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Quickbooks and Sales Tax Tracking: What You Should Know

As a business owner, it’s important that you calculate — and charge — sales tax on all purchased products and services. When a customer in your business’s state makes a purchase, you are legally required to charge him or her sales tax. Although different states and municipalities have different sales tax rates, most fall somewhere between 4% and 9%, meaning a customer who spends $100 must pay an additional $4 to $9 in sales tax. There’s no denying the fact that sales tax adds a new challenge for business owners. But if you use Quickbooks, you’ll be pleased to hear that it does most of the work on your behalf.

How Sales Tax Rate Is Calculated in Quickbooks

Quickbooks  is able to automatically calculate sales tax based on the region in which your business operates. As previously mentioned, there’s no universal sales tax rate for the United States. Rather, it varies depending on the state, city or county, with most places requiring businesses to charge between 4% and 9%. Quickbooks, however, contains an updated list of thousands of tax code rates for U.S. municipalities. Regardless of where your business operates, Quickbooks can automatically calculate your correct sales tax rate.

Charging Customers Sales Tax in Quickbooks

Of course, you’ll need to charge customers sales tax. While it’s best to consult with a professional tax accountant, businesses in the United States are generally required to charge sales tax for all products or services delivered in their respective state or municipality. If you use Quickbooks, however, you can easily charge customers sales tax by adding it to their invoices. Simply pull up the customer’s invoice, at which point you’ll see an option to add sales tax. And because Quickbooks automatically calculates sales tax rate based on your region, you don’t have to worry about trying to find the correct rate.

The Sales Tax Center

Quickbooks actually has a built-in feature that’s designed specifically for sales tax tracking: the Sales Tax Center. Using this feature, you can analyze and report your business’s sales tax. The Sales Tax Center even allows you to receive notifications for when sales tax is due. As you may know, most states require businesses to pay sales tax four time a year — once per quarter. With notifications enabled, you’ll receive an email before the due date of each quarter so that you don’t accidentally miss a tax payment.

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How to Clear an Overpayment Made By a Customer in Quickbooks

Has one of your business’s customers accidentally overpaid you for a product or service they purchased? If so, you’ll need to clear the customer’s overpayment in your accounting books. If you use Quickbooks, you can do this by writing a refund check to the customer for the difference between the purchase price of the product or service and the amount he or she paid your business.

To clear an overpayment in Quickbooks, start by creating a credit memo for the refund. This is done by logging in to your account and choosing “Create Credit Memos/Refunds” under the “Customers” menu. From here, you can choose the customer from the “Customer:Job” menu, followed by entering an item and amount of the credit. When finished, click “OK” to complete the process.

After creating a credit memo, open the credit memo and select “Refund” at the top of the screen. Double-check to make sure this information is correct, at which point you can click “OK” to proceed. You aren’t out of the woods just yet. You must still connect the check with the credit memo that you just recently created. Otherwise, Quickbooks won’t be able to track the overpayment and record it properly. From the main Quickbooks screen, select the “Customers” menu, followed by “Receive Payments.” From here, choose the customer who overpaid your business for their purchased product or service. You should notice the amount of the credit listed here. Assuming it’s correct, click “Apply Existing Credits” to place a check mark in this box. For the field titled “Refund,” enter the check amount in the column for “Refund.”

When finished, go back to the main screen and click “Customers,” followed by “Create Credit Memos/Refunds.” This will bring up the credit memo that you recently created. You can then select “Tx History” to see the refund check displayed in the history.

Overpayments are a common occurrence, especially with businesses that sell a service rather than a product. If your business sells a service — and the price of that services vary depending on the customer’s preferences or requirements — there’s a good chance that you’ll encounter an overpayment. The good news is that you can handle overpayments in just a few easy steps. Using Quickbooks, credit a credit memo and refund check, and then connect those two items together. When done correctly, it will properly refund the customer while recording his or her overpayment in your accounting books.

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What Is Current Ratio in Accounting?

Financial accounting is an important task associated with running a business. If you don’t know how much money you spend and how much you generate, you won’t be able to optimize your business’s operations, resulting in lower profits. But there are a number of metrics used to measure a business’s financial health, one of which is current ratio. As a business owner, you should familiarize yourself with current ratio so that you can effectively use this metric in your financial accounting efforts.

Current Ratio Explained

Current ratio is a financial metric used to determine if a business has the adequate amount of money and resources needed to cover its short-term expenses. It’s calculated by taking a business’s current assets and dividing it by the business’s current liabilities. If your business has $500,000 in current assets and $300,000 in current liabilities, its current ratio would be 1.66.

