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Small Business Finance Basics: QuickBooks & Beyond

Lesson 9 of 37

Quickbook Review

 

Small Business Finance Basics: QuickBooks & Beyond

Lesson 9 of 37

Quickbook Review

 

Lesson Info

Quickbook Review

I know that I mentioned the drink out of a fire hose, and what I would like to do in the challenge with QuickBooks is is that it required me going through multiple screens and then coming back out of multiple screens, and that's awfully hard to follow. So what I would like to do at the beginning of this segment is just go back through some of that overview to try to solidify in your mind generally where everything is generally where everything is okay so help. But everybody's gotta help. But the wheel took us to the settings to set up our account or business. All that stuff we filled in about our company. Name and address, email, perhaps website phone number. I mentioned employee identification number that you apply for through I r s dot gov. So we fill all that out. That's our preferences. Another thing you could do to get you back out of one of these out of the preference screen is you can actually click on the wheel again if you want to chart of accounts. Remember that the chart of ...

accounts was all the accounts that you have in their balances in some cases, those balances or zero. And also remember that the accounts are listed in order with assets, liabilities, equity revenue, expenses, the bottom. And this is true of all accounting software packages. Okay, I used when I was an auditor, and you would go into the field and pull people's records to perform an audit. They all have the same set up assets, liabilities, equity revenue expenses. Okay, so in our chart of accounts, you see all that listed here. Okay, equity income expenses, always at the bottom. And as I mentioned, I didn't mention cost of goods sold is an expense when you sell something out of inventory and then the expenses of the bottom. And I mentioned that you were most the accounts that you'll have the most of are going to be expense accounts. Okay, so I went to the wheel chart of accounts there. Well, I touched on lists very briefly. I'm not going to do that again, because that's not that wasn't really the point of this segment. Okay, However, I will say under list that you can set up recurring transactions now. Quicks books does a smart thing because I know we're getting some chat questions on which version of QuickBooks should I use? You'll see that the version I'm using today is called simple Start, and I'm using the 30 day free trial. And then it's 12 95 a month after 30 days. Now this is a great screen because it tells you all the things that each version conduce you. Okay, let's talk about some of the things I have been asked about today. Okay, for example, customized reports. Someone trying to get my Let me get my mouse. Here, there we There we go. How about recurring billing? We see that for the QuickBooks online version, it won't do the recurring billing. So what are my other choices? If you scroll up, you have essentials, which is an online version, and you have plus so you can add on. So if you need to do recurring building, which I imagine a lot of you will you pay a little bit more promote? Um, a couple of the things that I was asked about inventory tracking, which we talked about. You have to go all the way over to the more expensive online version, budgeting and planning. Jackie and I talked about. Can I put in a budget and compare? It's the more expensive online version, So going up to the top here, these are the three online versions that you can use. Okay, so I got to that through this button. I hit recurring transactions, and the system said, Well, this version of QuickBooks online won't do it, but let us show you what your choices are, so that was in the list category. Remember, the QuickBooks can import data from your bank credit card transactions, your banking account. Both of those you could import. It could import from Excel Reconcile in which I haven't covered. There's a tool in here, and there's no data filled in. But as I mentioned to someone earlier, who I think there was the question earlier today about Can I do some of my accounting in QuickBooks and some of it outside? And I said I highly recommended that you do your banking on QuickBooks because it has a very handy way of reconcile ing Elektronik Lee, which I like. So consider that consider putting your cash transactions in QuickBooks and not just posting journal interest because you can reconcile easily. Another thing I'm gonna cover later in the course is something we call variance. And a variance is a difference between your budgeted numbers, sales expenses and your actual sales and expenses. And we call that a variance. And so you see, here the QuickBooks has the ability to create a budget that you can compare to your actual results and look at variance. And the whole reason for doing that is to find out where was I off in my estimates. Maybe there's a cost that was much higher than I thought it would be. Um, the example used in my book is, if you're in a manufacturing environment and your labor costs were higher than you thought, Well, why is