QuickBook 2009

Reviewing the other Banking Commands

2010-12-09T07:32:00.000-08:00

Earlier, I describe the most common and useful banking commands. You may not need to use the other commands provided by the Banking menu. Nevertheless, my compulsive personality requires that I describe these other commands.

Order Checks & Envelopes Command

The Order Checks & Envelopes command displays a submenu of commands you use to order QuickBooks checks and envelopes or to get information about ordering QuickBooks checks and envelopes.

Enter Credit Card Charges Command

If you set up a credit card account — this is a credit card account that you or your business would use to charge transactions — you can choose the Banking ð Record Credit Card Charges command to display a submenu of credit-card-related commands: Enter Credit Card Charges and Download Credit Card Charges.

If you choose the Enter Credit Card Charges command, the Enter Credit Card Charges window appears (see Figure 1). You can figure out how this window works without my help, I'm sure. You identify the credit card account for which you want to record transactions, and you describe the credit card purchase by using the field at the top of the screen. You then use the Expenses and Items tabs — these tabs work the same way as the similar tabs in the Write Checks window — to detail the reasons and the accounts affected by your charge.

Figure 1: The Enter Credit Card Charges window

If you choose the Download Credit Card Charges command — assuming you've set up credit card accounts that allow for online services — QuickBooks downloads recent credit card transactions directly into the credit card register. Perhaps obviously, for this command to work, several prerequisites must be met:

You need a credit card account already set up.
You need to have set up the credit card account for online services.
You need an Internet connection so QuickBooks can go grab the credit card transactions from the credit card company.

Online Banking Command

The Online Banking command displays a submenu of commands that you use to apply for online banking and to see which financial institutions (banks, savings and loans, and credit unions) let you do online banking. If you want to do online banking — this can save businesses a ton of time — call your existing bank and ask whether it provides the service. If it does, ask for a sign-up packet and for specific instructions on how to get going with online banking.

If you don't like the idea of calling your bank directly, choose the Set Up Account for Online Access command from the Online Banking submenu. This command walks you through the process for applying for and setting up online financial services.

Remerber

Can I close with an editorial comment? Online banking is a real time-saver for business owners. If you're not using online banking, you really should have a pretty darn good reason for not doing so.

Online Banking Center Command

Available only when you've set up online banking, the Online Banking Center command displays the Online Banking Center window. You display the Online Banking Center window to transmit online payments and online transactions to your bank. How you use this window is described in the online banking instructions that you get from your bank. In a nutshell, you display the window by choosing a command. You click the Send/Update Account, you provide a PIN, and then you simply watch in admiration as QuickBooks and your bank's computer exchange information. That's really all there is to it.

You can use the Online Banking Center window to record online payments (you can also record online payments by using the Write Checks window described earlier in the chapter), to record online transfers between accounts (you can also use the Transfer Money Between Accounts command described earlier in the chapter), and to send messages. Because you have other ways to do these things, I don't show you how to accomplish these same tasks with the Online Banking Center window. If you do want to use the Online Banking Center window, you can refer to the earlier discussions of the Write Checks window and the Transfer Money Between Accounts window for help about what information goes into what fields and boxes.

If your account won't reconcile, the problem stems from one of several conditions. None of the conditions is hard to describe, but they can be pretty hard to fix. Here's a quick overview of what may be causing you trouble and what may be preventing you from reconciling your account:

Are you working with the right account? That sounds pretty dumb, doesn't it? But if you have several bank accounts, you may be trying to reconcile the wrong account or using the wrong statement to reconcile your account.
Are you missing any transactions? If the bank has recorded transactions that you haven't, this causes your ending balance to not equal your cleared balance. Look on your statement for any transactions that you're missing or forgot to record, and then record these and mark them as cleared.
Have you correctly recorded transactions? This may also sound silly, but if you recorded the transaction and you are a few pennies off or a few dollars off — perhaps you've transposed a couple of numbers — you won't be able to reconcile your account. I commonly find that I've entered a transaction or two wrong per month. (Maybe this is because my fingers are too arthritic to correctly record amounts.) But it's probably very common when you're entering dozens and dozens of transactions to occasionally record a transaction wrong. The occasional errors need to be fixed before you can reconcile an account.

Note that it's quite likely — especially as you are getting started — that you won't be able to successfully reconcile an account because of multiple errors. If you do something like record a transaction erroneously and then forget to record a couple of transactions, you'll need to fix each of these errors in order to reconcile your account.

One final tip: Reconciling an account is much easier if you're using online banking.

Loan Manager

The Loan Manager command displays a window that lists loan accounts you've sent up. This isn't all that special, but the Loan Manager window does do something else that is special. If you click the Add a Loan button, QuickBooks collects loan information from you so that it can break loan payments into principal and interest.

Other Names List

The Other Names list displays a window that lists all the other names you've used to record transactions. Individuals and businesses that appear on your Other Names list are not customers, vendors, or employees. In other words, the Other Names list includes names that don't neatly fit into one of the standard categories.

Reconciling the Bank Account

2009-12-06T19:25:00.001-08:00

You can reconcile a bank account with surprising speed in QuickBooks. To reconcile the bank account, choose the Banking ð Reconcile command. QuickBooks displays the Begin Reconciliation dialog box, shown in Figure 1.

Figure 1: The Begin Reconciliation dialog box

To begin reconciling your account, follow these steps:

Select the account that you want to reconcile from the Account dropdown list.
Use the Statement Date box to identify the ending date of the bank statement that you're using in your reconciliation.

As is always the case with date fields in QuickBooks, you enter the date in the mm/dd/yyyy date format or you click the calendar button and use it to select the correct date.
Enter the ending balance shown on your bank account statement in the Ending Balance box.
Use the Service Charge boxes and the Interest Earned boxes to identify the amount of any service charge or of any interest, the date of any such transaction, and the account that you use to track those charges.

For example, if your bank statement shows a service charge, enter the service charge amount into the first Service Charge box. Enter the date of the service charge transaction into the Service Charge Date box. Finally, enter an appropriate expense account for tracking service charges into the Service Charge Account drop-down list. (Bank charges, for example, is a good account to track service charges.)

In a similar fashion, use the Interest Earned boxes to describe any interest earned on a business account.
Review the statement information.

After you enter information about the bank account, the statement date, the ending balance, and any service charge or interest earned information, take a moment to review the information and confirm that it is correct. You'll have a whale of a time reconciling an account if the amount that you're trying to reconcile to is incorrect.
After you make sure that everything is hunky-dory, click the Continue button.

QuickBooks displays the Reconcile window, as shown in Figure 2.

Figure 2: The Reconcile window

To identify checks and payments transactions that have cleared your bank account, click the transactions that have cleared.

The Reconcile window displays two lists of transactions: a list of checks and payments, which appears on the left, and a list of deposits and other credits, which appears on the right. When you click a transaction, QuickBooks marks the transaction with a check mark. The check mark indicates that a transaction has cleared. You can mark all the transactions on a list as cleared by clicking the Mark All button. You can unmark all the transactions on a list as uncleared by clicking the Unmark All button.

Use the Deposits and Other Credits list to identify those deposit transactions that have cleared the bank account. You identify a cleared deposit transaction in the same way that you identify a cleared check or payment transaction. You can click a transaction, which causes QuickBooks to mark the transaction as cleared. You can also use the Mark All and Unmark All buttons to mark or unmark all the deposits and other credit transactions at one time.

Tip

If you realize that, as part of the reconciliation, you've incorrectly entered the service charge, interest earned, ending balance, or any other information, click the Modify button. QuickBooks redisplays the Begin Reconciliation dialog box (refer to Figure 1). Make the necessary changes and click Continue to return to the Reconcile window.

Verify that the cleared balance equals the ending balance.

If you have provided correct information in the Begin Reconciliation dialog box (refer to Figure 1) and you correctly identified all the transactions that have cleared your account, the ending balance should equal the cleared balance, as shown in Figure 3.

Figure 3: The Reconcile window after the reconcilation is complete
When the ending balance equals the cleared balance, click the Reconcile Now button.

QuickBooks permanently records your cleared transactions as cleared and redisplays the Register window. If you can't reconcile an account, you can click the Leave button. QuickBooks then saves your half-completed reconciliation so that you can come back later and finish it.

Tip

Can I interject a couple of tangential comments here? Good. If you want, you can print a little report that summarizes your reconciliation after you click the Reconcile Now button. (QuickBooks gives you this option in a dialog box that it displays.) You can also click the Previous Reports button to display a dialog box that lets you print other old reconciliation reports. You can click the Discrepancy Report button to produce a report that lists transactions that have been edited since you last reconciled the account. Finally, you can click the column headings used in the Reconciliation window to sort and resort the bank account information.

Transferring Money between Bank Accounts

2009-10-31T04:01:00.000-07:00

To use the Transfer Funds Between Accounts window, follow these steps:

Use the Date field to identify the transfer date.

You can enter the date in mm/dd/yyyy format, or you can click the small calendar button that appears to the right of the Date field. When QuickBooks displays the calendar, click the day that corresponds to the date you want to enter into the Date field.
Use the Transfer Funds From drop-down list to select the bank account from which you're moving funds.

You can enter the bank account name into the box or you can click the drop-down arrow at the right end of the box and select a bank account from the list that QuickBooks supplies.
Use the Transfer Funds To drop-down list to identify the bank account that receives the transferred funds.

The Transfer Funds To box works like the Transfer Funds From box.
Use the Transfer Amount box to identify the amount of the transfer.

For example, if you transfer $100 from your checking to your savings account, the transfer amount is $100.
(Optional) Provide a memo description for the transfer transaction.

If you want (and this is no big deal), you can use the Memo box to provide some brief memo description of the funds transfer.
Save the transfer transaction.

To save your transfer transaction, click either the Save & Close or the Save & New button. Alternatively, if you don't want to save the transfer transaction, click the Clear button.

Figure 1: The Transfer Funds Between Accounts window

Inventory in a Manufacturing Firm

2009-10-27T01:53:00.000-07:00

Tracking inventory in a manufacturing firm is more difficult than in other types of businesses. When you boil everything down to its essence, the problem stems from a couple of tricky accounting requirements:

In a manufacturing environment, the manufacturer combines raw materials items into finished goods items. This means—and this is the challenging part—that the manufacturing process reduces the inventory count and value for some items (the raw materials or the components) while at the same time it increases the count and value of the other, finished goods items.
In a manufacturing environment, the rules say that you don't just count the value of items in the finished goods item inventory values. You also count the cost of labor and factory overhead used in manufacturing the items.

QuickBooks solves the first problem related to manufacturing inventory; however, QuickBooks doesn't solve or address the second problem. Fortunately, as long as you're a small manufacturer, you probably don't need to worry too much about the second problem. You should ask your CPA about this. But don't worry—Congress and the Internal Revenue Service have provided a bunch of loopholes for making the accounting easier for the small guys.

Manufactured Inventory the Simple Way

If you're using QuickBooks Pro or some earlier versions of QuickBooks Premier, you don't have the capability to account for the manufacture of inventory in QuickBooks. The best that you can do is to use group items to combine into individual items on a customer's invoice. This approach sounds sloppy, but it isn't quite as bad as you may think at first blush. You can choose to show only the group item on a customer invoice. This means—getting back to the example of the florist selling red roses and vases—that the florist can "manufacture" a crystal vase of a dozen red roses and then show the manufactured item as a group item on the customer's invoice.

The one thing that's problematic about the "just use a group item" approach is that it doesn't give you a way to track the finished goods' inventory values.

Inventory Accounting in QuickBooks Premier

To account for the manufacture of inventory in QuickBooks Premier, you add inventory assembly items to the Item list for those items that you manufacture. You also record the manufacture of items as you, well, manufacture them.

For example, suppose that Pine Lake Porcelain mostly just buys and resells coffee mugs and other porcelain doodads. But also suppose that once a year, Pine Lake Porcelain assembles a collection of red coffee mugs into a boxed St. Valentine's Day gift set. In this case, QuickBooks can record the assembly of a boxed gift set that combines, for example, four red coffee mugs, a cardboard box, and some tissue wrapping paper.

Adding Inventory Assembly Items

To describe manufactured items, follow these steps:

Choose Lists ð Item List.

QuickBooks displays the Item List window.
Click the Item button in the Item List window and select New from the drop-down list.

QuickBooks displays the New Item window.
Select the Inventory Assembly item from the Type drop-down list.

QuickBooks displays the Inventory Assembly version of the New Item window, as shown below.

The Inventory Assembly version of the New Item window
Specify the account to use for tracking this item's cost when you sell it.

QuickBooks suggests the Cost of Goods Sold account. If you've created other accounts for your COGS, however, select the other appropriate account.
Describe the manufactured item.

Type in a description of the item that you want to appear on documents, such as invoices and so on, that your customers see. (QuickBooks suggests the same description that you used in the Description on Purchase Transactions text box as a default.)
Enter the amount that you charge for the item into the Sales Price box.
Indicate whether the manufactured item is subject to sales tax using the Tax Code box.
Use the Income Account box to specify the account that you want QuickBooks to use for tracking the income from the sale of the item.
Identify the components that go into the finished item.

Use the Components Needed list to identify the individual component items and the quantities needed to make the inventory assembly. Each component item goes on a separate line in the list. Not to be too redundant, but do note that you both identify the component item and the number of component items needed.
Identify the Asset Account.

Specify the other current asset account that you want QuickBooks to use for tracking this inventory item's value.
Select a Build Point.

Use the Build Point box to specify the lowest inventory quantity of this item that can remain before you manufacture more. When the inventory level drops to this quantity, QuickBooks adds a Reminder to the Reminders list, notifying you that you need to make more of the item.
Ignore the On Hand and the Total Value boxes.

See that On Hand box? Leave it set to zero. To enter a number now is to record an uncategorized transaction, and you don't want to do that. Go ahead and leave the Total Value field set to zero, too. You can also leave the As Of box empty, or you can enter the current date here. It doesn't matter.

Recording Manufacture or Assembly of Items

To build some assembly, choose the Vendors ð Inventory Activities ð Build Assemblies command. QuickBooks displays the Build Assemblies window, as shown. All you do is select the thing that you want to build from the Assembly Item drop-down list and then the quantity that you (or some hapless co-worker) have built in the Quantity to Build box. (In Figure 1, I've created an assembly—ValentineBox—which consists of some colorful coffee mugs, an attractive gift box, and some scented tissue paper.) Then you click either the Build & Close or Build & New button. (Click the Build & New button if you want to record the assembly of some other items.)

Figure 1: The Build Assemblies version of the New Item window

While I'm on the subject, let me make a handful of observations about the Build Assemblies window and the Build Assemblies command:

In the top-right corner of the window, QuickBooks shows the quantities of the assembly that you have on hand and for which customers have placed orders. That's pretty useful information to have, so, hey, remember that it's there.
A table in the Build Assemblies window shows you what goes into your product. Not that you care, but this is a bill of materials.
At the bottom of the bill of materials list, QuickBooks shows you the maximum number of assemblies that you can make, given your current inventory holdings.
When you build an item, QuickBooks adjusts the inventory item counts. For example, in the case where you make boxed gift sets, each with four red coffee mugs and two wrapping tissues, QuickBooks reduces the item counts of red coffee mugs and wrapping tissues and increases the item counts of the boxed gift sets when you record building the assembly.

Some of the components used in an assembly may not be inventory items. You can use non-inventory parts in an assembly.

Adjusting Physical Counts and Inventory Values

2009-10-24T19:40:00.000-07:00

Inventory shrinkage, spoilage, and, unfortunately, theft all combine to reduce the inventory that you physically have. In order to record these inventory reductions, you periodically physically count your inventory and then update your QuickBooks records with the results of your physical counts.

Figure 1: The Adjust Quantity/Value on Hand window

To use the Adjust Quantity/Value on Hand window, follow these steps:

Use the Adjustment Date box to record the date of your physical count.

In other words, you want to adjust your quantities as of the day you took or completed the physical inventory count.
Use the Adjustment Account drop-down list to identify the expense account that you want to use to track your inventory shrinkage expense.
(Optional) Identify the customer:job and class.

If it's appropriate, and in many cases it won't be, use the Customer:Job box to identify the customer:job associated with this inventory shrinkage. In a similar fashion, if appropriate, use the Class box to identify the class that you want to use for tracking this inventory shrinkage.

Supply the correct inventory quantities.

