Archive for the ‘Using QuickBooks’ Category

The Life of an Inventory Item

Friday, December 4th, 2009

2009 is soon drawing to a close. Do you know where your physical inventory items are? Whether you keep them in a closet, in an unused office, or a warehouse, you need to keep a close watch on how many products you have, how many have been ordered, and when it’s time to reorder. Fortunately, QuickBooks has tools that help you track all of those numbers. If you’re conscientious about making use of them, you should have a good sense of the state of your inventory, wherever you store it.

(Note: These tools are not available in Simple Start or QuickBooks Online.)

Inventory 101
Let’s take a look at the life of an inventory item. First, you have to tell QuickBooks that you will be selling products. It asks for this information during the EasyStep interview, but if for some reason you didn’t set this up, you can still do it. Click Edit/Preferences, then Items & Inventory, and then Company Preferences. Make sure the first line is checked, as well as any others you want active, as seen in Figure 1.


Figure 1: You can have QuickBooks track your inventory by selecting this option in the Preferences window.

Next, check your Chart of Accounts to see if you need to add any accounts to meet your inventory needs. This is easy. Go to Lists/Chart of Accounts, or click the icon on the home page. The Chart of Accounts is simply a list of the accounts your company uses, and the balance for each. QuickBooks sets a chart up for you based on the type of company you have, but as your business grows, you may need to add more. Figure 2 shows an example of the Chart of Accounts window.


Figure 2: The Chart of Accounts window shows you the balance for each of your accounts.

To add a new account, click on the arrow next to Account and click New. Select the correct type of account, and answer the questions in the Add New Account window. If you have any questions here, consult QuickBooks’ help file.

See your Inventory in High Definition
Next you’ll have to define your company’s products. Click Items & Services on the home page. The Item list opens. You can always come back here when you need to edit an item, but you may want to create one now. So click Item/New. You’ll see a screen similar to the one pictured in Figure 3, but its fields will be blank. Item records in QuickBooks contain a good amount of information about each item, which will be used in forms like invoices and documents like reports.


Figure 3: An item record allows you to define your company’s product.

Fill out the information in each item record for each item you sell. You won’t be able to alter the numbers in the lower right corner; these come from other parts of the program. As for the other values, the need to make changes depends on the field. When you defined the item, you entered an On Hand amount. This of course will change as you sell, so you can change the reorder point. Conversely, the average cost (value of your inventory) is calculated by the program; it’s the total cost of items in stock divided by the number of items in stock. On P.O. and On S.O. simply indicate how much of your inventory is promised on purchase orders and sales orders.

Get Better Organized
QuickBooks lets you create assemblies, groups of items that are sold together as a kit. If you want to create one, click Lists/Item List, then click the arrow next to Item and click New. Click the arrow under Type, and select Inventory Assembly. Fill in the blanks on the window as you would for a single item, and select the individual inventory items in the box at the bottom. This box is pictured in Figure 4.


Figure 4: An item assembly makes it easy to reviews important item details.

Once you’ve defined your items and assemblies, you can use them in two places primarily: transactions forms and records. Let’s say you’re creating an invoice. As you’re filling out the form, you’ll be able to click the arrow under ITEM and view a list of the items you’ve created. Click on one, and the details you’ve entered (like price) will appear. Click Reports/Inventory to customize and run the reports available.

Maintaining an adequate inventory-not keeping too much or too little on hand-is critical to your company’s financial balance. QuickBooks’ tracking tools can help you meet that ongoing goal.

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Settle Up Fast with QuickBooks Bill Paying Tools

Thursday, October 29th, 2009

Some of the financial crystal ball-types are telling us there are signs that the recession may be drawing some of its last breaths. But those bills are still coming in, and you may have had a long, dry summer and less income that you can use to meet those business obligations.

The desktop versions of QuickBooks can help. They can’t magically make more money appear in your coffers, but they can help you manage your bills so you’re always aware of what’s coming up and don’t get any nasty surprises. This keeps both you and your vendors happy, and minimizes the chance of affecting your credit report adversely. You can also maximize cash flow by being hyper-aware of when each bill is due and timing them appropriately.

(These bill-paying tools are available in all QuickBooks versions above Simple Start.)

Enter first, then pay
Of course, you can mimic your old manual method of bill paying by simply using QuickBooks’ check-writing convention. But if you do this, you risk paying the bill twice.  If you follow the process shown in Figure 1 by entering and the then paying, you’ll ensure that you record the expense in the same period it occurred.

