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QuickBooks E-News
 for Small Business     Volume 5

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In this Issue:


Working with reports part one.

There are so many reports in QuickBooks, remembering which report will produce the information you need can be difficult. Here are a few of my favorite reports, from which almost all other reports can be created.

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Bookkeeping Links
Cash versus Accrual accounting
Chart of Accounts
Record Retention Periods
Accounting Basics


  1. Balance Sheet Standard
  2. Income Statement Standard
  3. Accounts Receivable Summary
  4. Accounts Payable Summary
  5. Payroll Summary
  6. Inventory Valuation Summary
  7. Customer Balance Detail
  8. Vendor Balance Detail

Over the next few newsletters we will talk
about the usefulness of each report.
Understanding how flexible the reporting
is in QuickBooks will have you returning
to these reports over and over for all your
management needs.

This exercise in report development is an
introduction to how  QuickBooks reports

The Balance sheet provides a snapshot view as to what you own, what you owe, and what net income looks like.   Great reports can easily be created from the balance sheet. For example:   

By drilling down (double click) on any amount on the balance sheet report you can view the daily activity (or change the date range) in this account.  QuickBooks reports are incredibly flexible. Try creating my favorite bank account report:

Run a balance sheet report >Drill down on a bank account > Click on modify button  and you open to the display tab >Change the date to 'Last Month' >  Find the columns box (on the bottom left of this window) and scroll down to the bottom of the list - > To add the columns click once on  'debit' & once on 'credit'.  Remove the 'amount' column by clicking once (removing checkmark) on 'amount'> Click on the header tab and change the title to "Bank account register" > Click OK  

Use this same procedure if you need other columns to appear in your report, for example if you assign expenses to customer/job names, you will want to see the column for 'source name' (displays vendor or employee name) added to your report. (Later on, after this exercise, become familiar with which columns will add valuable information to your report by placing a checkmark next to every single column option and making a note of which column to include in your next report).   
Continuing our customizing of  this QuickBooks report to your specific needs:
- Increase the width of the memo column by hovering the mouse over the diamond to the right of the column header 'memo' until it changes to a crossbar. Click and drag the mouse to the right until you have reached the desired width then let go of the mouse. Dragging to the left has the opposite effect, in fact, dragging the right diamond left instead of right will shrink the column width and you can remove the entire column  from the report by dragging the diamond beyond the left diamond. It is a breeze to add back the column if you have removed it unintentionally;
Click on Modify, and the first tab open is the display tab and the 'columns' option appears in the lower right of this window.  Place a checkmark by clicking next to the desired column. Give this a try by removing the 'Clr' column from the report then adding the 'Clr' column back in.

- Change the order of the columns  - hover the mouse over the column header, for example, try 'type'  until the mouse pointer changes to a hand, click and drag the 'type' column to the desired location. Try dragging to the right until the column hovers in-between the split and debit column headers and then let go of the mouse. It is just as simple to move it back.

- Change the font size of the report header, footer , column headings, data, or all of the above.
Click on the Modify button > Click on the tab 'Fonts and Numbers' > Click to Highlight the part of the report you would like to change then click on the 'Change Font' button > click OK to accept your changes. In this 'Fonts and Numbers' tab you can also choose to remove cents from the report by clicking on the box 'Without Cents'. Click OK to save changes   You can change the default font and size for every report from the Preferences window. From the Edit Menu > Select Preferences > Scroll halfway down the icon bar on the left until you see the icon for 'Reports' and  click on 'Reports' > Click on the tab 'company preferences' and click on 'Format' > Click on the tab 'Fonts and Numbers' and make changes accordingly > Click on okay to save your changes.

- Sort the QuickBooks report. Take a moment to see how the same data, displayed in different orders might help you manage your business.  From the report window > click on the down arrow next to the option 'sort by' and click on Type.  The form used to create the transaction will shed light on how and why it appears or does not appear in a report,  Sort this same report by every option in this list to determine if and how it may help you make business decisions.  Return the 'sort' to the default order then take a moment to see how 'total by' can offer a different perspective on the data. Using the down arrow next to the option 'total by'  > click on payee. 

