Thousands of small companies and nonprofit organizations turn to QuickBooks to keep their finances on track. And over the years, Intuit has introduced various editions of the program to satisfy the needs of different types of companies. Back when milk was simply milk, you either used QuickBooks or you didn’t. But now, when you can choose milk from soybeans and rice as well as cows, and with five different levels of fat, it’s no surprise that QuickBooks comes in a variety of editions (which, in some cases, are dramatically different from their siblings), as well as six industry-specific editions. From the smallest of sole proprietorships to burgeoning enterprises, one of these editions is likely to meet your organization’s needs and budget.
QuickBooks isn’t hard to learn. Many of the features that you’re familiar with from other programs work the same way in QuickBooks—windows, dialog boxes, drop-down lists, and keyboard shortcuts, to name a few. And with each new version, Intuit has added enhancements and new features to make your workflow smoother and faster. The challenge is knowing what to do according to accounting rules, and how to do it in QuickBooks. This book teaches you how to use QuickBooks and explains the accounting concepts behind what you’re doing.
Despite the fluctuating size of the tax code, accounting and bookkeeping practices don’t change much each year. The changes in QuickBooks 2013 are mostly small tweaks and subtle improvements, but some of them might be just what you’ve been waiting for:
QuickBooks 2013 sports a brand-new look that simplifies the interface, removes clutter, and presents features and options in a much more organized and consistent way. The new color scheme is designed to help you focus on the task at hand: Navigation areas like the top and left icon bars are darker and monochromatic with silver icons so they recede into the background while the areas where you do your work stand out; blue, green, and yellow icons represent other features that relate to the work you do; the button that’s clicked when you press Enter is also blue so it’s easy to identify. Font sizes also vary to reinforce the hierarchy of information. The rows in transaction windows’ tables are taller and overall spacing is more ample to make data easier to read. One downside to this new look is that windows take up more space on your screen—but the feature described in the next bullet point can help with that.
Supermax view (Supermax View) enlarges a single window, such as Create Invoices, to fill the entire QuickBooks window. It also minimizes the window’s ribbon (described later in this list) so you can see more data, such as more lines in an invoice table.
QuickBooks Centers (Vendor, Customer, Employee—and Inventory if you use QuickBooks Premier and Enterprise) now include tabs for transactions, contacts, to-dos, and notes (Adding More Customer Contacts). When you choose a name in a center—for example, a customer in the Customer Center—the panel at the window’s bottom-right provides the full scoop about that customer. The Transactions tab displays all the transactions for that customer, and you can filter those transactions by type (invoices, credit memos, payments, and so on), status (such as open or all), and date. When you click the Contacts tab, you can create and manage multiple contacts, from the president to the accounting manager to the receptionist who knows where to find everyone. The To Do’s tab lets you create and manage to-dos you have to perform. Similarly, the Notes tab is where you create and manage notes you record.
Using the Notes tabs in the QuickBooks Centers, QuickBooks 2013 lets you create multiple notes for each name (Adding Notes). In previous versions, you could add as many notes as you wanted, but they all resided in one field in the Edit Note dialog box. On the Notes tabs, you can scan the list of individual notes, create new ones, or edit and delete existing ones.
You can set preferences to make QuickBooks mark all your time and expenses as billable or non-billable. In the Preferences dialog box’s Time & Expenses category, you can turn on the “Mark all time entries as billable” checkbox so that QuickBooks automatically turns on the Billable checkbox for every time record you create. (If you bill time only once in a while, turn this checkbox off so that time records are marked as non-billable unless you make them billable.) Similarly, if most of your expenses are billable, you can turn on the “Mark all Expenses as billable” checkbox. Then, in windows such as Enter Bills and Write Checks, expenses you add are automatically marked as billable. (If you bill only a few of your expenses, turn this checkbox off.)
Similar to Microsoft programs, QuickBooks now uses a ribbon (a panel that contains buttons and drop-down menus to access the program’s features) across the top of many of its windows, such as Create Invoices. Features that used to be scattered over the window’s toolbar, the form itself, and shortcut menus are now gathered at the top of the window. (If you’re a fan of right-clicking to open shortcut menus, those are still available.)
