Use QuickBooks Online Effectively: 7 Best Practices

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Here are seven ways you can be safe, compliant, and productive when you’re using QuickBooks Online.

“Best practices” is a phrase that human resources professionals have been using for decades. But every type of profession has its own best practices, whether they call it that or not. These guidelines are not enforceable rules, though some managers may build them into their official policies. They just describe the way work should be done to achieve optimal outcomes and keep data organized and secure.

You may have heard of Generally Accepted Accounting Principals (GAAP). Public companies are required to adhere to them, and many other businesses large and small follow these rules and procedures.  

We’re not going to discuss GAAP in this month’s column. Rather, we’re going to talk about more general best practices for accounting, actions you can build into your QuickBooks Online work to make that time more productive and in line with what other successful businesses do.

How Do They Help?

Accounting best practices have numerous benefits. For example, they:

  • Help maintain the integrity of your QuickBooks Online data files.
  • Improve the  accuracy of your accounting work.
  • Save time.
  • Provide insight on the financial health of your business.

When you incorporate best practices into your work, you may even find that your relationships with customers and vendors get better because you’re handling their businesses ? conscientiously.

7 Suggestions For You

Here are seven guidelines that we try to follow. We hope you will, too.

Track your 1099 vendors

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If your business employs contractors, make sure that you indicate their 1099 status in their vendor records.

Changes in the economy over the last few years have led some people to take on part-time (or even full-time) contract work. You should be creating vendor records for these individuals. Click Expenses in the tool bar and then select the Vendors tab. As you’re completing a record, you’ll see a section labeled Additional info. Check the box in front of Track payments for 1099. You can create and deliver your 1099s using QuickBooks Online when the time comes.

Reconcile, reconcile, reconcile

Once you’ve downloaded cleared transactions from your financial accounts, it’s important that you reconcile them. This is probably one of your least favorite tasks to undertake, but QuickBooks Online simplifies it for you some, walking you through the process. Reconciling accounts regularly can help you:

  • Discover errors and missing transactions.
  • Get a more accurate picture of your cash flow.
  • Make your reports more precise

Keep your lists up to date

Your QuickBooks Online company file can grow substantially over the years. Though the site has great search capabilities, you may still be scrolling to find the entries you want. This isn’t as big a problem for lists like Payment Methods or Terms, but overly lengthy lists of Products and Services, Customers, and Vendors can become unwieldy over time. Try to keep them current. If you don’t want to delete them completely, you can make individual records inactive by clicking an Action link in the listing table for each.

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If your QuickBooks Online Lists are getting too lengthy, you may be able to make some of the records Inactive.

Categorize and classify everything that you can

Your QuickBooks Online company file consists of hundreds or thousands of individual records and transactions. Though each is a separate entity, there will be many times when you want to be able to assemble groups of related ones. For example, you might want a list of all of your customers in a specific ZIP code or all services that go into the creation of a marketing program.

There’s more than one way to get this information quickly. You can customize reports. Assign Classes, Categories, and Tags. View a Project. Whatever method(s) you choose, do use them consistently. They can provide insight in a wide variety of ways that will help you make better business decisions.

Warning: Before you start making lists of these classification tools and assigning them, think carefully about what they should be. You can always add to and edit the lists, but you’ll want to make them as focused and flexible as you can. Let us know if you need help with this.

Assign user permissions carefully

QuickBooks Online makes it possible to restrict users to specific areas and functions on the site. Use these tools. You can find them by clicking the gear icon in the upper right and then Manage users. You trust your employees or you wouldn’t have hired them, but you need to put controls in place to protect your sensitive company data.

Use QuickBooks Online’s reports

Are you taking advantage of QuickBooks Online’s report templates? It’s absolutely essential that you keep up with reports in areas like Who owes you and What you owe. We can help with this. We can also generate and analyze the standard financial reports that you occasionally need, like Statement of Cash Flows and Profit and Loss.

Don’t leave QuickBooks Online running and walk away

This should go without saying if you’re in a multi-person office. Also, don’t use the QuickBooks Online mobile app on a public Wi-Fi network when you’re out and about. Your company file contains information about your customers, vendors, and employees that should never be compromised.

More Than Common Sense

These best practices may seem like common sense to you if you’ve been using QuickBooks Online for a while. But when you first start using web-based financial applications, they might not be second nature to you. That’s why we’re sharing them with you, to remind you that conscientious use of QuickBooks Online is critical to the safety, accuracy, and usefulness of your company data. As always, we’re here to answer any question you have.

