Rustler’s Quickbooks Tips

So I am wandering around the help file (yea I was bored) and I find that QB can print a deposit slip. The top one third goes to the bank, and the bottom is a concise list of each item. Pretty neat! Then I keep reading and it says that QB can only print the deposit slip on QB supplied deposit slips.

So I check and Intuit wants a pretty penny, and I think “Google is your best friend” and sure enough I find the same thing for almost half what Intuit wants.

But wait a minute, how in the hell does the program know that I have inserted a QB formatted deposit slip? Well obviously it doesn’t. So for giggles I print one anyway. Hmmmmm.

Back to the site I go and I find out that you have to give them your company name, bank name, routing number and account number which they pre-print on the forms. That hmmmm awhile ago was me wondering where the bank and account information was.

Now color me paranoid, but having hacked and phreked some back when I was less of a citizen than I am now, I have this phobia about giving that kind of information out. And if you don’t understand the words then you are more of a citizen than I will ever be - ROFL.

So off to QB I go. Long and short of it I have designed a deposit slip that works without having to buy any.

Well there is an extra step or two. I haven’t figured out how to automatically transfer the deposit list and data to the form (yet), so what I have done is make the template. You print the blank template, put it back in your printer, and print the deposit. Sounds complicated but it isn’t, and I avoid buying deposit slips that sit around as just one more file to keep. You do have to cut it since plain paper is not perforated, but hey no big deal.

If you want the deposit slip … it is free for all, but please also get the instructions that are a seperate file. The instructions tell you how to get the template into QB, how to put your business information in it, put your bank information in it, and how to use it.

Click the links below, click each one of them please! When you get asked if you want to open or save, save it to your hard drive (remember where you saved it, you will need that information to get it into QB). If the Adobe PDF document just opens, select the menu File>Save As and save it.

deposit template
template instructions

So I see this all the time, someone wants to use QB while on the road and yet still allow the office to use QB, and then merge the changes when they get back.

For 2008 Premier or higher, same process should work for previous years

First you have to have QB installed on both machines, BUT and here is the key, on the portable machine that you will take on the road, when you install QB select “Accountants” version.

Just before you leave on your road trip, using the file on the office computer bring up QB, select the menu File>Accountant’s Copy>Save File. Go through the wizard and select the date. I would use the current day or the most recent of the canned choices in the drop down list. Select the location to save the file, a USB drive is handy since you can then move it to the laptop.

When you create the accountants copy, QB locks your books (at the office) so you cannot make changes to the past, but you can work on current and future transactions. This is done so that the base of information is the same between the accountants copy and the copy the office works on. With the base of information the same it is easy to see what changes are made in each copy and merge them when the time comes.

There are somethings you cannot do when using the accountants copy on the road so it they are critical then this may not work for you. You CANNOT:

- make estimates or sales orders (but before leaving you could print blank ones and enter the info when you return)
- mark invoices as pending
- use the vehicle mileage applet (would be really nice if you could)
- pay Sales Tax
- do payroll

For most all other activities you can add, but not edit or delete. But to me it seems as though what you would be doing is creating invoices or sales receipts most of the time anyway.

Plug the USB drive in the laptop, open QB, and select the menu File>Accountants Copy>Open & Convert. That opens the company file you created as an accountants copy. Accept the default file name and proceed.

Now when you are on the road, process your transactions.

When you get back to the office. On your laptop, assuming you have finished entering everything, use the Menu File>Accountants Copy>view/export changes. That will bring up a report of the changes (think transactions) that you made while on the road. There is a button at the bottom that says “Create Change File for Client” - click that and accept the file name QB picks, save the file to your USB drive.

On the office computer, bring up QB, put your USB drive in the slot for it, use the menu File>Accountants Copy>Import Accountants Changes. Click yes if QB wants to close all windows. Select the file on the USB drive in the open dialog box, QB will open a report of the changes. I suggest at this point you print it out as a safe guard. Click the import button at the bottom and QB will first back up your company file, and then merge the changes. When the window says the changes were made click close.

