replace the existing file. Click Yes.
Then, just to make sure, QuickBooks displays a warning that youre about to
overwrite/delete the existing file. Thats fine; its what you want to do, so type
Yes in the dialog and click OK.
QuickBooks displays a message that your data files have been restored successfully
and opens the file.
T I P : If this backup wasnt saved yesterday, you must re-create every
transaction you made between the time of this backup and the last time you
used QuickBooks.
The restored file isnt exactly the same as the original file, and you should use My
Computer or Windows Explorer to open the folder into which you restored the file.
Youll find a folder named Restored_<CompanyFilename>_Files, and the folder
contains the following components:
A folder named Letters_Templates, which contains subfolders for all the letters
you can create using the QuickBooks feature called Prepare Letters With
Envelopes.
A folder named Printer_Settings, which contains the files that track your
QuickBooks printer configuration settings.
A folder named Spell_Checker, which contains your spell-check settings and
the dictionary (the words added to the spell checker) of the user logged on at
the time the backup was created.
A text file named HowToRestoreExternalFiles.txt. Double-click this file to open
it in Notepad. It contains information about the way restored files are saved and
how to move the files to the appropriate folders so you can use them.
Using a Por table Company File
A portable company file is a copy of your QuickBooks company file that has been
condensed to save disk space, to make it portable. Portable files are designed to
move data between computers (such as your home computer and your office), so
you can work at home and then bring the updated file back to the office. You could
also send the file to your accountant, but if the accountant is going to make
changes and return the file to you, you cannot work in your own copy of the
company file while your accountant has your portable file (because when you
restore the portable file it replaces/overwrites the file youve been working on).
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Creating a Portable Company File
To create a portable company file, choose File | Save Copy Or Backup, select
Portable Company File, and click Next. In the Save Portable Company File dialog,
select a location for the file (by default, QuickBooks selects the Desktop as the
location).
If youre taking the file to another computer (perhaps youre taking it home),
choose removable media such as a Zip or USB flash drive, and take the media with
you. Or, save the file on your hard drive and then send it to the person who will be
working with the file (such as your accountant), either by e-mail or by burning it to
a CD and sending the CD to the recipient.
C A U T I O N : If your company file is very large, the portable file, even
though its condensed, could be too large to e-mail. Many users have size
limitations on their mailboxes or have slow connections. In that case, burning
and mailing a CD is a better method.
QuickBooks automatically names the file using the following format:
CompanyFilename (Portable).QBM
Click Save. QuickBooks displays a message telling you it has to close and re-
open the company file to create the portable file. Click OK.
It takes a while to create the file, and when its done, QuickBooks issues a
success message and then re-opens the company file.
Ill 21-3
Restoring a Portable Company File
QuickBooks uses the word restore for the process of installing a portable
company file on a computer. That term is generally reserved for the process of
replacing a file with a backed up version of that file, and a portable file is not a
backup and isnt usually used for the reasons you use a backup file.
When you restore a backup, its because you know the original file is either bad
or missing. If the file is bad, its OK to overwrite (delete and replace) the original
file with the restored file. In fact, QuickBooks has utilities that can recover lost or
damaged data from a backup file, but there are no such utilities available when you
install a portable company file.
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When you restore a portable company file to a computer that has an existing file
for the same company, replacing the existing file may cause you to lose any work
youve performed in the existing file. The process of overwriting the existing file
with the portable company file deletes the existing file and replaces it with the
portable company file.
If youre the only person who works in the company file, and you take a portable
file to another computer (such as your home computer), work on the file and bring
it back to the office, its safe to overwrite the office copy with the portable company
file. Nobody has created any transactions since you created the portable company
file, so deleting the original file doesnt delete any new transactions.
However, if you send a portable company file to someone else, and then continue
to work in the original file, you cant restore the portable company file when its
returned unless youre prepared to lose all the work you did in the meantime. Your
options to avoid this problem are as follows::
Stop working on the file until the portable company file is returned. Then,
when you restore the portable company file, you dont lose any data.
Have the person who performs work in the portable company file send you a
list of the transactions that were entered, instead of returning the file, and enter
those transactions in the existing company file.
Restore the file to a different location, or use a different filename (or both). You
can open the restored company file and see whats new, then manually add that
data to your real company file.
To restore a portable company file, follow these steps to use the wizard that
guides you through the process:
Choose File | Open Or Restore Company.
In the Open Or Restore Company: Type window, select Restore A Portable File,
and click Next.
In the Open Portable Company File dialog, navigate to the folder or removable
media drive that holds the file, select the file, and click Open.
In the next window, click Next and then use one of the following guidelines to
select a location and filename:
If youre deliberately replacing a company file, select the folder that holds
the original company file and use the same filename as your company file.
QuickBooks displays a warning that youre about to overwrite the existing
file and asks if you want to replace it; click Yes. To make sure you really
understand what youre about to do, QuickBooks displays the Delete Entire
File dialog and asks you to confirm your action. Type Yes and click OK to
continue.
If you want to create a separate company file to avoid overwriting the work
you did in your real company file, change the location or the filename (or
both) before you click Save.
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After the portable company file is uncompressed, its loaded in the QuickBooks
window so you can work in it.
Verifying and Rebuilding a Company File
QuickBooks includes utilities to verify and rebuild the data in your company file.
Theyre both found on the File | Utilities submenu.
Verifying a company file checks the data and the accuracy of the files contents. If
any problems are found, theyre written to a log file named QBWin.log. You can
view the contents of the log within QuickBooks by pressing F2 to open the Product
Information window, and then pressing F3 to open the QuickBooks Tech Help
window. Click the tab named Open File and select QBWIN.LOG.
Ill 21-4
Click Open File to view the contents. Sometimes the log file has clear, helpful
information about the problem and you can remove the troublesome record from
the data file. However, its common to have to call Intuit support for help. If you do,
the support technician may ask you to send the log file, along with other files
available in the QuickBooks Tech Help window, using the button labeled Send Log
Files To Intuit Support on the Open File tab.
Rebuilding a company file can be a long, complicated process that shouldnt be
performed unless a QuickBooks support technician asks you to do so.
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N O T E : When you per form a backup with the option to verify the file enabled,
any problems QuickBooks finds are also written to the QBWIN.LOG file.
Cleaning Up Data
QuickBooks provides a feature that enables you to remove certain data in your
company file in order to remove elements that you no longer use or need. Using
this feature does not make your file smaller, but it does remove some list items and
transaction details you no longer want to wade through as you work in
QuickBooks.
Understanding the Data Removal Procedure
The data removal process deletes closed transactions and replaces them with a
journal entry that shows totals posted to accounts. (If you subscribe to any
QuickBooks payroll services, no current year transactions are condensed.) Open
transactions (such as unpaid invoices and bills and estimates that are not marked
Closed) are not removed. Before removing the data, QuickBooks creates a
backup, and then creates an archive copy of your company file (which you can
open to see the original transactions that were removed).
Choosing a Date
QuickBooks asks you for the date you want to use as the cutoff date. Everything
you no longer need before that date is removed, if it can be safely removed without
interfering with transactions that remain. No open transactions are removed; only
those data items that are completed, finished, and safe to remove are targeted. Also,
any transactions before the cutoff date that affect current transactions are kept, so
the details are maintained in the file.
Understanding Summary Transactions
The transactions that fall within the parameters of the condensing date are deleted
and replaced with summary transactions. Summary transactions are simply journal
entry transactions that show the totals for the removed transactions, one for each
month. The account balances are not changed by removing data, because the
summary transactions maintain those totals.
Understanding the Afteref fects
After you clean up the file, you wont be able to run detail reports for those periods
before the cutoff date. However, summary reports will be perfectly accurate in their
financial totals. You will be able to recognize the summary transactions in the
account registers because they will be marked with a transaction type GENJRNL.
You can open the archived file if you need to see the original transaction details.
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Running the File Cleanup Utility
To run the File Cleanup utility, choose File | Utilities | Clean Up Company Data.
The Clean Up Company Data Wizard opens, offering two cleanup methods (see
Figure 21-5). You may see a warning about losing your budget data when your file
is condensed, because some budgets are based on detailed postings. Click Yes.
For this discussion, select the option Remove Transactions As Of A Specific Date.
(Read Removing All Transactions with the Cleanup Wizard, later in this section, to
learn about that option.) By default, QuickBooks inserts the last day of the previous
fiscal year as the date but youll likely choose an earlier date so that youll have access
to the full detail of your QuickBooks transactions for the last two or three years. Its a
good idea to use an end-of-year dateif youve been using QuickBooks for several
years, you might want to choose the last day of 2007 instead of 2009 in order to
preserve transaction details for the past few years. Click Next when youve entered
the cutoff date.
Selecting Additional Transactions to Remove
In the next wizard window, you can select one or more types of existing
transactions to remove, even though they wouldnt be removed automatically
during a file cleanup process (see Figure 21-6). For example, if you have a
transaction marked To Be Printed thats more than a year old, you probably arent
planning to print it (and you probably forgot you ever created it). When youve
made your selections, click Next.
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FIGURE 21-5 You can choose to clean up your file or empty it.
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Removing Unused List Elements
In the next window you can select the lists that may have elements that wont be
used after old transactions are removed (see Figure 21-7). Click the list(s) you want
QuickBooks to examine to determine whether there are unused listings, and if so,
remove them.
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FIGURE 21-6 You can remove transactions that QuickBooks would normally keep, but make
these selections thoughtfully.
FIGURE 21-7 Empty lists of elements you created but never used.
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Click Next to see an informational window in which the cleanup process is
explained. Click Begin Cleanup to start the process. QuickBooks displays a message
telling you that first your data file needs to be backed up. This is not an everyday
backup, its the last backup of a full data file before information is removed.
Therefore, add text to the name of the backup file to indicate that its special (for
instance, MyCompanyFile-BeforeCleanupJun2010.QBB). Click Save to begin the
backup.
As soon as QuickBooks finishes backing up, it starts removing data. Youll see
progress bars on your screen as each step completes. When the job is complete,
youre given the name of the archive copy of your data file.
The archive copy is intact, just the way your file was before you ran the cleanup
feature. This means you can open it if you need to see transaction details the next
time a customer or vendor calls to discuss an old, old transaction.
Removing All Transactions with the Cleanup Wizard
The Clean Up Company Data feature offers an option to strip the file of all
transactions, leaving behind only the lists and the configuration settings you
created for printers and Edit | Preferences categories.
Often, this function is used as a way to start all over. Other reasons to use this
function include the following:
Start a new file at the beginning of a new year when the current company file
has become so large that working in it is slower than youd like.
A company has changed its legal structure (from a proprietorship to a
corporation or to an LLC). Payroll, equity accounts, and other elements of the
file must be changed to reflect the new organization type.
QuickBooks creates a backup of the file before beginning the process and creates
an archive of the file before clearing the transactions, so you dont really wipe out
the companys history.
N O T E : This function wont run if you have payroll transactions for the
current year.
Using the Audit Trail
QuickBooks automatically tracks all the additions, deletions, and modifications of
transactions in your data file. This record is called an audit trail, and it lets you
keep an eye on the activity in your data file. You can view the report by choosing
Reports | Accountant & Taxes | Audit Trail.
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The report lists each transaction, along with the action that affected that transaction,
the user who performed the action (if you enabled user login), and the financial
information. The transaction action is displayed in bold type, for example, Deleted
Invoice, ID#643. (The ID# is an internal QuickBooks number.)
N O T E : After you perform a file cleanup, all audit-trail data for removed
transactions is removed.
Updating QuickBooks
QuickBooks provides an automatic update service you can use to make sure your
QuickBooks software is up-to-date and trouble-free. This service provides you with
any maintenance releases of QuickBooks that have been created since you purchased
and installed your copy of the software. A maintenance release is distributed when a
problemis discovered and fixed, or when a new feature is added to the software.
N O T E : This service does not provide upgrades to a new version; it just
provides updates to your current version.
You can enable automatic updates, which means QuickBooks periodically checks
the Intuit update site on the Internet for updates to your version of QuickBooks.
If new files exist, theyre downloaded to your hard drive. If you turn off
automatic updates, you should periodically check for new software files manually.
Choose Help | Update QuickBooks and go to the Update Now tab to select and
download updated files.
Configuring QuickBooks Update Service
Choose Help | Update QuickBooks and move to the Options tab to configure the
Update feature. You can enable or disable the automatic check for updates. If you
enable automatic updates, the download location for storing update files is
displayed.
If youre using QuickBooks on a network, you can configure the update service
to share downloaded files with other users. When this option is enabled, QuickBooks
creates a subfolder on the computer that holds the shared QuickBooks data files,
and the other computers on the network use that subfolder as the source of
updated files (instead of going online and downloading files).
For this to work, every user on the network must open his or her copy of
QuickBooks and configure the Update options for Shared Download to reflect
the folder location on the host computer. The folder location is displayed on the
Options tab when you select the Shared Download option.
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A
p
p
e
n
d
i
x
Fixed Asset Manager
T
he values of fixed assets decline over time,
and calculating the decline is a thorny
undertaking. The calculations for
depreciation or amortization are extremely
complicated, mostly due to the vast number
of IRS regulations on the subject. To make it
worse, the regulations change frequently, so
keeping up with current rules is a
complicated task.
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In addition to making sure your depreciation calculations dont cause a problem
with the IRS, the amounts involved in depreciation transactions have a direct effect
on your business:
The amount by which an asset is depreciated affects the worth of a business
because the net (reduced) current value is used on the balance sheet
The depreciation amount affects the business tax bill (depreciation is
deductible)
The QuickBooks Fixed Asset Manager makes it easier to track and depreciate
assets, and to enter the resulting calculations in both the tax return and the
QuickBooks company file.
N O T E : The Fixed Asset Manager is included in QuickBooks Premier
Accountant Edition and in all editions of QuickBooks Enterprise Solutions.
Overview of Fixed Asset Manager
Fixed Asset Manager is a robust, complex program, and this appendix provides an
overview of its features. Heres a laundry list that should help you find your way as
you discover all sorts of innovative ways to use the programs power:
A detailed asset entry screen that you can customize
Up to five user-defined classifications for tracking assets
Six depreciation bases (Book, State, Federal, Other, AMT, and ACE)
Projected depreciation calculations
Disposition tracking
Onscreen queries and custom sorting options for the asset list
Full calculation overrides (also applies when linking to Pro Series)
A report list feature that allows you to group commonly-used reports for easy
access and printing
An export feature that allows you to transfer asset information into ProSeries
federal tax products
A desktop workspace you can customize
A toolbar for quick access to common tasks
QuickBooks Files and Fixed Asset Manager
When you open Fixed Asset Manager in QuickBooks (choose Accountant | Manage
Fixed Assets), the currently loaded QuickBooks company file links to the Fixed
Asset Manager. You can create a new Fixed Asset Manager client file for this
company, transfer prior year clients from QuickBooks Fixed Asset Manager or
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ProSeries Fixed Asset Manager to the current year, reconnect Accountants Review
Copy with Fixed Asset Manager or restore a previous QuickBooks Fixed Asset
Manager file from a backup.
QuickBooks Company Information
Fixed Asset Manager must know the type of tax form this business files. To make
sure the right tax form is configured for the company file (or, for that matter, to
make sure the tax form information isnt blank, which is often the case), choose
Company | Company Information and check the data in the dialog box.
Fixed Asset Manager uses other company information (such as the address, EIN
or Social Security number, and so on) when it creates the Fixed Asset Manager file,
and you can view that information within Fixed Asset Manager. However, you cant
edit the information in Fixed Asset Manager, so you must make sure the data is
correct in the Company Information dialog box.
Company Fixed Assets List
QuickBooks provides a Fixed Asset Item list, which tracks the purchase date, the
description, and the cost of each fixed asset the company owns. When your clients
use this list within QuickBooks, the list is inert; that is, it performs no calculations
and is not automatically linked to transaction data entry in QuickBooks. When
clients purchase or sell a fixed asset, and create the appropriate transaction entry
(a check, a loan, or a cash receipt), the information is not automatically transferred
to the Fixed Asset Item list.
Even though the Fixed Asset Item list is nothing more than a list, with no ability
to interact with standard QuickBooks software calculations, Fixed Asset Manager
can read (import) this list. If the Fixed Asset Item list exists in the company file,
your work in Fixed Asset Manager is faster and easier. Another advantage of using
the Fixed Asset Item list in QuickBooks is that assets in the list are linked to a
Fixed Asset account. In a roundabout way, this ensures the QuickBooks company
file has one or more Fixed Asset accounts. Fixed Asset Manager can use that
account information, which is another efficient time saver.
Fixed Asset Manager Client File Setup
You must create a Fixed Asset Manager client file for each company, and if no file
exists for the currently loaded company when you open Fixed Asset Manager, the
process of creating the file begins automatically.
If youd previously set up a Fixed Asset Manager client file for this company, but
the currently open company file is an Accountants Copy, select the option to
reconnect the Accountants Copy to Fixed Asset, and a wizard walks you through
the task of opening the file.
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When you choose to create a new client, the Fixed Asset Manager New Client
Wizard launches, and you click Next to move through each wizard window. The
first wizard windows display the company information for the client, and you
cannot edit that information (see the previous sections on making sure the company
information is correct before running Fixed Asset Manager). The wizard then asks
you to respond to queries about the following data:
Current fiscal year
Prior short years
Qualification for the small corporation exemption from AMT
Depreciation bases
Default depreciation method for each selected basis
The wizard offers the chance to import the fixed assets for this company
automatically, using the information in the Fixed Asset Item list in the company
file. You can also enter the fixed assets manually.
A client summary is displayed on the last wizard windowclick Finish to end
the client set up and begin using Fixed Asset Manager. (If you automatically
synchronized the fixed assets from the client company Fixed Asset Item list, a log
appears to report the fixed assets that were imported.)
When you opt to transfer information from client files for the prior-year version
of QuickBooks Fixed Asset Manager, or from ProSeries Fixed Asset Manager, into
this years version, the Transfer Client Wizard launches. Click Next to move
through each wizard window. Select the client you want to transfer on the first
wizard window that appears. The wizard then asks you to respond to the queries
about the following data:
Calculation options
Qualification for the small corporation exemption from AMT
QuickBooks Asset Synchronization
When a client summary appears on the last wizard window, click Finish to
complete the transfer and begin using Fixed Asset Manager.
Impor ting Data from Other Software
If you or your client have been keeping depreciation records in another software
application, you can import the data to Fixed Asset Manager. Once your Fixed
Asset Manager client file is set up, the software can import data from a Comma
Separated Value (CSV) format file. You must map the fields in the import file to
the fields in Fixed Asset Manager. Fixed Asset Manager provides help for this task
during the import.
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T I P : If the other program cant save to a file in CSV format, but can save
data in a file format that is readable by Microsoft Excel, open the file in Excel,
and then save the file in CSV format.
If youve been managing fixed assets in ProSeries tax software, you can import
data directly from that software to Fixed Asset Manager.
Working in Fixed Asset Manager
After the client file is set up, the Fixed Asset Manager software window opens so
you can begin your work. By default, the software window opens with the Schedule
tab selected. The tabs at the bottom of the window represent the bases you selected
for depreciation. Select the Schedule Tab, and as you select each basis tab the data
changes appropriately.
Schedule Tab
In the Schedule tab, Fixed Asset Manager identifies the assets using the text in the
Purchase Description field of the QuickBooks Fixed Asset Item listnot the text in
the Name field. In fact, Fixed Asset Manager doesnt even import the name field
from the QuickBooks Fixed Asset Item list.
Fixed Asset Manager assigns a number to each asset, and that number becomes
the assets name (you can think of it as a code) in the Fixed Asset Manager client
file. To arrive at the number (code), Fixed Asset Manager reads the text in the
Purchase Description field and appends a hyphen surrounded by spaces, followed
by the next available number. For example, if the Description text is Workstation
Computer, the Fixed Asset Manager name becomes Workstation Computer - 1.
If another asset has the same description (in QuickBooks, only the Name must be
unique, and the Name field isnt used by Fixed Asset Manager, so duplicates can
occur when synchronizing with Fixed Asset Manager), the next number is
appended to the text (Workstation Computer - 2). Asset numbers are appended
in the order in which they are sorted in the Fixed Asset Item List in QuickBooks
(which sorts on the QuickBooks Name field).
You can sort assets differently by changing the criteria in the sort set. In addition,
you can choose to edit an existing sort set or create a custom sort set. You can also
change the asset list and the columns in the Schedule tab using the View Column
Set, Sort Assets By and Apply Query Criteria controls on the Asset toolbar. To view
amounts for any basis supported in a clients file, click the corresponding tab at the
bottom of the Schedule tab. The Schedule tab lists all the assets in the Fixed Asset
Manager client file. The asset thats currently selected is the asset used when you
visit any of the other tabs at the top of the software window.
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Asset Tab
Use the Asset tab to enter information about tax forms, the QuickBooks chart of
accounts, and other items for the asset you selected in the Schedule tab.
The upper section of the tab is the place to enter general information for the
selected asset, including any classification fields. The bottom section of the Asset
tab is the Basis Detail section. Enter the cost, date acquired, tax system, depreciation
method, recovery period, and other information needed to calculate the assets
depreciation. You can also configure Section 179 deductions here, if appropriate
for this asset.
Disposal Tab
Use the disposal tab to dispose of assets. Fixed Asset Manager displays the cost
basis, and any Section 179 deductions. Enter the sales price, the expense of sale,
and any other relevant information about the Disposal.
Select a property type from the drop-down list to determine where the disposal
information will appear on Form 4797, Sales of Business Property (for ProSeries
client file exports).
Projection Tab
Use the Projection tab to determine the best depreciation method for the selected
asset by reviewing its projected depreciation. Use the Bases tabs at the bottom of the
window to see the projections.
T I P : You can change information in the Asset tab to alter the projections
available in the Projection tab.
N O T E : The other tabs on the Fixed Asset Manager window are informational.
The Notes tab is a blank window where you can write notes and reminders. The
Calendar tab displays information about an asset on the selected date (select
date acquired, date of disposal, or both).
Using the Section 179/40% Test
To determine whether the Section 179 deductions claimed for the current year are
within allowed limits, or to calculate the percentage of assets acquired in the last three
months of the year, use the Section 179/40% test. Performthese diagnostics after you
enter client asset information and before you print reports or link the file to the
clients tax return. To performthese tests, choose Tools | 179/40% Test. Review the
Section 179 test, then click the 40% test tab to review mid-quarter totals.
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Reviewing Section 179 Limitations
The Section 179 test determines the total cost of all eligible Section 179 property,
the total Section 179 expense deduction made, and how much of the deduction
exceeds federal limits for the active year.
Reviewing the Mid-quar ter 40% Test
Fixed Asset Manager totals the cost of all assets purchased in the active year and all
assets purchased in the last quarter of the active year. If the percentage of assets
purchased in the last quarter is greater than 40%, you can convert these assets to
the mid-quarter convention.
Using the Client Totals Summary
Use the Client Totals Summary to review the accumulated cost and depreciation
before and after current-year calculations for each basis supported in a client file.
