Pam Newman

Using QuickBooks® effectively is a learning process. Set realistic expectations about what QuickBooks can do for you and develop your action plan on how you are going to learn to use the various aspects. What was the last software that you learned in a day? Nothing as vast as QuickBooks, I can assure you.

1. Chart of accounts
Your chart of accounts is the backbone of your QuickBooks file. It's critical that you understand the various types of accounts so you can establish them correctly. The account types link to reports, so if your chart of accounts is inaccurate, your reports will be too. Setting up the accounts and determining whether they are assets, liabilities, equity, income, or expense accounts maps the information to your financial reports.

2. Items
Items…what are they? The item list is what we utilize to track the products or services we provide. It allows us to have a way of interacting with the estimating, invoicing, and job costing aspects as these all function through the item list. It enables us to have more detail than we could otherwise effectively manage through our chart of accounts. For example, on your chart of accounts you will only have one inventory account though you may have hundreds of inventory items on your item list flowing through to that one account.

3. Tax liabilities
When paying sales tax or employee tax liabilities, you have to do it through a certain process. For paying sales tax, you must go through the Vendor menu. Employee taxes are paid through the Employee menu. You cannot just use the "Write Checks" feature, as this does not remove the liability off of your books.

4. Journal entries
You cannot do journal entries with accounts payable and accounts receivable accounts. I can't tell you how many QuickBooks files I've seen where an accountant tried to "fix" someone's problem by just entering a journal entry. If your accountant tries to do this….just say NO! While it may clear out the account to zero, you will notice on your Accounts Receivable and Accounts Payable Aging Reports that those "fixes" remain there indefinitely.