QuickBooks Desktop vs. QuickBooks Online

If you’re in a desktop version of QuickBooks (Pro/Premier/Enterprise) you may be wondering if it would be better to move to QuickBooks Online (QBO) so you have remote access. With the new products just rolling out, I thought this would be good to discuss pros/cons – and my opinion ;-)

Yes, Intuit has put a heavy emphasis on QBO, but they still have many more desktop customers than online (and those customers bring in more revenue), so they aren’t going do desert them!  While Intuit is spending a lot to continue to develop this product, they realize that their current online product doesn’t yet meet the needs of many of their customers, so they are still committed to adding new features and improvements for their desktop products.

If you’re on the fence as to which way you go, it’s wise to look at what the products have to offer BEFORE deciding.

So here’s the deal. Even though QuickBooks is part of the name, the online version of QB is VERY different from the desktop (2 different development teams) – just ask anyone who’s moved from one to the other! The look is definitely different as is some of the terminology, so anticipate a learning curve. Some have loved it, but I’ve had a few clients tell me they tried QBO and went back to desktop!

QBO offers 24/7 access, no worries about updates or upgrades, automatic invoicing and bank downloads and a growing number of add-on apps.

However, with QBO, you pay a subscription PER company.  For some of you, that can add up!  And, Intuit raised their QBO prices again this year, so this may cost you more, rather than less.

If you’re in QBO or considering QBO, mobile access is probably a key enticement.  While easy to access, QBO is not nearly as feature-rich as the desktop product – and may never be. In fact, Intuit (at least for right now), seems happy to focus mostly on accounting in QBO and letting apps solve for the additional features/functionality you need.  In particular, a couple areas that are limited are job costing and inventory.  So you may need to subscribe to additional apps – which means additional costs and having to learn another product – or 2 or 3 or ….

Intuit is aware that QBO is still NOT a good fit for those who need job costing.  However, they have added a few job cost features in the Plus level, albeit limited compared to desktop.

  • Projects (in the customer section) – I will admit this has the potential to be a nice feature (you can see both costs and revenue for a project). If you use and add-on product, it may work for sub-customers but not projects – so you should ask before you turn on this feature. Once you turn this feature on, you can’t turn it off.  There are still a few issues (like getting the project name and/or address on an invoice), so you might wait before moving forward with this feature.
  • Estimates -you can create an estimate for Revenue, but not costs
  • You can have now both a cost side for a product or service as well as an income side (especially useful if you invoice for time and materials).
  • You can finally progress invoice customers but I haven’t seen a way to customize a progress invoice.
  • There is no Estimated vs Actual so you use budgets for projects. Budgets use your Chart of Accounts, so, you would need to run a Budget vs Actual – and you might find you have to put more detail in the chart of accounts since you can’t run an estimated vs actual using your items (products & services)
  • You can’t job cost your labor. This is huge for many of you. Even if you can get the hours by job from a 3rd party product, QBO uses total hours only.  Nor can you “burden” your labor with payroll taxes, etc.   So you can’t run a report on a job, drill down the work done and find your true cost of labor (which is sooo easy in desktop QB).  Instead, you will have to find a way to get the information from your add-on product
  • You can’t run a job profitability detail report (which lets you see all the different services and materials), – but you can customize the Item Profitability report. There is a Job Profitability report which pulls from your Chart of Accounts
  • You can’t see open PO’s totaled by customer:job

I’m not sure just how much Intuit will add for job costing vs letting 3rd party apps solve for issues, but will continue to monitor.

Some other areas to consider:

  • Sales Orders There is no sales order feature (which you can also use as a Work Order in QBDT). In QBO, you can use an estimate template as a sales order, but you can’t track back orders.  Also in QBDT, you can create sales orders from your Estimate, obviously not an option in QBO
  • Fixed Asset List – QBDT has a nice Fixed Asset List (gives you detail without expanding your Chart of Accounts)
  • Price Levels – In QBDT, you can have automatic pricing based on customer or type of customer, but not in QBO
  • Reports – Currently there’s no group of job cost reports like you see in the desktop products. Not only are there fewer reports (65+ in QBO vs 100+ in QB Pro/Premier), there are fewer ways to customize reports. And as I mentioned above, since the subscription is for only one company, you can’t run a combined financial for multiple companies.
  • Permissions aren’t very strong – an employee able to do payroll can also see your financial reports – yikes! When you start having 3-5 people or more in your books, you definitely want to restrict who can see and/or do what.  Enterprise is by far the best at controlling access.
  • Backups – Intuit does keep your QBO backed up, but you can’t select a specific backup to restore if there are any problems. Likewise, you can’t manually backup QBO and have your own copy or decide to restore a backup.  So if there was a major problem that happened as a result of an incorrect integration with a product or a bookkeeper making a massive mistake (either accidentally or deliberately), you don’t have a backup to restore like you do with the desktop product. While you can export the data out, it’s not in a ready-to-go format that you could use in desktop QB.
  • While you get the ease of remote access, you miss out on some other time-saving features available in desktop QuickBooks. Here’s a chart comparing the availability of some time-saving features in QB.

For a more complete list, you can download my QB Feature Comparison Chart from this link.

