QuickBooks 2017 for dummies

QuickBooks 2017 For Dummies PDFDrive com QuickBooks® 2017 For Dummies® Published by John Wiley Sons, Inc , 111 River Street, Hoboken, NJ 07030 5774, www wiley com Copyright © 2017 by John Wiley So.QuickBooks 2017 For Dummies PDFDrive com QuickBooks® 2017 For Dummies® Published by John Wiley Sons, Inc , 111 River Street, Hoboken, NJ 07030 5774, www wiley com Copyright © 2017 by John Wiley So.

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Table of Contents

Cover Introduction

About This Book Foolish Assumptions Icons Used in This Book Beyond the Book

Where to Go from Here

Part 1: Quickly into QuickBooks

Chapter 1: QuickBooks: The Heart of Your Business

Should You Get Your Accountant’s Help?

Chapter 3: Populating QuickBooks Lists

The Magic and Mystery of Items Adding Employees to Your Employee List Customers Are Your Business

It’s Just a Job Adding Vendors to Your Vendor List The Other Lists

Organizing Lists Printing Lists Exporting List Items to Your Word Processor Dealing with the Chart of Accounts List

Part 2: Daily Entry Tasks

Chapter 4: Creating Invoices and Credit Memos

Making Sure That You’re Ready to Invoice Customers Preparing an Invoice

Fixing Invoice Mistakes Preparing a Credit Memo Fixing Credit Memo Mistakes History Lessons

Printing Invoices and Credit Memos Sending Invoices and Credit Memos via Email Customizing Your Invoices and Credit Memos

Chapter 5: Reeling in the Dough

Recording a Sales Receipt Printing a Sales Receipt Special Tips for Retailers Correcting Sales Receipt Mistakes Recording Customer Payments Correcting Mistakes in Customer Payments Entries Making Bank Deposits

Improving Your Cash Inflow

Chapter 6: Paying the Bills

Pay Now or Pay Later?

Recording Your Bills by Writing Checks Recording Your Bills the Accounts Payable Way Paying Your Bills

Tracking Vehicle Mileage Paying Sales Tax

Setting Up Inventory Items When You Buy Stuff When You Sell Stuff How Purchase Orders Work Assembling a Product Time for a Reality Check Dealing with Multiple Inventory Locations The Lazy Person’s Approach to Inventory

Chapter 8: Keeping Your Checkbook

Writing Checks Depositing Money in a Checking Account Transferring Money between Accounts Working with Multiple Currencies

To Delete or to Void?

Handling NSF Checks from Customers The Big Register Phenomenon

Chapter 9: Paying with Plastic

Tracking Business Credit Cards Entering Credit Card Transactions Reconciling Your Credit Card Statement and Paying the Bill

Printing a Checking Register

Chapter 11: Payroll

Getting Ready to Do Payroll without Help from QuickBooks Doing Taxes the Right Way

Getting Ready to Do Payroll with QuickBooks Paying Your Employees

Paying Payroll Liabilities Preparing Quarterly Payroll Tax Returns Filing Annual Returns and Wage Statements The State Wants Some Money, Too

Chapter 12: Building the Perfect Budget

Is This a Game You Want to Play?

All Joking Aside: Some Basic Budgeting Tips

A Budgeting Secret You Won’t Learn in College Setting Up a Secret Plan

Adjusting a Secret Plan Forecasting Profits and Losses Projecting Cash Flows

Chapter 15: Reporting on the State of Affairs

What Kinds of Reports Are There, Anyway?

Creating and Printing a Report Reports Made to Order

Processing Multiple Reports Your Other Reporting Options Last but Not Least: The QuickReport

Chapter 16: Job Estimating, Billing, and Tracking

Turning On Job Costing Setting Up a Job Creating a Job Estimate Revising an Estimate

Turning an Estimate into an Invoice Comparing Estimated Item Amounts with Actual Item Amounts Charging for Actual Time and Costs

Tracking Job Costs

Chapter 17: File Management Tips

Backing Up Is (Not That) Hard to Do Accountant’s Copy

Working with Portable Files Using an Audit Trail

Using a Closing Password

Chapter 18: Fixed Assets and Vehicle Lists

What Is Fixed-Assets Accounting?

