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Write-Off vs Write-Down: What’s the Difference?

When running a business, you may encounter the terms “write-off” and “write-down.” While similar, though, write-offs aren’t the same as write-downs. And if you use them incorrectly, you could inadvertently throw off your business’s financial records. So, what’s the difference between a write-off and write-down?

What Is a Write-Off?

A write-off is an accounting process in which the value of an asset is reduced to zero. If an asset currently owned by your business no longer has value — it’s worth zero dollars, in other words — you can write it off to reduce your business’s taxable income for the given year.

A common example of a write-off is bad debt. If your business allows customers or clients to pay after their product has been delivered or their service has been performed, you’ll have to collect payments. Hopefully, this doesn’t occur, but if a customer or client fails to pay, your business will have bad debt. Although the debt was originally valuable, it no longer holds value once considered “bad.” Therefore, it can be written off in your business’s books.

How to Record a Write-Off in Quickbooks

You can easily record write-offs using the Quickbooks accounting software. To get started, log in to your account. Next, create an account for write-offs by clicking the gear icon and selecting “Chart of Accounts” under your company’s name. Next, click “New” and select “Expenses” from the “Account Type” drop-down menu. You can then enter a name for the account, such as “write-offs” or “bad debt.” When finished, click “Save and close.”

After creating the new account, you’ll need to create a new product or service for it. Of course, this is done by clicking the gear icon from the home screen and choosing “Products and Services” below “Lists.” From here, select “New,” at which point you can complete the fields with information about the write-off.

What Is a Write-Down?

A write-down, on the other hand, is the reduction of an asset’s value. The difference between a write-off and write-down is that the former reduces the asset’s value to zero, whereas the latter reduces the asset’s value to a number above zero.

If your business owns inventory, for example, the value of that inventory may become lower over time, in which case you can write it down. Write-downs have a similar effect as write-offs, making them an important tool to lower your business’s taxable income for the year.

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How to Make an Employee Inactive in Quickbooks

While Quickbooks allows you to add and remove employees, the accounting software also allows you to make them inactive. What’s the purpose of this feature exactly? By making an employee inactive, you can remove them temporarily from your account, ensuring that you don’t accidentally send them a paycheck. If an employee is on leave, for example, it’s a good idea to make him or her inactive. Of course, you can still use this feature on employees who’ve quit or otherwise left your business. Regardless, you’ll first need to familiarize yourself with the steps to using this feature.

Steps to Making an Employee Inactive

To make an employee inactive in Quickbooks, log in to your business’s Quickbooks account software and select the “Workers” menu from the main screen, followed by “Employee.” Next, scroll through the list of employees whom you’ve added to your Quickbooks account until you find the employee whom you want to make inactivate. After locating the appropriate employee, click his or her name and select “Make inactivate.” Quickbooks will then ask you to confirm the process. Choose “Yes” to complete the process by making the employee inactivate.

Steps to Reactivating an Employee

If the employee whom you made inactive has returned to your business, you’ll need to reactivate him or her in Quickbooks. To do this, go back to the home screen of Quickbooks and choose “Workers,” followed by “Employee.” You should see a gear-shaped icon below the link to add an employee, which you can click to reveal more options. After clicking the gear-shaped icon, click the box next to “Include inactive.” You can then choose the option for “Make active” in the “Action” menu. If you need to reactivate more than one employee, simply repeat these steps with the appropriate employee selected.

In Conclusion

When running a business, you’ll have plenty of employees come and go. Some employees may stay longer than others, but the fact is that all businesses add and remove employees. When an employee no longer works for your business, though, you’ll need to remove him or her from your Quickbooks account.

The accounting software supports a simple “inactive/active” feature to overcome challenge. Just make the employee inactivate, at which point he or she will no longer affect your business’s accounting processes. And if the employee returns, simply reactivate him or her in your Quickbooks account.

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How to Add a Customer in Quickbooks

It’s not uncommon for customers to make multiple purchases over the course of their relationship with your business. As a result, it’s a good idea to store their contact information. By storing your customers’ contact information, you can track sales, personalize their experience and more. If you use Quickbooks to track your business’s finances, you can easily add customers to your account in just a few easy steps.

Steps to Add a Customer in Quickbooks

To add a customer in Quickbooks, log in to the accounting software, click the “Invoicing” tab on the right-side menu and choose “Customer.” From here, click “New Customer.” Quickbooks will then reveal several fields in which you can add information about the customer, some of which include the following:

  • Name
  • Company
  • Email
  • Phone
  • Mobile
  • Fax
  • Website


You don’t have to complete all these fields. If you run a business-to-consumer (B2C) business, there’s no need to complete the “Company” field, for example. Nonetheless, you should try to include as much information about the customer as possible. The more you know about him or her, the better service you can provide.