To see the Client Totals Summary, choose View | Client Totals.
Calculating Depreciation
When the selected asset is properly configured, go to the Asset tab and choose
Asset | Calculate Asset. If the command is grayed out, Fixed Asset Manager does
not have all the information it needs to perform the calculation. Check all the fields
to make sure youve entered the required information about this asset.
You can set Fixed Asset Manager to automatically calculate assets after making
modifications using the Program Options window. To select this setting, choose
Tools | Program Options. Select the Automatically Calculate Assets option, and
click OK to save the change.
Posting the Journal Entry to QuickBooks
Fixed Asset Manager automates the process of creating a journal entry for
depreciation expense and/or accumulated depreciation. Choose QuickBooks | Post
Journal Entry to QuickBooks, and then enter the appropriate information.
Producing Repor ts
Fixed Asset Manager provides a variety of report options, including pre-configured
report templates. You can sort and select the information you want to print, and the
order in which you print it. Table A-1 describes the purpose of each predefined report.
You can select the reports you want to associate with your client using the
Report List Organizer and create a custom report list. Having a custom report list
allows you to batch print reports. To organize a report list, choose Reports | Report
List Organizer.
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ACE Adjustment Calculation To determine the total ACE adjustment needed to compute a tax
return for a corporation. Assets are grouped by category and
sorted by asset number within each group.
Amortization Schedule by G/L
Account Number
To see a summary of the activity of the amortized assets. Assets
are grouped by general ledger account number and sorted by
asset number within each group.
Amortization Schedule by
User Defined
(1 to 5)
To see a summary of the activity of the amortized assets,
grouped by one user-defined classification. (There is a report for
each user-defined field that you use.) Assets are grouped by the
user-defined field and sorted by asset number within each group.
AMT Adjustment Calculation To print the necessary information for AMT depreciation
adjustment reporting (Federal depreciation AMT depreciation =
AMT adjustment). Assets are grouped by category and sorted by
asset number within each group.
Asset Disposition by Asset
Sale Description
To see a summary of disposition information according to the sale
description assigned to each asset. Assets are grouped by asset
sale description and sorted by asset number within each group.
Asset, Basis and Disposal
Detail Report
To print the asset details for each asset in the Asset and Disposal
tabs that you see onscreen.
Assets Acquired in the Current
Year
To see a summary of each asset purchased in the current year.
Assets are grouped by general ledger account number and sorted
by acquisition date within each group.
Depreciation Schedule by G/L
Account Number
To see an activity summary for each asset, grouped by general
ledger account number. Assets are sorted by acquisition date
within each group.
Depreciation Schedule by
User Defined
(1 to 5)
To see an activity summary for each asset, grouped by one
user-defined category. (There is a report for each user-defined
field that you use.) Assets are sorted by asset number within
each group.
Lead Schedule by Category To see an activity summary for each asset, grouped by category,
in a traditional lead schedule format. Assets are sorted by asset
number within each group.
Lead Schedule by G/L Asset
Account
To see an activity summary for each asset, grouped by general
ledger account number, in a traditional lead schedule format.
Assets are sorted by asset number within each group.
Lead Schedule by Location To see an activity summary for each asset, grouped by location, in
a traditional lead schedule format. Assets are sorted by asset
number within each group.
TABLE A-1 Fixed Asset Manager Predefined Reports
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Expor ting Depreciation Data
Fixed Asset Manager has built-in tools for exporting depreciation data. The export
file you create is imported to the appropriate software. The following file formats
are supported:
ProSeries
Microsoft Word
Microsoft Excel
ASCII (text) file
CSV file
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Lead Schedule by Tax Form
and Property Description
To see an activity summary for each asset, grouped by tax form
and property description, in a traditional lead schedule format.
Assets are sorted by asset number within each group.
Monthly G/L Accumulated
Account Summary
To see the total monthly cost additions and deletions and their
beginning and ending balances. This report is grouped by General
Ledger Asset Account. Assets without assigned account numbers
are grouped by No Account Number.
Monthly G/L Asset Account
Summary
To see the total monthly accumulated depreciation/amortization
additions, and deletions and their beginning and ending balances.
This report is grouped by General Ledger Accumulated Depreciation
and Amortization account. Assets without assigned account numbers
are grouped by No Account Number.
Monthly G/L Expense Account
Summary
To see the total monthly depreciation/amortization expense
additions and deletions, and beginning and ending accumulated
depreciation and amortization balances. This report is grouped by
General Ledger Depreciation and Amortization Expense account.
Assets without assigned account numbers are grouped by No
Account Number.
Personal Property Schedule by
Year of Acquisition
To see a summary of depreciation amounts for assets that you
marked as personal property. Assets are grouped by the year
each asset was placed in service, and sorted by acquisition date
within each group.
Projection by Category To see a five-year projection for each asset. Assets are grouped
by category, and sorted by asset number within each group.
Remaining Basis Over
Remaining Life Report
To identify assets that were not fully depreciated. Assets within
this report are grouped and subtotaled by category.
TABLE A-1 Fixed Asset Manager Predefined Reports (Continued)
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Tax Worksheets
Fixed Asset Manager provides the following tax worksheets that can help you
complete the depreciation-related portions of your clients returns:
Form 4562 Part ISection 179 Summary Copy
Form 4562 Part II & IIILines 15, 16, and 17
Form 4562 Part IIILines 19 and 20
Form 4562 Part IVSummary
Form 4562 Part VListed Property
Form 4562 Part VIAmortization
Form 4797 Part IProperty Held More Than One Year
Form 4797 Part IIOrdinary Gains and Losses
Form 4797 Part IIIGains from Disposition of Depreciable Property
Form 4626Depreciation Adjustments and Tax Preferences
Form 4626ACE Worksheet
Form 4626Gain/Loss Adjustments
Fixed Asset Manager completes each worksheet automatically using the
information in the clients file.
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Index
Numbers
#10 envelope, 182
40% test (Section 179 deductions),
491492
940 forms, 240
940 payments, 231, 233234
941/943 forms
about, 235236
checking data on, 238
creating, 236237
editing, 237
printing, 239
saving and re-opening, 238
uneditable data on, 238
941/943 payments
about, 231
checks and e-payments for, 233
formula determining, 232
944 forms, 240241
1099 and 1096 Wizard, 401
1099 forms, 399402
1099 reports, 400
1120/1120S forms, 403
8109 form, 233
A
Account Prefill tab (New Vendor
dialog), 47
Accountant Edition, 35. See also Premier
Edition
accountants copy, 4
Billing Rates Level List, 53
Client Data Review in, 34
features of, 3
Fixed Asset Manager in, 487
general journal features for, 334336
selecting External Accountant
permissions for, 454
using accountants copy in, 350
accountants. See also accountants copy;
Enhanced Payroll for Accountants
approving account numbering
with, 27
preferences for Inventory Adjustment
account, 269
selecting trial balance data, 340341
using accountants copy, 350357
accountants copy, 350357
canceling, 355
choosing dividing date, 353354
creating change file, 356357
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accountants copy (cont.)
defined, 4
deleting, 355
merging changes from, 354355
password for, 351
saving, 350351
uploading, 351353
using, 356
accounting. See also accrual accounting;
cash-based accounting
audit trail, 484485
closing, 404405
Company Snapshot feature, 14,
357359
creating statements with GAAP, 362
permissions for sensitive
activities, 455
Accounting section (Preferences dialog),
435439
accounts. See also specific accounts
active/inactive trial balance, 340
adding to chart of accounts, 2931
Ask My Accountant, 273
assigning to customers, 39
checking tax line information for, 403
choosing trial balance, 340342
credit card, 283284
credit cards as liability, 283287
customer vs. vendor discount, 113
depreciation, 328329
displaying lowest subaccounts, 436
Draw, 122
editing, 32
Inventory Adjustment, 269
linking subcontractor payments to
specific, 412
making GJEs for, 327
merging, 33
multiple A/P, 143, 145
naming, 2829
nonposting, 24
numbered, 2528, 436
Over/Short, 123124
payroll, 201202
Previous Retained Earnings, 325
printing names of on vouchers, 437
Purchase Orders, 158
reconciling payroll, 333
reimbursement, 149150
requiring assigned, 436
reversing entries in, 330
selecting from examples, 3132
setting default bank, 439
sort order for chart of, 24
splitting expenses for vendor bills
among, 145146
subaccounts, 29, 3233
transferring funds between bank,
273274
Undeposited Funds, 117,
289290, 445
using for subcontractor payments, 412
vendor bills assigned to one, 144145
accounts payable. See also vendor bills
assigning bills to one account,
144145
inventory purchase postings for,
162163
receiving inventory items, 159160
recording bills for received inventory
items, 160162
recording vendor bills, 143146
recording vendor credits, 163164
using multiple A/P accounts, 143, 145
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accounts payable. See also vendor bills
(cont.)
using purchase orders, 158164
working with reimbursable expenses,
147157
accounts receivable, 126141
balance forward/open item systems
for, 105
balance of, 126
creating customer and job reports, 132
exporting/importing memorized
reports, 131
finance charges, 132136
formatting A/R aging reports, 130
memorizing aging reports, 130131
previewing statements, 141
printing aging reports, 131132
printing statements, 141
running aging reports, 126130
sending statements, 136
setting up statements, 138141
statement charges, 136138
tracking, 126
accrual accounting
about, 143
summary reports for, 448
tax reporting for, 190
trial balance for, 339340
ACH (Automated Clearing House),
233, 390
Add Icon Bar Item dialog, 465
Add New Account dialog, 30
Add Transactions To QuickBooks dialog,
379, 380, 384
Add Your Excel Data To QuickBooks
window, 2122
Add/Edit Multiple List Entries window,
13, 1920
Additional Customization dialog, 4751
Additional Info tab
New Customer dialog, 3739
New Vendor dialog, 4647
Address Info tab
New Customer dialog, 3637
New Vendor dialog, 45
addresses
customers ship to, 3637
multiple customer shipping, 9
Adjusting Row Amounts dialog, 311
Admin users
closing tasks for, 405
creating accountants copy, 351
recovering password for, 453
rights of External Accountant and, 360
Advanced Import button (Add Your Excel
Data To QuickBooks window), 2122
aging reports
A/R Aging Detail report, 127
customizing A/R, 127130
filtering data in, 128129
formatting, 130
memorizing, 130131
printing, 131132
running, 126130
annual returns, 239240
A/P. See accounts payable
A/P Account field (Enter Bills
window), 143
Apply Credit To Invoices dialog, 82
A/R. See accounts receivable
archiving 941/943 forms, 239
Ask My Accountant account, 273
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assemblies. See inventory assemblies
Asset tab (Fixed Asset Manager), 491
assets. See Fixed Asset Manager
Assisted Payroll service, 200
ATMs
recording withdrawals from,
279280
using, 278
audit trail, 484485
Automated Clearing House (ACH),
233, 390
automatic backups, 472475
automatic decimal point, 433
automatic GJE numbers, 437
automatic payments and calculations, 445
automatic transaction recall, 434
automatic update service, 485
Automatically Calculate Payments option
(Preferences dialog), 107
Available Credit dialog, 80
Available Estimates dialog, 75
B
backorders, 84
Backup Options dialog, 470
backups
last good, 476
making company file, 469472
reminders for, 471
restoring, 475477
scheduling, 472475
selecting location for, 470471
target drive for, 475
time stamping names of, 471
verification options for, 471
when to save, 471472
writing to CD, 472
year-end, 406
balance forward systems, 105
Balance Sheets, 344346
Budget Overview report, 316
calculating equity on, 344345
customizing and memorizing,
345346
Detail report, 345
Prev Year Comparison report, 345
Standard report, 345
Summary report, 345, 346
types of, 345
year-end, 399
balancing
checkbook, 289303
credit card statement, 282287
bank accounts. See also bank register
accepting differences in beginning
balances, 303
adjustments to reconcile, 297
clearing transactions in, 291, 293
correcting reconciliation errors,
296297
deleting transactions while
reconciling, 294
depositing payment income to,
117123
editing while reconciling, 294
entering undeposited funds while
reconciling, 294
finishing reconciling, 296
interest income and service
charges, 291
making non-customer deposits in,
272273
pausing reconciliation, 296
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bank accounts. See also bank register
(cont.)