Fixed-Assets Accounting in QuickBooks Setting Up a Fixed Asset List

Tracking Vehicle Mileage

Part 5: The Part of Tens

Chapter 19: Tips for Handling (Almost) Ten Tricky Situations

Tracking Depreciation Selling an Asset Selling a Depreciable Asset Owner’s Equity in a Sole Proprietorship Owner’s Equity in a Partnership

Owner’s Equity in a Corporation Multiple-State Accounting Getting a Loan

Repaying a Loan

Chapter 20: (Almost) Ten Secret Business

Formulas

The First “Most Expensive Money You Can Borrow” Formula The Second “Most Expensive Money You Can Borrow” Formula The “How Do I Break Even?” Formula

The “You Can Grow Too Fast” Formula

The First “What Happens If … ?” Formula The Second “What Happens If … ?” Formula The Economic Order Quantity (Isaac Newton) Formula The Rule of 72

Part 6: Appendixes

Appendix A: Installing QuickBooks in 11 Easy Steps

Appendix B: If Numbers Are Your Friends

Keying In on Profit

In the Old Days, Things Were Different What Does an Italian Monk Have to Do with Anything? Two Dark Shadows in the World of Accounting

The Danger of Shell Games

Appendix C: Sharing QuickBooks Files

Sharing a QuickBooks File on a Network Installing QuickBooks for Network Use Setting User Permissions

Specifying Multiuser Mode Working in Multiuser Mode

About the Author

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End User License Agreement

Running or working in a small business is one of the coolest things a personcan do Really I mean it Sure, sometimes the environment is dangerous —kind of like the Old West — but it’s an environment in which you have theopportunity to make tons of money And it’s also an environment in whichyou can build a company or a job that perfectly fits you

By comparison, many brothers and sisters working in big-company corporateAmerica are furiously trying to fit their round pegs into painfully squareholes Yuck

You’re wondering, of course, what any of this has to do with this book orwith QuickBooks Quite a lot, actually The whole purpose of this book is tomake it easier for you to run or work in a small business by using

QuickBooks

About This Book

As you start your reading, though, I want to tell you a couple of things aboutthis book

First off, know that I fiddled a bit with the Windows and QuickBooks displaysettings For example, I noodled around with the font settings and some of thecolors The benefit is that the pictures of the QuickBooks windows and dialogboxes in this book are easier to read And that’s good But the cost of all ofthis is that my pictures look a little bit different from what you see on yourscreen And that’s not good In the end, however, what the publisher found isthat people are happier with increased readability

Next point: To make the best use of your time and energy, you should knowabout the conventions that I use in this book, which are as follows:

letters you type in QuickBooks If I tell you to type Jennifer, you can type JENNIFER or follow poet e e cummings’s lead and type jennifer.

Whenever I tell you to choose a command from a menu, I say somethinglike “Choose Lists ⇒ Items,” which simply means to first choose the Listsmenu and then choose Items The  ⇒  separates one part of the commandfrom the next part

You can choose menus, commands, and dialog box elements with themouse Just click the thing you want

When I provide step-by-step descriptions of tasks, something I do

regularly within the pages of this tome, I describe the tasks by using boldtext and then, below the boldfacing, give a more detailed explanation.You can skip the text that accompanies the step-by-step boldface

You know a little bit about how to work with your computer

You have or will buy a copy of QuickBooks for each computer on whichyou want to run the program

This book works for QuickBooks 2017 (and with the equivalentversion of QuickBooks Enterprise Solutions, which is named EnterpriseSolutions 17), although in a pinch, you can probably use it for

QuickBooks 2016 or 2018 too (I have to say, however, that if you haveQuickBooks 2016, you may want to return this book and trade it in for

QuickBooks 2016 For Dummies by yours truly Furthermore, even

though I’m no fortune-teller, I’m willing to predict that you’ll be able to

buy a QuickBooks 2018 For Dummies book when QuickBooks 2018

Icons Used in This Book

The Tip icon marks tips (duh!) and shortcuts that you can use to makeQuickBooks easier