QB will open the company file, with the changes (the transactions you made while on the road) as well as the transactions that were made in the office while you were away.

Charlie in his comment make a good point, so good I thought I would copy it here rather than you having to click to find it, but to read the full comment just click on the comments link.

—–snip from Charlie ——

Prior to creating the accountant’s copy I would recommend that you check the starting file for any errors, and perhaps do a rebuild. Clean up any errors that show in the error log (which can be a bit cryptic, unfortunately). Some of us believe that these kinds of errors are what might be causing the merge problem later on.

And don’t let the office staff delete records or rename things while you are on the road, because if they delete something that you make a reference to in your “road” copy, this could possibly be a source of the error.

Personally, when I’m on the road, I usually have an Internet connection available, so I use a product like LogMeIn to access my office computer to do the updates there. Which isn’t as convenient, but works.

——end snip—-

When you create an invoice for taxable items QB prints the sales tax on the invoice, but when the invoice is non-taxable QB prints nothing to show that the invoice is non-taxable. I guess the omission of the sales tax entry is enough in Intuits opinion.

If you need or want the invoice to show the non-taxable status there is two ways to go about it.

When you bring up the invoice, click the button customize, then click the tab “Footer” there is a sales tax entry there that you can check mark to show on the footer when the invoice is printed. For non-taxable sales it will show zero percent.

If that isn’t good enough, create a customized invoice, call it non-tax, and insert a text field that says Non-Taxable, make it as large as you want and in the color you want. Then use that invoice when creating a non-taxable sale.

Adding a partner involves some preparation.

Assuming you’ve done all the legal work, you know how much the new partner (let’s call him Bill) is contributing.

First you have to create the owner equity accounts (Bill’s equity, Bill’s drawing, Bill’s investment at the minimum IMO).

If Bill is buying in for cash that makes it easy, deposit the money to the bank and credit Bill’s equity-investment account and you are done.  At the new year when you do the roll up of the equity accounts the amount in Bill’s equity-investment account will be moved to Bill’s equity.  I prefer to do it this way so that the investment is tied to a fiscal year and easy to see, but you could just credit the investment directly to owner equity if you want.

If Bill is buying in with cash plus inventory it gets a little more complicated.  Deposit the cash and credit Bill’s equity-investment as before.  Then bring up inventory adjust, mark it as a value adjustment, and as the adjusting account select Bill’s equity investment account.  Increase the number of items on hand and the total value of the items.  If Bill is bringing inventory to the business that you did not have, then I suggest setting up the new inventory items first, do NOT enter a quantity or a value,  that gets done when you use inventory adjust.

You could enter the quantity and value when setting up the inventory item, but then the total value will go to “Opening Balance Equity” and you will have to do a journal entry to move it to Bill’s equity investment, seems easier to me to let QB move the value around using inventory adjust.

The process is the same if Bill is bringing assets to the business, and depending on what they are and how you track them will determine how you bring them on the books.  But what ever value is placed on the asset, becomes the cost to the business and should be shown in Bill’s equity investment account.

With the exception of the high dollar enterprise version QB has a name limit, the dreaded 14,500 number.

Bring up QB and hit F2 (the function key) this screen tells you a world about your installation, but some of it is not to be trusted. As an example my screen says

Date First Used - 2/18/2006

Integrated applications last accessed - 7/27/2007 (I don’t have or use integrated applications- pretty good though huh? Accessed an application I do not have before I ever got the program installed)  Well Charlie pointed out the error of my ways in his comment, when I looked at preferences>integrated applications there sits my DYMO label maker - I forgot I had added it, but the date is still screwy, I added it in 2008.

Mine also has something called an on-line billing token and a shopping source token - both of which I have no idea what they are, and when I asked QB they said they weren’t used anymore and shouldn’t be there.

But anyway, right side, toward the bottom is a window, that tells you total accounts and total names. If the number seems high to you, that is because QB counts inactive items too. As I understand it, everything in that window is a name, and counts toward the magic number.

