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- Herausgeber: Packt Publishing
- Kategorie: Fachliteratur
- Sprache: Englisch
Whether you have bookkeeping experience or not, handling the financial side of your growing business requires expertise. With Mastering QuickBooks® 2022, Third Edition, you’ll learn how to use QuickBooks® to build the perfect budget, simplify tax return preparation, manage inventory, track job costs, generate income statements and financial reports, and perform all accounting-related tasks with ease.
Throughout the book, you’ll be guided by an experienced Certified Public Accountant and Advanced Certified QuickBooks ProAdvisor – from setup to core features and beyond.
This new edition has every chapter revised to cover a range of new features and updates available, including smart invoicing and cash flow projections. You'll learn how to create multilingual invoices, track mileage, work with a cash flow dashboard that helps you with cash forecasting and planning reports, and upload batches of bills and checks.
This book will also teach you how to manage sales tax, including how to set up, collect, track, pay, and report sales tax payments. In addition to this, you’ll explore how to export reports to Google Sheets, use the custom chart builder, import budgets, and perform smart reporting.
By the end of this book, you'll be well-versed with QuickBooks and have the confidence to manage all your bookkeeping tasks with ease.
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Veröffentlichungsjahr: 2022
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Mastering QuickBooks® 2022
Third Edition
The bestselling guide to bookkeeping and the QuickBooks Online accounting software
Crystalynn Shelton, CPA
BIRMINGHAM—MUMBAI
Mastering QuickBooks® 2022
Third Edition
Copyright © 2022 Packt Publishing
All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, without the prior written permission of the publisher, except in the case of brief quotations embedded in critical articles or reviews.
Every effort has been made in the preparation of this book to ensure the accuracy of the information presented. However, the information contained in this book is sold without warranty, either express or implied. Neither the author, nor Packt Publishing or its dealers and distributors, will be held liable for any damages caused or alleged to have been caused directly or indirectly by this book.
Packt Publishing has endeavored to provide trademark information about all of the companies and products mentioned in this book by the appropriate use of capitals. However, Packt Publishing cannot guarantee the accuracy of this information.
Producer: Tushar Gupta
Acquisition Editor – Peer Reviews: Saby Dsilva
Project Editor: Namrata Katare
Content Development Editor: Lucy Wan
Copy Editor: Safis Editing
Technical Editor: Tejas Mhasvekar
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First published: December 2019
Second edition: January 2021
Third edition: January 2022
Production reference: 4241122
Published by Packt Publishing Ltd. Livery Place 35 Livery Street Birmingham B3 2PB, UK.
ISBN 978-1-80324-428-0
www.packt.com
To my mother, Mary A. Moore, and my mother-in law, Florence J. McGrue, who are smiling down on me from heaven; to my husband, Charles, for always being loving and supportive; to my siblings, Cynthia, James, and Jay; and to my niece and nephews, Jonathan, Dante, Taelor, and Braylon, who make me proud to be their Aunt! To my fellow accountants, bookkeepers, and tax professionals, who spend countless hours doing their part to help small businesses succeed – I salute you.
– Crystalynn Shelton, CPA
Contributors
About the author
Crystalynn Shelton,CPAis the author of two Amazon Bestsellers, Mastering QuickBooks 2020 and Mastering QuickBooks 2021. She has a degree in accounting from the University of Texas, Arlington, and is a licensed CPA and Advanced Certified QuickBooks ProAdvisor. Crystalynn has managed accounting teams at Fortune 500 companies such as Texaco and Paramount Pictures. She ran her own bookkeeping practice for 3 years and worked for Intuit (QuickBooks) for 3 years as a senior learning specialist. Crystalynn provides training, consulting, and coaching services to small businesses looking to get a handle on their bookkeeping. She is also an adjunct instructor at UCLA Extension, where she teaches accounting, bookkeeping, and QuickBooks to hundreds of small business owners and accounting students each year.
When she is not working, she enjoys traveling and trying new restaurants with her husband. Visit her website at https://crystalynnshelton.com/ to sign up for her monthly blog.
To the editors, proofreaders, and technical writers at Packt, thank you for all of your hard work to help make this book possible. To the small business owners all over the world, YOU are my inspiration for writing this book. I hope it helps you to understand how important it is to stay on top of your business finances.
About the reviewer
Dominique Waits is a CPA, Chartered Global Management Accountant, and Certified QuickBooks ProAdvisor (recognized as a Top 100 ProAdvisor) with over 25 years of experience in both public accounting and private industry and an exceptional record of service. She is currently employed by Blue & Co., CPAs, a regional public accounting firm with offices in Kentucky, Indiana, and Ohio. She serves as a manager in the tax and business service departments, where she supports multiple clients with tax return preparation, financial planning, outsourced accounting, and QuickBooks services. She is also a trainer and consultant for a vast array of QuickBooks products including Desktop, Online, Enterprise, Point of Sale, and Payroll, with accounting expertise both as a CPA and a business owner.
Dominique is married and the mother of a teenage daughter, who she spends most of her free time chauffeuring and cheering on at sports events. She and her family enjoy working at their church, volunteering, and vacationing on a beach whenever possible. When Dominique has a moment to relax, she enjoys lounging with a glass of iced tea and a good book.
I would like to first thank my husband, Chris, and my daughter, Mackenzie, for allowing me to use some of my free time to review this manual. They understood that this was an important opportunity and encouraged me along the way. I would also like to thank my employer, Blue & Co., for supporting this project and sharing their enthusiasm, and particularly Director John Copeland for his encouragement.
