Diving into Quickbooks
what I have pulled up here is again. Let me sort of set the scene. The version of QuickBooks that I'm using is called QuickBooks, online that you can log in to and set up an account very easily. It's a simple version of QuickBooks, the simplest. It's also online, so you don't have a disc toe load, and it's also backed up on the cloud. Okay, so again, stepping way back, the challenge for creative people is how can I get comfortable with accounting? We started trying to get you over that hump last segment. How can I get comfortable with language and the system? I described accounting a lot of times a puzzle. It's a lot like a puzzle filling in a puzzle, So we tried to start that in the previous segments. How do I understand the language in the puzzle now that you've been exposed to some of that? Let's talk about an accounting system to use for your business. Now again, some ground rules there's there's some more complex accounting that this version won't use. I'm going to cover just abou...
t every type of version you need Teoh do, but not necessarily in the sophistication level that you would get if you had a different version of QuickBooks. A. For example, I may make a payroll entry a manual entry to pay somebody. There's a QuickBooks version that's a lot better that could do that for you a lot quicker. So there are add ons beyond this that we've talked about in prior segments. You could probably get a better QuickBooks version for payroll for more complicated, depreciating fixed assets for inventory. Okay, we could add that on if we wanted to. Um, so we're trying to get over the challenge of I'm not an accountant by trade. And, oh, by the way, I'm scared to death to start trying to put my finances, which are really important to me in a system that I don't understand. And so that is the challenge for creative people that were trying to get you past. Now I can't get you past it all the way, but I think I can give you enough where you could start doing transactions by yourself and get past that anxiety. And so that's what we're trying to do now. As I mentioned earlier in a prior segment, this is a lot better look visual look than QuickBooks. You used to look, It's a big improvement now for a creative person. I mean, take a look at the creative live site. This is pretty pedestrian. This is not real fancy, but I will tell you that if you saw QuickBooks online a year ago, six months ago, this is a big improvement. So we're just trying to get you comfortable enough to use this system. Okay, So what I did was how did I log in to begin with? I went to QuickBooks online, and I I just like you would anywhere. I created a user I d and password that I used toe log in and you'll see that I created a fictional company called Image Photography. Okay, user, right Indian a password. And the great thing is, you can access this anywhere. You have the web. I don't know. I can't remember if people are actually using it with mobile devices, but you could go out there and see if they are okay. The first step is I set up a company. Okay, so let me click on this is a help button that question mark so you can click on the topic that you want. All right, that's the help. But this wheel here has other information to you notice. You know, I notice, even as a non tech person that more and more websites now use these little wheel things. What is that we will do? Well, it pulls up a whole bunch of, um, places you can go, and this wheel is really helpful. Okay, so you'll see that over here on the bottom left, we have settings. And below it it has company settings screwed up here just a little bit. So let's see what the company's setting. So I'm gonna kick on, click on that, you see, at the top. It says preferences. There's a whole bunch of data in here. Sorry. You could fill out. I didn't necessarily fill out all of it. Okay, Company name, address, email. Address. Scroll down and just see what else is here. Website phone number, Employer identification number. When you start a business, you file with Ire s. It's ire s dot gov I rest dot gov. You apply for an employee identification number, which is important, and you need to hang on to Not necessarily that you would put it in QuickBooks. But you needed for your tax return every year. Usually two visits with a dash and then, like five or six digits afterward. Okay, you could put that in here if you want. It asked you for the first month of the fiscal year and the first month of your income tax year for our purposes, the fiscal year of the income tax year or the same. And what I mean by that is it's simply January to December of each year. Could it be different? Yeah, beyond the scope of this class. Okay. January 2, February of a typical year tax form image Photography is a sole proprietor with one owner. You see, we could have multiple owners here. The reason we need and may need to click on these other buttons is because if you're a partnership by definition of partnership is more than two or more people, you click on one of the other buttons. What arm or shareholders? If you were a corporation, also, non