But you can delete items that have not been used in a transaction and it lowers the number.

You can merge items and it lowers the number.

IRS Form 1099 is required to report payments to people and businesses you do business with, especially subcontractors. If the business you make payments to is a corporation you are not required to file a 1099, only unincorporated business must get a 1099 (with a few exceptions listed below).

The IRS requires that the 1099 be in the hands of the recipient by Jan 31 of the following year. (my suggestion is to order the forms early!) You have until Feb. 28 to get the forms to the IRS itself.

The who and how much varies though (get the directions for Form 1099 to see the whole gamut of reasons to file), some of the most common reasons are:

If the business pays subcontractors or others providing services - $600 or more (box 7).

If the business pays Rents and Commissions - $600 or more (box 1).

the exceptions:

Payments made to all providers of medical and health care services of at least $600 must be reported regardless of whether the recipient is a professional corporation (box 6).

All payments to attorneys must be reported regardless of whether the recipient is a professional corporation (box 14).

Note that the first item (box 7) also includes the value of any barter transaction. If you pay for a service by giving something from the business (inventory, professional services, etc) the fair market value of that item or service is taxable income to the person you traded with.

In QB, when you bring up the vendor edit screen there are two tabs, on the “Additional Info” tab there is a check mark box saying “Vendor is eligible for 1099″ mark that box and QB will keep track of the payments to that vendor for the purpose of filling in a Form 1099. You can get a report by using the menu Reports>Vendors & Payables>1099. I would think it would be under the menu item “Accountants & Taxes” but it isn’t.

And you thought the only income you needed to record came from sales huh? A donation is an income event too.

I don’t deal with non-profit accounting and from what I understand they have some different rules to go by so if you are a non-profit this may not apply.

A donation is an income, even if what is donated is equipment, it has to be recorded at the fair market value on the date of donation.

You need to create a seperate income account, called something like “Donation Income”, or just use the “Other Income” account and enter something in the memo block to remind you about it.

Then the value of the donation is debited to an asset account (cash, equipment, inventory, what ever) and credited to the “Donation or Other Income” account.

To get this done, bring up inventory adjust, mark it as a value adjustment, select the donation income account as the adjusting account, increase the quantity of the item, and increase the total value of the item. That gives the item a cost and the income account shows that same cost as income to the business.

This same holds true for rebates from credit cards, that is also an income.

A donation is free and clear of ownership, the person donating has no claim to business equity. If the donation is tied to a claim on ownership of some part of the business then you need to set up an equity account for the person donating (what they are really doing is investing not donating) and credit that equity account instead of income.

Interesting topic.

In cash accounting you account for cash in and cash out. You aren’t owed anything. A local candy store might be a good example, people come in and you get cash, you buy candy in bulk for cash. But you don’t extend credit if someone wants to buy.

In accrual accounting things change a lot. Income is posted as being received when you bill someone, that throws people off sometimes. But if you think it through it really makes little difference, you will get the money. The only time this appears to be an issue is at the end of the year. But when the new year rolls around, and you receive money on an invoice from last year, QB does not post it to the current years accounts - after all it was already posted to last years.

The problem I see is that people want to switch back and forth, and when the financial statements don’t make sense to them then there are problems. If you invoice and the customer owes you money there is a difference in the way the two systems handle it.

Accrual - the cost of what was sold is sent to COGS immediately and the amount you invoiced for becomes a receivable and is sent to sales.

Cash - Nothing happens! Well inventory is reduced but that is all. When you tell QB that you received some of the money owed then and only then does QB send the cost of what was paid for (the cost of what you sold) to COGS and the amount received goes to sales. Now if you receive the full amount owed that works out pretty good, the full cost goes to COGS. But if your customer only pays half of what is due, then only half of the cost is sent to COGS, and QB waits to be told that the rest has been paid for, cash has been received. This really screws up COGS when you try to look into the detail behind the postings - at least for me.
People seem to want the full cost to go to COGS when an invoice is written in the Cash system, but that just does not happen.