- Print the report.  Print to a pdf (File menu) making it possible to create a report that can be
e-mailed and opened using Microsoft Excel

Options which are used frequently include:
Printing landscape mode (short and wide) or
Printing portrait mode
(tall and thin);
Fitting report to one page wide
will make automatically resize your fonts to fit all the columns on one page;
Previewing the report
before printing will provide the number of pages in the report If its a partial report you seek, the preview button will help identify the specific page (s)  to print  
Smart page breaks  will improve presentation. QuickBooks avoids splitting related data across two pages. Within larger groupings, QuickBooks chooses the most logical place to insert a page break.
Print back to front:
For printers that print each page face up this option will save you the trouble of manually collating pages. From the print report window > click options  > click 'back to front'

- Memorize the Report.  Changes made to any report can be permanently saved by clicking on the memorize button at the top of the report window. Give the report a descriptive title.  You may recall the memorized report from the report menu and selecting 'memorized reports'.

Take the time to drill down from the Balance Sheet report on accounts receivable > sort by type and review the output >  total by customer name > add the debit & credit column.
Start over,  from the Balance Sheet Report > drill down on accounts receivable > filter the report for paid status = open, add  the column for aging. Run similar reports on accounts payable. 

Each month after the bank reconciliation is completed,  run a Balance Sheet Report, Modify the report and select a date range of 'last month' and click OK. From the Balance Sheet report drill down on every account on the balance sheet  and review the activity from the prior month. Use the sorting, filtering, printing techniques in this newsletter to help identify mistakes.

An accurate QuickBooks accounts receivable report.

This is the third article of our series, what to do about negative balances in accounts receivable. (See: list of reasons why A/R show negatives, and  what to do when a customer overpays

An invoice form creates a transaction that will increase sales and show up in reports that list who owes money.  Using the 'receive payments' form/window  an invoice is marked paid and removed from the open invoice report.  Marking an invoice paid can only be achieved using the 'receive payments' form AND marking an invoice listed in the "applied to" section of this form or applying a credit/discount to invoice. By placing a check next to the invoice, using "set credits",  or using "discounts", QuickBooks creates a link from the invoice to the payment and marks the invoice paid.   Without a link, both the credit and the invoice remain open on your books.

Once the payment or credit is linked to the invoice, QuickBooks provides you with a nifty tool to easily find the linked transaction. Open an invoice, receive payment, or credit transaction and at the top of the window the 'history button'  provides the details and hyperlinks ('Go To' Button) to the related transaction.

When a customer payment comes in before the invoice is created it is necessary to make a note to link this payment AFTER the invoice has been created.  At times a customer sends in a payment without instructions on how to apply the payment.  When payment is placed "on account"  (not assigned to invoices) it will be necessary to make a note to link this payment AFTER the customer has supplied the missing information. To place a payment on account, from the receive payment window > select the customer > enter the check number and amount > do not place a check next to the invoices in the bottom section of the window > click save & new or save & close, click OK to the pop up information window.

To create a link from the 'prepayment' or 'on account payment' to the invoice :
From the receive payment window > Select the customer account > enter $0  for amount > Click once on the invoice > Click on the 'Set Credit' button > Select the credit amount you would like to apply. You can apply a partial credit  by replacing the default  in the 'amount to use' column with the amount you wish to apply. 

Tip: When creating credit memos for customer returns, write-offs, or discounts; It is a good habit to  immediately open the receive payment window and apply the credit to the appropriate invoice.  This will mark the invoice paid, remove it from the customer statement, and prevent the customer from using the credit inappropriately against a different invoice.  For credit memos mailed to the customer, be sure to include a blurb on the invoice that informs the customer how to treat this credit (for example: This credit has been used to offset invoice number 234, please make the same adjustment on your records).

