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Small Business Finance Basics: QuickBooks & Beyond

Lesson 7 of 37

Basics to Quickbooks

 

Small Business Finance Basics: QuickBooks & Beyond

Lesson 7 of 37

Basics to Quickbooks

 

Lesson Info

Basics to Quickbooks

vendors people. You buy things from that you owe money to. So I built for our of fictitious photography company, Reliable Technology. That's a tech company they use. And there's a supply company called Sunset Photography Supply Vendors. This is all about I would encourage you to build in vendors so that if you buy from somebody repeatedly, you just type in the first couple letters of the vendor's name and it pops up. Save your time. So just like we had receivables on the customer screen, we have payables on the vendor screen. Okay, so I've made in my company $120 in payments in the last three days. Okay, The springs of something else with vendors and a lot of times people who don't work in account. And don't consider this. There are times when business owners purchase things and don't purchase them for cash. Okay, there are cases where if you need to buy supplies for something, let's say you're making blue jeans. You're making Levi blue jeans and you've got a denim supplier and you buy...

denim from these guys all the time and they know you and you've always paid him and you're short cash. So you go out to buy Denham, and instead of giving them cash, you give them basically alone document that says I'll pay in 30 days or days or whatever it is possible if you build event a relationship with a vendor and you get in a bind where your short cash, you know, to set up an agreement where you don't have to pay immediately if you've got that relationship going, Okay, this food for thought employees. Right now I don't have any in the section where I want to talk about two things with employees here. The first is I would highly recommend that you get a payroll company to handle any payroll, even if it's just one person. ADP and Paychex or the two big ones. ADP and Paychex probably seem right on W nines to 99 W. Two's tonight. The reason I suggest that is the rules on withholding are changing constantly because it's part of the tax code. Um, the ADP and Paychex, the payroll companies normally normally I'm gonna put a caviar on it, normally take responsibility for making sure those withholdings are correct. They take responsibility cause I've got lots of friends accounting friends who loved to do payroll because if you're an accountant, that's monthly business that you could do all the time. But there's really risk because the withholdings Federal, state, city, local. If you work in ST Louis City, it's a 1% earnings tax. So now you've got a city. Get her withhold for highly recommend you use a payroll company. Now what if you do use a payroll couple and you've got to employees use a teepee? What I'm suggesting is that you take a Teepees report. Here's the payroll. Here's with holdings and posted into QuickBooks yourself. Okay, and we'll do a transaction later on employees. So what I've done so far is I have gone down the left hand side. Transactions progress. Quick click twice. Is it going for me? Well, transactions just heading. So I got to go to the subheading and I pull up banking. When you first set this up, it will prompt you if you want to name your financial institution, because all of these large institutions, including PayPal, which I use for my business, have the ability to Teoh linked to paper to QuickBooks, including in some cases like not even not just deposits but credit card data. So if you've got a BancAmerica credit card, you can log into BancAmerica and they'll shoot it right to QuickBooks for you, which is handy. So I'm gonna close it out so you'll see here that there's a downloaded transaction screen if you choose to download information about banking, and that could include credit cards you'll see under sales here, um, that I have I have an open invoice of $170 open meeting that they haven't paid me up. Okay, so if you look at the bottom across across the bottom on January 6th, I generated invoice. It's everything's number. You got a number invoices. You got a number number stuff, because that way, you could make sure you got everything. If you're missing a number, you can go out and get the document so it's number. Everything in order the customers Riverside. Here's a due date about a month later, a balance. It's not paid yet, so you can see on this action here. I could print that I could save it. I can print it with a packing slip if I wanted to include the invoice and what I'm sending the customer, which I highly recommend. If you're physically if you procreate a physical good that you give to a client. Put the invoice right in there. Make it easy. Put it on top. If you hit, receive payment, you can record that. A payment was received. It flips you to that. Okay, I've already created some expenses in here. We wrote a check to reliable technology for some stuff. Way had some mileage. Expense registers is really the same thing for our purposes as chart of accounts. If I go to settings chart of accounts, I had a list of all the accounts in their balances. If I go to transactions, registers, I