This is the start of a series of posts in which we look at the features in QuickBooks that would be used in a business that sells services to its customers. It may sell materials as well, but the significant portion of its business is to provide a service to the public.
These are industries that QuickBooks serves well. The software, both the desktop version and the online, is rich with features to aid business-owners that fall into this category.
We will alternate the posts. As QuickBooks Online (QBO) continues to grow in popularity in some circles, it’s important we cover the features of both.
This post examines specifically the desktop version. We’ll start at the beginning and look at customer setup and the specifics that can help you keep tabs on your service-based company.
Start with the Customer Center, Customers->Customer Center. When looking for a particular transaction, people often ask where they should go to find it. If it is a customer transaction, this is usually the best place to start.
The Customer Center shows our list of customers on the left, along with each customer’s balance due (1). The upper right portion of the screen gives contact information. The lower right part of the screen may be the most helpful.
Arrow 2 points to the tabs identifying different information that can be kept in QuickBooks for each customer. The Transactions tab is the most common and is the one shown here. You can also keep information for multiple contacts for individual customers (Contacts). If you use the To Do list in QuickBooks, you can create custom ‘To Do’s’ for an individual customer.
Multiple notes can be saved, again individual to each customer, on the Notes tab. Lastly, The Emails tab will maintain a record of the invoices and other forms you send to the customer by email. This is a great resource as you will have a record of these contacts listed within QuickBooks.
Notation 3 is there to point out that, in the transaction part of the window, you can filter and sort in various ways to help you find past dealings with this customer.
A Complete Customer Setup
There’s more to setting up a customer in QuickBooks. While most of the following is optional, some of these settings will be very helpful.
There are several tabs along the left edge of the customer setup window. Let’s take a brief look at them.
The first is the Address Info tab. Most of this window is self-explanatory. One capability often overlooked here is that the fields with the down-arrow symbol in the label can serve multiple uses. Click on the down arrow and the label can be changed from say CC Email, to another web site, or phone number, etc. And the label will match the data you put in the field. It’s very customizable in this regard.
Also, you can store multiple ship addresses for customers. This may not be used much in a service-based company, but it’s good to know it’s there.
The three most useful items on the Payment Settings tab, in my opinion, are the three marked in the screenshot above. Setting the payments terms here means they will populate every invoice without being specifically selected, no matter who is entering the data. The preferred send method will also fill in a new invoice with the appropriate data without anyone remembering and making the selection manually.
The credit limit is a nice feature. Once the customer reaches the limit, you can still create an additional charge for them, but QuickBooks will give a warning the you have to answer, making the specific decision that, yes, you want to allow the customer to go over the limit.
Be careful keeping customer credit card information. Use independent logins and good security. You don’t want to be responsible for losing critical information like this and having to admit it to your customers.
Even service companies often sell items along with the services they perform. Often these items are subject to sales tax. Since it is common for service companies to be performing work at customer locations, different sales tax rates based on location are the rule. Here is where that setting is established so no one has to decide which sales tax item should be used when an invoice is created.
What about multiple projects for one customer?
There is one last attribute in the process of managing customers we need to cover. While many service-based companies will have no need to track the income and expense of a particular job or project independent of other jobs/projects, some will.
If your projects are large enough to track independent of other jobs, this feature will help you do that. In QuickBooks we can setup multiple jobs or projects for one customer. This allows reports to be created specific to a job or project, allowing the profitability of that one job to be analyzed.
To set up a job or project for a customer, choose Add Job from the New Customer & Job menu in the Customer Center.
In the window that opens, the only required field is a name for the job or project. Often QuickBooks users will use the address of the job. Other information like start and completion dates and various labels such as Pending or In Progress can be attached to the job as well.
When complete, the job will be indented underneath the customer name.
A question frequently asked by small non-profits using QuickBooks is; how do we create the letter donors will use to deduct their contributions on their tax returns?
There really has never been a way to do this in QuickBooks. As a result, the letter requirement has become a real chore.
The purpose of this blog post is to introduce you to a way to accomplish the creation of these letters using QuickBooks and QuickBooks’ ability to integrate with Excel and Word. It’s a multi-step process, complicated to describe in a blog post, so we’re showing it in a video.
If it seems complicated to you, run through it again. It’s not really complicated, but utilizes a couple of QuickBooks tools that may be new to some. The link to the video is here:
For many businesses, customer refunds are a fact of life. Defective products, services that didn’t work, or just to pacify an unhappy customer, occasionally a refund will need to be processed.
As common as this situation is, it is surprising how few QuickBooks users are familiar with the process.
Refunds are created using credit memos. Customer -> Create Credit Memos/Refunds.
In this example, Rock Castle Construction refunds their customer, Kristy Abercrombie, for two hours of labor that resulted from the breakdown of their air compressor.
When saving the credit memo, QuickBooks uses a popup screen to ask the following question.
Selecting “Retain as available credit”, keeps the credit memo as a credit in the customer’s balance. “Apply to invoice”, allows the QuickBooks user to apply the credit against an unpaid invoice for this customer.
In this instance, let’s say the customer had already paid the invoice and we wanted to give them an actual refund check. We would select the middle option, “Give a refund”.
Once the refund option is chosen, QuickBooks displays the above screenshot with all the information filled in. You can change it if necessary.
Usually, you can select OK with the data QuickBooks has used. The refund check is created, ready to be printed.
Have you ever used this feature?
We’ve been looking at ways to discount for customers the last couple of blog posts. Today we want to examine how QuickBooks will help you reward customers who pay early.
“Terms” refers to the terms for invoice payments you offer to customers. The most common terms used in business are already setup in QuickBooks, only a few QuickBooks users ever need to setup their own terms.
These terms set the due date of invoices we create. Some include a discount offered to the customer in exchange for quick payment. An example would be 2% 10 Net 30. The customer may take a discount of 2% if the invoice is paid within ten days. Otherwise, the amount is due within thirty days.
The list of available terms can be a little hard to find the first time. Look in Lists->Customer & Vendor Profile Lists->Terms list.
Granting the discount, when the customer pays, is part of the Receive Payment process.
The circled message at the bottom of the Receive Payment window informs the QuickBooks user that the customer merits a discount. In this case, the customer paid the discounted amount.
To grant the discount, first select the invoice being paid in the list of open invoices shown in the Receive Payments window. Click the Discounts And Credits icon on the ribbon.
The ribbon, as shown in this screenshot, is the view that users of QuickBooks 2013 and 2014 will see. Earlier versions of QuickBooks will have a Discounts and Credits button, but it will be in the lower part of the window. This button will provide the same functions as the icon on the ribbon of 2013 and 2014 products.
QuickBooks does the math and computes the discount should be 2.48. As you can see in the screenshot, that amount can be edited. Usually the reason for editing would be a rounding error where the customer has calculated an amount a penny or two off.
Select the account to which the discount should post. Here, we have created an account for just that purpose, Discounts Given. Then click done and the discount is applied to the invoice/payment.
If you discount certain items or certain customers on a regular basis, there’s an easier way than using a discount type item. Price Levels in QuickBooks will offer a better solution.
Price Levels are found on the Lists drop down menu. There is a difference between Pro and Premier as to what kind of price levels can be used.
In QuickBooks Pro, Fixed % price levels are available.
Navigate to Lists->Price Levels and select New from the menu that pops up with a right mouse click, and you will see the above window. Name the price level so it can easily be identified. Set whether the price level is an increase or a decrease over the price set in the Item List.
Then round in a way you wish prices to appear on your customer invoices.
The completed Price Level is shown in the above graphic. We’ve named our new price level “15% Discount.” The price level will decrease item prices by 15%.
The rounding has been set so that discounted prices will show as whole dollars. There are many options for rounding. Prices can be specified to end in .25, .50 and others. Many choices will allow specifying prices to end in .49, .89, .99 and so on.
A time-saving feature when using price levels is that QuickBooks can be told to always use a certain price level for certain customers without any ‘reminding.’
By editing the customer and accessing the Payment Settings tab, we can specify a certain price level to be used automatically with that customer.
Now, without the need for a discount item, the price comes up automatically for this customer with a 15% discount. How did QuickBooks compute this price of $2736?
A case of 500 ML Cattle Supplement is 24 bottles priced at $133 each. So, QuickBooks starts with $133, discounts by 15% (19.95) to arrive at a price of 113.05. Per our rounding instructions, it then sets the price at $114, rounding up to the nearest whole dollar. The last part of the calculation is to multiply the each price times 24 to reach a case price of $2736.
You could alter the pricing or units of measure to tweak the way the final price will come out on an invoice. Using different methods can yield different results.
The Premier level of QuickBooks offers an additional option to price levels. Per Item price levels.
Many of the same calculation and rounding parameters that are found in Fixed % type price levels are here as well. But, they can be applied to a single item rather than all items.
In addition, the calculation can be based on the price, as with Fixed % price levels, or cost.
Just like Fixed % price levels, the Per Item price levels can be applied to one or more specific customers.
Unfortunately, only one price level can be applied to a customer.