Remember icons mark the information that’s especially important toknow To siphon off the most important information in each chapter, justskim these icons

The Technical Stuff icon marks information of a highly technicalnature that you can normally skip

Online articles covering additional topics are at

www.dummies.com/extras/quickbooks2017

Here, you can find tangential articles about minimizing (legally) yourbusiness’s tax burden, tricks for increasing your business’s profitability,and ways to speed the way that QuickBooks works

go ahead and read this thing from front to back You can start reading Chapter

1 and continue all the way to the end (which means through Chapter 20 andthe appendixes)

I don’t think this from-start-to-finish approach is bad because I tellyou a bunch of stuff (tips and tricks, for example) along the way I tried

to write the book in such a way that the experience isn’t as rough as youmight think, and I really do think you get good value from your reading.But you also can use this book the way you’d use an encyclopedia If youwant to know about a subject, you can look it up in the table of contents orthe index; then you can flip to the correct chapter or page and read as much asyou need or enjoy No muss, no fuss

I should mention one thing, however: Accounting software programs requireyou to do a certain amount of preparation before you can use them to get realwork done If you haven’t started to use QuickBooks yet, I recommend thatyou read the first few chapters of this book to find out what you need to dofirst

if you’re just starting with Microsoft Windows, peruse Chapter 1 of the

Windows User’s Guide or one of these books on your flavor of Windows: Windows 7 For Dummies, Windows 8.1 For Dummies, or Windows 10 For Dummies, all by Andy Rathbone.

Quickly into QuickBooks

Understand the big picture stuff about why, how, and when you installthe QuickBooks accounting software

Get practical stratagems and common-sense tactics for quickly gettingyour accounting system up and running

Load the QuickBooks master files with startup information so you’reproductive and efficient from day one

Why QuickBooks?

Okay, I know you know that you need an accounting system Somebody,maybe your accountant or spouse, has convinced you of this And you, beingthe team player that you are, have just accepted this conventional viewpoint

as the truth

But just between you and me, why do you really need QuickBooks? And

what does QuickBooks do that you really, truly need done? Heck, just to betruly cynical, also ask the question “Why QuickBooks?” Why not use someother accounting software program?

Why you need an accounting system

Start with the most basic question: Why do you even need an accountingsystem like QuickBooks? It’s a fair question, so let me supply the two-part

The first reason is that federal law requires your business to maintain an

accounting system More specifically, Section 446 (General Rule for Methods

of Accounting) of Title 26 (Internal Revenue Code) of the United States Coderequires that you have the capability to compute taxable income by usingsome sort of common-sense accounting system that clearly reflects income

If you decide to blow off this requirement — after all, you got into business

so that you could throw off the shackles of bureaucracy — you might getaway with your omission But if the Internal Revenue Service (IRS) examinesyour return, and you ignored Section 446, the IRS gets to do your accounting

the way it wants And the IRS way means that you pay more in taxes and that

you also pay taxes earlier than you would have otherwise

Here’s the second reason for maintaining an accounting system I sort of goout on an editorial limb, but I’m going to do it anyway My strong belief —backed by more than three decades of business experience and close-handobservations of several hundred business clients — is that you can’t

successfully manage your business without a decent accounting system

Success requires accurately measuring profits or losses and reasonably

estimating your financial condition

This second reason makes sense, right? If your friend Kenneth doesn’t knowwhen he’s making money, which products or services are profitable, andwhich customers are worth keeping (and which aren’t), does he really have achance?

I don’t think he does

To summarize, your business must have a decent accounting system, no

matter how you feel about accounting and regardless of how time-consumingand expensive such a system is or becomes The law requires you to havesuch an accounting system And successful business management depends onsuch an accounting system

What QuickBooks does

Go on to the next question that you and I need to discuss: What does

QuickBooks do to help you maintain an accounting system that measuresprofits and losses and other stuff like that?

