Tutorials

It’s not uncommon for businesses to purchase products and services on behalf of their customers and later charge those customers for this expense. Known as a billable expense, it’s a common practice used in a variety of industries. But if you’re planning to use billable expenses in your business’s operations, you’ll need to know how to record them. Assuming you use Quickbooks, you can easily record billable expenses in just a few simple steps.

Enable Billable Expense

To get started, log in to your Quickbooks account and click the gear icon at the top of the page, followed by “Account and Setting.” Next, click “Expenses” in the left-side menu to open up a new window with information about your business’s expenses. From here, click the pencil icon in the “Bills and expenses” area and go through the fields to ensure that the following are activated: show item table on expense, track expenses and items by customers and make expenses billable.

While optional, you can also use this opportunity to set a markup rate as well as change the income account associated with your billable expenses. When finished, click “Save,” followed by “Done” to complete the process.

You may also want to create a sub-customer when adding billable expenses. This is done by clicking Sales > Customers> New Customers. From here, you can enter information about the new sub-customer, while also assigning the sub-customer to a parent customer. A good rule of thumb is to add a sub-customer for each billable expense. This means you can have several sub-customers with the same name, though each one represents a different billable expense.

Create a New Billable Expense

With billable expenses enabled, you can now create new billable expenses in your Quickbooks account. This this is done by creating either an expense in which you can include all the necessary information, such as the account, amount, description, customer, billable and tax. When finished, save the transaction.

Add the Billable Expense to an Invoice

In addition to creating a new billable expense, you must add it to an existing invoice. Go back to the main screen of your Quickbooks account and click the (+) icon, followed by “Invoice.” For the “Choose a customer field,” enter the name of the customer for whom the billable expense is designated. Now click “Add” for the billable expense that you with to add, at which point you can save and close this window.

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If you’re still operating your business as a sole proprietorship, you should consider incorporating it. Whether you choose a corporation or limited liability company (LLC), it’s a smart move that can pave off in several ways. Below, we’ve listed five of the top benefits of incorporation, revealing why you should take the steps to incorporate your business.

#1) Stronger Brand Name

By incorporating your business, you’ll have a stronger brand name that’d distinguished with “LLC” or “Inc.” Depending on which business structure you use, you can affix one of the aforementioned labels to the end of your business’s name. Consumers generally view businesses with such labels as being better and more authoritative than their counterparts, meaning it will help you build a stronger brand name.

#2) Lower Taxes

One of the biggest benefits of incorporating your business is lower taxes. While tax rates vary, most LLCs and corporations — and their owners — pay less in taxes than sole proprietorships. This alone is a huge benefit that can translate into thousands of dollars saved each year.

#3) Separates Personal and Business Finances

Operating as a sole proprietorship means there is no separation of your personal and business finances. Rather, you’ll use the same bank account or accounts to handle both types of finances. You’ll have an easier time tracking your finances, however, by incorporating your business. LLCs and corporations are required by law to separate their personal and business finances. You may have one bank account for your personal finances, for instance, and another for your business finances.

#4) Protection of Personal Assets

Of course, incorporating also your protects your money and other personal assets from business liabilities. What does this mean exactly? When your business is incorporated, any judgements against your business won’t affect your personal assets. If your business is sued and loses, only your business’s assets are subject to forfeiture.

#5) It’s Easy

Incorporating a business is surprisingly easy — more so than you may realize. The exact steps vary depending on the state in which your business operates, but it typically requires contacting the Secretary of State to acquire articles of incorporation. You’ll need to complete a form with information about your business, pay a fee and register your newly incorporated business with the Internal Revenue Service (IRS). All of this is relatively easy and painless, though. And once your business is incorporated, you’ll on

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Want to impose a finance charge on one of your business’s customers? Maybe the customer paid his or her late bill, or perhaps you want to add interest to a customer’s outstanding balance. Regardless, you can easily calculate and impose finance charges using Quickbooks. To do this, however, you’ll first need to set up your Finance Charge Preferences in the accounting software.

How to Set Up Finance Charge Preferences in Quickbooks

To get started, log in to your Quickbook Desktop account as the admin and click “Edit” at the top of the screen, followed by “Preferences.” From here, click “Finance Charge,” followed by “Company Preferences.” Assuming you followed these steps correctly, you should see a new window with information about your desired finance charge, including Annual Interest Rate, Minimum Finance Charge and Grace Period. Complete each of these fields before proceeding to the next step

After completing the aforementioned fields, click the drop-down menu for “Finance Charge Account” and choose the account from which you’d like to track the income generated by the finance charges. If you don’t see your preferred account listed here, you’ll need to add it to Quickbooks.

