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Start 2020 Right: Get into the Report Habit

1/7/2020

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It’s a good time to start new habits - or refresh old ones. Running reports regularly will help you make better business decisions.

 
Whether or not you made New Year’s resolutions, you probably look at January as a fresh start in personal and professional matters. Unfortunately, we can’t help you join a gym or organize your closets or meet your monthly sales goals.
 
What we can do, though, is encourage you to start a new habit that may actually leave you more time for those activities and even improve your company’s financial bottom line. We’re talking about committing to using the reporting tools QuickBooks offers.
 
You can’t possibly know how your business is doing unless you take advantage of this critical feature. It’s the payoff for all the hard work you do keeping up with your daily accounting workflow. Here are five things you should try.
 

Visit QuickBooks’ Report Center:

As you know. QuickBooks devotes an entire menu to reports, dividing them into types (Sales, Purchases, Inventory, etc.). When you hover your mouse over one of these categories after opening the Reports menu, you’ll see a list of all related reports.
 
Click on Report Center, though, and you’ll see a kind of home page for reports. They’re categorized by type, just like in the main Reports menu, but there’s much more you can do here.
 
 
Click on a report name in the Report Center and you’ll have numerous options.
 
When you click on the graphic representing a report, you’ll first be able to change the date range by clicking on the down arrow. Then you can Run the report, see a brief explanation by clicking Info, click on Fave to add it to your list of Favorites, or open Help. The tabs at the top of the screen allow you to toggle between these Standard views, reports you’ve Memorized, Favorites, Recent, and Contributed (report templates created by individuals outside of Intuit).
 
If you know exactly what reports you want to run it’s probably easier to just use the Reports menu, but the Report Center is a great place to learn about and organize your content.
 

Customize Your Reports:

You’re probably used to changing the date range on your reports, but have you ever explored any of QuickBooks’ other customization tools? You can use them on any report. Click the Customize Report button in the upper left. Click on the Display tab, and you can change the report’s columns by checking or unchecking entries in the list. Filters are more complex, and you may need our help setting up very specific, multi-filter reports. They offer a way to pare down your report to contain just the data you want. You could, for example, prepare a report that only includes one or more Transaction Types or customers who live in a specified state.
 

Memorize Your Reports:

Once you’ve changed columns and filters in a report you’ll run frequently, you can save those settings so you don’t have to go through all of that again. Open any report and click the Memorize button in the upper toolbar. The window that opens will ask if you want to save that customized report to a Memorized Report Group, which you can do by clicking the box and opening the list of groups. Either way, you can find your report by opening the Reports menu and selecting Memorized Reports.
 
If you want to create a new Memorized Report Group, open the Reports menu and click Memorized Reports | Memorized Report List. Open the Memorized Report drop-down menu and select New Group.
 

Schedule Your Reports:

The best way to get your report habit started is by creating a schedule of reports you need to see regularly. You can do this by setting up Reminders (Company | Reminders). Click the gear icon in the upper right corner to specify your Preferences and the + (plus) sign to add a reminder. QuickBooks 2017 and later versions offer a scheduling tool that allows you to share reports withothers, but please don’t try this on your own. It’s a complicated procedure with many rules.
 
You’ve probably noticed that there is a report category called Accountant & Taxes. Some of these should be created monthly or quarterly, but you’ll need our help analyzing them as well.
 
In the coming year, we strongly encourage you to expand your skills at generating reports. You can’t make realistic, effective plans for the future of your company without knowing its current financial state and its history. So start the year off right in 2020, and let us know how we can help.
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How to Clean Up QuickBooks for 2020

12/10/2019

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We know December is a busy month. However, take some time now to make sure QuickBooks is ready for 2020.

 
Yes, it’s here again: the end of the year. You probably have a lengthy to-do list full of tasks that must be done before December 31. There’s one task-or rather, a series of tasks-that you should definitely add to that list: year-end QuickBooks cleanup. Following the guidelines provided here will do three things. It will:
  • Ensure that you’ve processed every 2019 transaction (or that you know why you can’t).
  • Give you a sense of closure, knowing that you’ve dealt with all your 2019 financial data.
  • Allow you to start your 2020 QuickBooks activities with as clean of a slate as possible.

First Things First

 
Before you start looking at transactions and running reports, check to make sure that your fiscal year is recorded correctly in QuickBooks. Open the Company menu and select My Company. Click the pencil icon in the upper right to open the Company Information window, then click Report Information in the tabs to the left. This window opens:
 
Is your company’s fiscal year recorded correctly in QuickBooks? If not, please contact us. Don’t try to fix this on your own.
 

