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QuickBooks Pro Essential Training: Part 7 of 10
Customizing QuickBooks for your business By Suzanne Robertson

In QuickBooks Pro 2008 Essential Training (, instructor Suzanne Robertson explores the many powerful features of QuickBooks Pro, the popular accounting software that can be used for everything from handling personal expenditures to creating professional business account records. Suzanne covers organizing inventory and non-inventory items and using the automated EasyStep interview. She also demonstrates how to create and edit accounts, collect and pay sales tax, and handle invoices, vendor payments, and client refunds. Exercise files accompany the tutorial.

Note: QuickBooks Pro 2008 is not currently available for the Mac. If you are a Mac user you will be unable to open the exercise files for this tutorial, however you will still be able to watch the movies.

Topics include:
* Working with the Chart of Accounts feature
* Setting up items
* Tracking inventory items
* Using the Customer Center
* Invoicing customers
* Making client sales receipts
* Applying discounts and credits
* Entering and paying vendor bills


The second half of the step interview is all about customizing QuickBooks for your business needs. We're going to go through a series of questions and at the end we'll have a program that's set up and tailored to our business needs by selecting features that QuickBooks feels will best serve us. If at the end we see that there are features that our company actually doesn't need to use--not a problem. We'll be able to turn those features off at a later time.

We're going to go ahead and click on Next.

Our first question is what do you sell. Do you only sell services such as consulting? Gym memberships? Accounting services? Do I only sell products? Some physical, tangible things I'm making and delivering to somebody such as lamps, books, and hardware? Or do I do both? In the case of training, perhaps I do consulting and training services, and I also then sell products of that training in a CD or a book format. For our company, we do both. Eat Cake can provide services from catering, labor services. We can also sell prices far as physical cakes, muffins, cookies, things of this nature.

So our company does both products and services and that's what we're going to select. And we're going to click on Next.

Do you sell products online? Again, we can look at the option that QuickBooks gives us.

Number one is currently yes, I sell products online. No, I don't sell anything online but I may want to at a later date. Or I don't sell online and I'm not interested in doing so. Whichever one of these you select, if later on down the road you decide oops, nope, that wasn't the right choice for me, don't worry, you can go back and change it. So this is not an all or nothing at this point.

Your company may not currently sell online but you may want to at a later date. So we're going to go ahead and select that button Again, we can always change this later on. We're going to go ahead and click on Next. Do you charge sales tax? And notice that Yes is already defaulted and is recommended for our business type. Now QuickBooks mades that decision from what we originally told it that we were a caterer, restaurant, bar, that we were incorporated. All of these things now tells it, OK, so based on that criteria yes to this, no to that. And this particular feature is saying yes, we do recommend for your type of business that you should charge sales tax.

Again, if you're unsure don't worry about it. Later on we can always change it. So we're going to go ahead and leave the default the system has chosen for us.

Click Play or press spacebar to start or stop video

Do you want to create estimates in QuickBooks? Now, an estimate is similar to a quote, a bid, a proposal, something you're going to provide to a client to give them an idea of the cost of whatever it is you're selling to them. Some businesses use estimates, others do not. As you can see, QuickBooks for our business type has recommended no for us. However, I know that we are going to be providing estimates down the road to our clients because we do do catering in relationship to the bakery business, and so I will be providing estimates to my clients for wedding cakes and all types of other services. So we're going to go ahead and choose Yes.

Now again, if I find down the road that were not using this feature I can always turn it off later. I'm going to go ahead and click on Next.

Using sales receipts in QuickBooks: First of all a Sales Receipt is different than an Invoice and you need to understand the difference between the two. A Sales Receipt is something you use when a client pays you at the time they've received your service or goods or products.

This gets into the accrual versus cash-basis concepts and not all companies use sales receipts. There are a lot of companies that are strictly accrual. There's never a time when they're going to bill somebody that they're going to receive payment at the same time they bill. And in those cases they would use an Invoice. But in a retail or some type of a cash-based entity where you're selling something and at the time you sell it you receive payment, a Sales Receipt would be appropriate.

QuickBooks has told for us, they don't recommend it for our business. However, we do have a retail shop where people can actually walk in. They can choose from our muffins and cakes, buy them over the counter and pay us and at that time we could use a form of Sales Receipt in QuickBooks or what you would call a Cash Register function. So we're going to go and click on Yes here to enable that feature. And again, if we come into the program later on and we find that no, actually we don't need that, we can always turn it off.

I'm going to go ahead and click on Next.

Using Statements in QuickBooks: Billing Statements are very common for when you are on accrual-basis in invoicing your clients and they're going to then pay you later for something you've sold them today. Very commonly at the end of the month you may want to send the client a statement that shows all of the charges that have been accumulated up to that point in time from money that they owe you. Now, the statements can list not only money that is owed by the client. It can also show the payments or credits that may be applied to the client's account as well.

