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Small Business Finance Basics: QuickBooks & Beyond

Lesson 2 of 37

Quickbooks for Creatives

 

Small Business Finance Basics: QuickBooks & Beyond

Lesson 2 of 37

Quickbooks for Creatives

 

Lesson Info

Quickbooks for Creatives

Well, thank you, audience. Thank you, everybody. A creative live who has done a great job getting me ready and, uh, thank you Internet to What's great about being in San Francisco is is that this place is crawling with creative people crawling with creative people. I like to tell you the way, kind of how I going to do the course. I have a lot of notes on an IPad that I'm going to refer to, and I also have a clicker, and I'm gonna go through my course over here. I have an example of a creative person. It happens to be my son, who I'll give a shout out to counter Boyd, freshman at Emerson College in Boston who happens to be a film production major. So of the three kids in my family, I have one in particular. That's really creative, my son. The people I've met out here and being in San Francisco generally really got my energy up about being around creative people. And so the reason that I am here, I think is toe help get creative people like you where you need to go now. To get there, you...

're gonna have to do a little accounting and finance to get there. So I'm hoping to give you enough accounting and finance and QuickBooks to be dangerous. And what I mean by that is enough accounting QuickBooks to get you to run the business and to grow on organization, doing what you really like to do. Okay? Doing what you really like to do. It is One of my producers pointed out the other day, you heard my bio. I'm more of a creative person that I am an accounting person. And I say that because I'm better at explaining accounting and finance that I am doing it because I tried to do it in another life. And it really didn't go as well for me as what I do now. OK, um, I've heard some great things from the audience that I wanted to pick up on. We had some people that use QuickBooks already. We have some people who are still you. We have one person is still using excel, which is great. And then we have other people that are sort of on the Maybe they've got one foot in QuickBooks, one foot doing it a different way. Um, there's a challenge with QuickBooks and the challenges is that it's a mile deep. So if you enter a transaction or put a number somewhere or try to create a report and you don't quite understand what you're doing, it could be very frustrating. So the way I'm going to use QuickBooks for our purposes is is to just go deep enough to get you what you need for your business and not go any deeper. Just go deep enough to get you what you need for your business and not go any deeper. Okay, because it's really a black hole of information. As an example, I know people who are running businesses that are $15 million a year in sales using QuickBooks. It could do lots of things, but for most of you in the audience, you don't need it to do all those things. So that's why I'm not going to go tremendously deep into it just deep enough where you can use it. Okay, I think that's important. Um, some other things I wanted to mention at the beginning I told you about my son, which takes me into understanding who you are now. It may sound strange to talk about that in a course like this, but understanding who you are as it applies that this course means how much of this business the accounting and finance are you willing to do, and how much would you like to offload to somebody else? Whether you know, if you're in a business with your spouse, one spouse maybe takes care of the books. Do you hire an accountant? One person said. Well, I haven't accounted. Helps me reconcile the end of the month. How much of this are you willing to do yourself? And how much of it is it better for you to offload it to somebody else? And this is not a psychology class. But if you haven't done it, take a Myers Briggs personality assessment. It's free on the Web and find out a little about yourself and let me give you a couple of those features or personality traits that relate to what I'm talking about Here, for example, how much attention to detail are you as a person willing to pay attention to? How thorough are you? How accurate are you for most creative people? The answer probably is I'm not tremendously interested or focussed in doing a lot of detail, and that's perfectly fine, because you can take that information that you just learned about yourself. I don't do detail all that well, and that helps you decide how much of this you want to offload to somebody else. Does that make sense? Find that out at the beginning, and I know it's not a We're not in a psychology class, but I wanted to mention that another way of saying that is find the trades that are missing in your business and figure out a way to fill that in, find the traits that are missing and figure out a way to fill that in. Okay, so if you could imagine somebody starting a business with most businesses, start a side. Business is maybe even a hobby. So the example I use is that as e. V. Mentioned freelancer, so somebody is a freelancer photographer and they've got a day job, so to speak, and they start doing photography for people and people start raising their hand and saying she could you do some of that for me? Well, great. So a man walk yourself through that. So let's see that a photographer is going to go out and do, Ah, a commercial shoot for ah company. They're gonna do some shoots around the office pictures and put together a