The Item, Description, and Current Qty columns of the Adjust Quantity/ Value on Hand window identify the inventory items that you are holding and the current quantity counts. Use the New Qty column to provide the correct physical count quantity of the item. After you've entered the new quantity, QuickBooks calculates the quantity difference and shows this value in the Qty Difference column.

Tip

You can actually enter a value into either the New Qty column or the Qty Difference column. QuickBooks calculates the other quantity by using the current quantity information that you supply. For example, if you enter the new quantity, QuickBooks calculates the quantity difference by subtracting the new quantity from the current quantity. If you enter the quantity difference, QuickBooks calculates the new quantity by adjusting the current quantity for the quantity difference.

Adjust the value.

This window lets you enter both the correct physical count quantity and the updated value for the inventory item. You enter the physical count quantity, obviously, in the New Qty column. You enter the new updated value in the New Value column. You probably use this version of the Adjust Quantity/Value on Hand window only if you're using a lower-of-cost or market inventory valuation method. For example, both financial accounting standards and tax accounting rules allow you to mark down your inventory to the lower of its original cost or its fair market value. If you're doing this-and how you do this is beyond the scope of this book-you enter the new inventory value in the New Value column.

Figure 2: The expanded version of the Adjust Quantity/ Value on Hand window

Tip

Essentially, using the lower-of-cost or market inventory evaluation method just means you do what it says. You keep your inventory valued at either its original cost or, if its value is less than its original cost, at its new value. Obviously, assessing the value of your inventory is a little tricky. But if you have questions, you can ask your CPA for help. One thing to keep in mind, however, is that you can't go changing your accounting methods willy-nilly without permission from the Internal Revenue Service. And changing your inventory valuation method from cost, say, to lower-of-cost or market is a change in accounting method.

Provide a memo description.

If you want to further describe the quantity or value adjustment, use the Memo box for this purpose. For example, you may want to reference the physical count worksheets, the people performing the physical count, or the documentation that explains the valuation adjustment.
Save the adjustment.

After you've used the Adjust Quantity/Value on Hand window to describe the quantity changes or value changes in your inventory, click either the Save & Close button or the Save & New button to save the adjustment transaction. As you probably know at this point in your life, Save & Close saves the transaction and closes the window. Save & New saves the transaction but leaves the window open in case you want to make additional changes.

Tracking Inventory and Items

2009-09-04T03:23:00.000-07:00

If you've worked with QuickBooks, you won't be surprised to hear that the Item list is a key piece of your QuickBooks accounting system. The Item list identifies each of the things that you sell. The Item list also identifies other things that appear on your invoices and—if you use them—on your purchase orders.

I talk about how you work with the QuickBooks Item list: more specifically, how you look at and use the information on the Item list. I explain how to add information to the list and how to edit information already on the list. What's more, I talk about three accounting tasks that are related to your Item list: adjusting physical inventory accounts for inventory shrinkage or spoilage; adjusting price levels of your inventory items; and if you manufacture inventory, how the new version of QuickBooks handles manufactured goods.

Looking at Your Item List

QuickBooks provides a bunch of different ways to see the information that you've stored in your Item list. You may already know some of this stuff if you've worked with QuickBooks a bit. Some of it may be new to you. In any case, the next sections review the half-dozen ways that you can see the items on your Item list.

Using the Item Column

One important point to consider as you look at the Item column and Item drop-down list in Figure 1 is space. Note that the Item drop-down list is pretty narrow. Note also that the Item drop-down list in Figure 1provides the item code (the left column), the item type, and an item description. The item description—if the description is lengthy—is cut off. You'll want to remember this seemingly trivial but important point as you work with your Item file. You want descriptive item codes and, if possible, brief descriptions.

Figure 1: The Item drop-down list on the Create Invoices window

Tip

I'm using pretty self-explanatory item codes in this reference, as you can see from Figure 1. In real life, your codes may be far more cryptic.

Using the Item List Window

If you choose the Lists ð Item List command, QuickBooks displays the Item List window, as shown in Figure 2. The Item List window identifies the item code or name, the description, the type of item , the account that gets credited when you sell some of the items, and the inventory stocking and pricing information (if you supply that).

Figure 2: The Item List window

The Item list provides a good way to quickly see what items you can put on invoices and purchase orders. The Item list also provides a quick and convenient way to see the stocking levels and prices.

If you want more information about an item shown in the Item List window, you can double-click the item. When you double-click the item, QuickBooks displays the Edit Item window, as shown in Figure 3. Essentially, the Edit Item window displays all the information available about a particular item. You can use the Edit Item window to change bits of item information.

Figure 3: The Edit Item window

Using the Inventory Reports

I mention one other thing because it's so darn useful. As you would expect, QuickBooks supplies several interesting, useful inventory reports. If you choose the Reports ð Inventory command, for example, QuickBooks displays a submenu of inventory reports. The submenu provides reports that give inventory valuations, inventory stock levels, and a worksheet that you can use to go out and physically count the inventory on store shelves or in the warehouse.

Reviewing the other Vendor Menu Commands

2009-09-02T07:20:00.000-07:00

I talk about the most important commands on the Vendor menu. Nevertheless, before I wrap up this little dog and pony show, I will quickly review for you the other commands and what they do.

Vendor Center

The Vendor Center window, shown in Figure 1, displays a list of vendors and detailed vendor information for the selected vendor. To use it, select from the Vendors drop-down list the vendor for which you want to see detailed information. The Vendor Center shows a bunch of information for a vendor. This information all comes from the Vendor List, by the way.

Figure 1: The Vendor Center

Tip

If you keep records of your vendors, including information such as their telephone numbers, about the best place to store that information, in my humble opinion, is in the Vendor List. You have to maintain the Vendor List in order for QuickBooks to work. So why not also go to a little bit of extra effort and keep all your vendor information there? If you adopt this approach, the Vendor Detail Center window is the window that you can use to quickly look up things such as the vendor's phone or fax number.

Sales Tax Menu Commands

The Sales Tax command displays a submenu of commands that pay sales tax amounts you've collected to the appropriate tax agency; adjust the sales tax liability due; and produce reports on the sales tax liability you owe, the sales tax revenue you've generated, and the sales tax codes you've set up.

To pay the sales taxes you owe, simply choose the Vendors ð Sales Tax ð Pay Sales Tax command. When QuickBooks displays the Pay Sales Tax dialog box (which lists the amounts you owe various sales tax collection agencies), you select the agencies you want to pay or click the Pay All Tax button. QuickBooks then records checks into the bank account register, and you print the checks in the usual way.

To adjust the amount that QuickBooks thinks you owe a sales tax collection agency, you can choose the Vendors ð Sales Tax ð Adjust Sales Tax Due command. When QuickBooks displays the Sales Tax Adjustment dialog box, select a sales tax agency from the Sales Tax Vendor box and an appropriate expense or income account from the Adjustment Account box. Next, you select the appropriate button (either Increase Sales Tax By or Decrease Sales Tax By) and enter the adjustment amount into the Amount box.

To print one of the sales tax reports, simply select the command that corresponds with the report. For example, to print the Sales Tax Liability report, choose the Vendors ð Sales Tax ð Sales Tax Liability command.

The Manage Sales Tax command displays a window with buttons and clickable hyperlinks that you can use to get sales tax information and perform some of the tasks described in the preceding paragraphs.

Inventory Activities

The Inventory Activities menu displays a submenu of commands you use to work with QuickBooks inventory features and with the related Item list. I am not going to discuss this stuff here.

Print 1099s/1096

The Print 1099s command displays the Printing 1099-MISC and 1096 Forms dialog box, which lets you print 1099-MISC forms for a selected calendar year. You can select the year for which you need to print 1099 forms by selecting a date range description from the drop-down list. Initially, for example, the drop-down list shows Last Calendar Year. Alternatively, you can use the From and To boxes to specify the starting and ending point for the year. After you identify the year for which you want to print 1099 forms, click OK. QuickBooks then creates 1099 forms for any vendors who need them, provided that your 1099 preferences are set up correctly and the vendor is marked as a 1099 recipient in the Vendor List.

You typically send 1099 forms to vendors to whom you pay more than $600 in a year. You can control the actual threshold amount — it varies from year to year because of inflation and type of payment — by choosing the Edit ð Preferences command, clicking the Tax: 1099 icon, and then clicking the Company Preferences tab. For more information about how to set tax 1099 preferences.

Item List

The Vendors ð Item command displays the Item List window.

Paying Bills

2009-08-31T03:16:00.000-07:00

If you use QuickBooks to keep track of the bills that you owe, you don't use the Write Checks window to record the bills that you want to pay. Rather, you tell QuickBooks to display a list of these unpaid bills that you've already recorded — and then you pick and choose which bills QuickBooks should pay and the bank account from which QuickBooks should write the check.

Follow these steps to pay bills in this manner:

Choose the Vendors ð Pay Bills command.

QuickBooks displays the Pay Bills window, shown in Figure 1. You use the Pay Bills window to describe the payment that you want to make.

Figure 1: The Pay Bills window

Describe which bills you want to pay.

Use the Show Bills radio buttons at the top of the Pay Bills window to identify what you want to see. Select the Due On or Before radio button to show only those bills that are due on or before the specified date. To specify the date, enter the date into the Due On or Before date box. To see a list of all the bills that you have to pay, select the Show All Bills radio button.

Tip

You can use the Sort Bills By drop-down list to select the order that QuickBooks uses for listing your bills. For example, you can sort bills by due date, discount date, vendor, and amount due.

Select the bills that you want to pay.

To select bills that you want to pay, click the check column. The check column is the leftmost column in the list of unpaid bills — it's headed by a check mark. When you click the check column, QuickBooks marks the bill with a check mark. The check mark tells QuickBooks that you want to pay that bill. To deselect a bill, click the check column again. QuickBooks removes the check mark.
(Optional) Review a specific bill.

You can review detailed information about a specific bill by first clicking the bill to highlight it in the list and then by clicking the Go To Bill button. When you do this, QuickBooks displays the Enter Bills window with the bill information. To close the Enter Bills window, click the Close button.
Set the discount and credit.

If you click the Set Discount button, QuickBooks displays the Discount tab of the Discount and Credits window, as shown in Figure 2. You can use the Discount tab to enter a discount amount for the bill. If you enter a discount amount for the bill, you also enter the discount account. This is the account that gets credited for the reduction — the discount — in the correct amount.

Figure 2: The Discount tab of the Discount and Credits dialog box

If you click the Set Credits button, QuickBooks displays the Credits tab of the Discount and Credits dialog box, shown in Figure 3. The Credit tab lists any credit memos from this vendor. To apply a credit memo to the amount due a vendor, click the Set Credits button. QuickBooks marks applied credits by placing a check mark in the marked column.

Figure 3: The Credits tab of the Discount and Credits dialog box

When you complete your work with the Discounts and Credits dialog box, click the Done button to close the dialog box and return to the Pay Bills window.

Tip
Click the Clear button in the Discount and Credits dialog box to clear the applied credits shown on the Credits tab.
Use the Payment Account drop-down list to select the bank account to be used for making payments.

The ending balance for the bank account shows the Payment Account drop-down list.
Use the Payment Method drop-down list to select the payment method.

If you want to pay your bills by check, for example, select Check. Assuming that you'll print the checks in QuickBooks, select the To Be Printed radio button (otherwise, select the Assign Check No. radio button to have QuickBooks assign the next consecutive check number). You can also pay bills by other methods, such as by credit card and by online payment (if you're set up for online payment or online banking).
Use the Payment Date drop-down list to record the payment date that you want.

The payment date entry interacts with the payment method entry. The payment date that you set, for example, affects when an online payment gets made. The payment date also corresponds to the check date that is shown on printed checks.
After you select the bills that you want to pay and describe how you want to pay them, click Pay Selected Bills to pay the selected bills.

QuickBooks records the payment transactions in the bank account to pay the selected bills. QuickBooks also closes the Pay Bills window.
Complete your task.

You still need to print any unprinted checks necessary to pay bills if you are using checks to pay the bills. You also need to transmit any online payment instructions necessary to pay the bills if that's how you've chosen to pay the bills. If you're going to hand-write checks, you obviously need to hand-write the checks and then mail them out. In other words, all QuickBooks does at this point is record in the QuickBooks data file the payment transactions. It hasn't yet affected the transactions. You need to print the checks, send the online payment instructions, or hand-write the checks?

Entering a Bill | Paying Vendors

2009-08-11T03:25:00.000-07:00

If you told QuickBooks during the setup process that you want to track unpaid bills, also known as accounts payable, you can enter bills as you receive them. As you do this, QuickBooks keeps track of the unpaid bills.

Tip

Good, accurate recordkeeping of unpaid bills, or accounts payable, is essential if you want to do good accrual-basis accounting. Accrual-basis accounting produces more accurate financial statements than other methods.

If You haven't Previously Recorded an Item Receipt

To enter a bill, you follow one of two sequences of steps. If you're entering a bill for which you haven't previously recorded an item receipt, you follow these steps:

Choose the Vendors ð Enter Bills command.

QuickBooks displays the Enter Bills window, shown in Figure 1. You'll use this window to describe the bills that you later need to pay.

Figure 1: The Enter Bills window. Again
Use the Vendor drop-down list to identify the vendor.
Use the Date, Amount Due, and Bill Due fields to describe the invoice date, the invoice due date, and the invoice amount.

Optionally, use the Terms drop-down list to identify the payment terms and the Ref. No. box to identify the vendor's reference number. Next, if you want to, go ahead and provide a memo description for the bill by using the Memo box.
Identify the expenses billed.

Use the Expenses tab of the Enter Bills window to identify the expenses that the bill represents. To identify expenses, you supply the account number that should be debited, the amount, and, optionally, the memo, customer:job, and class information. The Expenses tab of the Write Checks window works the same way as the Expenses tab of the Enter Bills window.
Identify the items billed in the Items tab.

Use the Items tab of the Enter Bills window to describe any items for which the vendor bills you. For example, use the Item column to identify the thing that you purchased. Then use the Qty, Cost, and Amount columns to identify what the item cost. You can also use the Customer:Job column if you're tracking bills by customers. If you have questions about how to work with the Items tab, be aware that the Items tab of the Enter Bills window works in the same way that Items tabs of other QuickBooks windows work.

Tip

The buttons at the bottom of the Enter Bills window — Select PO, Receive All, Show PO, Clear Splits, Recalculate, and Clear — work the same way as the similarly titled command buttons located at the bottom of the Create Item Receipts window

If You Have Previously Recorded an Item Receipt

To enter a bill when you've already recorded the receipt of the item for which the bill invoices you, follow these steps:

Choose the Vendors ð Enter Bill for Received Items command.

QuickBooks displays the Select Item Receipt window, shown in Figure 2.

Figure 2: The Select Item Receipt dialog box
To identify the item receipt for which you're now recording a bill, select the vendor from the Vendor drop-down list.

Then, when QuickBooks displays a list of item receipts for the vendor, click the item receipt that corresponds to your bill. Next, click OK. QuickBooks displays the Enter Bills window for the item. QuickBooks fills out much of the Enter Bills window by using the information from the item receipt, as shown in Figure 3.

Figure 3: The Enter Bills window. Yet Again

Tip
You may be able to skip Steps 3, 4, and 5 if your item receipt information correctly and completely fills the Enter Bills window.
Use the Date, Amount Due, and Bill Due fields to describe the invoice date, the invoice due date, and the invoice amount.

Optionally, use the Terms drop-down list to identify the payment terms and the Ref. No. box to identify the vendor's reference number. Next, if you want to, go ahead and provide a memo description for the bill by using the Memo box.
Use the Expenses tab of the Enter Bills window to identify the expenses that the bill represents.

To identify expenses, you supply the account number that should be debited, the amount, and, optionally, the memo, customer:job, and class information. The Expenses tab of the Write Checks window works the same way as the Expenses tab of the Enter Bills window.
Use the Items tab of the Enter Bills window to describe any items for which the vendor bills you.

For example, use the Item column to identify the thing that you purchased. Then use the Qty, Cost, and Amount columns to identify what the item cost. You can also use the Customer:Job column if you're tracking bills by customers. If you have questions about how to work with the Items tab, be aware that the Items tab of the Enter Bills window works in the same way that Items tabs of other QuickBooks windows work.

Recording a Credit Memo

You record credit memos from vendors by using the Enter Bills window, too. The only difference in recording a credit memo is that you mark the Credit button.

Simultaneously Recording the Receipt and the Bill

2009-08-08T04:10:00.000-07:00

You can record a bill for items that you receive at the same time that you record the receipt of the items. You can do this simply by selecting the Bill Received check box that appears near the top of the Create Item Receipts window.

If you know that you're going to record a bill at the same time as you record the receipt of items, you can also choose the Vendors ð Receive Items and Enter Bill command. In other words, rather than choosing the Receive Items command from the Vendors menu, you choose the Receive Items and Enter Bill command. When you do this, QuickBooks displays the Enter Bills window, shown in Figure 1. Essentially, the Enter Bills window is just another version of the Create Item Receipts window except that the Bill Received check box is already selected. To simultaneously record items that you've received and enter a bill, you follow the same steps as you do to record the receipt of the items.

Figure 1: The Enter Bills window

One item worth noting about simultaneously recording bills and the receipt of items, however, is this: When you enter a bill, you need to be very precise about the charges of the vendor. For example, in all probability, you won't pay just for the ordered items. You may also pay certain shipping and handling fees. These amounts won't necessarily get recorded on the Items tab. They will probably be recorded on the Expenses tab.

Recording the Receipt of Items | Paying Vendors

2009-08-06T07:56:00.000-07:00

When you receive items from a vendor, you can record the receipt. You typically do this when you want to record the receipt of an item even before you receive a bill for the item. For example, in any business with inventory, you want to know exactly how much inventory you have in your warehouse or on your store floor. You don't want to wait to adjust your inventory records for these purchases until you receive the invoice from the vendor. In this scenario, you record when you receive items.

To record item receipts, follow these steps:

Choose the Vendors ð Receive Items command.

QuickBooks displays the Create Item Receipts window, as shown in Figure 1.

Figure 1: The Create Item Receipts window
2. Select the vendor from whom you're receiving items from the Vendor drop-down list.
Select any P.O.s that you're receiving items on.

If open purchase orders exist for the vendor, QuickBooks displays a Message box. The Message box asks whether you want to receive items against one of the open purchase orders. If the items that you receive are items that you set up on a purchase order, click Yes. When Quick Books displays the Open Purchase Orders dialog box — the dialog box just lists open purchase orders — select the one that ordered the items you are now receiving and then click OK. QuickBooks fills out the Items tab of the Create Item Receipts window by using the information from the purchase order. This automatic data entry of purchase order information should save you time if the items that you're receiving match items on the purchase order.
Confirm the receipt date.

Use the Date field to confirm the date of receipt. As with the Date field in other places in QuickBooks, enter the date in mm/dd/yyyy format. Or, you can click the Calendar button that appears to the right of the Date field and choose the date from the pop-up calendar that QuickBooks displays.
Use the Total box to identify the total value of the order received, if available.

QuickBooks calculates this total for you by adding up the individual item costs, so you can wait until later.
(Optional) Use a reference number.

You can use the Ref. No. field to provide a reference number. For example, you may want to reference the vendor's order number.
(Optional) Provide a memo description.
Describe the items received.

Use the Items tab to identify the items that you've received. The Items tab of the Create Item Receipts window resembles and works like the Items tab of the Create Purchase Order window. For this reason, I don't discuss how you enter, for example, item codes in the Item column.
Describe any related expenses.

The Expenses tab of the Create Item Receipts window works like the Expenses tab of the Write Checks window. If you have questions about how the Expenses tab works.
Click either the Save & Close or Save & New button to save the receipt item.

If you click the Save & Close button, QuickBooks saves your item receipt information and closes the Create Item Receipts window. If you click the Save & New button, QuickBooks saves the item receipt information and redisplays a fresh, clean, cleared version of the Create Item Receipts window. You can then use the window to describe the receipts of some other set of items.

That's about all you need to know to work with the Create Item Receipts window. Nevertheless, let me just quickly describe the half-dozen command buttons located at the bottom of the Create Item Receipts window that I haven't referenced in the earlier discussions:

Select PO: This command button displays the Open Purchase Orders dialog box. The Open Purchase Orders dialog box lists the purchase orders open for the selected vendor. By selecting a listed purchase order, you tell QuickBooks to fill out the Item tab with the information from that purchase order or orders.
Receive All/Clear Qtys: When labeled Receive All, this button says you've received all the items ordered on some purchase order; or when it's labeled Clear Qtys, it clears the received quantities shown in the Items tab if you've specified a purchase order. When you click this button, it changes from Receive All, into Clear Qtys, into Receive All, and so on.
Show P.O.: This button shows the selected purchase order.
Clear Splits: This button erases any expense or item information that you've entered in the Expenses tab or Items tab. In effect, the Clear Splits button lets you start over in recording the receipt of some item or items.
Recalculate: This button recalculates the total amount by using the information that you've entered onto the Expenses tab and the Items tab.
Clear: This button clears all the information that you've entered in the Create Item Receipts window, including the Expenses tab information, the Items tab information, and the vendor information shown at the top of the window.
Time: This button opens the Select Time Period dialog box, shown in Figure 2, which you use to specify the date range of the work for which you're paying.

Figure 2: The Select Time Period dialog box

Paying Vendors

2009-06-25T23:59:00.000-07:00

You can make the process of tracking vendor information as simple or as sophisticated as you like. In this chapter, I assume that you're going for sophisticated. However, you can make vendor management simpler by not using purchase orders or an accounts payable system.

Tip

You decide whether to use purchase orders and whether to track accounts payable (amounts that you owe vendors) as part of setting up QuickBooks. You can also later change your decision about using purchase orders or accounts payables. To do this, you choose the Edit ð Preferences command.

Creating a Purchase Order

A purchase order serves a simple purpose: It tells some vendor that you want to purchase some item. In fact, a purchase order is a contract to purchase.

Many small businesses don't use purchase orders. But when they grow to a certain size, many businesses decide to use them because purchase orders become permanent records of items that you've ordered. What's more, using purchase orders often formalizes the purchasing process in a company. For example, you may decide that nobody in your firm can purchase anything that costs more than $100 unless he gets a purchase order. If only you can issue purchase orders, you've effectively controlled purchasing activities through this procedure.

A Real Purchase Order

To use QuickBooks to create purchase orders, follow these steps:

Tell QuickBooks that you want to create a purchase order by choosing Vendors ð Create Purchase Orders.

QuickBooks displays the window shown in Figure 1.

Figure 2-1: The Create Purchase Orders window

Tip
If the Vendors menu doesn't supply a Create Purchase Orders command, QuickBooks doesn't know that you want to create purchase orders.
Use the Vendor menu drop-down list to identify the vendor from whom you want to purchase the item.

The Vendor drop-down list lists each of the vendors in your Vendor List.
(Optional) Classify the purchase using the Class drop-down list.
(Optional) Provide a different Ship To address in the Ship To drop down list.

The Ship To drop-down list displays a list of all your customers, vendors, and employees. You select the Ship To address by selecting one of these other names. After you select an entry from the Ship To list, QuickBooks fills in the Ship To address box with the appropriate information.

Tip
The Create Purchase Orders window supplies some standard and, I hope, familiar buttons and boxes: Previous, Next, Print, Find, Spelling, History, and Template.
Confirm the purchase order date.

Initially, QuickBooks puts the current system date into the Date box. You should, however, confirm that the date that QuickBooks enters as the purchase order date is correct. This is the contract date. Often, the date sets contractual terms — such as the number of days within which the item is to be shipped.
Confirm the purchase order number.

The purchase order number, or P.O. number, uniquely identifies the purchase order document. QuickBooks sequentially numbers purchase orders for you and places the appropriate number into the P.O. No. box. The guess that QuickBooks makes about the right purchase order number is usually correct. If it isn't correct, you can enter a replacement number.
Confirm the vendor and ship to information.

The Vendor block and the Ship To block identify the vendor from whom you're purchasing the item and the address to which you want the vendor to send the shipment. This information should be correct if your vendor list is up to date and you've correctly used the Ship To drop-down list to identify, if necessary, an alternative Ship To address. Nevertheless, confirm that the information shown in these two address blocks is correct. If the information isn't correct, of course, fix it. You can edit address block information by selecting the incorrect information and then retyping whatever should be shown.
Describe each item that you want to order.

You use the columns of the Create Purchase Orders window to describe in detail each item that you want to order as part of the purchase. Each item goes on its own row. To describe an item that you want to purchase from the vendor, you provide the following bits of information:
- Item: The Item column is where you record the unique item number for the item that you want to buy. Remember that items need to be entered, or described, in the Item List. The main thing to know about the Item List is that anything that you want to show on the invoice — or, for that matter, on a purchase order — must be described in the item file.
- Description: In the Description column, you describe the item that you select. You can also edit the Description field so that it makes sense to customers or vendors.
- Qty: The Qty column specifies the quantity of the item that you want. Obviously, you enter the number of items that you want in this field.
- Rate: The Rate column specifies the price per unit or rate per unit for the item. Note that QuickBooks uses different labels for this column depending on the type of business that you've set up.
- Customer: The Customer column identifies the customer for whom the item is being purchased.
- Amount: The Amount column shows the total expended for the item. QuickBooks will calculate the amount for you by multiplying the quantity by the rate (or price). You can also edit the column amount. In this case, QuickBooks adjusts the rate (or price) so that quantity times rate always equals the amount.
- Class: In the Class column, you classify purchase order items at the item level rather than at the purchase order level.
You enter a description of each item that should be included on the purchase order. This means, for example, that if you want to order six items from a vendor, your purchase order should include six lines of information.
Print the purchase order.

The purpose of recording a purchase order into QuickBooks is to create a formal record of a purchase. You almost always want to transmit this purchase order to the vendor. The purchase order tells the vendor exactly what you want to purchase and the price that you are willing to pay. To print the purchase order, you can click the Print button. You can also print purchase orders later in a batch; to do so, save all the purchase orders that you want to create, and then choose the File ð Print Forms ð Purchase Orders command.
Save the purchase order.

To save your purchase order, click either the Save & Close button or the Save & New button. If you click the Save & New button, QuickBooks saves that purchase order and redisplays an empty version of the Create Purchase Orders window so you can record another purchase order.

Purchase Order Tips and Tricks

I want to make a few more important observations:

Not every purchase deserves a purchase order. If you're not used to working with purchase orders, it's easy to go overboard when you first start using this handy tool. Nevertheless, keep in mind that not all purchases warrant purchase orders.
Use purchase orders to manage buying. Typically, businesses use purchase orders as a way to control and document purchases. In fact, many purchases don't really require a purchase order. Amounts that you've agreed to purchase that are documented through standard contracts, such as bills from the telephone company, the gas company, and your landlord, don't need purchase orders, obviously. In addition, modest purchases like office supplies often don't need purchase orders, either. You definitely do need a way to control these expenditures, but purchase orders are probably not the way to go.
Consider other complementary control tools. Other budgetary controls such as "approval from the supervisor" or a simple budget often work just as well.

Customer Odds and Ends

2009-06-16T00:12:00.000-07:00

In this chapter, I discuss most of the important commands on the Customers menu. However, the Customers menu supplies several other commands that are noteworthy — perhaps even useful — and deserve discussion somewhere in this book. For this reason, I want to briefly describe the other commands available on the Customers menu:

Customer Center: Displays the Customer Center window, which includes information about your customer list, including the amounts that your customers owe.
Enter Statement Charges: Displays the Accounts Receivable Register. You shouldn't need to use this command. You can, however, use this command to add amounts to the accounts receivable for a particular customer. The amounts then appear on the customer's next statement.
Create Statements: Displays a window that you can use to create a set of monthly statements for customers. Such statements show the amounts that a customer owes, invoices created for the month, credit memos issued for the month, and payments made during the month.
Add Credit Card Processing: Displays a submenu of commands that you can use to deal with credit card payments and credit card billing. QuickBooks, by the way, supports credit card merchant accounts and makes it easy to accept credit cards from customers. This is something you may want to do. You should visit the QuickBooks Web site and find out the details.
Marketing and Customer Tools: Displays a Web page of marketing tools that Intuit (the maker of QuickBooks) supplies to small businesses, including a tool to submit your small business's Web site to online directories, such as Google Maps and Yahoo! Local.
Item List: Displays the Item List, which shows the items that may be included on the invoice or credit memo.
Change Item Prices: Lets you change the prices of a bunch of different items at one time — for example, increasing every price by 5 percent.

Assessing Finance Charges

2009-06-14T07:53:00.000-07:00

You can tell QuickBooks to assess finance charges on overdue customer invoices. To do this, you first set up the finance charge calculation rules. After you've done this, you can easily assess finance charges on overdue amounts by choosing the QuickBooks command.

Setting up Finance Charge Rules

To set up the finance charge rules, choose the Edit ð Preferences command. When QuickBooks displays the Preferences dialog box, click the Finance Charge icon and then the Company Preferences tab. The Preferences dialog box at this point should look like the one shown in Figure 1. To tell QuickBooks how it should calculate the finance charges, enter the annual interest rate that you'll use for calculating charges into the Annual Interest Rate (%) box. Enter the minimum finance charge amount that you assess into the Minimum Finance Charge box. If you want to create a grace period, enter the number of grace period days into the Grace Period (Days) box. Use the Finance Charge Account drop-down list to specify the QuickBooks income account to which finance charge revenue should be credited. Select the Assess Finance Charges on Overdue Finance Charges check box if you want to charge finance charges on finance charges. Finally, use the Calculate Charges From radio buttons — Due Date and Invoice/Billed Date — to specify the date from which finance charges should be calculated. After you've provided this information, you can click OK to save your finance charge calculation rules.

Figure 1: The Company Preferences tab for the Finance Charge Preferences

Tip

QuickBooks assumes that you don't want to print finance charge invoices. For this reason, the Mark Finance Charge Invoices to Be Printed check box is not selected. Finance charges typically appear only on customer statements.

Calculating Finance Charges

After you set up the finance charge rules, you can easily assess finance charges on overdue invoices. To do this, choose Customers ð Assess Finance Charges. QuickBooks displays the Assess Finance Charges window, as shown in Figure 2. This window lists all the overdue invoices that customers owe you and, based on your finance charge calculation rules, calculates a finance charge. To assess the finance charge to a particular customer, click the Assess field for the customer. (By default, QuickBooks assumes that you want to assess finance charges whenever a customer's account is past due.) If you don't want to assess finance charges to a particular customer, remove the check mark from the Assess field by clicking it. After you've identified which customers should be assessed finance charges, click the Assess Charges button. QuickBooks, essentially, creates new invoices for each of these customers. These new invoices charge the customers a finance fee.

Figure 2: The Assess Finance Charges window

Receiving Customer Payments

2009-06-12T06:48:00.000-07:00

When a customer pays an invoice that you have previously sent, you choose the Customers ð Receive Payments command to record the payment. To use this command to record a payment, choose the command and then follow these steps:

After QuickBooks displays the Receive Payments window, as shown in Figure 1, use the Received From box to identify the customer paying you.

Figure 1: The Receive Payments window
Record the payment information in the Date, Amount, Reference #box, Pmt. Method box, and Card No. and Exp. Date boxes (if appropriate).
Identify the invoice or invoices paid.

QuickBooks lists the open invoices for the customer in the columns area of the Receive Payments window. You can identify which invoices a customer payment pays by clicking the invoices that you see listed.
Apply any credit memos to open invoices as you apply the payment.

Click the Discount & Credits button. QuickBooks displays the Discount and Credits dialog box, as shown in Figure 2. To apply a credit to the selected invoices, click the Credits tab and then select the credit that you want to apply.

Figure 1-21: The Discount and Credits dialog box
Apply any discounts to the open invoices and click Done.

Discounts work like credits. In fact, you use the same dialog box (refer to Figure 2).
Select the account to which you want to deposit the check or select the Group with Other Undeposited Funds option from the Deposit To box to indicate whether you immediately deposit the payment or batch the payment with a bunch of other payments that you later deposit.
Click the Save & Close or Save & New button to save the customer payment information.

Tip

Click the Get Online Pmts button to receive online payment information for a customer. The Get Online Pmts button appears only if you are using either online billing or online banking. An earlier discussion describes how online billing and deluxe online billing work.

Tip

To see a list of the payments that have been applied to an invoice, click the History button.

Recording Credit Memos

2009-06-10T04:45:00.000-07:00

Credit memos show when a customer no longer owes you money or when you owe a customer money. Credit memos may occur because your customer returns items that you previously sold to him or her. Credit memos may also occur because you issue a customer a refund for some other good reason — perhaps the product wasn't of the quality that you usually sell, or a service wasn't provided in the manner in which it should have been.