Disabling Late Payment Finance Charges

It’s not uncommon for business owners to waive late fees for their customers. In this case, you’ll need to click the “Assess overdue finance charges” box to remove the check mark from it. If the check mark is present, it will charge customers for late payments.

Completing the Process

You’re almost finished setting up finance charges. Quickbooks will ask you whether to charge customers on “due date” or “invoice/billed date.” Just click the box next to the option that you prefer.

You’ll also have the option of printing all your finance charges. This is done by clicking the box for “Mark finance charge invoices to be printed.” Keep in mind that this will print all your finance charge invoices at once. If you’re frequently assessing finance charges to customers, you may want to use this feature to keep a physical record of the charges. Otherwise, you may want to skip this optional feature. When finished, click “OK” to complete the process of setting up finance charges.

Assessing a Finance Charge

Now that your finance charge is set up, you can assess it on a customer. This is done by accessing Customers > Assess Finance Charges > Set Assessment date > choose the job or jobs >Assess Charges.

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Variable cost is a financial metric used by countless businesses. The term “variable cost” refers to non-fixed expenses related to the production of goods or products. Therefore, a business’s variable costs will fluctuate depending on its production volume. The higher a business’s production volume, the higher its variable costs will be. But this is just the basics of variable costs. To learn more about variable costs and how it’s calculated, keep reading.

Variable Costs Explained

Although there are exceptions, most businesses that produce and sell goods or products will incur two types of expenses when conducting their operations: fixed costs and variable costs. The first type expense, fixed costs, consist of expenses with a static, fixed price. Leasing a storefront building, for example, is considered a fixed cost because businesses owners pay the same amount for their lease payment each month. Payroll is another fixed cost incurred by businesses. While different employees are paid different amounts, the pay rate is static, thus making it a fixed cost.

Variable costs differ from fixed costs in the sense that they vary depending on the business’s production volume. This is in stark contrast to fixed costs, which are not affected by production volume. As previously mentioned, variable costs increase when production volume increases and lower when production volume lowers.

Examples of variable costs include the following:

• Materials
• Licensing fees
• Utility bills
• Commissions
• Credit card transaction fees
• Freight charges

Why Businesses Should Track Variable Costs

Tracking variable costs can help businesses succeed in several ways. First, it provides insight into how much a business spends to create the goods or products that it sells to customers. While tracking fixed costs are important, variable costs are equally if not more importance because they fluctuate depending on production volume. Businesses will have a better understanding of how much money they spend, however, by tracking variable costs as well.

Another reason businesses should track variable costs is to ensure that they aren’t spending more to make their goods or products than the revenue generated by those goods or products. If a business only tracks its revenue, it won’t be able to optimize its operations for higher profit. To maximize profits, businesses must measure all production-related expenses, including fixed and variable costs. By keeping a close eye on these metrics, businesses will have an easier time boosting their profits and dominating their target market.

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As your business grows, you may want to track financial transactions from certain segments of activity. For example, if your business has four separate stores or locations, perhaps you want to track the sales of each store. Using this information, you’ll know which stores are generating the most sales and which stores are generating the fewest sales. While tracking financial transactions from different stores — or other segments of your business’s activity — may sound difficult, it’s actually quite easy thanks to class tracking in Quickbooks.

What Is Class Tracking? Here’s What You need to Know

Class tracking is a feature in Quickbooks that allows you to track financial transactions from different segments of your business’s activity. The great thing about class tracking is that it provides you with complete freedom to track segments of activity. In addition to tracking transactions from different stores, you can track different types of products, date ranges, origin of manufacture and much more.

How to Enable Class Tracking in Quickbooks

Now that you know how class tracking works, you’re probably eager to start using it. First, however, you’ll need to enable this feature in your Quickbooks account. In Quickbooks Online, you can enable class tracking by logging in to your account, clicking the gear icon and choosing “Account and Settings.” From here, click “Advanced,” followed by “Edit” for the “Categories” section. You can then select “Track classes” to enable this feature in your Quickbooks Online account.

To enable class tracking in Quickbooks Desktop, log in to your account and click the “Edit” menu, followed by “Preferences. Next, choose the “Accounting” sub-category, followed by the “Company Preferences” tab. This should reveal a new window with information about your accounts and company. Specifically, you’ll see a section for “Class,” with an option titled “Use class tracking for transactions.” After clicking this box, click “OK” to finish the process and enable class tracking.

