If you sold only one type of product to customers in one city, collecting and paying sales tax would be easy. But most businesses have a wider reach than that.
QuickBooks Online offers tools that allow you to set up sales tax rates and include sales tax on sales forms. Further, it calculates how much you must pay to state and local taxing agencies.
This is one of the most complicated areas in QuickBooks Online because you may have to deal with numerous taxing agencies. If you’re not already working with sales taxes, we strongly recommend you let us help you get everything set up correctly from the start. Taxing agencies can audit your recordkeeping and you want to make sure it is set up correctly.
That said, here are five things we think you should know.
QuickBooks Online calculates sales tax rates based on:
- Where you sell. Every state is different. If your business is located in Florida and you sell to a customer in Minnesota, you’ll be charging any sales tax levied by the state of Minnesota and possibly the city and county and other taxing authorities – if you have a connection, a “nexus” in that state (a physical location, active salesperson, etc.).
- What you sell.
- To whom you sell. Some customers (like nonprofit organizations) do not have to pay sales tax. You’ll need to edit their customer records to reflect this in QBO. Open a customer record and click the Edit link in the upper right. Click the Tax info tab and make sure there’s no checkmark in the box that says This customer is taxable. The Default tax code will be grayed out, and you can enter Exemption details in that field.
Customer records for exempt organizations should contain details for that exemption. You’ll need to see their exemption certificate or at least know its official number.
Intuit now offers a revamped version of QuickBooks Online’s sales tax features.
At some point, you’ll be asked if you want to switch to the new, more automated system. The actual mechanics of the process are simple, but you’ll be moving historical and in-process data to a new structure. If you have sales tax set up right now and your situation is at all complicated, you’re going to want our help with the transition.
This enhanced feature only supports accrual accounting.
You can combine individual tax rates.
If you are required to pay city, county, and state sales tax rates for a particular customer, for example, you can create a Combined tax rate that contains all of the individual components. The customer will only see the total on an invoice or sales receipt, but QuickBooks Online will track each one accordingly for payment and reporting purposes
You can combine sales tax rates in QuickBooks Online (image above from current Sales Tax Center in QuickBooks Online, not the enhanced one).
Product and service records should contain sales tax information.
This is another area that will require some research. Just as some services are subject to tax, some products are not (like groceries in Arizona). So, you’ll need to find out what the rules are for what you sell. You can find this information on the website of the state’s Department of Revenue (sometimes called the Department of Taxation).
Once you know, you can record that status in QuickBooks Online. Open a product record by going to Sales | Products and Services and clicking Edit in the Action column or create a new one by clicking New in the upper right. Scroll down to Sales tax category in the record. You can choose between Taxable – standard rate and Nontaxable.
There’s a third option here: special category. This gets complicated. We can help you determine whether it applies to you.
QuickBooks Online tracks the sales tax you owe.
You can see what you owe to each agency by running the Sales Tax Liability Report, and record payments when you’ve made them. Summary and detail versions of the Taxable Sales report are also available.
Once you get sales taxes set up in QuickBooks Online, it’s easy to add them to the relevant sales forms. Getting to that point, though, takes time, study, and careful attention to detail. If you’re getting ready to sell, or you’re already selling and struggling with sales taxes, let us know. We can schedule an initial consultation to see how we can be of assistance.
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.
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.
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.
Intuit keeps innovating. Here are some of the changes the company introduced for QuickBooks Online in 2019.
Whether you can see them now or not, Intuit added and enhanced a ton of new features in 2019. Some of you may not see all of them until 2020, since the company typically rolls them out slowly.
So, if you’re not in one of the first waves of users, we want you to know what’s coming. It may also be that your version of QuickBooks Online has incorporated the changes, but you just haven’t noticed them. Here’s a rundown of what’s in store for everyone on the horizon.
A new location for the Create button
Previously, you clicked on the +(plus) sign in the upper right corner to open the Create window (invoice, sales receipt, bill, single time activity, etc.). Now, you’ll see a button marked +New in the upper left corner.
If you use QuickBooks Online Payments, you’ll be able to have available credit card and bank transfer payments from customers deposited in your bank account within 30 minutes for a 1 percent fee. The funds will be directed to your U.S.-issued Visa or MasterCard debit card.