Discounts are common in many businesses. Discounts for special events, special customers, or special payment terms. Just as there are a variety of reasons for granting discounts, there are various ways to create them in QuickBooks.
Let’s start with a simple method to give a customer a discount directly on an invoice. We can create a Discount type item.
You want to use discount items for one-time or occasional events. In cases where a discount is always granted a certain customer, or a discount given due to payment within a certain time frame are more efficiently handled in other ways.
The above screenshot shows the setup screen for a Discount type item. The following screenshot, shows the item setup screen after all the pertinent information is entered.
You must decide if the item, by default, is taxable or not. This is important. If you use the discount item to reduce the price of taxable items and the discount item is set to a non-taxable code, sales tax will not be reduced as a result of the discount.
No worries though, the sales tax code can be changed either way with each invoice where the discount item is used. So, just use the setting that would be appropriate most often.
Another setting is the account from the chart of accounts to which the discount item will post. This can be the same income account to which the items you normally sell post. Or, you can create a special income type account to track the amount of discounts. In the graphic of the Discount item, this latter approach was used. The discount amount will post to an income type account called, Discounts Given.
The invoice above shows an invoice using the new Discount item. A nice way to expand on its use is to add a subtotal after the discount showing the net price.
You can see that adding the subtotal line makes this appear a little better to your customer. They now can see the price of the merchandise before sales tax, but after the discount you’re giving.
The subtotal becomes critical for more complex invoices. For example, perhaps several lines need to be discounted, several lines do not.
The discount item in QuickBooks discounts the line immediately above it. If there are three lines of merchandise and/or services, then the discount item is used on line four, the discount is computed on line three only.
In order to discount the entire amount, use a subtotal item on line four, then the discount item on line five. Now the discount will apply to the entire amount.
That’s a good overview of adding a simple discount to an invoice. Next time, we’ll look at some of the other ways to create a discount for a particular purpose in QuickBooks, and do it with less manual input.
Voiding a bill payment check does not reduce any expense in QuickBooks. Payments to vendors are being reduced.
If a bill payment check is voided, the bill originally paid by a voided bill payment check, will now appear on the list of open payables. It is no longer a paid item.
If the bill payment was from a prior period, use the procedure outlined a couple of weeks ago for regular checks with two modifications.
The Name column in the Make Deposit window must have the vendor name the original check used. The Account column must be filled in with the account Accounts Payable.
The above transaction causes an increase in the vendor’s balance by the deposit amount.
Use the Enter Bills window, but change the radial button setting in the upper left of the window to Credit rather than Bill. Create the transaction just as you would a bill, using the same expenses or items as were on the original bill.
The next step is to access the Pay Bills feature, find the bill for that vendor, and use Set Credits to apply the credit to the bill.
Fortunately, the usual scenario in which a paycheck needs to be voided is when an employee loses a paycheck and it needs to be replaced. Here is an easy way to solve this sticky problem without affecting any other payroll transactions.
If the paycheck to be replaced were check number 287, create a regular check using the same payee (the employee), the date of the lost paycheck, and the same check number.
Use the Payroll Expenses account on the stub portion of the check but leave the amount of the check as zero. Create a memo explaining this is a voided paycheck, then save the check.
QuickBooks will display a warning message that the number already exists, but will allow the check to be saved. Now void the check using the QuickBooks Void command.
This completed step is merely to have a record in QuickBooks that the old paycheck number is a voided transaction.
Now display the original paycheck. Click on the Print icon at the top of the transaction ribbon.
Select Print. QuickBooks will suggest a new number for the check. Either accept the suggestion or type in the number of the check form that will be used, if different.
Once the check has printed, Save the paycheck with the new number.
The check register will now show the old check number as a voided check and the replacement check will, of course, have the new number as printed.
Setting up paid time off, like sick and vacation, is one of the common questions QuickBooks users have. QuickBooks will track this information for you, keeping the running tally of what is available for each employee and printing amounts available and taken on paycheck stubs.
As a demo, we will setup a time off accrual in Employee Defaults, that way it will be the default setting every time we hire a new employee.
Open the Employee Center. From the Manage Employee Information dropdown menu, choose Change New Employee Default Settings. Click on the button, Sick/Vacation.
The top portion of the Sick and Vacation window is what we’ll use in this example. It measures sick time. The procedures for vacation times would be essentially the same.
In the screenshot, the accrual period is set for “Every hour on paycheck”, let’s use that.
The next field tells QuickBooks how much time to accrue for every hour worked. In the sample file for Rock Castle Construction, time is set to show in hours and minutes. This is a setting in preferences. The time could show as a decimal.
We’ll set the amount of time to accrue per paid hour as two minutes. 0:02:00. This setting will accrue sixty minutes of sick time by the time the employee has worked thirty hours.
If time showed as a decimal, this amount would show as .03333. It would be the same amount of time.
The employee will be allowed to accrue a maximum of forty-eight hours. At that point, time ceases to accrue until some hours are used, bringing the amount available below forty-eight again.
The hours will not reset each year, which is a requirement in some states.
Note the checkboxes in the bottom portion of the window. We don’t want paid sick time to accrue on sick and vacation time used, so we will make that selection here.
Above is a paycheck created for a Rock Castle employee. Note the circled areas on the right. The lower of the two shows that Gregg has accrued 2:40 in sick time for the hours on his check. That’s eighty hours times two minutes each, resulting in 160 minutes, or two hours and forty minutes, for this paycheck.
The double headed arrow points out that we have added one hour of sick time to be paid. This lowers the amount of sick time available to 1:40. That is the amount shown by the top circled area, Sick Available.
Everything seems to be calculating correctly.
Hint: It’s not on the Edit menu
This is an area of QuickBooks that seems to generate more mistakes than almost any other.
QuickBooks provides a command, located on the Edit menu, to void a transaction. When this command is used, the transaction amount is changed to zero. A memo is added indicating the transaction has been voided.
But it is an edit. That is, the transaction retains its original date. The amount just changes to zero.
The problem with this solution is the impact on older transactions being voided.
Assume a company’s bookkeeping is complete, financial statements have been printed, perhaps given to a bank, and a tax return filed.
Then, it is decided something needs to be done about the old checks that won’t clear the bank. They are listed as outstanding on the bank reconciliations, perhaps the check dates are year or more old.
So, the checks in QuickBooks are voided. The result? Besides voiding the checks, the previously issued financial statements are incorrect and the filed tax return is now incorrect.
Voiding a check in a current period causes few issues. It can be located in the check register or on any report. Double click on the line with the check in order to view it. Then, from the edit menu or the Delete icon of the transaction ribbon, choose Void Check.
It might be a good idea to add a note of explanation in the memo field of the check. Then Save and Close to record the transaction. Since the check was originally written in the current period, prior account balances are not affected.
This is the more common situation and a task that must be handled with more care. The first step is the same. Find the check to be voided either in the account register or on a QuickBooks report.
Double click on the entry to view the check. In the memo field of the check make a note that the check is being voided with a deposit entry as of a current date.
Do not void the check with the QuickBooks Void command. Only note in the memo field that the check will be voided, and on what date.
Using a current date, create a Deposit in QuickBooks. The Name column can be left blank.
In the Account column, use the same expense account as was used on the original check. In the Memo column explain that check #XXX from (original date of the check), is being voided by this deposit. In the Amount column, use the amount of the check being voided.
The next and final step will be when the bank account is next reconciled.
The old check will still be there, but so will the new deposit. Check off both even though they are not on the bank statement. They are the same amount so will net to zero and not affect your bank reconciliation.
Those who do payroll in QuickBooks will find it necessary from time to time to create a payroll item. One of the most common is when a wage garnishment order for an employee is received.
When that happens, here is how to accomplish the task.
Navigate to Lists->Payroll Item list in order to display the list of payroll items. Either select the Payroll Item button in the lower left, or right-click your mouse anywhere within the actual list itself.
From the resulting menu, pick New.
In this post, we will use the Custom Setup method. It allows us more flexibility setting up the item.
You can see the many types of payroll items that can be selected in the graphic above. While the examples for the type selected suggest union dues, retirement plans, etc., a wage garnishment is definitely a deduction. So, we will choose Deduction as the payroll item type.
The next window in the wizard wants a name for the item. If you create a wage garnishment item for each wage garnishment order received, you will be able to create the checks to disburse the withheld amounts more easily. That’s what has been done in this example. Gregg Schneider is the employee whose wages will be garnished.
This screen allows you to specify the agency for payment of the withheld funds. It also contains a field for the number that identifies your employee to the agency. This is why we created the payroll item for only one specific garnishment order. Otherwise, this information could not be filled in here.
There is also a field for the liability account QuickBooks will use when creating paychecks and withholding the specified amounts. By default, QuickBooks will suggest Payroll Liabilities. Using an account like Wage Garnishments Payable allows much better tracking of the amounts coming in and going out of the account.
The Tax Tracking Type window is critical. The selection made from the dropdown menu shown, will determine the taxability of wages, how those wages are reported on government forms, and how they affect W2’s.