Account For All Of Your Income

 
You certainly want to have received all the money owed to you by December 31 if at all possible. So, run a report to see which customers have outstanding, overdue balances. Open the Reports menu and select Customers & Receivables | A/R Aging Summary.
 
The first column here will read Current. You don’t have to worry about these customers. It’s the next four columns that will require follow-up. If your default payment terms are 30 days, you’ll see columns for 1-30, 31-60, 61-90, and >90. Customers with dollar amounts in those columns have not met their obligations and are past due by those date ranges.
 
Note: If your default terms are different (like 15 days), you’ll need to customize the report. In the toolbar at the top, you’ll see a field labeled Interval (days). Change it to reflect your own default terms and click Refresh in the upper right corner.
 
If your report contains only a sea of zeroes in those four columns, everyone is paid up. If not, you can send statements to anyone who is at least one day past due to remind them of what they owe. Open the Customers menu and select Create Statements to see this window:
 
Partial view of the Create Statements window
 
Make sure the Statement Date is correct since QuickBooks will use this to calculate aging. Then you can either enter a specific Statement Period or request All open transactions as of Statement Date. If you choose the latter, you’ll most likely want to limit the statements to customers whose payments are overdue. So, you’d click in the box in front of Include only transactions over [your number here] days past due date.
 
Below these options, you’ll be able to indicate which customers should receive statements. The most common choice is All Customers (who fall into the group you just defined), but you can also send to one or multiple customers, for example. QuickBooks will display a list if you select one of these. The right pane of this window contains several additional options that you can check or uncheck. When you’re satisfied, you can Preview, Print, or E-mail the statements.
 

Pay Outstanding Bills

 
You should also try to settle your Accounts Payable before the end of the year. Open the Reports menu and select Vendors & Payables | A/P Aging Summary. Look for dollar amounts in the columns that show aging beyond the first column. You can also run the Unpaid Bills Detail report and look at the Aging column, as pictured here:
 
Look in the aging column of this report to see which bills are past due and by how many days.
 
Note: QuickBooks has multiple Preferences that relate to reports and aging. We can go over these with you if you haven’t explored them.
 
There are other tasks you should complete before December 31, some of which may require our assistance. These include reconciling all accounts, running year-end reports, and clearing any deposits that remain in the Undeposited Funds account. We’re here if you need us now, otherwise we can connect in the New Year.
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Setting Up Sales Tax in QuickBooks, Part 2

11/1/2019

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Now that you have your sales taxes set up, you’ll be able to use them in transactions and reports.

 
Last month, we talked about the process of setting up sales taxes in QuickBooks. To recap a bit, you first have to go to Edit | Preferences | Sales Tax to make sure the software is set up correctly for this use. This means you’ll need to understand exactly what your state and local sales tax rules are. You can learn this by going to your state’s Department of Revenue or Department of Taxation website.
 
State sales taxes are considered Items in QuickBooks; you create them like you would create product records. When local sales taxes are also required, you can set up Sales Tax Groups. You’ll be assigning these Items as well as Tax Codes to customers.
 

Using Sales Taxes

 
Once you have sales taxes set up, you can start using them in transactions. You can create them on the fly from within transactions, but we recommend taking care of this important housekeeping task before you start.
 
QuickBooks applies the Sales Tax Item or Sales Tax Group that you assigned to the customer on your invoices. You can see the others that are available.
 
Start by creating an invoice. When you reach the Tax column for your first line item, you’ll see that QuickBooks has already assigned Tax or Non to it based on the information in the item’s record. You can mix taxable and non-taxable items on the same invoice. You can also add a new sales tax on the fly from the invoice itself. Click the down arrow in the Tax column and select <Add New>.
 
Be sure you’re not required to pay sales tax on an item when Non is selected. You may not have to charge sales tax on, for example:
  • Nonprofit organizations
  • Out-of state sales
  • Items that your customers will resell
Tip: If you’d like, you can create more specific sales tax codes for these situations. You could use OOS for out-of-state sales, for example, LBR for labor, and NPO for nonprofit organization.
 
 
QuickBooks already includes Sales Tax Codes Tax and Non, but you can add additional ones that are more descriptive.
 
Be very careful with your sales tax classifications in QuickBooks. As we said last month, such errors will be discovered in a sales tax audit, should you ever be subject to one.
 
Once you’ve entered all the line items in the invoice, look down toward the bottom of the screen, directly beneath the table containing invoiced items and above the Total. QuickBooks will have calculated the sales tax due using the Sales Tax Item or Group you assigned to that customer during setup, placing it in the Tax field.
 