This is a tool previously found only in QuickBooks Self-Employed, but QuickBooks Online users will now have access to it. It does just what it sounds like: allows you to track business-related mileage so you’ll have a numerical total to enter when you come to that deduction on your income tax return. You can record trips manually by entering starting and ending addresses (or the total miles). Or, if you’re using the QuickBooks Mobile app, you’ll be able to turn on GPS and let your smartphone record the mileage automatically.
QuickBooks Online’s Mileage Tracker allows you to record business miles driven manually or automatically and calculates your tax deduction.
New navigation tools in QuickBooks Mobile app
You’ve probably gotten used to navigating from a list of features in the QuickBooks Mobile app. You should soon see an entirely different look for navigation that uses icons representing common tasks (Transactions, Expenses, Mileage, etc.). These will appear when you click on the Shortcuts tab. You’ll find the remaining tools under the All tab.
Health benefit management
QuickBooks Online now allows you to compare, buy, and manage employee health, dental, and vision coverage.
Receipts can be the bane of a business owner’s existence. Many still use the “shoebox” method, tossing receipts in a box and entering them when tax time rolls around. Not a particularly elegant solution. Now, you can snap photos of receipts and move them into QuickBooks Online in one of three ways, by:
- Scanning through the mobile app.
- Uploading, then dragging and dropping.
- Forwarding through email.
Receipts are automatically categorized and matched to transactions; if there’s no match, you can create a new transaction. Your receipts appear in the Receipts dashboard under the Banking tab.
Do you have international customers? If so, you may be able to send them invoices in their native languages. Besides English, QuickBooks Online now supports French, Spanish, Italian, Portuguese (Brazil), and Chinese (traditional).
You can now send invoices to customers in any of six languages.
One-step contractor payments
You can now select trackable details like class, project, and location by making selections from drop-down lists in the contractor payments window.
If you’re a QuickBooks Online Payments subscriber, you’ll be able to get next-day access to payments customers have made to you via credit card or ACH. You’ll have to sign up for this service, and fees apply to ACH payments (1 percent of the total deposit, up to $10).
Auto-calculated sales tax
QuickBooks Online has streamlined the process of adding sales tax to sales forms – even if you’re a cash-basis business. After you’ve done some initial setup work, QuickBooks Sales Tax will do the necessary calculations and add sales tax automatically.
We hope that 2019 has been a good year for your business, and we wish you the best in 2020. If you’re still struggling to use QuickBooks Online to maximize productivity and make better business decisions, remember that we’re here to help. We can also advise you on any of the new features Intuit has introduced. Contact us anytime to set up a consultation.
If you’re using QuickBooks Online Plus or Advanced, you can create projects and track their profitability.
You already know how to determine whether your business is making or losing money overall: you run a Profit and Loss report. But what if you want to break this data down further? How can you tell whether the individual jobs you do for customers, with all their related income and costs, are profitable?
This kind of insight can have an enormous impact on future business decisions about product and service pricing, worker costs, and expenses. It can even signal whether or not you should take on specific jobs. If you’re using QuickBooks Online Plus or Advanced, you can use their Project tools to calculate profitability. The theory is simple. You simply assign all relevant sales, time, and expenses to the project. QuickBooks Online will do the rest.
First, you’ll need to make sure that QuickBooks Online is ready to track projects. Click the gear icon in the upper right and select Account and Settings. Click on the Advanced tab and go down to the Projects section. If this feature is turned Off, click the pencil icon over to the right, click in the box to turn it On, and Save this option.
To create a project, click on Projects on the home page and then on the New Project button over to the right. This panel will slide out from the right:
Before you begin tracking a Project in QuickBooks Online, you’ll have to create a master record for it.
Enter a Project name in that field and select a Customer from the drop-down list (or <Add New>). Notes are optional but recommended. Click Save, and your new project will appear in a list on the Projects page. QuickBooks Online stores that information along with the customer in your company file and makes it available when you create, for example, invoices, checks, expenses records, and time activities.
Linking Projects in Forms
Your project will appear in different places on different forms. On an invoice, it appears in the Customer drop-down list as a sub-item under the linked customer. You’ll select the project name rather than the customer to make sure the invoice was “tagged” to the project and wasn’t just a one-off bill. If you’re recording an expense, you’ll see a column for Customer/Project with other line items details.
There’s also another way to connect transactions to their related projects. On the Projects home page, click on a project name in the list. Click the Add to project button in the upper right and select the correct transaction from the list that drops down. In some cases, like invoices, the project will already have been selected and will appear in the Customer field.
If you enter a transaction and realize later that you forgot to connect it to a project, you can correct this in most cases (like expenses and bills) by going back to the original transaction and adding (or changing) the Customer/Project name. Invoices are tricky, though, depending on their status. We’d recommend you consult with us about this.
You can see what your profit margin is on any project at any time.
After you’ve been entering project-related income and expenses for a while, you’ll probably be curious about whether or not you’re making money – even if the project is still in progress. To do this, open the Projects home page and click on the project name. The screen that opens (like in the image above) will be devoted to that one project. You can click on tabs to see:
- An Overview that lists your income and costs, as well as your profit.
- A list of related Transactions.
- Time Activity records.
- Project Reports (Project profitability, Time cost by employee or vendor, and Unbilled time and expenses).
We encourage you to use QuickBooks Online’s Project tools but would caution you about making changes to some existing transactions, especially invoices. We can help ensure that you’re on the right track with this feature. Contact us, and we’ll set up a consultation.
Keep a constant watch on your accounts receivable to improve cash flow.
Quick: How many of your invoices are unpaid? Have any of your customers gone over 30 days past due? Did you bill all of the time and expenses for that project you just completed for a customer?
If you’re doing your accounting manually, there’s simply no way to get that information quickly. Depending on your bookkeeping system, you may not be able to get it at all.
QuickBooks Online has more than one solution for this problem. You see the first one every time you log in. The Dashboard contains a graphic in the upper left corner that tells you how many invoices are overdue and unpaid. Click on the colored bar labeled OVERDUE, and you’ll see a list of invoices with the unpaid ones right at the top.
You can tell at a glance how much of your money is tied up in unpaid invoices.
While this is important information for you to have as you start your workday, it doesn’t tell the whole story. To get that, you’ll need to access some of QuickBooks Online’s reports – five of them in particular. Click Reports in the left vertical pane, and then scroll down to the heading labeled Who owes you.
These reports are listed in two columns. Each has the outline of a star next to it. Click on the star, and the report will be added to the Favorites list at the top of the page. Click on the three vertical dots next to it, and you’ll be able to Customize the report. And as you hover over the title, you’ll see a small, circled question mark. Click on this to get a brief description of the report.
There are several reports in this list that can provide insight into where your outstanding revenue is. We recommend you run five of them at least once a week – more frequently if your business sells large quantities of products and/or services. The suggested are:
Accounts receivable aging detail
This report provides a list of invoices that are overdue, along with aging information. There are several columns in the report, but you’ll want to pay special attention to the last one: OPEN BALANCE.
Tip: If you have many customers or simply a high volume of unpaid invoices, you might consider running the Accounts receivable aging summary instead.
Changing the Content
Before you run the report, you should explore the customization tools provided for it. They won’t be the same for every report, but you can start to get an idea of what can be done. Hover over the report title and click Customize. A panel like the one pictured below will slide out of the right side of the screen.
QuickBooks Online provides deep customization tools for reports.
You can see some of your customization options in the image above. Beyond these, you can also work with filters and headers/footers. When you’re satisfied with your changes, click Run report.
If you want to run a report with its default settings, just click on the report title in the list to display it. You’ll have access to limited customization from there.
Four other reports you should be generating regularly are:
- Customer Balance Summary: Shows you how much each customer owes your business
- Open Invoices: Lists invoices for which there has been no payment
- Unbilled Charges: Just what it sounds like: tells you who hasn’t been invoiced yet for billable charges
- Unbilled Time: Lists all billable time not yet invoiced
We don’t expect you’ll have any trouble understanding reports like these; they’re fairly self-explanatory. QuickBooks Online offers many other reports, the standard financial reports that need to be generated monthly or quarterly, like Balance Sheet, Profit and Loss, and Statement of Cash Flows. You’ll absolutely need these should you apply for a loan or need to supply in-depth financials for any other reason. We can help you analyze them to get a comprehensive, detailed picture of your company’s fiscal health.