To start, click the Enter Bills or Vendors/Enter Bills icon. The Enter Bills dialog box opens as shown in Figure 2. If you received a bill, be sure that box in the upper right is checked, and that the Bill radio button is filled in.


Figure 1: You’ll find these icons on QuickBooks’ graphical flow chart.


Figure 2: The Enter Bills dialog box.

Next, click the arrow next to the Vendor line to select an existing vendor or add a new vendor. Change the date if necessary, and enter a reference number (this may avoid confusion later). Then, enter the amount due.

When you initially set up vendors, you either set up terms for each vendor or accepted the default. So the Terms field should already be filled in, and will generate the correct bill due date. Enter a descriptive memo in that field if you’d like.

Tip: Use the right-click menu when you’re entering bills to see more options.

Since this was an expense, you’ll want to record it as such. Make sure the Expenses tab is highlighted, and click in the Account field. Click the arrow that appears to drop down the list, and select the appropriate expense type. Fill in the rest of the field on the line, making sure to check the Billable box if this is something you can bill back to a customer. If the expense needs to be split into separate categories, create a new line and amount for each. Your bill now looks something like Figure 3.

Click the Items tab and fill out the fields there if your expense involves products. You must have Inventory turned on to do this. Click Save & Close or Save & New. QuickBooks now works in the background, increasing Accounts Payable and dropping the bill into several reports.

Figure 3: Make sure your completed bill entry screen is as complete as possible.

Paying your debts
When it’s time to pony up, click on the Pay Bills icon, or click Vendors/Pay Bills. You’ll see a screen similar to Figure 4. Check the radio button next to the correct preference to view all bills, or to limit the list to those on or before a specific date. Put a check mark next to the bill(s) you want to pay. The correct amount should fill in by default, but you can change this to make a partial payment.

If you want to view the bill, take a discount, or use credits, click on those buttons. Select a payment date, method (check or credit card), and toggle to the correct account if it’s not showing.

Figure 4: The Pay Bills dialog box. Make sit easy to finish the job.

Once you’ve paid a bill, your Accounts Payable and checkbook balances decrease, and the vendor balance and reports are updated. QuickBooks stamps a PAID watermark on the bill to avoid confusion later on.

Tip: To find bills you’ve already paid, go to the Vendor Center.

So stop stacking your bills on an old spindle and ruffling through them every day to see what’s due. You’ll find that there are numerous benefits to using QuickBooks’ bill-paying features, such as an improved credit rating, a dearth of past-due notices, and better cash flow .

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Tune up Your Business Plan with QuickBooks

Saturday, September 12th, 2009

Do you have a business plan? If you don’t, even if you’re a sole proprietor, you should.
Business plans can be a good barometer for the health of your finances as a way to gauge whether or not you’re on the right path. If you don’t have a business path (or if yours is less than organized or polished), you can use QuickBooks’ tools to create or fine-tune one. We’ll show you how to use these tools to get the job done quickly and easily.

The Game Plan
To get started, select Company > Planning & Budgeting > Use Business Plan Tool and you’ll see what’s displayed in Figure 1. QuickBooks’ business plan tool uses a convention that other Intuit products use frequently: a lengthy wizard that walks you through the entire process. This tool supplies information and asks questions about what’s needed on each screen. You fill in the answers (or select from options) and the business plan wizard works in the background to place the data in the correct place.

The first topic you’ll be asked about is your company.  If you’re a new business, you’ll have to estimate in some areas, like the percentage of your sales that will come through credit. In other cases, you’ll be better able to answer in concrete terms. For example, what will your customer payment terms be? When do you want your business plan and financial projection to start?

Figure 1: QuickBooks walks you through the process of creating a business plan with an easy-to-use interface.

What’s Coming In?
Your income is up next, and this will take some figure-pulling (and maybe some hair-pulling). You can either fill in a spreadsheet manually, adding up to 20 categories, or use the Income Projection Wizard, as pictured in Figure 2. If you’ve already been working with your data in QuickBooks, the latter is certainly recommended. These numbers will be scrutinized very carefully, perhaps put under the microscope more than any other element of your business plan. Make sure you can back them up.

Figure 2: The QuickBooks Income Projection Wizard.