The left icon bar (Menus and the Icon Bars) is a new option that helps you access a variety of QuickBooks elements, including shortcuts to your favorite features, the QuickBooks windows that are open, applications you use, and to-dos that are on the horizon. If you haven’t graduated to a widescreen monitor, you can still use the top icon bar or hide both icon bars.
The Find button at the top-left of QuickBooks transaction windows (Searching with QuickBooks Centers) makes it easy to find specific transactions you’re looking for. When you click this button, a compact version of the Find dialog box opens so you can specify search criteria, such as customer name, date, bill number, or amount.
When you run a business (or a nonprofit), you track company finances for two reasons: to keep your business running smoothly and to generate the reports required by the IRS, SEC, and anyone else you have to answer to. QuickBooks helps you perform basic financial tasks, track your financial situation, and manage your business to make it even better. But before you read any further, here are a few things you shouldn’t try to do with QuickBooks:
Work with more than 14,500 unique inventory items or 14,500 contact names. QuickBooks Pro and Premier company files can hold up to 14,500 inventory items and a combined total of up to 14,500 customer, vendor, employee, and other (Other Names List) names. (The QuickBooks Enterprise Solutions version makes the number of names virtually unlimited.)
Track personal finances. Even if you’re a company of one, keeping your personal finances separate from your business finances is a good move, particularly when it comes to tax reporting. In addition to opening a separate checking account for your business, track your personal finances somewhere else (like in Quicken). If you do decide to use QuickBooks, at least create a separate company file for your personal financial info.
Track the performance of stocks and bonds. QuickBooks isn’t meant to keep track of the capital gains and dividends you earn from investments such as stocks and bonds. But companies have investments, too, of course. A machine that costs hundreds of thousands of dollars is an investment that you hope will generate lots of income, and you should track it in QuickBooks. However, in QuickBooks, these types of investments show up as assets of the company (Fixed Asset Items).
Manage specialized details about customer relationships. Lots of information goes into keeping customers happy. With QuickBooks, you can stay on top of customer activities with features like To Do items, Notes, Reminders, and Memorized Transactions. You can also keep track of leads before they turn into customers. But if you need to track details for thousands of members or customers, items sold on consignment, project progress, or tasks related to managing projects, a customer-management program or program like Microsoft Excel or Access might be a better solution.
Some third-party customer-management programs integrate with QuickBooks (Working with Leads).
QuickBooks comes in a gamut of editions, offering options for organizations at both ends of the small-business spectrum. QuickBooks Pro handles the basic needs of most businesses, whereas Enterprise Solutions (the most robust and powerful edition of QuickBooks) boasts enhanced features and speed for the biggest of small businesses. On the other hand, the online editions of QuickBooks offer features that are available any time you’re online.
QuickBooks for Mac differs significantly from the Windows version, so this book isn’t meant to be a guide to the Mac version of the program. Likewise, features vary in the editions for different countries; this book focuses on the U.S. version.
This book focuses on QuickBooks Pro because its balance of features and price make it the most popular edition. Throughout this book, you’ll also find notes about features offered in the Premier edition, which is one step up from Pro. (Whether you’re willing to pay for these additional features is up to you.) Here’s an overview of what each edition can do:
QuickBooks Online Simple Start is a low-cost online option for small businesses with very simple accounting needs and only one person running QuickBooks at a time. It’s easy to set up and use, but it doesn’t offer features like entering bills, inventory, tracking time, or sharing your company file with your accountant. You can download transactions from only one bank (or credit card) account.
QuickBooks Online Essentials allows up to three people to run QuickBooks at a time and lets you connect to as many bank or credit card accounts as you want. As its name suggests, it offers essential features like automated invoicing, creating estimates, and entering bills.
QuickBooks Online Plus has most of the features of QuickBooks Pro, but you access the program via the Web instead of running it on your PC.