see the same kind of thing. I see the accounts and their balances. Well, let's just see what if I click on this one? This one has a balance. What if I click on it? So where it goes is it pulls up a register, which is simply a list of all those entries that I made the date, the account. And there's this is very important and not only quickbooks, but any accounting software you use, which is a memo section. Were you right down? Why you Why you did the transaction that you did. OK, So for example, this one says process voters for Riverside, the client. It's important to write a memo for every single debit and credit, so you can remember what you did, and you can go back and find it if you need to. So that's the register section. I'm gonna show you one more thing here, and then I'm gonna do show you some specific transaction. QuickBooks has tons of reports, tons of reports. Now, there's a reason that I did Segment three on income statement, balance, shoot or whatever. That last segment waas before this Because this that those other segments help you understand which reports you need. But there's a lot of stuff in here. Okay, here's to reports. You need profit and loss. DoubleClick. You'll see you always whenever you pull up a report in QuickBooks. You've always got this running across the day. What period of time do you want it for? I'm going to say this month to date. Okay, so that's from 1121 22. I'm going to run the report. Okay, so What I'm suggesting that you do is think about the period of time you want the report for and consider changing those from in two days. Okay? And then hit. Run. Big mistake people make. They changed the from in two days, and then they don't hit. Run on the report, and they're not looking at the right reporters. They haven't run it yet, so make sure you hit run. Let me tie what you're looking at to some of the stuff we already learned. QuickBooks calls it a profit and loss. This is an income statement. Please be aware. QuickBooks calls it profit and loss. This is an income statement. Okay, so we sold $170 worth of services. We had $20 in mileage expense. We had $100 for photography processing. We have a profit off 50 bucks. Okay. Ah, handy tool to navigate to get more detail. What if I clicked on the services $170 amount? It takes me to the transactions that made up the revenue. OK, on the eighth, I issued this invoice. This sea gives you all the details. This account here is the description, please. Discipline yourself to write in enough of a description that if you glance at it, you'll remember what it is. People get lazy and they're like, uh, printing, printing, You know, give it enough of a description that you can remember what it is if you look at it. So my point is, you go back to the summary report. When you create a report, you can click on any of the numbers in here and go to the transaction that was used to create that report. So here's where we did mileage expense. We wrote a check with a $20 expense. So the first port, the first reporting suggestion that you use, is profit loss. And that was right here. The second report is balance sheet. Note. The difference balance sheet is, as of a specific date and time. It's a snapshot. It's not for a period of time, like a month or a year. Okay, so if you scroll down Oh, look, there's a cruel basis. Reason the accrual basis. Here are my assets now. It's a little clumsy here because you see how they in debt. When you start making Maura counts, this gets a little more difficult to read, for example, current assets, which I'll explain later, but a current versus non cornice bank accounts checking. So when I created the account called checking, the type of account was bank account, so you can see it gets a little clumsy, but it's worth making specific accounts. One other thing this photographer bought and I actually went on the line one online and looked for something that a photographer would buy and how much it is. And I found an umbrella umbrella backdrop for $70. So that was an asset that we created so you can see assets at the top. Liabilities and equity here at the bottom Liabilities equity and, oh, look the balance. They're both total's for $1100. Okay, so what we just did was we looked at the balance sheet. Now there. As I mentioned, lots of other reports you can use. You think you can create these air recommended. And in this plain old vanilla simpler version of QuickBooks, there's three. There's the aging schedule that I just talked about. If you want to age your receivables, and it turns out that a R means accounts receivable that The Riverside restaurant has a current amount due of $170 which means it's less. It's one we just build. Okay, one we just build. So those are the those of reports they really recommend now. If you want, you can create custom reports says. We recommend that you customize them, save work listed here, save customization to the top. You can do all kinds of other reports. So let's go to all reports, Um, this gets It's something that Jackie Mission, which was budgeting. Where can I compare it to a budget? Yeah, there's the ability to do that. So let's go toe you see all. Let's look at these different reports and you guys can pick out in the