Trying to compare either of the financial statements is a lost cause too, you just cannot do it. You cannot compare the cash basis profit and loss to the accrual profit and loss, and trying to compare the balance sheets is even more of a problem.

Of course keep in mind that I am not an accountant, so what seems wonky to me, might make a lot of sense to someone who is actually trained.

Purchase orders, sales orders, and pending invoices are non-posting records. They do nothing to the “books” in other words. You will not see them in any financial statements.

In preferences you can have Sales Orders reduce inventory levels if you wish, there is a toggle there to do it, but that is the only exception. All that does is reserve the inventory on the sales order, makes it appear, key word is “appear” as though the inventory is not there. Though it appears as though it is sold it is not, not until the sales order is turned into an invoice.

The problem with doing it that way is that if you do a physical inventory and compare what is on hand to what the item list says, there will be a difference because the sales orders have reduced inventory, well reduced what appears to be on hand.

I have some old habits that started way back in the 8-bit DOS/CPM days, but they apply today too.  Those were the days, hard sectored 5.25 discs, no hard drives, and the 300 baud modem, …….but I digress.

First I never ever keep my data files (for any program not just QB) on the same drive as the program and operating system. Drives today are cheap - so put another one in your computer!  The main drive gets a lot of use, the main drive is where virus attacks happen, the main drive gets cluttered, etc etc.  When you get the second drive, make a folder called something like QB company data.  QB for some reason does not have a “Save as …” function under the File menu - stupid!  So you will have to find the company files and copy them to the new folder, then select open company and navigate to the new folder.  Once saved QB always opens the last opened file, so it will use the file on the second drive from then on.

And when you get a new computer, pull the drive and put it in the new computer - unless the interface for the drive changes in the new computer (EIDE to SATA as an example) it will work fine.  And there are EIDE to SATA adapters out there.

Backing up your data is just as important.  At a minimum back up to the second drive, in a different top level folder.  When hard drives crash, most of the time only some folders get ruined, there is a good chance some techie can rescue data in another folder, when they can’t from a sub-folder.

Buy a USB external hard drive.  you can find back up software on the net that is free (look for open source programs) that will make a back up of any folders and/or drives you want at what ever schedule you want.  Then if there is an evacuation and you have warning (hurricane, tornado, whatever) you can just pick up the USB drive and take it with you.

QB offers an online  back-up service that they charge for, but there are numerous free on line back-up sites on the net - find one you like and back up to there too.  If you have a company web site that is hosted off your property (you don’t have the server in other words) you can back up to your company web site.  Create a folder, and FTP  your data folder to that folder.

The test file.

You need a test file, let me say that again, you have to have a test file.

And it makes more sense to have a file that has your accounts, your items, your customers, so that when you fool around trying to figure something out, you are used to what items you are using.  And you should fool around in the test folder, even if you read something here or on a forum, try it out on a test file first.

In windows, I have no idea how to do it on a mac, bring up windows explorer, find the drive and folder that holds the company data file, right click on the folder and select copy.  Then click on the top level of the drive and right click and select paste.  Windows will make a new folder called “Copy of <your folder name>”.  Right click on the folder and select “rename”, then rename the folder to include the word “QB TEST” in all capital letters to make it easy to find.

Open QB, from the file menu select open company and navigate to the test file folder, open the file.  The first thing you do when creating a test file like this is to open Company information, ( use the menu Company>Company Information) the very top line in the window that comes up is the company name, replace it with the words “TEST TEST” and click OK.  Then whenever the test file is open the main QB window title will read TEST TEST rather than the company name, an easy way to determine which file you are in.

Since QB always opens the last opened file, I developed the habit of opening the company file, and then closing down QB. That way it never opens with the test file open.

QB doesn’t seem to have any way to indicate that an invoice was mailed or e-mailed (and of course that includes the product shipment too).  What I do is enter the date I mailed it or e-mailed it in the memo block.  Then if you click on the column headers in the customer center you can customize the column headers and add the memo block so you can easily see the memo comment.  If you use delivery confirmation as I sometimes do, this is also a good place to make that note.