video. If you think about that, that person is going to invest time money, they're gonna They may have to buy some equipment. They're gonna have mileage costs. They may have to hire somebody else to help them. So they're gonna Kherson costs. They're gonna deliver a final product, maybe digital pictures over the web. Probably gonna have to back that up. So maybe they need a cloud backup service. So my point is, is that they're investing some costs. Okay, then hopefully they're gonna go out and build somebody for what they did. So they're going to give somebody an invoice. So that's another piece of paperwork. Then finally, they're gonna have to get a payment in deposited in an account, reconcile that account at some point so you can see that there are multiple steps that that person is starting to see, even with a few transactions as a freelancer, and this takes us into the first line, which is called arranging your desk, and I kind of touched on number one, which is what you have to offer is a creative person. Because I am all about empowering you, giving you what you need to go out and do what you really want to do, which is probably not accounting. Okay? I talked about self awareness, which is what you can do and what you prefer not to do. And number three is the one I'm on here, and I was kind of toying around with that phrase. I'm not sure it was really a good one to use for number three, but I kept it from the excitement of getting Isn't it exciting to get some business? Yes, Any any business, right? That's exciting. It's something you should be proud of. Its you know, it helps your self worth. But in that excitement that I just explained with our photographer is the freelancer. You've gotta have some sort of a plan to organize yourself. Okay? Some sort of plan to organize yourself. The new business scenario. I sort of started, and I'm gonna go to number five. What's in this course in just a minute. So I talked about my son, the film major and all of you have talents, lots of different talents, many of which I don't even follow our understand or new to me. Um, another way of saying something that I've already said is the accounting and finance is a necessary evil to get you where you need to go. Unfortunately, you have to do some of it, Okay, But it's a means to an end. The ends over here, the end is delivering your your photography, your products, finishing the product. But to get there, you gotta have a little counting and financing between. So I say that this course provides guidance in setting up and helping you run your business effectively and in italics at the bottom. Please don't let your accounting get in the way of that. Okay? Don't let your counting get in the way of it. That makes us I said that a couple of ways here at the beginning. Self awareness, the most valuable skill, understanding who you are and how that impacts your business, give you perfect example. Most people think I'm a really outgoing guy. Wow. He could make conversations with anybody. In fact, this is horribly embarrassing to my family. Dad, when we leave. Please don't start talking to people. It's so embarrassing. Dad, please, just can we just get out of here without? However, the truth is that while I can have kind of superficial conversations with lots of people, I don't have a lot of close friends, and I'm somewhat of a loner. I spend most of my time writing books and prepping and working alone. How did I find that out? I didn't. Myers Briggs is that helpful to know. Probably helpful. To know in that I would probably not be good in a job where I was out selling all the time because I don't wanna have deep relationships with lots of people. That's something I had to learn about myself. And once I did, I used that knowledge to get into a career that fit that. Okay, as we move through the course, how much you're willing to do yourself and get help, and I mentioned taking an assessment already. Okay, excitement organization. You find the first few clients I mentioned the freelancer out there. Maybe it's a hobby or a side business. How many of you know somebody that started a business that way? Right? Started a side business, but it's something you happen to be really good at. And so things continue. The bullet points that I have here are formalized some of the things I already talked about. You're going to spend some money, you're gonna incur some costs to provide a product or service. You're gonna have to deliver something. You're gonna have to build somebody for something and you're gonna have to collect payment. And later on, in the course I'm gonna spend time talking about let's make this payment process as easy as we possibly can. Okay? Make it really easy. Made the instruction simple. Make the process. Minimize the clicks. Minimize. Make it easy. So what I'm really trying to do here is to get to the last bullet point, which is let's minimize distractions from what we truly want to do. Another way of saying it is let's create a process where we can get from two sales a month, 250 sales a month, minimizing the accounting finance time it takes to do all that so we can replicate it, replicated the process without eating up a lot of time. Most of you. I had this conversation with my son. We were on our way to the airport, taken back to college. And of course, he loves to great get great advice for me all the time. But I explain to my son that look, you and I are in a project based business. We're always doing one project, and we're always looking over the horizon at the next one. Ryan, he said, Right. Many of you created folks are in a project