Join our book’s Discord space
Join the book’s Discord workspace for a monthly Ask me Anything session with the author: https://packt.link/QuickBooks
Contents
Preface
Who this book is for
What this book covers
To get the most out of this book
Get in touch
Section 1: Setting Up Your Company File
Getting Started with QuickBooks Online
What is QuickBooks?
Exploring QuickBooks Online editions
Choosing the right QuickBooks Online edition
QBO Simple Start
QBO Essentials
QBO Plus
QBO Advanced
Creating a QuickBooks Online account
Navigating in QuickBooks Online
QuickBooks Online dashboard and left navigation bar
QuickBooks Online icons
QuickBooks Online menus
Small business bookkeeping 101
Recording sales
Recording expenses
Recording inventory and fixed asset purchases
Recording liabilities
Understanding the chart of accounts
Choosing an accounting method
Understanding how double-entry bookkeeping works
Summary
QuickBooks Online Advanced
Accessing the QBO Advanced test drive account
Setting up customized fields
Managing customized user permissions
Using workflow automation
Importing invoices and budgets into QuickBooks Online
Importing budgets into QuickBooks Online
Batch-creating invoices in QuickBooks Online
Smart Invoicing
Reclassify transactions
Custom reminders
DocuSign integration
Using online backup and restore
Utilizing the performance center and custom charts
Fathom reporting app
Priority Circle membership
Summary
Company File Setup
Key information and documents required to complete the company file setup in QuickBooks Online
Setting up company preferences in QuickBooks Online
Company settings
Billing & Subscription settings
Usage settings
Sales settings
Expenses settings
Payment settings
Advanced settings
Summary
Migrating to QuickBooks Online
Questions to ask yourself in preparation for data conversion
Choosing your QuickBooks start date
Converting from another accounting software or Excel to QBO
Recording details of historical data in QBO
Importing data into QBO
Recording a summary journal entry of historical data in QBO
Reasons not to convert from QuickBooks Desktop to QBO
Functionality not available in QBO
QuickBooks Desktop data that will not convert to QBO
Converting QuickBooks Desktop data to QBO
Checking the target count
Creating a QBO account
Backing up your QuickBooks Desktop file
Checking for updates
Running the QuickBooks Desktop conversion to QuickBooks Online tool
Logging in to QBO
Verifying that all of your data was converted
Summary
Customizing QuickBooks for Your Business
Customizing the chart of accounts list
Adding a new account to the chart of accounts list
Importing a chart of accounts list
Editing accounts on the chart of accounts list
Inactivating an account on the chart of accounts list
Reactivating an account on the chart of accounts list
Merging accounts in QuickBooks Online
Connecting bank accounts to QuickBooks Online
Importing banking transactions automatically
Uploading banking transactions from an Excel CSV file
Connecting credit card accounts to QuickBooks Online
Importing credit card transactions automatically
Uploading credit card transactions from an Excel CSV file
Giving other users access to your QuickBooks data
Standard user
Company administrator
Reports-only user
Time tracking user
Accountant user
Summary
Managing Customer, Vendor, and Products and Services Lists
Managing customer lists in QuickBooks Online
Manually adding customers in QuickBooks Online
Importing customers into QuickBooks Online
Making changes to existing customers in QuickBooks Online
Inactivating customers in QuickBooks Online
Merging customers in QuickBooks Online
Managing vendor lists in QuickBooks Online
Manually adding vendors in QuickBooks Online
Importing vendors into QuickBooks Online
Making changes to existing vendors in QuickBooks Online
Inactivating vendors in QuickBooks Online
Merging vendors in QuickBooks Online
Managing products and services lists in QuickBooks Online
Manually adding products and services in QuickBooks Online
Importing products and services in QuickBooks Online
Making changes to existing products and services in QuickBooks Online
Inactivating products and services in QuickBooks Online
Merging products and services in QuickBooks Online
Summary
Section 2: Recording Transactions in QuickBooks Online
Managing Sales Tax
Setting up sales tax in QuickBooks Online
Creating an invoice that includes sales tax
Sales tax reports
Paying sales tax when it comes due
Summary
Recording Sales Transactions in QuickBooks Online
Understanding sales forms
Recording income using a sales receipt
Recording income using a deposit
Recording income using a sales invoice
Recording customer payments
Recording payments to the undeposited funds account
Issuing credit memos and refunds to customers
Summary
Recording Expenses in QuickBooks Online
Entering and paying bills
Entering bills into QuickBooks Online
Entering vendor credits into QuickBooks Online
Paying bills in QuickBooks Online
Managing recurring expenses
Writing checks
Printing checks
Editing, voiding, and deleting expenses
Capturing and categorizing receipts and bills
Summary
Reconciling Downloaded Bank and Credit Card Transactions
Overview of the Banking Center
Matching transactions
Editing banking transactions
Understanding bank rules
How do you want to apply this rule?