payroll, 201
receiving online customer
payments, 396
reconciling, 289303
recording ATM withdrawals, 279280
selecting for online payments,
391, 392
separating deposits by, 119
setting default, 439
sorting transactions in, 292
transferring funds between, 273274
undoing last reconciliation, 302303
bank register
adding downloaded transactions to,
380382
deleting unmatched transactions,
386388
including downloaded deposits in, 382
matching downloaded transactions to,
378379
preparing for reconciliation, 289290
printing check register, 181
recording petty cash expenses in,
280281
transferring funds online with, 395
writing checks from, 185188
banks. See financial institutions
Basic Customization dialog, 9697
Basic Payroll service, 200
batching
cash sales, 114, 116
checks for printing, 189
invoices for printing, 8788
payroll history manually, 213215
Begin Reconciliation window,
290291, 302
beginning balances, 299303
Bill of Materials (BOM), 9, 255
Bill Pay Service, 394395
Billable Time/Costs dialog, 152
billing rates
available with Professional Services
Edition, 10, 53
Billing Rates Level List, 53
multiple, 7
bills. See also vendor bills
receiving for inventory products, 157
recording for received inventory items,
160162
viewing unpaid, 173174
Bills section (Preferences dialog), 437
BOM (Bill of Materials), 9, 255
bookkeeping. See also accrual accounting;
cash-based accounting; general journal
entries
accrual accounting, 143
correcting voided or deleted cleared
transactions, 301302
reversing entries, 330
using Over/Short accounts, 123124
bounced checks, 275277
charges for, 277
invoices recovering, 276277
redepositing, 277
budgets, 305321
adjusting monthly amounts, 310311
automatically saving, 305
Budget Overview report, 315316
Budget vs. Actual Graph, 318
Budget vs. Actual report, 317318
Class, 314315
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budgets (cont.)
compounding charges for, 311312
copying numbers across months,
309310
creating from last years data, 312
Customer:Job, 312314
deleting, 306
entering data for, 308312
exporting, 318319
importing, 319
P&L, 305, 307312
preparations to start, 307
reports for, 315318
types of, 305
using Budget window, 306
using multiple, 305306
Build Assembly template, 259
building inventory assemblies
about, 256, 258260
pending builds, 259, 260261
burning backup CDs, 472
Business Planner, 320321
C
calendar
fiscal vs. calendar year, 405
setting reports, 341
canceling accountants copy, 355
cash. See also cash sales; cash-based
accounting
depositing in Undeposited Funds
account, 445
keeping from deposits, 122
leaving fields blank for, 282
recording disbursements, 280281
separate deposit from checks, 119
taking money out of till, 280
tracking in petty cash account,
278, 279
Cash Flow Projector, 320
cash flow report, 449
cash sales
defined, 114
handling payments for, 114117
postings for, 116117
cash-based accounting
selecting tax reporting for, 190
showing trial balance for, 339340
summary reports for, 448
CDR (Client Data Review), 34, 359360
CDs
backing up data on, 472
burning portable company file to, 478
change file, 356357
charges. See also finance charges
compounding for budgets, 311312
deducting finance, 286
entering bank service, 291
recording bounced check, 277
statement, 136138
chart of accounts
adding accounts, 2931
Contractor Editions, 7
creating full, 2533
editing, 32
merging accounts, 33
naming accounts, 2829
numbering, 2528, 436
order of credit card account in, 284
Over/Short accounts, 123124
payroll accounts in, 201202
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Composite Default screen
chart of accounts (cont.)
selecting accounts from examples,
3132
sort order for, 24
subaccounts on, 29, 3233
check register. See bank register
check verification services, 277
Checking section (Preferences dialog),
437439
checks. See also bank register
941/943 payment, 233
account number printed on vendor,
438439
bounced, 275277
calculating gross payroll amounts
for, 224
changing date when printing, 438
creating from timesheets, 425426
dates on, 176, 438
depositing separate from cash, 119
duplicate, 438
electronic processing of, 1213,
277, 396
fake payroll, 333334
Intuit Check Solution, 1213, 277, 396
logo printed on, 182
making direct disbursements, 177, 185
manual, 181, 186187
petty cash, 279, 281
postings for, 189, 279
preferences for, 437439
preparing unscheduled, 220
printed register of, 181
printing, 181182, 188189
purchasing computer, 181
reviewing and changing, 221223
scheduling payroll, 218220
selecting fonts for, 183
signatures printed on, 15
style of, 182
termination, 220
voiding, 277278
Choose Bank Account dialog, 230
Class Budget Overview report, 317
Class budgets, 314315
class tracking, 437, 460462
classes
creating, 460
customizing tracking of, 460462
defining Class List for items, 53
editing, deleting, and merging, 461
enabling tracking for, 437
payroll job costing, 425
reasons to use, 460
reporting by, 461462
subclasses, 460461
using in transactions, 461
Clean Up Company Data Wizard, 482484
clearing transactions, 291, 293
Client Data Review (CDR), 34, 359360
client files, 488489
Client Totals Summary, 492
closing
enabling date for, 437
year-end, 404405
Closing Date Exception report, 406
COGS account, 257
columns
Add/Edit Multiple List Entries
window, 20
customizing template, 95
Make General Journal Entries window,
324325
502
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Composite Default screen
Comma Separated Value (CSV) format,
489490
comma-delimited reports, 299
company file, 1861. See also year-end
procedures
accountants copy of, 350357
assigning per-item price levels, 5253
backups of, 469472
chart of accounts setup in, 2533
cleaning up data in, 481484
closing, 404405
connecting data to Intuit Statement
Writer, 363
consolidating multiple company
reports, 361362
creating, 18
credit card numbers in, 41
Customer Message List, 56
customer setup in, 3341
customizing fields for, 5759
data list setup in, 1920
deleting, 467468
entering items, 4851
entering jobs, 4244
Fixed Asset Item List, 5152
importing data, 2025
Job Type List, 55
Memorized Transaction List, 54
merging accountants copy changes in,
354355
merging records in lists, 6061
opening QuickBooks without, 467
Other Names List, 54
Payment Method List, 56
payroll items for, 216
payroll schedules for, 218220
portable, 477480
Price Level List, 52
removing from selection list, 468
Sales Rep List, 54
saving, 1819
sending to accountant, 350
setting up with Payroll Setup
Wizard, 216
Ship Via List, 56
Terms List, 5556
using in Fixed Asset Manager,
487488
Vehicle List, 57
vendor setup in, 4447
Vendor Type List, 55
verifying and rebuilding, 480481
Workers Comp List, 54
Company Preferences tab (Preferences
dialog)
about, 432
Accounting section settings, 436439
Finance Charge settings, 133134
General section settings, 435
Sales Tax section, 191, 451
Company Snapshot feature, 14, 357359
complex passwords, 458, 459
Confirmation And Next Steps dialog, 222
Contractor Edition, 57
Billing Rates Level List, 53
chart of accounts, 7
Fixed Asset Manager, 5
job costing features in, 57
contractors
paying, 412
time tracking for, 409, 411
copying budget numbers across months,
309310
copying previous timesheets, 417
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Cost Of Goods Sold account, 178
counting inventory, 263270
adjusting count on worksheet,
265267
planning physical count, 265
printing Physical Inventory
Worksheet, 263265
value adjustments, 267268
Create Credit Memos/Refunds dialog, 80
Create Invoices window, 64, 77, 276
Create New Budget dialog, 307
Create Progress Invoice Based On Estimate
dialog, 75
Create Statements window, 139
credit card protection
about, 41, 457459
enabling, 459
user access when enabled, 454
credit cards
accepting online payments via, 396
creating credit card account, 283284
deducting charges for from deposits,
121122
depositing payment from, 120
entering charges for, 284285
managing, 282
paying bill for, 287
reconciling bill for, 286287
renaming vendor transactions on, 387
treating as vendors, 282283
using as liability accounts, 283287
credit limits, setting customers, 39
credit memos
applying, 8082
creating, 79
e-mailing, 9192
printing, 8588
credits
applying to different jobs, 110
applying to invoices, 82, 109110
applying to payments, 179
floating, 81
giving credit refund, 8182
recording vendor, 163164
currency
configuring multiple, 444445
customers and jobs with multiple, 34
sales tax tracked in home, 190
current window icon, 465
Customer:Job Budget Overview report,
316317
Customer:Job budgets, 312314
customer, creating customer reports, 132
Customer Center
accessing Customers & Jobs List,
3435
entering jobs in, 4244
Customer Message List, 56
Customer Payment form, illustrated, 106
customers
about jobs and, 3334
accessing Customers & Jobs List,
3435
adding address information for, 3637
adding new, 35
assigning accounts to, 39
assigning sales tax codes and
items to, 196
configuring sales tax for, 39
creating Customer:Job budgets,
312314
credit card number for, 4041
editing data for, 41
entering cash sales for, 115116
504
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Composite Default screen
customers (cont.)
entering new, 3541
entering opening balance, 36
handling bounced checks from,
275277
handling reimbursable purchases
for, 158
integrating information in Word
documents, 10
invoicing for reimbursable expenses,
151156
linking sales tax codes to, 192
multiple price levels for, 9
multiple shipping addresses, 9
payment information for, 3940
payment postings for, 113114
preferred payment method, 3940
preferred send method for, 3839
receiving online payments from, 396
receiving PDFs of invoices, 92
retaining credit amounts for, 8081
sales rep for, 38
selecting for finance charges, 135
selecting group to receive statements,
139140
sending statements by preferred
method, 140
sending statements to, 136
terms for, 38
Terms List, 5556
type of, 38
using custom names fields for, 5758
viewing unbilled time and expenses
for, 156157
Customers & Jobs List, accessing, 3435
Customize Columns dialog, 226, 227
Customize Icon Bar dialog, 463, 465
Customize Your Menus dialog, 463
customizing, 431465
A/R aging reports, 127130
class tracking, 460462
company file fields, 5759
Employee Center, 225227
Enterprise fields, 16
Favorites menu, 14, 462463
Icon Bar, 463465
item fields, 59
and memorizing reports, 343344
payroll items, 205
payroll templates, 332333
Payroll Transaction Detail report,
427428
Preferences dialog, 431452
sales tax code reports, 196197
sensitive QuickBooks areas, 455
templates, 93101
user access, 453455
D
data
audit trail for, 484485
backup file verification options, 471
budgets based on last years, 312
changing and reviewing paycheck,
221223
checking on 941/943, 238
company file cleanup, 481484, 485
company snapshot, 14, 357359
configuring header/footer, 129130
creating and editing company file lists,
1920
entering budget, 308312
entering item, 4951
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data (cont.)