based business. OK, you incur some costs, you haven't output, Um, voice payment deposit. And I've done that a couple of times. But now let's consider something else doing this process. Multiple signs. How do you say efficient? How do you go from two times a month, times a month? In addition to the paperwork, let's put a little finer point on it when you go out and buy all that stuff. Do we still buy film for cameras? Photographers out there? Yeah, maybe. Yes, we dio I'm in the dark ages. OK, I did find out from I was talking about yearbooks for high school. Somebody explained that we don't really use black, ah, dark rooms anymore. Do we do we still use them? Photographers? Yes, some do. OK, so in one way or another, you're probably out buying stuff to fulfill this. This business. She got receipts for that stuff, right? I was talking to one of the producers here is in the film business. And he was talking about how a friend of Hiss had a sticker on every piece of film equipment he had. And every time you use it would put an X. And this was his way of figuring out how many times he used the equipment to do business to get to the point where he paid it off. Because then, beyond that point, it's all gravy. It's all profit isn't. And this guy labeled dozens and dozens of equipment. I'm not saying necessarily that you do that, but it starts to get you thinking about Well, how much How much business do I have to do to pay all this off? Right. So on the far left, you've got receipts for purchases in the middle e mails, text with clients, client instructions, brochures draft. There's a lot of stuff flying around. It took me a while to get out here yesterday, and so I had a lot of emails accumulated. Now, I don't know about you, but I make every effort to not keep any piece of paper for anything. I don't even have a printer of my house in my office. But we still to do with all that? Don't wait. We gotta answer email. We got answer Tax. Do I need to keep it? I've got cloud backup. Do I need to put it on the cloud backup? And I'm really disappointed about using cloud. But that's a nen vestment of your time, isn't it? Brochures draft. If you're a photographer in my example, the photos themselves Are you here? Are you delivering them in a package physically, or you delivering them digit digitally? That's artist. Are you backing it? Up on the cloud? Are you backing it up hard. Copy. What's going on? Okay. How many of the photographers? Just here. How many of you send it digitally most of the time. Yeah, at this point, far left when you finally get paid. Well, you got a deposit slip. You got a deposit. That client payment. What account doesn't go in? When do you reconcile? What about my bank statement? you start to think about while there's more involved in just fill in the order. Okay? You got to prevent the paperwork from piling up. My wife and I are both accountants. You could imagine that were pretty well organized. Okay, We're pretty, well, pretty well organized at home. We're not to the extent that were out advertising all of our food in the pantry, but we're pretty well organized, but most people are not, and that's fine. Um, in addition to giving you just enough, QuickBooks, let me explain how we're gonna get to QuickBooks. Okay? You can't get to QuickBooks until you understand some basic accounting terminology. Okay? Some basic accounting terminology, because what I'm gonna do is this is the the first live for the next segment. And what I'm gonna do at this point is I want to go through and touch on all the things that we're gonna cover here. But I want to emphasize again. I'm gonna give you a level of accounting knowledge, and then we're gonna apply that to QuickBooks. OK? And I'm really trying to minimize We went through this whole what we call Aquino the whole outlined yesterday, and I kept telling her producers I'm really trying to minimize all the jargon Really trying to minimize. Okay. Any questions so far from the audience, I have a question about QuickBooks and be ableto use it to communicate with your, um you know, your customers. I don't know if, like, let's say your ah have a rental property business. And you want Teoh, you know, send out a late notice that they haven't paid the rent. Would you be able to incorporate where you know it would show up that they haven't paid, and you could just automatically generate a I noticed to send out. Yeah, the answer is yes. Which, actually, I'm glad you brought that up because the version of QuickBooks I'm using is the lean and mean QuickBooks online. Basic beginner. Okay, Quikbook does have the ability for you to invoice electronically for you to send out reminders electronically like a late notice, or offer discounts to people on an invoice. However, it may take not just the QuickBooks online, but there may be an add on. You may have to Adeline, but yes, it does do that. It does do the other questions. Yes, me, I have a question for people who are just starting their business. Uh, they're willing to do their books themselves, but eventually they like to outsource it. Do you think if you just start out by outsourcing it and you don't do it yourself that you're putting yourself at a disadvantage, that you're not understanding the numbers yourself that you're outsourcing it? That's a great question. Um, in my experience, most people do start out doing it themselves to a certain extent, and I think part of the reason is a comfort or control issue, which I think is okay. I don't see a lot of situations where people outsources from the very beginning. So I think my answer to the question is, one