You can also add the memo field to most all reports, so reporting on aging as an example will show the memo entry. Handy if you sent a late notice, when that happens to me I enter LTE and the date the late letter was sent.

Remember back in grade school when you were learning positive and negative numbers, they showed you a number line?  There was zero in the middle and positive went to the right and negative went to the left.  Turn that number line on its’ end so positive is up and negative is down.

Debits increase, positive goes up.  Credits decrease, negative goes down.

When you have a negative balance, you owe money, that balance (credit) would be low on the number line, below zero.  Then when you pay the bill, you debit the account.  A debit increases right?  Look what happened to the point on the number line, it increased, it went closer to zero.

Well simplistic maybe but it helps me keep it straight.

Have I confused you? ROFL - yea well.

In QB and on all the forums, everyone talks about inventory as being something you have for sale, or something you use to create something for sale. And I fell into this habit too, …….. my bad.

What about that other stuff you have that you want to track, what we think of as equipment inventory? Desks, computers, copiers, filing cabinets, all that stuff. It is inventory to the business, even if you expense it off using the Section 179 deduction, it still exists in the business and you want to make sure you still have it.

To do that you have know you have it, or have 5 filing cabinets, 4 desk lamps, etc etc.

Unless you just like following obscure uses for QB, or have a need to track this stuff, go read something else cause this in going to get real complicated.

When you set up an inventory item you generally pick the COGS and sales accounts and leave the asset account alone - it defaults to inventory asset. BUT, if you change that asset account to something like Office Equipment (an Other Asset account) then the cost of the inventory item you are creating or buying will go to that account and the number on hand will reflect how many you bought. (You do have to keep a COGS and an income account on the item screen, but since you are not going to sell it, it makes no difference.)

In the item list you should segregate these items away from the inventory you sell. Make a blank line, a divider and label it non-sale items or equipment or something. Then make the desk item a sub item of that divider.

If you do it this way then the shortcut I talked about in the Misc Category under Section 179 Deduction wouldn’t be used. But interestingly enough, when you have a desk with a value of say $498.00 as an inventory item (in the Office Equipment asset account), and you do a journal entry to expense $498.00 off to the Section 179 expense, QB **only** removes the value from the asset account, the quantity on hand is still there.

So now you have a piece of equipment in “Equipment” inventory that you can track, the cost is easily found, and if it is expensed to the Section 179 Deduction that is also easily found. If you need to do the actual depreciation for an item of equipment then you can - the cost is readily available.

The other way to accomplish the same thing is to use the shortcut Section 179 deduction that I explained. That expenses the item off the books right away. Then create an inventory item with zero cost and the quantity of the item on hand. With zero cost it makes no difference what asset account you use, but you should use the Office Equipment asset account to keep things logical. I don’t particularly care for this way of doing it, because the cost is just too hard to track. When I buy the item and put it in the Equipment Asset account the cost is there in that account, and then the entry to move that cost to the Section 179 deduction is also there.

And hopefully at some point your business will make too much money to qualify for the Section 179 deduction, then you will have to cope with depreciation on the desks, copiers, etc. And if the cost is in the Equipment asset account, that makes it easier.

Renting poses some problems in QB. QB treats inventory as being sold when you put it on an invoice, and in a rental situation it is not sold, but it is not there either, so it should not be in inventory, but you still own it so the value should stay on the books.

In my view a capital asset is the easiest. Capital assets are things that cost a lot and have a long life, like a back hoe.