QuickBooks also has a handful of other windows that you use in a similarfashion It supplies an invoice window, for example, that looks like an invoiceyou might use to bill a customer or client You fill in the invoice window’sblanks by recording invoice information, such as the name of the client orcustomer, invoice amount, and date by which you want to be paid

Here’s the neat thing about these check and invoice windows: When yourecord business transactions by filling in the blanks shown onscreen, youcollect the information that QuickBooks needs to prepare the reports thatsummarize your profits or losses and your financial situation

If you record two invoices (for $10,000 each) to show amounts that you

billed your customers, and then you record three checks (for $4,000 each) torecord your advertising, rent, and supplies expenses, QuickBooks can (withtwo or three mouse clicks by you) prepare a report that shows your profit, asshown in Table 1-1

customers and products

I know I’m kind of harsh in the first part of this chapter — bringing up thatstuff about the IRS and business failure — but this accounting stuff is neat!(For the record, that’s the only exclamation point I use in this chapter.) Goodaccounting gives you a way to manage your business for profitability Andobviously, all sorts of good and wonderful things stem from operating yourbusiness profitably: a materially comfortable life for you and your

employees; financial cushioning to get you through the tough patches; andprofits that can be reinvested in your business, in other businesses, and incommunity charities

Let me mention a couple other darn handy things that QuickBooks (and otheraccounting systems, too) do for you, the overworked business owner or

bookkeeper:

Forms: QuickBooks produces, or prints, forms such as checks or invoices

by using the information you enter in those check windows and invoicewindows that I mention earlier So that’s neat, and a true time saver (See

Chapter 4.)

Electronic banking and billing: QuickBooks transmits and retrieves

some financial transaction information electronically It can email yourinvoices to customers and clients, for example (That can save you bothtime and money.) And QuickBooks can share bank accounting

information with most major banks, making it easy to make payments andtransfer funds electronically (See Chapter 13.)

Why not QuickBooks online?

Now for an awkward question: Should you be using the desktop version ofQuickBooks, or do you need to get with the program and use the online

version of QuickBooks? Good question

The desktop version is probably significantly more economical over theyears you use QuickBooks I’ve blogged about this (not in a bitter,

grumpy-old-man way, I hope) at our CPA firm’s website,

www.evergreensmallbusiness.com The problem with these

subscription-type pricing models is that you pay — over time — way,way more for an item And I believe that this is true with QuickBooks

At least currently, the desktop version of QuickBooks provides morefunctionality and a richer feature set I’m not going to individually listwhat is included in the desktop version and missing in the online version,but I see holes (I’m happy to stipulate that, yes, at some point Intuit willsurely plug these holes But in the meantime, hey, why pay more forless?)

Can I point out one scenario in which the online version does make sense inspite of its greater cost and lesser functionality? If you need to have people atdifferent locations (across town, across the country, around the globe, and so

on) share QuickBooks, the online version of QuickBooks rocks It really

rocks

Note: If your CPA can support your use of QuickBooks simply because

you’re using the online version, that may justify the extra cost and lighterfeature set

Ease of use: QuickBooks historically has been the easiest or one of the

easiest accounting software programs to use Why? The whole just-enter-people — probably including you — know almost everything they need

to know to collect the information that they need to do their books withQuickBooks Over time, other software programs have tended to becomemore QuickBooks-like in their ease of use The folks at Intuit have trulyfigured out how to make and keep accounting easy

I should tell you, because I’m an accountant, that the ease-of-usequality of QuickBooks isn’t all good Part of the reason why QuickBooks

is easy to use is that it doesn’t possess all the built-in internal controlmechanisms that some more traditional accounting systems have Thoseinternal control mechanisms, of course, make your financial data moresecure, but they also make the accounting software more complicated touse

