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In this Issue:
second guess what information is included in QuickBooks
You can't tell a book by
its cover and you cannot determine what information is
being displayed from the name of the QuickBooks report.
Make sure you
understand what information is included in a report
before coming to the conclusion that there are mistakes
and problems with your data.
QuickBooks is a collection of data: part numbers,
account codes, customer information, etc. It is data
stored in a computer file that can be searched and
retrieved by using predefined reports or customizing report content to fit your needs.
In QuickBooks, the
information retrieval process is known as 'filtering'.
And you can identify what information is being displayed
running the report
and clicking on the modify button (upper left corner on
the report bar) and clicking on the filter tab.
While you are reading this article, open the following
Reports > Vendor & Payables > Vendor Balance Detail
Report. Many QuickBooks users expect to see
all their vendor activity on this report. Click on
the modify button and then click on the filter tab.
Take note that this report has been filtered for the
accounts payable account. Therefore it will only display
transactions that have been included in accounts payable
account. So what transaction types are part of accounts
Half the battle of mastering QuickBooks and the reports
is learning which accounts are affected by each
transaction type. 'Enter bill', 'Write check', and 'Credit
card charges' are similar in that they
permit you to record an expense, loan payment or
purchase an asset. BUT, only one will
increase your accounts payable account (bill), one will reduce your cash (check) in your
bank account and another will increase what you owe on your
credit card (credit card).
Is it wrong to use 'write
checks' to pay a vendor? Or to record a payment
to vendor using a credit card? No! But neither
of these transactions will appear in the Vendor
Balance Detail Report because this report will only
display transactions which passed through the accounts
payable account. No problem! Other reports
exist to provide the information you seek. For
example, the Expenses by Vendor Detail Report,
found under the Company & Financial reports menu, will
display all the expense purchases from each vendor
regardless of the transaction type entered into
QuickBooks. Run the Expenses by Vendor Detail Report
and click on the modify button, and then click the
filter tab. This report will display all transactions
coded to an expense account AND only if a vendor name
was used. Therefore it
will exclude transactions to employees, customers
and other name types and money disbursed for loan payments and asset
purchases. No Problem!
In our last newsletter -
Before you can depend on your reports, office
procedures must be in place and followed to help weed
out inconsistencies. Gain business insight by
building, filtering, saving
and reviewing the same reports month to month and year
about the reports to review at month end.
Most reports are flexible
and will allow you to add or change the filter criteria
used to include the data you would like to see.
Take the Expenses by Vendor Detail Report one
step further to include all names regardless of name
type (vendor, customer, other, employee). Clicking in
the Filter tab, then on the Name Filter, then in the
dialog box, click on the blue down arrow and scroll to
the top of the list. Click on All Names to display
transactions for customers, vendors, employees,
and other name types, or click on selected Names to pick
more than one name from a comprehensive list of names.
Add loan payments that you want to see displayed on
this report? Click on the account filter, scroll
to the top of the dialog box list and click on selected
accounts and check off all the loan accounts you want
included and place a checkmark next to all the expense
accounts you would like included in the report.
Our QuickBooks Training CDs (see advertisement below) is
an ideal training solution for new users to gain the
understanding you need to master QuickBooks and all the
different transaction types. For individuals who
have spent some time with QuickBooks but need a
comprehensive overview to see what they have missed,
consider attending one of our live seminars
mentioned in this newsletter. We specialize
in helping small business owners correct and understand
their reports. And we can customize your QuickBooks to
reduce future errors. If you need assistance, give us a
800-216-0763 and allow us to demonstrate how our support
Office procedures manual that
includes a QuickBooks how to guide.
An office procedure
manual is a written 'how to' guide
describing the preferred policies of management.
Having such a guide is guaranteed to reduce errors and reduce training time
over the life of your business.
A policy & procedure manual is a tool your employee can
use to quickly become a productive member of your team.
It empowers them by providing guidance and training and
sets boundaries on authority. We
all have seen the chaos a new or temporary employee can
inflict because of poor training. Not to mention the
downswing in your productivity because of the constant
interruptions with questions. Much of which can be easily
addressed in an office procedures guide.
Be prepared for some employee resistance to documenting
their job. It is natural for an employee to want to
remain indispensable, but remind them about how handy it
will be should they
become sick or hurt and require time away from work.
Since each company has a different culture and employs
people with varying degrees of education
there is no cookie cutter training manual that is
easily customized. The procedures need to be detailed
enough to provide a newly hired individual with the
guidelines needed to complete the job and make
decisions. Write the manual with enough detail
that someone without as much education
or training can manage the basics of the job.