audience. Which report might be useful to you without getting into too much accounting mumbo jumbo. Before way have a little conversation going on in our chat rooms regarding why using QuickBooks online why, using this version and how this version might translate with the other version? That's a good question for the beginning user of accounting software. I would recommend QuickBooks online now. Then the question comes up that I haven't covered yet, which is What? What if I got to go to a more complicated version? This could be transferred to that more complicated version. It can. All the data could move over. Yes, I think I follow up on that. We had a question from Daniel. Nicole, is there a way to work offline in this virgin? Say, if you're on a plane or somewhere with no Internet connection and then sink it back up later? Because I'm assuming for this online. You do need to be connected at that. Yes. I don't know the answer. Okay, well, look, we'll find we'll try to find that out if you could make it. No, it I'll try to find that out. Sure. I'm a little hesitant to do work off line because I'm not cause I'm paranoid. I want to make sure it gets posted. So I would prefer that people do it when they're live on the web. Just cause I'd hate to lose something in the translation. Okay. Profit loss, balance sheet. We covered their statement of cash flows that I just explained in a prior segment, which is the ability to divide up your checkbook inflows and outflows between operating activities investing activities and financing. Look, that umbrella backdrop that asset that we bought is an outflow a negative. Under investing the financing transaction that you'll see in a minute when the owner puts money in the business, that is an inflow positive number financing. When I build a client, you know, that goes in her accounts receivable. Now that shows a more complex way of doing this and I'm not gonna cover. But you have operating. Let me do it. Operating, investing and financing this data here in the middle I'm not gonna cover. It's beyond the scope of this class. But I didn't want you to see the report, so I was at reports statement cash flubs again. If you choose to customize a report, you can That's there also. Okay, So what we just did was if I go back to home, we navigated across the top and down the side. What I'd like to do now is to show you some transactions that I did. Now you seeing pieces of them already, But you haven't seen the whole thing with this. Is it possible to get this level of detail by project or by client? We've looked at generating an estimate. And then I see recording of expenses with details under memo. But would there be a way to track an individual project? There is, But it's pretty complex. I would I would suggest that you keep it in excel instead. Because it's easy. The answer is yes. We call that job costing. You know where you've gotten. Um, Seaside film client. Here's all the expenses that relate to them in QuickBooks. Yes, I would suggest that until you got enough activity justify it. I would do that in excel by itself. Yeah, I've done that with clients who are tradespeople, like tree service companies implement. And it gets really it's really easy to make a mistake and put in the wrong place. Okay, so I am going to scroll over. Let's go to the X at the top and go to create. Now, I showed you just these categories, but I'm gonna hit show more now and there's a whole bunch more that you can create. So I mentioned during this process that or during this to the segment today, if you've got to create a company from scratch and QuickBooks, I suggest that you do journal entries. Okay, Journal entry self. How do I get there? I click on create the X. This is how it's gonna look when you could click on the X initially show Mawr Journal entry. Okay, So this is data where you're going to create a journal entry. Now you'll notice that it's numbered. I've already done for journal entries. My point is showing you this is this is where you post a journal entry. So let me show you some transactions that I already did. All right, create. I'm in the show more. And I've got this journal entry tab where I can post a journal entry. That's how I'm going to make an initial transaction. Easy way to see it is there's a couple of ways to There's a couple of ways to see the data. The first is you're trying to find a transaction. Let's How do I find it? Well, I did a transaction in here where the owner invested $1000 in the business. So how do I find that transaction? Well, one way to find it is to go to the report and go to balance sheet where I know part of the transaction would be posted. So when the owner put money into the business, it affected this owner's equity account. Let's click on it. So now I see the transaction where the owner put $ into the business. The owner put $1000 into the business. What if I click on journal injury? Ah ha. I get to the detail. Let me do that whole thing again. That's a lot of steps. I'm trying to find a transaction one more time. I know that I'm trying to find the transaction where the owner invested money in the business. How can I find it? Reports? Well, I know owners equities in the balance sheet Balance sheet Owners Equity. I