There’s quite a list of available options and if setting up something other than a simple wage garnishment, you’re likely to find on the list exactly what you are looking for. For our purposes, a wage garnishment does not affect taxes. None is the correct choice.
The next window (not shown) will allow very specific setup of the effects the new payroll item will have on tax withholdings. Generally, if you feel something in that window needs to be changed, you should seek professional payroll advice from your accountant or bookkeeper. Rarely would anything in that window need to be altered.
If the payroll item were to be based on quantity, like mileage, we could specify that in this window.
A wage garnishment will be deducted from net pay.
The last window in the setup process allows us to set a default rate. This can be either a dollar amount of a percentage. In the example, we have specified 25% of the employee’s net check.
If there were an annual limit, that could be set in this window as well.
In next week’s post, we’ll detail how to set this up with an employee to automate payroll processing.
From time to time, it becomes necessary to write off a customer balance that has become uncollectable. Let’s look at how to record this transaction in QuickBooks.
Step 1 - Add a new Item for Bad Debts
► Open the item list, click the Item button in the lower left corner, and select New.
► Select 'Other Charge' as the item type.
► Name the item "Bad Debt".
► Do not enter a default amount
► Make the item taxable and in the Account field, select the expense account for Bad Debt Expense. If you don’t already have an expense account for this purpose, you can create one without leaving item setup.
Step 2 - Issue a Credit Memo
► Choose the Refunds and Credits icon from the Home Page or select Create Credit Memos/Refunds from the Customer drop-down menu
► Enter the customer, a current date, etc. in the header of the credit memo.
► Use the bad debt item just created as the line item in the credit memo. Enter the amount to be written off exclusive of any sales tax amounts.
► Enter the appropriate Sales Tax Code. Use a non-taxable code if there is no sales tax to be written off.
► If applicable, select the appropriate Sales Tax Item from the drop down list at the bottom of the Credit Memo form
► Click Save and Close.
Step 3 - Apply the Credit Memo
Choose the selection to Apply to an invoice when this popup appears.
Be sure the correct invoice, if there is more than one, is selected in this window, and click Done.
That’s it. This method allows the recovery of any sales tax that may have been paid on the customer’s original invoice. As long as you use a current date for the credit memo, it preserves the account balances from previous periods. Your accountant will thank you for that.
Anyone using this method already?
Statements and finance charges can help small businesses receive more timely payments from their customers.
There is a little setup in order to use finance charges in QuickBooks. Let’s look at that first.
Navigate to Preferences->Finance Charges->Company Preferences.
The first field asks for an annual percentage rate the finance charge computation should use. Keep in mind this is an annual rate. In the sample company, QuickBooks will compute what the annual amount should be, then divide to only charge for the appropriate period, usually one month.
What is the minimum amount QuickBooks should charge. This field should really be filled in. Otherwise, the amount could be very small, making it less than the cost of charging the fee.
A grace period is often a good idea. Where this is most useful is preventing a customer payment and a statement with a finance charge from crossing in the mail.
As an example, say the customer has terms allowing thirty days before payment is due. They pay on the thirtieth day. At the same time, finance charges are computed and statements sent by the business. The customer will receive notification they are late and have been charged a finance charge even though they paid on time.
Finance Charge Account allows the selection from the chart of accounts. Finance Charge income will post to this account. A best practice is to use an Other Income type of account.
Most QuickBooks users will charge from the due date as shown.
Rarely does anyone want to print an invoice for each finance charge created. Most companies will leave the final checkbox unchecked.
To calculate the finance charges, either the menu option on the Customer menu or the icon on the Home Page can be selected. The following window shows the Assess Finance Charges window from the sample company Rock Castle Construction.
Only one customer has overdue invoices as of 12/31/2018 (the date in the sample file).
The overdue balance is $3500. If we looked up the details of this balance, we would find an invoice that was due on 11/14/18. The amount is overdue by several weeks.
Ten percent (the amount of our annual rate) of $3500 is $350. At December 31 the invoice is forty-seven days late. The result of that calculation is a finance charge of $45.07.
Different states may have regulations controlling the amount that can be charged customers for late payments and when those can be assessed. Be sure when you set your preferences you are in compliance with these regulations in your state.
Do you charge your customers finance charges? Does it help you get paid faster?
There is a feature, introduced in QuickBooks 2014, that will make the entries for a customer’s bounced check in QuickBooks. It uses the method we have suggested to QuickBooks users in the past, but those entries had to be created manually. Now, the software does it automatically.
Above is a screenshot showing a typical payment transaction in QuickBooks and highlighting the icon on the transaction ribbon that will activate the Bounced Check feature. Note the manner in which the payment is currently allocated.
Above is the window that opens once the Bounced Check icon is selected. Note that all the fields in this popup window are editable. You are able to choose the amount the bank has charged you for the bounced check. You are also able to set the transaction date, the expense account charged for the bank fee, class (if you use the class feature), and the fee you wish to charge your customer.
Once the information is filled in correctly, you may select the Next button at the bottom of the window.
This is an informational window, explaining what entries QuickBooks will make.
Note that in section 1, QuickBooks is explaining that the two original invoices paid by this payment, are now marked as open, or unpaid. Section 2 explains that the amount of the bad check, $7,633.28 and the service amount charged by the bank, $25.00, have both been deducted from the QuickBooks bank balance.
Section 3 informs you that a new invoice will be created for the customer, charging them and adding to their balance, the amount you, the QuickBooks user, chose to charge your customer for the returned check. We chose $35.00.
The customer name in the graphic is “Remodel Bathroom” which can seem a little confusing. This sample file is for a contractor who tracks income and expense by job. The payment was for a particular job, Remodel Bathroom. In your QuickBooks file, if you used an actual customer name on the invoice, rather than a job, that name would show here.
This last graphic is the portion of the Customer Center showing the customer’s transactions. It has been filtered to show only open transactions. Note that there are only three invoices open.
The bottom two are the invoices originally marked paid when the payment from the customer was first received. QuickBooks has marked these as open. This procedure allows these invoices to age properly, as of the original invoice date since, in reality, they were never really paid.
The third invoice, the one shown on line one in the graphic, is the invoice charging the customer the $35.00 fee for the dishonored check.
Recording a customer’s bounced check is as easy as a couple of mouse clicks.
Since this feature has been available since the 2014 version, have you ever used it?
One of the selling points of QuickBooks Online is the anytime, anywhere access. While having access to your business books from anywhere there’s an internet connections, there’s more.
QBO is also mobile. QBO has an app for iPhones/iPad and Android devices. Let’s get a brief overview of what’s possible on an Apple iPhone.
Above is a screenshot of the QBO menu on an iPhone screen. The menu items give access to almost all of the information in your QBO accounting program. Your customers and vendors are here. So is your list of products and services.
From your phone you are able to access transactions downloaded from your bank. Add, match, and accept them.
You can add expenses with a check or credit card transaction.
Account registers are accessible. View reports like a profit and loss or balance sheet.
It’s possible to create a number of different transactions for customers. In the following screenshot, we have accessed the sample company Rock Castle Construction.
On the iPhone screen is an estimate for the customer Kristy Abercrombie. The estimate can be created on your phone. In this case, we accessed one that already existed.
Note the dark blue area with the total and the link that will allow us to turn this estimate into an invoice.
As an example, let’s assume that someone from Rock Castle just completed the estimated task at Kristy’s home. Now he wishes to create the invoice for the completed job. Tap the instruction “convert to invoice.”
QBO creates the invoice. The red dots next to the items allow you to delete that line. The green dot just visible at the bottom would allow you to add additional items to the sale.
Above is the invoice. It’s been saved without any changes from the estimate. The area in the dark blue section allows the user to receive a payment if Kristy decided to pay now. If not, there is a signature line at the bottom. Tap there and the customer can sign the invoice with their finger.
This completes the transaction. It’s not necessary to download the transaction to QBO or sync information between devices. Back at the office, the bookkeeper working in QBO from their desktop sees the new transaction on their screen.
Can creating invoices and accepting payments in the field help your business?
This is a common scenario for small businesses. Another business buys product from you. They are a customer. But, they also sell to you. They are a vendor.
This is an issue in QuickBooks because a name cannot be both a customer and a vendor. And there is no way to trade services or products between customers and vendors.
At least, not in a straightforward, documented way. There is a solution.
Creating a name as both a customer and a vendor is not difficult. Change the name a little.
Let’s say we have a customer named Greg Aackerman. We want to put Greg on the vendor list as well.
In vendor setup, use the vendor name ‘Greg Aackerman (vendor)’, and fill in the “Print on Check as” field with the name only.
Create a new bank type of account. You’ll see why in a few paragraphs. Name the new bank type of account “Clearing Account.”
Recording transactions is simple. Use the customer, in our case Greg Aackerman, to record sales on invoices. Use the vendor, in our case Greg Aackerman (vendor), to record purchases on bills.
Saving the above transactions results in the following customer/vendor balances.
The puzzling part for most QuickBooks users comes now. How do we offset the balances?