Expense: QuickBooks, especially compared with the hard-core

accounting packages that accountants love, is pretty darn inexpensive.Different versions have different prices, but for a ballpark figure, you canget an excellent accounting software solution for a few hundred bucks.Not to go all grandfatherly on you or anything, but when I was a youngCPA, inexpensive accounting software packages often cost several

thousand dollars And it was almost easy to spend tens of thousands ofdollars

Ubiquity: The ubiquity issue relates to the ease of use of QuickBooks

and the cheap price that Intuit charges for QuickBooks Oddly enough,the ubiquity of QuickBooks becomes its own benefit, too You’ll find itvery easy to find a bookkeeper who knows QuickBooks, for example.And if you can’t, you can hire someone who doesn’t know QuickBooksand then send that individual to a QuickBooks class at the local

community college (because that class will be easy to find) You’ll alsofind it very easy to find a CPA who knows QuickBooks Now, you mightchoose to use some other, very good piece of accounting software Almostassuredly, however, what you’ll discover is that it’s tougher to find people

to find CPAs who know the software, and even tougher to find booksabout the software

What’s Next, Dude?

At this point, presumably, you know why you need accounting software andwhy QuickBooks is probably a reasonable and maybe even an excellent

choice In other words, you swallowed my line about QuickBooks hook, line,and sinker That decision on your part leaves the question of what you should

do next Let me say this In a nutshell, before you can begin working withQuickBooks, you need to do the following:

Rest assured, however, that none of the setup work is overly complex; it’s justtime-consuming Also know from the very start that QuickBooks provides atremendous amount of hand-holding to help you step through the setup

process Remember, too, that you have your new friend — that’s me — tohelp you whenever the setup process gets a little gnarly

How to Succeed with QuickBooks

Before I wrap up the little why, what, and how discussion of this chapter, Iought to provide a handful of ideas about how to make your experience withQuickBooks a successful one

Here’s my first suggestion: Please plan on spending at least a few hours to getthe QuickBooks software installed, set up, and running I know you don’treally want to do that You have a business to run, a family to take care of, adog to walk, and so on

But here’s the reality sandwich you probably need to take a big bite of: Ittakes half an hour just to get the software installed on your computer (Thisinstallation isn’t complicated, of course You’ll mostly just sit there, sippingcoffee or whatever.)

But after the QuickBooks software is installed, unfortunately, you still have torun through the QuickBooks Setup process Again, this work isn’t difficult,but it does take time Setting up QuickBooks for a very simple service

business probably takes at least an hour If your business owns inventory, or ifyou’re a contractor with some serious job-costing requirements, the processcan take several hours

Therefore, do yourself a favor: Give yourself adequate time for the job athand

Don’t focus on features

Now let me share another little tip about getting going with QuickBooks Atthe point that you install the QuickBooks software and start the program,you’ll be in shock about the number of commands, whistles, bells, and

buttons that the QuickBooks window provides But you know what? Youcan’t focus on the QuickBooks features

Your job is simply to figure out how to record a handful — probably a smallhandful — of transactions with QuickBooks Therefore, what you want to do

is focus on the transactions that need to be recorded for you to keep yourbooks

Suppose that you’re a one-person consulting business In that case, you mayneed to figure out how to record only the following three transactions:

Invoices

Payments from customers (because you invoiced them)

Payments to vendors (because they sent you bills)

“Oh, Steve,” you’re saying, “you just intentionally picked an easy business.I’m a retailer with a much more complicated situation.”

Okay, well, you’re right that I picked an easy business for my first example,but I stand by the same advice for retailers If you’re a retailer, you probablyneed to figure out how to record only four transactions:

Chapter 11)

I don’t want to be cranky or careless here, but one truly good trick for getting

up to speed with QuickBooks is to focus on the transactions that you need torecord If you identify those transactions and then figure out how to recordthem, you’ve done the hard part Really

Outsource payroll

Here’s another suggestion for you: Go ahead and outsource your payroll.That’ll probably cost you between $1,000 and $2,000 per year I know, that’sroughly the total cost of four discount tickets to Hawaii, but outsourcing

payroll delivers three big benefits, even after considering the stiff price:

Simplicity: Payroll is one of the most complicated areas in smallbusiness

accounting and in QuickBooks Accordingly, you’ll greatly simplify yourbookkeeping by moving this headache off your desk and onto the desk ofyour accountant (he or she may love doing your payroll) or the payroll

Penalties: Did I mention that payroll is one of the most complicated areas

in smallbusiness accounting and in QuickBooks? I did? Good, becauseyou truly need to know that payroll preparation and accounting mistakesare easy to make And payroll mistakes often subject you to seriouslyannoying fines and penalties from the IRS and from state revenue andemployment agencies I grant you that $1,500 per year for payroll

Peabody’s first payroll, she’ll ask to meet with you — to talk about whyMrs Raleigh makes $15,000 more per year than she (Mrs Peabody) does,and also to ask why she (Mrs Peabody) makes only $2 per hour morethan Wayne, the idiot who works in the warehouse Because you’re a niceperson, Mrs Peabody will leave a few minutes later with a $1.50-per-hourraise And at that point, you’ll remember, vaguely, my earlier cautionabout the problem of saving maybe $2,000 per year in payroll service feesbut then having to give Mrs Peabody an extra $3,000 raise Ouch

Get professional help

A quick point: You can probably get a CPA to sit down with you for an hour

or two and show you how to enter a handful of transactions in QuickBooks

In other words, for a cost that’s probably somewhere between $200 and $300,you can have somebody hold your hand for the first three invoices you create,the first two bills you record, the first four checks you write, and so on

You should try to do this if you can You’ll save yourself untold hours ofheadache by having someone who knows what she or he is doing provide anitty-bit of personalized training

Use both the profit and loss statement and the balance

And now, my final point: You truly want to use your profit and loss statement (which measures your profits) and your balance sheet (which lists your

assets, liabilities, and owner’s equity) as part of managing your business Inother words, get used to producing a QuickBooks profit and loss statementeach week, or month, or whatever Then use that statement to determine yourprofitability In a similar fashion, regularly produce a balance sheet to checkyour cash balances, the amounts customers or clients owe, and so on

Maybe this advice seems obvious, but there’s a semi-hidden reason for mysuggestion: If you or you and the bookkeeper do the accounting correctly,both the QuickBooks profit and loss statement and the balance sheet willshow numbers that make sense In other words, the cash balance number onthe balance sheet — remember that a balance sheet lists your assets, includingcash — will resemble what the bank says you hold in cash If the QuickBooksbalance sheet says instead that you’re holding $34 million in cash, you’llknow that something is rotten in Denmark

The big decision

Before you fiddle with your computer or the QuickBooks software, you need

to choose the date — the so-called conversion date — on which you want to

This decision is hugely important because the conversion date that you

choose dramatically affects both the work you have to do to get QuickBooksrunning smoothly and the initial usefulness of the financial information thatyou collect and record by using QuickBooks

You have three basic choices:

The right way: You can convert at the beginning of your accounting year

(which, in most cases, is the same as the beginning of the calendar year).This way is the right way for two reasons First, converting at the

accounting period is, see Appendix B.)

The my-way-or-the-highway way: You can convert at some time other

than what I call the right way and the slightly awkward way Specifically,you can choose to convert whenever you jolly well feel like it You create

a bunch of unnecessary work for yourself if you take this approach, andyou pull out a bunch of your hair in the process But you also have thesatisfaction of knowing that through it all, you did it your way — withoutany help from me

I recommend choosing the right way What this choice means is that if it’slate in the year — say, October — you just wait until January 1 of the nextyear to convert If it’s still early in the year, you can retroactively convert as

of the beginning of the year (If you do this, you need to go back and do yourfinancial record keeping for the first part of the current year by using

QuickBooks: entering sales, recording purchases, and so on.)

If it’s sometime in the middle of the year — say, Memorial Day or later —you probably want to use the slightly awkward way (I’m actually going to

The trial balance of the century

After you decide when you want to convert, you need a trial balance

“Yikes,” you say “What’s a trial balance?” A trial balance simply lists all

your assets, liabilities, and owner’s equity account balances as well as theyear-to-date income and expense numbers on a specified date (which, notcoincidentally, happens to be the conversion date) You need this data for theQuickBooks Setup process and for some fiddling around that you need to doafter you complete the QuickBooks Setup process

Creating a trial balance doesn’t have to be as hard as it sounds Ifyou’ve been using another small-business accounting system, such asthe simpler Quicken product from Intuit or the Simply Accounting

program from Computer Associates, you may be able to have your oldsystem produce a trial balance on the conversion date In that case, youcan get the balances from your old system (Consider yourself lucky ifthis is the case.)