Look to the left of those numbers, and you’ll see the actual rate that was applied. To the left of that is a drop-down list containing the correct Sales Tax Item or Sales Tax Group. Click the down arrow if you want to see the list of other options. And in the lower left of the screen, you’ll see the Customer Tax Code.
 

The Sales Tax Center

 
The Manage Sales Tax window
 
When it’s time to pay sales taxes, you’ll open the Vendors menu and select Sales Tax | Manage Sales Tax. From the screen that opens, you’ll be able to:
  • Access Sales Tax Preferences.
  • Generate sales tax reports that will help you fill out required forms.
  • Visit related screens.
There are two reports you’ll need to run: Sales Tax Liability (displays total sales, amounts that are taxable and at what rates, taxes collected, and how much sales tax is due to each taxing agency) and the Sales Tax Revenue Summary (breaks down total sales into taxable and non-taxable). These reports are, of course, customizable, so you can filter them, for example, by Sales Tax Code.
 

A Delicate Balance

 
Collecting the correct amount of sales tax on taxable items and submitting the right tax totals to the right agencies takes vigilance. You don’t want to charge customers for unnecessary taxes, but you also don’t want to end up paying taxes you should have invoiced out of your own pocket.
 
We can help you get this straight from the start. It’s much easier to spend some time setting up sales tax accurately in QuickBooks than it is to go back and untangle inaccurate records. Give us a call and we’ll set up a consultation.
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Setting Up Sales Taxes in QuickBooks, Part 1

10/1/2019

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If your business is required to collect and pay sales taxes, you can use QuickBooks' tools to help you meet those obligations.
 
Next to payroll, state sales taxes represent probably the most complex element of your accounting tasks. QuickBooks can help with the mechanics, but there's a lot you need to learn before you can start charging and paying them. For example:
  • Is your company located in a destination-based or origin-based state where taxes are concerned (do you charge sales tax based on where your customers are or where you are)?
  • Certain types of items and services are exempt from sales tax. Are yours?
  • What local taxes (city, county, etc.) must you collect, if any?
  • How often must you submit what you owe, and to what agency?
If you don't know your state's rules, search for your Department of Revenue (sometimes called the Department of Taxation) on Google. Or talk to us about this whole complicated process. You can't begin to work with sales taxes in QuickBooks until you know the answers to many questions.
 

First Steps

Once you know what your state's rules are, you can start setting up the sales taxes you're required to collect and pay. Open the Edit menu and select Preferences. Click on Sales Tax, then Company Preferences. Make sure the Yes button is highlighted next to Do you charge sales tax?, then click on Add sales tax item. You'll see this window:
 
In states where it's required, you may have to at least set up a state sales tax item in QuickBooks. You may also be responsible for local (city, county, etc.) taxes.
 
TYPE should already be set to Sales Tax Item. Enter a name for your tax in the Sales Tax Name field; the Description should automatically appear as Sales Tax. Type in the Tax Rate (%) and the name of the Tax Agency that will collect it (select <Add New> if it's not there already). Click OK to return to Company Preferences and continue to define additional tax rates. If there is a sales tax item you use frequently, you can select it from the Your most common sales tax item field.
 
Tip: Each sales tax rate is considered an Item in QuickBooks. When you have to edit or delete one, open the Lists menu and select Item List. Type sales tax in the Look for box, then Search. Right-click on your target and select your desired action from the local menu that appears.
 

Sales Tax Groups

When you want to combine multiple sales taxes as one item (state, county, etc.), click Add sales tax item again in Company Preferences and choose Sales Tax Group. Enter a Group Name/Number and Description. In the table below, click the down arrow in the field in the TAX ITEM column. Keep selecting individual tax rates until you're finished, then click OK. When you use one of these groups in a transaction, the customer will only see the total tax, but reports will break them down into their individual parts.
 

Completing Your Preferences

The bottom half of the Company Preferences screen needs more information.
 
It's important that all the entries at the bottom of the Company Preferences screen are correct before you start working with sales taxes in QuickBooks.
 
The first two items here are simply field labels that will appear in transactions to indicate whether or not a line item should be taxed. You should leave them as is; they're automatically created by QuickBooks. If you want to Identify taxable amounts as "T" for Taxable when printing, click in that box to make a checkmark.
 
Is your QuickBooks company file set up on a cash or accrual basis? Click on the button in front of the correct choice. WHEN DO YOU PAY SALES TAX is a question that will be answered as you're learning about your state's sales tax requirements. When you've completed this section, click OK.
 

