QuickBooks Setup for Success

It’s the start of a new year and for many, this is the time to make changes to your QuickBooks before your season gets busy.

There are 4 major areas I consider when working with contractor clients:

  1. Software – So much depends on your setup and what setup you can do depends on your software! So, is your version of QuickBooks a good fit for your company?  Regardless of how long you’ve been in QuickBooks, this is always good to review.  This will give you a start:
    1. Start with creating 2 lists – what you need and what you want. Realize that you may not get everything you want, so you might have to rank some features. Also, keep in mind that QuickBooks is an accounting package so it won’t be the best for CRM, scheduling and time tracking.  Here are several questions to help guide you:
    2. How many need access? This may quickly narrow your options
    3. Who needs to be able to do what? For instance, if you just want someone to track their time, you might want a mobile time tracking product that integrates with QuickBooks instead of giving them access to QuickBooks.
    4. Do you need to job cost? The desktop version of QuickBooks (QBDT) still beats the online version Online (QBO) (by far in my personal opinion) when it comes to job costing but QBO is making progress.
      1. The desktop can track labor costs per task (if you run payroll through QuickBooks) and has many job cost reports
      2. You can now track labor costs per job (project) if you use one of the QBO payroll products and Intuit’s TSheets; TSheets can use the Projects. However, the project field is not currently available to add-on products so if you use something different for time-tracking, you miss out.  There currently only a couple job cost reports.
    5. Are you currently using a 3rd party product or considering one? If so, which versions of QuickBooks do they integrate with?  Some will integrate with both but not with all the same features.  And some will integrate with desktop only or online only, so you need to know!
    6. If you want mobile access, what you do you want to be able to do when you’re not in the office? Sometimes an add-on product might be a better option.
    7. For those of you in Pro Plus, or Premier Plus or Enterprise, let me know so we can price your current plan and see if there’s a plan that can save you money and/or give you more for your money. When you call Intuit directly, you won’t always get someone who has your best interests at heart – they have sales quotas & goals ;-)
    8. A few resources that might help you more:
      1. My feature comparison chart – this makes it easier to compare
      2. An article I wrote comparing QuickBooks Desktop (Pro/Premier/Enterprise) with QuickBooks Online. In spite of the rumors, Intuit is not giving up on the desktop versions of QuickBooks – they are still the bigger money makers for them.  I am in the process of updating this article
      3. Videos showing the differences between the products
      4. Intuit made several changes at the end of 2019 so might be good to talk if you are considering changes. Number of users, what you do for payroll, what you need for job costing, what you do for time tracking, inventory needs, and any add-on products all come into play.
    9. And if you want to make a change, let us know. There are promotions we can’t always advertise, and there are often life-long discounts we can get for you (and not available from Intuit) versus a short-term discount followed by full price later.
  1. Setup – I often see problems in the setup, which can explain why you can’t get the reporting or information you want. So here are some major areas to consider:
    1. Classes – Classes are unique to QuickBooks. I think of Classes as way to do side-by-side comparisons of Profit Centers. You can see a sample report below.  For contractors, that’s usually your divisions.   Here are some examples to get the wheels turning.
      1. Landscapers, often use maintenance, Installs, Irrigation, Lighting, and Snow (or some variation).
      2. Painters might do interior and exterior work and/or commercial vs residential (I can create a P & L for Customer Type if you don’t want to use classes).
      3. Construction might want New construction, remodel – maybe even historic, if that’s a specialty of yours.
      4. For those of you with multiple offices, then you might want to use location – especially if those locations are in different sates
      5. Other ideas: Sales rep, partner, crew, program….
      6. You can even have sub-classes; starting with 2020, you can now collapse the subs and just look at the parent classes when you want!
        QuickBooks Setup
    2. Chart of Accounts – Those not using Classes are usually doing it in their Chart of Accounts. I used to start here but I found that once we setup Classes, we were going back & changing the Chart of Accounts, so now Chart of Accounts is 2nd ;-). My main strong recommendation for all you contractors:
        1. Your job costs belong in the Cost of Goods section. The sample service file in QuickBooks is a great idea of what NOT to do!! My rule of thumb – if you had to spend that money for that job (e.g. buy materials, pay for labor, rent equipment, etc.) then that’s a direct cost.  Some of you have all your payroll in payroll expenses – you’ll want to separate office staff from field staff since that’s such a large component of your job costs. You’ll like the separation when looking at your Profit & Loss reports as is the example above.  Also note in the above example, they did NOT pull out field labor as I recommend (tsk tsk!).  Knowing your Gross Profit after job costs will help you know what you need to cover overhead plus have a profit!  It also makes estimating easier because then you’ll know what % profit margin you need to attain from the job in order to cover your overhead and still yield a nice profit.
    3. Items – The key to job costing in QuickBooks is in your Items – NOT your Chart of Accounts!
        1. Decide what Items you need. My rule of thumb for Items (Products & Services) is (1) What do your customers need to see and (2) What do you want to see in your job cost reports
        2. For contractors, if you do T & M invoicing (Time & Materials), you want your Items to have a cost side as well as an income side. That way you can see what you paid for the different materials and subs as well as what you invoiced.
    4. Jobs – Many of you provide more than one service for your customer and there is often crossover in time period. So if you want to see the job costs for one job, you need to be able to specify the job. In some cases, I just see a list of customers, so it’s hard to pull out the costs for a specific job.   If these are one-time customers, 1 short job or 1 service, then you may not need jobs, but most contractors I work with need to specify jobs.
    5. Payroll Intuit recently made several changes to their payroll products (I just learned about them the latter part of December) so there are now more options for payroll. If you want job costed payroll, still the best are Enhanced or Assisted Payroll with Intuit and I can get your pricing discounted as well as help explain how they work and which might be your best option.  Depending on number of users, number of employees, and type of payroll, sometimes payroll bundled in with one of the QuickBooks products is a better deal.  it might be easier to discuss.  However, if you are using QuickBooks Online, there are several new payroll products (and we can get you discounts) let us know so we can help you make the choice best for you.
        1. If you want to outsource your payroll, there are a couple different “tricks” to get the labor costs – let me know if you need to know.
  2. Work Flow – This is another big area where I hear complaints and work to help my clients streamline. You usually know where the work slows to a crawl – could be time tracking, payroll, invoicing, payables, tracking cash flow or getting job cost data or some other type of reporting.  Poor workflow adds to your overhead and stress, so while it’s not a hard cost like field staff, it definitely affects your bottom line. It’s good to list the areas that are a problem – then you can begin to look at solutions.
  3. Reports – This is often the issue that prompts changes. What reports are you unable to get, and/or doing them in Excel? Which reports take too long to get? What information would you like to see in reports but are not?  From there, we can begin to address the issue.

If you would like to make a change in your QuickBooks, payroll or want help with setup, workflow, or reports, please contact our office. Now’s the time to do it before you get really busy!

Here’s to a year that will provide better data and smoother and faster workflow!

This entry was posted in Business Finance, Features, Job Costing, QuickBooks and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *