Reconciling the Bank Account

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:

1. Select the account that you want to reconcile from the Account dropdown list.

2. 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.

3. Enter the ending balance shown on your bank account statement in the Ending Balance box.

4. 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.

5. 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.

6. 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

   

7. 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.

8. 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

   

9. 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

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

1. 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.

2. 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.

3. 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.

4. 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.

5. (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.

6. 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

Paying Vendors

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:

1. 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.

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.

2. 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.

3. (Optional) Classify the purchase using the Class drop-down list.

4. (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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

Billing for Time | Invoicing Customers

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

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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. (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.

7. 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.

Specifying How Sales are Taxed

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

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

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

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

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

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