These online editions let you use QuickBooks anywhere, on any computer, so they’re ideal for someone who’s always on the go. However, the online editions are subscription-based, so you pay a monthly fee to use the software. A year’s subscription adds up to more than what you’d typically pay to buy a license of QuickBooks Pro, but with a subscription, your software is always up-to-date—you don’t have to upgrade it or convert your company files to the new versions you installed.
QuickBooks Pro is the workhorse edition. It lets up to three people work on a company file at a time. QuickBooks Pro includes features for tasks such as invoicing; entering and paying bills; job costing; creating estimates; saving and distributing reports and forms as email attachments; creating budgets; projecting cash flow; tracking mileage; customizing forms; customizing prices with price levels; printing shipping labels; and integrating with Word, Excel, and hundreds of other programs. QuickBooks Pro’s name lists—customers, vendors, employees, and so on—can include up to a combined total of 14,500 entries. Other lists, like the Chart of Accounts, can have up to 10,000 entries each.
QuickBooks Pro Plus is a subscription product that costs a little more than the one-time license fee you pay for QuickBooks Pro, but QuickBooks Pro Plus offers mobile access, unlimited phone support, and always-up-to-date software. Similarly, QuickBooks Premier Plus is the premier version of the subscription product.
QuickBooks Premier is another multiuser edition. It can handle inventory items assembled from other items and components, generate purchase orders from sales orders and estimates, apply price levels to individual items, export report templates, produce budgets and forecasts, work with different units of measure for items, and it offers enhanced invoicing for time and expenses. This edition also includes a few extra features like reversing general journal entries. When you purchase QuickBooks Premier, you can choose from six different industry-specific flavors (see the next section). Like the Pro edition, Premier can handle a combined total of up to 14,500 list entries.
Enterprise Solutions is the edition for larger operations. It’s faster, bigger, and more robust than its siblings. Up to 30 people can access a company file at the same time, and this simultaneous access is at least twice as fast as in the Pro or Premier edition. The database can handle lots more names in its customer, vendor, employee, and other name lists (1 million versus 14,500 for Pro and Premier). You can handle inventory in multiple warehouses or stores, and produce combined reports for those companies and locations. And because more people can be in your company file, this edition has features such as an enhanced audit trail, more options for assigning or limiting user permissions, and the ability to delegate administrative functions to the other people using the program. And if you subscribe to Advanced Inventory, you can value inventory by using first-in first-out (FIFO) inventory valuation.
You don’t have to pay list price for QuickBooks. Your local office supply store, Amazon.com, and any number of other retail outlets usually offer the program at a discount. (If you buy QuickBooks from Intuit, you pay full price, but you also have 60 days to return the program for a full refund.) In addition, accountants can resell QuickBooks to clients, so it’s worth asking yours about purchase and upgrade pricing. QuickBooks ProAdvisors can get you up to a 30 percent discount on QuickBooks Pro or Premier, and you’ll still have 60 days to return the program for a refund.
If you work in one of the industries covered by QuickBooks Premier, you can get additional features unique to your industry. (When you install QuickBooks Premier, you choose the industry version you want to run. If your business is in an industry other than one of the five options, choose General Business.) Some people swear that these customizations are worth every extra penny, while others say the additional features don’t warrant the Premier price. On the QuickBooks website (http://quickbooks.intuit.com/premier), you can tour the Premier features to decide for yourself. Or you can purchase QuickBooks Accountant, which can run any QuickBooks edition, from QuickBooks Pro to the gamut of Premier’s industry-specific versions.
The Accountant edition is designed to help professional accountants and bookkeepers deliver services to their clients. It lets you run any QuickBooks edition (Pro or any of the Premier versions). In addition to being compatible with all other editions, it lets you review your clients’ data and easily correct mistakes you find, transfer an accountant’s copy to your client, design financial statements and other documents, process payroll for clients, reconcile clients’ bank accounts, calculate depreciation, and prepare clients’ tax returns. In mid-2012, Intuit introduced QuickBooks Professional Bookkeeper, which is somewhere between the QuickBooks Pro and QuickBooks Accountant editions. It lets you work on two company files at a time, manage client passwords, and create new company files based on existing files, but it doesn’t offer many of the Accountant edition’s advanced features, such as reclassifying transaction, calculating depreciation, and creating reversing journal entries.