Just to split hairs, the trial balance should show account balances at the verystart of the first day that you’ll begin using QuickBooks for actual

accounting If the conversion date is 1/1/2017, for example, the trial balanceneeds to show the account balances at one minute past midnight on 1/1/2017.This is also the very same thing as showing the account balances at the veryend of the last day that you’ll be using the old accounting system — in otherwords, at exactly midnight on 12/31/2016 if you’re converting to QuickBooks

invoices

To get your other asset account balances: Know what each asset

originally costs For depreciable fixed assets, you also need to provideany accumulated depreciation that has been claimed for that asset

You don’t need to worry about the owner’s equity accounts QuickBooks cancalculate your owner’s equity account balances for you, based on the

difference between your total assets and your total liabilities This method is abit sloppy, and accountants may not like it, but it’s a pretty good compromise.(If you do have detailed account balances for your owner’s equity accounts,use these figures — and know that you’re one in a million.)

If you’re using the slightly awkward way to convert to QuickBooks — inother words, if your conversion date is some date other than the beginning ofthe accounting year — you also need to provide year-to-date income andexpense balances To get your income, cost of goods sold, expenses, otherincome, and other expense account balances, you need to calculate the year-to-date amount of each account If you can get this information from your oldsystem, that’s super If not, you need to get it manually (If you suddenly haveimages of yourself sitting at your desk late at night, tapping away on a ten-key, you’re probably right What’s more, you probably also need to allocatehalf of another Saturday to getting QuickBooks up and running.)

Just for fun, I created the sample trial balance shown in Table 2-1 This tableshows you what a trial balance looks like if you convert at some time otherthan at the beginning of the accounting year

balance So if you have a cash balance of –$5,000, your account is overdrawn by $5,000 In the sample trial balance shown in Table 2-1, the accumulated depreciation shows a credit balance of $2,000, which is, in effect, a negative account balance.

For liabilities, owner’s equity accounts, and income accounts, things are flip-flopped A credit balance is the same thing as a positive balance So an accounts payable credit balance of

$2,000 means that you owe your creditors $2,000 A bank loan credit balance of $10,000 means that you owe the bank $10,000 And a sales account credit balance of $60,000 means that you’ve enjoyed $60,000 worth of sales.

computer:

Last year’s federal tax return: QuickBooks asks which federal income

Copies of all your most recent state and federal payroll tax returns: If

you prepare payroll for employees, QuickBooks wants to know about thefederal and state payroll tax rates that you pay, as well as some other stuff

Copies of all the unpaid invoices that your customers (or clients or patients or whatever) owe you as of the conversion date: I guess this is

probably obvious, but the total accounts receivable balance shown onyour trial balance needs to match the total of the unpaid customer

invoices

Copies of all unpaid bills that you owe your vendors as of the

conversion date: Again, this is probably obvious, but the total accounts

payable balance shown on your trial balance needs to match the total ofthe unpaid vendor bills

A detailed listing of any inventory items you’re holding for resale:

This list should include not only inventory item descriptions and

quantities, but also the initial purchase prices and the anticipated salesprices In other words, if you sell porcelain wombats, and you have 1,200

of these beauties in inventory, you need to know exactly what you paidfor them

Copies of the previous year’s W-2 statements, W-4 statements for anybody you hired since the beginning of the previous year, detailed information about any payroll tax liabilities you owe as of the

conversion date, and detailed information about the payroll tax

deposits you made since the beginning of the year: You need the

information shown on these forms to adequately and accurately set up theQuickBooks payroll feature I don’t want to scare you, but this is probablythe most tedious part of setting up QuickBooks