QuickBooks Online doesn’t require deep knowledge of accounting principles. Still, there are concepts you should understand.
You probably didn’t expect you’d have to become an accounting expert when you started your business. You knew you’d have to deal with recording income and expenses – maybe track your inventory and process a payroll. But you may not have understood just how complex financial bookkeeping could be.
That’s why you decided to use QuickBooks Online, or are at least considering it. The service is an expert on accounting, and it simplifies the process. It knows exactly how you have to document transactions to stay compliant with the rules that accountants and other businesses follow. This is good practice, and it’s absolutely necessary if, for example, you ever have to apply for financing.
One of the features of accounting systems you should understand is the Chart of Accounts. You won’t have to alter it in any way-in fact, we strongly advise against it-but you’ll encounter it when you work with transactions. Here are five things you should know about it.
What is it?
These three columns from QuickBooks Online’s Chart of Accounts display account Names, Types, and Detail Types.
QuickBooks Online’s Chart of Accounts is a list of financial categories that are used to classify your company’s transactions when you record them. If you were doing your accounting manually, you would have to create your own Chart of Accounts. But QuickBooks Online builds one for you based on the company type and industry you choose when you’re setting up the site.
Why is the Chart of Accounts important?
Some people refer to the Chart of Accounts as the “backbone” of your company file. All transactions flow to it. Its primary importance can be summed up in one word: reports. Your reports will not be accurate if your Chart of Accounts is poorly constructed or if you categorize transactions incorrectly. This becomes as issue when you want to:
- Prepare taxes. Your income tax return will not reflect your reportable income and deductible expenses if transactions are not assigned to the right classifications.
- Apply for financing, take on an investor, sell your company, etc.
- Monitor your finances. You won’t get a true picture of your income and expenses, which makes it difficult to analyze your company’s fiscal health and plan for the future.
What’s in the Chart of Accounts?
There are two types of accounts. One contains information that’s used in the Balance Sheet report. These accounts will have a number in the QuickBooks Balance column that’s based on all transactions up to the current date. They include Assets (bank accounts, accounts receivable, inventory, etc.), Liabilities (unpaid bills, credit cards, payroll and sales taxes, loans, etc.), and Equity.
The remainder of the accounts are used in the Profit and Loss report, otherwise known as the Income Statement. They’re divided into Income (sales, discounts given, etc.), Cost of Goods Sold (labor, shipping, materials and supplies, etc.), Expenses (advertising, insurance, payroll, etc.), Other Income, and Other Expense. You won’t see a number in the QuickBooks Balance column for these accounts because the Profit and Loss report changes based on the date range selected.
Should I ever make any modifications to my Chart of Accounts?
You can set up bank and credit card accounts in QuickBooks Online’s Chart of Accounts.
As we stated earlier, we strongly recommend that you never modify your Chart of Accounts without consulting us. However, there are two exceptions to this. You’ll want to create entries for your bank and credit card accounts. To do this, first open the Chart of Accounts by clicking the gear icon in the upper right and selecting Chart of Accounts under Your Company. When it opens, click New in the upper right corner. Choose Bank or Credit Card and fill in the blanks.
Do I need to use account numbers in the Chart of Accounts?
Generally, the smaller the business, the less need there is for this. If your business is big enough that you have dedicated A/P and A/R individuals, you may want to post transactions to account numbers.
QuickBooks Online makes it possible for you to view the Chart of Accounts and those two critical reports, Balance Sheet and Profit & Loss. Customizing and analyzing them, though, is something you should do under professional supervision. We’re happy to help here and in other advanced areas of the site. Contact us for a consultation.
You can track the hours employees work in QuickBooks Online. But if your time-tracking needs are complex enough, you’ll need an integrated app.
If your company has a staff and sells services, you know better than anyone that time is money. It’s critical that you track every minute that employees work, as well as those that can be billed to customers. QuickBooks Online offers dedicated tools that let you do just those tasks.
But QuickBooks Online has limitations in that area, and you may need more versatile time-tracking than it provides. There’s a solution for that: add an integrated add-on application. Several are available that go above and beyond in the area of employee time management. If you’re interested in exploring these online solutions, we can help you both find and get started with the right one.