way or another. It's find out source of the very beginning. You need some basic knowledge. Before you do that, you need some basic knowledge. Before you, for example, you mentioned inventory what things do inventory. Just a couple. Well, I take different raw materials and packaging and then I assemble it. I have a contract manufacturer. I send this all to them and then they put together the final product on, so I need to be able to track when I combine all those raw materials. And then when I fell one of my creams What is my inventory? So I can know exactly what I have. And when I need to reorder, let's use that as an example. So that's your business. You have inventory and you need to know. When do I buy it? When does it go out? The door is a cost. We'll talk about a cost of sale. Where is it all? And how much did the raw material that I had come in and I put a label on? And how much was the cost So I could match that with how much I sold it for figure out profitability, that whole scenario, right? I think before I would before I would ship that off to somebody at the very beginning. I think there's some basic accounting understanding, which is what I'm trying to do here, that will get you there. And then if you understand that, then sure, give it off to the accountant. You send the bank statement whatever. Here is my list of inventory, you give it to him. Let and let them do it all. Sure, but you do need a basic understanding at the beginning. Okay. How about check? Question? Karp was saying I work on a project based income with monthly and yearly subscription based billing. Is there a way to set up recurring monthly billing? There is, Yes. And QuickBooks you can set up monthly building. Um, and it's fairly easy to do. Probably the best thing about QuickBooks that is a time saver for a small business is that very thing. Which is? It makes invoicing easier. Now what I have building quickbooks that we're gonna use later today. I have not. I'll show you the invoice template. I have not built an invoice in there, but I'll show you how you can use it. And in fact, if you send an invoice that somebody QuickBooks can automatically record the fact that you had a sale, Okay, again, this is comfort level. Some people start off creating Mom is gonna create an invoice in word or Excel, Senator. And then I'll put in quickbooks that I had a sale. Or on the other hand, some people create the envoys in QuickBooks and everything. It's automatically posted, but there's all kinds of things. You can do with them with invoices, and we may be getting to this a bit later. But Skeeto has a question about inventory. Can you use QuickBooks to keep track of your inventory as well? You can. It takes probably again. There's probably an add on to do that. Okay, let's walk through your example, because, actually, I can connect the chat to what you just said. So you you, by 15 items at $10 QuickBooks has the ability you type it in, and now you've got your inventory listed, and here's all the items of $10 apiece. Then you start selling. You're able to pull that. I'd amount of inventory number one and attach it to a sale, and it goes out the door. Your inventory level goes down, your cost of sales go up. And, yes, that whole thing is linked in cycling. What else? Yes, way to connect QuickBooks to any sort of like e commerce platform that you may be using. That may already be tracking your inventory. So what, you're doing it twice, or do you have to do it twice? Say that one more time. For instance, if you're using an E commerce platform that all your inventory is marked in. So when somebody purchase, it automatically goes from 15 to 14 now, Okay, now, if that information is already in that e commerce platform, then do you now have to take that and inter manually into QuickBooks? There's a way that quick BookScan import that there's There are QuickBooks has the ability to import lots of data. It's kind of beyond the scope of this class, but the answer is generally, yes, that you can import. You can even import from Excel. If you're in excel now, you can import a lot of stuff to QuickBooks. Somebody else had a question on the something else. Have their hand up over here I couldn't sell. Yes, how about like Bill of Materials? So you can tell when you need to reorder certain components that go into your final product? I don't know that it will do Reorder. We'll talk about that very thing, but I don't know the QuickBooks will do it. I imagine there's somebody probably out there who can comment on. That brings up another point, which is if you need somebody to help you with a complex QuickBooks issue. Intuit that owns QuickBooks has QuickBooks pro advisers that I highly recommend. These were people who have passed a certification kind of a test and you confined by zip code, and they can help you with those more complex questions. It was more complex questions. Okay, portion come in just now from from the chat rooms. Also photograph ICS. Miami is asking if it's necessary to link QuickBooks to your bank account, or can it be used just for recording expenses like revenue, invoicing and general reports and tax info? It can be kept separate. You don't have to do connected to your banking, although I would highly recommend that you do, because particularly because QuickBooks has a a feature that will wreck that will make it really easy to reconcile bank statement. So if you're typing all your checks and you're typing in all your, um, you're typing and checks going out the door and debits and you're typing in all your deposits and you go to reconcile, it'll pull it all