Reconciling accounts
Summary
Section 3: Generating Reports in QuickBooks Online
Report Center Overview
Navigating the report center
Reports available in the report center
Customizing reports
General report customizations
Row and column report customization
Using filters to customize reports
Header and footer report customization
Saving a customized report
Exporting reports
Exporting reports to Excel
Exporting reports to PDF
Sending reports via email
Summary
Business Overview Reports
Understanding profit and loss statements
Generating balance sheet reports
Understanding the statement of cash flows
Creating a budget
Using the Cash Flow planner
Generating the Audit Log report
Summary
Customer Sales Reports in QuickBooks Online
Generating an accounts receivable aging report
Generating an open invoices report
Generating a sales by client report
Generating a sales by product/service report
Summary
Vendor and Expenses Reports
Generating an accounts payable (A/P) aging report
Generating an unpaid bills report
Generating an expenses by vendor summary report
Generating a bill payments report
Summary
Section 4: Managing Employees and Contractors
Managing Payroll in QuickBooks Online
Setting up payroll
Payroll setup checklist and key documents
Setting up payroll in QBO
Running payroll
Generating payroll reports
Filing payroll tax forms and payments
Summary
Managing 1099 Contractors in QuickBooks Online
Setting up 1099 contractors
Tracking and paying 1099 contractors
1099 year-end reporting
Summary
Section 5: Closing the Books and Handling Special Transactions
Closing the Books in QuickBooks Online
Reviewing a checklist for closing your books
Reconciling all bank and credit card accounts
Making year-end accrual adjustments
Reviewing new fixed asset purchases and adding them to the chart of accounts
Making depreciation journal entries
Taking physical inventory and reconciling this with your books
Adjusting retained earnings for owner/partner distributions
Recording journal entries
Setting a closing date and password
Preparing key financial reports
Giving your accountant access to your data
Summary
Handling Special Transactions in QuickBooks Online
Using apps in QuickBooks Online
Overview of the QuickBooks App Center
Finding apps for your business
Managing credit card payments
Customizing sales templates
Setting up business loans and lines of credit
Adding a business loan or line of credit to the chart of accounts
Making payments on a loan or line of credit
Managing petty cash
Adding a petty cash account in QuickBooks
Recording petty cash transactions
Replenishing petty cash
Reconciling petty cash
Recording bad debt expense
Creating a bad debt item
Creating a credit memo
Applying a credit memo to an outstanding customer invoice
Tracking delayed charges and credits
Summary
Appendix
Shortcuts and Test Drive
QuickBooks Online keyboard shortcuts
QuickBooks Online test drive
Discount on a QuickBooks Online account
QuickBooks Certified User Exam Objectives
Other Books You May Enjoy
Index
Landmarks
Cover
Index
Preface
Intuit QuickBooks is an accounting software package that helps small business owners manage all their bookkeeping tasks. Its complete range of accounting capabilities, such as tracking income and expenses, managing payroll, simplifying taxes, and accepting online payments, makes QuickBooks software a must-have for business owners and aspiring bookkeepers.
The goal of this book is to teach small business owners, bookkeepers, and aspiring accountants how to properly use QuickBooks Online. Using a fictitious company, we will demonstrate how to create a QuickBooks Online account; customize key settings for a business; manage customers, vendors, and products and services; enter transactions; generate reports; and close books at the end of the period. QuickBooks records debits and credits for you so that you don’t have to know accounting. However, we will show you what’s happening behind the scenes in QuickBooks so that you can understand how your actions in QuickBooks impact financial statements. We will also provide you with tips, shortcuts, and best practices to help you save time and become a QuickBooks pro.
The US edition of QBO was used to create this book. If you are using a version that is outside of the United States, results may differ.
Who this book is for
If you’re a small business owner, bookkeeper, or accounting student who wants to learn how to make the most of QuickBooks Online, this book is for you. Business analysts, data analysts, managers, professionals working in bookkeeping, and QuickBooks accountants will also find this guide useful. If you are planning to take the QuickBooks Certified User (QBCU) exam, this book is an excellent study guide. No experience with QuickBooks Online is required to get started; however, some bookkeeping knowledge would be helpful.
What this book covers
Section 1: Setting Up Your Company File
Chapter 1, Getting Started with QuickBooks Online, starts off with a brief description of QuickBooks Online, then it outlines the key features in all four editions of the software. We also explain how to choose the right edition for your business. There are step-by-step instructions on how to create a QBO account and how to navigate the software. Finally, we provide you with some basic bookkeeping knowledge to help you understand what’s going on behind the scenes in QuickBooks.
Chapter 2, QuickBooks Online Advanced, includes a deep dive into the features included in this top-tier QuickBooks Online subscription. We show you how to access the QuickBooks Online Advanced test drive account, how to add custom fields, how to manage customized user permissions, what workflow automation is and how to use it, how to import invoices and budgets, and much more.
Chapter 3, Company File Setup, shows you how to customize the QuickBooks Online account created in Chapter 1 to meet your business needs. First, we explain the documents and key information you will need to have handy for the setup. Next, we walk you through all of the available preferences in QBO and explain the purpose and benefit of utilizing the various options available.
Chapter 4, Migrating to QuickBooks Online, gives you all the information required to migrate to QuickBooks Online from platforms such as Excel, QuickBooks Desktop, or another accounting/bookkeeping software.
Chapter 5, Customizing QuickBooks for Your Business, introduces customization for the chart of accounts and then dives into the different ways of connecting bank accounts and credit cards to your QuickBooks Online account, followed by granting users access to your QuickBooks data.
Chapter 6, Managing Customer, Vendor, and Products and Services Lists, gives you a detailed insight into how to manage your customers, vendors, products, and services. This includes importing customer, vendor, and product and services data from an Excel spreadsheet and manually entering it into the software.
Section 2: Recording Transactions in QuickBooks Online
Chapter 7, Managing Sales Tax, covers how to set up sales tax for the various tax jurisdictions you are required to collect sales tax for, how to create an invoice with sales tax, and what reports will help you to report and pay the appropriate sales tax amount when it becomes due.
Chapter 8, Recording Sales Transactions in QuickBooks Online, starts by giving detailed information on different forms of sales, followed by information on how the customer can record payments using different methods, and finally teaches you how to initiate refunds for your customers.
Chapter 9, Recording Expenses in QuickBooks Online, teaches you how to enter and pay bills for your QuickBooks Online account. Then, we’ll start exploring how to manage recurring expenses, followed by writing and printing checks.