A current ratio above 1.0 indicates that your business’s assets are worth more than the cost of its liabilities. Of course, that’s a good thing. If your business’s liabilities are higher than its assets, your business may spend more money than what it earns. In this regard, current ratio is primarily used to measure a business’s liquidity.

Current Ratio Vs Quick Ratio

Current ratio is often confused with quick ratio. Both of these financial metrics reveal a business’s liquidity by comparing its assets with its liabilities. However, that doesn’t necessarily mean they are the same. The difference between current ratio and quick ratio is that the former takes into account all assets, whereas the latter only takes into account highly liquid assets that can be easily converted to cash in a short period of time. Examples of assets used in the quick ratio formula include cash and accounts receivables.

How to Improve Your Business’s Current Ratio

There are several steps you can take to improve your business’s current ratio. First, try to keep your liabilities to a minimum. In other words, avoid taking out loans or using credit cards to fund your business. Second, work to increase your business’s current assets. With more assets, you’ll achieve a higher current ratio. There are countless ways to increase assets, such as exploring new markets or releasing new products or services. With a little work, you can improve your business’s current ratio, allowing for greater liquidity.

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What Is Billable Expense Income in Quickbooks?

When using Quickbooks to keep track of your business’s finances, you may come across “billable expense income.” Unfortunately, many small business owners are confused when seeing this term. And if a business owner doesn’t know what this term means, he or she won’t be able to accurately record it in their Quickbooks account. So, what is billable expense income in Quickbooks exactly?

Overview of Billable Expense Income

Billable expense income is essentially money paid by a customer to cover the cost of an expense your business incurred during the completion of the customer’s service. It’s not uncommon for businesses to charge customers for products or services the business purchases. A professional landscaping company, for example, may charge its customers for the cost of new grass seed, plants and trees. These charges are in addition to the landscaping company’s standard service charge. The purpose of billable expense income is to track the money paid by customers for expenses such as these. If your business charges customers for products or services related to the completion of its services, you should track billable expense income.

Tracking billable expense income requires the use of billable expenses. This is done by marking expenses recorded in Quickbooks as “billable,” after which you can apply them to the customer’s invoice. When the customer receives the invoice, he or she will see the billable expenses listed. And the money paid by the customer for these billable expenses is considered billable expense income.

How to Disable Billable Expenses

Quickbooks allows business owners to disable billable expenses in their account. Once disabled, any billable expenses that are currently listed in your account will remain present until you either apply them to an invoice or unmark them as a billable expense. However, you won’t be able to create any additional billable expenses with this feature disabled.

To disable billable expenses, log in to your Quickbooks account and click the gear icon at the top of the page. Next, click the menu for “Account and Settings,” followed by “Expenses.” Under the menu for “Bills and expenses,” click the pencil-shaped edit icon, at which point you can click the box labeled “Track billable expenses and items as income” to disable this feature. When finished, complete the process by clicking “Save.” You can then close out of Quickbooks.

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How to Transfer Funds Between Bank Accounts Using Quickbooks

Want to transfer funds from one bank account to another bank account? If so, you’ll need to record this transfer so that it doesn’t interfere with your business’s accounting records. Using Quickbooks Online, you can easily record bank transfers such as this. The cloud-based version of Intuit’s popular accounting software supports bank transfers. It even has a special feature, known as the “Transfer Funds” feature, to simplify this process. For instructions on how to transfer funds between two bank accounts using Quickbooks Online, keep reading.

Start by launching Quickbooks Online and logging in to your account. Once logged in, click the (+) icon at the top of the screen, followed by Other > Transfer. You should now see a “Transfer Funds From” menu, which you can click to select your bank from the drop-down list. Be sure to choose the bank from which the funds are coming. Do not select the bank to where the funds are going.

Quickbooks Online should also present you with a menu for “Transfer Funds To.” Click this menu and choose the bank account to which the funds are going. Of course, you’ll only see bank accounts here that have already been added to your account. If you want to transfer funds from or to a bank account that isn’t connected with your Quickbooks Online account, you must go back and add the bank account to Quickbooks Online first. Only then will you be able to record the transfer using this method.

There are a few more steps left to record a transfer between two bank accounts using Quickbooks. After selecting your bank accounts, you must enter the dollar amount that you’d like to transfer between these two accounts in the “Transfer Amount” field. After double-checking this amount to ensure it’s correct, enter the date of the transfer and click “Save and close.” Upon closing this window, Quickbooks Online will record the transfer.

An alternative solution is to use a check. You can transfer funds between bank accounts using a check. When writing a check to transfer funds, however, you should include the bank account from which the funds are coming at the top of the check, and include the bank account to where the funds are going at the bottom in the “Account” line.