When you are finished adding the customer’s information, click “Save” to complete the process. If you need to add multiple customers to your Quickbooks account, simply repeat the listed previously listed.

How to Create a Sub-Customer

Quickbooks even allows you to create sub-customers for your business. A sub-customer is essentially a customer that’s placed under an existing, parent customer. Why would you need to create sub-customers? Well, one reason is to track customers for a specific job. You can place all customers associated with a specific job under a new parent customer.

To create a sub-customer in Quickbooks, go back to the accounting software’s home screen, click “Invoicing” and choose “Customers.” Next, choose “New Customer.” You can then complete the fields just like you would when adding a regular customer.

Before clicking the “Save” button, though, click the box labeled “Is sub customer,” at which point you can select the parent customer. Only after clicking this box and assigning the sub-customer to a parent customer should you click “Save.” Keep in mind that you’ll need to create the parent customer before the sub-customer.

Creating both customers and sub-customers is easy in Quickbooks, requiring just a few mouse clicks from the software’s home screen.

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How to Create an Estimate for a Customer in Quickbooks

It’s not uncommon for clients to request estimates from a business. If you operate a construction company, for example, a client may inquire about the rough cost of a project. While it’s always better to provide clients with a fixed, exact cost, this isn’t always possible. If you don’t know exactly how much a project will cost, for example, you’ll have to provide the client with an estimate. Using the Quickbooks accounting software, you can easily create estimates for your business’s customers.

Enable Estimates

Before you can create estimates in Quickbooks, you’ll need to activate this feature. While logged in to your Quickbooks account, click “Edit,” followed by “Preferences.” On the left-side menu, click “Jobs & Estimates” and select “Company Preferences.” For the question “Do you create estimates,” choose the “Yes” option. When finished, click “OK” to save the changes and exit this menu. You can now create estimates for your business’s clients using Quickbooks.

Steps to Create an Estimate

After enabling estimates, go back to the main Quickbooks screen and click the “Customers” menu, followed by “Estimates/Create Estimates.” From here, you can select the client for whom you are creating an estimate in the “Customer: Job” menu. If it’s a new client who isn’t listed in your account yet, click “Add New” to add him or her.

Once you’ve selected the client for whom you are creating an estimate, you’ll need to complete a few fields with information about the estimate, such as the “Date” and “#” fields. The former should reflect the date on which you creating the estimate, whereas the latter should be a unique number associated with the estimate.

You’ll also need to add the product or service for which you are creating an estimate in the detail field. Keep in mind that you can add multiple products or services, even if you are only creating a single estimate.

Adding a Discount to an Estimate

While optional, some business owners may want to provide clients with a discount in their estimates. To include a discount in your estimate, you must create a discount item. Of course, this is done by going to the “Item List” menu in Quickbooks, right-clicking on an open area and choosing “New.” Under the “Type” menu, you can then choose “Discount,” allowing you to create a discount for the estimate.

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Help! I Entered the Wrong Payment Amount in Quickbooks

When recording a payment in Quickbooks, you should double-check the amount to ensure it’s correct. If a customer pays you $75, for example, it’s important to record the payment as exactly $75. Placing the decimal in the wrong place will result in your business’s books being incorrect.

The good news is that you can fix incorrect payment amounts after recording them in Quickbooks. For a step-by-step walkthrough, check out the tutorial below.

Remove the Payment From the Deposit

To fix an incorrect payment, log in to Quickbooks and click the gear icon at the top of the page. Next, click “Chart of Accounts” from the “Your Company” menu. You can then scroll through your deposits until you find the one with connected to the incorrect payment.

After locating the deposit, click the “Edit” button. You should see then a see a list of all payments associated with the deposit. Go through this list and locate the incorrect payment. When you find it, click the box to remove the check mark from it. Doing so removes the payment from the deposit, allowing you to fix it before adding it back.

Edit the Payment Amount

With the payment removed from the deposit, you can now safely edit the payment amount. This is done by going back to the main Quickbooks screen, selecting the gear icon and choosing “Chart of Accounts” again. From here, locate the deposit in the action section and click “View register.”

Next, find and click the deposit to select it, followed by “Edit.” You can then edit the payment with the correct amount. When finished, click “Save and close” to finish editing the payment amount.

Add the Payment Back to the Deposit

The final step involves adding the newly corrected payment back to the appropriate deposit. You’ll need to go back to your “Chart of Accounts” where you can search for the deposit account. After locating the deposit account, click “View register,” followed by “Edit” next to the deposit. You can then enter the correct amount for the payment.

It’s frustrating when you accidentally enter the wrong amount for a customer’s payment. We’re all human, however, so mistakes are bound to happen. The next time this happens, simply follow the steps listed here to correct the payment amount and restore your business’s accounting records back to good health.

