figure 1

Accounting Quickbooks

Are You Defining Items In QuickBooks Correctly?


Figure 1: Clearly-defined items result in precise reports. 

Obviously, you’re using QuickBooks because you buy and/or sell products and/or services. You want to know at least weekly — if not daily — what’s selling and what’s not, so you can make informed plans about your company’s future.

You get that information from the reports that you so painstakingly customize and create. But their accuracy depends in large part on how carefully you define each item. This can be a laborious process, but it’s a critical part of QuickBooks’ foundation.

QuickBooks’ Item Lineup

You may not be aware of all of your options here. So let’s take a look at what you see when you go to Lists | Item List | Item | New:

Service. Simple enough. Do you or your employees do something for clients? Training? Construction labor? Web design? This is usually tracked by the hour.

Inventory Part. If you want to maintain detailed records about inventory that contain up-to-date information about value, quantities on hand and cost of goods sold, you must define these items as inventory parts. Before you start creating individual records, make sure that QuickBooks is set up for this purpose. Go to Edit | Preferences | Items & Inventory | Company Preferences and select the desired options there, like this:


Figure 2: QuickBooks needs to know that you’re planning to track at least some items as inventory parts. 

Inventory Assembly. Just what it sounds like; it’s sometimes referred to as a Bill of Materials. Do you sell items that actually consist of multiple individual products, services and/or other charges (though you may also sell the parts separately)? If you’re planning to track the compilations as individual units, then you must define them as assemblies.

Non-Inventory Parts. If you don’t track inventory, you can set up items as non-inventory parts. Even if you do track inventory, there may be times when you’ll want to use this designation. For instance, you might sell something to a customer that they asked you to obtain, but you don’t plan to stock it. In that case, QuickBooks only records the incoming and outgoing funds.


Figure 3: The New Item window looks a bit intimidating, but it’s critical that you complete it thoroughly and correctly. We can help you get started. 

Other Charges. This is a catch-all category for items like delivery charges or setup fees. You can’t designate a unit or measure here; they’re just standard costs.

Groups. Unlike assemblies, these are not recorded as individual inventory units. Use this designation when you sell a combination of items together frequently but you don’t want them tracked as one entity.

Discount. This is a fixed amount or a percentage that you subtract from a subtotal or total.

Payment. Normally, you would use the Receive Payments window to record a payment made. But if your customer has made a partial or advance payment upfront, use this item to subtract it from the total when you create the invoice or statement.


Figure 4: Use the Payment item to record an upfront remittance. 

Sales Tax Item. One sales tax, one rate, one agency.

Sales Tax Group. If a sale requires two or more sales tax items, QuickBooks calculates the total and displays it for the customer, but the items are tracked individually.

Additional Actions

The Item menu provides other options for working with items. You can:

      • Edit or delete
      • Duplicate
      • Make inactive
      • Find in transactions and
      • Customize the list’s columns.

Let us know if you’re not confident about items you’ve already created or if you’re just getting started with this important QuickBooks feature. Some extra work and attention upfront can save you from hours of back-tracking and frustration–and from reports that don’t tell the truth.

Quickbooks

Backup or Portable Company File? How to Decide

When you think about it, it’s pretty amazing that Intuit is able to pack the lion’s share of your financial data into one giant company file. It certainly makes it easier to separate from QuickBooks and move when necessary.

There are actually three options for saving and relocating that file. You know about backups, since you should be producing them religiously. You generate them so that if QuickBooks — or your computer itself — stops working or your file becomes corrupt, you can re-create the entire environment. Portable company files are more limited, and are best used when you want to save your file to a temporary location and/or email it to someone else.

You would only use an Accountant’s Copy, of course, when you want us to check your progress. We’ll work with you on setting this up.


Figure 1: Once you save and send off an Accountant’s Copy, you can’t work on transactions created before the dividing date. 

The Critical Backup

We can’t emphasize this enough: Losing your financial data can be the beginning of the end of your company. You won’t know what you’re owed, so you’ll be unable to collect. You’ll miss vendor payments. Payroll will be impossible to reconstruct, and you won’t be able to submit payroll taxes. And how will you know what your income tax obligation is?

It can happen to you.

QuickBooks simplifies this process. Click File | Create Backup… You’ll be asked whether you want to back up locally — to a network folder or thumb drive, for example – or to the cloud, using Intuit Data Protect (fees apply). If you select the local preference, click onOptions to designate a location in this window:


Figure 2: Choose from options in this window to create a backup profile. 

Click OK, then Next. QuickBooks will ask when you want to save your backup copy and offer scheduling options. When you’re done, click Finish.