First, note the amounts. Greg owes us $1125. We owe him $560. So whatever we do, we want to end up with a zero balance due to Greg the vendor and a balance due us of $565 ($1125 - $560) from Greg the customer.
Receive a customer payment from Greg in the amount of $560.
Navigate to Pay Bills and pay the bill we owe to Greg the vendor. Use the Clearing Account as the bank account to pay from.
Record a bank deposit. Deposit only the $560 payment we received from Greg and deposit it to the Clearing Account.
The result is that we no longer have a balance due to Greg in accounts payable. We show a balance due from Greg in accounts receivable of $565.
It’s important to double check and be sure we have created the transactions correctly. If we have, there should be a zero balance in the bank type account, Clearing Account.
This option isn’t for everyone, but it is a unique capability of QBO. If you sell services to your customers, most likely you are purchasing those services either from contractors or employees.
If you sell those services based on time, X number of hours at X dollars each, you need a record of that time in order to invoice the customer/client.
QuickBooks Online (QBO) has some features that can help you with this process. The Plus version of QBO includes time tracking features that simplify the entry and sale of the services you provide.
The base subscription for the Plus subscription to QBO allows up to five users. In addition to those five, you can create two accountant users which do not count against the limit of five.
The unique capability we want to highlight here, is that you can add even more users without paying additional fees. Users with report viewing only rights and users with time entry rights can be added. An unlimited number at no cost.
To see how this works, we’ll setup a fictional example. We have a sample company to use, Rock Castle Construction. Rock Castle provides certain services to its customers. Some of those services are performed by employees, some by subcontractors.
All this time must be tracked so Rock Castle can pay for it and invoice its customer. To ease the burden of tracking the time, we’ll let those who provide the service track the time for us.
The first step is to set up a new user in QBO.
From Settings (gear icon), choose Manage Users. Then Add a new user.
Remember, selecting Time Tracking as the user type, means we can add as many as we want.
Both the list of vendors and the list of employees is available, we can choose a name from either one. In this case, we will choose a vendor, Mendoza Mechanical.
As we proceed through the setup, QBO will ask for the user’s name and email address. We enter the information and continue.
QBO will invite the user to setup an account.
Above, you can see a portion of the email QBO sent to Mendoza Mechanical, inviting them to setup their user account in Rock Castle’s QBO subscription. A link is there allowing the recipient to accept the invitation. There are also instructions for signing in when time needs to be entered.
Above is the very simple screen presented to Mendoza so they can setup their user account login credentials.
After the one-step setup is completed, Mendoza can access the time activity portion of Rock Castle’s QBO subscription. Here, they can enter time.
Above is a screenshot of Mendoza Mechanical’s access to Rock Castle Construction’s QBO subscription. How much of the program is accessible is always a concern. But you can see from the screenshot that the other menu items do not exist in this window. There is nowhere else in the software this user can go.
Shown is the single activity time entry screen. A weekly timesheet could also be used. Mendoza selects the customer they worked for and what service was performed. They can enter time as a total amount, or opt to include start and end times.
There is also a help popup window to answer questions they might have about this entry.
Once the time is entered, it is available in the QBO system to pay Mendoza and invoice the customer without further manual entry.
Is a feature like this something that would be useful to you?
A lot of the work Intuit has done in recent years to improve inventory management in QuickBooks has gone into their Enterprise software. Even without the Advanced Inventory features that are part of the highest subscription level, Enterprise has several inventory features the other versions of QuickBooks don’t have.
One of those is automatic cost and price changes.
It’s very important to note a couple of things about cost information in QuickBooks. First, the value of inventory is maintained on an average cost basis. That is, if we purchase a widget at $5 and one at $10, QuickBooks tracks inventory as 2 widgets valued at $7.50 each.
The sale of one of those widgets will generate a charge to cost of goods sold of $7.50.
An item record actually has two cost fields.
The bottom circled area titled Calculated Average, is the QuickBooks generated average cost for this item. It is not an editable field.
The upper circled area is editable. You can put any number you want in that field. It affects very little. QuickBooks uses the average cost in all accounting entries.
That can change with QuickBooks Enterprise. That user-entered cost field can matter very much when using the automatic cost and price updates. Let’s see how that feature works.
First, turn on the preference.
Several settings are available in the Automatic Cost & Price Updates window. The top dropdown field labeled Markup, gives the QuickBooks user two choices. Percent over cost or Amount over cost.
The middle section determines how automatic cost updates will be handled by QuickBooks. The first field is labeled “If item cost changes on a purchase. The choices are Always update item cost, Never update item cost, or Ask about updating item cost. Selecting Always or Ask and then assuming the QuickBooks user responds positively when asked, will cause QuickBooks to update the Cost filed in the item setup window.
The second field is labeled “When item cost changes.” The selections for this field are Always update sales price, Never update sales price, or Ask about updating sales price.
In the sample file is a product named Virus Vac A. The cost field is filled in with the amount 37.50. The price is set at 75.00.
If we enter a bill purchasing Virus Vac A at 30.00, the following popup appears.
The popup appears because the setting selected in preferences is “Ask about updating item cost.” Yes has been selected as the answer in the graphic in order to show the price options. If yes is not selected, the price update options are grayed out. If you do not automatically change the cost, there is no way to automatically change the price.
So, the new cost is $30. QuickBooks will change this value in the item window when this transaction is completed. The markup on the old cost is 100%. A cost of 37.50 times 100% yields a price of 75.00.
Now, if QuickBooks updates the new cost to 30.00, in order to maintain the price markup of 100%, the price will be updated to 60.00.
Let’s go back to our Automatic Cost & Price Updates window.
The bottom section in the preference window deals with assembly type items. If we are having QuickBooks automatically update costs for inventory items, should these new costs then add up to create a new cost for an assembly item? The checkbox indicates yes, QuickBooks should make that calculation.
If the cost of the assembly total bill of materials changes, should QuickBooks automatically update the sales price? Again, a selection in this checkbox indicates that yes, it should.
How do you maintain pricing as the costs of the products you sell changes over time?
There are two good reasons to review the chart of accounts today. One, there is a setting when creating a new account that is unique to QBO. Two, knowing how to create accounts will make your company’s financial reports more accurate.
The account, from the chart of accounts, tells the financial software how to handle the amounts we post there when we create transactions. If the account is an asset or liability, the balance in the account is increased or decreased depending on the type of transaction we use and that balance remains, even across multiple years. It’s the account type that makes that happen.
On the other hand, with an income or expense type of account, the dollars posted there only appear on reports for certain time periods. We determine that time period when we create the report. A Profit and Loss report for June 2017 will show the expense amount of in particular account for that time period only, regardless of what may have happened in the past.
A 6/30/2017 balance sheet will show the total of all transactions in an asset or liability account since the beginning of the QuickBooks file, up through 6/30/2017.
So, it is very important to use correct account types. QBO takes another step.
You can view your chart of accounts by navigating to Transactions on the left panel and then choosing Chart of Accounts.
Above is a screenshot showing how the list appears. Note the column headers.
The first column from the left displays the name of the account. This is usually specified by the QBO user.
The second column shows the account type as explained a few paragraphs ago. In the graphic, Bank, Accounts Receivable, and Other Current Asset types of accounts appear in the list.
The third column is circled. This is the Detail Type.
Detail Type is not part of account setup in QuickBooks Desktop, so if you are new to QBO, you may not be familiar with it. It’s a way QBO gathers more information about how you intend to use this account. That information helps QBO decide where the account balance should appear on financial reports like Profit and Loss and Balance Sheet.
The fourth column shows the account balance, but only for balance sheet accounts. Those would fall into the general categories of assets, liabilities, and equity.
Scroll down this list to the income and expense accounts and you find that no balance shows. Income and expense accounts close, that is the balance is zero’d out for reporting purposes, at the end of each year. QuickBooks does not maintain an indefinite running balance for those types of accounts.
Also note that there are two account balances for the bank accounts shown. If the screenshot were long enough that you could see the credit card account type also, you would see both account balance columns filled there as well.
This tells us there is a difference between what our QuickBooks balance in this account is and the balance coming from the financial institution. There are transactions we need to match or enter from our bank feeds.
Once you are more familiar with and understand the QBO chart of accounts, it becomes easier to create new accounts correctly.
QuickBooks Premier and Enterprise provide an item type not found in Pro. It’s the inventory assembly type item.
Assembly items are used to create, assemble or manufacture products to sell from different component items already in stock.
Let’s stick with our sample company, Rock Castle Construction. They have one assembly type item. It’s an Interior Door Kit.
Rock Castle buys and maintains in inventory things like doors, door frames, hinges, doorknobs, etc. From these inventory parts, it assembles what it calls an interior door kit. That is, a door assembled with a frame, hinges, doorknob, etc. All the purchaser has to do is slide the mounted door and frame into a wall opening.
Since the component pieces are all in inventory, let’s look at how the assembly item would be created.
An Inventory Assembly type item is similar to an inventory part type item. You can see from the three arrows shown in the graphic, it requires the same number of accounts for posting as the item is used in various transactions. Cost of goods sold, income, and asset.