Did this tutorial work for you? Let us know in the comments section below!

How to Create Statements in Quickbooks

If you run a small business, you might be asked to produce a transaction statement for a customer. Maybe the customer needs it for his or her own accounting purposes, or perhaps they believed they were wrongly charged for a product or service. Regardless, there are times when customers may require a transaction statement. Rather than scouring through your receipts, though, you can easily create transaction statements using the Quickbooks accounting software.

Invoice vs Statement: What’s the Difference?

Some business owners assume that invoices are the same as statements, but this isn’t necessarily true. Invoices only reveal the details of a single transaction. This transaction may include the purchase of one product, or it may include the purchase of multiple products (or services). Either way, invoices are associated with a single transaction. Statements, on the other hand, reveal the details of all transactions a customer or client has made during his or her professional relationship with your business.

Steps to Creating a Statement in Quickbooks

To create a statement in Quickbooks, log in to your Quickbooks account and click the “Sales” tab in the left-hand sidebar menu, followed by “Customers.” Next, scroll through your list of customers and select the one for whom you want to create a statement. If the customer isn’t listed, you’ll need to add him or her to your account.

After selecting the customer, click the “Actions” drop-down menu and choose “Create Statement.” You will then be prompted to select the type of statement you with to create.

Next, enter the start and end date for the statement, as well as the statement date. The start date is typically the day on which the customer made his or her first purchase, whereas the end date is the day on which the customer made his or her most recent purchase. For the statement date, enter the current day’s date.

You’re almost finished creating a statement. Assuming you’ve followed all the aforementioned steps, you can proceed by clicking the “Apply” button. Quickbooks will then provide a preview of the statement. If everything looks correct, click “Save.” With your statement created, you can now print it from within your Quickbooks account.

Creating statements is a relatively quick and painless task. It only requires a few basic steps, at which point you can provide customers or clients with details regarding their transactions.

Did this tutorial work for you? Let us know in the comments section below!

What Is a Fixed Asset in Accounting?

From retail stores and coffee shops to e-commerce stores and construction companies, all businesses have assets. In accounting, an asset any resource owned by a business that offers future value. In other words, it’s something that a business can convert into revenue. There are different types of assets used in business accounting, however, one of which is fixed. So, what are fixed assets exactly, and how do they compare to other types of assets?

Fixed Assets Explained

Also known as tangible assets, fixed assets are assets — resources of future value owned by your business — that cannot be converted into money within a short period of time, typically a year. An example of a fixed asset is heavy machinery owned by a construction company. Even if a piece of heavy machinery has monetary value, it may take a while for the construction company to sell. Therefore, it’s considered a fixed asset.

Another example of a fixed asset is a fleet of trucks owned and operated by a transportation company. Like heavy machinery, trucks cannot be easily sold or otherwise converted into cash, so they are considered a fixed asset. Regardless, all fixed assets are defined by their ability to be converted into cash within a short period of time.

Recording the Depreciation of Fixed Assets

Because they cannot be easily converted into cash within a short period of time, you should calculate the depreciation of your business’s fixed assets for tax purposes. The Internal Revenue Service (IRS) allows businesses to deduct depreciation of fixed assets from their taxes.

If you use Quickbooks Desktop to keep track of your business’s finances, you can easily calculate the depreciation of your fixed assets. The software contains a special feature known as Fixed Asset Manager (FAM) that uses up-to-date IRS standards to calculate how much your fixed assets have depreciated.

It’s important to note that FAM isn’t available in all versions of Quickbooks. You’ll only find this feature in Quickbooks Premier Accountant, Enterprise Accountant and Enterprise.

Fixed vs Current Assets

Current assets, on the other hand, are assets that can be converted into money within a short period of time. Inventory, for example, is typically considered a current asset. A retail apparel store may have a surplus of shirts and jeans. Because the store sells these items, they are considered a current asset.

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How to Record Loan Payments in Quickbooks

Starting a new business isn’t cheap. According to the Small Business Administration (SBA), most U.S. small businesses with fewer than 500 employees require about $10,000 to start up. The good news is that you don’t have to tap into your personal funds to start your business. You can apply for a loan from a bank or private lender. When using a loan to fund your business, though, you’ll need to keep track of your loan payments.

Add Your Loan to Quickbooks

Before you can track your loan payments in Quickbooks, you must first add the loan to your Quickbooks account. After logging in to Quickbooks, click the gear icon at the top of the page, followed by “Chart of Accounts.” From here, choose “New,” followed by either “Long-Term Liabilities” or “Other Current Liabilities” for the account type. For the “Detail Type,” choose “Loan Payable.” Finally, enter the name of the account, after which you can click “Save and close.”