entering online payment, 389
filtering report, 341342
hiding detail on tax form worksheets,
245, 246
importing from Excel, 2025
importing into Fixed Asset Manager,
489490
mapping imported, 2223
merging records in lists, 6061
reviewing client, 34, 359360
saving budget, 305
selecting for trial balance, 340341
sorting bank account, 292
transferring to TurboTax, 404
verifying backup, 471, 476
data entry, cash sale, 115116
dates. See also fiscal year
check, 176, 219, 438
choosing accountants copy dividing,
353354
closing, 404405, 437
default for new transactions, 434
format for, 435
hiding transactions by, 292293
paying bills by due, 174
sales tax payment, 191
selecting data for cleanup by, 481
selecting range for statements,
138139
setting finance charge assessment, 135
warnings for past due, 437
decimal point, 433
deductions
calculating payroll, 200
deducting credit card charges from
deposits, 121122
e-payment, 390
paycheck contributions and, 235
tax, 167, 286
default packing slip, 90, 450
delays in online payments, 389
deleting
accountants copy, 355
budgets, 306
checks, 278
classes, 461
company files, 467468
icons, 464
invoices, 71
transactions while reconciling, 294
unmatched transactions, 386388
unused list elements, 483484
user information, 452453
deposit slips
filling out, 120122
printing, 122123
deposits
adding downloaded deposit to bank
register, 382
adding to bank register before
reconciling, 289290
cash back from, 122
credit card, 120
deducting credit card charges from,
121122
delaying, 120
entering while reconciling
accounts, 294
filling out slip for, 120121
handling non-customer, 272273
making payment income, 117123
depreciation. See also Fixed Asset Manager
accounts for, 328329
506
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depreciation. See also Fixed Asset Manager
(cont.)
calculating with Fixed Asset
Manager, 492
defined, 327328
GJEs for, 329330
reviewing projected, 491
tracking, 327330
Desktop View section (Preferences dialog),
439441
dialogs. See specific dialogs
Direct Connect
enabling access for, 371374
illustrated, 371
paying bills online, 388390
PINs for, 370, 372373
sending messages to bank, 393394
services available with, 377
direct deposit
dates for paycheck, 219
enabling for employee, 200, 210
services for, 200
direct disbursements, 177, 185188
disbursements
adding to bank register before
reconciling, 289
voiding, 277278
Discount Account field (Discount And
Credits window), 178179
Discount And Credits dialog, 109, 111
discounts
allowing for late payments, 112113
applying to invoices, 6869, 111113
applying to payments, 177
earned, 178
posting, 113114
taking after discount date, 177178
Discounts account, 113
Discrepancy report, 300301, 302
Display tab (Modify Report: Trial Balance
window), 339
Disposal tab (Fixed Asset Manager), 491
dividing date for accountants copy,
353354
Document Actions panel (Intuit Statement
Writer), 364365
Document Management
about, 1112
illustrated, 12
dot matrix printers, 8687, 183
downloading
bank transactions, 374, 375, 377382
data with Web Connect, 451
Draw account, 122
drop-down lists, 432
duplicate invoice numbers, 450
duplicate purchase orders, 443
duplicating estimates, 74
E
earned discounts, 178
EasyStep Interview
configuring company file with, 18
selecting from examples in, 3132
using, 34
e-check processing, 1213
Edit Account dialog, 148
Edit Employee dialog, 410
Edit Item dialog, 258
Edit Renaming Rules dialog, 385
editing
chart of accounts, 32
customer data, 41
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Composite Default screen
editing (cont.)
external accountant users, 361
icons text or appearance, 464
invoices, 71
multiple list entries, 13, 1920
reimbursable expense amount on
invoice, 155
renaming rules, 385
sales tax amounts, 198
transactions, 433
transactions while reconciling, 294
user information, 452453, 456
editions of QuickBooks. See also Enhanced
Payroll for Accountants; Enterprise
Solutions Edition; Premier Edition; and
specific editions
Accountant Edition, 35
Billing Rates Level List and, 53
Contractor Edition, 57
managing backorders, 84
Manufacturing and Wholesale
Edition, 79
new QuickBooks features, 1116
Nonprofit Edition, 9
number of custom fields for items, 59
Professional Services Edition, 10, 53
Retail Edition, 10
U/M supported in, 251
EFT (Electronic Fund Transfer), 390
EFTPS (Electronic Federal Tax Payment
System), 233
electronic checks
printing signatures on, 15
processing, 1213, 277, 396
e-mailing
941/943 forms, 239
accountants copy to accountant, 350
customer statements, 140
e-filing W-2/W-3 forms, 243
financial statements, 366
invoices and credit memos, 9192
portable company files, 478
purchase orders, 158
Employee Center, 223227. See also
employees
customizing, 225227
Employee tab, 224
illustrated, 223, 226
Payroll tab, 225
Transactions tab, 225
Employee Defaults window, 206
Employee tab (Employee Center), 224
employees
assigning to payroll schedule, 219
calculating payroll from timesheets,
425426
configuring, 207211
defined, 411
direct deposit service for, 200, 210
information template for, 205207
linking to time tracking, 423
officer, 211
paycheck deductions and
contributions, 235
payroll data for, 215218, 223227
reimbursing mileage for, 170171
setting up, 216217
tax information for, 209210
termination and unscheduled checks
for, 220
tracking time for, 409411
types of, 211
employer payroll payments, 331, 332
508
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Composite Default screen
Employment Info tab (New Employee
dialog), 207, 210
enabling
class tracking, 437
credit card protection, 459
Direct Connect access, 371374
employee paycheck direct deposit,
200, 210
numbered chart of accounts, 2528
purchase orders, 157, 442
reimbursement tracking, 148149
sales orders, 450
tax information fields, 403
unit of measure, 250251, 443
Web Connect access to, 374376
Enhanced Payroll for Accountants
about, 200
archiving 941/943 forms, 239
calculating gross amounts with, 224
workers compensation with, 235
Enter Bills window, 127, 144
Enter Credit Card Charges window, 285
ENTER key, 432
Enter Payroll Information window,
221, 426
Enter Sales Receipts window, 114115
Enterprise Solutions Edition
Accountant Edition features, 35
configuring users for, 456457
consolidating reports for multiple
companies, 361362
Contractor Edition for, 57
creating purchase orders from
estimates, 83
customizing fields in, 16, 59
editing user information, 452453
exporting memorized report
templates, 349
Fixed Asset Manager in, 487
new features of, 1116
special features in, 1011
Working Trial Balance in, 5
e-payments. See also online payments
941/943, 233
account deductions for, 390
equity calculations on Balance Sheet,
344345
estimates
changing, 75
creating, 7375
making purchase order from, 83
memorizing, 74
using in progress billing invoices,
7576
Example Accounts dialog, 31
Excel
editing ISW financial reports in,
363366
importing data from, 2025
Intuit Statement Writer, 5
preparing tax worksheets in, 2021,
244246
saving files in CSV format, 490
expense accounts, 269
expenses. See also reimbursable expenses
tracking and reimbursing mileage,
167171
exporting
budgets, 318319
depreciation data, 494
financial statements, 366
memorized reports, 131, 349
tax data to TurboTax, 404
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External Accountant users
creating, 361
finding Client Data Review as, 359
permissions of, 360361, 454
EZ Setup for payroll items, 204205
F
fake payroll checks, 333334
Favorites menu, 14, 462463
federal tax payments
making 940/941/943 payments, 231,
233234
sending, 231234
setting up FICA payments, 202
Federal Unemployment Tax Act (FUTA),
231, 233234
fields
adding to template footer, 96
custom company file, 5759
customizing customer, 39
enabling tax information, 403
moving between, 432
starting cursor in Write Checks
Payee, 438
ToolTips for clipped, 433
files. See also company file; portable
company file
accountants copy change, 356357
backing up, 469472
cleaning up, 482484
CSV, 489490
deleting company, 467468
formats for exported depreciation
data, 494
PDFs, 92, 239, 354
printing reports to, 299
providing accountants copy for
accountant, 350351
saving downloaded Web
Connect, 451
size of portable company, 478
time stamping backup, 471
transaction log, 476
filtering
bills for payment, 173175
data in aging reports, 128129
trial balance data, 341342
Filters tab (Modify Report: Trial Balance
window), 341
Finance Charge section (Preferences
dialog), 133134, 441
finance charges, 132136
assessing, 134136, 141
configuring, 133134, 441
deducting business-related, 286
printing, 136
financial institutions
deleting unmatched transactions,
386388
Direct Connect services for,
371374, 377
downloading transactions from, 374,
375, 377
finding online, 369371
matching transactions to bank register,
378379
paying bills online to, 388390
renaming rules for transactions with,
382386
selecting regional, 372
sending electronic messages to,
393394
510
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financial institutions (cont.)