The big difference is the circled area, the bill of materials. This tells QuickBooks what items go into building this assembly item. From the screenshot, you can see that it takes one doorknob, a door, and three hinges. It also takes a door frame but you would have to scroll down that list in order to see that particular item.
What this means is that when one Interior Door kit is made, inventory of the component pieces will be reduced by the amounts required for the manufacture of the finished product.
In this case, there will be one less door, doorknob, door frame, and three fewer hinges.
QuickBooks has a process in order to create the assembly item, it’s called a Build Assemblies transaction.
The quantity we want to build is entered in the lower right part of the window. You can see in the screenshot that we have decided to build five of this item. Making that selection fills in the right-most column. How many component parts will be used in this transaction?
The quantity on hand of those components will be reduced by the numbers shown in the “QTY NEEDED” column. The on hand quantity of the assembly item, Interior Door Kit, will go up by five.
This is a good basic overview of how the assembly type item works in QuickBooks. It is also possible to add service item(s) to the ‘recipe’ or bill of materials, thus adding the cost of things like labor and overhead to the inventory assembled.
Do you have a use for this QuickBooks feature? How do you use it?
Since we covered bank downloads in another section, it makes sense for us to take a look at reconciliations as well. While the process is very similar to QuickBooks desktop, there is a major difference allowing the procedure to take significantly less time.
Bank transactions can import into your QBO directly from your bank account. We examined that earlier.
Procedures differ from one organization to another. Some people prefer not to enter bank information manually. They use electronic transfers and/or debit cards. These transactions then download into their accounting software, QBO.
Occasionally an edit is still necessary to be sure a downloaded transaction posts to the right account. But there’s really very little manual data entry.
That same procedure won’t work for everyone. Some QBO users still need to manually enter that data.
Checks written, bill payments to track, and so on, these will require manual data entry even in QBO for some. Perhaps these users want the reduction to the account balance to show now, not when the transaction hits the bank.
So what are the benefits of downloading and matching bank transactions in a case like that? If you enter all your banking transactions manually, why do you care if QBO imports directly from your bank account?
Let’s look at reconciliation.
Above is a screenshot showing the transactions that downloaded from the bank. The lower arrow points to those QBO has already matched. You can see the green “match” symbol.
These can all be accepted, entire batches at a time, with a couple of mouse clicks. Simple.
The others, the ones indicated by the upper arrow, do not exist in QBO now. Those will have to be edited so they post to the correct expense account.
Still, you can see the rapid procedure for matching transactions.
We’ll complete this process as a step one. It will take a few minutes at most.
The above screenshot shows the check register after the downloaded bank transactions have been matched or entered.
Note the green icons next to the “C” designation. These transactions were either matched or entered from the bank downloads. Those that have no such designation have not been matched to a corresponding bank transaction.
The “C” indicates this transaction has cleared the bank, but has not yet been reconciled.
Now, let’s reconcile the bank account.
Click on the gear icon and select Reconcile from the Tools section. Which account to reconcile will be the first selection you make. Then, the bank or credit card statement date, and the ending balance.
A handy tip is to check the box highlighted in the upper right part of the window. This selection causes QBO to only show the relevant transactions, those dated on or before the statement date.
The green icons indicate transactions that have been matched with the bank already. They show in this window as well. If all the transactions had been matched, there would be no hunting and scrutinizing of the bank statement to match them in this window. QBO has already done that.
Once the transactions listed in the window are marked as cleared to match those shown on the statement, the Difference field, which appears in the bottom central section of the screen should be zero.
At that point, you can click Finish Now.
Above is another screenshot of the check register. This one though is after the reconciliation has been completed.
The “C” designation, indicating a transaction had cleared the bank, is replaced with an “R” designation if that transaction had been reconciled in the bank reconciliation window.
If all transactions are downloaded and matched from the bank feed, the reconciliation will be practically complete when you go to perform that function in QBO.
This week we’re taking a break from QuickBooks Online. A number of you have expressed less interest in the online version than in the desktop version of QuickBooks. Accordingly, this blog post is about QuickBooks desktop.
We still want to finish our series on QuickBooks Online. It is good to have an overview of what online accounting programs will do for you. They are growing tremendously. So, as a compromise, we’ll alternate between both QBO and desktop for the next few weeks until out QBO series is complete.
Forms like invoices can be customized in QuickBooks to a much greater degree than many people realize. There are many options to creating forms that will make your business look unique in a world of standard QuickBooks forms.
The customization option we want to look at today is adding a logo to an invoice or other forms. A logo can be added to invoices, sales orders, credit memos, purchase orders, reminder statements, estimates, and sales orders.
In order to accomplish this, you need to have a digital copy of your company logo. This can be a digital photo, a scanned in copy, almost any copy of your logo that is saved on your computer.
When customizing forms in QuickBooks we are working with templates. There is a list of templates available at Lists->Templates. This list will show all the saved templates in your company file. You can edit some of them. Some, the defaults that come with QuickBooks, can be easily copied and then edited.
Another way to edit an existing template is to open it. Then, from the format tab of the ribbon, select Customize Data Layout.
After either selecting a template from the list and choosing edit, or clicking the customize icon from the form itself, a screen opens with many options. Along the bottom of the screen are several buttons. One is labeled Basic Customization. Choose this button.
You can see in the screenshot the checkbox that tells QuickBooks you want to use a logo. Once that is selected, click the Select Logo button to navigate to the location on your computer where the graphic file of the logo exists.
Once the logo is selected, QuickBooks copies it into the folder where the company file resides. The name of the graphic file now shows next to the Use logo checkbox.
QuickBooks has also placed the logo on the invoice template. You can see that in the Preview panel where the arrow is pointing.
We may not be happy with the placement. To change that, we would click on the Layout Designer button.
In Layout Designer we can drag text and data boxes to the locations we desire. We can also change fonts, sizes, colors, etc. to control how the information on our form appears.
In the end, we can create something that looks more like this:
How about you? Have you added a logo to your invoice template? Any tips for someone who hasn’t done this before?
One of the time-saving features in QuickBooks Online (QBO) is the ability to automatically download bank transactions. Those transactions can then be matched to existing ones in QBO, or entered as new.
Note the arrow in the screenshot of the QBO company home page. One of the bits of handy information on this page is the bank balance.
The balance in QBO, resulting from the transactions we have entered manually, is $1201.00. According to the bank though, it is -3621.93.
We must have transactions to enter.
The above screenshot is the banking page. We navigated here by selecting Banking in the Transactions section of the menu located in the left-hand blue panel.
There are twenty-five bank transactions that need to be either matched or entered into QBO. We have already selected the “Recognized” link (see the arrow). Choosing this option filters the QBO bank account transaction list to those that are recognized as a match between our records and the bank.
We’ll select them all, then from the Batch actions dropdown list, choose Accept Selected.
This leaves us with nine transactions in the list. QBO has not found definite matches for these nine.
It did find a possible match for one, but it waits for us to make a decision and complete the transaction.
The circled transaction above is a possible match. It didn’t match automatically with the others.
If we click on the transaction, a window showing more detail opens. In that window we learn that there are two possible matches. QBO lets us verify which should be the accurate match, and this transaction can then be processed.
The others need to be added. Notice that they each have a link in the right-hand column to Add. QBO doesn’t really know what account to post to, so you can see that the account column for all of them is filled in with Uncategorized Expense.
That’s definitely not how we want these amounts to post. A profit and loss report with a large amount in uncategorized expense is not very helpful.
The above screenshot shows the first transaction after it has been selected by clicking on it with the mouse. Now, with this detail window open, QBO gives us the option to select the correct account.
The vendor is Books by Bessie. It is a deposit. We’ll assume this is a refund from the company bookkeeper.
We change the expense account to Bookkeeper, a subaccount of Legal & Professional. Now we can click Add.
When we do, the transaction is added to our check register, posting to the correct account.
We can repeat that process with the remaining amounts in just a couple of minutes. Our check register is updated and these transactions will already be marked as cleared when we reconcile the bank account.
Sometimes, the best intentions…
It had been our goal to stay on schedule with the blog through all seasons. Including tax season. But the crush of the last few weeks made that impossible. The good news is we’re back!
We are in a series of posts about QuickBooks Online. If you’ve ever wondered about the advantages/disadvantages of using online accounting software, stay with us for a few weeks and we’ll give you a taste of what QuickBooks Online will and will not do for you.
This is the second in the series.
To use QuickBooks Online (QBO), it’s necessary to use an internet browser. Here are some tips you should know going in.
First, it’s important to choose the right browser. Everyone is familiar with Microsoft’s Internet Explorer, it comes with Windows. We all have it on our computer.
Internet Explorer, however, is not recommended for use with QBO. The recommended browser is Google Chrome. Using Chrome will make life easier.
If you don’t have Google Chrome, a simple internet search on the name will provide you a link for the free download. It is simple to install. You are up and running in moments.
Internet browsers retain information as we visit various sites on the internet. This information conveniently remembers things like logins, data from our favorite sites to speed the loading of those pages, and so on.