How to Give Your QuickBooks Online Forms a New Look

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Your sales forms are a part of your company’s identity. Make them professional, personalized, and polished.

Your first impression of a business probably comes from a website or a mailing or an advertisement. The second might be from an invoice or sales receipt. What does it say about that company if its printed or digital sales forms are poorly designed or hard to read or just plain unattractive?

Customers form opinions about you not only from the quality of your products or services, but also by the professionalism and aesthetics of your written communications. Putting some effort into making them look good isn’t superficial. It’s an important part of your branding.

QuickBooks Online provides the tools you need to make your sales forms appealing, understandable, and consistent. They enhance your image and have impact on your customers’ overall impression of your business. Here’s how you can make them a part of your identity.

Where Do You Start?

QuickBooks Online comes with a default invoice form to get you started. You can either edit this one or create a new one. You can also make your own estimates and sales receipts. 

Click the gear icon in the upper right corner and select Custom form styles under Your Company. You’ll see the default invoice labeled Standard. We’ll leave that one as is and create a new one so there’s always a clean version. Click the down arrow next to New style in the upper right and select Invoice. You’ll see a copy of the default invoice, like this:

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This is QuickBooks Online’s default invoice template. You can make a copy of it and modify it for your own company.

You’ll see your modification options in the left pane of this screen. Your choices are divided into three different sections. Before you start working with them, enter a name for your new template in the field at the top. QuickBooks Online will have suggested a name, but you can change it to something descriptive that you’ll remember, like My Modified Invoice 1022. 

Changing the Form’s Look

The first tab, Design, should be highlighted. From here, you can:

  • Change up the template. Choose from one of the six options that QuickBooks Online offers.
  • Add a logo. Browse your system files to find your logo.
  • Splash on some color. Select a color palette from the ones offered.
  • Get choosy with your font. Select a new font type and size.
  • Edit print settings. Change the margins and other print options.

Editing the Content

When you’re done there, click the Content tab. You’ll notice that your invoice, which appears in the right pane, is grayed out. There are three pencil icons on the right side of the form. Click the one in the upper right corner, next to the invoice number. The top third of the form becomes active, and the content in the left pane changes to match the fields on the right. As you make changes in the left pane, like checking a box to add a phone number, the actual sample invoice changes to reflect that.

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When you add, edit, or delete content in the left vertical pane…

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…the changes are reflected in the sample invoice in the right pane. Your company information will appear like this across all of your sales forms.

As you click on the other two pencil icons in the sample invoice, the left pane displays your options for those content areas. You have control over all of the content on your forms. It’s even possible to add your own custom fields. Let us know if you want to do so and we’ll show you how.

Readying Customer Emails 

The third tab on the customization screen, labeled Emails, shows you what your form will look like when you email it to your customer. Again, your working area is in the left pane, with the finished result appearing on the right. You have multiple options here, including text for the subject line, greeting, and message. You can also edit the text for reminder emails. 

When you’re done customizing, you can preview the PDF that will be attached to your customer emails. Then click Done. Your new invoice will appear on the Custom form styles page. Whenever you want to modify an existing sales form, click Edit at the end of its row. You can also make any form the default by opening the Edit menu and clicking Make default. 

Making your sales forms the best that they can be doesn’t really take that long. And it will demonstrate to your customers that you care not only about the quality of your products and/or services, but also about your communications with them. If we can be of any help as you work with forms modification in QuickBooks Online, please let us know. We’ll be happy to walk you through the process.

How QuickBooks© Online Tracks Products and Services, Part 1

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What products and services does your company sell? Do you have enough to fulfill existing and future orders? QuickBooks Online can tell you.

Most small businesses maintain a changing inventory of multiple products. Even if you sell one-of-a-kind goods, you need to know what you’ve sold and what’s available. And if your company sells services, you also have to keep track of what you’re able to offer customers.

QuickBooks Online can meet these needs. It allows you to create detailed records for both products and services. If you carry inventory, it can make sure that you always know what’s available to sell. When you enter sales and purchase transactions, the site draws on the records you’ve created to help you complete invoices, sales receipts, purchase orders, etc., without having to leave the form you’re working on.

Creating your records initially can take some time. And your products and services require regular monitoring and maintenance. But if you’re conscientious about these tasks, you’re not likely to run short on inventory or have too much money tied up in products that aren’t selling fast enough.