Here are the industries that have their own Premier editions:
The General Business edition has Premier goodies like per-item price levels, sales orders, and so on. It also has more built-in reports than QuickBooks Pro, sales and expense forecasting, the Inventory Center, and a business plan feature (although, if you’re using QuickBooks to keep your books, you may already have a business plan).
The Contractor edition includes special features near and dear to construction contractors’ hearts: job-cost and other contractor-specific reports, the ability to set different billing rates by employee, and tools for managing change orders.
Manufacturing & Wholesale is targeted at companies that manufacture products. Its chart of accounts and menus are customized for manufacturing and wholesale operations. You can use it to manage inventory assembled from components and to track customer return materials authorizations (RMAs) and damaged goods.
If you run a nonprofit organization, you know that several things work differently in the nonprofit world, as the box on the previous page details. The Nonprofit edition of QuickBooks includes features such as a chart of accounts customized for nonprofits, forms and letters targeted to donors and pledges, info about using the program for nonprofits, and the ability to generate Statement of Functional Expenses 990 forms.
The Professional Services edition (not to be confused with QuickBooks Pro) is designed for companies that deliver services to their clients. Unique features include project-costing reports, templates for proposals and invoices, billing rates that you can customize by client or employee, and professional service– specific reports and help.
The Retail edition is customized to work for retail businesses. It includes specialized menus, reports, forms, and help, as well as a custom chart of accounts. Intuit offers companion products that you can integrate with this edition to support all aspects of your retail operation. For example, QuickBooks Point of Sale tracks sales, customers, and inventory as you ring up sales, and it shoots the information over to your QuickBooks company file.
QuickBooks helps people who don’t have a degree in accounting handle most accounting tasks. However, you’ll be more productive and have more accurate books if you understand the following concepts and terms:
Double-entry accounting is the standard method for tracking where your money comes from and where it goes. Following the old saw that money doesn’t grow on trees, money always comes from somewhere when you use double-entry accounting. For example, as shown in Table 1, when you sell something to a customer, the money on your invoice comes in as income and goes into your Accounts Receivable account. Then, when you deposit the payment, the money comes out of the Accounts Receivable account and goes into your checking account. (See Chapter 16 for more about double-entry accounting and journal entries.)
Each side of a double-entry transaction is either a debit or a credit. As you can see in Table 1, when you sell products or services, you credit your income account (since your income increases when you sell something), but debit the Accounts Receivable account (because selling something also increases how much customers owe you). You’ll see examples throughout the book of how transactions translate to account debits and credits.
Table 1. Following the money through accounts
Sell products or services
Sell products or services
Pay for expense
Pay for expense
Chart of accounts. In bookkeeping, an account is a place to store money, just like your checking account is a place to store your ready cash. The difference is that you need an account for each kind of income, expense, asset, and liability you have. (See Chapter 3 to learn about all the different types of accounts you might use.) The chart of accounts is simply a list of all the accounts you use to keep track of your company’s money.
Cash vs. accrual accounting. Cash and accrual are the two different ways companies can document how much they make and spend. Cash accounting is the choice of many small businesses because it’s easy: You don’t show income until you’ve received a payment (regardless of when that happens), and you don’t show expenses until you’ve paid your bills.
The accrual method, on the other hand, follows something known as the matching principle, which matches revenue with the corresponding expenses. This approach keeps income and expenses linked to the period in which they happened, no matter when cash comes in or goes out. The advantage of this method is that it provides a better picture of profitability because income and its corresponding expenses appear in the same period. With accrual accounting, you recognize income as soon as you record an invoice, even if you’ll receive payment during the next fiscal year. For example, if you pay employees in January for work they did in December, those wages are part of the previous fiscal year.
Financial reports. You need three reports to evaluate the health of your company (described in detail in Chapter 17):
The income statement, which QuickBooks calls a Profit & Loss report, shows how much income you’ve brought in and how much you’ve spent over a period of time. This QuickBooks report gets its name from the difference between the income and expenses, which results in your profit (or loss) for that period.