So lets say you are buying 5 back-hoes to rent. If this the first time you will have to create a fixed asset account, and then buy the item on the expense tab of “Enter bills and expenses”, when you select the fixed asset as the expense QB will ask if you want to bring up the fixed asset list and add the item, say yes and fill in the blanks - that gets it on the books. I would suggest you enter each back-hoe as an individual entry, rather than a quantity of 5, that will make selling or disposing of one later on easier. (Capital assets have to be depreciated, see the entry on depreciation in the Bean Counting 3101 category in this blog)

Now you need to track it. Create an inventory item called back-hoe, and then use enter bills against inventory and “buy” 5 back-hoes for zero dollars. When you rent an item, use the inventory item back-hoe on the invoice, that gets it out of inventory but does not increase COGS since the cost of the back-hoe in inventory is zero. When the item is returned use inventory adjust and increase the number on hand by the quantity of the item returned. If you want to identify each back-hoe specifically you will have to either enter each one by serial number as an item, or enter the serial number on the invoice itself, QB does not track specific items at all.

If the rental is month to month then you will also need to create a service item called something like rental. For following months use the service item to invoice for the monthly rental and in the description block put the item being rented. Kind of a pain, but QB does not really handle rentals very well.

In truth if all you do is rent items you could list all items for rent this way, even if they are not normally considered capital assets, say something like a circular saw, jig saw, etc etc.

But let’s say you also sell items as well as rent them, saws, drills etc. That poses a new problem, well several problems. If you rent an item, the value has to stay on the books but you have to know it is not there ready to sell. And if you sell an item that has been rented, you probably will not sell it for full retail value either, so you have to know how many new items you have for sale and how many used items (returned rentals).

There are two ways to do it that I know of - both require attention to detail, neither is a good solution IMO but in QB you have to work around what it will an will not do.

1. Use a sales order to show items being rented. Add the column “On Sales Order” to the item list (click the column header and select customize, then add the column). When you look at the item list you can do the mental math to subtract the items being rented (on the sales order) from what is on hand and only sell what is on hand. Use a service item to rent the item (do not put the item on the invoice, but you can put the description of the item rented in the description area of the invoice). But you have to look at the item list before selling, QB will sell an item in inventory even if it is on sales order, sales orders are non-posting. So if you do not look at the item list first, QB will sell the item and it may not be there at all, it is rented.

2. Create a sub-item called something like widget-rented. When you rent an item use inventory adjust to decrease the number on hand of the parent item widget and increase the sub item widget-rented. That moves the item out of the parent item and shows it being rented, so when you go to sell the item (parent item) only the number of widgets on hand and available for sale is there.

I would also create a sub item called something like widget-available to show items that are used (have been rented) and are on hand. Then if you want to sell a used item, you can use that item on the invoice. When the item comes back from being rented use inventory adjust to move the item from the widget-rented item to the widget-available item to show it is back in the shop and can be rented.

Income is what the business makes, pretty obvious huh? Don’t get that confused with profit. Profit is what is left after you pay all the different costs of operating your business, including buying inventory, insurance, advertising, rents, etc., and of course paying uncle sam and nephew (the state) his taxes.

Now I don’t begrudge paying taxes, and no matter what you feel about how high they are, I can tell you from having lived all over the world that we pay some of the lowest taxes there is.  But just because I don’t begrudge paying taxes doesn’t mean I want to pay more than I have to.

And that is the reason I have  a partnership with no employees.  By not having employees the business doesn’t have to pay the various state and federal unemployment taxes, the business does not have to match social security contributions, and best of all the business doesn’t have to pay for a payroll service just to keep up with the changing taxes withheld.

What I am hoping to do (and please realize this is not a recommendation, just my opinion) is to take on help when that day comes as a limited partner.  Limited in that they do not get a vote as to operation or fiscal planning decisions.  The new partner will get a guaranteed draw and have to file estimated taxes, but I have a spread sheet that does that calculation easily and each partner can have a copy.  That means that the guaranteed draw has to be higher than a straight salary since the partner is paying the tax, but, and the key word is but, if I can show the business growing, the new partner will also share in profit.  That lure of a “bonus or profit sharing” check will, I hope, mitigate the lower guaranteed draw.

And let’s face it, if an “employee” has a stake in the business, gets a profit share, they hopefully will be more concerned with the business relationship with vendors and customers.