To record a credit memo, first display the Create Credit Memos/Refunds window by choosing Customers ð Create Credit Memos/Refunds command. Then follow these steps:

Identify the customer, or the customer and the job, in the Customer:Job box.

Use the Class box for class tracking if you've decided to do that (see Figure 1). If you have questions about how either of these boxes works, refer to the earlier discussion about these two boxes. These boxes work the same way for credit memos as they do for invoices.

Figure 1: The Create Credit Memos/Refunds window
Provide the credit memo date, credit memo number, and confirm customer information.

Credit memos, like invoices and sales receipts, include a header. This header includes the transaction date, number, and the customer information. You should confirm that the credit memo header information is correct on the Create Credit Memos/Refunds window. If it isn't, edit the default information that QuickBooks uses to fill the Create Credit Memos/Refunds window.
In the columns area of the Create Credit Memos/Refunds window, describe the reason for the credit memo.

If the customer returned items, for example, use the columns to describe these items and the original price that you are refunding.
Click the Print button to print the credit memo.
Click either Save & Close or Save & New to save the credit memo.

Note, too, that you can also print credit memos in a batch. Obviously, after you print credit memos, you need to distribute them.

Recording a Sales Receipt | Invoicing Customers

2009-06-08T20:39:00.000-07:00

To record the fact that you sold the customer some item — presumably this is because the customer simultaneously purchases and pays for the item or service — you don't invoice the customer. Rather, you create a sales receipt. A sales receipt looks very, very similar to an invoice. However, it doesn't include shipping information (because that's irrelevant) and it lets you record the amount that the customer pays.

To record a sales receipt when it is appropriate, choose the Customers ð Enter Sales Receipts command and then follow these steps:

In the Enter Sales Receipts window, shown in Figure 1, use the Customer:Job box to describe the customer or, optionally, the customer and job.

Figure 1: The Enter Sales Receipts window

Use the Class drop-down list to identify the class if you are performing class tracking.
Provide the sales receipt header info.

A sales receipt, like an invoice, includes some header information. Specifically, the sales receipt includes a sales receipt date and a sales number. The sales receipt also includes a Sold To box, which shows the customer name and address. You should confirm that this information is correct — and it should be if you're recording timely sales receipts and have an up-to-date Customer List.
Use the items column to describe the items that you're selling.

The items column on a sales receipt works the exact same way as the items column on an invoice. Therefore, rather than repeat myself, go back to the earlier discussion of how this column works.
(Optional) If you want, enter a customer message in the footer area of the Enter Sales Receipts window.

If you have added other footer information to the Enter Sales Receipts window — this would be because you have customized the sales receipt form template — you can include that information, too.

Describe where the sales proceeds go.

In the bottom-left corner, the Enter Sales Receipts window may show a Deposit To drop-down list. Use this drop-down list to indicate what you do with the money that you receive from this sale. If you immediately deposit the amount into a bank account, select the account into which you will deposit the check. If you want to batch this receipt with a bunch of other receipts — maybe you're going to deposit the day's receipts together in one lump sum — select Group with Other Undeposited Fund.

Tip

If you don't see the Deposit To drop-down list, you may have indicated (perhaps even inadvertently) during the setup that you just want QuickBooks to assume funds are deposited into an undeposited funds account. This probably works just fine. If you do want to specify an account where sales proceeds go when you record the sales receipt, choose the Edit ð Preferences command, click the Sales and Customers icon, click the Company Preferences tab, and then unmark the Use Undeposited Funds as a default deposit to account.

(Optional) To print a copy of the receipt, click the Print button.

The Previous, Next, Find, Spelling, History, and Time/Cost buttons on the Enter Sales Receipts window work identically to the same buttons on the Create Invoices window.
Click the Save & Close or Save & New button to save the sales receipt.

These buttons work the same way for the Enter Sales Receipts window as they do for the Create Invoices window.

Tip

Both the Create Invoices window and the Enter Sales Receipts window include a To Be Printed check box in the footer area. If you select this check box, QuickBooks adds the invoice or sales receipt to its list of unprinted invoices or sales receipts. You can print invoices and sales receipts that appear on either side of these lists by choosing the File ð Print Forms command and then either the Invoices or Sales Receipt command. There's also a To Be E-mailed check box that you can mark if you want to later e-mail a receipt

Printing & Emailing Invoices | Invoicing Customers

2009-06-07T02:33:00.000-07:00

Printing Invoices

You can print invoices and then mail the printed invoices in a couple of different ways:

You can print individual invoices by clicking the Print button at the top of the Create Invoices window.
You can also print a batch of invoices by clicking the arrow button next to the Print button, choosing Print Batch from the menu that QuickBooks displays, and then using the Select Invoices to Print dialog box (which QuickBooks displays) to select the To Be Printed Invoices for printing. After you select the invoices that you want to print by clicking them, you click OK.

Tip	The menu that QuickBooks displays when you click the Print arrow button includes a Preview command. You can choose the Preview command to see a preview version of the printed invoice.

E-Mailing Invoices

You can e-mail an invoice from QuickBooks. To do this, click the Send button and choose the Mail Invoice command from the menu that QuickBooks displays. (The Send button appears at the top of the Create Invoice screen.) When QuickBooks displays the Send Invoice dialog box, as shown in Figure 1, provide the e-mail address and, optionally, a new e-mail message. Then click the Send Now button to send the invoice. Alternatively, you can click the Send Later button to batch your e-mail invoices for later delivery. To send all your invoices in a batch later, you click the arrow button next to the Send button at the top of the Create Invoices window and choose the Send Batch command from the menu that QuickBooks displays.

Figure 1: The Send Invoice dialog box

Tip

You can also use the Send Invoice dialog box to send the invoice to QuickBooks and then have the QuickBooks folks mail a paper copy to the customer or client. To do this, mark the Mail through QuickBooks button. QuickBooks then tells you about this extra service and, if you decide to go for it, steps you through the sign-up process.

Billing for Time | Invoicing Customers

2009-06-06T20:26:00.000-07:00

Most of the time, line items that appear on an invoice are items that you have described in the item list and then quantify directly on the invoice. However, in some service businesses, you may actually sell many units of the same item. For example, a lawyer may sell hours or partial hours of legal advice. This may be all that she sells. A CPA may sell hours of consulting or accounting or tax preparation work.

In these circumstances, you don't want to have an invoice go out to the customer with one line on it that says, for example, "legal services, 100 hours, $20,000." You instead want an invoice that details each of the tasks that the lawyer performed: estate planning for 1.5 hours, review of a contract for 4 hours, preparation of a new real estate lease for 2 hours, and so forth. To provide this level of detail — detail that is really beneath the item — you use the QuickBooks Time Tracking feature.

QuickBooks supplies two methods for tracking the time spent that will be billed on an invoice as an item. You can use the weekly time sheet or you can time or record individual activities. I briefly describe how both time tracking methods work — neither is difficult. Professional service providers — such as accountants, attorneys, consultants, architects, and so on — should consider using one of these features to make sure that they accurately keep good records of the time spent working for a client or customer.

Using a Weekly Timesheet

To use the weekly timesheet method, choose the Customers ð Enter Time ð Use Weekly Timesheet command. QuickBooks displays the Weekly Timesheet window, shown in Figure 1. To use the Weekly Timesheet window, first use the Name box to identify the employee or vendor or other person performing the service. You should be able to select this person's name from the Name box. If you can't select a person's name from the Name box, enter the person's name into the box, and then, when prompted, tell QuickBooks which list (employee, vendor, or other names) should be added. After you've added the name of the person performing the work, use the columns of the Weekly Timesheet window to describe the customer or job for whom the work has been performed, the service code, a brief description or note, the payroll item (if you're using QuickBooks for payroll), the class (if you're tracking classes), and then the hours spent per day. You can enter as many lines onto the Weekly Timesheet window as you want. Each line appears separately on an invoice. The notes information appears in the description area of the invoice. For this reason, you want to use appropriate and descriptive notes.

Figure 1: The Weekly Timesheet window

Timing Single Activities

If you want to record service activities as they occur, choose the Customers ð Enter Time ð Time/Enter Single Activity command. QuickBooks displays the Time/Enter Single Activity window, as shown in Figure 2.

Figure 2: The Time/Enter Single Activity window

To time or record a single activity, record the activity date into the Date box. Use the Name box to identify the person performing the service. In the Customer:Job box, identify the customer or the job for which the service is being performed. Select the appropriate service item from the Service Item drop-down list and the appropriate payroll item from the Payroll Item drop-down list. If you're tracking classes, predictably, you can also use the Class drop-down list to classify the activity. The Notes box should be used to record a brief appropriate description of the service. This description appears on the invoice, so be thoughtful about what you write. After describing or providing this general information about the service, you have two ways to record the time spent on the service:

Manually record time: You can manually record the time spent on an activity by using the Duration box to enter the time. If you spent 10 minutes, for example, enter 0:10 into the Duration box. If you spent 3 hours and 40 minutes, enter 3:40 into the Duration box.
Have QuickBooks record the time: You can also have QuickBooks record the time that you spent on the activity. Just click the Start button in the Duration box when you start the activity, and click the Stop button when you stop the activity. If you want to pause the timer (while you take a phone call, for example) click the Pause button.

After you describe the activity you're performing in the Time/Enter Single Activity window, click the Save & New or Save & Close button to save the activity information.

Tip

Verify that the Billable check box is selected. The Billable check box appears in the upper-right corner of the Time/Enter Single Activity window. By selecting the Billable box, you tell QuickBooks that it should keep this record of a billable activity for later inclusion on an invoice.

Tip

You can use the Previous and Next buttons that appear at the top of the Time/Enter Single Activity window to page back and forth through your records of activity timing. Note, too, that the Spelling button is also available on the Time/Enter Single Activity window. You can, therefore, click the Spelling button to spell check the notes description that you enter — which is a good idea because this information will later appear on an invoice.

Tip

QuickBooks also allows your employees to enter their time directly. Choose the Customers ð Enter Time ð Let Employees Enter Their Time command to get information about how this Web service works.

Including Billable Time on an Invoice

To add billable time and cost to an invoice, create the invoice in the usual way, as I describe previously. After you identify the customer (and if you've entered time for the customer), and if you've been tracking time or costs for the customer, QuickBooks will ask if you want to bill for any of the time or costs using a message box. If you indicate "yes," QuickBooks displays the Choose Billable Time and Costs dialog box shown in Figure 3. The Time tab of the Choose Billable Time and Costs dialog box shows each of the times that you've recorded for a customer. To add these times to the invoice, click the Use column for the time. Or, if you want to select all the times, click the Select All button. Then click OK. QuickBooks then adds each of these billable times as lines to the invoice. Figure 4 shows how billable time information appears on the Create Invoices window.

Figure 3: The Choose Billable Time and Costs dialog box

Figure 4: The Create Invoices window billing for billable time

Invoicing a Customer

2009-05-30T02:36:00.000-07:00

To invoice a customer, use the Create Invoices window to identify the customer and specify the amount that the customer owes. To display the Create Invoices window, choose the Customers ð Create Invoices command. When you do, QuickBooks displays a Create Invoices window like the one shown in Figure 1. Note, however, that the Create Invoices window you see may not look exactly like the one shown in Figure 1. As previously described, you can use more than one type of invoice form. You can also choose to customize an invoice form so that it perfectly matches your business requirements. In the following steps, I describe, generally, how to invoice a customer. The specific steps that you take may be ever-so-slightly different if you're working with a different invoice form template.

Figure 1: The Create Invoices window

Tip

In Figure 1, I closed the Open Window List to provide more room for the Create Invoices window. You can close your Open Window List by clicking its close box (the small box marked with an X that appears in the upper-right corner of the list). To redisplay the Open Window List after you've closed it, choose View ð Open Window List.

After you display the Create Invoices window, take the following steps to invoice a customer:

Identify the customer and, if appropriate, the job.

To do this, select the customer or customer and job combination from the Customer:Job drop-down list. Don't worry about this "job" business if you aren't familiar with it. You must identify the specific customer that you are invoicing. You do this by selecting the customer from the Customer:Job list. If the customer is a new customer that you haven't yet invoiced or described in the Customer List, enter a brief name for the customer — like an abbreviation of the customer's business name — in the Customer:Job list. QuickBooks then indicates that the customer doesn't yet exist on the Customer List and asks whether you want to add the customer; indicate that you do. When prompted, supply the customer information that QuickBooks requests.
You can also classify an invoice as fitting into a particular category by using the Class drop-down list. Don't worry at this point about using class tracking.
Confirm or provide new invoice header information.

After you identify the customer, QuickBooks fills out the Date, Invoice, Bill To, and, possibly, the Ship To fields. You probably don't need to change any of this information. You should review the information shown in these boxes to make sure that it is correct. For example, you wouldn't typically invoice someone unless you have already shipped the product or the service has already been provided. Therefore, you probably should confirm that the invoice date follows the product shipment date or the provision of service date. You may also want to confirm, for example, that the Ship To address is correct.
Provide or confirm the Invoice field information.

Invoices include field information that records items such as purchase order numbers, payment terms, ship date, and shipping method. You should make sure that whatever QuickBooks shows in these field boxes is correct. If a customer has provided you with a purchase order number, for example, enter that purchase order number into the P.O. Number box. Confirm that the payment terms shown in the Terms box are correct. Confirm that the date shown in the Ship field is correct. Not all these fields need to be filled for every invoice, but you want to supply any information that makes it easier for a customer to pay an invoice, tie an invoice to his or her purchasing records, and figure out how and when an item is being shipped.

Describe the items sold.

How the columns area of your invoice looks really depends on whether you're selling products or services. Figure 2 shows the columns area for a product. The columns area for a service looks simpler because you don't provide much information when describing service items. In the columns area, you want to describe each item — each product or service — for which an invoice bills. To do this, you use a single row for each item. The first item that you want to bill for, then, goes into row 1 of the columns area. For each item, you enter the quantity ordered, the code for the item, and a price or rate. QuickBooks retrieves an item description from your Item List and places this data into the Description column. QuickBooks also calculates the amount billed for the item by multiplying the quantity by the price or rate. You can, however, edit both the Description and the Amount fields. If you edit the Amount field, QuickBooks recalculates the Price Each field by dividing the amount by the quantity.

Figure 2: How a Create Invoices window may look when completed

To enter additional items onto the invoice, enter additional rows. Each item that you want to bill for — each item that should appear as a separate charge on the invoice — appears as a row in the columns area. If you want to invoice a customer for some product, one line in the columns area of the invoice is used for that product. If you want to charge a customer for freight, one line of the invoice area describes that freight charge. If you want to bill a customer for sales tax, again, one line or row of the columns area shows that sales tax charge.

Discounts represent a tricky line item to include on an invoice. For this reason, I provide an example of how a discount item appears on an invoice. Assume that you want to grant some customer a 25 percent discount. In order to do this, you now know (or should be able to guess) that you include a discount line item on your invoice. However, although QuickBooks includes a discount item on its Item List, a discount percentage can be applied only to the previous line item on the invoice. For this reason, QuickBooks also supplies a subtotal line item. You use a subtotal line item to total all the previous items shown on the invoice. By subtotaling all the product items shown on the invoice in Figure 2, for example, the business can grant the customer a 25 percent discount on these products.

Tip

You need to include the percentage symbol for QuickBooks to calculate a discount equal to a percentage of the subtotal. If you omit the percentage symbol, QuickBooks assumes you want a dollar discount and not a percentage discount. In Figure 2, for example, omitting the percentage symbol would turn the 25% discount into a $25 discount.

Use the Customer Message box at the bottom of the Create Invoices window to supply a customer message that appears at the bottom of the invoice.

If you've created a custom invoice form template that includes other footer information, these footer boxes also appear at the bottom of the Create Invoices window. You can use them to collect and transfer additional footer information.
(Optional) Check your spelling.

If you click the Spelling button, which appears along the top edge of the Create Invoices window, QuickBooks checks the spelling of the words that you've used on the invoice. If QuickBooks finds no spelling errors, QuickBooks displays a message telling you that the spelling check is complete. If QuickBooks finds a spelling error — product code abbreviations often produce spelling errors in QuickBooks — QuickBooks displays the Check Spelling on Form dialog box, shown in Figure 2.