that? Well, maybe you had to pay ah, higher rate to get qualified people to work in your factory. Then you budgeted. That would be a variance. Ah, higher cost. I use the term earlier today. What if scenarios, Which is really what a budget is? A what if scenario. So it props you when you click on the wheel tools budgeting. It takes you to this tool to create budgets. And again, it's the more expensive online version. But I think it's worth it to have it, because it's not much per month higher than the basic version. Okay, I didn't mention it, but you can have multiple users, and this brings up a few issues. Um, you may in your business grow to the point where you have somebody helping you with the accounting records. That may also mean that that person who maybe comes in once a week, takes all your expenses and post them into QuickBooks. That person, the bookkeeper and you both need to have access. But you need to be careful that you're not duplicating transactions and that you have a clear delineation on what you're going to do and what the bookkeeper is going to do. The great thing about the online version is you don't have to worry about using the latest version or the latest set of reports cause it updates all the time. So the bookkeeper goes in a two o'clock and post a bunch of expenses. In a to 15. You go in and post a deposit. It's already been updated automatically. Okay, so that is the we all section of the homepage. Again, I keep clicking home to get us back where we want to be. I click on this clock. I guess it's oclock. Recent transactions again handy. Last segment I posted journal entry number five. So it's a way of remembering what you've done. What, you haven't kind of a quick reminder. A big section where we spent a lot of time was the create section. Now, when you first pull up the create section, you just get these four, um, points to click on. But I'm gonna click on show more. We found out about invoicing a client. There's a standard invoice, and you'll see that your prompted that you could handle online payments here. It says, get paid faster and give your customers and easy way to pay. When you send this invoice, learn more and we'll set you up so you can have Visa. I think you're gonna have pay, pal. In here. It's a little faint. I can't quite see it so you can invoice through the create button. What if I want? What if I get a payment in well, rather than going to cash and trying to get to cash to make that deposit? If I hit received payment here is a window that I can put a transaction in, and it will automatically post to cash. Receive payment can. We're just trying to navigate visually navigate the QuickBooks again. I mentioned with Josh and I were talking about a purchase order. Let me define it. First of all, so a purchase order is a form you use when you need to buy something for your business. Okay, Bigger businesses, you prat. You fill out a purchase order as a firm grows, you might have a formal process. Where if you need to buy a new camera, you gotta fill out a purchase order and you hand that to somebody and they approve it. OK, you can do purchase orders and QuickBooks and you can do re occurring purchase orders. If you have to go back to a vendor every month and by or your creative live and had to go back to a vendor every month by a camera or a piece of equipment or supplies, you could have a re occurring per disorder. And again, you need to upgrade to get to that. That's a purchase order again. And the crew were still in the creates section bank deposit. Just you can. If you'd like to just click on here rather than making the journal entry, you can do a deposit. One more thing. We got to the journal entries from the create screen. Okay, so so far in our review, we did the wheel. We did this button. We did the create. We've got a search capability here. Concert Click on homepage. Whenever you're lost again, I'm going through multiple screens. Right. Click on the home page and just start over again if you need to. Okay, customers. In the prior segment, we created a new customer. That customer ended up down here. You'll see that Riverside restaurants for that customer. We've actually done some business. And we have an invoice who are waiting to get paid on vendor again. People you do business with. We created DTC photo as a new vendor. So you've got all your vendors listed down here. So if you buy something from a vendor and you need to record that expense and the payment, you can started the vendor window if you want and click on a vendor and fill in a transaction a new transaction. If you want to go that way, Another challenge with QuickBooks and we touched on it. At the end of the segment. There are multiple ways to do the same thing. For example, if you buy something from Sunset photography, you can go to vendor, click on the vendor, create a new transaction. Yeah, I could just go straight to journal entry, and I could have some sort of expense. And I could note over here on this side that the vendor, I could put the vendor's name over here like DTC photo. So there are multiple ways to do the same thing, which is why this is a little challenging. But you could, so there's good and bad news. Good news is, QuickBooks makes makes it