Preparing QuickBooks Online

Before you begin creating records and tracking inventory, you need to make sure that QuickBooks Online is set up correctly. Click the gear icon in the upper right. Under Your Company, click Account and settings. Click the Sales tab in the toolbar. You’ll see the Products and services section near the middle of the screen.

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Make sure you’ve turned on the Products and services features you’re going to need.

Toggle the slider buttons on and off by clicking on them, and be sure to save your changes when you’re done. One option allows you to turn on price rules. This is still classified as a beta feature, but it’s live on the site. It’s also quite complicated to set up and can create confusion for your customers and revenue loss for you if it’s not done correctly. Let us help if you want to use this tool.

Creating Your Product and Service Records

Your first task, of course, is to build your product and service records. Hover your mouse over Sales in the left vertical toolbar on the home page and select Products and Services. The screen that opens is your home base for dealing with inventory and services. Eventually, it will contain a detailed table containing information about both. Two large buttons at the top of the page warn you when you have Low Stock or you’re Out of Stock.

Click New in the upper right corner. A vertical panel slides out from the right displaying your four options for Product/Service information. They are:

  • Inventory. If you buy and/or sell products whose quantities you must track, these items are considered inventory.
  • Non-inventory. You may have products that you buy and/or sell, but you don’t need to track the amount you have in stock. These are considered non-inventory.
  • Service. These are, well, services that you provide to customers, like landscaping or web design. You might sell these by the hour or project, for example.
  • Bundle. You might call these assemblies. Bundles are multiple products and/or services that you sell as a package for one price.

Click on Inventory for this example. Here is a partial view of the pane you’ll see:

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You can track your inventory levels and reorder points when you create inventory product records in QuickBooks Online.

To create a product or service record, just fill in the blanks on the form and save it. Some fields are optional. In fact, only three are required: Name, Initial quantity on hand, and As of date. Of course, your inventory tracking and the use of product and service records in transactions and reports will be much more effective if you complete as many of the fields as possible. We recommend that you at least provide answers in some additional fields (some of which aren’t shown here), including:

  • Category (will be useful in reports, for example)
  • Reorder point (will keep you from running out of items)
  • Inventory asset account (you can leave the default, Inventory Asset)
  • Description (for sales forms)
  • Sales price/rate (what the customer will be charged)
  • Description (for purchase forms)
  • Cost (what you pay to buy it)
  • Expense account (often Cost of Good Sold, but you can ask us to be sure)

Next month, we’ll discuss how QuickBooks Online makes these records available as you complete other tasks, like transactions. In the meantime, please let us know if you have other questions we can answer that would help you use QuickBooks more effectively. We hope you’re enjoying your summer!

Keeping Up With Receivables: Know Who Owes You

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QuickBooks Online provides numerous ways for you to know which customers owe you money – and who is late.

There are so many financial details to keep track of when you’re running a small business. You have to make sure your products and services are in good shape and ready to sell. You have to stay current with your bills. Orders need to be processed as quickly as possible, as do estimates and invoices. And you may have numerous questions from customers and vendors that must be addressed.

Your number one priority, however, is ensuring that your customers are paying you. Whether you accept credit cards or bank transfers or issue sales receipts for cash and checks, you need to always know where you stand with incoming payments. “Are my receivables current?” should be a question you’re asking yourself or your staff frequently.

QuickBooks Online offers numerous ways to know whether you’re being paid for your products and/or services and who might be falling behind. That information is critical to your understanding of how your receivables are stacking up against your payables. You should be able to gauge whether you’re making a profit, staying even, or losing money. Here’s a look at the tools you can use.

Learning When You Launch

QuickBooks Online provides a good overview of your current cash flow as soon as you log into the site and see your two-pronged Dashboard. The first thing you see when you click the Business overview tab is a cash flow forecast that goes up to 24 months. Other content includes a profit and loss graph and charts showing expenses, income (including open and overdue invoice totals), and sales. Your account balances are there, too.

This is helpful data, but it’s broad. To get far more detailed information, hover your mouse over Sales in the toolbar and select All Sales. The horizontal bar across the top displays dollar and transaction totals for estimates, unbilled activity, overdue (invoices), open invoices, and (invoices) paid last 30 days. When you click one of the bars, the list changes to show only that particular set of transactions.

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Partial view of the toolbar at the top of the Sales Transactions page

The table of transactions is interactive. That is, there’s an Action column at the end of each row. Click the down arrow next to any of the activity listed there, and you’ll see a menu of options. Depending on the status of each, these options include commands like Receive payment, Send reminder, Print packing slip, Send, and Void. 