Figure 3: The Check Spelling on Form dialog box

You can use the Change To box to correct your spelling error — if it actually is a spelling error. You can select one of the suggested replacements from the Suggestions list box by clicking the suggestion and then clicking the Replace button. You can replace all occurrences of the misspelling by clicking the Replace All button. If the word that QuickBooks says is misspelled is actually correctly spelled, you can click the Ignore button to tell QuickBooks to ignore this word or the Ignore All button to tell QuickBooks to ignore all occurrences of this word on the invoice form.

If you use terms that are always popping up as misspelled words, at least in QuickBooks, you can click the Add button that appears on the Check Spelling on Form dialog box. Clicking the Add button tells QuickBooks to add the word to its spelling dictionary. After you've added a word to the QuickBooks spelling dictionary, QuickBooks doesn't see the word as misspelled. Also note that you can click the Options button to display the Spelling Options dialog box. The Spelling Options dialog box includes check boxes that you can use to turn on or Off certain types of spell checking logic. For example, the Spelling Options dialog box includes a check box that you can select to tell QuickBooks to always check the spelling of forms before printing, saving, or sending the form. The Spelling Options dialog box also includes check boxes to tell QuickBooks it should ignore certain sorts of words, such as those that use numbers, those that are all uppercase, and those that are mixed case.

Click either the Save & Close button or the Save & New button to save your invoice.

Click the Save & Close button if you want to save the invoice and close the Create Invoices window. You use the Save & New button if you want to save the invoice and then enter another invoice into the blank version of the Create Invoices window.

Tip

Click the Ship button to display the QuickBooks Shipping Manager window, which lets you automate some of the steps in shipping packages using Federal Express or UPS. If you use Federal Express or UPS, therefore, you may want to experiment with this tool.

Warning

One internal control problem within QuickBooks that I hear CPAs complain about over and over is that QuickBooks allows someone to print a form without saving it. This seems innocuous enough, but this little idiosyncrasy can cause serious problems for a business owner. Here is why this "printing without saving" option becomes dangerous: A dishonest employee can create an invoice form, print the invoice form, send the invoice form to a customer, and then not save the invoice form. At this point, a customer has what appears to be a valid invoice from your firm and probably will pay that invoice. If the nefarious employee can intercept the check that pays that invoice, he can then deposit that check into a personal checking account, and you are none the wiser.

In order to prevent or at least minimize this opportunity for employee theft, you want to separate the capability to create an invoice form from the capability to print an invoice form. . In this scenario, by the way, the people who create invoices (such as sales people or accounting clerks) don't actually print invoices. Somebody else — perhaps even you, the owner — prints the invoices and then arranges to have them distributed. Also note that you can use QuickBooks' e-mail invoices and batch printing to greatly simplify the work of sending out invoices. So you aren't actually creating that much extra work for yourself.

Tip

To page through invoices that you've already created, click the Previous and Next buttons. Or, click the Find button and use the Find Invoices dialog box to describe the invoice that you want to locate.

Working with the Layout Designer Tool | Invoice Form

2009-05-27T01:24:00.000-07:00

Okay. Perhaps you've used the Basic Customization dialog box to make some changes to your invoice's appearance. And you haven't been satisfied. Maybe you've gone the extra mile and noodled around with the Additional Customization dialog box to make further changes. And maybe even that hasn't left you happy with the appearance of your invoice.

Do you have any additional recourse? Are you stuck with an invoice that doesn't look right? That doesn't work for your organization? Heck no!

If you click the Layout Designer button, which is available in both the Basic Customization and Additional Customization dialog boxes, QuickBooks displays the Layout Designer window, as shown in Figure 1. The Layout Designer window lets you move invoice information around on the actual printed invoice. Your best bet for learning to work with the Layout Designer tool is to experiment with it. My recommendation is that you create an example invoice form template — something you don't really care about — and then use this new invoice form template for some goofing around.

Figure 1: The Layout Designer window

Here are some of the things that you may want to try:

Moving and resizing objects: You can move and resize objects on the form pretty easily. To move some bit of the form, first select the bit by clicking it. Then use the arrow keys or drag the mouse to move the selected bit. You can resize the selected bit in a similar way. Resize the selected object by dragging the black squares (called resizing handles) that show the object is selected. When moving and resizing invoice form objects, keep two points in mind:
- You can select the Show Envelope Window check box to have QuickBooks draw envelope windows on the invoice form to show you where these appear. You want to have envelope windows shown to make sure that your customized invoice still has its address information showing through.
- You can click the Grid button to display the Grid and Snap Settings dialog box. This dialog box provides two check boxes where you can indicate whether QuickBooks should use a grid (those are the dots you see) to more accurately line up invoice objects on the form. The Grid And Snap Settings dialog box also includes a Snap To Grid box so you can tell QuickBooks that it should make gridlines sticky — sticky gridlines automatically attract invoice objects so that you can more easily line up the objects against the gridlines. The Grid And Snap Settings dialog box also includes a Grid Spacing box that you can use to specify how wide or narrow QuickBooks should draw gridlines.
Selecting objects: You can select multiple objects on the invoice by dragging the mouse. To do so, click at a point above the upper-leftmost object that you want to select and drag the mouse to a point that is just below the lower-rightmost object that you want to select. As you drag the mouse from one corner to the other, QuickBooks draws a rectangle. Any object that's inside this rectangle when you release the mouse gets selected.
Resizing multiple objects: You can change the height, width, and size of multiple selected objects by clicking the Make Same Width, Make Same Height, and Make Same Size buttons. To use these Make Same buttons, you first select the objects that you want to make the same.
Changing column widths: You can change the width of columns in the column area of the invoice form by clicking the Column object. After you do this and QuickBooks selects the columns area, drag the column divider line left or right to resize the column. Note that if you make column 1 narrower, QuickBooks makes column 2 wider to take up the space. Also note that you can resize the entire column area in the manner described in the preceding point.
Positioning text within fields: If you click an invoice object and then click the Properties button, QuickBooks displays the Properties dialog box, shown in Figure 2. The Properties dialog box includes a Text tab that lets you specify how text should appear within an invoice object area. The Properties dialog box also includes a Border tab that lets you specify whether QuickBooks should draw a border along the edges of the invoice object.

Figure 2: The Properties dialog box
Changing fonts: You can change the font used for the selected object by clicking the Properties button, clicking the Text tab of the Properties dialog box, and then clicking the Font button that appears on this tab. QuickBooks displays the Example dialog box. The Example dialog box lets you choose a font; font style; a point size; and special effects, such as strikeout, underlining, and color.
Adjusting margins: If you click the Margins button, QuickBooks displays the Margins dialog box, which includes a Top, Bottom, Left, and Right text box that you use to specify the margin around the invoice. The default or initial margin settings equal half an inch.

Tip

Center a selected object on an invoice form by clicking the Center button to activate the Layout Designer. You can click the Zoom In and Zoom Out buttons to see more or less detail. If you want to undo your most recent change, click Undo. Or, click the Redo button to undo your last undo option.

After you use the Layout Designer to make whatever changes are appropriate to your new invoice form template, click OK to save your changes.

Reviewing the Additional Customization Options | Invoice Form

2009-05-26T10:29:00.000-07:00

If you can't create invoices that look exactly the way you want using the options available, your next step is to click the Additional Customization button. QuickBooks displays the Additional Customization dialog box, as shown in Figure 1. This dialog box gives you more control over both the information that appears on your invoices and how invoices print. You can't use the Additional Customization button if you're working with one of the default invoice templates — only if you're working with a copy. Accordingly, QuickBooks may prompt you to make a copy of an invoice template when you click the Additional Customization button.

Figure 1: The Header tab of the Additional Customization dialog box

Specifying Header Information

The Header tab of the Additional Customization dialog box (see Figure 1) lets you specify what information goes on the top portion of the Create Invoices window and in the top area of an actual printed invoice form. This information is called the header and provides the invoice number, the invoice date, and the billing and shipping information. You can also choose how information is labeled by filling in or editing the contents of the text boxes. For example, the Default Title check boxes let you specify whether the form title should appear on the screen version of the invoice (this would be inside the Create Invoices window) and on the printed version of the invoice. The Default Title text box lets you specify what the form title should be. In a similar fashion, the Date check boxes let you specify whether the date should appear on the screen and print versions of the invoice and what label should be used to describe the invoice date. Figure 1, as you can see, uses the clever descriptive text Date for this invoice date information.

Tip

If you don't need a particular piece of information on an invoice, leave the Screen and Print check boxes for that bit of data deselected. This tells QuickBooks that it should not include that piece of header information on the window or print version of the invoice form.

Specifying Columns Information

The columns portion of an invoice describes in detail the items for which an invoice bills. For example, product invoice columns describe the specific products, including price and quantity; they also describe the items being invoiced. A service invoice's columns describe the specific services being billed. As you may guess from looking closely at Figure 2, the Columns tab of the Additional Customization dialog box looks like the Header tab. You use the Screen and Print check boxes to indicate whether a particular piece of column-level information should appear as a column on the Create Invoices window or on the actual created invoice. Similarly, you use the Title text boxes to provide the descriptive labels that QuickBooks uses on the Create Invoices window and on the printed invoice form.

Figure 2: The Columns tab of the Additional Customization dialog box

The only unusual option shown on the Columns tab is the Order text boxes (see Figure 2). The Order boxes let you indicate in what order (from left to right) the column should appear. If the item number or code should appear in the first column on the left, for example, you enter the value 1 in the Item Order box.

Specifying Prog Columns Information

The prog columns portion of an invoice provides information relevant to situations where you're using progress billings. You can click the Prog Cols tab to add and remove information such as the ordered amount, the previously invoiced amount, and any backordered amounts.

Tip

The Header, Columns, and Prog Cols tabs let you make changes to your invoice forms, but don't get too tense about making perfect changes the first time. You can easily see exactly how your changes look by using the Preview box (if your eyesight is better than mine) or by clicking OK and then carefully reviewing the new version of the Create Invoices window. If you realize that you've made an error — perhaps you've used the wrong bit of descriptive text or you've incorrectly ordered the columns — you can customize your invoice again and thereby fix your earlier mistakes.

Specifying Footer Information

The Footer tab of the Additional Customization dialog box lets you specify what information appears on the Create Invoices window beneath the columns area and on the actual printed invoice beneath the columns area. As Figure 3 indicates, the footer information includes a customer message, the invoice total, payments and credit information, a balance due field, and, optionally, a longer text box. You work with the Footer tab in the same manner as you work with other tabs. If you want some bit of information to appear, select the Screen check box and the Print check box. To change the bit of text that QuickBooks uses, edit the contents of the Title text box.

Figure 3: The Footer tab of the Additional Customization dialog box

Specifying Print Information

The Print tab of the Additional Customization dialog box, shown in Figure 4, lets you exercise a bit of control over how QuickBooks prints invoices that use the template you've customized. For example, the radio buttons at the top of the tab let you specify that when printing this particular invoice template, QuickBooks should use the regular old invoice printer settings or, alternatively, that it should use other, special print settings. The Print settings also let you tell QuickBooks how it should number the pages of a multiple-page invoice.

Figure 4: The Print tab of the Additional Customization dialog box

Tip

You can return all the customized invoice settings to their default condition by clicking the Default button. When you do this, however, you remove any changes or customizations that you've made.

Specifying How Sales are Taxed

2009-05-25T03:23:00.000-07:00

Although no personal preferences are available for sales tax, company preferences do exist. Figure 1 shows the Company Preferences tab for the Sales Tax Preferences set. The Do You Charge Sales Tax? radio buttons, which appear at the top of the tab, control whether you can charge sales tax within QuickBooks. You select the radio button — Yes or No — that answers the question.

Figure 1: The Company Preferences tab of the Sales Tax Preferences dialog box

The Taxable Item Code and Non-Taxable Item Code drop-down lists let you define what code QuickBooks should use to identify taxable and non-taxable sales. By default, QuickBooks uses the clever "tax" code for taxable sales and the equally clever "non" code for non-taxable sales. However, you can select the Add New entry from either drop-down list and use the dialog box that QuickBooks displays to create your own taxable and non-taxable codes.

The Set Up Sales Tax Items and Assign Sales Tax Codes boxes let you set up an item for the sales tax that you charge on invoices. You can indicate the default (or most common) sales tax item that you want to include by entering this sales tax item name into the Your Most Common Sales Tax Item drop-down list. To add the sales tax item, select the Add New entry from this drop-down list and complete the dialog box that QuickBooks displays. The New Item dialog box lets you name the sales tax item and identify the sales tax rate.

Tip

You can also add a new sales tax item by clicking the Add Sales Tax Item button.

The Taxable Item Code and Non-Taxable Item Code drop-down lists let you select the code words to designate invoice items as subject to sales tax. The Mark Taxable Amounts With "T" When Printing check box, if selected, tells QuickBooks to flag taxable amounts on an invoice with the code T.

The When Do You Owe Sales Tax? radio buttons let you indicate when the taxing authority says you owe sales tax: as of the invoice date (which means the taxing authority requires accrual-basis accounting) or upon receipt of payment (which means the taxing authority allows cash-basis accounting).

The When Do You Pay Sales Tax? radio buttons (Monthly, Quarterly, and Annually) let you tell QuickBooks how frequently you must remit sales tax amounts. You select the radio button that corresponds to your sales tax payment frequency.

Telling QuickBooks How Reminders Should Work

2009-05-23T06:18:00.000-07:00

The My Preferences tab of the Reminders Preferences set consists of just one check box: You can use it to tell QuickBooks that you want to see the Reminders list when you open a company file. Because the My Preferences tab includes only a single check box, I don't show it here as a figure.

The Company Preferences tab, as shown in Figure 1, provides a bunch of radio buttons that you can use to specify how QuickBooks should remind you of accounting and bookkeeping tasks that you need to complete: Checks to Print, Paychecks to Print, Invoices/Credit Memos to Print, Overdue Invoices, Sales Receipts to Print, Sales Orders to Print, Inventory to Reorder, Assembly Items to Build, Bills to Pay, Memorized Transactions Due, Money to Deposit, Purchase Orders to Print, To Do Notes, and Open Authorizations to Capture.

Figure 1: The Company Preferences tab of the Reminders Preferences dialog box

For each of these accounting or bookkeeping tasks, you indicate whether you want to see a reminder for the item in the Summary list that appears in the QuickBooks Company Preferences Reminders list. You can also choose to actually see the List of Tasks — such as the list of Checks to Print — or you can indicate that you don't want to be reminded of some particular category of accounting or bookkeeping. For some of the reminder notes, you indicate how many work days in advance you want to be reminded. For example, if you indicate that you want to be reminded to print checks, you must indicate how many days before the check date that you want the reminder to appear. You do this by entering a numeral in one of the Remind Me text boxes.

Controlling How Payroll Works

2009-05-21T07:06:00.000-07:00

The Payroll & Employees Preferences set includes only Company Preferences. The Company Preferences tab is shown in Figure 1. The QuickBooks Payroll Features radio buttons let you tell QuickBooks how you want to handle payroll: using an outside payroll service such as Intuit Complete Payroll (select Complete Payroll Customers in this case), using QuickBooks payroll features (select the Full Payroll radio button), or that you're not using payroll at all (select the No Payroll radio button).

Figure 1: The Company Preferences tab of the Payroll & Employees Preferences dialog box

The Pay Stub & Voucher Printing button lets you tell QuickBooks what employee information to print on the payroll check: employee address, company address, sick pay information, vacation pay information, and pay period information. You can figure out how this works by clicking the button and looking at the dialog box that QuickBooks displays.

The Workers Compensation button lets you fiddle with the way that QuickBooks tracks information related to your workers' compensation tax. The Sick and Vacation button lets you fine-tune how QuickBooks monitors employee sick and vacation pay accrual and usage. Again, click either of these buttons to see a screen that provides more information about how the button works.

In roughly the middle of the Company Preferences tab of the Payroll & Employees Preferences set, QuickBooks supplies several other check boxes and radio buttons:

Copy Earnings Details from Previous Paycheck: Another Duh.
Recall Quantity Field on Paychecks: QuickBooks recalls or reuses paycheck quantity information from the last pay period's paychecks. (The QuickBooks Help File suggests that you use this option when you have a "fixed quantity that occurs from paycheck to paycheck." The Help File uses the example of tiered sales commissions where the commission amount is set for each tier.)
Job Costing, Class and Item Tracking for Paycheck Expenses:

QuickBooks lets you track payroll expenses not just by account but by job, class, or item.
The Assign One Class Per radio buttons (Entire Paycheck and Earnings Item): Enables you to break down wages expense into classes more finely. For example, you can indicate that you want to use a different class for each item that appears on an employee's paycheck. (This option appears only if classes are enabled.)