profit. Is anybody setting up a nonprofit or do you know of anybody that set up as a non profit? I haven't covered? Yes. Um, Don prop nonprofits. Just as an aside, the purpose of a non profit is not to make money. Obviously, the purpose of a nonprofit is a mission. I did some accounting work for a company in ST Louis that takes old realize that run through ST Louis and they're tearing out the rails and they put in hiking and biking trails we have in ST Louis, one of the biggest. In spite, we don't have the best weather all the time. We have a huge hiking and biking system throughout, and there was a nonprofit that did that, and I did some accounting work for him years ago. So they're driven by mission. They're not driven their motivation. Their goal of existence is not money, so there's a button there for non profit. So for most people, this button is gonna be one owner. OK, closing the books I haven't mentioned, but I am going to mention it here, and I don't have a specific slide in my work now that I think about it for closing the books. So let's talk about what that means for a minute because it helps you understand income statement and balance sheet. Okay, closing the books. Let's say you have revenue of $100 in expenses of $50 for February. At the end of the month, which is the end of our period, you're going to zero out that revenue and zero out that expenses and put those two numbers together and come up with a profit number. Right, So 100 revenue, 50 expenses of $50 profit. Okay, here's what closing the books means all of your revenue and expense accounts. Your income statement accounts that we just saw in the last segment Get adjusted to zero me. Say that again. All your income statement accounts. Your revenue and expense accounts get adjusted to zero at the end of every period. And where all that information goes, is it to your profit, which becomes part of your equity again? It SSM accounting mumbo jumbo going on here. But what I want you to know is when it says closing the books that has the process of taking all your revenue and expense activity coming up with your profit, which moves into equity, and I'll explain more on that later. Okay, account Does anybody approach? Does anybody know work with have a relative who is an account. Okay, you may hear my wife is one. So we know at my house at the first couple of days of the month is busy because Mrs Boyd is closing the books for her company. And so that's what accountants do. They closed the books at the end of a year. My wife's real busy, cause now you're closing out the year and when we mean closing, we mean zeroing out all the income statement accounts and moving the profit. Number two. Your balance. You. So that's what that button means. There, uh, closing the books, all right. And I'm not covering every cell of every thing in here That it out it out it out about a company logo. Somebody else about logo. There's a spot for logo. I have a stack of books on my website. It's incredibly creative. Thank you. It's a piece of clip art, and I said, Well, that's good enough. So name address, email website. Okay, company. You might click on if I click on products and services. This goes into, um, pricing your product. Keeping track of the quantity quantity of inventory might be beyond the scope of this class. But bear in mind that if there is preference information that you don't fill in here, you can always fill it in somewhere else. So if you wanted to put in some information about inventory and you didn't do it in the preferences, when you get to the inventory elsewhere, you could do it then. So don't be uptight if you forget to do something, OK, but you can always catch it later. You also saw Let me do go back. So I'm gonna go back to the circle the wheel chart of accounts I mentioned. I mentioned before the break. I touched on chart of accounts. When we got the question of Can I have a chart of accounts? That is Taylor to my industry. And the answer is yes. A chart of accounts. The definition of chart of accounts is the list of all the accounts and their balances, a list of all the accounts and their balances. Okay, so I have done some transactions already here, So the typical set up is in a chart of accounts. You have your asset accounts of the top, your liability accounts. You're liability and equity revenue and expense. Let me do it again. In order, in numbered order or in the way they appear on the screen, you're gonna have your asset accounts, cash accounts receivable at the top, liability accounts payable equity and then revenue expensive the bottom. That is the way that most chart of accounts for all software systems are set up. So in a company, cash might be count account number 100 account 1000 accounts payable, which is a liability, might be account 500. So you kind of get the idea. Revenue might be 700 accounts. Expenses might be 809 100. Normally, when you guys set up your own businesses, you'll have MAWR types of expense accounts than any other account. You'll have MAWR expense accounts than any other. So if I were to school down here again, the chart of