easy. You could get this the same place several different ways. The bad news is that can be confusing. That could be confusing. We did customer. We did vendor employees. Um, if you wanted to create a new employees, what the system asked you to do is to turn payroll on. Let's read what that says at the bottom. You could easily paid employees within QuickBooks before entering any employee information. You can enable QuickBooks payroll, which allows you to set up and pay employees and a few simple steps you can turn that on. Okay, that's gonna be the more expensive version to do that again on payroll with my What I recommend is is that you use a payroll service like 80 p. You take their reports. That says, Here's the gross salary and here's what we deducted And here's the Net pay and you use that report and loaded into quick push herself. Or you can upload their data, which is what most people do. So it goes straight to your accounts for payroll expense and withholding automatically. Okay, you know, we had a question in the chat room in regards to security. So yeah, I know we've been talking a lot about having this online version. I know some people are concerned with having important client information. Financial figures online. Do you have any advice for people who are a little hesitant to use the online virgin and have this information out in the cloud? That's probably that's probably beyond my net level of knowledge, And I would call QuickBooks because, um, I get that question. Let me let me back up and say something before that. In my opinion, I would rather have somebody use a system that is back up on a cloud than backed up on disk or on a server. Gets number one number two. How secure is that? I would call QuickBooks and ask that question. I'll give an example. My wife's firm is in the investment business. Obviously, they have very sensitive data. They have a vendor that they pay. That is basically their cloud backup. This company's servers is their companies back Cloud backup because the data is so sensitive. But I would call QuickBooks great. And there was. There's a little bit of confusion, both with to finding vendor and finding assets and just figuring out which is which. But I do this one first. The Guava Project asks if you would go into more detail on defining a vendor. For example, if I use QuickBooks for my accounting, are they considered a vendor or is that just a business expense? Okay, let's quickly inventor to answer the question. A vendor is anyone you buy stuff from, or that you pay. Now my recommendation is is that anybody that you pay that you're you think you're gonna pay more than once I would set up a vendor for Okay, So a vendor is anybody you buy something from? That's number one. Number two. Should creative entering QuickBooks Or should I Just if I'm buying all the supplies from, um, OfficeMax. Should I create a vendor called OfficeMax? I think you should, because you're gonna be buying stuff from them all the time. If it's a one off, it's a one time thing. I would just record the expense in a generic expense account. So if you're gonna buy a couch from Rothman Furniture in ST Louis and it's the only time you're gonna by the couch I would just create an asset account called Couch and Credit cash and be done and not creative under. So a vendor is somebody that you, the anybody you buy something from, and you don't necessarily have to sit, Um, all up in QuickBooks, we had another question here from the last segment regarding journal entries. And just to be clear, Jo Jo wanted to ask, still wondering if we should do a journal entry for everything. All types of transactions, including incoming dollars, or should only be for outgoing expenses should be for everything. Should be a journal entry for everything. Now the springs back the challenge, which is, if you're telling me to make an entry for everything, where do I make it? And this is the challenge where there's a couple ways to do it. Let's just review that. One way to do it is every single time I'm gonna go to create journal entry. And every single time, I'm just gonna enter it this way and I'm gonna find the account. And I'm gonna do it this way. I mean, inner amounts, blah, blah, blah. I could do it that way. But there are shortcuts. For example, I'm not going to save this. Are you sure you want to cancel your changes? Yes. If I'm paying a vendor, I don't have to make a journal entry. I could click on the vendor's name and do a new transaction. New expense gets me to the same place. This data is gonna flow into a journal entry. So, yes, you should journal eyes, everything. But where you do it can vary. Okay. These questions regarding assets, Vera M. Wants to know she's still not understanding how or why assets are increased by debuting. And there was a few other she was requesting a new explanation for that to start with. Okay. And this is from last segment. Okay, as a review, remember that debits on the debits of the left credits on the right. Why is an asset increased by deboning about all I can say is, in order to make the math work out on the accounting equation, assets equal liabilities plus equity. The question is, why hasn't asked a debit? Okay, The simple explanation is in