What QBO Can Do
QuickBooks Online’s own time-tracking features are easy to set up and use – but you must be sure they’re turned on. Click the gear icon in the upper right, then Account and Settings under Your Company. Click on the Advanced tab and go down to the Time Tracking section. The first two entries here should be checked; if they’re not, click in the boxes. If you don’t want employees to see how much customers are actually being billed for their time, keep that box unchecked. Change the First day of work week if you want and click Save.
If you’re going to track hours worked by employees and bill them to customers, these two boxes need to be checked.
Once time-tracking is enabled, you’ll be able to enter single timed activities and/or fill in timesheets., marking them as billable where appropriate. Employees will be able to enter their own hours on timesheets, and billable hours can be easily transferred to customer invoices.
Adding an Add-On
As we said earlier, there are numerous advanced add-on time-tracking applications that can be integrated with QuickBooks Online. They contain built-in tools to facilitate their actual connections with QBO, and they know what data needs to be exchanged and synchronized. Hours captured on timesheets go directly into QuickBooks Online, which transfers billable hours to customer invoices and uses the data in job costing and payroll.
Here’s an example of how the setup process works in one of the most popular apps, TSheets. Once you’ve created an account (a 14-day free trial is available), you’ll click on the Feature Add-ons link in the lower left, then Manage Add-ons. Select QuickBooks Online from the list and click Connect to QuickBooks. Click Connect again to establish the link. TSheets then asks some questions about your import preferences. When you’ve designated those and clicked on Start Import, TSheets will import your employees, customers, service items, and other data you’ve specified from QuickBooks Online.
You may need our help with one task in particular: setting up the Payroll Item Mapping Tool. This ensures that your pay types (salary, overtime, etc.) match those in QuickBooks Online. There are many other internal settings that will require your attention before you start using TSheets.
You can fine-tune your time-tracking app’s settings, as in the above image from TSheets.
TSheets and other QBO-friendly time-tracking applications have their own unique set of features, but they all focus on getting your employees paid for their work and your company paid by customers who use your services – accurately and in documented detail. Prices vary, but they generally charge a monthly base fee and an additional monthly fee for each user.
Employees can, for example:
- Punch into and out of specific jobs on a virtual time clock (desktop or mobile). Facial recognition adds another layer of security.
- Use time cards or timers to record work hours.
- Record their breaks and time off based on the stated company policies.
- Track time when wifi or cellular service is not available.
- Access and approve timesheets from the mobile app.
- Schedule shifts and assign employees to them.
- See who’s working (and on what) and locate them via GPS tracking.
- Generate real-time, live reports.
Keep in mind that when you add an app to QuickBooks Online, you’re essentially having to learn how to use an unfamiliar website or program. Since they touch both payroll and customer billing, time-tracking applications must be understood thoroughly and used with precision. So if your needs go beyond what QuickBooks Online can do, let us help you select and implement the right app for you.
Do you know about all of QuickBooks Online’s settings? What you’re missing may be important.
Looking through all the settings available in QuickBooks Online is something like reading the owner’s manual when you get a new car. You know you should do it, but you find yourself consulting it only when you encounter a problem.
Whether you’re new to QuickBooks Online, or you’ve been using it for a while, we recommend that you familiarize yourself with these important preferences. Settings do more than turn features off and on: they can teach you about tools you might not have known were available.
Let’s explore some that you may have missed.
Closing the Books
You’ve probably heard this phrase before but do you know what it actually means in QuickBooks Online? When you set a closing date, you’re indicating that no transactions entered prior to that date should be changed.
Click the gear icon in the upper right, then select Your Company | Account and Settings. Scroll down to the Advanced section in the left vertical toolbar. Under the first heading, Accounting, check the box in front of Close the books. Enter a date and choose one of the two options for exceptions, as pictured in the image below:
You can close the books as of a specific date in QuickBooks Online so users can’t change transactions entered before then.
Warning: Talk to us before you make this decision. We can discuss the pros and cons.
QuickBooks Online offers a couple ways to categorize transactions so you can see related data in searches and reports. Scroll down to Categories and click on the Off button to the right of Track classes to turn this feature on. QuickBooks Online will then add a Class field to forms like invoices, along with a drop-down list that you can build with your own options. For example, you could create categories like departments, customer types, and product lines. You can choose to assign classes to entire transactions or to individual rows in them, and you can ask to be warned if you try to save a form without selecting a Class.
