Linda Bliley, CMA, EA Bliley Tax and Accounting LLC Setting Up QuickBooks Linda Bliley, CMA, EA Bliley Tax and Accounting LLC

Topics The QuickBooks Product Line What is the Goal? Accounting Briefly Setting Up – What You Need Entering Transactions in QuickBooks Payroll Set Up Key Points

Editions of QuickBooks Pro Premier Accountant Enterprise Online Industry Editions (Premier and Enterprise) General Business Contractor Manufacturing & Wholesale Nonprofit, Professional Services Retailers

Snapshots In order for the information to be useful, it has to be right

Snapshots

Snapshots

Topics Choosing a Start Date – Step 1 Creating the Company File – Step 2 Setting Up the Chart of Accounts and Other Lists – Step 3 Setting Up Opening Balances – Step 4 Entering Open Items – Step 5 Entering Year-to-Date Income and Expenses – Step 6 Adjusting Opening Balance for Sales Tax Payable – Step 7

Topics (cont.) Adjusting Inventory and Setting up Fixed Assets – Step 8 Setup Payroll and YTD Payroll Information – Step 9 Verifying your Trial Balance – Step 10 Closing Opening Bal Equity – Step 11 Setting the Closing Date - Backing up the File – Step 12 Users and Passwords

Choosing a Start Date: Step 1 Best start dates: Calendar-Year Basis December 31 Fiscal Year basis Last day of fiscal year For a new company First day of the business

Creating the File: Step 2 Express Start Detailed Start

Creating the File, Step 2 QBO

Setting Up the Chart of Accounts: Step 3 To set up the Chart of Accounts, use the default or talk with your accountant or whoever is going to do your books. An example of why this is important

Payroll Item List Account numbers are typed in the descriptions of the type of pay (not recommended)

Payroll item description and account don’t match

What Is Double Entry Bookkeeping?

Accounting’s Focus To assess: The financial position of the organization relative to its debts (liabilities) Its capabilities to satisfy those debts and continue operations (assets), and The difference between liabilities and assets (net worth or equity) The Accounting Equation, Assets = Liabilities + Equity

Account Types Assets: Bank Accounts Receivable Other Current Asset Fixed Asset Other Asset Liabilities: Accounts Payable Credit Card Loan Other Current Liability Long Term Liability Equity Income: Income Other Income Expenses: Expense Other Expense Cost of Goods Sold

Setting Up Opening Balances: Step 4 Gathering Your Information Entering the Opening Balances Understanding Opening Balance Equity

Gathering Your Information Trial Balance for your start date Bank Statements (all accounts) Outstanding Checks and Deposits Open Invoices Unpaid Bills Employee List and W-4 Information Payroll Liabilities by Item Year-to-Date Payroll Detail by Employee Year-to-Date Payroll Tax Deposits Physical Inventory by Inventory Part

Understanding Opening Balance Equity As the opening balances for assets and liabilities are entered, QuickBooks automatically adds offsetting amounts in the Opening Bal Equity account Opening Bal Equity will be “closed” into Retained Earnings (or Owner’s Equity).

Entering Open Items: Step 5 Outstanding Checks and Deposits Open Bills (Accounts Payable) * Open Invoices (Accounts Receivable) Open Purchase Orders Open Estimates and Sales Orders * Why use Bills to enter payments and not just write checks?

Writing Checks

Entering a Bill

Paying Bills

Cash Flow Forecast

Entering Year-to-Date Income and Expenses: Step 6 MID-YEAR SET UP ONLY: General Journal Entry to enter your year-to-date income and expenses Summarize the total income and expenses

Sales Tax Adjustment: Step 7 Total Tax Due = Collected Tax + Uncollected Tax Uncollected Tax = Tax on Open Invoices Collected Tax = Total Tax Due – Uncollected Tax

Adjusting Inventory: Step 8

Setup Payroll Information: Step 9 Setting up payroll in QuickBooks is a lengthy and involved process See Payroll in later slides

Verifying your Trial Balance: Step 10

Closing Opening Balance: Step 11

Setting the Closing Date and Backing up the File: Step 12 Set the start date as the Closing Date to Protect your Setup Balances Backup your finished file

Setting Up Users in the Company File

Summary of Key Points Choosing a Start Date – Step 1 Creating the Company File – Step 2 Setting Up the Chart of Accounts and Other Lists – Step 3 Setting Up Opening Balances – Step 4 Entering Open Items – Step 5 Entering Year-to-Date Income and Expenses – Step 6 Adjusting Opening Balance for Sales Tax Payable – Step 7

Summary of Key Points (cont.) Adjusting Inventory and Setting up Fixed Assets – Step 8 Setup Payroll and YTD Payroll Information – Step 9 Verifying your Trial Balance – Step 10 Closing Opening Bal Equity – Step 11 Setting the Closing Date - Backing up the File – Step 12 Users and Passwords