Chapter 10, Reconciling Downloaded Bank and Credit Card Transactions, gives you a brief overview of the banking center in QuickBooks Online and gives you a deep understanding of how the bank rules work, followed by how to edit QuickBooks Online transactions, and finally how to reconcile bank accounts.
Section 3: Generating Reports in QuickBooks Online
Chapter 11, Report Center Overview, takes you through the Report Center, followed by the different reports available, how to customize and export reports, and finally how to send reports via email.
Chapter 12, Business Overview Reports, discusses the three primary reports that provide a good overview of your business: the profit and loss statement, balance sheet report, and statement of cash flows. It also covers the Cash Flow planner and the Audit Log.
Chapter 13, Customer Sales Reports in QuickBooks Online, focuses on reports that will give you insight into your customers and sales. We will discuss what information you will find on each report, how to customize the reports, and how to generate each report.
Chapter 14, Vendor and Expenses Reports, dives into what information you can expect to find in each report, how to customize the report, and how to generate it. This chapter also discusses ways that you can use the report to help you manage your expenses and cash flow.
Section 4: Managing Employees and Contractors
Chapter 15, Managing Payroll in QuickBooks Online, shows you how to set up your payroll system, how to generate payroll, and how to fill payroll tax forms and payments.
Chapter 16, Managing 1099 Contractors in QuickBooks Online, talks about how to set up 1099 contractors, tracking and paying 1099 contractors, and how to generate the 1099 year-end report.
Section 5: Closing the Books and Handling Special Transactions
Chapter 17, Closing the Books in QuickBooks Online, covers the steps needed to close your books each month or for the year; including but not limited to reconciling all bank and credit card accounts, making year-end accrual adjustments (if applicable), recording fixed asset purchases made throughout the year, recording depreciation, taking a physical inventory, adjusting retained earnings, and preparing financial statements.
Chapter 18, Handling Special Transactions in QuickBooks Online, starts by showing you how to use apps in QuickBooks Online. Apps are a great way to help you streamline day-to-day business tasks that can be time-consuming. It also covers how to record credit card payments from customers, keep track of petty cash, and record delayed charges.
Appendix
At the end of the book, there is a brief section called Shortcuts and Test Drive, which summarizes the keyboard shortcuts you can use in QuickBooks Online to save time, and also provides links to the QBO test drive account as well as a QBO discount code. This is followed by the QuickBooks Certified User Exam Objectives, where you’ll find the full list of things you need to know to pass the QBCU exam, along with references to where the relevant content appears in the book – a handy reference for revision.
To get the most out of this book
This book is ideal for anyone who has accounting/bookkeeping knowledge as well as those that don’t. Each chapter builds on the knowledge and information presented in the previous chapters. If you don’t have any experience of using QuickBooks Online, we recommend you start with Chapter 1, Getting Started with QuickBooks Online, and complete each chapter in the order it is presented. If you have experience of using QuickBooks Online, feel free to advance to the chapters that cover the topics you need to brush up on.
Download the example code files
The code bundle for the book is hosted on GitHub at https://github.com/PacktPublishing/Mastering-Quickbooks-2022-Third-Edition. We also have other code bundles from our rich catalog of books and videos available at https://github.com/PacktPublishing/. Check them out!
Download the color images
We also provide a PDF file that has color images of the screenshots/diagrams used in this book. You can download it here: https://static.packt-cdn.com/downloads/9781803244280_ColorImages.pdf.
Conventions used
Bold: Indicates a new term, an important word, or words that you see on screen. For example, words in menus or dialog boxes appear in the text like this. Here is an example: “Click on the Accounting tab located in the left menu bar and select Chart of Accounts.”
CodeInText: Indicates text that the user should type into a field or search bar. For example: “The email address in our example is [email protected].”
QBCU-relevant headings will appear like this
QBCU5.4.5
QBCU5.4.5
QBCU-relevant subsections will appear like this.
Warnings or important notes appear like this.
Tips and tricks appear like this.
Get in touch
Feedback from our readers is always welcome.
General feedback: Email [email protected], and mention the book’s title in the subject of your message. If you have questions about any aspect of this book, please email us at [email protected].
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Submit your proof of purchaseThat’s it! We’ll send your free PDF and other benefits to your email directlySection 1: Setting Up Your Company File
1
Getting Started with QuickBooks Online
QuickBooks is the most popular accounting software for small businesses. The desktop version has been around for more than 25 years and the online version more than 10 years. It is affordable, easily accessible, and ideal for non-accountants. Many competitors have great software but you need accounting or bookkeeping knowledge to use it whereas someone without this knowledge can set up and use QuickBooks. Before diving into the nuts and bolts of setting up QuickBooks for your business, you should understand what QuickBooks is, and what your options are when it comes to using it. Once you know what your options are, you will be in a better position to choose the version of QuickBooks that will best suit your business needs. We will then show you how to create a QuickBooks Online (QBO) account, and how to navigate in QBO.
If you don’t have previous experience as a bookkeeper, then you will need to know a few bookkeeping basics before you get started. In the Small business bookkeeping 101 section, we cover five key areas in terms of recording transactions in your business: money coming in, money going out, inventory purchases, fixed asset purchases, and liabilities. In this section, we will also cover the importance of the chart of accounts, accounting methods, and what double-entry bookkeeping is.
We will cover the following key concepts in this chapter:
What is QuickBooks?Exploring QuickBooks Online editionsChoosing the right QuickBooks Online edition Creating a QuickBooks Online accountNavigating in QuickBooks OnlineSmall business bookkeeping 101Once you’ve got these key concepts under your belt, you will be ready to dive into setting up your business in QBO.
The US edition of QBO was used to create this book. If you are using a version that is outside of the United States, results may differ.