Tip: There is no simple way to move a credit incorrectly applied from one invoice to another.  A trick to unlink the credit memo is to change the name on the credit memo to another customer > save the credit, then change the name back to the original customer. This will reopen the credit for  application to the correct invoice on your customer's account.

QuickBooks User Question:
A common mistake: A 'write check' window was used to pay a bill that had also been entered into QuickBooks with an enter bills window. How do I mark the bill that is still showing as open on the accounts payable report as paid?

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Two steps will correct the situation:

1. Find the 'write check' transaction.  Change the account to 'accounts payable' and enter the vendor name under the 'customer:job' field. Save and close

2. To link the payment to the vendor bill, From the Vendor menu > Pay bills > place a checkmark next to the open vendor bill > Click on set credits and then done. Save and close the pay bill window.

This solution is better than simply deleting the original 'bill' transaction. The dates used on forms in QuickBooks determines the month the transaction will show up on reports. The date used on the bill transaction will keep the expense in the month it was incurred. If you delete the 'bill' the date on the check would be the date that the expense shows up in reports.

Keeping personal separate from business in QuickBooks

Schedule C filers or for Partnership Taxpayers.
Writing checks from the business account or using business credit cards  for personal expenses does not create problems for a business organized as a partnership or sole proprietor. This is not true when the business is organized as an S Corporation or C Corporation. The IRS is a bit more lenient in its rules about drawing funds from the organization for personal use because Schedule C filers and General Partners' personal assets are at risk against claims arising from business operations.  This leniency does not suggest that owners can take a tax deduction for personal expenses, simply that a payment of personal expenses is allowed to the owners of a sole proprietorship or a partnership.  To help keep deductible business expenses separate from personal expenses in QuickBooks we suggest setting up a series of Equity accounts per owner to house the personal payments and keep them separate from the business expenses.
Capital - owner A
    Draw A - Create the following subaccounts of Draw
       Draw A - Medical payments
       Draw A - Estimated Income Tax Payments
       Draw A - Owners Pension
       Draw A - Miscellaneous 
Set up a similar grouping for each owner.   
January 1st of each year create a journal entry to bring the balances of the draw accounts to zero.  Banking menu > Create Journal Entry > Debit Capital > Credit each draw account for the balance in Draw as of 12/31/prior year.

Keeping these non business payments off the income statement provides the business owner with a profit and loss report that will ''at a glance" provide information that will help the owners manage the business.

For S Corporations and C Corporations
These business owners have to take much greater care in the tracing of funds that come into and out of the business.   S Corporations provide the owners with limited liability and avoids double taxation by passing the income to the personal return.  In fact, in some cases the overall tax paid is less than that paid by a Sole proprietor or Partner because the amount taken as a distribution is exempt from social security taxes.  The IRS keeps a close watch on the amount paid to owners of S Corporations looking for abuses such as understated wages (wages are subject to social security taxes).  Also, payments to owners that are not wages (treated as distributions) must correlate to the percentage of ownership share held.  For help setting up QuickBooks to stay within the boundaries  Read the full article on Reasonable compensation

Its payroll tax time again

Preparing your own payroll quarterly taxes?  Mistakes are costly and come back to haunt you several years after all the records have been placed in storage. So we have put together a short list of tips that will help you identify mistakes.

We update our site regularly, visit our payroll tax regulations to refresh your knowledge and learn correct methods for including fringe benefits in the W-2's. We have added a nice questionnaire at the bottom of this webpage that employee's can complete for a self-review before raises are handed out.

Tax and accounting regulations mentioned herewith or at the QBalance website are intended for businesses or individuals residing in the United States.  Tax and accounting regulations can be complex. Exceptions and circumstances will impact how a regulation applies to your unique situation.  Therefore information presented should not be relied upon without seeking professional advise from your accountant or attorney.

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