This remembered data can sometimes be a problem for QBO. When the software just doesn’t act as it ought to, one recommendation will be to clear cookies and cache. On the other hand, continually clearing that data can make using the internet for other things less convenient.
An alternative is to use a separate user in Chrome, especially for use with QBO. From Settings, this can easily be done.
Select the menu (arrow 1) and click on Settings (arrow 2). Arrow 3 is inserted to point out the location of the Chrome User’s name. You can see we have already created a special user just for QBO.
Remember, you are accessing Chrome settings, not QBO.
After you click on Settings from the dropdown menu, a tab with multiple sections opens. Navigate to the section labeled People. Click on the button that reads (Add person…). Create your new QBO user.
Another helpful tip. In QuickBooks Desktop, it is possible to have multiple windows open at one time. A common complaint from new QBO users is the lack of this functionality.
Actually, we can replicate this in QBO. The difference is that with online, this is a function of the browser rather than the accounting software.
As an example, we’ll open both the banking transactions list and a profit and loss report.
In the above screenshot, we have navigated to the banking transaction list in QBO. There is also a menu open in the middle part of the screen. This resulted from a right-click of the Chrome tab on which we are working.
From the menu, we select Duplicate.
The result is a new tab in our Chrome browser that is logged into the same site as the one above. We have the transaction list open in two tabs.
We’ll simply select one of the tabs and navigate to the new function we want in QBO, in this case, a report.
As you can see from the above graphic, we now have a profit and loss report open in our company file. At the same time, the tab with our banking transaction list, same company file, remains open.
If needed, we could create more duplicate windows, using various parts of the program. It’s a good idea to refresh the windows as you move between them.
One of the great tech changes of the last few years has been the explosion of computer applications on the internet.
In the past, our computer applications, including accounting programs like QuickBooks, have been installed on our local computer or a local network. That’s how we’ve been used to working. So why the move by so many to online computing?
QuickBooks desktop isn’t going away any time soon. As an older product with many years of added features built in, the desktop version of QuickBooks has features that the online version (QBO) only dreams of at this point.
On the other hand, online apps bring capabilities that have just never worked all that well in desktop software.
First, be aware. QBO isn’t QuickBooks desktop online. They are very different. The screens look very different.
This comes as a surprise to many who are used to the familiar QuickBooks Pro on their office computer. They decide to move to the online version and discover it bears little resemblance to what they are used to.
Freedom and Mobility
QuickBooks Online (QBO) offers great freedom and mobility. If you like the idea of jumping into your accounting program from office, home, or wherever you have an internet connection, you will love QBO.
Your QuickBooks company file actually exists on a huge computer server somewhere else and is only accessible over the internet. The advantage to this is the ability to access that company file from anywhere. Whether you are in your office or hundreds of miles away, as long as you have an internet connection, you have complete access to your QuickBooks.
Connectivity is another advantage. This could be a long, detailed article all its own, so we’ll just use bank transactions as an example.
More and more of the world’s information is stored online. Online sites can ‘talk’ to one another. Speculation is that a few years hence, we may do a small fraction of the computer entry we do now. Online business programs may exchange and create transactions, a sale for one and an expense to another. The only human interaction at this level may be an approval process.
Even now, once QBO is linked to your bank account, all bank transactions upload to your company file overnight. Each night. You still have to accept the entries. There won’t be any surprises waiting for you, like you bank balance suddenly taking a big hit.
But the list of what cleared the bank last night is waiting for you each morning. You decide what should happen to each of those transactions.
We’ll look at that closer in a future section.
What about data safety? You will hear the concern from time to time that information stored online, or in the cloud, is vulnerable. The truth is that information is far less vulnerable than what is on your desktop computer.
Data centers like Intuit’s are staffed by IT professionals, backed up daily, and protected from outside threats. You would need full-time IT professionals in your company in order to approach the level of security of a reputable online service.
The last benefit we’ll mention here is mobility. This ability can be huge in certain industries. With a smart phone you can create invoices, accept payment, and create many other transactions. Your QuickBooks file is updated in real time.
Yes, there are disadvantages to QBO. Mostly these fall into the category of features that exist in desktop, but not in the online version.
Trying to catalog them all could make for a tedious list. Mostly, these fall into two areas. If your business needs deep inventory capabilities, QBO probably isn’t there yet for you. If your business tracks jobs or projects, you will want to take a careful look before making the switch to online. While many of the tracking abilities are there, the reporting is weak.
One other thing to keep in mind is the cost. Whether it is more expensive or not depends on your specific situation. A single user will probably see QBO as more expensive. You need to decide if the additional features are worth it.
If you have several desktop users, and maintain a local network for accounting purposes, it’s possible you could find significant cost savings.
Which Online Solution?
There are other online accounting solutions. QBO is nearing the two million subscriber mark. It is the clear front runner in the online accounting world.
This is the ninth and final installment in a series of blog posts that specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
For this last post, we are going to look at adding a little more technology to features we’ve already demonstrated. Definitely one of the headaches of all the QuickBooks abilities we’ve looked at is the recording of time. Several steps are involved and several people. The communication between those people is critical and that is often the greatest obstacle in any organization.
So how can we make recording time for employees simpler?
A number of developer solutions exist that will record time and automatically import it into QuickBooks. One of the most popular and best known is an Idaho company named TSheets.
A detailed look at the service is far more than what we could cover here, so let’s just hit the high points and examine how this might help you.
With a TSheets subscription, I have a web site login where I, as the administrator, have access to all my company settings. Employees, customer:jobs, class, and more upload directly from QuickBooks. I don’t have to enter this data.
Along the left side of the screenshot above are a number of tools that allow me to setup and mange employees, look at reports of time worked, etc.
There’s a popup window labeled My Time Card which lets me record my own time if necessary. Another window is labeled Who’s Working and would display all employees that were clocked in at that particular moment.
There are several ways the TSheet service can be used. Each employee can clock in and out for themselves as they go through each workday. Or I, as the administrator, can fill in my employee’s time after the fact, although this misses out on some of TSheets’ cool abilities.
TSheets is mobile-friendly. Employees can clock in and out on their mobile device. Or, managers can be setup to be responsible for groups of employees. Anywhere there is a cell phone connection, the manager can clock his/her crew in and out as needed.
The above screenshot was taken on an iPhone with the TSheets app.
There are approval steps that can be added to the process. The employee can enter time, or it can be entered by a manager. At the end of the pay period, the time is ‘submitted’ with the click of a button.
Depending on the setup you choose, it may be someone else’s responsibility to approve the time. Once your designated approval process is complete, the time will automatically populate the weekly timesheet in QuickBooks for that employee.
The next step is to simply go to the Payroll Center and issue paychecks.
TSheets, and similar services, have much more to offer than only the features described in today’s post. But this gives you an idea of what is available in the way of automating and simplifying time entry.
If you would like more information about TSheets, you can contact us. You can also review the TSheets web site and/or sign up for a free trial subscription by clicking here.
This is the eighth in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
Over the last few weeks we’ve looked at a couple of ways to track crop and/or field costs in very specific ways. We’ve also looked at how to set budgets so we can see how the actual results of a particular crop or field compare to our plan.
The one piece that remains is labor cost. If we are using QuickBooks to process our payroll, how do we make sure those costs flow to the right crop, field, location, or other designation?
The feature in QuickBooks built to make this possible is the weekly timesheet. There are two time keeping forms. There is a Time/Enter Single Activity option besides the weekly timesheet. This is just a different way of looking at the same information that can be entered on the weekly timesheet. Kind of like looking at a check form in QuickBooks or viewing the same check in the check register.
Generally, entering time in the weekly timesheet is much more efficient.
The form for entering time is pretty straightforward. Let’s examine some of the columns though.
The Customer/Job column allows specifying what crop or project the time should be allocated to. In the above screenshot, Gregg is working on a wheat crop for the 2018/2019 season. This will populate reports for this wheat crop with the expense of Gregg’s time once this payroll is completed.
The service item is from the list of items we created to track various costs we want to record in the process of growing this particular crop. Gregg worked on both irrigation and tractor work this particular week.
The payroll item for Gregg is Regular Pay. If overtime were involved, we could use the overtime pay item for a portion of his time. This designation allows this time to be pulled directly into the payroll part of QuickBooks without re-entering it. If all Gregg’s time is recorded on the timesheet, it’s all there when we open the payroll center to create the paycheck.
The WC Code is the workers’ comp code. We published a post on tracking workers’ comp in QuickBooks on December 12th.
You may not have the Class column. The Ag sample file has three locations and tracks them by using Class. If you don’t have the class feature turned on, you won’t see this column.
The column farthest to the right in the screenshot deserves a mention. You will probably always uncheck the indicator in that column. If the graphic were stretched a little farther to the right, you could see the column header is labeled Billable. This would be used if we wanted to invoice a customer for this time. The way we are recording time, no one is getting invoiced for Gregg’s work.
Above is the earnings portion of Gregg’s paycheck. All the hours entered into the timesheet flowed automatically to this point. There was no additional entry needed.
It would be possible to enter all the timesheet information here on the paycheck form, but it’s generally easier on the weekly timesheet, especially where multiple lines are needed to track service items, locations, crops, etc.
Above is a report showing the progress on the wheat crop which has not been harvested or sold yet. The amount on the Tractor Work line comes solely from paychecks that have been created for employees working this particular crop.
You can watch the video on using the weekly timesheet here.
This is the seventh in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
Remember the post from a couple of weeks ago about using the job/project features in QuickBooks to track crop costs? Today’s post is an offshoot from that. More specifically, if we track a crop or field as we would a project, what’s the easiest way to plan or set a budget for that crop/project?
It may sound unusual, but the easiest, most effective way to do this would be by using an estimate in QuickBooks. Stay with us a couple of minutes here as we work through this. See if this can’t work for you as well.
One of the steps in tracking crops/fields as projects was to use items rather than accounts when recording income and expense. The reason for that was that the job/project reports in QuickBooks work with items, not accounts.
Forms like estimates also need items to populate them rather than accounts. Let’s look at how we might create an estimate to budget for a planned crop year.
Create the items that will reflect the major costs of a particular crop/project. This can be a subjective process to a degree. That is, the items may be different from one QuickBooks user to another depending on the costs that are important to each. One may combine herbicide and pesticide costs into one line. Someone else may want to see a line for each.
In the screenshot above, the cost has been entered for each. There are no revenue amounts for these since we will not receive income. These are costs only.
The markup column is usually left blank. But, in an experiment we’ve added a negative 100% to result in a zero for the revenue column. QuickBooks considers the total column to be total revenue.
This hasn’t been ‘field-tested’ yet, but it’s an intriguing idea. It works fine in a sample file. If you try this, let us know how it works for you. You’ll see the difference in the report screenshot below.
Above is the screenshot of the report from this simple example. The income (or revenue) for the crop shows on line three. There is no estimated number for this as it was not included on the estimate form. We only planned or budgeted for costs. We could easily have added the item for the sale of the crop as well.
You can see that all of the lines for cost items, except for the first line, include estimated revenue. That’s because QuickBooks assumes, if we enter no other amounts, the cost will also be the revenue.
In the past we’ve just ignored the revenue column for cost items. The main purpose of using the estimate was to be able to compare the estimated cost to the actual cost. If we didn’t make as much on the crop as we planned, what cost items were the culprits?
The first line though is where we added the -100% markup. It makes for a little cleaner report. Try that if you like and let us know how it works for you.
You can see a video of this topic here.
We are partnering with the Visalia Chamber of Commerce to teach a QuickBooks class on February 22nd. You can find more info here.
We are also partnering with the Tulare Chamber of Commerce to teach a QuickBooks class on March 1st. You can find more info here.
This is the sixth in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
Usually, there is some kind of budget for each particular crop. This may be as simple as a few figures memorized in your head. It may be a more detailed Excel worksheet. A third possibility is QuickBooks.
This week and next, we will examine the tools in QuickBooks that can help with budgets. There’s more than one. And there’s more than one budget. A budget, even if mental, can be for the entire operation. A budget could be for each location if there is more than one. A budget for each crop or animal purchase is a third option.
Let’s start with the highest level budget tool in QuickBooks.
On the Company drop down menu is a section labeled Planning & Budgeting. In this section, choose Set Up Budgets.
The wizard for creating a budget in QuickBooks will walk you through a couple of steps, asking pertinent questions along the way. Above is the first step. What year is this budget for? Do we want a budget for Profit and Loss or Balance Sheet?
Profit and Loss is by far the usual choice and we’ll use that today.
The second screen gives us several options, from high-level budgets to very specific.
The ‘No additional criteria’ option allows us to create one budget for the entire operation. The option ‘Customer:job’ will create a budget for one particular customer or project. Think back to last week’s post about setting up crops as customers and projects. The option in this budget setup window would allow a budget to be created for a specific crop or field.
The third option is only available if we are using the class feature in QuickBooks. The ag sample file has three locations and uses the class feature to breakdown the income and expense for each. Using the class option allows us to create a budget for each location.
For today’s example, that is the option we will choose.
The final step is to tell QuickBooks if we want to create a budget by manually entering estimated income and expense, or base those numbers on the prior year. We will manually add the numbers for our budget.
Since we selected the budget by class option, we have a drop-down list in the set up budget window. The arrow in the screenshot points to that. We’ve chosen ranch #2 for the class.
At this point it’s a matter of entering the estimated income and expense into the appropriate fields. The income and expense accounts form the rows of the budget form, the months of the year, the columns.
There are two buttons in the lower left that provide tools if you are able to automate part of this process. You could automatically copy a single number across all months for a particular expense for example. Or increase it by a set percentage each month.
Once a budget is complete and saved, there are a couple of budget comparison reports at Reports->Budgets & Forecasts.
Above is a Budget vs Actual report. Normally this report shows the account totals by month. We reduced the columns to just one for the total year in order to show more of the report results in the screenshot.
In my opinion, this budgeting tool works best on an overall company budget, or a location budget. It will certainly work for crops and fields as well. But it’s a little time consuming.
We have another idea for budgeting at the crop or field level. More on that next time.
You can watch a video of this QuickBooks feature here.
This is the fifth in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
Determining the profit and/or loss for individual projects is critical for businesses like contracting, architecture, engineering, and others. Agriculture bears some similarity to these other types of businesses. That is, the profitability of the enterprise depends on the financial performance of individual crops grown.
With that established, we can look at features in QuickBooks meant to aid in the management accounting of project-based businesses and see if they might have application in agriculture.
Basically, our desired outcome is the same. To isolate the income and expense for individual projects or crops in order to examine how profitable they actually are.
Let’s try this out in an agriculture setting.
Crops as Customer/Jobs
Some of these steps are going to sound strange. Just be patient, work through the entire solution, and you’ll see where all this takes us in the end.
Setup you crops and/or fields as customers. You don’t need much information, just a name. It may help if you use the Customer-Job hierarchy in QuickBooks.
In the above screenshot, the customers shown are Wheat and Corn. The indented entries 2018/19 and 2018 are jobs created under those customers. Over time, one can keep the original customers and just add jobs to designate each crop year. As those crop years come to a close, they can be made inactive to keep the length of the customer list as short as possible.
Items Not Accounts
Our next challenge is to think in terms of items rather than accounts. The simple reason is that job or project type reports in QuickBooks gather numerical information from items rather than accounts.
It’s a simple process. A few minutes setting up a few basic items and you’ll be up and running.
Above is a simple item list setup for an agriculture sample QuickBooks company. Let’s examine the setup of an individual item.
We’ve used ‘Service’ as the type of item in the upper left-hand field of the setup window. The name of the item only needs to be something recognizable to you the user. The description is completely up to your discretion.
The account is the most important setting. In this example, Water Expense is used. Normally QuickBooks expects income type of accounts to be used in items like this and you may get a message telling you that. It’s okay. We’re making QuickBooks features created for a purpose work for us in a different way.
Set up items like this for the different major expenses you would want to track as part of a review of the profitability of a certain crop and/or field. You can see a few more examples two graphics ago, in the item list.
Don’t sweat it too much at the initial setup phase. You can add items as you go along. As you use this method, undoubtedly you will make additional alterations as you gain experience and find the right mix of items for your liking.
One last item you will need is for the sale of the crop. The only difference with this item will be the account. The sale will create income and an income type of account should be used in the item setup.
Recording The Transactions
Now that we have customer:jobs(crops:years) and items, the next important step is using these them on transactions.
There are two things somewhat unique about the check above. One, the Items tab is used rather than the Expense tab. This allows us to use the items created in the last step, like Water Purchased.
Second, we’ve used the Customer/Job column on the stub portion of the check. This column is only used for tracking jobs or projects. That’s the process we’re imitating. We are thinking of one crop or field as a project. Since we’ve already setup our crops and/or fields as customers, insert that name in this column.
Recording The Sale of The Crop
When the crop is sold, use a sales receipt to record the sale, using the item created for that purpose. This item was discussed a few paragraphs ago when we covered creation of items.
That’s the procedure for adding the income and expense to QuickBooks. The result is a report showing the financial performance of a particular project, or as we are using these features here, a particular crop or field.
The above report is a Job Profitability Report. It can be accessed in QuickBooks by navigating to: Reports->Jobs,Time,& Mileage->Job Profitability Detail report.
You can watch a video of the above procedure here.
Using QuickBooks Class for locations, fields, and crops
This is the fourth in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
QuickBooks has a feature called Class. It provides another “bucket” besides accounts in which to collect transactions.
This is often used in an organization where the same or similar income and expenses need to be tracked for different departments, locations, funds, etc.
For instance, a non=profit organization might track donations as income, but also want to know if those donations are for general use, building fund, or other special purposes, class might be your solution.
A business might have more than one department for which income and expenses are tracked. Or, it could have more than one location and want to track the financial performance of each location.
Turn on the class feature in preferences.
Once the option is turned on, transaction forms contain an added column for this information.