If you’re projecting manually, be prepared to calculate the Cost of Goods Sold (COGS).  This number contains three pieces:

  • Material: What percentage of each dollar pays for the cost of product(s)? If you’re a service company, enter the associated materials costs.
  • Labor: What percentage of each dollar is tied to the employee costs associated with goods production?
  • Other: What percentage of each dollar goes into other costs?

Business Expenses and More
You have the same two choices when you’re entering your expenses. You can enter them manually or use the Expenses Projection Wizard. If you do the latter, your projections can be based on either the last 12 months of history or an average from the last 12 months.

In the Interview section, you’ll need to have numbers available, including:

  • Beginning account balances
  • Assets you own or need to buy
  • Cash available to invest (if applicable)
  • Amortization and depreciation

As in other areas of the business planning tool, existing data in QuickBooks will be automatically filled, such in Figure 3.

You’ll also answer questions here about inventory (i.e., fixed or variable, minimum balance), vendor financing,  lines of credit, and your total credit limit.


Figure 3: The business planning tool pulls in existing data from QuickBooks.

Writing your Plan
Now it’s time to write, but don’t panic thinking you’ll face a blank screen. The Plan section is divided into three sections, and you can toggle between them. You can view the actual plan outline tree, which is a window that provides tips and examples, as well as a text entry window, as shown in Figure 4.

Though this is primarily a text-based section including information about things like your company background, products and services, and the competition, you’ll supply some numbers, too, and the rationale for arriving at them.


Figure 4: The Plan section is divided into three main sections.

Once you’ve completed all of the sections, you simply preview and print your plan. QuickBooks assembles it with all of the text, tables, graphs, and charts in the right place, and presents you with a professional business plan that you can take to the bank, or simply revisit from time to time to make sure you’re on course.

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Save Time for Summer by Memorizing Transactions

Saturday, August 29th, 2009

Unfortunately, your work with QuickBooks doesn’t end just because it’s summer, the weather’s great, and school’s out. But there are ways to minimize your time spent managing your money and maximize your time at the beach. Memorizing transactions is one such way. When you memorize a transaction, QuickBooks remembers all of the relevant details and either processes it automatically or reminds you that it’s due.
A memorized transaction could be bills that show up in the same amount every month, like your Web-hosting payment, or obligations that change regularly, like your utility bill. You can specify the amount due if it’s static, or leave the amount open if it regularly changes, making this feature very flexible and easy to set up.

Jog your memory
Once you start teaching Quickbooks to memorize transactions, you’ll wonder why you didn’t use this handy feature before.  Say you want to automate your electric bill. First, create a transaction without an amount, like the one shown in Figure 1. Click the Edit menu, and then click Memorize Bill. The dialog box shown in Figure 2 opens.

Figure 1: To memorize a bill payment that changes regularly, fill out the transaction form minus the amount.

Figure 2: When you click Edit/Memorize Bill, this dialog box opens.

The vendor’s name appears in the Name field. If you want a more descriptive name so you’ll recognize it in a list, change it here. You have a few decisions to make in order to set up the repetitive transaction:

  • Do you want QuickBooks to remind you in advance of the bill’s due date? Click Remind Me.  If not, click Don’t Remind Me. And if it’s a bill whose amount remains the same every time, you can click Automatically Enter. If the transaction is a part of a group you’ve created, click the With Transactions in Group button.
  • How often do you pay this bill? Generally, it will be monthly, but QuickBooks gives you several options.
  • Check the Number Remaining box if you have a transaction with a finite number of payments, such as paying off a company vehicle.
  • How much warning do you want? Enter a number in the Days In Advance To Enter field.
  • If you’ve created a group and you want this transaction to be a part of it, select the name from the drop-down list.

When you want to use a memorized transaction, click the Lists menu, then Memorized Transactions List to open the dialog box shown in Figure 3. You can also “memorize” repetitive reports. Open the report you want to work with by clicking, for example, Reports/Company & Financial/Profit & Loss YTD Comparison. A dialog box like the one in Figure 4 opens. Accept the name presented, or change it to one that you’ll more easily recognize. If you want to save reports in groups you’ve created, like Accountant, select the group from the drop-down list.


Figure 3: The Memorized Transactions List allows you to customize to your preference.

Figure 4: The Memorize Report dialog box.

Thanks for the memories
Memorized transactions and reports can not only save you time for more summer adventures: They provide another way for QuickBooks to give you a quick look at what you owe and are owed, and how your company is performing overall.

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