accounts is simply a list of the accounts and their balances. Now, let me point out some headings. You can set up your own accounts, and in fact, I've already done a couple. When you set up an account and we'll do that later, you'll see that they ask you what type of account it is which is a way of bunching or grouping your accounts together. So, for example, uh, I set up a credit card account where somebody paid for gas, you know, mileage expense in there. So they're going to ask you what type of account it is. And when we set up an account later, you'll get a better picture of what that IHS. So at any point in time, you can pull up your chart of accounts and you'll see that so far the owners put in equity of $1000 and that's on the that's on the chart. Also the balance. Okay, this is a tricky thing in the chart of accounts. There is not a distinction made between whether it's a debit or a credit. All these numbers are just positive numbers. You don't know that's OK because you're not creating financial statements from here. They just list the account balance and whether it's debit or credit, we'll get to that when we do the financial statements. So that is a chart of accounts, a list of all your accounts in the balances. By definition, um, QuickBooks has the ability to create lists, and here are some of the list. Um, the big ones here are chart of accounts, which you already saw. But you can also set up what we call recurring transactions. For example. Well, let me read the definition. First. Displays a list of transactions that have been saved free reuse for From here, you can schedule your transactions to occur automatically with reminders. So if you have a bank loan you're paying $500 a month. Wouldn't it be nice to set that up to just automatically post every month? Right, Depreciation on assets, same amount every month. Interest expense on alone. Same amount every month. So what you can set up in QuickBooks is a prompt for yourself, so that when you get to month end, ah, little ding, a little reminder comes up and says, Do you want to post the same activity? And QuickBooks will do it for you. You can set up products and services that you sell. So it was a particular type of inventory that you could do that payment methods, terms. If you offer certain discounts. I occasionally offer discounts to people. But let me say a word about discounting. I mentioned in an earlier segment that. Ah, problem in business is that people don't charge enough for what they do, and they don't turn down business. Another thing is, be careful. Be judicious with discounting, because if you discount once, what you think is gonna happen when you go back to the same client again they wanted every single time. As an aside, I don't go to shopping malls ever. So, um, it's always a big adventure when I go, because my girls have figured out this whole online discount coupons sale on return and all this stuff. And a lot of that has to do with offering discounts, doesn't it is possible in QuickBooks to set up standardized discounts so that you can click a button when you create an invoice? And it says the terms are if you pay within 30 days, you get a 10% discount, and if they do that, it will change the accounting to reflect that they didn't under pay you. They actually paid the amount that they were do, so it will automatically happen. So if they owed you 1000 but they paid within 30 days and they paid you 900 and now they're paid in full QuickBooks will automatically adjust everything. Okay, if I real quick, There was a couple of questions in the chat room regarding which QuickBooks this is if it's quickbooks online or this is QuickBooks online. And this is called also, uh, simple set up. Great symphony set up. Okay. Classes, the category. I would stay away from using classes for now in the beginning. And so these air lists again. And the way we found list waas way went right here. We've talked about importing during the lunch break. We talked about importing from Excel. You can certainly import data. Um, I had a client. I'm trying to remember why. Who asked me to go out to QuickBooks and figure out how to import some stuff for his contracting business, and I figured out how to do it. I can't remember what it is, but there's lots of different ways you can import again to try to save yourself time. Another question that came up right before we went on the air. Waas If I'm doing things manually or not in excel In other words, if I'm doing things in a way that cannot be imported, how do you suggest that I load all this information to have a balance sheet and an income statement starting point. And I said to use journal entries, which I'll get to later, which is the debit and credit and entering the account in the amount process. Okay, questions coming in on the chat room. Do we have time to you? Okay. Great. One of the questions was from a guest in the chat room who has a dry cleaning store. But they also do other things, like alterations outside of that store. And it seems like when they have Teoh use the select option, they have to choose. They don't get a choice, so