How to Use Quickbooks

Quickbooks is accounting software frequently used by small and medium sized businesses as well as by professional accountants and bookkeepers.

Quickbooks helps businesses with bookkeeping and accounting tasks, such as keeping track of payroll and purchases, invoicing for sales, and managing inventory. The software is also often used by accountants on behalf of their clients. It uses a standard method known as double-entry bookkeeping to accurately keep track of transactions by recording each one as both a debit entry and a credit entry in the relevant ledgers. Despite using accepted accounting principles, users don't need to have much accounting knowledge in order to use Quickbooks.

The software is produced by Intuit, who offer several different versions of Quickbooks. It can be used as an online service for a monthly fee, which is dependent on the size of the business, for example the number of users within the company, or the number of customers handled. It can also be purchased outright for use on your own computers, again in several versions of varying price and sophistication.

The online versions of Quickbooks offer a free trial for a period of 30 to 60 days. However pricing is such that using the online service for six months is likely to work out more expensive than purchasing an appropriate version of the software, at least for companies that already have arrangements in place to manage their own computers.

Read on for an introduction on how to use Quickbooks.

Getting started with QuickBooks can seem quite daunting, and it is useful to have an overview of what the whole process will entail before beginning.

First, you'll need to select and buy the version of QuickBooks most suited to your business. The QuickBooks website will help you compare versions.

Next, if you have chosen to run QuickBooks on your own computer rather than use their online service, you'll install the program. You do this the same as with any other software by using the installation DVD, and following on-screen instructions.

Now, before actually launching QuickBooks for the first time, it is important to gather together the information that you'll need to enter. When first started, QuickBooks will take you through an "EasyStep Interview" where you enter key data about your business and its finances. The information that will be needed for this is described in detail in the Setting Up section below.

After ensuring you have the required information, you can start QuickBooks and the EasyStep Interview. Here you will tell QuickBooks the basics about your business, its current accounts, and how you intend to use QuickBooks.

At this point you'll most likely want to make a "Trial Balance", to check that the data you've entered adds up and makes sense, and correct any anomalies.

Next you set up what are called the Master File Lists. These are lists of things such as customers, employees, vendors, prices etc.

You may then want to review the preferences that QuickBooks has set for you, which include things like whether you want to be reminded to print checks, and if so how far in advance you want the reminder.

Once you've done all that you're at last ready to use QuickBooks for handling business transactions. These different transactions are explained in later sections of this guide.

1. Before starting QuickBooks setup, gather the information that will be required. There are three set of records you'll need: a) Accurate financial accounts, b) Records of accounts payable, receivable, inventory and fixed assets, and c) As complete a list of employees, customers, vendors and inventory items as possible
2. Now start the program and create a new company profile by selecting New Company under the file menu.
3. The EasyStep interview launches and you'll likely see a big welcome screen to start off with. During this process, the program will ask you different questions about your business in order to set up your bookkeeping. You can also choose to skip the interview and enter your company information manually instead.
4. The first set of information required is relatively straightforward, things like company name, address, federal tax number, start month of your fiscal year and so forth.
5. Quickbooks will then ask you questions about your business, such as whether you sell items, what you want invoices to look like, whether you want to use QuickBooks to help with your employee payroll and more.
6. QuickBooks asks you to name any bank accounts you use in your business, and their balances on the start date you decided to use for your accounts. (This date will typically be the first of a month, as that is the date for which your bank statements or previous accounting systems will usually have information.)
7. Toward the end of the EasyStep interview QuickBooks will suggest a "chart of accounts". These are the categories that you use to track your income, assets, expenses and equity, and QuickBooks will make suggestions based on the industry you are in and your earlier answers. You can amend these suggestions either now or later if if you have the accounting knowledge to make your own judgement about what you'll need.
8. If you want to change any information you have already entered, you can move backwards during the interview.
9. When the interview is complete choose a location to save the file under Filename for Your Company.
10. You will be able to add several users to the account. By choosing an administrative password and username for yourself, you can decide which privileges the users will have.
11. After completing the EasyStep interview, you have set up a basic company profile for your business. At this point QuickBooks may open a "Learning Center" window where you can view tutorials to help you understand using QuickBooks. Go ahead and explore.

Trail Balances are usually prepared by bookkeepers or accountants, so if you do not already understand the concept, you may want to get help from an accountant as this stage.

However the basic idea is relatively simple. A trial balance first runs though the transactions on each separate account, producing a total position on that account. For example, it runs through all the amounts paid into and out of a bank account to arrive at what should be the current balance. These individual account balances help find one level of problem. For example, if the history of transactions does not arrive at the correct total that suggests that some transaction information may be missing. At this point you may be able to identify and add the missing information, or if you decide that the records are not available, you make an adjusting entry to ensure the accounts balance.