Want to see what difference it makes?  Take last years P&L, add up the cost for your payroll service and the total costs of unemployment taxes, the business contribution to social security and any other taxes and fees you pay because you have employees - then add that figure to net profit. (And if you use QB payroll include the cost of “upgrading” to a new version of QB every three years, since they sunset the payroll service.)

Less taxes (and associated costs)  paid equals higher net profit - pretty simple.

QB has a limit on names, 14500, seems like  a lot until you have been in business awhile.  QB will not let you delete an item if it was used in any transaction for the life of the file.

Marking the item inactive will get it off the screen but it is still there taking space and “reserving” the name, a name once used cannot be used again.

But you can merge names, which of course merges the items and all transactions for them, so be careful.   Decide what name you want to stock it under, then bring up the other items and change the name.  QB will ask if you want to merge the items, say yes.

And while we are on the subject of names, the names that you buy things under also count, so if you start using vendor names for each and every gas station you use while traveling, you will hit the limit fast.  When ever possible use a generic name like gas, food, lodging, printing, etc. and if you want you can put the business name in the description block.

Above is a pic of my QB screen. This is how it opens when I start QB, the reminders window and the Home window open all the time. You can set yours up and set what ever windows you want to always be there.

First grab the Home window and drag it up and to the left, the setting I have it at is the minimum it will shrink without causing scroll bars and hiding the information.

Then open, size and place the windows you want to always open when you start QB.

Go to Menu>Edit>Preferences and select the Desktop view, click in the radio button, save current desktop. Click OK.

Then open Preferences again and select the Desktop view again, this time click in the radio button that says “keep previously saved desktop” and then click OK.

The IRS has the neatest thing called a Section 179 deduction, that basically says that if your business qualifies you can deduct the cost of equipment in the year you bought it rather than dealing with depreciation over some span of years. And the IRS considers damn near anything equipment, furniture, computers, software, video, audio, all kinds of things. And if you bought more than the allowable deduction, you can carry forward to next year the remainder.

What you are supposed to do is to buy the equipment and use an account called something like Office Equipment (an asset account) to record the purchase and then at the end of the year you make an adjusting entry to move that value out of Office Equipment and into the 179 deduction expense account.

I took a shortcut. My accounting friends are going to cringe at this, accountants have no sense of humor sometimes <smile>. I created expense accounts that reflect the Section 179 catagories. My account list looks like this (indented names are sub accounts) :

Section 179 Deductions

A - Computer Equipment

B - Video and Audio Equipment

C - Cellphone

D - Copier, Calculator

E - Furniture

G - Tools, Machines, Equipment

K - Software

Notice the skip in lettering? That is because the IRS uses those letters when you report the category on the Section 179 form. The missing category (letters) are ones that do not apply to my business so why list them in my chart of accounts?

Your tax guy can give you the whole list, or if you have a copy of TurboTax for Business they are contained in there.

So when I buy software (as an example) I record the expense directly to the Section 179 deduction sub account “K - Software” and when I do my taxes I print out the Section 179 account quick report so I can transfer the numbers to the correct form for IRS reporting.

Last year I began a paperless office, it takes a couple of extra steps but what a nice idea. Here is how I do it, it might work for you.

I set up a folder with the company name-paperless-<year>, then sub folders for the following (there are actually more but this so you get an idea)

Financial

bank-1

deposits

statements

bank-2

deposits

statements

Credit Card-1

Credit Card-2

Invoices

Invoices Paid

Purchase Orders
Contracts
Receipts

USPS

Gas

Food

Lodging

Printing

When I do a transaction I save the invoice to pdf in the appropriate folder. When an invoice is paid, rather than saving it all over again so it has the paid stamp on it I just move it to the paid folder.

I scan my receipts and print them to pdf in the folder they belong. Since my scanner software dates the receipt and I categorize them in folders there is no reason to change the name. Once it is saved in pdf I delete the scan from my scanning software - no reason to keep it. And of course when the receipt is scanned there is no longer a reason to keep it.