The Display Employee List By radio buttons let you choose how employee lists are sorted on reports — by first name or by last name.

If you click the Employee Defaults button, QuickBooks displays a dialog box that you can use to set employee payroll default information, such as deductions for taxes or health insurance.

Finally, at the bottom of the dialog box, QuickBooks provides two other options for handling payroll. The Mark New Employees as Sales Reps check box, if selected, does what you'd expect: It marks new employees that you add to the employee list as sales reps. And the Display Employee Social Security Numbers in Headers on Reports check box, if selected, also does what you'd expect: It adds employee Social Security numbers to reports.

Controlling Integrated Applications

2009-05-20T01:03:00.000-07:00

The Integrated Applications Preferences aren't personal, so no options are available on the My Preferences tab. However, the Company Preferences tab for the Integrated Applications Preferences set does control and track other applications, or computer programs that open the QuickBooks company data files. Figure 1 shows the Company Preferences tab for the Integrated Applications Preferences set.

Figure 1: The Company Preferences tab of the Integrated Applications Preferences dialog box

The Don't Allow Any Applications to Access This Company File check box, if selected, tells QuickBooks that it should not allow other applications to open this company data file. The Notify the User Before Running Any Application Whose Certificate Has Expired check box, if selected, tells QuickBooks that it should not allow any program whose security certificate is out of date to open the QuickBooks company data file without first notifying the user (that's you).

The drop-down list on the Company Preferences tab of the Integrated Applications Preferences set shows the name of the applications that have previously requested to open the QuickBooks company data file. You can remove an application from this list by clicking the application and then the Remove button. You can change the rules or properties that the QuickBooks program applies to access this other application by clicking the application in the list and then clicking the Properties button.

Setting General Preferences | Quickbook 2009

2009-05-18T05:59:00.000-07:00

Figure 1 shows the My Preferences tab of the General Preferences set. This tab provides check boxes that you can select to tell QuickBooks to do the following:

To move the selection cursor from one field on the window to the next field when you press Enter
To automatically open drop-down lists when typing
To beep when you record a transaction
To automatically place a decimal point two characters from the right end of the number
To warn you when you are editing an existing transaction
To bring back all the one-time Help messages that it shows
To turn off pop-up messages for products and services
To show ToolTips for clipped text
To warn you when you're deleting an existing transaction or some item on a list
To automatically recall account or transaction information — telling QuickBooks, for example, to automatically recall the last transaction for a particular customer, vendor, or employee
To use either today's date or the last entered date as the default date
To keep custom item information changed as part of entering a transaction

Figure 1: The My Preferences tab for General Preferences

Tip

If you have specific questions about the My Preferences check boxes that are available for the General Preferences options, click the Help button that appears along the right edge of the Preferences dialog box. QuickBooks provides brief but useful descriptions of how the Preferences options work and what they do.

Figure 2 shows the Company Preferences tab for the General Preferences set. The Time Format radio buttons let you specify whether QuickBooks should show the minutes in an hour as a decimal value or as minutes. The Time Format radio button descriptions include examples of how these two approaches vary, so look closely at the dialog box if you have questions. The Company Preferences tab includes a check box that lets you specify that QuickBooks should always show years using four digits. And the Company Preferences tab includes a check box that you can select to tell QuickBooks that it shouldn't update the name information for a particular customer, vendor, employee, or other name when you're saving a new transaction for that customer, vendor, employee, or other name.

Figure 2: The Company Preferences tab for General Preferences

Changing the Desktop View

2009-05-17T00:47:00.000-07:00

Figure 1shows the My Preferences tab of the Desktop View Preferences set. The My Preferences tab provides View radio buttons — One Window and Multiple Windows — that let you indicate whether QuickBooks should use one window or multiple windows for displaying all its information. The Multiple Windows option looks like older versions of Microsoft Windows.

Figure 1: The My Preferences tab for the Desktop View Preferences

With multiple windows, an application such as QuickBooks displays multiple, floating document windows within the application program window. If you have a question about how this works, your best bet is to simply try both view settings.

The Desktop radio buttons (see Figure 1) let you specify whether and when QuickBooks should save the current appearance, or view, of the desktop. You can select the Save When Closing Company radio button to tell QuickBooks that it should save the view of the desktop when you close a company. When you reopen a company, QuickBooks then reuses this desktop view. You can also select the Save Current Desktop radio button to tell QuickBooks to save the current view and then reuse this view when QuickBooks later opens. If you don't want to make changes to the default desktop view, select the Don't Save the Desktop radio button.

The Desktop check boxes let you specify whether QuickBooks should display the QuickBooks home page, the Coach window and related features, and the Live Community window. If you select a check box, QuickBooks adds the appropriate element — such as the QuickBooks home page.

The Color Scheme drop-down list lets you pick a color set for the QuickBooks program. The default color scheme is the Checkbook: Sea Green scheme. QuickBooks provides several other color schemes, including Denim Blues, Desert Isle, Grappa Granite, and so on. (If you're wild about color, you can experiment with these other options.) Note that these are My Preferences options, which means that they're personal to you. You can experiment with the settings for color without having anyone else see that you're really into Sea Stone or Summer Linen (two other color options).

The Windows Settings buttons let you access the Windows Display Properties and Windows Sounds Properties settings. Typically, you would make changes to Windows Display Properties and Windows Sounds Properties by using the Control Panel tools. However, you can also make changes from within QuickBooks by using these two buttons. (In actuality, when you click these buttons, QuickBooks just starts the Control Panel tools.)

If you have questions about how the Windows Display Properties or Sounds Properties work, refer to the Windows Help file or to a good book, such as Windows XP For Dummies or Windows Vista For Dummies, by Andy Rathbone (Wiley Publishing, Inc.).

The Company Preferences available for the Desktop view let you specify what icons appear on the QuickBooks home page, as shown in Figure 2. The Customers set of check boxes, for example, lets you specify which customer-related accounting tasks are available via icons on the home page. The Vendors set of check boxes lets you specify, in similar fashion, which vendor-related accounting tasks are available via icons on the home page. Near the button of the Company Preferences tab for the Desktop view are other hyperlinks you can click to turn on and off the display of other accounting task icons.

Figure 2: The Company Preferences tab for the Desktop View Preferences

Setting the Checking Preferences

2009-05-11T00:34:00.000-07:00

If you display the Preferences dialog box and click the Checking icon, QuickBooks displays either the My Preferences tab, shown in Figure 1, or the Company Preferences tab, shown in Figure 2

Figure 1: The My Preferences tab for Checking Preferences

Figure 2: The Company Preferences tab for Checking Preferences

The My Preferences tab for Checking Preferences lets you tell QuickBooks which account it should suggest as a default account when you open particular types of windows within QuickBooks. For example, if you look closely at Figure 1, you see the Open the Write Checks check box. This is the first check box on the tab. To the right of the Open the Write Checks check box, you see the Form With Account drop-down list. If you select the Open the Write Checks check box, you can select an account from the Form With Account drop-down list. This tells QuickBooks to use or suggest the specified account every time you open the Write Checks window.

The My Preferences tab also includes check boxes that you can use to specify the default account for the Pay Bills window, the Pay Sales Tax window, and the Make Deposits window. If you have multiple checking accounts set up, setting the default accounts using the My Preferences tab is a good idea. Setting these preferences makes it less likely that you'll erroneously write checks on or pay bills from the wrong account.

The Company Preferences tab, as shown in Figure 2, provides check boxes that you can use to describe how checks work within QuickBooks:

Print Account Names on Voucher: This check box lets you indicate to QuickBooks that it should print account names on the voucher portion of the check.
Change Check Date When Check Is Printed: Select this check box to tell QuickBooks to use the current system date as the printed check date.
Start with Payee Field on Check: Select this check box to tell QuickBooks to place the insertion point, or text cursor, on the Payee field when you open the Write Checks window.
Warn about Duplicate Check Numbers: Selecting this check box tells QuickBooks to alert you to duplicate check numbers. (You want to leave this check box selected, obviously, so that you don't use duplicate or erroneous check numbers.)
Autofill Payee Account Number in Check Memo: Select this check box to tell QuickBooks to automatically fill in the payee account number when you write a check. QuickBooks retrieves the account number for a payee from the Vendor List or from the Other Names List.
Select Default Accounts To Use: These check boxes let you specify which account QuickBooks suggests when you open the Create Paychecks window or open the Pay Payroll Liabilities window. Essentially, then, these boxes let you tell QuickBooks which checking account you use to write payroll checks and to pay payroll liabilities, such as federal income tax withholding amounts.

Setting the Accounting Preferences

2009-05-09T03:31:00.000-07:00

The My Preferences tab of the Accounting Preferences set provides a single option: You can tell QuickBooks you want it to autofill information when recording a general journal entry.

Don't get irritated with the lack of personalization, however. This almost total lack of individually personalized preferences makes sense, if you think about it. Accounting for a business needs to work the same way for Jane as it does for Joe and for Susan.

However, you do have the option to set several company preferences for accounting. This makes sense, again, if you think about it. Different companies run their accounting systems in different ways. Figure 1 shows the Company Preferences tab for the Accounting Preferences set.

Figure 1: The Company Preferences tab of the Accounting Preferences dialog box

Using Account Numbers

By default, QuickBooks lets you use names to identify accounts on the Chart of Accounts or in the accounts list. For example, the account that you use to track wages expense may be known as "wages." However, you can select the Use Account Numbers check box to tell QuickBooks that you want to use account numbers rather than account names for identifying accounts. Larger businesses and businesses with very lengthy lists of accounts often use account numbers. You can more easily control both the ordering of accounts on a financial statement and the insertion of new accounts into the Chart of Accounts if you're using numbers.

The Show Lowest Subaccount Only check box lets you tell QuickBooks that it should display the lowest subaccount rather than the higher parent account on financial statements. QuickBooks allows you to create subaccounts, which are accounts within accounts. You can also create sub-subaccounts, which are accounts within subaccounts. You use subaccounts to more finely track assets, liabilities, equity amounts, revenues, and expenses.

General Accounting Options

The Company Preferences tab provides the following five general accounting check boxes as well as closing date settings. (These check boxes are probably self-explanatory to anybody who has done a bit of accounting with QuickBooks, but for new QuickBooks users, I provide a brief description of what each one does.)

Use Account Numbers: The Use Account Numbers check box, if selected, enables you to enter an account number for a transaction. The associated check box, Show Lowest Subaccount Only, tells QuickBooks to display only the name and account number of a subaccount (if you're using one) instead of the full heritage of the account. If you use a lot of levels of subaccounts, this option can really clean up views, making it easier to tell what account you're looking at.
Require Accounts: The Require Accounts check box, if selected, tells QuickBooks that you must specify an account for a transaction. This makes sense. If you aren't using account numbers to track the amounts that flow into and out of the business, you aren't really doing accounting. It would never make sense, in my humble opinion, to deselect the Require Accounts check box.
Use Class Tracking: The Use Class Tracking check box lets you tell QuickBooks that you want to use not only accounts to track your financial information but also classes. Classes let you split account level information in another way. This sounds complicated, but it's really quite simple. The account list, for example, lets you track revenue and expenses by categories of revenue and expense. You may track expenses by using categories such as wages, rent, and supplies. Classes, therefore, provide you with a way to track this information in another dimension. For example, you can split wages expense into those wages spent for two different locations of your business. A restaurateur with two restaurants may want to do this.
Automatically Assign General Journal Entry Number: This check box tells QuickBooks to assign numbers to the general journal entries that you enter by using the Make Journal Entry command. You want to leave this check box selected. General journal entries, by the way, are typically entered by your CPA or your professional on-staff accountant.
Closing Date settings: The Closing Date box lets you identify a date before which your QuickBooks data file can't be changed. In other words, if you set the closing date to December 31, 2008, you're telling QuickBooks that you don't want any changes made to the QuickBooks data file before this date. This means that someone can't modify a transaction that's dated before your closing date without getting a scary warning message. It also means that someone can't enter a transaction by using a date before this closing date. You can also click the Set Password button to display a dialog box that lets you create a password, which is required if someone wants to add an old transaction or modify an old transaction.

Tip

Past versions of QuickBooks also let you turn on and off an audit trail feature by using the Company Preferences tab of the Accounting Preferences. However, since 2007, QuickBooks provides an always-on audit trail, so you don't see an Audit Trail check box accounting preference any more. An audit trail, by the way, simply keeps a list of who makes which changes to transactions. Accountants, predictably, love audit trails. Audit trails enable someone, such as your CPA, to come in after the fact and figure out why an account balance is what it is.

Fine-Tuning QuickBooks

2009-05-07T04:35:00.000-07:00

You can specify how QuickBooks works for you by setting preferences. In fact, just so you know, much of what you do when you run the QuickBooks EasyStep Interview (when you set up QuickBooks) is provide information that QuickBooks uses to set your preferences. For example, if you indicate that you charge customers sales tax, the EasyStep Interview describes how sales tax should work for your business by using the sales tax preferences.

Because these preferences have so much effect on how QuickBooks works and on how a particular user works with QuickBooks. None of this material is particularly complicated, but because QuickBooks provides you with a rich set of preferences options, I cover quite a bit of material. Simply use it as a reference when you have a question about how to change the way QuickBooks works in a particular area.

Accessing the Preferences Settings

You can set preferences within QuickBooks in two ways:

During the EasyStep Interview: You actually set all the preferences, or at least all the starting preferences for QuickBooks, when you run the EasyStep Interview. Most of the time, the preferences that the EasyStep Interview sets are correct. The EasyStep Interview is very smart about the way it asks questions and translates your answers into preferences settings. But if your business changes, or if you make a mistake during the setup interview, or if someone else in your office ran the EasyStep Interview for you, you may still need to check and fiddle-faddle with these preferences.
By manually changing the preferences: You can manually change the preferences by choosing the Edit ð Preferences command. QuickBooks displays the Preferences dialog box, as shown in Figure 1. QuickBooks groups categories of preferences. For example, QuickBooks groups all the accounting preferences into an accounting preference set. QuickBooks groups all the checking account preferences into a checking preference set. If you look closely at Figure 1, you see that along the left edge of the Preferences dialog box, QuickBooks displays a list of icons. The first icon is Accounting. The second icon is Checking. To see the preferences within one of these groups, you click that preference's icon.

Figure 1: The Preferences dialog box

One other item to note about the Preferences dialog box is that it supplies, in general, two tabs of preferences for each preference set. Preferences that are specific to an individual user appear on the My Preferences tab, shown in Figure 1. Preferences that are tied to the company data file appear on the Company Preferences tab, shown in Figure 2.

Figure 2: Company Preferences tab of the Preferences dialog box

Not every My Preferences tab gives you options for changing the way that QuickBooks works. Sometimes a particular set of preferences gives personal options; sometimes it doesn't.

For example, the My Preferences tab of the Accounting set of preferences provides no personalized options. In other words, you can't tell QuickBooks that a firm's accounting works differently for a particular person. This makes sense, right? Accounting needs to work the same way for every user within a firm. However, with other preferences settings, QuickBooks may allow different options for different users. You'll see this as I discuss the various sets of preferences in the remainder of this chapter.

And now, I'm just going to walk you through a discussion of each of these preferences sets. I talk both about the My Preferences option (if available) and the Company Preferences option.

Setting up the Profile Lists

2009-05-05T02:20:00.000-07:00

If you choose the Lists ð Customer & Vendor Profile List command, QuickBooks displays a submenu of commands that you use to create some of the mini-lists that QuickBooks uses to ease your bookkeeping and accounting. The Profile Lists include lists of sales reps, customer types, vendor types, job types, payment terms, customer messages, payment methods, shipping methods, and vehicles.

Most of the Profile Lists are pretty darn simple to use. For example, if you choose the Sales Rep List command, QuickBooks displays the Sales Rep List window. You then click the Sales Rep button and choose New. QuickBooks displays the New Sales Rep window, as shown in Figure 1. I bet you can figure out how to use this window.

Figure 1: The New Sales Rep window

In case you're still experiencing a certain amount of accounting anxiety, let me just point out that you enter the name of the sales representative into the Sales Rep Name box. Then, throwing caution to the wind, you enter the sales rep's initials into the Sales Rep Initials box. When you click OK, QuickBooks adds the sales rep to your Sales Rep List.