Running Reports

The Sales Transactions page provides more of your receivables nuts and bolts than the Business overview screen does. But to get the most in-depth, customizable, comprehensive view of who owes you, you’ll need to run reports. Click Reports in the toolbar and scroll down to Who owes you. 

There are three columns here. You’ll land on Standard, which is a complete list of all of the pre-formatted reports that QuickBooks Online offers. Click Custom reports to see the reports you’ve customized and saved. Management reports opens a list of three reports that can be viewed by a variety of date ranges: Company Overview, Sales Performance, and Expenses Performance. You can view, edit, and send these, as well as export them as PDF and Microsoft Word files.

There are five reports listed under Who owes you that you should be creating on a regular basis. How regularly? That depends on the size of your business. The greater your sales volume, the more frequently you should run them.

When you select A/R Aging Summary, you’ll see at a glance which customers have current balances and those that are 1-30, 31-60, 61-90, and 91+ days past due. A few customization options appear at the top, like Report period, Aging method, and Days per aging period. To really zero in on the precise data set you want, click Customize. The panel that slides out from the right contains option in several areas: General, Rows/Columns, Aging, Filter (by customer), and Header/Footer.

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QuickBooks Online helps you target the data set that you want.

There are four other reports that can help you track your receivables:

  • Open Invoices displays a list of invoices that still contain a balance.
  • Unbilled Time tells you about any billable time that hasn’t been invoiced.
  • Unbilled Charges lists billable charges that haven’t been invoice.
  • Customer Balance Summary simply provides all open balances for you customers.

These are all very simple reports that you shouldn’t have any trouble customizing and running. They can give you a complete picture of where your receivables stand. But there are other reports that will require our help. These are standard financial reports that should be created monthly or quarterly, including Statement of Cash Flows, Profit and Loss, and Balance Sheet. You’ll need these critical financial statements if, for example, you’re applying for a loan or trying to attract investors. Please let us know if you want us to run and analyze these so you can get a detailed, comprehensive view of your financial health.

How to Use Tags in QuickBooks Online

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Where is your money coming from? Where is it going? You can use tags in QuickBooks Online to find out.

QuickBooks Online offers numerous ways to help you track your sales, expenses, and profitability. If you’re using QuickBooks Online Plus or Advanced, you can create and assign Classes to transactions to differentiate between, for example, store departments or product lines. Some of the site’s reports are designed specifically for these tools, like Sales by Class and Profit and Loss by Class. 

You can assign Categories to products and services to gain insight into your sales and inventory. There’s a different set of Categories that you’ll use when you record bills and expenses. These are important for reporting and tax purposes. You can also add a Location field to sales transactions so you can track sales by stores, sales regions, or counties, for example.

What Are Tags?

Then there are Tags, which are fairly new to QuickBooks Online. These are customizable labels that you can assign to transactions (invoices, expenses, and bills). They’re more flexible than the tools we’ve already mentioned – they allow you to track your money any way you want. They don’t affect your books, and they’re not included in the customization criteria for reports. But there are two reports specifically designed for them: Profit and Loss by Tag Group and Transaction List by Tag Group.

Creating Your Own Tags

Once you’ve given your group a name, you can start adding tags to it.

Before you create a tag, you need to create a Group. Groups consist of related tags that share a common theme. For example, say you do some event planning. You might have a group titled Events. Individual events might read, for example, Grayson Wedding, Spring Art Show, and Hillman Conference.

To get started, click the gear icon in the upper right. Under Lists, click Tags to get to the tool’s home page. (You can also click on the Transactions link in the toolbar, then click the Tags tab.) Click New, then Tag group. A vertical panel slides out from the right. Enter a name in the Group name field. Click the down arrow to select a color, then click Save. 

Enter your tags one by one in the fields labeled Tag name. Click Add after each one until your list is complete. Click the Edit button to make any changes. When you’re finished, click Done. The main Tags page will open again, and you’ll see your new group under Tags and Tag Groups. Repeat to add as many as you’d like, up to 300 tags.

Using Tags

You can add tags to any transaction that contains a field for them

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Let’s look at how you’d use tags in an expense. Click the Expenses link in the toolbar, then New transaction | Expense in the upper right. Click the down arrow in the Payee field in the upper left and select + Add new. Enter Billy’s Bridal in the Name field Leave the Type as Vendor and click Save. Back on the Expense screen, select the Payment account, Payment date, and Payment method for the expense (reference number is optional).