order to keep these this formula in balance, we have toe increase the assets on the left hand side in a different way that we increase the liabilities in the equity on the right hand side. Okay, or else they wouldn't be in balance. So not only does this formulating to stay in balance, but debits and credits need to stay in balance. So someone decided that we will increase assets by deboning. If that's true, we have to increase liabilities and equity by crediting because if we do that, debits and credits are equal and this formula remains and true. Let me do that one more time. Somebody decided we're gonna increase assets by deboning. That means that at liable is an equity must be increased by crediting so that not only do debits and credits equal each other, but assets equals liabilities and equity remains about Okay, It's actually a good question, and it's a nice review. All right, so excuse me. In this review, we did customer. We did vendor working our way down the side. We did employ. We also looked at some transactions to and you can see that these run down the side. I click on sales. Give me an overview. My sales transactions. Here's an overview of my expenses. Now, here's another choice. If you want to post a new sale, you can create a new sail from here. I'm gonna create an invoice If you want to again different ways to get to the same data expense. Create a new expense If you want to, you can go from the screen and create a new expense. Okay, What? I want people to be comfortable with IHS what every way you want to do This is fine. For example, if you always create expenses by going to transactions expenses new Fine. That's cool If, on the other hand, you're more comfortable going to the wheel, uh, plus journal entry and posting an expense this way, that's fine, too. Okay, anyway, that you get comfortable with. And I would pick one way and stick with it, and I would write that down as a procedure and stick with it. Okay, Reports. Okay. Finally, in turn, on our review of QuickBooks. Here's what we did. I mentioned that we have these two basic reports and I clicked on balance sheet. And what I was trying to do for everyone is to show you How do you get to What do you find when you click on each one of these numbers? Again? If you click on accounts receivable and you have 30 receivables, it will show all 30 transactions. I click on accounts receivable. I can get to the invoice. Let me go back. I'm still in the balance sheet. And again, I'm gonna make the time, period the ending time period to be the end of February, cause I posted a transaction in February, so I changed the date, and I hit run report. You can see now that, um, there's that prepaid insurance amount. So what I tried to do in this segment waas to take reports. Here's profit and loss, which is your income statement. Click on amounts and show you the numbers behind in the transactions behind those numbers. So I got the invoice again. Okay, so again, one last thing before we get away from QuickBooks. Uh huh. If you want to post your transactions by going to journal entry what? Just what I do. Because that's old school. I mean, that's what before we had QuickBooks, we do this manually. Democratic Democrats. I'm comfortable with that. But if you think it's easier for you to go to transactions and sales and poster new invoices here, which goes and posts your accounting activity for revenue and receivables, that's fine. Just pick a method. Other questions before I move into the exciting, breathtaking final segment information. Anything else? Okay, somebody writes you a check that is not paid. So your initial entry would be Let's go do a journal injury. I'm gonna do a journalist because I gotta think through this. So I hit checking 50 bucks, uh, reduced by crediting my accounts receivable. bucks. Right. The Czechs, bad first problem is I need to reverse this transaction because this is now wrong, right? My checking account balance is too high and my receivables is too low. In other words, they still owe me the money. And I didn't get paid the cash. Okay, so let me x out of this. Losing save changes. Yes. So how would I handle that? Balance check now that it's bounced? Okay, first thing I got to do is restore the account receivable for 50 bucks because they still owe me the money. And I need to reduce my checking account, cause I don't have that much money again. This is a great example. Do that is one journal entry by itself and saving a move on. Don't do four things in the same screen. Okay, so that's how I would handle a bounced check. It basically takes you back to where you were, which is that you're still owed the money and you don't have the cash and then you pursue getting the money. Okay, let's get going. What about bank charges? And again, I'm doing separate challenger. I know this is tedious, but when you're a beginner, I think it's good to just do 2222 So there's not something set up in quickbooks that would make all this easier. I think in the bank reconciliation process for the more advanced versions of QuickBooks, there is a way to record a bounced check in the fees and all that without doing these manual steps. However, I'll caution you that I might you might consider doing journal entries