The other Profile Lists work in the same, simple, scaled-down fashion. You choose the Profile List in the submenu, click the Profile List button, and choose New. When QuickBooks displays a window, you use one or two boxes to describe the new Profile List.

Just to prove to you that this really is as easy as I've said here, take a look at the New Customer Message window shown in Figure 2 (accessible from the Customer Message List). This is the window that you use to create a new customer message. You can place customer messages at the bottom of customer invoices and credit memos.

Figure 2: The New Customer Message window

Tip

If you want to track vehicle mileage within QuickBooks — and note that you usually must track business vehicle mileage in order to claim business vehicle expenses as a tax deduction — you can maintain a list of business vehicles using the Vehicle List. This list then lets you easily track your business vehicles — something you do by using the Company ð Enter Vehicle Mileage command.

Setting up a Fixed Assets List

2009-05-03T06:18:00.000-07:00

If you choose the Lists ð Fixed Asset Item List command, QuickBooks displays the Fixed Asset Item List window. You can use this window to see a list of the fixed assets — furniture, equipment, machinery, vehicles, and so forth — that you've purchased. Or at least you can after you click the Item button, choose New from the menu, and fill in the New Item window for each fixed asset. Figure 1 shows the New Item window you use to describe each fixed asset.

Figure 1: You describe each fixed asset using the New Item window

Let me make a couple of comments about the QuickBooks Fixed Asset Item List. The Fixed Asset List doesn't really integrate with the QuickBooks general ledger. You record the purchase or disposal of fixed assets using regular old QuickBooks transactions. For example, you might record the purchase of a particular fixed asset simply by entering a check in the usual fashion. And you might record the disposal of a fixed asset by entering a general ledger journal entry.

The Fixed Assets Item List, then, just acts as a standalone list that lets you keep track of the fixed assets you purchased. Because the list is so standalone-ish, I'm not going to spend much time talking about it in the books of this reference. Let me also say that your CPA probably — no, surely — maintains a list of your fixed assets because she needs that list in order to correctly include depreciation on your tax return and in your financial statements (if you get CPA help to prepare those). For this reason, some people — including me — see the fixed asset item list as a little bit redundant.

Setting up the Vendor List

2009-05-01T02:09:00.000-07:00

Just as you use a Customer List to keep records on all your customers, you use a Vendor List to keep records on your vendors. Like a Customer List, a Vendor List lets you collect and record information, such as the vendor's address, the contact person, and so on.

To add a vendor to your Vendor List, follow these steps:

Choose the Vendors ð Vendor Center command.

When you do, QuickBooks displays the Vendor Center window, as shown in Figure1.

Figure1: The Vendor Center window
To add a new vendor, click the New Vendor button.

QuickBooks displays the New Vendor window, as shown in Figure 2.

Figure 2: The New Vendor window
Give the vendor a name in the Vendor Name box.

As is the case with the Customer: Job List, you use this name to refer to the vendor within QuickBooks. For this reason, an abbreviation is fine. You just want something easy to enter and easy to remember.

(Usual Rule) Ignore the Opening Balance and As Of fields.

Don't do anything with the Opening Balance and As Of boxes. People who don't know better use those boxes to enter the opening balance owed a vendor and the date the amount is owed. But this only creates problems later. At some point in the future, this poor soul's accountant will need to find and correct this error. As when you add new customers, however, an exception to the usual rule exists, as discussed in the tip that follows.

Tip

Although the usual rule is that you don't want to set an opening balance for a vendor, this rule has an important exception. You record your accounts payable balance on the conversion date by setting an opening balance for each vendor as of the conversion date. The sum of these opening balances is what QuickBooks uses to determine your total accounts payable on the conversion date.

Supply the vendor address information.

The Address Info tab supplies a bunch of easy-to-understand boxes that you use to collect vendor name and address information. You enter, predictably, the vendor's full name into the Company Name box.

You can click the Address Details button to display another dialog box called the Edit Address Information dialog box, which lets you enter the address in typical street address, city, state, and ZIP code format.

Supply any additional information necessary.

If you click the Additional Info tab (shown in Figure 3), QuickBooks displays a handful of other boxes that you can use to collect and store information, such as your account number with the vendor, the vendor type, the payment terms that you use when paying the vendor, your credit limit, and the vendor's tax ID number. The tax ID number is actually important if you later send this vendor a 1099 form to report payments to him.

Figure 3: The Additional Info tab

Tip

A good guideline if you're paying a vendor for the first time is to get his tax ID number. If somebody won't give you his tax ID number — thereby making it impossible for you to report payments that you make to him — it's probably a sign of something a bit amiss.

Tip

If you click the Account Prefill tab (the third tab available on the New Vendor dialog box) QuickBooks displays boxes you can use to list the accounts that you want QuickBooks to automatically fill in for you when you record a check to some vendor or when you record a bill from some vendor. For example, if the check to the landlord always pays rent expense and utilities expense, you could tell QuickBooks to "prefill" using these two accounts every time you indicate you're writing a check to or recording a bill from the landlord.

Setting up a Customer List

2009-04-30T05:58:00.000-07:00

A Customer List keeps track of all your customers and your customer information. For example, the Customer List keeps track of billing addresses and shipping addresses for customers.

Follow these steps to add a customer to the Customer List:

Choose the Customers ð Customer Center command.

QuickBooks displays the Customer Center window, as shown in Figure 1.

Figure 1: The Customer Center window
To add a new customer, click the New Customer & Job button and then choose the New Customer command.

QuickBooks displays the New Customer window, as shown in Figure 2.

Figure 2: The New Customer window
Use the Customer Name box to give the customer a short name.

You don't need to enter the customer's full name into the Customer Name box. That information can go into the Company Name box shown on the Address Info tab. You just want some abbreviated version of the customer name that you can use to refer to the customer within the QuickBooks accounting system.

(Usual Rule) Ignore the Opening Balance and As Of boxes.

You typically don't want to set the customer's opening balance by using the Opening Balance and As Of boxes. That's not the right way to set your new customer accounts receivable balance. If you do this, you're essentially setting up the debit part of an entry without the corresponding credit part. Later, you'll have to go in and enter crazy, wacky journal entries in order to fix your incomplete bookkeeping. But an exception to the usual rule exists, as discussed in the tip that follows.

Tip

Although the usual rule is that you don't want to set an opening balance for a customer, this rule has an important exception. You record your accounts receivable balance on the conversion date by setting an opening balance for each customer as of the conversion date. The sum of these opening balances is what QuickBooks uses to determine your total accounts receivable on the conversion date.

Use the boxes of the Address Info tab to supply the company name, including contact information, billing and shipping addresses, contact name, contact phone number, fax number, and so on.

I'm not going to tell you that you should enter somebody's first name into the First Name box, or that the phone number of your customer goes into the box labeled Phone. I figure you don't need that kind of help.
Supply a bit of additional information about the customer.

If you click the Additional Info tab, shown in Figure 3, QuickBooks displays several other boxes that you can use to collect and store customer information. For example, you can use the Type drop-down list to categorize a customer as fitting into a particular "customer type." Use the Terms drop-down list to identify the customer's default payment terms. Use the Rep drop-down list to identify the customer's default sales rep. Finally, use the Preferred Send Method to select the default method for transmitting the customer's invoices and credit memos. You can also record a resale number, specify a default price level, and even click the Define Fields button to specify additional fields that you want to collect and report for the customer.

Figure 3: The Additional Info tab
Click the Payment Info tab to display the set of boxes shown in Figure 4. You can record the customer's account number, his or her credit limit, and the preferred payment method.

Figure 4: The Payment Info tab
(Optional) Click the Job Info tab to describe the customer job.

The Job Info tab lets you describe information associated with a particular job being performed for a customer. You use the Job Info tab if you not only set up a customer but also set up a job for that customer.

Setting up Classes

2009-04-28T03:52:00.000-07:00

QuickBooks lets you use classes to segregate or track financial data in ways that aren't possible by using other bits of accounting information, such as the account number, the customer, the sales rep, the item, and so forth. A firm can use classes, for example, to segregate business units for product lines or geographical territories.

To set up classes, follow these steps:

Choose the Lists ð Class List command.

QuickBooks displays the Class List window, as shown in Figure 1.

Figure 1: The Class List window

Tip
If you don't see the Class List command, Choose Edit ð Preferences, click the Accounting icon and then the Company Preferences tab, and select the Use Class Tracking check box.
To create a new class, click the Class button and choose New from the Class menu.

QuickBooks displays the New Class window, as shown in Figure 2.

Figure 2: The New Class window
To name the new class, enter a name or abbreviation into the Class Name box.

Note that you enter the class name whenever you record a transaction that falls into the class. For this reason, you don't want to create lengthy or easy-to-mistype class names. Keep things short, simple, and easy.
If the class that you're setting up is actually a subclass of a parent class, select the Subclass Of check box and then select the parent class from the Subclass Of drop-down list.

After you describe the new class, you can click OK to save the class. Alternatively, you can click Cancel to not save the class. Or you can click the Next button to save the class and redisplay the New Class window.

Tip
If you don't want the class to be used any more, you can select the Class Is Inactive check box.

The Class menu, which appears when you click the Class button, also supplies commands for editing the information of the selected class, for deleting the selected class, for making the selected class inactive, for printing a list of classes, and several other useful commands as well. These commands are all pretty straightforward to use. Go ahead and experiment with them to find out how they work.

Setting up a Payroll Item List

2009-04-26T02:49:00.000-07:00

The Payroll Item List identifies items that appear on employee payroll check stubs. If you're using an outside payroll service bureau to handle your payroll — and this isn't a bad idea — you don't even need to worry about the Payroll Item List. If you're using the QuickBooks Assisted Payroll Service, again, don't worry about the Payroll Item List. (In either case, the QuickBooks folks set up the payroll items that you use for recording payroll.) And in the case of the QuickBooks Premier Payroll Service, you don't even need to track payroll inside QuickBooks because the QuickBooks people do it at their office location on their computers.

If you do need to add payroll items, follow these steps:

Choose the Lists ð Payroll Item List command.

QuickBooks displays the Payroll Item List window.
To add a new Payroll Item, click the Payroll Item button and then choose New from the Payroll Item menu.

QuickBooks displays the Add New Payroll Item dialog box. You can choose to set up a new payroll item either by using the EZ Set Up Method or the Custom Set Up Method. If you want QuickBooks to help you and you're setting up a common payroll item, click the EZ Set Up button, click Next, and then simply follow the on-screen instructions.

If you want to perform a custom setup of a payroll item, click the Custom Set Up button and then Next. QuickBooks walks you through a multiple-screen interview — that asks you about the payroll item to set up. For example, the first dialog box that QuickBooks displays asks you to identify the type of payroll item that you want to create. You answer this question by selecting one of the radio buttons and then clicking Next.
Name the payroll item.

After you identify the type of payroll item, you name it. QuickBooks provides another version of the Add New Payroll Item dialog box that includes a field you fill in to give the new item a name.

To finish the payroll item setup, click the Next button to move through the remaining payroll item setup questions.

You identify the name of the government agency to which the liability is paid, the taxpayer identification number that uniquely identifies you to the taxing agency, the liability account that you use to track the items, the tax form line that you use to report the item, the rules that QuickBooks should use for calculating the item (such as whether the item is subject to taxes), and a couple of other miscellaneous pieces of data. After you supply all this information and click the Finish button (which appears on the last version of the Add New Payroll Item dialog box), QuickBooks adds the new payroll item to the Payroll Item List.

Tip

The Payroll Item menu supplies commands that are useful for working with the Payroll Item List. In addition to the commands that you use to add an item to the list, the menu supplies commands for deleting payroll items, renaming payroll items, making payroll items active, and printing the list of payroll items.

Loading the Master File Lists

2009-04-24T01:37:00.000-07:00

Setting up QuickBooks, as a practical matter, requires that you take two steps: Run the EasyStep Interview, and load the master file lists. The master file lists store information that you can use and reuse. For example, one of the master file lists describes each of your customers. And this master file of customer information includes the customer's name and address, contact information, account numbers, and so on.

One important note: You don't need to completely fill your master files before you start doing anything. If you enter your active customers into the customer master file, your active vendors into the vendor master file, and so forth, that amount of information may be all you need to get started. With the information you entered through the EasyStep Interview and the addition of a few more entries into key master files, you may be able to add everything else on the fly. QuickBooks enables you to add entries to the various master files as you work with windows and dialog boxes that reference master file information.

Setting up the Chart of Accounts List

The Chart of Accounts List is a list of accounts that you use to categorize your income, expense, assets, liabilities, and owner's equity amounts. If you want to see a particular line item of financial data on a report, you need an account for that line item. If you want to budget by a particular line item, you need an account for that budget amount. If you want to report some bit of financial information on your tax returns, you need an account to collect that specific data.

Fortunately, the steps for creating new accounts are quite straightforward. To set up a new account within your Chart of Accounts List, follow these steps:

Choose the Lists ð Chart of Accounts command.

QuickBooks displays the Chart of Accounts window shown in Figure 1.

Figure 1: The Chart of Accounts window
Click the Account button at the bottom of the window.

QuickBooks displays the Account menu. One of the Account menu options is New, which is the command that you use to add a new account.
Add a new account by choosing the New command from the Account menu.

QuickBooks displays the first Add New Account window, as shown in Figure 2.

Figure 2: The first Add New Account window
Use the Type buttons to identify the type of account that you're adding.

QuickBooks supplies the following account types: Income, Expense, Fixed Assets, Bank, Loan, Credit Card, Equity, and, if you mark the Other Accounts Type and open the Other Accounts Type drop-down list, Accounts Receivable, Other Current Asset, Other Asset, Accounts Payable, Other Current Liability, Long Term Liability, Cost of Goods Sold, Other Income, and Other Expense. If you have a question about which account type your new account fits into which describes how financial statements work. These account groups essentially tell QuickBooks in which area of a financial statement account data gets reported. Note, too, that the first Add New Account window shows examples of the selected account type in the box above the Continue and Cancel command buttons.
Click Continue.

QuickBooks displays the second Add New Account window, as shown in Figure 3.

Figure 3: The second Add New Account window
Use the Name box to give your new account a unique name.

The name that you give the account will appear on your financial statements.
If the account you're adding is a subaccount underneath a parent account, identify the parent account by selecting the Subaccount Of check box.

After you select the Subaccount Of check box, name the parent account by using the Subaccount Of drop-down list.
(Optional) Provide a description for the new account.

You don't need to provide a description. Without a description, QuickBooks can still use the account name on financial statements. If you want a more descriptive label placed on accounting reports, however, use the Description box for this purpose.
Provide other account information.

The Add New Account window shown in Figure 3 includes a Bank Acct. No. box that lets you record the bank account number for a particular bank account. Other account types may have similar boxes for storing related account information. For example, the credit card account type version of the Add New Account window lets you store the card number.

If you do have another box or two in which to store account information, go ahead and use that, if necessary, to collect the bits and pieces of data that you want to save.
Identify the tax line on which the account information is to be reported by selecting a tax form and tax line from the Tax-Line Mapping drop-down list.

You may not need to assign a particular account to a tax line if that account data isn't reported on the business's tax return. For example, cash account balances aren't reported on a sole proprietor's tax return. So a bank account for a sole proprietor doesn't have any required tax line data. Cash account balances are recorded on a tax return of a corporation, however. So if you're adding a bank account for a corporation, you use the Tax-Line Mapping drop-down list to identify the tax line on which the bank account information gets reported.
(Optional but dangerous) Consider recording an opening balance for the account.

Typically, you shouldn't supply an opening account balance for an account. But the second Add New Account window does let you do so. For example, in the dialog box shown in Figure 3, you can click the Enter Opening Balance command button. When you click this button, QuickBooks displays another dialog box that you can use to set a starting account balance. All this sounds rather innocuous. But, seriously, this is something you rarely do. However, if you know something I don't, you can use this capability to set the starting balance for the account as of some date. One last caution, however. My accounting professors taught me two things that would suggest that this approach to setting account balances is crazy:
- Debits are supposed to equal credits. (If you're setting the opening balance for an account as part of setting up the new account, you're only recording half of the accounting transaction.)
- Entering the opening balance as part of setting up a new account means no audit trail exists for the transaction. (Rather than having an invoice associated with a transaction or a check, or even a general journal entry, you're just setting balances on the fly. But hey, maybe you know something I don't…)

After you describe the new account that you want to set up, you can click OK to save the new account to the Chart of Accounts List. You can also click the Next button to save the account information and then redisplay the Add New Account window so that you can add another account.