Directly below those fields, you’ll see the Tags field. Click Manage tags if you need to add or edit one; the right vertical pane you saw before will slide out. Otherwise, click in the field below Tags. Your list of tags will drop down. Select Grayson Wedding to move it into the field. You can assign as many tags as you’d like to transactions, but you can only select one tag from each group. Finish the expense and save it. 

Go back to the Tags home page, and you’ll see that there’s a link to one transaction in the Events row. At the end of each row is the Action column, where you can run a report, add a tag, and enter or delete a group. Your expense total appears in the Money Out (by tag) box above it. 

Tags are a great addition to the tools QuickBooks Online provides to help you track incoming and outgoing funds. If you’re not familiar with the others we mentioned at the beginning of this column and want to learn how to explore them, let us know. We’d be happy to walk you through their use and help you understand how they can make your finances more understandable.

How to Create Product Records in QuickBooks® Online

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Whether your company sells product or services, QuickBooks Online can help you track them.

If you sell one-of-a-kind products and can see all of them at a glance, tracking your inventory isn’t such a big issue. But not many people run businesses like that. Even if you do, you’d want to keep track of what you have and what you’ve sold for accounting purposes.

Most businesses sell multiple types of products and stock numerous units of them. These companies need to be able to easily add them to invoices and sales receipts. They need to know what’s selling and what’s not, and they need to know when it’s time to reorder.

QuickBooks Online’s recording and tracking tools meet all of these requirements by allowing you to create records for services. Here’s how it works.

Getting Ready

Before you can start working with QuickBooks Online’s product records, you should make sure that the site is set up for this purpose. Click the gear icon in the upper right, then Your Company | Account and settings. Click the Sales tab to get to the Products and services section, as pictured below.

QuickBooks Online’s Account and Settings has a section devoted to Products and services.

Click on Products and services to open your options here. To turn any entry from On to Off, or vice versa, click in the box at the beginning of the line to check or uncheck it. To see an explanation of each, click on the small circled question mark. When you’re done here, click Save. Then click the X in the upper right to close this window.

Creating Records

To start entering product and service data in records, click the gear icon in the upper right, then select Products and services. Since you haven’t entered anything yet, the table will be blank. Eventually, it will contain data for each record you’ve created. You’ll also notice two colored circles at the top of the screen, one marked Low Stock and the other, Out of Stock. When there is a number next to either of them, you’ll be able to click on either circle to see a list of what’s low or what’s out.

Click New in the upper right. A vertical panel will slide out asking what kind of record you want to create. You can choose from:

  • Inventory – Physical items you sell whose quantity you want to track
  • Non-inventory – Products you buy or sell but whose quantities you don’t need to track
  • Service – Services you sell, like legal representation or landscaping
  • Bundle – A group of products and/or services that are sold together, like computer training and accompanying software

We’re going to create an inventory item, so click on Inventory. Type its Name in that field and add a photo if you’d like. If the product has been assigned a SKU, enter that in its field. You may want to divide your products into primary categories and sub-products or services (like Writing Instruments and Pens, Pencils, Markers, etc.). You can skip this option if you don’t.

QuickBooks Online helps prevent product shortages.

In the next section, you’ll enter the Initial quantity on hand. How many do you have as of (current) date? And where do you want to set your Reorder point? What number of items remaining should trigger the Low Stock alert so you can replenish your supply?

Inventory asset account should already be set at Inventory Asset. Enter a brief Description and then the product’s Sales price/rate (the price you’ll charge customers) and leave Income account set at Sales of Product Income. Then select a Sales tax category. If you haven’t set up sales taxes in QuickBooks Online and believe you’re required to pay them on at least some sales, please let us help. 

In the Purchasing information field, enter the description that should appear on purchase forms, then Cost (the price you paid to buy the product, if any). The Expense account should be Cost of Goods Sold. Select a Preferred Vendor if you’d like and Save the record.

Not all fields are required in your product and service records, but we strongly recommend you complete each record as thoroughly as is possible.

Next month, we’ll look at how product and service records are used in QuickBooks Online. In the meantime, please let us know if there’s any way we can help with your accounting or your use of QuickBooks Online. We know these are challenging times for you, and we hope you’ll use us as one of your resources.

How to Create and Use Vendor Records in QuickBooks® Online

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Keeping your supplies coming in may be difficult right now. Be sure you know your vendors and track their records carefully.

Your company counts on its supply chains to keep operations running smoothly. When it falters, you can have trouble creating and shipping products. Problems may even crop up that have a negative effect on your internal business needs.