Assigning Tax Codes

As you create item and service records in QuickBooks, you'll be asked to indicate whether or not they're taxable. The Tax Code field appears at the bottom of the window, like in the image below.
 
You'll need to designate every item or service you sell as taxable or non-taxable.
 
There's much more you need to know about collecting and submitting sales taxes, like how to work with transactions and reports. We'll cover those topics next month. In the meantime, let us know if we can help you set up your QuickBooks company file for this complex task.
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Creating Statement Charges in QuickBooks

9/1/2019

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There’s more than one way to bill customers for your products and services. A statement charge is one of them.

 
Depending on what kind of business you have, you probably have a preferred way of billing customers. If they walk into your shop and present a credit card or cash, you create sales receipts. If they order off your website, they might receive an electronic receipt. Or your arrangement may be such that you send invoices.
 
There’s another way that’s especially useful if your customers are responsible for paying recurring charges, like an ongoing service contract that’s billed monthly. You can enter those financial obligations directly as statement charges.
 
As you know, QuickBooks can create statements, summaries of a customer’s activity. These are generated automatically from the invoices, receipts, payments, and other transactions you’ve recorded over a given period of time. But did you know you can manually add charges to statements? Here’s how it works.
 

Creating a Statement Charge

 
Click the Statement Charges icon on the home page or open the Customers menu and select Enter Statement Charges. Your Accounts Receivable register appears. Open the list in the field next to Customer:Job by clicking on the down arrow and select the correct Customer:Job.
 
Warning: If the item will be attached to a specific job, not just a customer, be sure you choose the correct job. QuickBooks maintains a separate register for each.
 
 
Consider creating a statement charge instead of an invoice for recurring transactions that will not be billed immediately.
 
Change the date if necessary and open the Item list (or click <Add New> if you haven’t created an item record yet). Select the one you want and enter a quantity (Qty). QuickBooks should fill in the rate and description. The TYPE column will automatically contain STMTCH (statement charge). Click Record when you’re done. The next time you create a statement for that Customer:Job, you’ll see the transaction you just entered.
 

Statement Charge Limitations

 
Before you decide to use statement charges, keep in mind that:
  • You can’t include some information that would appear on an invoice, like sales tax and discounts.
  • Even if your charge relates to hours you worked for the customer, QuickBooks will not open a reminder window containing that information the next time you create an invoice for the customer. You’d have to Enter Time by creating a single activity or entering the hours on a timesheet.
  • You still have to bill the customers.
 

Billing the Customer

 
There are two ways to bill customers for statement charges. You can, of course, just generate statements that include the date(s) of the charge(s). The next time you create a statement for customers who have manually-entered statement charges, it will contain them, along with any other activity like invoices and payments.
We’ve covered statements before, but we’d be happy to go over this QuickBooks feature with you. This means you’ll have to enter a statement charge every month if it’s to be a recurring one. Instead, you can treat them as memorized transactions, so they’re automatically entered in the register. If you’re billing multiple customers for the same service every month, for example, this would work well.
 
First, you’ll need to create a Group that contains all of those customers. Open the Lists menu and select Memorized Transaction List. Right-click anywhere on that screen and click on New Group. This box will open.
 
 
If you regularly bill customers for the same service, like a monthly subscription, you can create a Group and memorize the transactions.
 
Give your Group a Name and click the button in front of Automate Transaction Entry. Open the list in the field next to How Often and select the billing interval. Choose the Next Date to indicate when this group billing should begin. If the charges should be entered on a limited basis, enter the Number Remaining. And be sure to fill in the Days In Advance To Enter if that’s applicable. Click OK.
 
Next, you’ll assign the customers who should be billed monthly to your Group. Click Statement Charges on the home page again to open your A/R register. Select each customer one at a time and right-click on the statement charge that you want to recur monthly, then select Memorize Stmt Charge. In the window that opens, give the transaction a new Name if you’d like (this will not affect the transaction, only how it’s listed). Click on the button in front of Add to Group and select the Group name from the drop-down list. Repeat for each customer you want to include.
 

Keeping Track

 
If periodic statements are your primary customer billing method, this system should work fine. But if you also send invoices and/or collect payment at the time of the sale, you’ll need to remember that your statement charges must be billed on a regular basis, too. We can go over your customer billing procedures with you to determine whether you’re using QuickBooks’ tools wisely - or whether some changes could improve your collection of payments.
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Using QuickBooks' Bill Tracker

8/1/2019

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If your business pays a lot of bills, you need an efficient system for staying current with them. QuickBooks' Bill Tracker provides that.