Again, QuickBooks defaults based on prior information we gave it to whether it thinks we need Billing Statements or not for our company. It recommended no, but we're going to go ahead and turn that feature on again because we do have times when we're going to do a Cash Receipt. Meaning what the person comes in at the time and pays for us right over the counter. And then during our catering side of the business we will be billing or invoicing people for services that will be delivered later and I may need to send them a statement for that information. So we're going to go ahead and turn that feature on and click on Next.

Using progress invoicing: Now Progress Invoicing is a little bit different than just your traditional invoicing in QuickBooks. Progress Invoicing is generally used for if you're doing a large job that may run several months and along the way you're going to charge the client for little sections of work that has been completed and payment up to that point. It's very commonly used in construction. So where a contractor will come in and bid on a home. They're going to build your house for you and the house is going to take six months to build. And so during that course of time there will be sections of it completed. So in the first 30 days the framing goes up. OK so they're going to charge you at that point for the work done up to that point. That is a Progress Invoice. In the next 30 days they get the sheet rock up and they get to start to put up the drywall and they create another Progress Invoice for the work completed up to that point. And so on forth. In our business model we do not use progessing invoices. We're not going to have jobs that are going to go on months and months and months with all these components to it. We're going to invoice the client at one time and then be paid for that invoice. So we're going to leave this feature as no as QuickBooks has recommended.

Again, we could always turn it back on later if we needed to. We're going to go ahead and click on Next.

Managing bills that you owe:

This is actually another word for Accounts Payable. Accounts Payable is a way of managing money that you owe to other people. So, it's a list of your vendors. It's a list of all the bills, and when they're due, and how much money you've paid to them. I strongly suggest for almost every business type that you use Accounts Payable or a managing of your bills. And as you can see QuickBooks has recommended that as a yes to us that we should be doing this to track our bills. So we're going to go ahead and leave that as the default and we're going to go ahead and click on Next.

Do you print checks? And again, here we have our series of questions of whether yes, I currently print checks. No, I don't currently print them but I'd like to later. Or I don't print them and I don't plan to. Now, I don't know of any business that doesn't need to write a check. (Laughs.) If you're the kind of business that is just taking money in and not having to pay it out, I want to come work for you. For our company, yes, we print checks. We've printed them in the past. We're going to continue to print them so we're going to select that. And then we're going to go ahead and click on Next.

Tracking inventory in QuickBooks: And again, this is going to really depend on the type of business you are and whether you currently track inventory, whether you would like to track inventory in the future. Inventory Tracking is very common for people who manufacture something. So they're building the components and then putting it together. Or possibly they're buying the rock components from other vendors but then assembling it themselves. Or they just buy the component from another vendor, they stock in on their shelf, and then they in turn resell it.

All of those could be used for tracking of some type of material that you have sitting on your shelf that later on you're going to turn around and resell to somebody else. Whether they're raw materials and goods that you then turn into another product that you in turn sell, or whether there is an individual product you buy from a vendor and then turn around and resell it yourself.

Those types of items you may or may not want to track in inventory. And again, it's a choice that you have to make depending on your own company needs.

QuickBooks has some good solutions for tracking of inventory. It helps allow you to see how much quantity you have on hand at any given time of a particular item. that allows you to see the average cost of that item, how much you've sold, and when you need to reorder by setting default thresholds.

For our business, we're going to go ahead and turn on that feature even though it recommends no.

We do actually do some tracking of inventory for our company. We buy espresso machines that we then turn around and resell to our clients. And we also buy coffee mugs that we them will turn around and resell. So I want to make sure that I track my inventory of coffee mugs and espresso machines so that I know how much it's costing me, how much I have on hand, and when it is time to reorder that product. So we've selected Yes and we're going to click on Next.

Do you accept credit cards? And again, we have our three questions here of yes, I do currently accept them. No, I don't currently but I would probably like to later. Or I don't and I don't plan on doing it. Now again, in today's market most people are accepting credit cards. Again, don't worry. If right now you don't and you don't select that feature, later on you can always turn it on. We're going to go ahead and leave it on because we do accept credit cards for our business. We're going to click on Next.

This is very helpful if you're going to bill customers based on labor costs for a job that you've done. Very commonly again, this is used in a construction setting where I'm charging time and material for my job. I need to be able to charge the client for the labor costs. I also want to be able to analyze how much time I've spent and to what job that's associated with. And I want to be able to pay my employees based on that time tracking. So all those things you accomplish by turning on time tracking in QuickBooks. And for our purposes we're going to leave it on for our company because we do provide again catering, which does have labor services involved. And I want to be able to associate that with perhaps a particular client. Again as if we're catering a wedding, I want to be able to track that time associated, pay appropriately, and charge the client appropriately for the hours spent. And so we're going to leave that as a yes and again, if you turn this off don't worry, you can always turn it on again later. We're going to click on Next.