How to Add Classes

Once you’ve enabled class tracking in your Quickbooks account, you must create new classes. This is done by going back to the gear icon and choosing “All Lists.” Next, click “Classes” and then “New.” Quickbooks will ask you to enter a name for the new class. It’s recommended that you choose a unique, relevant name that reflects what the class will track, such as “Store A” or “Product Type B.” When finished, click “Save” to complete the process.

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Want to compare financial metrics of your business from multiple time periods? Using Quickbooks, you can easily do this by running a time comparison report. Maybe you want to see how your business fared from Q1 to Q2 of last year, or perhaps you want to see how your business performed during the holidays compared to the rest of the year. Regardless, Intuit’s popular Quickbooks accounting software makes this task a breeze. Using the software, you can run a time comparison report to view side-by-side financial metrics from different time periods.

Steps to Run a Time Comparison Report

To run a time comparison report, log in to your Quickbooks account and access “Reports” from the left-side menu. From here, choose “Transaction List by Date,” at which point you can specify the time period for which you’d like the first report to reflect. After setting the time period for the first report, you can then filter the report by elements such as as credit card expense, credit card credit, vendor credit, check, bill payment check, cash expense, etc. When finished, click “Run Report” to run your first report.

Assuming you follow the steps listed above, you should see a report for your specified criteria. You can compare this report to a second report, however, by performing just a few additional steps. Look at the top of the first report and you’ll see a menu titled “Compare another period,” which you can click to run a second report.

Quickbooks will prompt you to enter a time period for your second report, which may include the previous period, previous year or year to date. Previous period, of course, refers to the time period immediately before the report period. If the report period is December, for example, the previous period is November. Previous year refers to the last year, whereas year to date includes transactions from the beginning of the year to the beginning of the report period.

In addition to specifying the time period of the second report, you must choose how you want Quickbooks to compare the difference between the two reports. After entering this information, click “Run Report” to run the second compare, which you can compare to the first report. You can repeat these steps to compare other reports in your business’s Quickbooks account.

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When using Quickbooks to keep track of your business’s finances, you may come across a feature called “advanced inventory.” Available in Quickbooks Desktop Enterprise, this feature lives up to its namesake by providing greater insight and control into your business’s inventory. To learn more about advanced inventory and how to use this feature, keep reading.

Advanced Inventory Features: What You Should Know

Advanced inventory brings a plethora of new inventory management features to Quickbooks. The “Enhanced Pick, Pack and Ship” feature, for example, creates a centralized dashboard from which you can manage your business’s workflow. Using this dashboard, you can send items to a packaging center, print shipping labels and more. It’s just one of many features that makes advanced inventory a powerful tool for businesses.

In addition to “Enhanced Pick, Pack and Ship,” advanced inventory also features a tool that automatically tracks inventory in your warehouse. Known as “Cycle Count,” it works by reading inventory count sheets that you upload to Quickbooks. Once uploaded, you can review the count sheets for erroneous data or discrepancies.

Furthermore, advanced inventory allows you to scan barcodes of inventory items when you receive them at your business’s warehouse. Just scan the barcode, at which point it will be added to your Quickbooks account as an inventory item.

Advanced inventory even offers customizable reports that you can use to analyze key performance metrics (KPIs). Specifically, there are three different types of reports that you can run, including a Valuation Summary report, Inventory Stock by Item report and Assembly Shortage report.

Finally, advanced inventory makes it easy to track the movement of your business’s products. You can track products by serial number, lot numbers or even bin location. By tracking your products, you’ll have a better understanding of how and when they reach your customers. And you can use this information to optimize your businesss’s approach to achieve higher profits.

How to Enable Advanced Inventory

Assuming you have Quickbooks Desktop Enterprise, you can enable advanced inventory in just a few easy steps. After logging in to your Quickbooks account, click the “Edit” menu at the top of the screen, followed by “Preferences.” From here, click “Items & Inventory,” followed by “Company Preferences.” You can then click the “Inventory and Purchase Orders are Active” box, which will place a check mark in the box, confirming that the feature is now enabled and active.

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It’s not uncommon for business owners to invest their some of their own personal money in their business. Known as an owner contribution, it can help entrepreneurs get their new business up and running. Using this money, they can purchase equipment, advertising, inventory and more, all of which allows entrepreneurs to run their business. But if you’re planning to invest your own money in your business, you’ll need to record it as an owner contribution in Quickbooks.

Steps to Recording an Owner Contribution in Quickbooks

To record an owner contribution in Quickbooks, launch the Quickbooks program and click the “Banking” tab at the top of the home screen. From here, choose “Make Deposits” and then select the bank account where you’d like to deposit your personal investment. If you don’t see your preferred bank account listed, you’ll need to add it. This is done by accessing your “Chart of Accounts,” from which you can add new bank accounts.