We don’t have to tell you that COVID-19 has interrupted supply chains. The pandemic has been catastrophic for many small businesses because of this, and because income has been suddenly and sharply reduced. Some financial help is available, and we hope you’re able to take advantage of it during these extraordinarily difficult times.

It’s perhaps more important than ever to carefully track your income and expenses, and we hope you’re using QuickBooks to do so. Among the software’s financial management tools is the ability to maintain thorough records of those vendors that make up your supply chain. Let’s take a look at how this works.

Creating Vendor Records

We’ll go through the steps for creating vendor records, though you may have at least started on these already. Hover your mouse over Expenses in the toolbar and select Vendors. If you’ve already added some, you’ll see them in a list. To create a new one, click New Vendor in the upper right. Most of the form is easy to complete; it’s primarily contact information.

There are a few fields, though, that need special attention. These are:

  • Cost rate/hr and Billing rate/hr. These help you track time costs for your projects. Don’t enter anything here if you pay vendors via bills or expenses.
  • Terms. Due on receipt? 15 days? 30 days? 
  • Account no. and Business ID No. You should have these on file.
  • Track payments for 1099. Put a check in this box for any 1099 contractors.

When you’re done, click Save. This vendor will now appear in your list.

Taking Action

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You can take a number of actions from QuickBooks’ Vendors screen.

You can do a lot of your work directly from QuickBooks’ Vendors page. This screen displays a list of all of your vendors, along with columns for their Phone, Email, and Open Balance. At the end of each row is an Action column. The link there reads either Create bill or Make payment, depending on whether there is an outstanding balance. 

Click on the down arrow in that column to open a list of additional options. If there is a zero balance, you can Create expense, Write check, Create purchase order, or Make inactive. If money is due, your options are to Create bill or Create expense. Icons in the upper right allow you to print the list, export it to Excel, or change the column settings.

Collecting Your Billables

Before we look at vendor records in QuickBooks, we’d like you to check a couple of settings to make sure you’re billing your customers for every expense they incur with you. Click the gear icon in the upper right corner and select Your Company | Account and Settings, then click on Expense. Among others, you’ll see these options:

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If you incur expenses on behalf of customers, be sure you will be reimbursed for them by adding a Billable column on expense and purchase forms.

To add a Customer column to expense and purchase forms, click in the first box pictured in the image above. To Make expenses and items billable, click in the second box and add a default markup rate if you want. Do you want to Track billable expenses and items as income? If you’re not sure, ask us. And if you’ve set up sales tax in QuickBooks and want to add that to billable items, check that box, too. When you’ve finished with these and the other questions under Bills and expenses, click Save.

Now is the time to focus on the importance of cash flow and vendor relationships by maintaining good vendor payable records. You want to keep your relationships with your suppliers in good status. If you’re having trouble tracking cash flow or dealing with any other element of your accounting (or QuickBooks itself), please do contact us. We want to support you through this difficult period as much as we can.

How to Use Rules in QuickBooks® Online Transactions

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Maintaining your transaction registers conscientiously leads to a clearer understanding of your finances.

Last month, we talked about the types of best practices that can lead to more effective use of QuickBooks Online and, ultimately, more thorough knowledge of your finances. The first one was this: Go through your new transactions every day. Categorizing and otherwise expanding on the data brought in by your financial institutions really pays off when it comes to customer billing, reports, and taxes.

Granted, this habit will add time to your daily accounting chores. But there’s a tool on the site that can greatly accelerate this process: Rules. This feature must be used with care to avoid mischaracterizing or, worse, losing track of critical transactions. Here’s how it works.

Creating Rules

There are two ways to create Rules. The easiest is to start with an existing transaction. Hover over Banking in the left vertical pane and select Banking to open your transaction list. Be sure that you’re looking at transactions that are still For review, as these are the only ones that can be assigned to Rules.

Click on a transaction to open its expanded view. At the bottom of the small window that just opened, click on Create rule from this transaction. A screen like this will open:

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QuickBooks Online’s Rules feature allows you to automatically document transactions that meet certain conditions.

Let’s say you own a lawn and garden maintenance company. You always order supplies from the same vendor, so there are numerous transactions every month. You want QuickBooks Online to automatically categorize and clear transactions under $250; above that, and you’d want to see them individually. 

You’d start by naming the rule, designating it as Money out or Money in, and choosing an account (or leaving this option set at All bank accounts). Next, tell QuickBooks Online whether the conditions you’re about to establish should apply to all or any. That is, if you’re setting multiple conditions, is it all right if just one meets the criteria, or must they all?