What is QuickBooks?
QuickBooks is an accounting software program that allows you to track your business’ income and expenses. One of the benefits of using QuickBooks is having access to key financial reports (such as profit and loss) so that you can see the overall health of your business at any time. Having access to these reports makes filing your taxes a lot easier. QuickBooks has been around for almost three decades, and it is the accounting software used by millions of small businesses around the globe.
QuickBooks comes in two formats: software that you can install or download on a desktop computer, and a cloud-based program that is accessible from any mobile device or desktop computer with an internet connection.
The cloud-based version, QuickBooks Online (QBO), is available in four editions: Simple Start, Essentials, Plus, and Advanced. The desktop version, QuickBooks Desktop (QBD), also comes in four editions: QuickBooks Mac, Pro, Premier, and Enterprise. In this book, we will focus on QuickBooks Online, discussing each of its editions in detail next. However, if you need additional information regarding QuickBooks Desktop, visit https://quickbooks.intuit.com/.
Exploring QuickBooks Online editions
QuickBooks Online comes in four editions:
Simple StartEssentialsPlusAdvancedEach edition varies in terms of the price, the number of users to which you can give access, and the features included.
The following figure gives a summary of QBO pricing and features for each edition of QBO at the time of writing:
QBCU1.1.1
SimpleStart
Essentials
Plus
Advanced
Cost
$25
$50
$80
$180
Maximum number of users
1
3
5
25
Track income and expenses
Invoice and payments
Tax deductions
Reports
General
Enhanced
Comprehensive
Powerful
Receipt capture
Mileage tracking
Cash flow
Track sales and sales tax
Time tracking
Estimates
Pay 1099 contractors
Bill management (accounts payable)
Time tracking
Inventory tracking
Project profitability
Analytics and insights
Batch invoices and expenses
Customized access
Exclusive Premium Apps
Dedicated account team
On-demand training
Workflow automation
Data restoration
Task management
Table 1.1: QuickBooks Online edition comparison
As you can see from the preceding table, all four editions of QBO include the following features:
Maximum number of users: Each plan includes a set number of users; Simple Start includes one user, Essentials includes three users, Plus comes with five users, and Advanced includes up to 25 maximum users. In addition, each plan includes one or more accountant users. For example, you can give a bookkeeper or your certified public accountant access to your books.Track income and expenses: Keep track of all sales to customers and expenses paid to vendors.Invoice and payments: Invoice customers, enter payments, and stay on top of unpaid invoices.Tax deductions: Keeping track of all expenses will ensure you don’t miss out on any tax deductions you may qualify for.Reports: QuickBooks includes preset reports so you don’t have to create them from scratch. The number of reports available is based on your subscription plan. Simple Start includes the minimum number of reports and Advanced includes the most reports.Receipt capture: Use your phone or mobile device to snap a photo of a receipt and upload it to QuickBooks. You can also link expense receipts to transactions.Mileage tracking: Automatically track miles with your phone’s GPS and categorize them as business or personal trips.Cash flow: Stay on top of your cash flow by using the cash flow tools available in all QBO plans.Track sales and sales tax: Keep track of sales tax collected from customers, submit electronic payments to state and local authorities, and complete required sales tax forms and filings.Time tracking: Employees and contractors can enter time and apply it to a specific customer or project.Estimates: Create a quote or proposal and email it to prospective clients for approval.Pay 1099 contractors: You can keep track of payments made to independent contractors and generate 1099 forms at the end of the year.The Simple Start plan is the most economical, at $25 per month, on sale currently at $12.50 per month. It includes one user and two accountant users.
The Essentials plan is the next tier and starts at $50 per month, on sale currently at $25 per month. It includes three users and two accountant users.
Unlike Simple Start, you can manage bills (also known as accounts payable, A/P) with the Essentials plan. The Plus plan is $80 per month, on sale currently at $40 per month. It includes five users and two accountant users. Unlike the Simple Start and Essentials plans, you can track your inventory and project profitability with the Plus plan. The Advanced plan is the top-tier QBO plan. It starts at $180 per month, on sale currently at $90 per month, and includes up to 25 users and 3 accountant users.
Keep in mind that pricing is subject to change and that the pricing reflected in this book is based on what is reflected on the Intuit website at time of writing.
We will discuss the features of each plan in more detail, and how to choose the right QuickBooks Online version for you, in the next section.
Choosing the right QuickBooks Online edition
QuickBooks Online is ideal for solopreneurs, freelancers, and mid-to-large-sized businesses with employees and 1099 contractors. 1099 contractors are also known as independent contractors, who you may hire to provide services for your business. Since they are not employees of the business, you must provide a 1099 form at the end of the year to any contractor you have paid $600 or more to in the calendar year.
The needs of your business will determine which edition of QBO is ideal for you. The following provides some additional insight into the ideal businesses for each edition of QBO.
QBCU1.1.2
When you purchase a QBO subscription, you can track business finances for one business. If you need to track more than one business, you will need to purchase a QBO subscription for each business entity that you have.
QBO Simple Start
QBO Simple Start is ideal for a freelancer or sole proprietor that sells services only, and no products. You may have employees that you need to pay, or 1099 contractors. The majority of your expenses are paid via online banking or wire transfer, so you don’t need to write or print checks to pay bills.
QBO Essentials
QBO Essentials includes all of the features found in QBO Simple Start. QBO Essentials is ideal for freelancers and sole proprietors that only sell services and no products. You have employees and/or contractors whose time you need to keep track of in order to bill back to clients. Unlike QBO Simple Start, you pay most of your bills by writing checks, and you need the ability to keep track of your unpaid bills. QBO Essentials is the next step for small businesses that may need more reporting options.