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How to Reactivate an Account in Quickbooks

Is there an account in Quickbooks that you’d like to reactivate? Quickbooks allows you to disable active accounts. Once disabled, you won’t be able to use those accounts. This makes it a valuable feature if your business is constantly adding or removing vendors or customers. But what if you want to reactivate an account that you previously disabled? Well, Quickbooks also allows you to reactivate disabled accounts. In just a few easy steps, you can turn these disabled accounts back on so that you can target them in Quickbooks.

To reactivate a disabled account, log in to Quickbooks and click “Transactions” on the left-hand menu, followed by “Chart of Accounts.” As you may know, “Chart of Accounts” displays all accounts associated that you’ve added to Quickbooks. Next, click the “Action” column at the top of the screen, followed by “Settings.” This will bring up several configuration options for your “Chart of Accounts.” Find the option titled “Include inactive,” and click it. This option, of course, tells Quickbooks to display all your business’s accounts in the “Chart of Accounts,” including those that you’ve set as inactive.

From here, you can scroll through the list of accounts until you find the one that you’d like to reactivate. Depending on the size of your business and how many accounts you’ve added, this may take a while. If you have hundreds of accounts, for example, you’ll have to sift through them to find the specific one that you’d like to reactivate. Once you’ve found the account, click the option titled “Make active.” Assuming you’ve followed these steps, the account should be reactivated, thereby allowing you to select it when recording entries in Quickbooks.

Even after reactivating a disabled account, you can still go back and make it temporarily inactive again. The process is pretty much the same, involving accessing your “Chart of Accounts,” followed by scrolling through your list of accounts until you’ve found the one that you’d like to disable. Once located, simply click “Make inactive.” When done correctly, Quickbooks will change the status of this account to inactive again. It should only take a few minutes to perform this process, after which the account will be inactive. And like before, you can go back and change the status of this account to active or inactive account. Just remember to follow the steps listed in this blog post.

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How to Track Job Costs in Quicbooks

Whether your business sells a product or service, you’ll probably to spend money to make money. Therefore, it’s important that you track your business’s job costs. By closely monitoring your job costs, you can see exactly how much money your business spends to produce the products or services that it sells. If this number is too high, it will result in a lower return on investment (ROI). In fact, some businesses experience a negative ROI, indicating that they spend more money to produce their products or services that the amount for which those products or services are sold. Using Quickbooks, you can easily track your business’s job costs in just a few simple steps.

To track job costs in Quickbooks, you’ll need to create a unique “job” for each customer in Quickbooks. This will allow you to create custom job costs for each customer. After doing do, you can access the “Customer:Job” column column in your Quickbooks account to enter an expense. In this column, you’ll see a few basic fields. The billable time field, for example, refers to the numbers of hours that your business spent performing the job for the respective customer.

There’s also the job-related purchases field, which refers to products or services that your business purchased (not sold) for the purpose of selling its own products or services to the customer. You can use a bill or credit card to record job-related purchases. For the “Items” tab here, enter products or services that your business purchased to perform the job. Just remember to assign each item to the customer.

For the overhead expenses field, you’ll want to enter overhead expenses associated with the sale of the product or service to the customer. What is overhead exactly? Overhead refers to ongoing, indirect expenses associated with running a business. Examples of overhead expenses include rent, utilities and office supplies. While overhead expenses are typically less than direct expenses, it’s still important to track them as a job costs.

Some businesses may also want to record mileage as a job cost. If you or someone who works for your business has to drive to deliver the product or service to customers, then you should calculate and track mileage. Quickbooks will display an “Enter Vehicle Mileage” window, which you can use to track the number of miles driven to complete the job.

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Using Discounts to Write Off an Underpayment in Quickbooks

Has your business received an underpayment from a customer? Known as an underpayment, this occurs when a customer pays an amount that’s lower than the cost of the product or service your business sold to them. Underpayments can occur for a variety of reasons, the most common of which is human error. While attempting to collect the difference between the underpayment and the cost of the product or service is always an option, many businesses prefer to write off the difference because it’s easier and faster. In Quickbooks, you can write off underpayments such as this using the accounting software’s “discounts” feature.

Steps to Writing Off an Underpayment

To write off an underpayment in Quickbooks, log in to your Quickbooks account and create a charge off account. This is done by choosing “Chart of Accounts” from the “Lists” menu. After accessing the “Lists” menu, select Account > New > Income > Continue. For the “Account Name” field, type “A/R Charge Off,” followed by “Save & Close.” You can technically create any name for the “Account Name,” but using “A/R Charge Off” will help you remember that the write off was for an accounts receivable that was charged off and forgiven.