viewing transactions downloaded
from, 377378
Web Connect services for,
374376, 377
Financial Institutions Directory, 394
financial statements. See also reports
access to sensitive, 455
Balance Sheets, 344346
creating and opening in ISW, 363
editing in ISW, 363
P&L, 346348
previewing and printing from
ISW, 366
providing supporting documents
for, 366
running year-end reports, 398
trial balance, 338344
financial status report, 357359
fiscal year
calendar vs., 405
payroll year vs., 212
setting reports, 341
Fixed Asset Manager (FAM), 487495
about, 5, 487
Asset tab, 491
calculating depreciation, 492
client files for, 488489
company tax information needed, 488
Disposal tab, 491
exporting depreciation data, 494
Fixed Asset Item List, 5152, 488
importing data into, 489490
journal entries to QuickBooks
from, 492
opening, 487488
Projection tab, 491
reports for, 492494
Schedule tab of, 490
Section 179/40% test, 491492
tax worksheets for, 495
using Client Totals Summary, 492
floating credits, 109
FOB (Free On Board), 450
folders for QuickBooks, 19
fonts
check, 183
report, 342343
template, 98
Fonts & Numbers tab (Modify Report:
Trial Balance window), 342343
footers
adjusting report, 342
configuring data for, 129130
customizing template, 96
forecasting. See also budgets
Business Planner, 320321
Cash Flow Projector, 320
setting up, 319320
formatting A/R aging reports, 130
forms. See also W-2 forms; and specific
numbered forms
940, 240
941/943, 235239
944, 240241
1099, 399400
1120/1120S, 403
8109, 233
Bill of Material, 9
customized nonprofit, 9
invoice alignment, 8687
modifying in Layout Designer, 98101
using Excel worksheet, 244246
voucher check alignment, 185
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Composite Default screen
Full Access permissions, 454455
FUTA (Federal Unemployment Tax Act),
231, 233234
G
GAAP (Generally Accepted Accounting
Principles), 362
general journal entries (GJEs)
about, 323
Accountant Edition and, 334336
adjusting, 335336
automatic numbering of, 437
creating, 323325
custom payroll templates for, 332333
entering opening balances, 325
Fixed Asset Manager, 492
limitations using, 325326
making for changed or new
accounts, 327
recording outside payroll services,
330334
reversing entries, 330
tracking depreciation, 327330
viewing, 335
year-end, 402
general ledger
accounts receivable balance on, 126
bill payment postings to, 176
cash back postings to Draw
account, 122
cash sales postings, 116117
discount postings in, 113114
inventory adjustment postings in, 270
inventory purchases in, 162163
invoice postings for, 7273
recorded check transactions in, 189
transactions when transferring
funds, 274
vendor bill postings in, 146
vendor credit postings in, 164
General section (Preferences dialog),
432435
Generally Accepted Accounting Principles
(GAAP), 362
go live date, 212
graphs
Budget vs. Actual Graph report, 318
preferences for, 447448
using class data in, 462
groups
automatically created for reimbursable
expenses, 152153
creating icon, 464
memorized bill, 166167
sales tax, 194195
H
Header/Footer tab (Modify Report: Trial
Balance window), 342
headers
adjusting report, 342
configuring data for, 129130
customizing template, 9495
Excel worksheet, 245
heading information on invoices, 6567
health benefits, 235
hiding bank account transactions, 292293
history
bounced check, 275
entering payroll, 212215, 217
finance charge, 135
manually batching payroll, 213215
512
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Composite Default screen
I
Icon Bar, 463465
icons
adding, 465
creating current window, 465
customizing order and display of,
463465
removing, 464
Import A File dialog, 22, 25
importing
budgets, 319
company file data, 2025
data into Fixed Asset Manager,
489490
memorized reports, 131, 349
income accounts for reimbursements,
149150
income statements. See P&L statements
inkjet printers, 87, 183, 184
insufficient inventory quantity
warnings, 443
Integrated Applications section
(Preferences dialog), 442
interest income, 291
Internal Revenue Service (IRS)
e-filing W-2/W-3 forms, 243
electronic 941/943 payments to, 233
Internet. See Direct Connect; Web
Connect; and specific online functions
Intuit Check Solution, 1213, 277, 396
Intuit Statement Writer (ISW), 362366
about, 5, 362
creating and opening financial
statements in, 363
modifying templates in Excel,
363366
previewing and printing from, 366
providing supporting documents for
statements, 366
inventory. See also inventory assemblies
adjusting worksheet count, 265267
backorders, 84
counting, 248249, 263270
general ledger postings for purchases,
162163
insufficient quantity warnings, 443
Inventory Adjustment account, 269
making value adjustments, 267268
ordering with POs, 158159
other adjustments to, 270
Physical Inventory Worksheet,
263265
planning physical count, 265
postings for adjustments, 270
preferences for, 442443
product availability tracking, 8
purchasing, 157158
QuickReports for, 263
receiving items for, 159160
recording bills for items received,
160162
reports for, 261263
tracking, 248249
tracking BOM, 9
unit of measure for, 249252
Inventory Adjustment account, 269
inventory assemblies
building, 258260
creating, 255257
defined, 255
non-inventory items in, 2.11-2.12,
257258
taking apart, 261
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inventory items. See also inventory
assemblies
assigning U/M to, 252
bills received with, 160162
calculating quantity available, 443
creating, 252254
defined, 248
receiving, 159160
selling those with u/M, 252
transactions when buying, 157158
using subitems, 254255
Inventory Stock Status report, 262263
Inventory Valuation Detail report, 262
Inventory Valuation Summary report,
261262
Invoice For Time & Expenses window,
156157
invoices. See also reimbursable expenses
adding heading information on, 6567
applying price levels for, 6768
batch printing, 8788
cash payments for, 114117
checking completed, 6970
credits and refunds for, 7982
credits applied to, 82, 109110
customizing, 93101
date-driven terms for monthly, 56
discounts applied to, 6869, 111113
duplicate numbers for, 450
editing, 71
e-mailing, 9192
entering line items for, 67
finance charges on, 135136
job estimates, 7375
line items with zero amounts not
printed, 450
memorized, 101102
messages and memos on, 70
method of sending, 70
modifying timesheets before
creating, 420
paying, 105110
postings for, 7273
previewing printed, 154
printing, 8588, 136
progress billing, 7579
receiving payment for, 105110
recovering bounced checks with,
276277
reimbursable expenses on, 151156
retaining credit for customers, 8081
saving, 70, 135136
selecting templates for, 65
standard, 6473
underpayments for, 108109
voiding and deleting, 71
IOUs, 280
IRS. See Internal Revenue Service; taxes
Issue A Refund dialog, 81
ISW. See Intuit Statement Writer
items. See also inventory items
about, 48
Billing Rates Level List, 53
bounced check, 275276
Class List, 53
creating nonbillable, 425
customizing fields for, 59
data entry for, 4951
deleting unused, 433
entering on invoices, 67
Fixed Asset Item List, 5152
item types, 4849
Price Level List for, 52
514
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items. See also inventory items (cont.)
price levels for, 5253
requiring assigned accounts for, 436
retaining description when editing,
434435
Sales Tax Code List, 53
subitems, 254255
types of, 4849
Items & Inventory section (Preferences
dialog), 442443
J
job costing
calculating from timesheets, 425426
classes for payroll, 425
configuring payroll preferences
for, 424
Contractor Edition features for, 57
linking employee record to, 423
tracking costs, 151
Job Costing Center, 6
Job Info tab (New Job dialog), 43
Job Status drop-down list (New Job
dialog), 4344
Job Type List, 55
jobs. See also job costing
about customers and, 3334
accessing Customers & Jobs List,
3435
applying credits to different, 110
choosing for progress billing invoice,
7576
Contractor Edition features for, 57
Customer:Job budgets for, 312314
entering in Customer Center, 4244
estimates for, 7375
overruns for, 76
progress billing invoices for, 7579
reports for, 111
tracking expenses for, 151
Jobs & Estimates section (Preferences
dialog), 443444
journal entries (JEs). See general
journal entries
L
labels for imported data, 2224
laser printers, 87, 183, 185
last good backup, 476
late payment discounts, 112113
Layout Designer, 98101
liability accounts, 283287
lighting bolt icon, 371, 392
line items
changing on progress billing invoice,
7779
dont print items with zero
amounts, 450
entering, 67, 7677
lists
accessing Customers & Jobs, 3435
adding/editing multiple entries, 13,
1920
Billing Rates Level, 53
Class, 53
Customer Message, 56
deleting elements of, 483484
Fixed Asset Item, 5152, 488
Job Type, 55
Memorized Transaction, 54
merging records in, 6061
Other Names, 54
Payment Method, 56
Price Level, 52
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Composite Default screen
lists (cont.)
removing company file from
selection, 468
Role, 457
Sales Rep, 54
Sales Tax Code, 53
Ship Via, 56
Template, 101
Terms, 5556
Vehicle, 57
Vendor Type, 55
Workers Comp, 54
local tax remittance, 234
Locate Discrepancies dialog, 300
logos
adding to templates, 97
printing on checks, 182
M
mailing. See also e-mailing
customer statements, 140
labels for, 8889
Make Deposits window, 120121
Make General Journal Entries window,
323325
manual checks
recording, 186187
writing, 181
manual data entry
payroll, 201, 213215
QuickBooks, 19
Manufacturing and Wholesale Edition, 79
mapping imported data, 2223
marking up reimbursable expenses,
155156
matching downloaded transactions,
378379
Medicare payments. See also 941/943
payments
setting up, 202
Memorize Report dialog, 344
Memorize Transaction dialog, 333
Memorized Transaction List, 54
memorizing
aging reports, 130131
Balance Sheets, 345346
custom reports, 343344
estimates, 74
importing/exporting memorized
reports, 131, 349
invoices, 101102
payroll transactions, 332333
vendor bills, 165167
memos
adding invoice, 70
credit, 79, 8082, 8588, 9192
menu, Favorites, 14, 462463
merchant card fees, 121122
merging
accounts, 33
changes from accountants copy,
354355
classes, 461
list records, 6061
messages. See also warnings
after sending accountants copy,
352353
before opening reports, 447
invoice, 70
restoring one-time, 433
sending to bank, 393394
turning off pop-up, 433
Microsoft Excel. See Excel
Microsoft Word, 10
516
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Mileage By Job Detail report, 170
Mileage By Job Summary report, 170
Mileage By Vehicle Detail report, 169170
Mileage By Vehicle Summary report, 169
mileage expenses, 167171
adding vehicles for, 167168
creating mileage items for, 168
entering, 169
rates for, 168
reimbursing employees and
subcontractors for, 170171
reports for, 169170
Modify Report: A/R Aging Detail
dialog, 128
Modify Report: Trial Balance window
Display tab, 339
Filters tab, 341
Fonts & Numbers tab, 342343
Header/Footer tab, 342
Most Common Sales Tax Item field (Sales
Tax Preferences dialog), 193194
multiple billing rates, 7
multiple budgets, 305306
multiple currencies, 34, 444445
multiple job estimates, 74
multiple pricing levels, 9, 10
multiple U/Ms, 251
My Preferences tab (Preferences
dialog), 432
N
Names List, 5758
naming
accounts, 2829
customizing name fields, 5758
printing account names on
vouchers, 437
vendors for SUI, SDI, and, state
income tax, 234
New Customer dialog, 3541
Additional Info tab, 3739
Address Info tab, 3637
illustrated, 35
Payment Info tab, 3942
New Employee dialog
changing tabs of, 207
Employment Info tab set, 207, 210
Payroll And Compensation Info tab,
207, 208210
Personal Info tab set, 207208
Workers Compensation tab, 207, 211
New Financial Report window, 363, 364
New Item dialog, 50, 195, 253
New Job dialog, 4244
New Vendor dialog
Account Prefill tab, 47
Additional Info tab, 4647
Address Info tab, 45
illustrated, 45
using, 4445
No Access permissions, 454
non-customer deposits, 272273
nonposting accounts, 24
Nonprofit Edition, 9
Notepad, 4142
NSF (NonSufficient Funds), 275276
numbers
automatic decimal point in, 433
changing report display for, 342343
credit memo, 79
numbering GJEs, 437
printing account number on vendor
checks, 438439
using chart of account with, 2528, 436
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O
officer employees, 211
online backup service, 469
online banking services, 368396
Direct Connect access, 371374
finding your bank online, 369371
improvements to, 15
interface preferences for, 439
paying bills online, 388390
PINs and passwords for, 369, 370,
372373
setting up, 369
using Online Banking Center, 376377
Web Connect access, 374376,
451452
online payments. See also electronic checks
941/943 e-payments, 233
accepting credit cards for, 396
bank register for making, 393
bank support for, 388
checking status of, 391
e-payments, 390
how it works, 390391
Pay Bills window for, 392393
QuickBooks Bill Pay Service,
394395
receiving from customers, 396
selecting bank accounts for, 391, 392
transferring money online, 395
uploading, 393
using QuickBooks vs. bank website
for, 388389
Write Checks for, 391392
Online Payroll service, 200
Open Bills Exist window, 186
open item systems, 105
opening balances
correcting reconciliation, 299300
entering, 325
entering customers, 36
opening QuickBooks without company
file, 467
orders. See also purchase orders; sales
orders
backorders, 84
Other Names List, 54
outside payroll services, 330334
customizing entry templates, 332333
noting employer payments, 331, 332
reconciling payroll account, 333
recording payroll, 331, 332
transferring money to payroll account,
330331
overruns, 76
owner employees, 211212
P
P&L (Profit & Loss) budgets, 305,
307312
P&L statements, 346348
about, 346
by class, 462
customizing and memorizing, 348
Profit & Loss Budget Overview report,
315316
Profit & Loss Budget Performance
report, 318
Profit & Loss By Class report, 348
Profit & Loss By Job report, 348
Profit & Loss Detail report, 347
Profit & Loss Prev Year Comparison
report, 347
Profit & Loss Unclassified report, 348
518
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P&L statements (cont.)