If you’re retroactively converting as of the beginning of the year, you need a list of all the transactions that have occurred since the

beginning of the year: sales, purchases, payroll transactions, and everything and anything else: If you do the right-way conversion

retroactively, you need to re-enter each of these transactions into the newsystem You actually enter the information after you complete the

searching for the rest of the items for this scavenger hunt

If you take the slightly awkward way, you don’t need to find the lastitem that I describe in the preceding list You can just use the year-to-date income and expense numbers from the trial balance

Stepping through QuickBooks Setup

After you decide when you want to convert, prepare a trial balance as of theconversion date, and collect the additional raw data that you need, you’reready to step through QuickBooks Setup You need to start QuickBooks andthen walk through the steps

Starting QuickBooks

To start QuickBooks 2017 in Windows 10, click the QuickBooks 2017 tile onthe Windows Desktop Or click the Windows Start button and then click themenu choice that leads to QuickBooks (I choose Start ⇒ All Apps ⇒ 

QuickBooks Premier: The Premier version adds features to QuickBooks

Pro and also comes in a variety of industry-specific flavors, including anAccountant edition that mimics most of these other flavors

QuickBooks Enterprise Solutions: This version is nearly identical to

QuickBooks Premier but allows for very large QuickBooks files,

I use the Accountant edition flavor of QuickBooks Enterprise

Solutions, so some of the figures might differ a wee bit from what yousee onscreen But know this: Aside from minor cosmetic differences, thevarious versions of QuickBooks all work the same way You can use thisbook for any of these program versions

If you’ve started QuickBooks for the first time, QuickBooks first tells youhow it plans to use your Internet connection to regularly update the

QuickBooks software After you click the button that indicates “Okay, yeah,I’m good with that,” QuickBooks displays the No Company Open dialog box(not shown) Then you click the Create a New Company button so that

QuickBooks displays the QuickBooks Setup dialog box with the message

Let’s get your business set up quickly! (see Figure 2-1)

FIGURE 2-1: The first QuickBooks Setup window.

If you aren’t starting QuickBooks for the first time but want to stepthrough QuickBooks Setup to set up a new company anyway, chooseFile ⇒ New Company

I should mention that the first QuickBooks Setup dialog box (the one shown

in Figure 2-1) identifies some other setup options you can use to get started.The dialog box gives you the Detailed Start option, for example, which letsyou control the setup and fine-tune the company file The dialog box alsogives you the option to create a new file from an old file It also suggests thatyou might want to upgrade from Quicken or some other accounting system.(Basically, that upgrade means that you want QuickBooks to try using yourexisting accounting system’s data as a starting point.)

Two simple bits of advice: Don’t fiddle with Detailed Setup unless you’re anaccounting expert, and don’t attempt to “upgrade” Quicken or some otheraccounting program’s data It’s just as easy and usually considerably cleaner

to work from a trial balance

The one group of new QuickBooks users who probably should try

upgrading their old accounting system’s data are people who’ve done areally good job of keeping their books with the old system, includingcomplete balance sheet information No offense, but you probably aren’t

in this category Sorry

Using the Express Setup

QuickBooks 2017 provides you a very fast setup process compared with otheraccounting software programs and even with old versions of the QuickBookssoftware Basically, you fill in some boxes and click some buttons, and voilà

1 In the first QuickBooks Setup dialog box (refer to Figure 2-1 ), choose Express Setup.

With the first QuickBooks Setup dialog box displayed, click the ExpressStart button QuickBooks displays the Glad You’re Here! dialog box,shown in Figure 2-2

2 Specify the business name.

The name you specify goes on QuickBooks reports and appears on

invoices you send customers Accordingly, you want to use your “real”business name If your business is incorporated or formed as a limitedliability company (LLC), you want to use the right suffix or acronym in

Be thoughtful and cautious about the industry you specify

QuickBooks sets up a starting chart of accounts for you based on theindustry A chart of accounts lists the asset, liability, income, and expenseaccounts (or categories) that QuickBooks will use to categorize yourbusiness’s finances

4 Identify the tax return you file.

Use the Business Type field to specify the tax return that your businessfiles You can click that field and then make a choice from the menu that