Below that, you’d specify the actual conditions that must be present for QuickBooks Online to handle similar transactions in the same way. In our example pictured above:

  • The transaction [Description] [is exactly] Lawn and Garden Supply LLC, and, 
  • The [Amount] [is less than] $250.

So, any transaction that comes into QuickBooks Online from your bank that has Lawn and Garden Supply LLC in the Description field and which is for less than $250 will be treated similarly.  There are other options for the first two fields; you’ll find them by clicking the down arrow.

Now you have to tell QuickBooks Online what to do with the transactions that meet those criteria. Farther down on this screen, you’ll see these options:

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QuickBooks Online will handle the transactions that meet the conditions you set by completing these fields.

Using the drop-down lists of options, you’ll select the Transaction Type, Payee, Category, and Class (if you use them). Every time a transaction comes in that meets the conditions you defined above, QuickBooks Online will apply these options.

Finally, you’ll have to choose from two different ways of processing these matching transactions. You can have QuickBooks Online Auto-categorize and auto-add, in which case the transactions will be automatically processed and moved out of the For review queue. In our example, we chose this so we didn’t have to work with transactions of less than $250; we only wanted to see more expensive purchases. If we had wanted QuickBooks Online to fill in those fields but still show us the transactions, we would have clicked in front of Auto-categorize and manually review. Clicking Save would move this Rule into a list that could be accessed by clicking Banking | Rules, where you can Edit or Delete them.

Complicated Stuff

To recap, because of the Rule that was created here, any transaction in which the Description reads Lawn and Garden Supply LLC and which is for less than $250 will now be auto-completed and moved out of For Review. Any transaction for over that amount will remain in the queue for approval.

QuickBooks Online’s Rules can save time if you have a large volume of similar transactions. But if they’re not created with absolute accuracy, you risk mischaracterizing or missing transactions you should have reviewed before adding them to the Reviewed queue. We’d be happy to help here to ensure that that doesn’t happen, so that you can take full advantage of the helpful Rules feature.

Are You Following Best Practices in QuickBooks® Online?

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“Best practices” are recommendations for the most effective way to get things done. Are you following standard procedures in QuickBooks Online?

Habits can be good things when you’re talking about getting through the workday successfully. You might have developed a habit of responding to emails quickly and preparing checklists before you go into meetings. Maybe you schedule your most challenging work for high-energy times of the day and leave less-demanding tasks for those times when you’re not as chipper.

It’s easy to fall into habits with QuickBooks Online, too. You might follow the same workflow pattern every day simply because that’s the way you’ve always done things. There’s nothing wrong with that – as long as you’re incorporating as many of the site’s best practices as you can. That is, you’ve made a habit of taking actions that will lead to the most effective use of QuickBooks Online.

Here are four habits we think you should consider developing if you haven’t already.

Go through your new transactions every day:

One of the five best things about QuickBooks Online is its ability to connect to your financial accounts and import transactions regularly. But this feature is only useful if you review your recently-downloaded transactions every day. Wait too much longer than that, and it will become too overwhelming.

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We recommend you review your account transactions every day and complete any of the fields necessary.

To view an account register, you’d click Banking in the left vertical pane, and then click on the desired account at the top of the screen. When you select a transaction, a small window like the (partial) one pictured above drops down and displays your options. If you have not worked with defining and clearing downloaded transactions before, we can provide guidance here. It’s complicated.

Always assign categories to expenses:

You’ll get out of QuickBooks Online what you put into it. That is, the more conscientious you are about completing records and transactions thoroughly, the more helpful your reports will be. It’s especially important that you assign categories to expenses and mark them as billable or not. Those categorized expenses will be very important as you’re preparing your company’s income taxes. And you want to be sure that customers are billed for expenses you incur on their behalf.

Run aging reports once or twice a week:

QuickBooks Online can help you keep up with money owed to you and money you owe, but you have to take the time to stay current with that information. The site’s Dashboard provides the dollar total for unpaid invoices and links to a list, but it doesn’t tell you what bills of your own may be coming due – or are late.

We recommend you run at least two reports at the beginning and end of the week: Accounts Receivable Aging Summary and Accounts Payable Aging Summary. You can modify these reports by clicking the Customize button, but they should be good as is. You don’t want to see any numbers in any columns except the first one (Current). If you see any beyond that, it means that either incoming or outgoing payments are overdue.  Click on any number to see the transactions behind it.