Profit & Loss YTD Comparison
report, 347
types of, 315316, 318, 347348
unclassified reports, 348, 462
year-end, 398399
packing slips, 90, 450, 451
Paid status, 71
Partial Page tab (Printer Setup dialog), 184
passwords
accessing closed books with, 405
complex, 458, 459
credit card protection, 458459
managing user, 453
needed for accountants copy, 351
online banking service, 370
recovering administrators, 453
Pay Bills window, 175, 392393
payees
leaving blank for petty cash
expenses, 282
renaming rules for, 383
skipping renaming rules for, 386
Payment Application Best Practices
(PABP), 457
payment card industry (PCI), 457
Payment Info tab (New Customer dialog),
3942
Payment Method List, 56
Payment Summary dialog, 179180
payments. See also online payments;
remittances
941/943, 231233
applying to invoices, 107108
ATM, 280
calculating automatically, 107
choosing accounts for, 176
configuring customers, 3940
credit card, 287, 396
credits applied to, 179
delaying deposit of, 120
delays in online, 389
depositing income from, 117123
discounting, 111113, 177179
e-payments, 390
general ledger postings for, 176
including downloaded transactions in
register, 380382
method of, 3940, 176
online bill, 388396
over and short, 123124
partial, 177
preference settings for, 445
receiving invoice, 105110
recording invoice, 105107
remitting federal tax, 231232
selecting vendor bills for, 174177
sending to vendors, 180183
subcontractor, 412
underpayments, 108109
Payments section (Preferences dialog), 445
Payments To Deposit window, 118119
payroll. See also Enhanced Payroll for
Accountants; outside payroll services;
payroll items; remittances
accounts for, 201202
configuring, 201205
data found in Employee Center,
223227
deductions for, 200
direct deposit for, 390
editing timesheets before running, 420
entering historical data, 212215, 217
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payroll. See also Enhanced Payroll for
Accountants; outside payroll services;
payroll items; remittances (cont.)
gross amount calculations with
Enhanced, 224
job costing with, 424, 425
journal entries for outside services,
330334
linking employee record to, 423
payroll items for vendors, 202
posting fake checks to, 333334
reconciling account with outside
services, 333
remitting payroll liabilities, 230231,
331, 332
running, 220223, 425426
scheduling, 218220
signing up for Payroll Service,
200201
transferring money to account,
330331
types of services, 200
using templates for, 205207, 332333
Payroll & Employees section (Preferences
dialog), 446
Payroll And Compensation Info tab (New
Employee dialog), 207, 208210
payroll checks. See checks
Payroll Checkup, 217218
payroll head tax, 234
payroll items
adding, 203204
configuring companys, 216
creating vendor, 202
custom setup of, 205
customizing, 205
defined, 202
EZ Setup for, 204205
Payroll Service, 200201
Payroll Setup Wizard
company setup with, 216
employee setup with, 216217
entering payroll history in, 217
illustrated, 215
running Payroll Checkup, 217218
tax setup with, 217
using, 201, 215218
Payroll tab (Employee Center), 225
Payroll Tax Form, 242, 243
Payroll Transaction Detail report, 427428
PCI (payment card industry), 457
PDFs
archiving 941/943 forms as, 239
e-mailing invoices as, 92
viewing accountants copy notes, 354
pending builds, 259, 260261
pension contributions, 235
per-item price levels, 5253
permissions
assigning to sensitive data, 455
credit card protection and user, 454
existing transaction, 455
External Accountant users,
360361, 454
setting Premier Edition user, 453455
timesheet, 412
Personal Info tab set (New Employee
dialog), 207208
petty cash. See cash
Physical Inventory Worksheet
adjusting count on, 265267
defined, 263
printing, 263265
separating pages of, 265
520
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PINs for online banking services, 369, 370,
372373
pop-up messages, 433
portable company file, 477480
creating, 478
restoring, 478480
using, 477
postings. See general ledger
Preferences dialog, 431452
Accounting section, 435439
Bills section, 437
Checking section, 437439
customizing Job Status drop-down list,
4344
date and time formats, 435
default packing slips, 90, 450, 451
Desktop View section, 439441
Finance Charge section, 133134, 441
General section options, 432435
Integrated Applications section, 442
inventory and purchase order
features, 157
issuing 1099 forms, 399400
Items & Inventory section, 442443
Jobs & Estimates section, 443444
Multiple Currencies section, 444445
numbering chart of accounts, 2528
Payments section, 445
Payroll & Employees section, 446
personalizing, 431432
reimbursement tracking options,
148149
Reminders section, 446447
Reports & Graphs section, 447449
Sales & Customers section, 449451
Sales Tax section, 190191,
193194, 451
Service Connection section, 451452
setting up payroll for job costing, 424
Spelling section, 452
Tax:1099 section, 452
Time & Expenses section, 452
tracking inventory, 248249
viewing downloaded bank
transactions, 377378
preferred send method
choosing for invoices, 70
designating customers, 3839
Premier Edition
Accountant Edition features, 35
Contractor Edition for, 57
creating purchase orders from
estimates, 83
creating users in, 453456
deleting users in, 456
editing user information,
452453, 456
exporting memorized report
templates, 349
new features in, 1116
number of custom fields for items, 59
Working Trial Balance in, 5
previewing
printed invoices, 154
statements, 141
Previous Retained Earnings account, 325
Price Level List, 52
prices
applying levels to invoices, 6768
assigning per-item levels, 5253
multiple levels of, 9, 10
using Price Level List, 39, 52
Print Checks window, 15
Print InvoicesConfirmation dialog, 89
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Print Labels dialog, 89
Printer Setup dialog, 182, 184
printers
aligning forms for, 8687
check printing setup, 181182
dot matrix, 8687, 183
handling partial check pages, 183
inkjet, 87, 183, 184, 185
invoice form setup, 8586
laser, 87, 183, 184, 185
voucher check setup, 185
printing
941/943 forms, 239
1099 forms, 400402
account names on vouchers, 437
account number on vendor checks,
438439
aging reports, 131132
batches of invoices, 8788
check register, 181
check signatures, 15
checks, 181182
deposit slips, 122123
finance charge invoices, 136
financial statements from ISW, 366
invoices and credit memos, 8588
logos on checks, 182
mailing labels, 8889
packing slips, 90
Physical Inventory Worksheet,
263265
purchase orders, 158
reconciliation report, 297299
reprinting checks, 185
saving transactions before, 435
single and batched checks, 188189
statements, 140, 141
W-2 forms, 241243
weekly timesheets, 420421
product availability tracking, 8
Professional Services Edition, 10, 53
Profit & Loss statements. See P&L
statements
progress billing invoices, 7579
changing line items, 7779
choosing estimated job for, 7576
entering line items, 7677
Projection tab (Fixed Asset Manager), 491
Properties dialog, 100
purchase orders
checking for open vendor, 160
duplicate, 443
enabling, 157, 442
generating automatically from sales
orders, 83
illustrated, 159
Purchase Orders account, 158
purchasing computer checks, 181
Q
QBWin.log, 480, 481
QOH (Quantity on Hand) data, 258259
quantity in inventory, 443
QuickBooks. See also editions of
QuickBooks
access to sensitive data in, 455
Accountant Edition of, 35
accountants copy in, 350
Ask My Accountant account, 273
Bill Pay Service, 394395
Billing Solutions, 92, 396
closing in, 404
configuring desktop for, 439441
522
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QuickBooks. See also editions of
QuickBooks (cont.)
customers and jobs in, 3334
customizing transaction windows for,
432435
entering fake payroll checks, 333334
Fixed Asset Manager, 487488
folders for, 19
GJE limitations for, 325326
integrating with other
applications, 442
Intuit Check Solution, 1213,
277, 396
Intuit Statement Writer, 5, 362366
Live Community, 441
loading company file in, 467468
Merchant account, 396
new features of, 1116
online backup service, 469
opening without company file, 467
payroll services with, 200
printing and mailing invoices service
by, 93
updating, 485
uploading accountants copy to server,
351353
using your e-mail software with, 91
QuickBooks Payroll Setup Wizard. See
Payroll Setup Wizard
QuickBooks Pro, 3
QuickBooks Tax Forms Workbook
dialog, 245
QuickBooks Tax Worksheets dialog, 244
R
RAs (Return Authorizations), 164
rebuilding company file, 480481
recalling transactions, 434
receivables. See accounts receivable
Receive Payments window, 108, 112
reconciling, 289303
adding transactions while, 293294
clearing transactions, 291, 293
correcting errors while, 296297
correcting voided or deleted cleared
transactions, 301302
credit card bills, 286287
deleting bank account transactions
while, 294
entering interest income and service
charges, 291
entering undeposited funds while, 294
finishing, 296
giving up search for errors, 303
pausing, 296
payroll account, 333
preparing for bank account,
289290
Reconcile Now feature, 296
reconciliation reports, 297299, 303
setting up Reconcile window, 291293
troubleshooting errors, 299303
undoing last reconciliation, 302303
using adjusting entries, 297
using Begin Reconciliation window,
290291
viewing Discrepancy report,
300301, 302
recovering administrators password, 453
recurring entries and bills. See memorizing
redepositing bounced checks, 277
refreshing reports and graphs, 447
refunds, 8182
regional financial institutions, 372
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registers. See also bank register
credit card, 285
regular employees, 211
reimbursable expenses, 147157
adding taxes to, 153154
changing amount of, 155
editing, 155
excluding on invoice, 154155
including on invoices, 151153
managing, 147
marking up, 155156
preferences for, 449451
recording, 150151
setting up accounts for, 149150
tracking, 147149
types of, 147
viewing unbilled, 156157
reminders for backups, 471
Reminders section (Preferences dialog),
446447
remittances
annual returns, 239241
handling employee deductions and
contributions, 235
making 940 payments, 231, 233234
remitting payroll liabilities, 230231,
331, 332
sales tax, 190, 197198
scheduling payroll, 229230
sending federal tax payments,
231234
state and local income taxes, 234
SUI or SDI, 234235
unscheduled vs. scheduled
payroll, 230
workers compensation, 235
renaming online transactions, 382388
reports, 338366. See also Balance Sheets;
P&L statements
A/R Aging Detail, 127
1099, 400
accounting basis for summary, 448
adjusting headers and footers, 342
Balance Sheet, 344346
budget, 315318
cash flow, 449
class, 461462
Client Data Review, 359360
Closing Date Exception report, 406
company snapshot, 14, 357359
configuring header/footer data,
129130
consolidating multiple company,
361362
contractor-specific, 6
creating customer and job, 132
custom A/R aging, 127130
customizing Payroll Transaction
Detail, 427428
data cleanup effect on, 471
Discrepancy, 300301, 302
displaying unpaid bills, 173174
exporting, 131, 349
filtering data for, 128129, 341342
Fixed Asset Manager, 492494
formatting A/R aging, 130
importing, 131
Intuit Statement Writer, 362366
inventory, 261263
making accountants copy, 350357
Manufacturing and Wholesale
Edition, 79
memorizing, 130131, 343344
mileage, 169170
524
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reports, 338366. See also Balance Sheets;
P&L statements (cont.)
modifying font and number display
for, 342343
Nonprofit Edition, 9
preferences for, 447449
printing aging, 131132
Profit & Loss statements, 346348
Retail Edition, 10
running year-end, 398
sales orders, 83
sales tax, 196197
setting calendar basis for, 341
timesheet, 417418
tracking backorders, 84
trial balance, 5, 338344
unclassified P&L, 462
viewing accountants copy notes, 354
viewing GJE, 335
voided/deleted transaction, 348349
year-end P&L, 398399
year-end tax, 402404
Reports & Graphs section (Preferences
dialog), 447449
restoring
backups, 475477
one-time messages, 433
portable company files, 478480
Retail Edition, 10
reversing entries, 330
Review And Create Paychecks window,
221222
roles, 456, 457, 458
running payroll, 220223
about, 220221
changing data for, 221
reviewing data before, 221223
special runs, 220
S
sales. See also cash sales
batches of cash, 114, 116
data entry for cash, 115116
handling cash, 114117
postings for cash, 116117
Sales & Customers section (Preferences
dialog), 449451
sales orders
about, 8
creating, 83
defined, 83
enabling, 450
generating purchase orders
automatically from, 83
reports tracking, 83
Sales Order Fulfillment worksheet,
78, 101102
templates for, 451
Sales Rep List, 54
sales representatives, 38
sales tax, 190198. See also sales tax codes;
sales tax items
about, 190
adding to reimbursable expenses,
153154
adjusting, 198
codes for, 191193
configuring, 39, 190
creating Sales Tax Code List for
items, 53
creating tax groups, 194195
items for, 192, 193194
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sales tax, 190198. See also sales tax codes;
sales tax items (cont.)
