QuickBooks Tips for Business

QuickBooks is a great accounting program for home businesses to keep track of their income and expenses. Easy to learn and easy to use. It has a great help file. You don’t need accounting knowledge to generate statements like income statements and balance sheets needed to prepare your taxes and run your business. I’ve listed some key points to keep in mind when using QuickBooks.

Cash or accrual accounting? The first step in setting up your business in QuickBooks is to determine whether you will track income and expenses in cash or on an accrual basis. Most small businesses operate on a cash accounting basis. This means that you record your expenses when you write a check or charge your credit card, and you record your sales or income when you take the money to the bank and deposit it into your account. This is the easiest way to record your transactions. Some businesses must report to the IRS on an accrual basis. This generally applies to large publicly traded companies and/or some manufacturing entities. On an accrual basis, you record revenue at the time of sale, not when you receive payment. You also enter expenses when you receive your bill, not when you pay it. It is up to you which foundation to use. QuickBooks supports both accounting methods.

Simplify your chart of accounts! The most important list in your accounting system is your chart of accounts. With this list of accounts, you can track your money flow, including where your income comes from, where you save it, what your spending is for, and how much you pay for it. The QuickBooks EasyStep Interview walks you through setting up your accounts. The system also offers sample business templates that already have accounts set up for you. You can later remove or add any accounts originally set up in this conversation to better match your income and expenses. Keep your billing schedule SIMPLE! Too many accounts result in messy reports that are difficult to read and analyze. Also, use descriptions for account IDs, not numbers. If you assign account numbers to each account, you will need to remember the numbers for quick data entry. It is much easier to enter the account name when entering transactions. This is a key time saver!

Take advantage of reports QuickBooks has many reports that you can run for the daily management of your business. The most used reports are the Profit and Loss Statement and the Balance Sheet. A profit and loss statement is simply your sales minus your expenses over a period of time. When you choose to view a report, such as a profit and loss statement, you can drill down to each account to get the source of the amount on the report. For example, you see that your travel expense account has a balance of $1,000.00. You want to see who you paid for the trip that month, so you can hover over the amount of the trip expense and double-click for a report that shows you the details of the transactions that make up the $1,000.00 amount spent. You can then continue browsing to see the actual written check. Overview The balance sheet shows your company’s assets, liabilities, and equity. Assets include what you own and what people owe you, such as your bank account balance, inventory you own, accounts receivable, and fixed assets such as equipment and furniture. Liabilities include what your business owes to other people or what your business owes. Examples include unpaid bills, money you owe on credit cards, loans, and sales tax you owe. Equity is your company’s net worth: equity = assets liabilities. Other reports include detailed and summary sales reports, sales tax reports, inventory reports, vendor reports, sales tax reports, payroll reports, and many more.

Create a professional image QuickBooks also has other features that let you customize the forms you want to send to your customers and vendors, such as invoices, statements, and purchase orders. It allows you to generate mailing labels and email messages for your existing customers and vendors that are set up in QuickBooks. You can also print checks on preprinted business forms.

Online banking is available with QuickBooks, which allows you to pay bills electronically and reconcile your bank accounts on a monthly basis. This is essential to ensure that you capture all business deductions to minimize your tax liability at the end of the year.

Keep it separate! You should not keep track of personal finances, investments, and details that are not specifically listed