because then when you get the bank statement and reconcile it, it gets a little tricky because you'll see the check go through. And then I'm not sure how your bank's gonna is the bank gonna add it. You know what I mean? It might be hard to read on your statement, so I would caution you that maybe do it in pieces and put the same memo on balance. Check. Bounced. Cheque bounced. Yeah, cause banks post data differently. Excuse me? Anything else on? Go ahead. Nice to see which customer is bouncing all these checks. So in action. Okay, let's talk about that. That's really an invoice issue. Okay, so let's say that I'm gonna go to create invoice. Okay? So I created envoys of cinnamon invoice. Now they pay me So I go to create. And there's one here for bank deposits I can note here received from. And I can note who I received it from. Okay, then the check. And so this is gonna post increase cash reduce receivable. Now the cheque bounces. Okay, I'm sorry, but this is a couple of steps to get there. When the cheque bounces, I'm gonna post the journal entry, and I'm going to include which client it waas so I can keep track of who's bouncing checks. Okay, that's not a smooth answer, but that's probably the best way to do it. It's not a smooth answer. Yes, multiple, Because all of that would be under journal six. You can. I'm suggesting that as a beginning person, you don't let me give you an example. Let me let me take Josh's example and show you how maybe a a on account would do it. Okay, here's what you might see. So we increases checking and we reduce the receivable. 50 bucks, OK, We reconcile that night and we see the check that we see. The check did not pay. Okay, I got a reverse of which means I've got to create the receivable because they still owe me the money. And I've got to reduce my checking account because they didn't pay me that. I have bank fees. Okay, I go down and I find an expense account for bank fee bank charges. Maybe they charged me 30 bucks and my checking goes down 30 bucks. I'm actually glad you ask this question. You could do that if you want, but and one thing that's important to do is to put the same explanation. Bad check from Riverside Number 123 Let's say I didn't event and I have five people gave me checks and I want to put them in. Can I do all five checked under that journal Number six? So let's talk about let's clear this. Here's how you do that checking. And you could you could then post revenue, which is going to be a revenue account toward the bottom income sale. Make it easy. And you can say that that was Bob and you can recognize sales again and say it was Soo and you can recognize it that way. Sure, you bet. We, uh, a little bit earlier, and I know that we said we get back to it and maybe we'll get back to it later on in the course. But we had a one of the guests in the chat room had asked about his his business. He has the dry cleaning business. And then he also restorations. Yes. And how? Basically to you How to make separate accounts on quick books using the same user. I d Are we gonna get to that later? Is that something we could let me do it? No. Well, same user I d o within the same entity on quickbooks. Right? Okay. So again, I'm old school. I'm gonna go journal entry. Uh, let's say that somebody pays us $ and some of it is one type of sale, So I'm gonna go down to an income, Let's say one of them sales and one of them services. So what I'm saying is you can get pay. You can have cash come in for two different services. Now, let me expand the example. Let's say that I don't have an account in my chart of accounts. I could get add new, and if I hit, add new. I can create different types of about by type. We saw that column words that type earlier so I could scroll down and I can create a new income account. I'm not going to set it up in here because I'm in a photography business, but I can set up a new account called Alteration Income. That's his alternation. You know what I mean? So you can you can name a new account. It's gonna be part of your income, and you could have multiple income accounts for the same payment coming in if you wanted to. So now, when you get your So okay, so who cares? What is it? Why does that matter? Here's why it matters. If I go to reports and I go to profit and loss under income, I would have a dry cleaning category and an alteration category separate under the income in profit and loss. Okay. Anything else on QuickBooks before I move? Yes, I have a question. See, uh, I'm recording an expense. I'm making my general entry and say I bought office supplies at Staples. Is there a way I can scan or take a picture of that receipt and link it visually to that journalist I think there is, but I think that is on a I'm not even sure that's on the QuickBooks online version. Let me do this. Let me take one peak and look at this. Gave us the proper were listening all the choices that you have. That wasn't it. I won't take the time to it now. You can do that. I'm not sure it's in the online version or not. But what you can do is go to QuickBooks online on your own and find that scream where it gave you the choices with the check marks and they'll tell you they're okay. Yes, Something on there that we feel like when