it makes them choose an option from the QuickBooks list, which isn't exactly accurate for their business. Is there any way around that? Yeah. So if I have two kinds of revenue which I think is what they're asking, So I have dry cleaning revenue, and I have alteration revenue. I would create a separate revenue account called alteration revenue. Perfect. And I would So we're gonna find out a little bit how you can create accounts because I'll guarantee you to do this correctly. I would make your accounts of specific is you need them for you to remember. What in the world. Your posting. Right. So don't a lot of people has it. I don't want to make new accounts. Go ahead and make new accounts if you need to. So you could be clear about the activity that your post? Okay. Expense accounts. If you need to make 200 expense accounts to really understand what's going on go for Go for. Okay, great. So that is the wheel, and I'm gonna click. Usually I can click over here and get out of if you had, like, two automobiles, would you have some accounts toe? Another great question. If you have to automobiles or let's say a year. Your a plumber and you have five. Well, we'll use a tree service company they use later. They have stumped Randers. They pull in behind a truck grind stumps. I would make an asset account asset for each asset you have for the most part, it So if you own two vehicles which are big dollar amounts, I would absolutely have to asset accounts. Uh, other. This way, I'll go across. Yes, me. So I saw it tab in there for, like, budgeting. So is there a way to actually compare, like, a time period with what your budget is there is There is in this version. Yes. Yeah, I'm sorry. Right. Would you make that additional account for, like, the dry cleaning business with the alterations? Is that under chart of accounts? Screen before? Yeah, and I'm being there. Correct. And I'll show you how to set up an account here and just okay, we will show you how to set up an account. Okay, I'm gonna keep navigating across. I'm just looking at my notes to see what I'm doing next year. So you got a button here? Let's click on that recent transactions. Well, that's kind of handy. Now, you'll notice in the recent transactions here that I have journal entries thes air, dab it in credits that I put in. Okay, um, there number. It's important that all your transactions are numbered. So, for example, I have an invoice. That's number 1001. I have journal entries that are numbered. It's important number, everything. So you could go back and find it. Okay, So if you had gotten a check in from a client in your and you you open quit, you open QuickBooks up and you're like, You know, I'd like to check and see if I made that deposit, but I don't want to necessarily go through all the screens. You can go to recent transactions. Oh, there it is. Yeah, I posted. That's this sort of clock icon that What's the plus? Okay, now we've got create. We can create an invoice. How many of you do estimates anybody do estimates for clients? Yeah, I used the example. The tree service company where you know you go, You got the guy goes out with a clipboard. It gives you the estimate, You know, I've got a tree in my backyard. That is when we got that bad storm. I just stood in the back, looked at my back window. I said, Boy, I hope that tree doesn't fall down on my neighbor's yard before I get a chance to say that they have taken down and I'm looking at Well, it hit the power lines, would hit the phone. Now, went wanted the phone line would hit. Yeah, So I need to have somebody come out and do an estimate, taking down about a 30 foot tree. So they're gonna have to have a crew of guys. They're gonna have to bring certain equipment, like saws in a stump grinder. They gotta figure out how long it takes them. They've got to figure out how much gas mileage, all that stuff. And they're gonna put that in an estimate. So you could do estimates here. Even template as well. They will give you click on it. They'll give you a template. Now, if you'd like a temple that's more complex than this, you can create one unique to your business. Okay, so maybe if you're a photographer, you have a wedding photographer Estimate template as an example. Okay, so that's create so a lot of a lot of time you'll probably spend clicking on this icon, you know, to look at your chart of accounts. Maybe you had a list and you'll spend a lot of time clicking on the plus icon, which takes you to places to do things. Okay. Their search search for a transaction you can search by account. Title is probably the best way to do it. For example, you could type in checking cause I've got a checking account, so there's a filter and you can filter it down even further. Says no matches found because I set up a separate account for, ah, cash for this company so you can normally eat filter by account title, create search. So what I've just done is I have talked about what's all across the top here. Okay, let's talk about what's down the side here. There's the home were on the home page. Now what I like about it is the improvements they