Financial Management

QuickBooks has added a number of new offerings this year that you might want to consider when choosing whether to upgrade to 2010 or wait until next year:

• In QuickBooks you are able to sort the “Pay Bills” window four ways: Due Date, Discount Date, Vendor, and Amount Due. Now you can also Filter that screen for one vendor or multiple vendors. You no longer have to see every vendor you owe money to, in that window.
• Want to go paperless? You can, using QuickBooks Document Management system from within QuickBooks. Every QuickBooks form now has a paperclip icon on the top that says “attach”. This allows you to scan and attach documents to a form that are directly related to that form. For example, you can scan and attach the vendor bill, you received, as back up to the bill you are paying in QuickBooks. *This service is free up to approximately 1,000 2-page PDF’s. Additional space can be purchased for an additional cost.
• In the bank reconciliation window, items are highlighted in bold until checked off allowing a more visual means of seeing unreconciled items. They definitely stand out! continue

They both record the same information:  SALES.  Invoices record sales on an accrual basis, sales receipts record sales on a cash basis.

An invoice records the sale as income and increases accounts receivable, as of the date of the invoice, even though you haven’t received the PAYMENT for the sale.  To complete the sale process started by using an invoice, you must “Receive the Payment” against the invoice, which will reduce your accounts receivable.
This is a two step process:  Increase to Accounts Receivable = Sale and Payment = Reduction to Accounts Receivable.

A sales receipt is used when you receive the PAYMENT at the time of the sale. In other words, this is a cash sale.  In completing a sales receipt in QuickBooksTM, you record the sale as income and deposit the PAYMENT in to Undeposited Funds or a bank account, at the same time, using the “sales receipt” form.
This is a one step process:  Sale = Payment.

In addition, in QuickBooks, a sales receipt is also often used when a client gives you a deposit towards future work.

To learn how to use QuickBooks more efficiently in your business, contact Teri at 619-463-6851 or by e-mail at teri@terimilligan.com.

Recent economic trends have caused many contractors and other businesses to deal with accounts receivable issues.  Five years ago, when the economy was better as a whole, there was less concern with enforcing a contractual right to payment because bills were being timely paid.

For those contractors dealing with collection issues, not much can be done to “squeeze blood from a turnip”—if your customer has no money, collection efforts are often futile.

But to best assure your ability to collect debts, a few steps can be taken at the contract stage and during your work to best assure your ability to collect.

As a litigation attorney, I can advise you that these are the circumstances that best allow me to collect debts owed to my clients:

• Clear and certain scope of work terms set forth within a signed contract, including signed change orders confirming any revisions to the scope of work or the contract price (don’t forget to make sure your home improvement contract meets the legal requirements of Business & Professions Code section 7159, otherwise collection will be even more difficult);

• Attorneys’ fees provisions in a contract that help you leverage payment short of incurring attorneys’ fees;

• Service charge provisions in a contract that further help you leverage payment of at least the principal balance owed; continue

This past December, QuickBooksTM added an online payroll option to their payroll lineup of QuickBooksTM Basic Payroll, Enhanced Payroll and Intuit’s Payroll Service.  How do you decide which one is best for you and your company?  Let’s take a look.
QuickBooksTM Basic Payroll – Allows you to create paychecks to pay your employees using the most current federal and state payroll tax rates.  You have the ability to print federal payroll tax forms, but not state payroll tax forms.   I don’t generally recommend this version, since it does not come with the state payroll forms.  continue

Here are a few of the enhancements designed to make your work in QuickBooks easier, faster, and more accurate:

1.        There’s a new button up on the toolbar called “Company Snapshot”.  On one screen, you can see an income and expense graph, customer, vendor, and account balances, plus your reminders.  Pick either this or the “Home” page as your default view each time you open the program.

2.       The online banking feature has been simplified to make it easier and quicker to match or enter downloaded transactions.  Automated routines and naming logic help make sure that transactions are properly categorized.

3.       Multi-user enhancements include the ability of one user to run a report while another creates an invoice.  They have also enabled back-up in multi-user mode so users  won’t have to switch to single-user mode to back-up files.

Visit my website and click on the button, “Order QuickBooks” for a chart detailing all of the upgrades in QuickBooks 2009.

Another overlooked feature in the bank reconciliation module of QuickBooksTM is the “Hide transactions after the statement’s end date” box in the upper right hand corner of the bank reconciliation screen.
So, why would you click that button?
To save you from having to search through transactions not relevant to your current month reconciliation. Often when reconciling it’s already two weeks in to the next fiscal month, which means all the transactions you have entered since the end of your bank statement date are going to show in the reconciliation window, but are not relevant to the bank statement you are reconciling for last fiscal month.
The one caveat to clicking this button is if you have misdated something for your current reconciliation, you may miss it if you hit that button. For example, bank charges for July 31, you dated August 31 when entering them in your bank register. If you are reconciling for July, you may end up entering your July 31 bank charges again because you can’t see them. If you are missing something that you know you entered in to your register, you can always unclick the “Hide” button to find the transaction, change the date on the transaction if necessary, then click it again to finish your reconciliation.
Improvements coming in QuickBooksTM 2009…you will finally be able to sort the checks and payments/deposits and other credits columns, in the bank reconciliation window by date, check, payee, and amount. This is a huge improvement and will make the bank reconciliation process easier and quicker. Stay tuned for more news about QuickBooksTM 2009.
*Please note that all QuickBooksTM Tips are based on QuickBooks for the PC. If you have either the Mac or Online version of QuickBooksTM, these tips may not be applicable.