you had new customers that had billing. And how is that different from, like, end voicing. Okay. So when I I create a new customer, this is just the person, okay? I have, In other words, I could make customers here all day long, and I've never built anybody anything. Okay, It's only when I click on a customer and I created Invoice that I'm actually charging somebody. Does that answer. I know about a field that was underneath the new customer category. Okay, let's go to customer new. Okay, so here's a new customer, and there's a field you're looking for. Ah, underpayment and building billing. Yep. Right there. Right here. You click on that tab. How did they pay you? You could even asking. What kind of credit card? How do you deliver the bill? I bought some stuff in Macy's. And of course, I don't go to malls, so I don't know, but they asked me if I want I know that from the dark ages. But do you want your invoice email or do you want to print? And I said, Well, give me both, um, okay, Terms while we're here. If you discount, you could have terms per client. So if you tell him that it's do when they receive it or if you give them 30 days to pay, you can set that up by clients. So, for example, if you got a client that's a little shaky on payment, you may want to write due on receipt. If you know the client pays. I'm just gonna helmets doing 30 days so you could treat clients differently. Yes. What about like late bees? Like if you want to put late fees into that if something's late a couple ways to do it, I don't know that I would do it here. You might want to make a note to yourself in this note section What? Your policy is for late fees. And now that would be the same for late. Pain early, like 2% net. Okay, let me make the distinction for ah, for discounting. I'm on the payment and billing terms. Okay. Discount. Well, there's no discount built in there. It's just saying that in 15. 30 right? This is when you but on the there is a There is the next online version you can do, for example, to 10 net 30 which was 2% discount calculated for you. Okay, now, um, what about, um, help me? Late fees, late fees. Um, I would handle this a couple ways. I would first put in the customer information how you handle a fees, then when I go to transactions, sales, new invoice. Okay, what I would do on the invoice. I know this is a couple of steps. This is probably more than what you're asking, but I would put on the invoice X percent late fee charges after a certain number of days, and I would put on the original invoice. Okay, You could also, but I guess return policies on their return policies right now. What would you do when they actually now there late in the OU 20 bucks. In addition to the invoice amount, you could do a couple of things you could go in and add. You could go in and change the original invoice and change it from 1000 cinnamon new invoice with late fee. So change the invoice right in 1000 mark. Right? And, you know, on this product or service, I'd write in the service on this line event photography. And on this line you put in, you know, you add a category late fee. If you had that as a revenue category and you have two lines that add up to 1000 20 and you sent him a new invoice with an explanation take up. And so, um, I would actually blow out the original invoice by doing a journal injury. The original $1000 invoice. I would blow that one out, and I would put in this new one. So you're only looking at one invoice with late fee. Okay, that's probably more steps than you're interested in and more documentation. But I think that's the best way to handle that. If you blow out the first en voice that you still have a record somewhere that you sent it with, think it'll say invoice, you know, and then you'll have a memo that says voided invoice. So you'll have a trail. Yeah. So, for example, in the client gets a new one, and they wait a minute. How can you send me another invoice? You already build me. You can not only explain to them while they're getting the new one with late fee, but also you've got it in your system and you're not double count. Uh huh. Wondering, um, the online payment. What is the fee to process the credit cars through the QuickBooks? Is there a fee? There is a feat, I don't know. Off the top of my head, I think it's similar to what kind of like a papal charges, because I used PayPal, where it depending on the dollar volume declines. Um, I'm gonna guess my list. My pay pal is 2.5 3% at the beginning, and then it declined based on dollar volume. That's how it works. So you would need to, um this brings up a good point. So if you're using an online payment and they charge you a fee, the easiest way to handle that is to when you get your statement and you've got all these whole you charge somebody $100 but you only got $98.50. Okay, I would post the whole $100 my revenue, and then I would post a dollar 50 is a credit card expense. So that that matches with the credit card sent you, cos

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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.

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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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