Entering Transactions in QuickBooks Forms Lists Accounts Registers Items Demo a form, list, account, register, and item. in order to make the most useful of the software you should have these things set up

The Accounting in QuickBooks Transactions are entered in forms Invoices, Bills and Checks QuickBooks handles the debits and credits

QuickBooks Items and Other Lists To help you track more details about your sales, QuickBooks provides several lists: The Items List The Terms List The Price Levels List

QuickBooks Items The Item list identifies products and services purchased and/or sold Used on the sales forms QuickBooks automatically handles the behind the scenes accounting for items

Item Types There are several different types of items in QuickBooks

Service Item

Subcontracted Services Item

Sales Tax Items

The Terms List Payment terms for your Invoices and Bills Terms used to calculate when the Invoice or Bill is due If the terms specified on the transaction include a discount for early payment, QuickBooks also calculates the date on which the discount expires

Payroll Basics Types of Payroll QuickBooks Offers Checklist for Setting up Payroll

Payroll Options in QuickBooks Three payroll choices : Basic Payroll Enhanced Payroll Full Service Payroll

Payroll Options

Checklist for Setting up Payroll Gather information about each of your employees Activate the Payroll function Set up payroll accounts Enable your QuickBooks file for payroll processing Use the Payroll Setup Interview Add additional payroll items directly into Payroll Item List Edit payroll items to modify the vendor information and the way it affects the Chart of Accounts If setting up mid-year, enter year-to-date information for each employee and enter year-to-date liability payments Verify payroll item setup, employee setup, and the vendor list Proof your setup.

Setting up Year-to-Date Payroll Amounts If you are setting up your own payroll in the middle of the fiscal year, you’ll need to enter the year-to-date payroll information for each of your employees before entering your first paychecks

You probably don’t need to know Other Stuff You probably don’t need to know

Activating Account Numbers

Adding Accounts

Adding Accounts

Adding Subaccounts

Removing Accounts from the Chart of Accounts Deleting Accounts - Option 1 Deactivating Accounts - Option 2 Merging Accounts - Option 3

Deleting Accounts – Option 1

Deactivating Accounts – Option 2

Merging Accounts – Option 3 Select the account you wish to change Rename the account to the account you wish to keep

Reordering the Account List Sorted by name without account numbers

Entering the Opening Balances: Step 4 (cont.) Two Methods Directly Editing the Account Using a General Journal Entry to Record Opening Balances

Directly Editing the Account

Using a General Journal Entry

Payroll Accounts Payroll Liability Accounts Payroll Expense Accounts

Payroll Items

The Payroll Setup Interview This Interview is optional, but very helpful and works even if you have existing payroll Starting the Payroll Setup Interview: Select the Employees menu, select Payroll Setup

Setting up Compensation and Benefits Payroll Items

Medical Insurance Three ways to allocate costs between the company and the employee: The company could pay the entire expense The company and employee could share the expense The employee could pay the entire expense If the costs are shared between the company and the employees, or if the employees pay for the entire cost via payroll deductions, use a Deduction Item to track the deductions

Medical Insurance Payroll Deduction

401(k) Employee Deduction and Company Match Items If you have a 401(k) plan, you can set up Payroll Items to track the employee contributions (salary deferral) to the plan

Paid Time Off Payroll Items The Payroll Setup Interview will walk you through creating items to track and pay vacation or sick pay If you have a “Paid Time Off (PTO)” policy instead of separate sick and vacation time you can use either Sick or Vacation time to keep track of PTO.

Setting up Employees After you have set up your Payroll Items, you can set up each employee’s payroll record.

Payroll Tax Item Setup

Vendors for Payroll Tax and Withholding Items To set up vendors for payroll liabilities, continue with the payroll Setup Interview

Setting Up Employee Defaults Default settings for each new employee

The Employee Contact List report To view all employees, including deactivated employees, display the Employee list and click the Include inactive box

Accounting’s Focus To assess: The financial position of the organization relative to its debts (liabilities) Its capabilities to satisfy those debts and continue operations (assets), and The difference between liabilities and assets (net worth or equity) The Accounting Equation, Assets = Liabilities + Equity

Accounts and Chart of Accounts Business transactions are recorded in several types of ledgers, called accounts The summary of all transactions is called the General Ledger A listing of every account is called the Chart of Accounts. Each account has a type (i.e., asset, liability, equity, income, or expense)

Double-entry Accounting Total debits must always equal total credits Debits = Credits Double Entry Accounting Every transaction creates a debit in one or more accounts and a credit in one or more accounts. A debit might increase or decrease an account; the same is true of credits Depending on the type of account Debits are not always “bad” and credits are not always “good”