The balance sheet is a snapshot of how much you own and how much you owe. Assets are things you own that have value, such as buildings, equipment, and brand names. Liabilities are the money you owe to others (like money you borrowed to buy one of your assets, say). The difference between your assets and liabilities is the equity in the company—like the equity you have in your house when the house is worth more than you owe on the mortgage.
The statement of cash flows tells you how much hard cash you have. You might think that a Profit & Loss report would tell you that, but noncash transactions—such as depreciation—prevent it from doing so. The statement of cash flows removes all noncash transactions and shows the money generated or spent operating the company, investing in the company, or financing.
QuickBooks Help provides a healthy dose of accounting background and troubleshooting tips. If you don’t find the answer you need in the “Have a Question?” window (QuickBooks Help), the Intuit Community—which lets you ask your peers and experts for answers (Intuit Community)—or by searching with keywords, where do you turn next?
This book provides lots of real-world examples and you can search for topics in its index. In addition, with this book, you can mark your place, underline key points, jot notes in the margin, or read about QuickBooks while sitting in the sun—stuff that’s hard to do onscreen.
This book applies to the U.S. Windows version of QuickBooks Pro and Premier. (Because the Mac version of the program differs significantly from the Windows one, this book won’t be of much help if you have QuickBooks for Mac. Versions for other countries differ from the U.S. version, too, although primarily in how you work with payroll and taxes.)
In these pages, you’ll find step-by-step instructions for using every QuickBooks Pro feature, including those you might not quite understand: progress invoicing (Comparing Estimates to Actuals), making general journal entries (Recording Purchases Made with Petty Cash), customizing forms (Customizing Forms), writing off losses (Transferring Funds), and so on. If you’re just starting out with QuickBooks, read the first few chapters as you set up your company file. After that, go ahead and jump from topic to topic depending on the bookkeeping task at hand. As mentioned earlier, you’ll learn about some of the extra bells and whistles in the QuickBooks Premier edition, as well. (All the features in QuickBooks Pro—and in this book—are also in Premier.) To keep you productive, this book also includes evaluations of features to help you figure out which ones are most useful and when to use them.
Although each version of QuickBooks introduces new features and enhancements, you can still use this book if you’re using an earlier version. Of course, the older your version of the program, the more discrepancies you’ll run across.
QuickBooks 2013: The Missing Manual is designed to accommodate readers at every technical level. The primary discussions are written for people with beginner or intermediate QuickBooks skills. But if you’re using QuickBooks for the first time, special boxes titled “Up To Speed” provide the introductory info you need to understand the current topic. On the other hand, people with advanced skills should watch for similar boxes labeled “Power Users’ Clinic,” which cover more technical tips, tricks, and shortcuts for experienced QuickBooks wranglers.
This book is divided into five parts, each containing several chapters:
Part One explains how to set up QuickBooks based on your organization’s needs. These chapters cover creating and managing a company file; setting up accounts, customers, jobs, invoice items, and other lists; and managing QuickBooks files.
Part Two follows the money from the moment you rack up time and expenses for your customers and add charges to a customer’s invoice to the tasks you have to perform at the end of the year to satisfy the IRS and other interested parties. These chapters describe how to track time and expenses, pay for things you buy, bill customers, manage the money that customers owe you, pay for expenses, run payroll, manage your bank accounts, and perform other bookkeeping tasks.
Part Three delves into the features that can help you make your company a success—or even more successful than it already is. These chapters explain how to keep your inventory at just the right level, build budgets, and use QuickBooks reports to evaluate every aspect of your enterprise.
Part Four helps you take your copy of the program to the next level. You’ll learn how to save time and prevent errors by downloading transactions electronically; boost your productivity by setting the program’s preferences to match the way you like to work and integrating QuickBooks with other programs; customize the program’s components to look the way you want; and—most important—set up QuickBooks so your financial data is secure.
Part Five provides a guide to installing and upgrading QuickBooks, and a reference to helpful resources.