have made. It's kind of cool to show you the income here in dollar amount. How much income have you earned? They show you the expenses I've posted so far? That's gonna cool. They've got this thing over here, which is needs attention, which is a fancy way of saying, you know, we're gonna give you some reminders, will tell you what day it is. Give you a tour of the home page. Maybe you want the mobile app. There's that QuickBooks mobile app. Okay. Running down the side here and then they give you a profit and loss. So going back up to the top, I had netted. I have expenses of 120. I haven't income of 1 70 less expenses with 1 I've got net income of $50 so that's kind of nice. Kind of give you a snapshot right when you open QuickBooks. I think it's kind of nice. Click on customers. Um, you'll notice that under customers, they give you some really useful information because they make distinctions between types of transactions for your customer unbilled. That would be if you'd given somebody a dollar amount estimate, but you haven't invoiced him yet. Unbilled unpaid people. You have invoiced whether you've invoiced them through QuickBooks or somewhere else, but they haven't paid you and then paid. This brings up something called on aging Schedule an aging schedule, which is a valuable thing to look at, which tells shows you all your clients and you could do it in QuickBooks is a can report basic report that's in there, all your clients, how much they owe you and how long it's been since you invoice them. Generally in accounting world, it's somebody's owed you money for 90 days or more. In most businesses, that's considered a bad debt. They're not gonna pay you so a typical aging schedule will say, Here's Here's Who you build the last 60 days of last night's days, 60 days, 90 days. We call it an aging schedule, and that's important to look at to kind of stay on top of, um, most companies. And this brings up something that I cover later. That's important, and this is a good point. Stick it in here. One of the things that companies hire me as a consultant to do is to help him create operations manual, which is simply a book that explains how you do everything. Why do you need, well, two reasons. First, to help you understand why you do what you do and can you improve it. And secondly, it's my hit by a bus document. If I get hit by a bus, somebody else can pick up what I do and keep it going. One of your procedures is how do we handle people who owe us money? Most companies have a process where they say, Okay, if it's 30 days late, somebody brought it up. I remember earlier, um, it might have been Christine. I'm going to send him a letter that their past two. The envoy since this past. You on it? Maybe. And after 60 days, I'm gonna call him. And after 90 days, I'm gonna call him again. And maybe you've got something in your procedure manual that says, you know, if it gets to be 60 days old, I can't do any new business with them until they pay me for the other order. I've had to do that with people. Another thing in your business in terms of collecting money, because this relates to this too. How many of you asked for deposits? Like I asked this today. Last segment. Okay, um, if you have new clients, asking for a deposit is a great way to find out if the customer is willing to put skin in the game. I always ask for deposit with a new customer because I want to find out if they're gonna pay me and I want to find out they're gonna put in a good way to start off. Is will they pay me anything So I always ask for a deposit. Rarely, if ever. Now does anybody have a problem with paying a deposit? Plus you think about it. A deposit helps you recover some of the cost that you're going to incur to serve that client. Anyway, why should you have to spend all the money for the photography developing and the gas money and that whatever in the postage on your dime, why not get a deposit from them and let them cash flow that you see what I mean? Why should you be out of pocket? You provide a valuable service. Okay, So, um, your policies on, do you ask for a deposit? When do you call in late bills. Do you send out a late notice? Needs to be written down somewhere. I cannot tell you the number of companies, big companies or when a valuable person leaves. Nobody has made an effort to update that procedures manual. And now moment. Nobody knows what's going on, and things fall through the cracks. Very important toe. Have a procedures, manual and toe. Update it half the time, particularly creative folks that this is not your thing. People need to create a Cedric Procedures mantle just to think through what in the world they do. You probably know it intuitively. Oh, yeah. You know, you're in the shower and you're thinking? Well, yeah. I need to do these 15 things today, but you do need to write it down. You might be able to improve it. You can also delegate work to somebody else at some point if you have a procedures manual. Okay. So a big procedures manual. That was a good point to stick that in there. That's the customer on the left to drop down that we just covered.