Having arrived at the total balances for each account, the trial balance then compares the total of all the debit balances with the total of all the credit balances. These should be equal. If they are not, an error has occurred somewhere, and the nature of the differences might help you pinpoint the location. Common errors that might lead to an imbalance include entering a transaction into the wrong journal, or a numerical error such as a mistyped digit.

It is useful to make a trial balance at this stage so you can resolve any problems in your data before you start using Quickbooks day to day.

In Quickbooks, you can make a Trial Balance with one command. Depending on your version, you will probably find the command in the Reports menu, under the Accountant & Taxes Reports sub-menu.

The master file lists record information that you will reuse often, for example customer information such as name, address, contact information and account numbers. It’s a good idea to set up your most active master file data now before you begin regular use of Quickbooks. Less frequently used data can be added later as needed.

The following steps take you through the lists that are needed for a typical small business. Not all of them are applicable to every kind of business, so include only those that are relevant to your own situations.

1. First you’ll want to set up the Chart of Accounts List, which you can do using the command in the Lists menu. You should create an account for anything that you would like to see as a line item in reports, whether for your own internal use, or to include on tax returns. For example if you wanted to track entertainment expenses separate from other types of expense, you’d create an account or sub-account for that category.
2. Next set up the Item List. This tracks items that you buy, hold and sell to customers. It can include inventory that you retail and parts that you use to build your own products.
3. Now set up the Price Level List and Sales Tax Codes. These will help define prices, discount level, and whether items are taxable or not.
4. If you are using Quickbooks to handle payroll, set up a Payroll Item List. If you are using another service to handle your payroll, including Quickbooks own Premier Payroll Service, you don’t need to do this.
5. Set up Classes. These are ways that you want to track financial data that don’t automatically correspond to things like customer, sales rep etc. An example might be if you wanted to track sales by geographical territory or business unit.
6. Set up a Customer List. Apart from the usual customer information like names, billing and shipping addresses and so forth, you have the option to add more advanced information like customer type and default payment terms if you so choose.
7. Set up a Vendor List. This is similar to the customer list, and you can enter details such as the credit limits you have with them. The vendor’s tax ID number is an important piece of information. Note that if somebody won’t give you a tax ID number the first time you do business with them this should be considered a warning sign that something may be wrong.
8. Set up a Fixed Assets List. If your CPA keeps track of your fixed assets, this may not be needed. This list is standalone and purely for you to keep track of assets you’ve purchased such as furniture and machinery if you need to do that.
9. Set up your Employees. Clicking the Employee Center button allows you see add new employees, and see lists of current and past employees.
10. Set up an Other Names List. This is a list of organisations or individuals that you pay or receive payments from, but who don’t fall into any of the other categories like vendor, employee or customer. Examples might include government agencies.
11. Set up the Profile Lists. These allow you to do things like define customer types, list your sales reps, shipping methods etc.

Now that you're set up, Quickbooks can be use in a variety of ways to help you run business day-to-day. Not every business needs every one of these features, but where they are relevant they can save a great deal of time and effort.

Invoicing Customers

Everything to do with customers is found in the Customers menu. Here you can choose the appropriate invoice form for your business and customize it to suit your requirements. This means a business that sells physical items can have include descriptions of the items being invoiced for, while service business might have include billable hours.

The Create Invoice window allows you to create an individual new invoice, and fill in all the relevant details. Your most active customers should already be available to you via a drop-down list as you entered their details in Step 3, when loading your master file lists.

After creating invoices, you can print them either individually or in batches, or if you prefer they can be emailed. If you have a business where customers pay for items immediately, you can create a sales receipt instead of an invoice.

When a customer pays an invoice, use the Receive Payments command in the Customers menu to process the payment details.

Paying Vendors

Many small businesses don’t use formal purchase orders for buying goods from vendors. However if you do, you can create them and process them in the same way as invoices, except you now use the Vendors menu.

You can also track unpaid bills, technically knowns as accounts payable. You do this with the Enter Bills command in the Vendors menu. You can later use the Pay Bills command in the same menu to actually pay the bills. With this command you will be able to specify which bills you want to pay, which bank accounts to take payments from, and whether you want to print a check or make an online payment.

• Later versions of Quickbooks have included several new features.

1. The program has several services available through the Internet, including possibilities to enter and access your accounting information online.
2. You can import information from Microsoft Excel.
3. Several other accounting software can integrate with Quickbook to fill functions Quickbook does not provide.
4. Quickbook offers several options beside the standard accounting software. For example, there is a Quickbook Point of Sale software, which you use instead of a cash register to keep track of sales.
5. Quickbook is also available in an online version.

• Quickbooks offers you an option for bookkeeping for your business. To start using Quickbook, it's best to first complete the EasyStep interview and the computer will help you to set up a company profile for your business.

• Overview of Using QuickBooks
• Step 1: Setting Up
• Step 2: Make a Trial Balance
• Step 3: Load the Master File Lists
• Step 4: Use Quickbooks for Transactions and Bookkeeping
• Additional Features and Software
• Conclusion