Warning: If you’re using Intuit Sync Manager, there are special rules about copying the company file. Let us help you handle this safely.

Just the Facts

Portable company files are more compact than backup files, so they can be easily e-mailed as attachments or copied onto another computer. But they don’t contain everything that backups do. They lack, for example, letters, logos, attachments, images and templates. Don’t use this option if changes will be made, since they can’t be merged back into the file.

Be sure to create a current backup before you begin to move your file.

To save a portable company file, click on File | Create Copy (you can do this to copy any kind of file, actually). This window opens:


Figure 3: Click File | Create Copy… to access any of QuickBooks’ three options. 

Select Portable company file and click the Next button. In the following window, you’ll browse to a location for your file. QuickBooks will already have entered the name and will save your data in .qbm format. Click Save, then OK when QuickBooks tells you it must close and reopen your file first. Click OK again when you’re told that the file has been created.

Opening the File Elsewhere

When you’re ready to open the file at another location, click File | Open or Restore Company… In the window that opens, select Restore a portable file. The Open Portable Company File window opens; make sure that the file’s location is displayed in the Look in: field. Click Open. QuickBooks then asks where you want to restore the file.

The following step is critical. Rename your file unless you want to overwrite your current company file. You can add a date or some other identifying information like a version number.

Click Save. QuickBooks will convert your portable file to a standard company file with a.qbw extension.

QuickBooks makes it easy to create copies of your data, but an error here can threaten your company’s future. We can help ensure that that doesn’t happen.

Accounting Business Technology

Billing for Time and Expenses: How It Works

Billing for inventory parts is easy. Pick the items from a list and specify a quantity. Poof. Done.

Billing for costs, time or mileage is a little more complex. QuickBooks has built-in tools to help you do this, but it’s a bit of a process.

To simplify your workflow, do this groundwork first:

  • Go to Edit | Preferences | Time & Expenses | Company Preferences. Click the Yes button under Time tracking and indicate your choices under Invoicing options. If you plan to mark up some costs and want a default number, enter a percentage and account (these can be changed on individual invoices).


Figure 1: As you do with other QuickBooks processes, make sure that your Preferences are set correctly.

  • Add any billing items necessary by clicking Lists | Item List and then Item | New in the lower left corner.
  • If you plan to bill for mileage, go to Lists | Customer & Vendor Profile List | Vehicle List and enter information about every business vehicle.

Invoicing for Services

If you’re a service-oriented company, you bill for time frequently. This is easy. You’re probably already familiar with the Enter Time entry in the Employees menu. Whether you make individual time entries or complete a timesheet, it’s critical that you make the correct selections for each Customer: Job, Service Item and Payroll Item field, and check the Billable box.

When you create invoices, this box will open after you select a customer:


Figure 2: QuickBooks lets you know when there are time and costs to be billed for each customer.

You can let QuickBooks enter the time totals now, or add them later by clicking the Add Time/Costs button. Either way, the Choose Billable Time and Costs window opens. Add a checkmark next to each entry that should be billed, and click Options… to indicate whether you want one line for each time entry or would rather combine all similar service item types.


Figure 3: QuickBooks wants to know which entries should be invoiced.

More Complexity

If you’re done with billable expenses for this invoice, click OK. If there are other costs that you covered, click the Expenses tab to see all transactions that you earmarked for this client on a bill, check or credit card. You have the option here to mark up the cost by a percentage or amount (even if you established this in Preferences), and to specify an account.

Do the same for Mileage, which you would have entered previously — when it was incurred — at Company | Enter Vehicle Mileage. Then select any Items that you purchased for the customer. Your records should be correct, assuming that you were conscientious about assigning expenses to customers and jobs.


Figure 4: It’s easy to pull billable expenses into invoices if they’re documented carefully.

Turning expenses into invoices and then into income can be complicated. Let us know if we can help. We are your partner in building a successful business.

QuickBooks Tip: Here’s a cool little keyboard shortcut. Hit F2 while you’re in QuickBooks, and you’ll get the Product Information screen. It’ll tell you everything you want to know about your specific copy of QuickBooks, like your release and license number, the file size, number of users logged in, audit trail status and the total number of accounts, customers, employees, etc.

QuickBooks News Update

Please note that as of May 31, 2012, Intuit is discontinuing support for QuickBooks Pro, Premier and Simple Start 2009, QuickBooks for Mac 2009 and QuickBooks Enterprise Solutions 9. You can continue to use these solutions, of course, but live technical support and add-on services like payroll, credit card processing, online banking and bill-pay will not be accessible. Talk to us about upgrading if you’re using any of these products or services.

Scroll to top