payment dates for, 191
preference settings for, 451
remitting, 190191, 197198
reports for, 196197
tracked in home currency, 190
Sales Tax Adjustment dialog, 198
sales tax codes
assigning to customers, 196
creating, 193
default, 191193
linking to customers and items, 192
reports for, 196197
sales tax items
assigning to customers, 196
creating, 194
defined, 191, 193194
linking sales tax codes to, 192
Sales Tax Liability report, 196, 197
Sales Tax section (Preferences dialog),
191, 451
Save Copy Or Backup window, 469, 473
saving
941/943 forms, 238, 239
accountants copy, 351, 357
backups, 471472
budget data, 305
company file, 1819
downloaded Web Connect data, 451
payment information on vendor bills,
179180
transactions before printing, 435
scanners, 12, 396
Schedule B (941/943 forms), 236, 237
Schedule Backup dialog, 474
Schedule Payments window, 229
Schedule tab (Fixed Asset Manager), 490
scheduling
backups, 472475
payroll, 218220
payroll remittances, 229230
unscheduled vs. scheduled
remittances, 230
SDI remittances, 234235
Section 179/40% test, 491492
security for credit cards, 41, 454, 457459
Select 1099s To Print dialog, 401
Select Bank Account dialog, 376
Select Checks To Print window, 184
Select Employees For Form W-2/W-3
window, 241242
Select Items To Delete dialog, 388
Select Labels To Print dialog, 88
Select Payroll Form window, 241
Select Reconciliation Report dialog, 298
Select Timesheets To Print dialog, 421
Selecting From Examples button (Add New
Account dialog), 31
Selective Access permissions, 454455
Send Accountants Copy dialog, 352
Service Connection section (Preferences
dialog), 451452
Set Closing Date and Password dialog, 405
Set Number Of Previous Companies
dialog, 468
Set Up Account For Online Services For
Payroll Account dialog, 372
Set Up Custom Fields For Names
dialog, 16
Set Up YTD Amounts Wizard, 213, 214
Setting Up Custom Fields For Names
dialog, 58
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sharing company files, 19
Ship Via List, 56
shipping
customers ship to address, 3637
methods of posting, 7273
multiple customer addresses for, 9
setting default, 450
sick pay, 210
signatures on checks, 15
social security. See 941/943 payments
sorting
bank account transactions, 292
bills, 175
order for chart of accounts, 24
spelling checking, 6970, 452
standard checks, 182
state taxes
employee information for, 209
naming vendors for SUI, SDI, and, 234
remitting, 234
statements. See also finance charges
choosing customers to receive,
139140
creating, 138141
entering statement charges, 136138
preferred method for sending, 140
previewing, 141
printing, 140, 141
selecting date range for, 138139
sending to customers, 136
skipping customers for, 140141
status stamps
including on templates, 98
voided invoices with Paid, 71
statutory employees, 211
Stopwatch feature, 414415
strong passwords, 458, 459
subaccounts
creating, 3233
depreciation, 328329
numbering, 26
showing lowest only, 436
using, 29
subclasses, 460461
subcontractors
paying, 412
reimbursing mileage for, 170171
subitems, 254255
SUI
configuring employee deductions
for, 209
remitting, 234235
summary transactions, 481
T
tab-delimited reports, 299
target drive for backups, 475
Tax:1099 section (Preferences dialog), 452
tax codes. See sales tax codes
tax items. See sales tax items
taxes. See also specific taxes
deducting credit card finance
charges, 286
deducting mileage expenses and
income, 167
employee information for, 209210
information needed in Fixed Asset
Manager, 488
remitting payroll liabilities, 230231
running year-end reports, 402404
setting up vendors for paying, 202
setting up with Payroll Setup
Wizard, 217
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taxes. See also specific taxes (cont.)
using own tax tables, 200
worksheets for, 2021, 244246, 495
Tech Help window, 480
Template List, 101
templates
adding logo to, 97
batch sales, 116
changing colors on, 98
choosing sales order, 451
company information on, 98
customized nonprofit, 9
customizing, 93101
defined, 93
editing, 9698
employee, 205207
exporting memorized report, 349
font selection for, 98
list of, 101
modifying for ISW, 363364
modifying layout of, 98101
modifying line items in Build
Assembly, 259
payroll entry, 332333
selecting invoice, 65
status stamps on, 98
termination checks, 220
terms, 38, 5556
time. See also time tracking
format for, 435
stamping backups with, 471
viewing unbilled, 156157
Time & Expenses section (Preferences
dialog), 452
time tracking. See also job costing; timesheets
configuring, 409412
copying previous timesheets, 417
enabling for payroll, 409414
linking employees to, 423
running timesheet reports, 417418
setting up tasks for, 411412
timesheets for, 413415
Weekly Timesheet for, 415416
Time/Enter Single Activity dialog,
413414, 419
timesheets
copying previous, 417
editing original, 419420
editing report entries in, 418419
efficient use of, 424
filling out weekly, 415416
printing weekly, 420421
reports about, 417418
running payroll from, 425426
Stopwatch feature for, 414415
tracking single activity on, 413414
user permissions for, 412
using, 413
ToolTips for clipped fields, 433
tracking. See also time tracking
cash, 278282
depreciation, 327330
inventory, 248249
job costs, 151, 423, 425426
mileage expenses, 167171
online payments to vendors, 389
reimbursable expenses, 147149
Transaction window, 336
transactions
adding while reconciling, 293294
automatic recall of, 434
beep when recording, 432433
clearing bank account, 291, 293
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transactions (cont.)
correcting voided or deleted cleared,
301302
creating Customer:Job budgets
from, 314
data clean up for, 481484, 485
default date for new, 434
deleting, 294, 386388
downloading bank, 374, 375, 377382
editing while reconciling, 294
entering ATM withdrawal, 279280
hiding, 292293
ignoring renaming rules for, 386
including downloaded deposits in
bank register, 382
log file of, 476
maintaining item information when
editing, 434435
matching downloaded bank, 378379
memorizing custom payroll, 332333
permissions to existing, 455
removing all, 484
renaming rules to match online,
382386
reports of voided and deleted,
348349
requiring accounts for, 436
restoring lost, 475477
saving before printing, 435
selectively removing, 482483
sorting bank account, 292
summary, 481
undoing reconciled, 302303
using classes in, 461
viewing downloaded bank, 377378
warning when editing or deleting, 433
Transactions tab (Employee
Center), 225
Transfer Funds Between Accounts
dialog, 274
transferring funds
between bank accounts, 273274
between petty cash and bank
accounts, 279
EFTPS, 233
electronic check processing, 1213,
277, 396
electronically, 390, 395
moving to payroll account, 330331
trial balance, 338344
about, 338
accrual or cash, 339340
configuring, 339343
selecting and filtering data for,
340342
working, 5
troubleshooting
reconciliation errors, 299303
reprinting checks, 185
restoring lost transactions,
475477
using detailed tax form worksheets,
245246
verifying and rebuilding company file,
480481
TurboTax, 404
turning off pop-up messages, 433
U
unattended backups, 472, 474475
UNC (Universal Naming Convention), 475
unclassified P&L reports, 462
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Undeposited Funds account
about, 117
adding funds to bank register from,
289290
depositing cash in, 445
underpayments, 108109
undoing last reconciliation, 302303
unit of measure (U/M), 249252
about, 249250
assigning to items, 252
creating one or more, 251252
enabling, 250251, 443
U.S. Treasury, 202
Universal Naming Convention (UNC), 475
unscheduled payroll, 220
updating QuickBooks software, 485
uploading
accountants copy, 351353
online payments, 393
user forum for QuickBooks, 441
user interface. See also specific windows and
dialogs
beep when recording transaction,
432433
configuring QuickBooks window,
439441
customizing Favorites menu, 14,
462463
drop-down lists, 432
modifying Icon Bar, 463465
moving between fields, 432
online banking services
preferences, 439
tabs of Fixed Asset Manager, 490491
users
access to sensitive data, 455
deleting in Premier Editions, 456
editing information for, 452453, 456
Enterprise, 456457
External Accountant, 359,
360361, 454
keeping record of passwords for, 453
managing information for, 452453
permissions for existing
transactions, 455
Premier Edition, 453456
preventing access to closed books, 405
roles for Enterprise, 456, 457, 458
timesheet permissions for, 412
V
vacation pay, 210
vehicles
list of, 57
tracking expenses for, 167168
vendor bills
applying credits to, 163164, 179
assigning to account, 144145
managing inventory item purchases
on, 157163
memorizing, 165167
partial payments for, 177
purchase orders vs., 159
receiving with inventory items, 162
recording, 143146
reimbursable expenses on, 147157
saving information about paying,
179180
selecting for payment, 174177
splitting expenses among accounts,
145146
tracking and billing mileage expenses,
167171
viewing unpaid, 173174
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Vendor Type List, 55
vendors. See also vendor bills
about, 44
configuring, 4445
credit cards treated as, 282283
discounts for, 113
filtering bills by, 175
leaving blank for petty cash
expenses, 282
naming SUI, SDI, and state income
tax, 234
paying electronically, 390
payroll items for, 202
renaming online transactions for,
383, 387
running reports for 1099, 400
sending payments to, 180183
tracking time for, 411
verifying
backup data, 471, 476
company file, 480481
viewing
bounced check history, 275
Discrepancy report, 300301, 302
downloaded bank transactions,
377378
finance charge history, 135
reconciliation reports, 298, 299, 302
unbilled time and expenses,
156157
unpaid bills, 173174
voided/deleted transaction reports,
348349
voiding
correcting voided, cleared
transactions, 301302
disbursements, 277278
invoices, 71
vouchers, 182, 185, 437
W
W-2 forms
e-filing, 243
printing, 241243
W-3 forms, 243
W-4 forms, 211
wallet checks, 182
warnings
duplicate check numbers, 438
duplicate invoice numbers, 450
duplicate purchase orders, 443
insufficient inventory quantity, 443
past due date, 437
types of transaction, 433
Web Connect
enabling access to, 374376
passwords for, 370
paying bills online, 388390
preferences for, 451452
saving downloaded files, 451
services available with, 377
Web sites
online payments to bank, 388390
viewing purchase orders on
vendors, 158
weekly timesheets, 415416, 420421
withholding. See 941/943 payments
Word, 10
workers. See contractors; employees
workers compensation
contributions for, 235
Workers Comp List, 54
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Workers Compensation tab (New
Employee dialog), 207, 211
worksheets
Physical Inventory, 263267
Sales Order Fulfillment, 78, 101102
tax, 2021, 244246, 495
workweeks, 409
Write Checks window
entering petty cash expenses in, 281
illustrated, 188
making direct disbursements from,
185188
printing from, 188189
selecting bank accounts for online
payments, 391
starting cursor in Payee field, 438
writing
backups to CD, 472
direct disbursement checks, 185188
manual checks, 181, 186187
Y
year-end procedures, 398406
about, 398
Balance Sheet for year-end, 399
closing, 404405
Closing Date Exception report, 406
creating year-end backup, 406
issuing 1099 forms, 399400
making year-end journal entries, 402
printing 1099 forms, 400402
producing P&L, 398399
running 1099 vendor reports, 400
running financial reports, 398
running tax reports, 402404
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