Documenting procedures and policies can appear to be an overwhelming task
and therefore may finds its way to the bottom of the 'to
do' pile. Instead, allow yourself several months
to complete this task. Breakdown the writing into
phases. Create an outline of what you would like
included and address one part each week. For example, by next
Friday, have everyone outline their job, the following
Friday may include writing a procedure for one or two
aspects of their job. Don't get hung up over grammar or
style, more importantly is having the documentation
on how each job function is performed. You can always
standardize the format at a later date keeping in mind
that the manual will be a continual work in progress as
technology and procedures change and systems are
Here are a few ideas to get your manual started.
Passwords (who is responsible for the list of all
passwords used on all computers and updated every time
there is a change). Where, is this information
stored and secured?
Backup procedures for the server and also
individual workstations including frequency and what
should be backed up. Plus - how often a 'test
restore' is performed to make sure the backups are
working as intended and the backup media is not damaged.
IT - Computer security including access, data
storage, who has access, remote access policies,
what can be downloaded from the internet, adherence to
software license and management polices.
Disaster recovery plan in the event of a fire or weather
Who has authority to commit the company to contracts
with customers & vendors.
Who can procure supplies, goods & services
and are there any applicable limits. Who has use of
company credit cards.
What are the vendor payment policies. What documentation is required
before payment can be approved such as purchase orders, pricing,
and goods receipts. What is
the pecking order of who gets paid in the event of cash
What are the
accounts receivable policies such as authorization
to establish new accounts, credit limits, pricing
policies, authorization to issue credit memos and write
off bad debts. Invoicing policies - how often, which
forms, what pricing and approvals are required.
Remember the customer list is an asset of the company
and access should be based on need only. Any printed
copies should be numbered and accounted for. If you
maintain records on customer credit cards what
policies are in place to protect customers from credit
card theft, what policies are in place to protect
personal information of customers.
You can find
confidentiality and discrimination policies on the web
and then have your attorney review.
Provide employee payroll procedures & benefits.
Who is entitled to company
paid benefits and what cost is born by the employees?
What forms should be included in an employee file, how
often are performance reviews completed? Who is the
administrator and who is responsible for providing the
plan administrator with the information needed?
Are there plan documents and where are they filed? Who
has access to employee payroll information (a key factor
in preventing identity theft)? Sick leave and personal
time off policies should be described.
Budgeting- Development and adherence to amounts
and types of employee and management training.
List acceptable limits and describe what supporting
documentation must be submitted for reimbursement for travel, entertainment,
Describe nonacceptable uses of the office telephone and
internet including posting on social media sites.
An Internet acceptable-use policy can save hundreds of
nonproductive hours per year from an employee tempted to
shop online and maintain social ties. Acceptable use
might allow employees to check their e-mail or update
their social networks before work or on their breaks. Be
sure to educate employees on an ongoing basis,
identifying the latest security threats and how their
e-mail could be targeted. Newsletters or department
meetings might be a good forum for disseminating
this information. Purchasing online monitoring
software that tracks what employees do online will
discourage the employee who might spend hours shopping
online, downloading videos or frequenting U-tube plus
provide evidence should you need to let this employee
How does the filing system work? What records should be retained,
location and filing frequency (daily, weekly, monthly),
how long they should be kept and where long term storage
Define the accounting use of each Chart of Accounts. Describe the types of
payments that get coded to each account with a list of vendors
that normally end up in the account. This will be a real handy
guideline for a novice to bookkeeping.
When and how are taxes payable? Provide a list of what taxes and licenses
are paid with due
dates and identify who is responsible for insuring payment and
What are the month end policies? Who will perform bank reconcilations, enter
adjusting entries, what reports should be reviewed and
what final reports should be printed and distributed.
Have your CPA review these policies to make sure you
have the tightest possible grip on internal controls.
Provide a step by step how to guide on common data entry
transactions (Invoicing, Bill paying, Payroll, etc).
of QuickBooks in your manual. Also mention any
procedures, hints and tips on correcting common
mistakes. With each QuickBooks data entry task
mention, also list the reports you work with to review
You can grab a screen
shot of a QuickBooks window by pressing the 'Ctrl' +
'Print Screen' keys at the same time on your
keyboard. Doing so, places the image into memory
for pasting into your manual. You will not see any
change in your computer monitor until place
the cursor in the spot in your document where you want the image
to appear and press the 'Ctrl' + 'V' keys at the same
An office procedure manual provides the guidance needed
to help your employees work together in achieving the
goals and mission statement of your company.