With the bank account added, you should now be able to select it from the “Make Deposits” screen. After clicking your preferred bank account, go ahead and add a note, such as your name and “owner contribution,” in the “Detail” section. You can then enter the amount of money that you wish to invest in your business in the “Amount” field. When finished, click the “From” menu and proceed to choose your owner equity account. To finalize the process, click “Save and Close.” To record additional owner contributions, simply repeat these steps.

Owner Contribution vs Loan: What You Should Know

Some business owners assume that an owner contribution is the same as a loan, but this isn’t necessarily true. While they both involve a business owner investing money into his or her business, they are two unique forms of owner-initiated funding. The fundamental difference between an owner contribution and a loan is that the former doesn’t require repaying, whereas the latter does require repaying. If you make an owner contribution to your business, you don’t have to repay that money back to yourself from your business.

There are also owner draws, which as the name suggests is the opposite of an owner contribution. This involves pulling money from a business’s financial account and transferring it into the business owner’s personal account. Owner draws result in less owner capital and equity.

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When using Quickbooks to track your business’s finances, you’ll probably add and edit entries on a regular basis. Even if you don’t have any employees or freelance contractors, you’ll still have to create an entry for every sale your business makes as well as every expense. The good news is that you can look back to see these changes using the software’s Audit Log feature.

What Is the Audit Log?

The Audit Log is a feature in Quickbooks that contains a record of all changes made to your Quickbooks company file. Specifically, it allows you to see what changes were made, when those changes were made, and who made the changes. If you discover an erroneous entry in your Quickbooks company file, for example, you can use the audit log to see when it was added and who made it.

The purpose of the Audit Log is to provide business owners and accountants with greater insight into their accounting activities. Maybe another worker has access to your Quickbooks account. If so, there’s a possibility that he or she made an erroneous entry. Using the Audit Log, you can see exactly who made the erroneous entry.

How to View the Audit Log

To view the Audit Log, log in to your Quickbooks account and click the gear icon at the top of the page. Next, select “Audit Log” under the “Tools” tab. From here, click “Filter” to select your desired criteria, such as “User,” “Date” or “Events.” When finished, click “Apply,” after which Quickbooks will display all changes that meet your filter criteria.

Keep in mind that Quickbooks will only display a maximum of 150 entries in the Audit Log. To see more changed entries, click the “Next” button at the bottom of the screen.

User Types Displayed in Audit Log

The Audit Log may display certain types of users. Supper representatives, for example, refer to official Quickbooks supper representatives who make changes to a business’s company file on behalf of the business. System administration users, on the other hand, aren’t real users at all. Entries listed as “system administration” are made automatically by Quickbooks

Learning how to use the Audit Log can help your business avoid accounting problems. This nifty feature reveals all changed entries in your company file, including the type of change, when the change was made and who made the change

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A chart of accounts is one of the most important documents in business accounting. Featuring a chart-based layout with columns and rows, it reveals your business’s expenses, revenue, assets and liabilities. While you can always create a chart of accounts manually using pen and paper, Quickbooks simplifies the process by automatically creating them using entries. So, how do you print a chart of accounts using Quickbooks?

Steps to Printing a Chart of Account

To print a chart of accounts in Quickbooks, log in to your Quickbooks account and click the gear icon in the upper-right corner, followed by Settings > Chart of Accounts. This will display your chart of accounts as prepared by Quickbooks. To print the chart of accounts, simply click the box in the upper-right corner of the page titled “PRINT.”

If Quickbooks fails to print your chart of accounts, check your printer settings to ensure they are correct. Quickbooks will automatically attempt to print your chart of accounts using your default printer. If you recently changed printers but still have your old, unconnected printer set as default, it may not print. Therefore, you should inspect the printer settings on your computer or device to see which printer is set as default. And if you don’t see your new printer listed, you may need to install the new drivers (software) for it.

There’s also the possibility that your printer is out of paper. If you don’t hear your printer printing after clicking the “PRINT” button in Quickbooks, look inside your printer’s paper tray to see if it’s empty. Without paper, it won’t print your chart of accounts or any other document

How to Edit an Account Number in Your Chart of Account

After printing a chart of accounts, you may discover that one or more account numbers are wrong. You can easily fix incorrect account numbers, however, in just a few easy steps.

To edit an account number in your chart of accounts, go to the “Lists” menu and choose “Chart of Accounts.” Next, right-click the account containing the wrong account number and select “Edit Account.” Once clicked, you can edit the account number and make other changes to it. Just remember to click “Save & Close” when you are finished to complete the process. Otherwise, Quickbooks won’t save your changes, retaining the old account number instead.

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