QBO Plus
QBCU1.1.2
QBO Plus includes all of the features found in Simple Start and Essentials. Unlike QBO Simple Start and QBO Essentials, QBO Plus is ideal for small businesses that sell products, since it includes inventory tracking. Similar to QBO Simple Start and QBO Essentials, you can pay employees. If you tend to work on a project basis, QBO Plus is ideal because you can track the profitability of all of your projects.
QBO Advanced
QBO Advanced includes all of the features found in Simple Start, Essentials, and Plus. QBO Advanced is ideal for businesses that have more than five users needing access to their data. QBO Advanced is QBO Plus on steroids: it includes all of the features found in QBO Plus, along with some great bonus features, such as on-demand online training for your entire team, and Smart Reporting with Fathom.
The bonus features you will find in QBO Advanced are as follows:
Analytics and insights: Track key performance indicators (KPIs) and create presentation-ready reports.Batch invoices and expenses: Allows you to enter, edit, and email hundreds of invoices, checks, expenses, and bills instead of entering them one by one.Custom user access: Provides a deeper level of user permissions that allows you to manage access to sensitive data, such as bank accounts.Exclusive premium apps: Intuit has more than 600 best-in-class apps to customize QuickBooks for your business needs. For example, Amazon Marketplace Connector is available to automatically sync eCommerce sales to QuickBooks.Dedicated account team: With a QBO Advanced subscription, you will have access to a team of experts who will learn how your business works in order to answer your questions. They will also provide additional resources that will help you to better manage your business financials.On-demand training for staff: With QBO Advanced, on-demand online training videos help you and your staff get up to speed on how to use QBO. This training has an annual value of $2,000 but is included with your subscription to QBO at no additional cost.Workflow automation: Save time and minimize risk by implementing automation for repetitive tasks.Analytics and Insights: Using an app called Smart Reporting with Fathom, you can measure profitability, cash flow, and other KPIs. You can also compare, rank, and benchmark multiple companies, clients, or franchises. This feature is not available in any other QBO edition.Data restoration: Continuously back up changes to your company file or restore a specific version.Task management: Create and assign tasks to staff as well as implementing reminders to ensure deadlines are met.For more in-depth information about the features and benefits of QBO Advanced, head over to Chapter 2, QuickBooks Online Advanced. In that chapter, we take a deep dive into all of the features available in the top-tier QBO plan.
Depending on your business and individual circumstances, you should now be able to determine whether you will need QBO Simple Start, Essentials, Plus, or Advanced. It is important to pick the right version for you so that you have access to the appropriate features you will need. Now that you know about QBO, we will show you how to create a QBO account.
Creating a QuickBooks Online account
The first step to setting up your business in QBO is to create a QBO account.
In this section, we will create a QBO account for Photos by Design, a fictitious business we will use to demonstrate features and explain concepts taught throughout this book. Photos by Design is owned by a sole proprietor who provides photography services for special occasions such as weddings, graduations, and baby showers. Photos by Design is in its first year of business with no employees. However, the owner does hire a few contractors to help meet the demand during the peak months of the year.
To create a QBO account, you need to go to the Intuit website and select a QBO subscription plan.
Follow these steps to create a QBO account:
Open your web browser and go to the Intuit website: www.intuit.com.Click on Products and select QuickBooks, as shown in Figure 1.1:Figure 1.1: Navigating to QuickBooks
Click on Plans & Pricing, as indicated in Figure 1.2:Figure 1.2: Choosing Plans & Pricing
Choose from one of four pricing plans: Simple Start, Essentials, Plus, and Advanced, as indicated in Figure 1.3:Figure 1.3: Choosing a pricing plan
Pricing is as of the writing of this book and is subject to change. To get a discount on your QBO subscription, use my referral link: https://quickbooks.grsm.io/crystalynnshelton4264.
Pro Tip: Intuit has a service called QuickBooks Live that connects you with a bookkeeper, who can assist you in getting things set up properly and managing ongoing tasks.
Figure 1.4: Creating an Intuit account
The following welcome screen will appear:Figure 1.5: Welcome screen after account creation
Click Next as indicated in the screenshot above.
The following screen will appear:Figure 1.6: Entering your legal business name
Type your legal business name as shown in the screenshot above and click the Next button.
The following screen will appear:Figure 1.7: Entering your industry
In the Industry field, type the industry that your business falls into and you will see a variety of options that you can choose from. Photos by Design falls into the Photography studios, portrait industry:
Figure 1.8: Confirming your industry
Pro Tip: QuickBooks uses the industry selection to create a chart of accounts. While you do have the option to skip this field, I don’t recommend it. Instead, pick an industry that is the closest match to your business.
Figure 1.9: Selecting your business structure
Pro Tip: Most small businesses start out as sole proprietors. If you’re not sure what your business structure is, talk to your accountant. You can always select I’m not sure and answer this question in the company settings section that we will explore in Chapter 3, Company File Setup. However, it’s important that you select a business structure in order to customize QuickBooks for your business.
Select Sole proprietorfor Photos by Design and click Next.
On the next screen, select how you make your money: providing services, selling products, both, or something else. Photos by Design generates sales by providing services and selling products, as indicated below:Figure 1.10: Selecting how your business makes money
Click the Next button.
On the next screen, select your role in the business so that QuickBooks can customize your user experience to meet your specific needs. Choose Bookkeeper or Accountantfor Photos by Design and click the Next button as indicated below:Figure 1.11: Selecting your role in the business
On the next screen, select the type of people that work at the business. Photos by Design is a sole proprietorship with one owner who occasionally uses contractors. These selections have been made as indicated in Figure 1.12:Figure 1.12: Selecting who works at the business
Click Next.