You can find three bonus appendixes online at www.missingmanuals.com/cds: “Keyboard Shortcuts,” “Tracking Time with the Standalone Timer,” and “Advanced Form Customization.”
To use this book (and QuickBooks), you need to know a few basics. This book assumes that you’re familiar with the following terms and concepts:
Clicking. This book includes instructions that require you to use your computer’s mouse or trackpad. To click means to point your cursor (the arrow pointer) at something on the screen and then—without moving the cursor—press and release the left button on the mouse (or laptop trackpad). To right-click means the same thing, but you press the right mouse button instead. (Usually, clicking selects an onscreen element or presses an onscreen button, whereas right-clicking typically reveals a shortcut menu, which lists some common tasks specific to whatever you’re right-clicking.) To double-click, of course, means to click the left button twice in rapid succession, again without moving the pointer at all. And to drag means to move the cursor while holding down the left mouse button the entire time.
When you’re told to Shift-click something, you click while pressing the Shift key. Related procedures, like Ctrl-clicking, work the same way—just click while pressing the corresponding key.
Menus. The menus are the words at the top of your screen: File, Edit, and so on. Click one to make a list of commands appear, as though they’re written on a window shade you’ve just pulled down. Some people click to open a menu and then release the mouse button; after reading the menu choices, they click the option they want. Other people like to press the mouse button continuously as they click the menu title and drag down the list to the desired command; only then do they release the mouse button. Both methods work, so use whichever one you prefer.
Keyboard shortcuts. Nothing is faster than keeping your fingers on your keyboard to enter data, choose names, trigger commands, and so on—without losing time by grabbing the mouse, carefully positioning it, and then choosing a command or list entry. That’s why many experienced QuickBooks fans use keyboard shortcuts to accomplish most tasks. In this book, when you read an instruction like “Press Ctrl+A to open the Chart of Accounts window,” start by pressing the Ctrl key; while it’s down, type the letter A; and then release both keys.
Throughout this book, and throughout the Missing Manual series, you’ll find sentences like this one: “Choose Lists→Customer & Vendor Profile Lists→Customer Type List.” That’s shorthand for a much longer instruction that directs you to navigate three nested menus in sequence, like this: “At the top of your screen, click the Lists menu. On the Lists menu, point to the Customer & Vendor Profile Lists menu item. On the submenu that appears, choose Customer Type List.” Figure 1 shows the menus this sequence opens.
Figure 1. Instead of filling pages with long and hard-to-follow instructions for navigating through nested menus and nested folders, the arrow notation is concise but just as informative. For example, choosing Lists→Customer & Vendor Profile Lists→Customer Type List takes you to the menu item shown here.
Similarly, this arrow shorthand also simplifies the instructions for opening nested folders, such as Program Files→QuickBooks→Export Files.
As the owner of a Missing Manual, you’ve got more than just a book to read. Online, you’ll find example files so you can get some hands-on experience, as well as tips, articles, and maybe even a video or two. You can also communicate with the Missing Manual team and tell us what you love (or hate) about the book. Head over to www.missingmanuals.com, or go directly to one of the following sections.
This book doesn’t have a CD pasted inside the back cover, but you’re not missing out on anything. Go to www.missingmanuals.com/cds and click the “Missing CDROM” link for this book to download a sample company file that includes an opening balance general journal entry, as well as three additional appendixes to this book. And so you don’t wear down your fingers typing long web addresses, the Missing CD page also offers a list of clickable links to the websites mentioned in this book.
If you register this book at oreilly.com, you’ll be eligible for special offers—like discounts on future editions of QuickBooks: The Missing Manual. Registering takes only a few clicks. To get started, type http://oreilly.com/register into your browser to hop directly to the Registration page.
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In an effort to keep this book as up-to-date and accurate as possible, each time we print more copies, we’ll make any confirmed corrections you’ve suggested. We also note such changes on the book’s website, so you can mark important corrections into your own copy of the book, if you like. Go to http://tinyurl.com/9l5h5ks to report an error and view existing corrections.
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