 
Bill-paying may be your least favorite accounting activity. You definitely know how those checks and online payments affect your account balances, but it's more than that. Staying up to date with your bills and paying them on time (but not too early) takes a supreme organizational effort.
 
If you're using a manual bookkeeping system, you know how difficult it is to keep up. QuickBooks offers several options for helping you with this. You can set reminders and/or put the due dates on your calendar. If you're using QuickBooks 2016 or later, you have access to another tool: Bill Tracker.
 

A Comprehensive Overview

 
QuickBooks Bill Tracker is similar to the software's Income Tracker. If you've used that, you know that it provides a way to get a birds-eye view of your accounts receivable. You can see where every transaction falls in your income "pipeline" (estimates, open invoices, etc.).
 
Bill Tracker works similarly, but for accounts payable. It has two advantages over just opening your Vendor Center and clicking the Transactions tab. First, it displays the Status of each transaction. Second, it contains Action links, so you can do more than simply open each entry.
 
Bill Tracker lets you switch between lists of different types of accounts payable transactions.
 
To open this tool, click Bill Tracker in your navigation pane. The screen that appears consists of two parts. Color-coded bars across the top represent different transaction types, Purchase Orders and Bills. The latter is further divided into Open Bills, Overdue, and Paid In The Last 30 Days. Each bar contains both the number of transactions that fall in that category and their total dollar amount. Click on one, and the list below changes to include only that type of entry.
 
Note: You can see in the image above that the Open Bills list has three alternate views that you can open by clicking on them in the drop-down list: Item Receipt, Credit, and Unapplied Payments. If you have questions on any of these, we can explain them to you, since you should know when to consult these lists.
 

Changing the View

 
Bill Tracker defaults to the broadest view possible. That is, when you select a category of transactions, it shows all of the active ones. But a series of drop-down lists below the main toolbar gives you control over what subset of information is displayed there. You can narrow your list down to one vendor, for example, and choose a date range.
 
Data columns are different for each list. When you're displaying Overdue transactions, the labels read Vendor, Type, Number, Date, Due Date, Aging, Status, Amount, Open Balance, and Action. You get a thorough description of each entry at a glance.
 

Taking Action

 
As we said earlier, Bill Tracker lets you work with transactions as well as just view them. Click on Purchase Orders and open the drop-down list at the end of one of the rows in the Action column. You can see in the image below what your options are there, including Convert to Bill. When the Open Bills list is active, you'll be able to click on Pay Bill.
 
Open the drop-down list in the Action column to see what you can do with the selected transaction.
 
To see what else you can do with individual transactions or groups of them, look in the lower left corner of the screen and locate the Batch Actions and Manage Transactions buttons. With the Purchase Orders list open, click in the box in front of one or more to create a checkmark. Open the Batch Actions menu. You'll see that only two options are available to you here; the others are grayed out. You can Print Selected Purchase Orders or Close Purchase Orders. Pay Bills is only active when you're in a list that allows that.
 
Now, open the Manage Transactions list. You can create transactions from this menu by clicking on Purchase Order, Bill, CC Charge, or Check. If you select Edit Highlighted Row, the original transaction will open.
 
Warning: Remember that you should never write a check to pay a bill if you're using QuickBooks' bill-payment tools. If you've already entered the bill, click Pay Bills on the home page or open the Vendors menu and select Pay Bills. Talk to us if you have questions about this process.
 
QuickBooks offers multiple ways to take the same actions in accounts payable; Bill Tracker is just one. But this instant overview can tell you quickly where you stand with your vendors -- and help you avoid late payments.
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Do You Need to Bundle Products in QuickBooks? Create Assemblies

7/1/2019

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If you frequently sell multiple inventory items grouped together, you need to learn about QuickBooks’ assemblies.

 
Let’s say you run a home improvement retail outlet, and one of the things you sell is doors. You might sell their parts-door frames, hinges, doorknobs, etc.-individually, in case a customer needs to replace a piece. You may also want to sell all of the individual components as a kit and give your buyer a price break for purchasing them all together.
 
QuickBooks calls these assemblies; sometimes they’re referred to as kits. Just as you’d create an individual inventory part, you can group related parts together and create an item that you would sell as a package.
A couple of caveats here. You can only build assemblies in QuickBooks Premier and above. If you need this feature and are using QuickBooks Pro, talk to us about upgrading. Second, we know that not all of you are using the latest versions of the software. We’ll use QuickBooks Premier 2018 in the examples here.
 