The following screen will appear:Figure 1.13: Option to link your QuickBooks accounts
QuickBooks allows you to link your bank and credit card accounts so transactions are automatically downloaded. We will cover this in Chapter 5, Customizing QuickBooks for Your Business, so let’s skip this step for now.
On the next screen, you can choose any apps you are currently using or would like to use.Pro Tip: One of the benefits of using QBO is the ability to connect it to more than 600 apps that are available in the Intuit App Store. The advantage of connecting apps to QBO is it allows you to share data from other programs with QBO, eliminating manual data entry altogether.
Choose I don’t use any apps for Photos by Design, and click the Next button as indicated below.
Figure 1.14: Selecting apps you already use
Click Next again.On the next screen, you can select the transactions you plan to track in QuickBooks. This information will further customize your interface to meet your needs. The selections for Photos by Design are indicated in Figure 1.15 with a checkmark:Figure 1.15: Selecting what you want to use QuickBooks for
After making your selections, click Done.
The following screen will appear:Figure 1.16: QuickBooks Payroll free trial
QuickBooks allows you to run full cycle payroll for your employees and contractors. You must sign up for a payroll subscription, which is an additional monthly fee. Photos by Design does not have employees and a payroll subscription is not required to pay contractors.
Select Maybe later as indicated in the screenshot above and click Done.
You will see the following message appear:Figure 1.17: Completing the account setup
You have completed the initial QuickBooks setup. Now, you can either click on the button at the bottom to Take a quick tour or close out of this screen by clicking the X in the top-right corner.
Now that you have created your QBO account, you are one step closer to managing your books. Next, we will show you how to navigate through the program, which will help you locate what you need to get your business set up.
Navigating in QuickBooks Online
QBO is a very intuitive software. The initial home page is customizable so you can see key data such as invoices, expenses, profit and loss, bank accounts, and sales. There are a variety of ways you can navigate within the program, including via these:
DashboardsLeft navigation barIconsMenus (including within the gear icon and the Quick Create menu)Let’s look at the QBO dashboard and left navigation bar first.
QBCU5.3.2
QuickBooks Online dashboard and left navigation bar
To explore what a QuickBooks dashboard looks like, we will use our sample company, Photos By Design:
Figure 1.18: QuickBooks dashboard
The dashboard includes two views, Get things done and Business overview, as indicated by the two tabs at the top of the screen.
The Get things done view includes a workspace broken down into Money in, Money out, and Accounting and reports. Icons that represent tasks associated with a particular transaction, such as Money in, appear in the order that they should be completed, with arrows pointing to the next step in the process.
Click on the Business overview tab and the following screen will appear:
Figure 1.19: Business overview tab
A brief explanation of the information that appears on the QBO dashboard is as follows:
PROFIT AND LOSS: A snapshot of your total income and expenses will appear in this section. You can select the time period (for example, monthly, quarterly, or annually) you would like to view from the drop-down menu in the upper right-hand corner. Click on the Income or Expenses bar to drill down to the details that make up the totals.EXPENSES: In this section, you will see a summary of expenses by type (for example, office supplies, bank fees, and so on). You can select the time period you would like to view this information for (for example, monthly, quarterly, or annually) from the drop-down in the upper-right corner of the tile.INVOICES: In this section, you will see a summary of paid and unpaid customer invoices. Plus, you will see the number of payments that have been received from customers that have been deposited or are waiting to be deposited. If you click on the tile, you can drill down to the specific invoices and deposits that make up the totals that appear there.BANK ACCOUNTS: A list of all the bank accounts you have connected to QuickBooks Online will appear in this section, along with the balance per the bank and, below that, the balance currently in QuickBooks.You can connect bank and credit card accounts to QuickBooks so that your transactions will automatically be downloaded for you. In Chapter 10, Reconciling Downloaded Bank and Credit Card Transactions, we show you how to manage downloaded banking transactions.
The left navigation bar is another way you can maneuver around QuickBooks. In addition to the dashboard, it includes quick access to key areas such as Banking, Sales, Cash flow, Expenses, Projects, Payroll (if applicable), Time tracking, Reports, Taxes, Mileage, Accounting, and other areas, as shown below:
Figure 1.20: The left navigation bar
Now that you have a better understanding of the dashboard and the left navigation bar and how to customize them to fit your needs, let’s look at the next navigation tool: icons.
QuickBooks Online icons
The following screenshot shows the common icons that can be found on the QBO home page:
Figure 1.21: Icons on the home page
The following are the options you can see:
My Experts (1): Access to a live bookkeeper who can help you get your books set up is available through this link. You can also upgrade your QuickBooks Online subscription or access a QuickBooks ProAdvisor through My Experts.Help (2): If you have a question or need to learn how to do something in QBO, you can click on this icon to launch the help menu. You will find detailed support articles, video tutorials, and access to a sample company file in this section.Search (3): If you need to locate an invoice, bill, or any transaction, you can do a global search of the program by typing an amount name, the name of a vendor, or any information in this field to search for it.Notifications (4): Notifications about changes that have been made to your account or upgrades to your QBO subscription can be found here.Gear (5): This icon will display a menu of tasks that you can perform in QBO. Tasks related to global company settings, lists, and tools such as reconciling and budgeting can be found here.Account info (6): This button allows you to log out of QuickBooks or manage your Intuit account.As we mentioned previously, the QBO icons allow you to navigate the program so that you can quickly get to the information you need. In addition to icons, the QBO menus allow you to access your overall company settings, lists, tools, and your company profile. We will cover QBO menus next.
QuickBooks Online menus
In addition to the left navigation bar, there are a couple more menus you can use to navigate QBO.