Tip

If you look closely at Figure 3, note some boxes and buttons and even a hyperlink that I haven't talked about. QuickBooks does supply other fields for collecting account information. And, occasionally, QuickBooks also provides clickable hyperlinks and buttons that you can use to do special tasks associated with the particular type of account. For example, in the case of a bank account, QuickBooks supplies an Order Checks hyperlink that you can click to start the process of ordering check forms for the new account.

And that's almost everything you need to know about adding accounts. The one other thing I should mention is that the Account menu — this is the menu of commands that QuickBooks displays when you click the Account button available on the Chart of Accounts window — provides several other useful commands for working with accounts. The menu provides a Delete command that you use to delete the selected account (as long as you haven't already used the account). The menu provides an Edit button that you can use to make any changes to the selected account information (by using a window that looks very much like the New Account window shown in Figure 3). The Account menu also provides other commands that you can use to work with the Chart of Accounts List. Fortunately, most use self-descriptive command names: Print List, Make Inactive, and so on.

Tip

The Activities button, which appears at the bottom of the Chart of Accounts window, displays a menu of commands that you can use to write checks, make deposits, enter credit card charges, transfer funds, make journal entries, reconcile a bank account, and use a register. The Reports button displays a menu of commands that you can use to print reports containing account information.

Running the EasyStep Interview

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After you install the QuickBooks program, the installation program may start QuickBooks automatically and then start the EasyStep Interview. You can also start the EasyStep Interview by starting the QuickBooks program the same way you start any program — by choosing the File ð New Company command.

The Big Welcome

The Welcome screen of the EasyStep Interview appears when you choose the New Company command. The screen provides some general information about setting up a new company within QuickBooks. The screen also provides links — such as the link you can click to get help from a QuickBooks certified advisor. (QuickBooks advisors, by the way, are people who have taken a test about QuickBooks and paid $500 to Intuit to get a copy of QuickBooks and be listed on the QuickBooks Web site as a QuickBooks advisor.) You probably want to read through this screen's information, but when you're ready to begin, click the Start Interview button.

Figure 1: The EasyStep Interview window showing the Welcome message

Tip

The EasyStep Interview walks you through a bunch of screens full of information. To move to the next screen, you click the Next button. To move to the previous screen, you click the Prev button. If you get discouraged and want to give up, you can click the Leave button. But try not to get discouraged.

Supplying Company Information

The first few screens of the EasyStep Interview collect several important pieces of general information about your business, including your company name and the firm's legal name, your company address, your federal tax ID number, the first month in the fiscal year (typically January), the type of income tax form that your firm uses to report to the IRS, and the industry or type of company that you are operating (retail, service, and so forth), as shown in Figure 2.

Figure 2: The first screen of the EasyStep Interview collects general company information

After collecting this general company information, QuickBooks creates the company data file that stores your firm's financial information. QuickBooks suggests a default name or a QuickBooks data file based on the company name (see Figure 3). All you need to do is accept the suggested name and the suggested folder location (unless you want to save the data file into the My Documents folder, which isn't a bad idea).

Figure 3: The Save As dialog box

Customizing QuickBooks

After QuickBooks collects the general company information mentioned in the preceding paragraphs, the EasyStep Interview asks you some very specific questions about how you run your business so it can set the QuickBooks preferences. Preferences, in effect, turn on or off various accounting features within QuickBooks, thereby controlling how QuickBooks works and looks. Here are the sorts of questions that the EasyStep Interview asks to set the QuickBooks preferences:

Does your firm maintain inventory?
Do you want to track the inventory that you buy and sell?
Do you collect sales tax from your customers?
When do you sell items?
What invoice format do you want to use to bill customers?
Do you want to use sales orders to track customer orders and backorders?
Do you want to use QuickBooks to help with your employee payroll?
Do you want to prepare written or verbal estimates for your customers?
Do you ever prepare more than one invoice for an estimate (if you want to do progress billing or partial billing)?
Would you like to track the time that you or your employees spend on jobs or projects for customers?
Do you want to use classes to further segregate income and expense, assets, liabilities, and owner's equity data?
How do you want to handle bills and payments (enter the checks directly, or enter the bills first and the payments later)?
How often do you want to see your Reminder List?
Do you prefer to view reports on an accrual or cash basis?

Setting Your Start Date

Perhaps the key decision that you make in setting up any accounting system is the day on which you begin using your new system. This is called the conversion date. Typically, you want to begin using an accounting system on either the first day of the year or the first day of a new month. Accordingly, one other big question the interview asks you is about the conversion date. You're prompted to identify the start date by using the dialog box shown in Figure 4.

Figure 4: This EasyStep Interview dialog box lets you select the start date

Tip

The easiest time to start using a new accounting system is at the beginning of the year. The reason? You get to enter a simpler trial balance. At the start of the year, for example, you enter only asset, liability, and owner's equity account balances.

At any other time, you also enter year-to-date income and year-to-date expense account balances. Typically, you have this year-to-date income and expense information available only at the start of the month. For this reason, the only other feasible start date that you can pick is the start of a month.

In this case, you get year-to-date income amounts through the end of the previous month from your previous accounting system. For example, if you've been using Peachtree, get year-to-date income and expense amounts from Peachtree.

After you provide the start date, you've accomplished three stages of the interview: You've supplied the basic company information, you've identified most of your accounting preferences, and you've identified the date on which you want to start using QuickBooks. You're almost done.

Tip

If you click the Leave button, QuickBooks leaves you in the QuickBooks program, ready to get to work. However, the EasyStep Interview process isn't lost forever; to get back into the interview, just open the file you were in the process of setting up. When you do, the EasyStep Interview restarts.

Adding Bank Accounts

During the EasyStep interview, you're asked about any bank accounts you use in your business, as shown in Figure 5. You just name the bank accounts.

Figure 5: The EasyStep Interview collects information about your bank account(s)

Reviewing the Suggested Chart of Accounts

At the very end of the EasyStep Interview, based on the information that you supply about your type of industry and the tax return form that you file with the IRS, QuickBooks suggests a starting set of accounts — accountants call it a chart of accounts. These accounts are the categories that you use to track your income, expenses, assets, and owner's equity. Figure 6 shows the screen that the EasyStep Interview displays for showing you these accounts.

Figure 6: The EasyStep Interview screen shows you its recommended income and expense accounts

The accounts that QuickBooks marks with a check, as the screen explains, are the recommended accounts. And if you don't do anything else, these checked accounts are the ones you'll use (at least to start) within QuickBooks. However, you can remove a suggested account by clicking the check mark. QuickBooks removes the check mark and that means the account won't be part of the final chart of accounts. You can also click an account to add a check mark and have the account included on the starting chart of accounts.

Tip

You can click the Restore Recommendations button at the bottom of the list to return to the initial, recommended chart of accounts (if you made changes you later decide you don't want).

When the suggested chart of accounts looks okay to you, click Next. It's fine to just accept what QuickBooks suggests because you can later change the chart of accounts.

Looking at the QuickBooks Learning Center window

After you finish with the EasyStep Interview, QuickBooks displays the QuickBooks Learning Center window, as shown in Figure 7. This window provides clickable hyperlinks that you can use to view tutorials that provide a "big picture" overview of how you work with QuickBooks. There's good stuff here, so if you're new to QuickBooks, go ahead: poke around. After you finish poking, click the Begin Using QuickBooks button and the QuickBooks program window comes into full view. Now, finally, you can begin to enter accounting data into QuickBooks. Whew.

Figure 7: The QuickBooks Learning Center window

Dealing with the Pre-Interview Jitters

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After you install QuickBooks, you run an interview to set up QuickBooks for your firm's accounting. In the next sections, I explain what you need to do before you run the QuickBooks setup interview so that you work in an efficient manner. I also give you an overview of what you'll do as you go through the interview.

Preparing for the Interview

By running the interview, you provide quite a bit of information to QuickBooks. As a practical matter, the EasyStep Interview and the post-interview cleanup require that you have the following:

Accurate financial statements as of the conversion-to-QuickBooks date
Detailed records of your accounts payable, accounts receivable, inventory, and fixed assets
A complete or nearly complete list of employees, customers, vendors, and inventory items (if you buy and sell inventory)

You want to get all this stuff together before you start the EasyStep Interview because you're asked about this stuff as part of the interview. Don't try to scurry around, looking for a particular piece of data while you're running the interview; collect this data up front. Then stack all the necessary paperwork on your desk next to your computer.

Let me also note that you're going to make several accounting decisions as you go through the EasyStep Interview. For example, you decide whether you want to use an accounts payable system. You tell QuickBooks whether you want to send customers monthly statements. You're also asked whether you want to prepare estimates for customers. And you're asked whether you want to use classes to further track your income and spending.

In general, when you're asked one of the accounting questions, you can simply accept the default answer. However, you're required by law to be consistent in your accounting for tax purposes. If you want to change your accounting — technically called a change of accounting method by the Internal Revenue Service — you must request permission to make the change from the IRS. How to do this and the ramifications of doing this are beyond the scope of this book, but be forewarned: The IRS insists that you be consistent in your accounting. If you've been treating particular items of income or expense in a certain way, the IRS says, "Hey, dude, you must continue to treat them that way unless you get permission from us to change."

One final note: You should have your tax return from last year handy because it supplies a bunch of information that you need for running the EasyStep Interview. For example, last year's tax return supplies your taxpayer ID number, your legal business name, and your method of accounting.

What Happens during the Interview

As you walk through the interview, you work with QuickBooks to set up the QuickBooks preferences (which determine how QuickBooks works and which features are initially available) and to set up a chart of accounts and your bank accounts.

The chart of accounts, just so you know, identifies those income, expense, asset, liability, and owner's equity accounts that appear on your financial statements.

After you complete the EasyStep Interview, you're almost ready to begin using QuickBooks. In fact, in a pinch, you could (after the EasyStep Interview) limp along with QuickBooks.

Warning

An important point of clarification: You might think that you should be ready to rock and roll after installing QuickBooks and running through the EasyStep Interview. However, you have two other QuickBooks setup tasks to complete after the EasyStep Interview: identify your starting trial balance and load your key master files. The trial balance identifies your year-to-date income and expense numbers; and your asset, liability, and owner's equity numbers as of the conversion date. The master files store information that you repeatedly use about customers, vendors, employees, and inventory items. For example, the customer master file stores a customer's name and address, phone number, and the contact person.

Installing QuickBooks

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You install QuickBooks in the same way that you install any program. And how you install a program depends on which version of Microsoft Windows you're using. In general, however, recent versions of Microsoft Windows require that you place the QuickBooks CD into your CD-ROM or DVD drive. When you do this, Windows looks at the QuickBooks CD and recognizes it as a CD that includes a new, to-be-installed software program and starts the process for installing the QuickBooks software.

You don't need to do anything special to install QuickBooks. Simply follow the on-screen instructions. You typically are prompted to enter the installation key or installation code. This code is available within the QuickBooks packaging — usually on the back of the envelope that the disc comes in.

The QuickBooks installation process may ask you to answer questions about how you want QuickBooks installed. Almost always, you want to accept the default suggestions. In other words, QuickBooks may ask you whether it can create a new folder in which to install the QuickBooks program files. And in this case, choose yes.

If your version of Microsoft Windows doesn't recognize that you've stuffed the QuickBooks CD into the machine's CD or DVD drive, you have a couple of choices:

You can wait. Probably, if you wait, Windows will recognize that you've placed the QuickBooks CD into the CD or DVD drive and, after a short wait (even though it may seem like an eternity), Windows starts the process of installing the QuickBooks program.
You can manually force the installation of the QuickBooks program. Windows includes a tool that you can use to add or remove new programs (unsurprisingly named the Add/Remove Programs tool). I don't describe how this Control Panel tool works here, but you can refer to a book such as Windows XP For Dummies or Windows Vista For Dummies, by Andy Rathbone (Wiley Publishing, Inc.), or Windows online Help to get this information. In a nutshell, you simply open the Control Panel window, click the Add/Remove Programs tool, and follow the on-screen instructions for telling Windows to install a program stored on the CD or DVD in the computer's CD or DVD drive.

Warning

QuickBooks can work as a multi-user accounting system. This means that several people can use QuickBooks. The QuickBooks data file — the repository of all the QuickBooks information — typically resides on a centrally available computer or server. People who want to work with the QuickBooks data file simply install the QuickBooks program on their computers and then use the program to access centrally located QuickBooks data files. This multi-user system isn't complicated to run; Note that you need to own a separate copy of QuickBooks for each computer on which you install QuickBooks. You can also buy multi-user copies of QuickBooks that let you install the QuickBooks program on up to five computers. I mention this because you don't want to get involved in software piracy — which is a felony — as part of inadvertently setting up QuickBooks in the wrong way. The bottom line: You need a legal copy of QuickBooks for every machine on which you install QuickBooks.

Setting up QuickBooks

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To use QuickBooks, you need to do two things: install the QuickBooks software and run the setup interview, which is called the EasyStep Interview. This post gives a bird's-eye view of both of these tasks. I also spend just a few paragraphs talking about some of the planning that you should do before you set up QuickBooks, and some of the missing setup steps in the EasyStep Interview — things it should do but doesn't.

Planning Your New QuickBooks System

I start with a couple of big picture discussions: what accounting does and what accounting systems do. If you understand this big picture stuff from the very start, you'll find that the QuickBooks setup process makes a whole lot more sense.

What Accounting Does

First you need to know what accounting does. People may argue about the little details, but most would agree that accounting does the following four important things:

Measures profits and losses
Reports on a financial condition of a firm (its assets, liabilities, and net worth)
Provides detailed records of the assets, liabilities, and owner's equity accounts
Supplies financial information to stakeholders, especially to management

What Accounting Systems Do

Now take a brief look at what accounting systems — or at least at what small business accounting systems — typically do:

Produce financial statements, including income statements, balance sheets, and other accounting reports.
Generate business forms, including checks, paychecks, invoices, customer statements, and so forth.
Keep detailed records of key accounts, including cash, accounts receivable (amounts that customers owe a firm), accounts payable (amounts that a firm owes its vendors), inventory items, fixed assets, and so on.
Perform specialized information management functions. For example, in the publishing industry, book publishers often pay authors royalties. So royalty accounting is a task that book publisher accounting systems must typically do.

What QuickBooks Does

Okay, after you understand what accounting does and what accounting systems typically do, you can see with some perspective what QuickBooks does:

Produces financial statements
Generates many common business forms, including checks, paychecks, customer invoices, customer statements, credit memos, and purchase orders
Keeps detailed records of a handful of key accounts: cash, accounts receivable, accounts payable, and inventory in simple settings

Allow me to make an important observation here: QuickBooks does three of the four things that you would expect an accounting system to do. Compare the list that I just provided with the previous list ("What accounting systems do"). However, I'll save you the time of finding the fourth thing; QuickBooks doesn't supply the specialized accounting stuff. For example, QuickBooks doesn't do royalty accounting discussed in the earlier example.

And Now for the Bad News

So QuickBooks does three of the four things that accounting systems do, but it doesn't do everything. QuickBooks is often an incomplete accounting solution. Be careful, therefore, about setting your expectations. You also, typically, need to figure out workarounds for some of your special accounting requirements.

QuickBooks gives users and businesses a lot of flexibility. So, returning to the previous example, a book publisher can do much of what it needs to do for royalty accounting in QuickBooks. This royalty accounting work simply requires a certain amount of fiddling as the business is setting up QuickBooks.

However, QuickBooks does suffer from a couple of significant weaknesses:

QuickBooks Pro doesn't supply a good way to handle the manufacture of inventory. However, QuickBooks Premier and QuickBooks Enterprise Solutions do support simple manufacturing accounting. (These versions of QuickBooks help you account for the process of turning raw materials into finished goods.)
QuickBooks doesn't handle the situation of storing inventory in multiple locations. It just shows, for example, that you have 3,000 widgets. It doesn't let you keep track of the fact that you have 1,000 widgets at the warehouse, 500 widgets at store A, and 1,500 widgets at store B.

In spite of the fact that QuickBooks may be an incomplete solution and may not handle inventory the way you want or need, QuickBooks is still a very good solution. What QuickBooks does, it does very well. Furthermore, I don't want to suggest that you shouldn't ever use a smaller software company's accounting solution, but consider the fact that QuickBooks will be around for a long, long time.

It's far more likely that an accounting software product with 600 users, for example, will be discontinued rather than a product like QuickBooks, which has 2,000,000 customers.