The next question QuickBooks asks you is do you have employees. And for our company, yes we do. And regardless of whether using QuickBooks payroll or not, I would suggest that you set this up appropriately for whatever your company business has. For ours we have employees and we have W-2 employees, which is someone that you actually run through payroll, collect taxes out of their check and then send that tax payment in for the employee to the state and federal government. In addition to W-2, we also have what's called 1099 contractors.

Now, a 1099 contractor is not an employee. You do not withhold taxes from what you're paying them during the course of the year. You pay them a gross wage. Then you report those earnings to the government at the end of the year and then it is up to that person to pay their own taxes directly to the government themsleves. We do have both so we're going to select both and we're going to click on Next.

Using accounts in QuickBooks: The next section here is going to talk about the Chart of Accounts which is nothing more than a way to organize your income and expenses within the program. The Chart of Accounts is a great feature in accounting. It allows you to be able to see how much you're making, how much you're spending based on categories that you've determined. And that really allows you to be able to control expenses and understand where your sales are coming from so that you can better manage your business.

And if you look here QuickBooks gives you a little why is Chart of Accounts important and the help tools are always great for little reminders or clarification on things that you may not be familiar with. OK, we're going to go ahead and click on Next.

We now need to select a start date for our business. This is the date we're going to convert all of our financial information into QuickBooks. And we spoke about this earlier how important the start day is. This really determines how much information we're going to be bringing into QuickBooks at the time that we start using it for our company operations. It gives you two options here. Basically you have the beginning of the year that you can select and it's defaulted to 1, 1 of 2008. Now, you may see something different when you actually load the software on for yourselves. Generally QuickBooks will drive to whatever the current year you're in.

We are showing 1, 1 of 2008 for the purposes of this exercise. The other option we have is use today's date or the first day of the quarter or month. And again, this is really up to you. We strongly recommend starting the first of th calendar year when possible. It makes it the easiest for everybody. You don't have to bring as much level of detail into QuickBooks. Of course, if that's not going to work for you, if you know, it's May and you need to get this going now and you can't wait until the next year to get going on QuickBooks, then obviously you have to have a different start date. I always recommend  the first day of the month or the first day of a quarter. For our purposes for the exercise we're going to choose the beginning of the fiscal year.

But again, you have to look at your own company needs, where you're at in the year in relationship to your fiscal year, and when you feel is appropriate for you to start using QuickBooks. The amount of detail or data you have to bring into QuickBooks will be predicated on whatever start date that you choose. QuickBooks is now asking us to Add a bank account.

Now, bank accounts are generally what you're going to be tracking your money in, so your actual, physical cash. Commonly they're checking accounts, savings accounts, money market accounts, things of this nature. At this point in the easy step interview we could set up our existing bank account, however, we're going to go ahead and do that in a later chapter. So I'm going to go ahead and select No and we're going to add the bank account later. You could select yes and then it would take you through setting up some bank accounts, but as I said we're going to go ahead and do that in a later chapter so I'm going to select No at this point.

Reviewing of your income and expense accounts: These are the default accounts that QuickBooks is now going to populate into your company file.

Again, these accounts were chosen based on all the prior criteria we've been giving QuickBooks in answering all these questions. Its come up and said OK, these are the accounts we think you're going to most frequently use. So here you go. Here's your list. And if you notice on the left you've got checkmarks. The checkmark means that's the account thats been selected and it tells you the account name or description of the account and to the right it's going to give you the type of account. Now, we're going get into more information as far as what these mean in a later chapter. But you can go ahead and go with the defaults QuickBooks has set up because again, once we actually get into the program we can customize. We can take things out, we can add things in.

It's all changeable. So you don't have to be worried that you have to choose everything right at this point. Later on we can go in and edit or add as we need. And we can even do it as we start to work with the program. So we're going to go ahead and leave the defaults that QuickBooks has chosen here. We're going to click on Next.

Congratulations. You've now finised the easy step interview and we're now ready to move on and start using QuickBooks.
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As both an experienced artist and an accomplished professional in finance, Suzanne Robertson possesses a unique combination of creative and analytic talents. She utilizes her 20 years of business experience and 10 years of teaching experience, along with a distinct affinity for software, to teach complex subjects in a way that is both easy to understand and applicable to the real world.

Suzanne is happily married and lives in California, where she enjoys being a mother to two beautiful children. She works as a consultant, assisting small business owners in creating and maintaining successful financial practices.


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