Set reorder points on inventory items.

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Inventory-tracking in QuickBooks Online is complicated. We can help you understand it.

Keep an eagle eye on your product inventory levels. When you create an item record (Sales | Products and Services | New), be sure to enter a Reorder point. The Products and Services page tells you how many items have Low Stock or are Out of Stock. You can also see the Qty on Hand and Reorder Point in the table below those numbers.

Warning: Inventory-tracking is an advanced feature of QuickBooks Online. If you need these tools, contact us about scheduling some time to go over them thoroughly.

More to Implement

There are many other best practices that we’d recommend for your use of QuickBooks Online. Several of them have to do with reports, one of the site’s capabilities that is particularly robust but which many businesses don’t fully engage in because some of them are difficult to analyze. These include standard financial reports like Balance Sheet and Statement of Cash Flows. 

You’ll need these reports if you apply for financing or want to share information about your company’s financial health with a third party. The insight they provide can also be useful to you in making business decisions.  We’d be happy to create and analyze these for you on a regular basis, or to consult with you on any other aspect of QuickBooks Online that is perplexing.

Still Dealing with 2019 in QBO? Clearing the Way for 2020

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If you have a nagging feeling this month that you’re not caught up with your accounting tasks, it’s time to clean up your unfinished 2019 work.

It would be great if you could have closed out 2019 knowing that you were all caught up with your accounting work. You sent all your invoices, paid all your bills, and wrapped everything up with a series of reports and a proverbial bow.

Unfortunately, December rarely goes that way. You’re making last-minute adjustments for your taxes. Dealing with the holiday rush if you’re a retailer. Handling end-of-year employee issues, trying to make your monthly sales quotas, and doing something special to make your customers feel appreciated at this time of year.

On top of your daily accounting work, you’re feeling pressure in December to get a clear picture of your finances for the entire year. Then the holidays hit, and suddenly you’re ringing in the New Year without having had time for that.

Here are five things you can do clean up 2019 and make way for 2020.

1. Create two critical A/R reports: Accounts Receivable Aging Summary and Open Invoices.

This may make you feel both better and worse. On the bright side, you’ll know where you stand in terms of who owes you what and how big the problem is. On the other hand, you may find it disheartening to see how many payments are past due. These reports are easy to find. Click Reports in the left vertical pane and scroll down to Who owes you.

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The Open Invoices report can show you quickly who’s past due.

Now would be an excellent time, too, to develop some strategies to be proactive and keep your accounts receivable more up to date in 2020. We’d be happy to sit down with you and help you with this difficult task.

2. Create two critical A/P reports: Accounts Payable Aging Summary and Unpaid Bills.

Add “Stay Current with Bills” to your list of 2020 goals. But first, you have to see where you stand right now. Click Reports again and scroll down to What you owe.

Who is responsible for paying bills? If it’s you, maybe it’s time to hand over that task to someone without your managerial responsibilities who can make it a priority.

3. Create statements for all customers who are past due.

Things slip for your customers toward the end of the year, too. Give them a chance to catch up. Their invoices might have gotten lost in the year-end confusion, but you need to get current with your accounts receivable. So, send statements to those in arrears.

Click +New at the top of the left vertical pane, then go to Other | Statement. 

4. Clean up your customer and vendor lists.

Customers and vendors come and go, but their QuickBooks records are forever unless you do something about them. You can easily make them inactive – after confirming they have no open activity. Click Sales | Customers in the left vertical pane. Click the box in front of customers you want to make inactive and then click Batch actions | Make inactive.

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Cleaning up your customer and vendor lists will save you time in the future.

5. Always look carefully at your dashboard when you log in.

The block in the upper left corner is the most important here. You can see at a glance how much money you have tied up in unpaid invoices and how much money needs to be deposited. This will help you keep QuickBooks Online cleaned up.

More to Do

There are certainly other things you can do to clean up QuickBooks. For example, if you carry inventory, January is a good time to run the Physical Inventory Worksheet report and make some decisions about where your purchasing emphasis should be in 2020. Need help interpreting your product movement and sales priorities? We can help with that.

Finally, sometime this month—certainly in the first quarter of 2020—let us create the critical standard financial reports (under For my accountant in Reports) that you could actually generate in QuickBooks Online, but which would be difficult for you to analyze. These are the reports you would need if you were going to apply for a loan, for example, or request a business valuation. But the insight they provide can give you a sophisticated overview of your finances.