LUTZ BUSINESS INSIGHTS
What You Need to Know About Accounting to Use QuickBooks
JIMMY BURGESS, SENIOR ACCOUNTANT
Whether or not you use the word “accounting,” your business already does it. You manage accounts, pay bills, receive payments – all tasks that are a part of the process. When you use QuickBooks, though, you are following the same generally-accepted practices that professionals do.
The thing is, though, that you don’t have to deal with most of the nuts-and-bolts activity that is required. You don’t have to understand how to, for example:
- Create a Chart of Accounts.
- Balance debits and credits.
- Design standard financial reports.
- Assemble customer statements.
An Invisible Helper
QuickBooks takes care of those chores—and much more—behind the scenes. It provides a digital framework for the financial data provided. You’ll interact with it by entering words and numbers in blank fields, selecting options from drop-down lists, and clicking on buttons and in boxes. It works much like other Windows software, so navigation and data entry shouldn’t be a problem.
But you should have a basic understanding of some simple accounting concepts. You may also need to learn about how to stay in compliance with government agencies if you are going to use QuickBooks’ payroll features.
Specifically, here’s some of what we recommend you know as you begin to use QuickBooks:
The role of the Chart of Accounts
Again, you don’t have to create one: QuickBooks does that for you. This list of accounts is divided by type: assets (what you own), liabilities (what you owe), equity (the difference between the previous two), income, and expenses. You’ll encounter accounts at various places in the program, like when you have to assign an expense account to a bill you’re paying. Incorrect account classifications can lead to serious problems when you create reports and prepare income taxes.
QuickBooks helps you create records for each “item” you buy or sell. These can be inventory parts, non-inventory parts, or services. It’s very important that you recognize the difference and categorize each item record correctly.
The sales tax status of items you sell
QuickBooks lets you add sales tax when you’re creating invoices, but you’ll need to know the rates and regulations for any state and local sales tax that you are required to collect and pay.
Your state’s payroll requirements
If you’re already doing your company’s payroll manually or using a payroll service, you may save time and money by using QuickBooks’ payroll tools. The mechanics of this challenging element of accounting are simplified by the software, but every state has its own requirements for withholding and paying payroll taxes. You’ll need to know what these are, in addition to understanding exactly what’s expected by benefits providers.
There are other concepts you’ll need to understand, like the role of all sales (invoices, statements, receipts, etc.) and purchase (bills, purchase orders, vendor credits, etc.) forms; report customization; and the recording of incoming payments. We can get you up to speed on what you should know or provide a refresher for you if you’re already struggling with QuickBooks. Contact us to get started.
ABOUT THE AUTHOR
JIMMY BURGESS + SENIOR ACCOUNTANT
Jimmy Burgess is a Senior Accountant at Lutz with over four years of relevant experience. His primary focus is to provide outsourced accounting to clients with a focus on QuickBooks, tax and payroll compliance, small business consulting, as well as software implementation training.
AREAS OF FOCUS
- Outsourced Accounting Services
- Tax & Payroll Compliance
- Small Business Consulting
- Software Implementation & Training
- Construction Industry
AFFILIATIONS AND CREDENTIALS
- Nebraska Society of Certified Public Accountants, Member
- Certified Public Accountant
- BS in Business Administration and Accounting, University of Wyoming, Laramie, WY
- Youth Sports Coach, Volunteer
QUICKBOOKS PROADVISOR CERTIFICATIONS
SIGN UP FOR OUR NEWSLETTERS!
We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.
13616 California Street, Suite 300
Omaha, NE 68154
747 N Burlington Avenue, Suite 401
Hastings, NE 68901
601 P Street, Suite 103
Lincoln, NE 68508
3320 James Road, Suite 100
Grand Island, NE 68803