I keep everything in pdf because everyone can read a pdf, no special software is needed in the event of an audit. I print my tax returns and K-1’s to a folder called IRS too, then when I am done with the year I copy the whole folder to a CD as an annual record.

I actually have a folder that is called “paperless-master” that I only use to create a new company paperless folder each year. The paperless master folder contains only the sub folders, nothing is ever saved to it so I can use it year after year to create a new paperless folder.

In windows explorer, right click on the folder and then select “Copy”, then select the top level folder and right click and select “Paste” - windows explorer will create a complete duplicate copy of the folders and call it “copy of <folder name>”.

Then click in the folder name to highlight the folder, click one more time and the name will highlight, click one more time and a cursor will appear in the name and you can delete the words “copy of” and change the year to make a new year paperless folder.

All companies should have equity accounts, and I think they should be set up this way.

Equity-name
Equity-drawing-name
Equity-investment-name

Where ‘name’ is the name of the owner. One set of accounts for each owner.

Equity is the amount of the business you own, and to the business, that is a debt the business owes, as a result the amount is carried normally as a credit balance.

The Equity-drawing is an account used to hold the amounts of money an owner took out of the business. Money in this case really means value, if you took an item out of inventory that has value and that value is what is held in this account. Since it is a value that the business no longer owes you, a balance in this account is normally held as a debit.

So when you write your self a check, use the account Equity-drawing to record it. If you add money, or something that has value to the business, then the addition is Equity-investment and the Equity-investment account normally has a credit balance.

These accounts are used to hold the owner transactions during the year. At the end of the year when you do your EOY financial statements, QB creates an account called “Retained Earnings” and the net profit goes there on the first day of the new year.

Income taxes often require you make some adjustments to your financial records and your accountant or tax guy tells you what end of the year entries to make. Once that is done, you can and should “roll up” the equity accounts.

Unfortunately this is another area QB dropped the ball. There is no easy one button approach to rolling up equity annually. You have to make journal entries to do it. Why do it? Well you really do not have to if you are the sole owner, but for a business with more than one owner you have to distribute the profit according to the business agreement. I think even a sole owner should do it, if you do it annually then during the year you can see how much you are taking out of the business for that year.

So to roll up the equity accounts, put the final profit and loss statement on the table in front of you and bring up the journal (Menu Company>Make journal entries). I was always taught that the first line of a journal should be the debit, but it really makes no difference. (NOTE: each journal entry is a seperate entry, hit save and new after each one)

Set the date for the first of the year and …

IF … Equity-investment-name has a value
Debit Equity-investment-name for the amount
Credit Equity-name for the same amount

IF … Equity-drawing-name has a value
Debit Equity-name for the value
Credit Equity-drawing-name for the value

Now you are ready to distribute net profit which is held in the account Retained Earnings.

Debit Retained Earnings for the amount that goes to the owner
Credit Equity-name for the same amount

Do this for each owner. When you are done, Retained Earnings should have a zero balance, as well as the investment and drawing accounts - for the first of the year. Any amounts that were posted to those accounts after the beginning of the year will still be there waiting for you to do it again at the end of the current year.

Note: The above assumes you had a profit, if you had a loss the value in retained earnings will be a negative ( a debit) so the entries will have to be opposite, Credit retained earnings and debit owner equity.

We write a contract for a future consultation, when we do I create a sales order to reflect the terms of the contract. My daughter (da boss) actually performs the consultation and I send out an invoice the next day.

(note - sales orders are only available in Premier and higher)

I’ve been trying to figure a way to create some kind of reminder so I would be able to look at the date and see that an invoice needed to be created. The open sales report is useless since it will NOT allow sorting on the date. When a customer has open orders for more than one date in the date range (month) the report lumps them together under the customer name - useless!

On top of that, I wanted an automatically updated listing, this is a computer after all.

I finally figured out that if I set the flag “to be printed” on a sales order it will display in the reminders window in chronological order. When I create the invoice I remove the to be printed flag and it goes away in the reminders window.

And what is really nice is that if I change the date on the sales order and then save it, it reorders itself on the reminders list.