Under the Hood

 
Before you can start working with assemblies, check your QuickBooks settings to make sure they’re correct. Open the Edit menu and select Preferences, then Items & Inventory | Company Preferences. Click in the box in front of Inventory and purchase orders are active in it’s not already checked. If you want QuickBooks to deduct the quantity of items that have already been entered on sales orders, check that box (we recommend this, so you’re not selling items that have already been promised). Then make sure the button in front of When the quantity I want to sell exceeds Quantity Available is filled in, for the same reason.
 
Before you start building assemblies, you’ll need to make sure your Company Preferences are marked accordingly.
 

Creating an Assembly Item

 
Open the Lists menu and select Item List. Open the drop-down list under Item in the lower left corner and click New. In the window that opens, click the down arrow under Type and select Inventory Assembly. Enter an Item Name/Number in the corresponding field in the window that opens. Don’t check the Subitem of or the I purchase this assembly item from a vendor boxes, and ignore Unit Of Measure.
 
Again, depending on the version of QuickBooks you’re using, you may see different fields in the Inventory Information box at the bottom of this window. But there are some standard elements you should find in this window no matter the version. They include:
  • Cost. How much does it cost you to purchase all of the parts for one assembly?
  • Sales Price. What will you charge your customers per kit?
  • COGS Account. “COGS” stands for Cost of Goods Sold. What account in the Chart of Accounts will you use to track the cost of producing your assemblies? Usually, the default one in QuickBooks is fine.
  • Income Account. Which account tracks your sales of this assembly?
  • Bill of Materials (BOM). This appears as a table in QuickBooks; it’s a list of all the individual inventory parts that make up the kit, along with their Cost (to you), QTY (quantity required for each assembly), and the total BOM Cost.
 
Your Bill of Materials Cost is the total of all inventory items required to create an assembly.
 
The Inventory Information box at the bottom of this window might contain fields for information like the Asset Account, quantity On Hand, and the number of items on purchase orders and sales orders. Once your inventory assembly is saved, it will appear in your Item List.
 
When you need to actually create kits, you’ll open the Vendors menu and select Inventory Activities, then Build Assemblies. You’ll select the Assembly Item from the drop-down list in the upper left corner, which will open a list of the components needed and their quantity on hand. You’d enter the number of kits you want (the maximum possible appears below the table) and then click one of the Build buttons. The next time you look at the kit in your Item List, you’ll see that its quantity has increased.
 
The concept of assemblies is easy to understand, but if you haven’t worked with accounts and inventory much, you may find creating kits in QuickBooks to be a bit of a challenge. Inventory levels can be a real problem if they get out of whack, and accounts must be assigned correctly to avoid inaccuracies in reports and taxes. We’d be happy to work with you as you get started with this task.
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Issuing Credit Memos and Refunds in QuickBooks

6/1/2019

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You’re accustomed to money going in a certain direction, but sometimes you have to pay your customers. Here’s how it’s done.

 
QuickBooks is very good at helping you get paid by your customers. It comes equipped with customizable invoice templates for billing customers and sales receipts for recording instant sales. It supports online payments, so you can accept debit or credit cards and electronic checks. It simplifies the process of recording payments and it offers reports that let you keep track of it all.
 
There are times, though, when you have to issue a payment to a customer. QuickBooks provides forms that allow that transfer of funds: credit memos and refunds. Do you know when and how they should be used? Here are the basics.
 

Credit Memos

 
A credit memo is just what it sounds like. A customer returns an item for which they’ve already paid, and you have to credit him or her for its cost. This is the more complicated of the two and requires more bookkeeping, since you’re tracking the sale, its payment, and the return item. You can deal with the amount of the credit by:
  • Retaining the funds in the customer account.
  • Issuing a refund.
  • Applying it to the next open invoice.
 
When you issue a credit memo to a customer, you have three options for returning the money they paid.
 
To create a credit memo, click Refunds & Credits on QuickBooks’ home page or open the Customers menu and select Create Credit Memos/Refunds. The Credit Memo window opens. Select the correct Customer:Job. In the line item section of the form, choose the merchandise returned in the Item column and enter a quantity. Repeat the process if more than one item was returned, then click Save & Close. The Available Credit window, pictured above, will open. Click the button in front of the option you want.
 
Select the first option if that’s what you want and click OK. The window will close, and the customer will have had that credit amount applied to his or her own account. You can see this in the Customer Center if you click on Customers in the navigation toolbar (or Customers | Customer Center). You can then either click on the Customers & Jobs tab and scroll down until you can highlight your customer’s record or click on Transactions | Credit Memos.
 