Track locations works similarly. You can assign a location (territory, store, department, etc.) to each transaction if you’d like.
By using QuickBooks Online for your daily accounting tasks, you’re already saving time. But the site offers a way to save even more with its Automation tools. Here’s what you can do:
- Pre-fill forms with previously entered content. Once you’ve saved a transaction for a customer, vendor, or employee, you can choose to have QuickBooks Online complete some fields in the next form you create for them.
- Automatically apply credits. Do you want QuickBooks Online to apply credits to the next invoice you create for a given customer? Most businesses do, but a specific example of a time you wouldn’t check the box would be if you’re a property manager who requires security deposits.
QuickBooks Online offers several automation options.
- Automatically invoice unbilled activity. Be careful with this one. When you have customers with unbilled activity, QuickBooks Online can automatically create invoices for them on a schedule you designate. You have a few options here. You can simply ask for a reminder as the date approaches, or you can allow the site to automatically create invoices – with or without notifying you.
- Automatically apply bill payments. When you record bill payments, QuickBooks Online can automatically apply them to the oldest recorded bill.
Does your company sell services that are billed by the hour? If so, there are a couple of options you can turn on here. When you create timesheets or individual timed activities, you can add a Service field to the tracking form. You can also include a checkbox to indicate that a block of timed work is billable to customers. If you do the latter, you can opt in or out of letting users see the actual rate you’re charging customers.
Checking Your Work
QuickBooks Online refers to these as Advanced Settings for a reason. Making the wrong choices on any of them could lead to unhappy or confused customers and/or inaccuracies in your accounting file. We think you should know about these options, but we also hope you’ll schedule a consultation with us before attempting to set them up. It’s always much easier to spot problems in the making than to correct mistakes already made.
Estimates-or quotes, or bids-are useful tools when you’re pitching a sale of products or services. Here’s how QuickBooks Online handles them.
Sales estimates are standard procedure in many professions. You wouldn’t authorize a car repair without one. Nor would you OK a remodeling job on your kitchen or a summer’s worth of yard landscaping without knowing what the costs will be upfront.
Estimates don’t have to be formal documents. You could scribble a proposal for products or services and their prices on a paper napkin and have your customer sign it. But as we’ve said before, the quality of your sales documents reflects on your company’s professionalism as well as its image.
QuickBooks Online offers specialized tools to manage this step in the selling process. You can create detailed estimates that the site can easily convert to invoices when you get an approval. And QuickBooks Online reports help you monitor the progress of your quotes. Here’s how it works.
A Dedicated Form
You probably already know how to create an invoice. If so, you shouldn’t have any trouble generating estimates because the forms are very similar. To get started, click the + (plus) sign in the upper right corner of the screen. In the Customers column, click Estimates. A form like this will open:
QuickBooks Online provides a form template for your estimates.
Open the drop-down list in the Customer field and select the correct one (or +Add new).
Note: If you click on +Add new, you’re only required to enter your prospective customer’s name to create an estimate; contact detail, of course, will not appear on the form. You can go back later and complete a customer record, but it’s best to at least enter a physical and email address. Click +Details to open the complete record, then save what you provide there.
The word “Pending” should appear below the Customer field. This refers to the status of your estimate. Click the down arrow to the right of it, then on the down arrow in the small window that opens to see what options you’ll have later. If you want to copy someone else on the estimate, click the small Cc/Bcc link to the right and provide the email address(es).
Enter (or select by clicking on the calendar graphic) the Estimate date. If your offer is only good for a limited period of time, enter an Expiration date; otherwise, leave that field blank. Then go down to the Product/Service grid and select the items for which you’re providing an estimate, one on each line. Fill in the Qty field and check the labeled box if the item is taxable.
If you had created a product record for it already, the other fields should be completed automatically. If not, click +Add new. The Product/Service information pane should slide out from the right side of the screen. Here again, you’re only required to enter a Name, but you should really create the whole record and save it to return to the estimate. If you’ve not been through this process before, we can walk you through it.
You can add a discount to the estimate as either a percentage or a dollar amount in the lower right corner of the screen. You can also edit the customer message that appears in the lower left and attach any files necessary. When you’re done, save the estimate.