Last month I focused on the “Locate Discrepancies” button that is part of the Bank Reconciliation feature in QuickBooksTM. Like the “Locate Discrepancies” button, another overlooked, but very helpful part of the Bank Reconciliation feature in QuickBooksTM is the “Undo Last Reconciliation” button. This button is located right next to the “Locate Discrepancies” button that you see when you are entering your bank statement information. It’s in the first screen, at the bottom, after clicking on “Bank Reconciliation” from the Home Page or from the Banking Menu.

Intuit recommends backing up your data before undoing a previous reconciliation, which is always a wise choice.

The “Locate Discrepancies” button and the “Undo Last Reconciliation” button are often used in conjunction with each other. If you’ve had to turn to the “Locate Discrepancies” button, but are unable to rectify the issues with your bank reconciliation using that report, it is sometimes wiser to undo your last bank reconciliations until you reach one that is correct and then re-reconcile your bank statement or statements. This can often be more accurate and less time consuming.

When you click on the “Undo Last Reconciliation” button, QuickBooksTM will tell you exactly what to expect by continuing with this process. Please read this screen. The important item to know about this process is that QuickBooksTM will not remove any of your transactions and all service charges, interest and other adjustments made to your bank account, as part of your prior reconciliation, will remain in your bank account.

The “Undo Last Reconciliation” button is really meant as a means to correct a bank reconciliation(s) that has (have) gotten off course. Just remember to use it wisely and after careful consideration.

Over the next few months I’m going to give quick tips about the bank reconciliation feature in QuickBooksTM. There are a lot of wonderful tools that are part of the bank reconciliation feature and learning just a couple of them can make your life a little easier.

One of the little known features in the bank reconciliation feature of QuickBooksTM is the “Locate Discrepancies” button that you see when you are entering your bank statement information. It’s in the first screen, at the bottom, after clicking on “Bank Reconciliation” from the Home Page or from the Banking Menu.

Since it is so easy to delete or change transactions in QuickBooksTM, this button can come in very handy. You would want to click on this button if the beginning balance from your bank statement does not match the beginning balance when you begin your bank reconciliation. If you click on this button, it will alert you to what has changed, in your records, since you last reconciled your bank statement in QuickBooksTM. Using this information, you can re-input the deleted/changed items and clear them through your current bank reconciliation, which will get your back on track.

If what is showing in the discrepancies window is something that really should not be part of your records, then re-input the data as stated above and then correct it in the current period so that your bank reconciliations for past periods always remain correct.

One of the greatest tools in QuickBooksTM is the ability to print 1099’s from within QuickBooksTM.

To set up your system for this feature, go to the preferences, from the Edit menu, then click on Tax: 1099 on the left side, then on the company preferences tab.

Answer the question, “Do you file 1099-MISC forms?”, yes. Then under the account column across from Box 7: Nonemployee Compensation, click the account(s) to which you have coded your vendors that are eligible for 1099’s. click OK.

Make sure that you have coded all of your vendors as eligible for 1099’s and have entered their address and social security number. You can access all of these fields on the “Additional Info” tab after clicking on Edit Vendor for each applicable vendor in the Vendor Center.

Run a QuickBooksTM 1099 detail report to verify that all of the information is correct. You can create this report by going to the reports menu, then choose vendors and payables, and then click 1099 detail. You can alter the report by changing the “1099 Options” at the top of the report, which will give you more information to review.

Once you have set your preferences and verified all your eligible vendors have complete information, it’s time to print your 1099’s. Be sure to purchase preprinted, red paper stock from an office supply store. Your 1099’s must be printed on this particular paper stock or they will not be accepted. Then go to the Vendor menu, click on Print 1099’s/1096 and click on Print 1099’s. From the print screen you will be given the choice to print 1099’s or 1096.

Do you or do you know someone that accepts retainers from clients?

To accept client retainers in QuickBooks:

1. Create a liability account called “Client Deposits”.
2. Create a new item, type is “service”. Name it “Client Deposit” and then pick the liability account you created called “Client Deposits” in the account field.
3. Then, when you accept a deposit, open a Sales Receipt, pick the client from which you received the deposit. In the item field enter the item called “Client Deposit”, then enter the amount received in the amount field. Complete any other fields you feel necessary. Click save and close.
4. To apply the client deposit to an invoice, create the invoice as you want it, then on the next line down, choose the item “Client Deposit” and enter the retainer amount to apply to the invoice as a negative in the amount field. This will take the retainer out of the liability account and apply it to the invoice.

Next month I’ll show you how to create a client retainer report for each individual client.

To learn more about how you can use QuickBooks in your business, contact me at (619) 463-6851 x2 or teri@terimilligan.com.