Click on Give a Refund to open the Issue a Refund window. Everything should be filled in here except for the payment method. If you select Cash from the Issue this refund via drop-down list and then pick the correct account from the list that opens, the refund amount will be subtracted from the account. Select Check and then the Account, and check the box in front of To be printed. That refund will be in the list the next time you open the File menu, then Print Forms | Checks. Choose a credit card and check the box in front of Process credit card refund when saving box to issue a credit card refund automatically.
 
Tip: Can’t work with credit cards because you don’t have a merchant account? We can help you set this up.
 
The Issue a Refund window
 
If there is an open invoice, the Apply Credit to Invoices window will open, containing a list of unpaid bills. If there isn’t already a checkmark in front of the invoice you want to apply it too, click in the first column to create one. QuickBooks will tell you how much credit was applied and whether any remains. When you’ve checked the screen for accuracy, click Done.
 

Dealing with Overpayments

 
Let’s say a customer is catching up on multiple outstanding invoices and he or she sends you a check for the total but overpays you. Open the Receive Payments window by going to Customers | Receive Payments or clicking Receive Payments on the home page. Select the customer and enter the Payment Amount and Check #. QuickBooks will have put a checkmark in front of all the outstanding invoices listed to indicate they’ve been paid.
 
In the lower left corner, you’ll see a section titled Overpayment. The extra amount and your two options for dealing with it appear here. You can either credit the customer or issue a refund. Click the action you want to take, then save the transaction.
 
If a customer overpays you, you can use QuickBooks’ built-in tools to credit him or her.
 
You can also issue refunds through the Write Checks window, but this is a more complicated procedure. It’s easier to process a credit memo.
 
If you’re at all unclear about what we’ve described here, please contact us for assistance. Refunds or credits that come through incorrectly (or not at all) can make customers very unhappy and may affect future sales. So, let us help you get it right the first time.
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How QuickBooks Protects Your Data, and How You Can Help

4/30/2019

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The data in your QuickBooks company file contains some of the most sensitive information on your computer. Make sure it’s secure.
Your customer list is gold. And those Social Security and bank card numbers in your payroll, client, and vendor records need to be protected from intruders and only viewed by authorized employees.
It’s not just large corporations and financial institutions that get hacked. That’s what the bad guys want you to think. In reality, small businesses are often the victims of data breaches because their owners think they’re immune from data theft and destruction.
Even if you’re password-protecting your PCs and running antivirus and anti-malware software, there’s more you need to do when it comes to your accounting records. Here’s what we suggest.
Restrict access by setting up user permissions.
If you have multiple staff members using QuickBooks, don’t share the same user name and password. That obviously gives everyone access to all data and activity. If something goes awry, you have no way of knowing when or how it happened, and who was responsible. To protect yourself and everyone else who logs in, it’s critical that all users have their own unique logins. They should only be allowed to access information and functions that relate to their job duties.
You can restrict QuickBooks users to certain screens and activities.

To assign these permission levels, open the Company menu and click on Set Up Users and Passwords, then Set Up Users. This opens the User List window, where you should be identified as the Admin. Click Add User. Enter a user name and password for an employee who needs access (this can be changed later). Check the box in front of Add this user to my QuickBooks license.
Tip: Not sure how many users are allowed under your current license? Click F2 and look in the upper left corner. If you need to add licenses, let us know.
Click Next. The next screen lists three options. You can grant access to all areas or to selected areas. You can also create a login for us as your external accountant, which lets us see everything except sensitive customer data. Select the second option and click Next. You can see in the image above that you can give the employee different levels of responsibility. When you’ve made your choice, click Next. The subsequent nine screens deal with different areas of QuickBooks and their related activities.
Tip: When you need to change your password, which you should do at a minimum every three months, go to Company | Set Up Users and Passwords | Change Your Password.
Save your company file elsewhere.
You should always be backing up your company file to an external storage device (like a CD or thumb drive). To set this up, open the File menu and select Back Up Company, then Create Local Backup. This window will open:
 
The 
Create Backup window

Make sure Local backup is selected, then click the Options button below (not pictured here). Click Browse to see a directory of your PC and select the correct destination. Leave the two boxes below it checked; this will add the backup date/time to the filename and limit the number of backup copies to three.
By default, QuickBooks will remind you to back up your file every fourth time you close your company file; you can change this number if you prefer. Leave the Complete verification option checked and click OK, then Next. Specify when you want to save your backup copy and click Next again. You can schedule regular backups of your company file on the next screen if you’d like. When you’ve completed this screen, click Finish.
You should also consider saving a copy of your company file to the cloud. Intuit offers its own service for this; it costs $9.95/month or $99.95 annually, but it gives you 100 GB of storage space, so you can back up other critical business files, too. If you can’t swing this financially, at least store your backups to a portable device that you can carry offsite.
Warning: If you already pay for cloud storage from another vendor, don’t assume you can just copy your QuickBooks file to it. Talk to us.
Other Steps
There are other things you can do to protect your QuickBooks data, including:
  • Insist on strong passwords. Yes, it’s a pain to create and remember them, but it’s critical here.
  • Keep everything updated. That includes your operating system and anything else that requires updates.
  • Minimize web browsing on work computers and remind employees about smart email behaviors.