click on the amount and it gives me the part of the transaction that affected owners equity. It does not give me both debit and credit. It only gives me the one side. So how do I find both transactions? I click on the word journal entry. Okay, this is where I manually made a journal entry. And here's what I did. Sarah, the sole proprietor of Image Photographer are fictitious. Company contributed cash into the business and you'll notice that I wrote a memo on both the debit and credit copy and paste that memo down for both sides of the transaction to remember and keep them linked together. Okay, Checking is an asset we debited to increase an asset. And I said, Capital contribution. We credited Owner's Equity. That's an equity account. It got credited. So this is my journal entry and you'll see at the bottom that debits equal credits. Why do I bring that up? Because you could have a situation where you could have 10 debits in three or four credits. And as long as the dollar totals agree, you can have multiple debits and credits in the same journal, Inter. So that is a journal entry to post the fact that Sarah our own or put money into the business. OK, let's go back and see what other things happened in the business. Well, what's this accounts receivable again? I'm in the balance sheet. I wonder what that accounts receivable is. I can click on it. We made a sale to accompany Riverside Restaurant they haven't paid us yet. I posted two accounts receivable. I want to see the debit and credit transaction. Okay, Well, what if I clicked on invoice someone or what would happen in this case? I set up an invoice and QuickBooks that fed to accounts receivable. So I filled out. I created I created a client called Riverside Restaurant. You see, that's the only client I have set up right now. I put in a fake email address. Here's their billing address. Envoy State due date. This has to do terms. You can see that. All kinds of discounting terms I could give this. Just says the bill is doing 30 days and 30. Okay. Why did I do it? The product or services event photography, Riverside restaurant. You can put a quantity if you want to. Particularly. You're taking inventory out of the business, and I got a balanced do. Okay. How did I get to this invoice? If I go back, I went to the balance sheet. A report. Let's go all the way back. Report Balance sheet. I clicked on the amount next to account receivable. I got the transaction and I clicked on inwards. Okay, Let's see if there's anything else in the balance sheet that I want to look at. I didn't amount for prepaid insurance, and I'm gonna click on a journal entry for that. Okay, let me go back to where I got it and explain why it is where it is. Okay. Prepaid insurance. $100. I click on the amount I click on the word journal entry transaction type journal, injury. What does this mean? Okay, I bet you when you pay your insurance premium, you're paying ahead, right? So when you write the check in February, it's for March coverage, right? In other words, you always paid before the coverage. Okay, so we have an account. Whenever you pay something in advance, you can create a prepaid account. So prepaid insurance means that I wrote a check in January January 6th for February insurance premiums on a car that I use in the business. That is an asset. So I debit to increase it. I wrote a check, so I reduced my checking account by $100. Prepaid is an asset because it's money. I don't have to pay later for insurance, So that is an asset. Okay, let's see if there's anything else on the balance sheet that I want to look at. I looked at Owner's Equity. I looked at the I didn't look at the umbrella that I bought you. Let's look at that again. Clicked on the amount. Here's the umbrella purchase. Let me click on journal entry Ian Bell. Umbrella backdrop is an asset I'm gonna use in my business for a long time. So I create an asset and I debit to increase it. I put an explanation off to the side. Here you can put the vendor that you bought the asset from which happens to be sunshine photography supply. I credit checking, and that's that journal injury.

Class Description

Accounting can be easy if you know how to use the right tools. In this course, Ken Boyd offers an in-depth introduction to the accounting and QuickBooks skills that are the foundation of every thriving small business.

Learn QuickBooks Online

Ken covers everything you need to know about understanding and managing your business’s cash flow to insure that your business stays profitable and that you have the right amount of money at the right time. You’ll explore the principles of making sound business decisions that both grow your company and protect your bottom line. Ken will also cover best practices for integrating QuickBooks as an accounting tool, from setting up payment and invoicing systems to generating accounting reports to paying your company’s bills, and much more.

Whether you’re a first-time entrepreneur ready to learn the basics or a long-time business owner looking to sharpen your skills, this course will give you the tools you need to confidently manage your company’s finances -- no stress or guesswork required.

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