up, and all the things that have cleared your bank statement, you click off and it makes it really easy. So I recommended. But you don't have to I have a question here. I mean, as you know, a lot of our studio audience, our audience in the chat room, our international from all over the place. So we do have a question about will A lot of what we learned today be able to be used in Canada. Where will there be differences if people are located in different countries? Or will this be universal knowledge for everyone? For the most part, the accounting I'm going to talk about is universal. There are taxes. They're attacked, differences in how you do taxes internationally. One of the things happened in the accounting professionals were trying to combine US accounting rules with international rules. And we're trying to make one complete set and they're not consistent yet. So, for example, there are people in Canada who do a little bit different accounting on things than we do in the U. S. However, at this basic level, for this course, most of its transfer, most of it will be the same. Okay, anything else right now before we keep going. There were a couple questions came in on the chat room about customizing QuickBooks from putting in your own logo to just making it look nicer. Having a different head or things of that nature. You can put logos on do things with invoices. Certainly, I don't know that you could do much beyond that. We were laughing about this. The production meeting. I said, Well, you know, QuickBooks online looks a lot better now than it used to. Now for creative people, it's still probably pretty dull. But for accountants like me, Hey, it's so much better. Look, they actually use colors now. Okay, I know you can. I know you can customize invoices will be on that. I'm not sure anything else on chat. There was actually another question that came in, and I'm not exactly sure what this is. But Laura XG asked what your thoughts were on wave accounting. I don't know what I think that people I think it's just another piece of software that people use. So we have had some people asking. I know this is about books, but people are asking about wave accounting for one, and also flying Drifter wants to know if you have any open source solutions instead of QuickBooks. I know we don't want to get too far into that. But people were just talking about some different solutions for them. Okay, I'm not aware of open source. I'm sure there's some out there cause they're so it seems to be open source for everything. Yeah, I'm not familiar with wave. I will say, though, that besides QuickBooks, you may hear the term peach tree, which is a piece of software. In my experience, peach tree is pretty much used by accountants where QuickBooks can be used by both. QuickBooks, to me at least, is a little more user friendly. Okay, now, it came up when we were interviewing the students in the room about combining personal accounting with business and obviously into. It also owns Quicken, which is the tool that people use personally, which I think is a good tool. Okay, Um, the other day I think quickbooks did a smart thing because now they've done online where you could back up in the cloud, the big fear for accountants like me. For years, Waas people would take the disk and install QuickBooks, and I was always concerned. Is it backed up? Did we back up the right version? Where is it? Backed up and now that's become much easier. I would highly recommend that you do it on the cloud, even if it becomes more complicated and you've got a museum or complex version. I highly recommend that you back it up on the cloud because I can tell you many stories that people I knew who would lose their data that had the wrong version, you know, you're getting your taxes done. You hand him the version. It's not consistent with the hard copy that you have in front of you, and you're like, Wait a minute. That's dated March 12 from the backups dated March 8. What's going on? That created problems. So I really like the cloud. Great. Okay, it looks like we have some questions. How about integrating QuickBooks with, like, TurboTax toe? Figure your taxes quicker. I believe there. I believe that you can do that, and that would be helpful because one of the things we'll talk about in segments is what do you really need to do your taxes out of this QuickBooks thing? And there's probably four or five numbers for most people that you need. Well, I need my revenue number writing my expense number 18. That profit number, if I'm in a partnership, becomes a little more complicated. We'll talk about that. I need to know what percentage of ownership each person has. Maybe, but yes, you can't do that. And appreciation schedules. Well, they have a fixed asset package, and we'll talk about what depreciation means, and it relates to inventory to They do have the ability to appreciate, which is another thing that, if you don't do it in QuickBooks, can be really time consuming. Depreciation is basically might as well sit now, using up on asset using up something you use in your business. So if you if you're a plumber and you've got a truck and you're going out neighborhoods and doing residential plumbing as you use that to create revenue, you are quote using up the truck, so you need to expense by depreciating. The cost of that truck that's a $30,000 truck may be depreciated evenly over five years. 6000 Here I did my math right. It's using up and ask them. Using up in asset is depreciation

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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