The first menu is accessible through the gear icon, located in the upper right-hand corner, next to the Notifications icon. The following screenshot shows the menu that will be displayed when you click on the gear icon:
Figure 1.22: Menu options after clicking the gear icon
A brief description of the areas of QBO that you can access through the gear icon is as follows:
YOUR COMPANY: This section includes global company account settings, which we will explore in detail in the next section. It also allows you to access Manage users, which is where you can give others access to your QuickBooks data. You can launch the Chart of accounts from here and also QuickBooks labs, which is the testing area for new features that are in beta.LISTS: The LISTS menu includes all QuickBooks lists, such as customer listing, vendor listing, and products and services listing. Recurring transactions are available here and any files or images that you have attached to QuickBooks transactions, such as receipts or signed contracts, are accessible in the form of attachments. If you have added custom fields or tags, you can access those lists from this menu.TOOLS: The QBO subscription that you have will determine the tools that are listed in this section. We are using the QuickBooks Plus subscription, which includes budgeting and SmartLook. It also provides us with the ability to import data such as banking transactions, customer and vendor lists, a chart of accounts, and products and services.PROFILE: The profile menu includes a user profile (specific to the user that’s currently logged in), a Feedback section where you can submit recommendations or issues to the Intuit team, the option to refer a friend, and the built-in privacy features included in QBO. If you have multiple QBO companies, you can choose Switch company to navigate from one company to another.The second menu that is available in QuickBooks is the Quick Create menu. You can access this menu by clicking on the + New button located at the very top of the left navigation bar. The following screenshot shows the menu that you will see when you click on the Quick Create icon:
Figure 1.23: The Quick Create menu
Brief descriptions of the areas of QBO that you can access through the Quick Create menu are as follows:
CUSTOMERS: Most of the transactions that pertain to customers can be found here, from creating invoices and sales receipts to accepting customer payments.VENDORS: The tasks related to vendors can be found in this section. This includes recording expenses, writing checks, tracking unpaid bills, and creating purchase orders.EMPLOYEES: If you sign up for a QuickBooks Payroll subscription, you can access all payroll-related tasks in this section. This includes adding new employees, setting up employee deductions, running payrolls, and making payroll tax payments.OTHER: This section includes making bank deposits, bank transfers, recording journal entries, generating customer statements, making inventory adjustments, and paying down credit cards.In this section, we have learned how to access the menus of QBO, all of which give you access to your company information, lists, tools, and profile. In addition, the Quick Create menu allows you to access customers, vendors, employees, and other areas of QuickBooks. From Chapter 3, Company File Setup, onwards, we will show you how to navigate through these and customize QuickBooks for your business. To conclude this chapter, we will introduce you to a few important bookkeeping concepts you need to help you use QuickBooks.
Small business bookkeeping 101
If you are an aspiring accountant, the concepts that we will cover in this section will be familiar to you. However, if you are brand new to bookkeeping, make sure you grab a notepad to take notes, and a cup of coffee to stay alert.
One of the benefits of using QuickBooks to manage your books is that you don’t need an accounting degree to learn how to use the software. However, you should have a basic understanding of how bookkeeping works and what’s happening behind the scenes in QuickBooks when you record transactions.
The main areas of your business include the following:
Money coming into your business (sales)Money going out of your business (expenses)Inventory and fixed asset purchasesTracking the money you owe (liabilities)Using the chart of accounts to properly track everythingAccounting methods: cash versus accrualDouble-entry bookkeepingLet’s discuss each of these areas in more detail.
Recording sales
Every business generates sales by either selling products, services, or a combination of the two. For example, a freelance photographer provides photography services for weddings, graduations, and other special events. A retailer that sells custom T-shirts in various sizes and colors provides a product to generate sales.
In general, there are two types of sales: cash sales and credit sales. The primary difference between the two is in terms of when you receive payment from your customer. Cash sales are sales that require payment at the time a product is sold or services have been provided. For example, let’s say a customer walks into a T-shirt shop and buys a T-shirt. This sale would be considered a cash sale because the sale of the T-shirt and payment by the customer take place at the same time.
Credit sales are the opposite of cash sales because the sale and the payment by the customer take place at separate intervals. For example, let’s say the freelance photographer spends four hours at a wedding and sends their customer a bill a few days later. This is considered a credit sale because payment will take place sometime in the future after services have been rendered.
For bookkeeping purposes, credit sales are recorded as accounts receivable. Accounts receivable, also referred to as A/R, is the money that is owed to a business by its customers. We will talk more about how to keep track of your A/R balances later on.
Recording expenses
The majority of the money that flows out of a business is used to pay for business expenses. Business expenses can be categorized as recurring or non-recurring. A recurring expense is one that repeats, such as rent, utilities, and insurance.
A non-recurring expense is one that is unexpected or takes place less frequently. For example, if a photographer’s camera stops working and they need to spend money to get it repaired or buy a new one, this would be considered a non-recurring expense because it was unexpected.
QuickBooks is designed to help you easily track both recurring and non-recurring expenses. In this book, we will cover how to create recurring transactions in QuickBooks so that you don’t have to manually enter them each time they occur. Plus, you will learn how to pay non-recurring transactions by writing a check, making online payments, or paying with a credit or debit card.
Recording inventory and fixed asset purchases
To keep track of all the costs and quantities for each item that you purchase, you would create a purchase order and send it to your vendor supplier to place an order. When you receive the goods, you would record them in your inventory. As you sell products to customers, you would record the sale in QuickBooks so that your inventory, cost, and quantities can be adjusted in real time.
If you purchase computers, printers, or other equipment for your business, these items are called