Once the you have completed the manual, make sure
that it is never falls into the hands of your
competition. As a precaution, print and assign a
unique number to each printed manual. Do not allow
the manual to be photocopied or removed from the office
and before handing over a final paycheck to an exiting
employee, be sure the office manual is returned.
Improved reports with
the 'credit card charge'
If you have set
up an American Express or other credit card
account in QuickBooks, you have seen how
payments with credit cards vendors show up
in detail expense reports under the vendors name and not
the name of your credit card providing
important expense management information.
Excellent detailed transaction reports
include the 'general ledger' and the
'transaction detail by account' both found
under the Accountant & Taxes section
of the Reports menu.
1. To set up a
credit card account (a separate account is
needed for each credit card you use), from
the List menu > Chart of Accounts > Right
click and select New > Select 'Credit Card'
as the type of account > Enter the name of
your credit card (AmEx, Visa, or
Mastercard) and to differentiate when you
have 2 or more of any one you can add the
last 4 digits of the card number.
2. To enter monthly
purchases on your credit card, from the banking menu >
credit card charges > and then select 'enter
credit card charges'. Entering
each transaction on your credit card
statement will provide you with important
management information and help your
accountant prepare your tax returns.
3. To make a
payment to the credit card company,
use a write check transaction and code the
check to the credit card account you created
in step 1.
Other uses of the 'credit card'
type of account:
Occasionally business owners use their
personal funds (cash, personal checking,
personal credit cards) to pay business
expenses. Setting up an officer loan account
as a credit card account will permit the use
of the 'enter credit card charge' form for
data entry. And as mention earlier,
this form allows us to enter the
vendor/payee name providing important
information about the item or service
purchased and still track the amount as
reimbursable to the business owner.
When you are managing several
corporation/business entities with
QuickBooks, and one company
regularly pays expenses on behalf of a
sister company, then the credit card
account type will create more meaningful
reports making reconciliations of the
intercompany loans a breeze.
Lets assume Company A pays expenses for
Company B. In Company B set up a 'Due to
Co A' . in the QuickBooks file of the
affiliate as a credit card type of account.
Enter in the 'enter credit card charges' all
payments made by Company A using the same
In Company A set
up an asset account, 'due from Co B''.
Code all checks, bills, and credit cards made on behalf of the
Co B to the 'due from
Co B' account. At the end of each
month, make sure these intercompany accounts
have the same ending balance.
inside scoop on IRS
deductions can I take on my tax return?
A very reasonable question. A few rules of
thumb: "any reasonable and necessary "
expense is deductible unless there is a
specific provision that limits the deduction
in the IRS code. An example of a
limitation is 50% of meals & entertainment
expenses are not allowable. Examples of a
nondeductible expenses are political
contributions and fines and penalties. A
deduction arises when you spend money. So if
you are retaining income to fund future
growth you are not spending so plan on
paying income tax.
A lot of the IRS code is pure common sense.
Restrain urges to be 'piggy' about taking
excessive deductions. For example, if your
competition does not spend oodles on Meals &
Entertainment, and you do, then your tax
return will tend to stand out. So find out
what is reasonable for your industry. And
pay your taxes timely (ie: don't use tax
money to fund your business growth). For
more valuable tips on tipping the odds in
your favor of never be called in to justify
your books and records see the audit guides
To be truly informed about what the IRS
looks for in a tax audit, read the manual
the IRS wrote for their rookie staffers
right out of school. Written in plain
English, learn about what the IRS believes
is not so reasonable and how they fish out
those questionable expenses and uncover
To download the IRS audit guide for your
industry, click on the industry link below
that most closely resembles the way you do
business (please take note of the date
published and check with your CPA for any
additional tax regulations or changes since
Artists and Art Galleries, Attorneys,
Body and Repair Industry,
Beauty and Barber Shops,
Bed and Breakfasts,
Car Wash Industry,
Cash Intensive Businesses,
Child Care Providers,
Computers, Electronics and High Technology,
Entertainment - Music
Farm Hobby Losses,
Specific Income Issues and Farm Cooperative,
Hardwood Timber Industry,
Independent Used Car Dealer,
Masonry and Concrete Industry,
Mobile Food Vendors,
Oil and Gas
Coastal Waterways Industries,
Retail Gift Shop,
Scrap Metal Industry,
Tour Bus Industry,
Updated guides found on IRS website,
IRS Auditor handbook on which penalties they
can negotiate (chapter 20)
We make QuickBooks work for
you! We clean up your files, provide one on one
training, and make sure that you know when an error has
occurred. Don't need help right now? Please tell your
customers, vendors & business contacts that we are here.
800-216-0763. An affordable and top notch service
is available immediately by our CPAs and Certified