With the loan created, your next course of action should be adding an opening balance to it. Go back to the main screen and click the (+) icon at the top of the page, followed by “Bank Deposit” under the “Other” menu.” From here, scroll through the menu and choose the account to which you will make the loan payments. For the “Account” field, choose the payable account as well as the amount of the loan. When finished, click “Save and close.”

Recording Loan Payments in Quickbooks

Now that your loan is set up and ready to go, you can begin to record payments to it. To record a payment, go back to the main screen and click the (+) icon. Next, click “Check” under the “Vendors” menu. Assuming you use an Electronic Funds Transfer (EFT), you can simply enter “ETF” in the field here. If you’re making a payment on the loan using a physical check, however, you should enter the check’s number in this field.

Quickbooks will prompt you to complete a few additional fields in the “Account details” area. In the first field, enter the account for the loan as well as the amount of your payment. In the second field, enter the expense account used for the loan’s interest. In the third field, enter any other fees associated with the loan payment. After double checking to ensure this information is correct, click “Save and close.”

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What Is a Delayed Charge in Quickbooks?

When using Quickbooks to keep track of your business’s financial transactions, you may come across the term “delayed charge.” Unfortunately, many business owners are unfamiliar with this term, let alone know how and when to use it. In this post, we’re going to explain what delayed charges are used for, as well as instructions on how to record them in Quickbooks.

Delayed Charges Explained

In Quickbooks, a delayed charge is exactly what it sounds like: a charge billed to a customer or client in the future. It’s not uncommon for businesses to temporarily delay charging a customer or client for a product or service. In instances such as this, a delayed charge should be used. Delayed charges allow you to record charges while postponing the billing of those charges to a future date.

Why should you delayed charges exactly? Well, you won’t need to use this feature if your business collects payment or otherwise charges customers or clients at the time of the transaction. If your business charges customers or clients in the future, however, using delayed charges will help you record billable charges so that they don’t go unnoticed and unaccounted for.

Steps to Recording a Delayed Charge

To record a delayed charge, log in to Quickbooks and click the (+) menu at the top of the screen, followed by “Customers” and then “Delayed Charge.”

After selecting “Delayed Charge,” click the field for “Choose a customer” and select the customer or client for whom you wish to record the delayed charge. If the customer or client isn’t listed, click “Add new” to add him or her to your Quickbooks account.

You’re almost finished recording a delayed charge. You should now be able to select the date on which you purchased the product or service associated with the delayed charge. If you purchased materials to perform a job for a customer, for example, enter the date on which you purchased the materials.

For the “Products/Service” field, enter the product or service for which you are charging the customer or client. If it’s not listed, click “Add new” to add the product or service to your Quickbooks account.

Last but not least, select “Income Account” for the “Product or Service Information” option, followed by the price of the delayed charge. When finished, click “Save and Close” to complete the process.

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Bill vs Expense in Quickbooks: What’s the Difference?

The terms “bill” and “expense” are often used interchangeably by business owners when recording financial transactions. Many business owners assume that all instances in which they owe money — either to a vendor or anyone else — is a bill or expense. However, this isn’t necessarily true. If you use Quickbooks to keep track of your business’s finances, you should familiarize yourself with the differences between bills and expenses. Only then will you be able to properly record your business’s financial transactions.

Overview of Expenses

In Quickbooks, an expense is money paid by your business for a product or service that’s related to its operations. If you run a retail store, for example, you may have to purchase inventory. When you buy inventory for your store, you’ll incur the cost of inventory as an expense.

Recording expenses in Quickbooks is a relatively simple process. After logging in to your account, click the (+) icon at the top of the page, followed by “Expense” and then “Suppliers.” From here, select the payee’s name and click “Add.” While optional, you can include more information about the payee by clicking the “Details” button. Next, select the account from which the money came. To finish up, select the payment date for the expense, payment method, category, description and amount, after which you can click “Save and Close” to complete the process.

Overview of Bills

In Quickbooks, a bill is money owed by your business that’s due at a later time. It’s similar to an expense with the only exception being that bills are paid at a later time. You pay expenses on the spot, whereas bills are paid in the future (according to the seller’s terms). Aside from this subtle nuance, though, expenses and bills are pretty much the same. Just remember that expenses are paid on the spot, whereas bills are paid at a late time.

To record a bill in Quickbooks, go to the main screen and click the (+) icon, followed by “Suppliers” and then “Bill.” From here, choose the supplier from which you made the purchase. Next, click the drop-down arrow for “Terms” to enter the payment terms of the bill, such as “Due on receipt,” “Net 15,” “Net 30” or “Net 60.” After entering the bill’s payment terms, choose a bill date and due date, followed by an appropriate category.

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