WHAT YOU NEED TO KNOW ABOUT ACCOUNTING TO USE QUICKBOOKS

Whether or not you use the word “accounting,” your business already does it. You manage accounts, pay bills, receive payments – all tasks that are a part of the process. When you use QuickBooks, though, you are following the same generally-accepted practices that professionals do.

The thing is, though, that you don’t have to deal with most of the nuts-and-bolts activity that is required. You don’t have to understand how to, for example:

• Create a Chart of Accounts.
• Balance debits and credits.
• Design standard financial reports.
• Assemble customer statements.

 AN INVISIBLE HELPER

QuickBooks takes care of those chores—and much more—behind the scenes. It provides a digital framework for the financial data provided. You’ll interact with it by entering words and numbers in blank fields, selecting options from drop-down lists, and clicking on buttons and in boxes. It works much like other Windows software, so navigation and data entry shouldn’t be a problem.

But you should have a basic understanding of some simple accounting concepts. You may also need to learn about how to stay in compliance with government agencies if you are going to use QuickBooks’ payroll features.

Specifically, here’s some of what we recommend you know as you begin to use QuickBooks:

THE ROLE OF THE CHART OF ACCOUNTS

Again, you don’t have to create one: QuickBooks does that for you. This list of accounts is divided by type: assets (what you own), liabilities (what you owe), equity (the difference between the previous two), income, and expenses. You’ll encounter accounts at various places in the program, like when you have to assign an expense account to a bill you’re paying. Incorrect account classifications can lead to serious problems when you create reports and prepare income taxes.

ITEM TYPES

QuickBooks helps you create records for each “item” you buy or sell. These can be inventory parts, non-inventory parts, or services. It’s very important that you recognize the difference and categorize each item record correctly.

THE SALES TAX STATUS OF ITEMS YOU SELL

QuickBooks lets you add sales tax when you’re creating invoices, but you’ll need to know the rates and regulations for any state and local sales tax that you are required to collect and pay.

YOUR STATE’S PAYROLL REQUIREMENTS

If you’re already doing your company’s payroll manually or using a payroll service, you may save time and money by using QuickBooks’ payroll tools. The mechanics of this challenging element of accounting are simplified by the software, but every state has its own requirements for withholding and paying payroll taxes. You’ll need to know what these are, in addition to understanding exactly what’s expected by benefits providers.

There are other concepts you’ll need to understand, like the role of all sales (invoices, statements, receipts, etc.) and purchase (bills, purchase orders, vendor credits, etc.) forms; report customization; and the recording of incoming payments. We can get you up to speed on what you should know or provide a refresher for you if you’re already struggling with QuickBooks.