We strongly recommend that you consult with us as you’re setting up any kind of backup system for QuickBooks. The software’s instructions are straightforward, but we don’t want you to do anything that would jeopardize the integrity of your company file.
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Receive Payments the Right Way in QuickBooks: Your Options

3/27/2019

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How you record a customer payment in QuickBooks depends on why and how you received it.
 
One of the reasons we like QuickBooks is because it uses language and processes that are familiar to small businesspeople. Instead of using the term “accounts receivable,” it has a menu label that says Customers and menu items that use phrases like Create Invoices and Receive Payments. You would have to go into the Chart of Accounts to find standard accounting terminology - and we never recommend that you do that without consulting with us first.
 
Yet when you’re doing customer-related tasks, you’re following a traditional accounts receivable workflow, a series of steps that completes a sales cycle, like Estimate | Invoice | Payment | Deposit. QuickBooks keeps it simple for you and doesn’t often force you into unfamiliar territory.
 
One of the more pleasant elements of accounts receivable is the process of receiving customer payments. There’s more than one way to do this, and it’s very important that you use the correct way in each situation.
 

Payment Methods

 
Before you record your first payment, you’ll need to make sure that QuickBooks is set up to accommodate its Payment Method. QuickBooks comes with some standard types, but you can add, edit, and delete your own options (though not those that are built in to the software).
 
Open the Lists menu and click Customer & Vendor Profile Lists, then Payment Method List. This window will open:
 
You can work with Payment Method options in this window.
 
To use any of the commands in the Payment Method drop-down list, you’d highlight the method by clicking on it and opening the options list by clicking the down arrow in that field.
 
Note: When you add or change an existing entry, the window that opens contains fields for both Payment Method and Payment Type. They should be identical or at least very similar.
 

Settling an Invoice

 
If your company sends invoices, you’ll need to record their matching payments in the Customer Payment window. Click Customer | Receive Payments or the Receive Payments icon on the home page. There’s also a button for this in the toolbar in an open invoice. However you get there, here’s what it looks like:
 
You’ll record payments that customers send in response to invoices in this window.
 
Select a customer in the RECEIVED FROM field, and any outstanding invoices will appear in the table below. The CUSTOMER BALANCE appears in the upper right corner. Enter the PAYMENT AMOUNT and verify the date.
 
Click in the box for the correct payment method to the right. If it’s a check, enter the number in the CHECK # field. If you choose CREDIT DEBIT, you can enter the card details in the small window that opens. If you provided this information in the customer’s record and chose that as the PREFERRED PAYMENT METHOD, it should fill it in automatically.
 
Note: To set a PREFERRED PAYMENT METHOD, which will save time, open the customer record and click the small pencil icon in the upper right. Click Payment Settings and complete the fields in that window.
If the customer has paid less than the balance due, you can either LEAVE THIS AS AN UNDERPAYMENT or WRITE OFF THE EXTRA AMOUNT. Select one of those two options in the lower left and save your work when you’re done.
 

Instant Payments

 
You’ll use a different form when a customer gives you a payment in exchange for the goods or services you provided, without receiving an invoice. Click Customers | Enter Sales Receipts to open a window like this:
  
If a customer gives you a payment without receiving an invoice, you’ll provide them with a Sales Receipt.
 
 
You’ll complete this form much like you did the CUSTOMER PAYMENT window, except you won’t be applying the payment to an existing invoice.
 
Tip: If you have a merchant account or are willing to get one, you can record payments and email sales receipts at remote locations on your mobile device. We can walk you through the setup.
 
Receiving payments from customers is one of the easier tasks you’ll do as a QuickBooks user, but if you don’t use the software’s tools correctly, your books will be difficult to untangle. We can help ensure that you’re doing this element of your work right from the start; just contact us to schedule a consultation.
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    Author

    Julie L. Davis, CPA is the founder and owner of JD and Company in Yorba Linda, CA.  The company specializes in both for-profit and non-profit organizations, providing accounting, bookkeeping services, and tax preparation for small businesses. 

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