You can work with your estimate from the Sales Transactions screen.
If you’re not already there, click the Sales link in the left vertical toolbar, and then the All Sales tab and the Estimates bar. Find your estimate and look at the end of the row, in the Action column. If you want to convert your estimate to an invoice, click Create invoice. In the window that opens, indicate whether you want to invoice:
- A percentage of each line item,
- A custom amount for each line, or,
- The total of all lines.
Look over your invoice when it opens, complete any other fields necessary, and save it. Your estimate’s status has now been changed to Closed, and the new invoice created from it will appear on the Sales Transactions screen. It will also be included in the Estimates By Customer report.
If you can create an invoice, you can create an estimate. The tricky part comes in when you have to amend an estimate before you bill it – or even alter it and resubmit it. If you’re going to be working with estimates extensively, let us help you get it right from the start.
Does your business do work for clients over weeks or months? Consider using QuickBooks Online’s progress invoicing.
Let’s say you’re doing a job or project for a customer that is going to take a long time, but you don’t want to wait until you’re finished to get paid. Or you’ve agreed to let a customer pay for something in multiple payments. QuickBooks can help. You can create an estimate upfront for the work or products and send a series of invoices at different intervals until the bill is paid off. This is called progress invoicing.
Before you can use this tool, you’ll need to make sure it’s turned on. Click the gear icon in the upper right and select Account and Settings. Click the Sales tab. Look for Progress Invoicing in the left column. If that option isn’t On, click the pencil icon in the far-right column and click in the box to create a checkmark and Save it. Then click Done in the lower right corner.
Creating a Template
You’ll need to use a special template for progress invoicing. Click the gear icon again and select Custom Form Styles. In the upper right corner of the screen that opens, click the arrow next to New Style and select Invoice to open the design window. Replace the template name with a descriptive one and click Airy Classic to select it.
You’ll need to select the Airy Classic template and give it a descriptive name.
There are other options on this page – lots of them. You can add a logo, change fonts and colors, and even modify the content on the invoice. Talk to us if you want to explore the possibilities.
Your progress invoice needs you to adjust a couple other things here. Click on Edit print settings. If there is a check in front of Fit printed form with pay stub in window envelope, uncheck it. Next, click the Content tab, then click the small pencil icon in the second section of the invoice sample over on the right. At the bottom of the left pane, click Show more activity options.Check the box in front of Show progress on line items if you want your progress invoice to display item details. When you’ve made all the changes you want to, click Done.
Estimate to Invoice
QuickBooks can create both invoices and estimates. They’re very similar, and you’ll complete them in the same way, with one obvious exception: In addition to an Estimate date, you can also specify an Expiration date. Click the + sign in the upper right, select Estimate, and fill out the form. Save and close when you’re done.
When your customer has accepted the estimate and you’ve agreed on a payment schedule, you’ll need to know how to create a progress invoice. Click Sales in the navigation bar on the left, then All Sales. Locate your estimate on the list and click Create invoice at the end of the row. This window opens:
You have three options when the time comes to start your progress invoicing.
You’ll choose Remaining total of all lines when you’re ready to send your final invoice. For your first, you can either enter a percentage of each line item or a custom amount for each. If you choose a percentage, QuickBooks will calculate what that number would be and enter it. You’ll be able to specify your custom amounts when the progress invoice actually opens. Click Create invoice.
The invoice that opens will contain the information you provided on the estimate. You’ll notice a new column here, though, labeled Due. Your calculated percentage will appear there if you chose that option. If you indicated that you wanted to enter a custom amount for each line, that field will say $0.00 of [total]. Go down that column and type in the amount you expect to be paid on each line item. When you’ve finished, Save the invoice and send it to your customer. Now it appears in the invoice list, where you can send reminders, receive payment, etc.
You can send as many progress invoices as you’d like until you can finally bill your customer for the Remaining total of all lines. QuickBooks provides a report so you can see the progress of all of your progress invoices at once. Click Reports and scroll down to Sales and customers to run Estimates & Progress Invoicing Summary by Customer.
Progress invoicing is a simple concept, but it requires many steps, as you’ve seen here. And there are other ways to go about it in QuickBooks. We strongly suggest that you let us help you with this task to make sure your invoices are set up correctly – and that you’re paid in full.