Classes can be added ‘on-the-fly’ by typing in the name in the class column and selecting Add when QuickBooks does not recognize the name. Or, you can navigate to Lists->Class List and enter your desired classes there.
Using class designations on your transactions results in a profit and loss report that can be analyzed based on whatever criteria you are tracking with the class feature.
Keep the following in mind:
* Use only one criteria. Using both location and department for classes will create a confusing report.
* Create a general or administrative class for transactions that do not fit into any of the special class categories. That way, when unclassified transactions show up on the Profit and Loss by Class, you know they need to be corrected.
* Class is for income and expense, not for assets and liabilities. While QuickBooks offers a balance sheet by class, it is cumbersome and difficult to use and requires stringent guidelines on entering transactions.
What about Agriculture?
This feature can be used in a couple of ways for ag QuickBooks users.
If there is more than one location, locations for which income and expense amounts can be determined, this would be a good use for class.
Here is an example of a profit and loss report for an agriculture-based sample company using this method.
Another use for the Class feature is for field, crop, and/or year. For instance classes might be created for “Field 3 Corn 2018”. And then a new class “Field 3 Corn 2019” would be created the next year.
The reason for making the class names so specific is to prevent crop income or expense showing on a report and being allocated to the wrong crop year. An expense might be billed late by a supplier, or income is received late, after the new year has already been started.
There’s always that possibility, that if there is only one class for Field 3, some transaction for the year 2018 gets recorded in 2019, thus compromising the accuracy of the report for both years.
Using class in this way will work fine for some. It could create a very long class list over time. There’s another solution that you should consider.
More on that in the next post.
You can watch a video demonstration using Quickbooks Class here.
This is the third in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
QuickBooks has a feature that will allow the cost of workers’ compensation to be tracked in the system. This will accrue the expense so it appears in the correct period on financial reports. It also results in the ability to run reports that will show wages subject to workers’ compensation, the rates and classifications, and the amount of premium due for a specific time period.
Tracking this expense as it accrues rather than when it is paid also allows it to be associated with various jobs and/or classes.
The first step to tracking workers’ compensation costs is to set the preference.
Once the preference is set, a wizard is available under the Employees dropdown menu to help you complete the setup. Employees->Workers’ Compensation->Manually Track Existing Workers’ Comp Policy.
The wizard will take you through a number of steps setting up the workers’ comp accrual. You will need information like:
• The name of your workers’ comp insurance carrier.
• Job classifications and rates.
• Experience modification factor.
• Policy Number (optional, but good to have).
You may assign each employee the appropriate workers’ comp code. Often, in agriculture, a worker may be subject to various workers’ comp codes depending on various required functions on the farm or ranch. It’s possible to leave employees unassigned. Alternatively, if an employee can be classified under more than one code, but commonly fall under one specific designation, Make that most-common selection in this window.
You will need to enter your Experience Modification as this affects your premium.
Enter the rates for each workers’ comp code.
If you pay overtime wages, a screen will allow you to specify whether or not the overtime premium is included for insurance premium calculations.
Let’s say a worker earned $10 per hour for regular time and $15 per overtime hour. Excluding the overtime premium would cause QuickBooks to calculate the premium for every hour as though it were paid at $10. The additional $5 paid for overtime hours would be ignored.
Using multiple workers’ compensation categories for employees means that their hours worked must be broken down into those categories. That can be acconplised in two ways.
When creating payroll checks, the paycheck detail screen will need to be opened for each employee. Here, the workers’ compensation information can be entered.
Some QuickBooks users will prefer entering time on the weekly timesheet from which it will automatically flow to payroll. There is a column for workers’ comp rates here as well.
The result of all this tracking work in QuickBooks is a report detailing the wages paid, under which categories, and the premium that will be owed.
A little more work up front saves a lot of time at the end.
Call us if you would like to try this feature but need help with the implementation. You may view this feature setup as a video here.
This is the second in a series of blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
QuickBooks has the ability to keep electronic copies of documents and files of various sorts. It stores them with a link to transactions or list elements like customers or employees.
This is not a specific agriculture problem. But it can be useful both on a general business level, and as a specific solution for ag users. We’ll examine the feature first, then look at a unique ag application.
You may not have noticed before, but inside various windows in QuickBooks are found small paperclip icons and, in the case of one of the centers like the customer center, an entire column with the header “Attach”.
These are both indicators of the Attached Documents feature. The paper clip graphic in the ATTACH column of the customer list indicates that a document is attached to this customer.
The paper clip icon at the top of the screen opens the Attach Documents function.
A click on the paper clip next to the customer name, in this case MWI, opens a list of one or more documents linked to this customer. See the following graphic.
From this window, the pdf document can be selected and opened.
The icons along the top of the Attachments window show the variety of ways QuickBooks will accept a document for attachment.
It could be scanned in from a paper copy.
If the document is already on the computer, the computer icon could be selected. The user would then navigate to the correct location and select the file to be attached.
Other documents like Word docs and Excel worksheets can also be attached.
The Doc Center can be opened with the third icon, or is available from Company->Documents.
Four documents are shown in the Doc Center screenshot. It is easy just to drag the files from other locations and drop them here.
The arrows point to the indicators that signify the last doc of the list is attached. It is attached to the customer MWI as shown in an earlier screenshot.
The other three are not attached to anything.
It is possible to select documents anywhere on the computer or to scan them into the computer while a transaction or list is open. This action attaches them to the open transaction or list element.
It is also possible to drag them into the Doc Center and then find the place in QuickBooks where you want them attached.
Documents can be attached to transactions just as they can to name lists. Simply click on the paperclip icon.
There are limitations to the Attached Documents feature in QuickBooks.
When the QuickBooks company file is backed up, the documents are not. They have to be included in a separate backup.
Another shortcoming of the feature is security.
The documents are stored in a folder labeled ‘Attach’ in the location of the company file. There are no security precautions that prevent anyone from browsing through that folder and finding, deleting, or altering those individual documents.
So how about Ag? What special application does this have to the ag industry?
Documents can be attached to Fixed Asset Items. From the Fixed Asset Item list, highlight the item you want to attach to and click the Attach button at the bottom of the list window.
If we click on the paperclip icon belonging to the JD 8330 tractor item, the attachment will open. The attachment is an Excel spreadsheet, created earlier and attached to this Fixed Asset item. On that spreadsheet is a record of repair and maintenance costs of this particular piece of equipment.
It is an Excel worksheet which many farmers use now to track these costs. The difference is it resides with QuickBooks. I access it from my list of equipment within QuickBooks. I don’t have to maintain a separate folder with Excel worksheets, carefully naming each one so I am sure to record the repair costs on the correct one.
It’s a small thing. But small things that ease workload and save even a little time add up. This is one worth considering.
You can view this in a video here. It’s the same video as last week, we combined both procedures into one video.
Next week: attacking those pesky workers comp rates for employees with multiple classifications.
Lance Wilkins, QuickBooks Advanced Certified ProAdvisor
M Green and Company LLP
This is the first in a planned series of nine blog posts that will specifically examine QuickBooks from an agriculture perspective. There is no “QuickBooks for Ag”. So how can we use some of the features in QuickBooks if we are in the ag business?
The Fixed Item List is a relatively unknown feature in the product. Its intention is to provide a place for businesses to track large asset purchases like vehicles, equipment, and buildings.
It’s not a feature that has really caught on. That may be because it has not generated much excitement in the accountant community. When accountants aren’t encouraging their clients to use it, there’s little motivation to do the extra work.
Often though, a feature can be used in a related, but different way than it was originally intended.
One thing most farmers and ranchers have is lots of equipment. That equipment must be tracked, not just for income tax purposes, but county property tax purposes as well. We’re talking about the dreaded 571 property tax report that is mailed to you at the first of each year.
That report requires some very specific information. Year after year. How can we make that job easier?
Access the Fixed Asset Item List from the menu as shown above. When you select this option, a window similar to the following appears.
The fixed item list in this sample company has many items on it. Yours may have none. New items can easily be added by clicking the Item button in the lower left part of the window.
The window that opens for the setup of a new Fixed Asset Item can be daunting. You’re staring at a screen full of blank spaces waiting to be filled. Don’t fear. You don’t need to fill all those empty fields. Let’s just track a few pieces of information that we find useful.
Above is the setup window for one of the fixed asset items shown on the list. We could fill in information like a description, where and when we purchased the asset, and so forth. Most of those fields are optional, but they could prove handy for providing information to our accountant at year-end.
In this example, we’ve used an APN number, that is the number on our 571 property tax report, in the Location field. This can be useful if we have multiple locations where we keep equipment. The county will ask for a report on each.
Serial number might be a good piece of information to have, and keeping it in QuickBooks leaves us with one less list or file to keep. There is a lot of room for notes. Keeping repair notes here is one idea. It’s not optimal though as there is only one note field, it must be edited each time we want to add new information, there’s no pattern to the information we put in, and there doesn’t seem to be any way to access this field for reports.
We actually have some other ideas about tracking repair and maintenance data. We’ll look at that in the next blog post.
Watch the video here.