With the new account created, you’ll need to add a charge-off item to it. This is done by going back to the “Lists” menu and choosing “Item Lists.” Next, click Item > New. For the “Item Type,” select “Other Charge,” followed by “Continue.” For the “Item Name” field, type “Charge Off .” Quickbooks will then ask you for some other basic information associated with the account, including the type of account. For the account type, choose “Minor A/R Charge Off.” For the tax code, choose “Non-Taxable Sales.” When finished, click “OK” to complete the process.

There are a few more steps to writing off an underpayment. Go back to the “Customers” menu in Quickbooks and click “Receive Payments.” Scroll through the list and click the name of the customer who made the underpayment to your business. You must then choose the invoice that associated with the underpayment, followed by “Discounts & Credits.” In the “Discounts” menu, enter the difference between the underpayment and original cost of the product or service. Next, choose “Minor A/R Charge Off” for the “Discount Account” section, followed by “Done.” Quickbooks will now write off the underpayment so that it doesn’t increase your business’s taxable income.

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How to Make Tax Payments Electronically Using Quickbooks

Want to make tax payments for your business electronically? If you use Quickbooks, you can easily make electronic tax payments. Intuit’s Quickbooks accounting software allows business owners and accountants to set up electronic tax payments via the Electronic Federal Tax Payment System (EFTPS). It’s a quick and easy process that eliminating the need of driving to your local post office to send a check via snail mail. If you’re interested in making tax payments electronically using Quickbooks, keep reading for a step-by-step tutorial.

Sign Up for Electronic Services

To get started, you’ll need to sign up for electronic services in Quickbooks. This is found by logging in to Quickbooks and clicking the left-hand navigation bar, followed by Taxes > Payroll Tax > Pay Taxes. From here, Quickbooks will display a list of all taxes that your business must pay. You can then click “Create Payment” next to the tax that you’d like to pay. After entering your payment information, Quickbooks will ask you to verify it. Assuming everything looks good, click “Approve,” at which point the tax payment will be processed.

Viewing Your Past Tax Payments

Now that you know how to create tax payments using Quickbooks, you might be wondering how to view tax payments that you’ve already made. Well, this is done by going back to the main Quickbooks home screen and clicking “Taxes & Forms.” Next, choose “View Tax Payments” in the “Overview” menu. Place your cursor over the navigation menu and choose “Reports.. This should provide you with a list of all tax payments that your business has made. You can review these payments to ensure that are accurate and up to date.

What You Should Know About Electronic Tax Payments

There are a few things you should know about making electronic tax payments in Quickbooks. First, you might be surprised to learn that electronic tax payments are actually required when making federal tax payments. The Internal Revenue Service (IRS) changed its rules in 2011, thereby requiring the use of the EFTPS to make federal tax payments. This was done to save time and reduce the possibility of mistakes.

When you make an electronic tax payment, you’ll be required to approve the payment by no longer than two business days before the payment date. Your electronic tax payment will include some basic information, including the dollar amount, date of withdrawal and your EFTPS account number.

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The Basics of Setting Up and Tracking Inventory in Quickbooks

If you run a small- or medium-sized business, you might be wondering how to set up and track inventory in Quickbooks. Intuit’s popular business accounting software is loaded with useful features, including inventory tracking. Also known as stock tracking, this allows you to track the products your business sells by one or more criteria. Unfortunately, many business owners overlook inventory tracking, believing it’s too difficult to set up and, therefore, not worth the effort. However, Quickbooks makes it easy to set up inventory tracking. Just follow the steps listed below.

The Different Ways to Track Inventory

Quickbooks supports four different methods for tracking inventory. First, you can track inventory by quantity, such as the number of products that your business buys or sells in a given period. Second, you can track inventory by the items that your business buys or sells but can’t use (known as non-inventory items). Third, you can track inventory by services, such as services your business sells and offers to its customers. Fourth, you can track inventory by bundle, which consists of multiple products and/or services that your business sells together as once.

How to Set Up Inventory Tracking

To set up inventory tracking, log in to your business’s Quickbooks account and click the gear icon at the top of the page. Next, click “Account and Settings” below the “Your Company” menu. On the left-hand sidebar, click “Saves.” You should see a new window in the middle of the screen labeled “Products and services.” Look for a pencil icon next to this window and click “Track Inventory.” Assuming you followed these steps, Quickbooks will now enable inventory items under “Products and Services.” You can test this by going back to the main screen and choosing “Products and Services,” followed by “New.” If it worked, you’ll see a new item type here called “Inventory item.”

With inventory tracking enabled, you can now choose “Inventory” as a product type. This essentially allows you to track the products that your business sells by one of the four aforementioned criteria. Not all businesses need to track inventory — and that’s okay. However, if your business sells a lot of products, tracking products is usually a good idea. It provides you with invaluable data on where your products are being sold and how they are bold sold. Using this information, you can optimize your business’s strategy to achieve greater success.

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