So what are your options?  Personally, I still recommend the desktop versions of QuickBooks for anyone who wants job costing.  For remote access, here are some options:

  • You can use a product like GoToMyPC, LogMeIn or TeamViewer and remote into your computer – and you have access to your entire computer. If you choose this option, I strongly recommend a Windows password and turning off your monitor(s) when you’re out of the office.
  • QBox is a way to share a QuickBooks data file. It locks the file allowing only 1 person to work in it, so not a good fit if you need concurrent users, but for just a couple people, this might be a viable option.
  • There are Intuit-approved companies who will “store” (host) your QuickBooks and data; this gives you remote access plus the ability to use QB Pro/Premier or Enterprise. You pay per month per user to access the remote server in addition to your software.
  • Many 3rd party products work remotely, solving for your “need” and integrate with desktop QuickBooks. They tend to be either task-specific (e.g. time tracking) or industry-specific. Method is probably the product that gives you the most flexibility for remote access without being industry specific.
  • Enterprise can run in a “Remote Desktop” environment. In this setup, both the software and the data are on the server, so you just log into the server.  In a traditional network environment, the software is on your computer and the data is on the server.  The Remote Desktop servers have to be more powerful than traditional servers because everyone is using both software and data, but they can be really nice when you have people working remotely or in different locations.

If you still opt for QBO, just realize that you may need to find one or more products to integrate with QuickBooks or have work-arounds so you can do all that you need or maybe decide to do without.  Contact me if you want to discuss more or would like to see our discounted pricing on the QuickBooks products.

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Protecting Your Business From Fraud

How safe is your business from fraud?  While many worry about someone hacking into their systems, you’re more likely to experience embezzlement by a trusted employee.  About 28% of small businesses have this unfortunate experience, including a few of my clients over the years. And one client learned that her trusted bookkeeper of 15-20 years had been stealing from her for many years.  Let’s face it- most who embezzle have your trust – otherwise it would be much harder to steal from you.

Embezzlement is costly on many levels.  It’s not just the dollars lost, which can be significant, but it’s also the dollars to fight it (legal, accounting, staff time), the dollars to pay penalties and interest on unpaid/underpaid taxes/bills, the time to fight it, and the emotions of learning a trusted employee/friend has stolen from you.

This happens more easily in a small business because there are fewer resources to segment work and often, owners are unaware of controls they can put in place.  The generally accepted rule of thumb is 10 percent of people will never steal no matter what, 10 percent of people will steal at any opportunity, and the other 80 percent of employees will go either way depending on how they rationalize a particular opportunity.  So it’s the 80% that you direct your energies for prevention.

There are 3 factors, that when combined, lead to fraud.

  1. Pressure (often a financial need such as medical bills, divorce, debt)
  2. Opportunity (i.e. how easy is it for them to steal) and
  3. Their rationalization for stealing from you.  While you can’t affect their perceived need or rationalization, you can direct your energies towards lowering opportunities.

As business owners, we want to delegate and bookkeeping is frequently one of the first tasks to be delegated.  While you may want to delegate the books completely, remember that the buck stops with you, the owner. You’re the one who will get assessed penalties and interest for missed tax payments, and you will feel it most between the headaches, extra expenses at a time when your bottom line is less because of theft.

So here are some checks and balances you can put into place both in procedures and in QuickBooks to limit opportunity for theft or discourage most employees from even trying.

  • Run a background check on employees (I had one client who unknowingly hired someone as her bookkeeper who was out on parole from embezzling!)
  • Have separation of responsibilities as much as possible. i.e. use different people for Accounts Receivable, Accounts Payable, and Payroll
  • Checks and Payment Safeguards – Check fraud is more prevalent than credit card fraud. In fact, 4 out 5 fraud attempts are committed through checks.
    • Use secure checks, i.e. checks that are more resistant to fraud.  The Intuit checks you can order through us (at a 35% discount) were developed with the assistance of  Frank Abagnale (of Catch Me if You Can), now a fraud consultant for over 40 years.
    • If someone other than you can sign checks then have a policy that all checks over a certain dollar amount require your signature or 2 signatures
    • Don’t sign blank checks
    • Keep blank checks locked away.
    • Review Reports: Voided/Deleted Transactions, Missing Checks, Audit Trail
    • Pay bills electronically
    • Setup automatic payments
  • Customer Payments
    • Give customers the opportunity to pay you online via ACH or credit card – then you remove a temptation
    • Use check scanners or Intuit’s e-check so checks go straight into your bank account.
    • Make deposits yourself
  • Bank statements
    • Have bank & credit statements mailed to your home so you can review before delegating
      • If you are paperless, make it a point to review
    • Reconcile bank and credit card statements regularly – either yourself (you can pick up on problems more easily) or have one person review the reconciliation done by another
  • Close the books after certain periods (monthly, quarterly, or annually), so changes can’t be made except by authorized personnel and run the Closing Date Exception Report periodically
  • Monitor
    • Accounts Receivable (Open Invoices),
    • Accounts Payable (Unpaid Bills) and
    • Payroll (timesheets, wages, overtime, deductions and commissions)
  • Other security measures
    • Every user should have their own login, including the business owner, who should also be the administrator of the account
    • Don’t keep your QuickBooks open when you walk away from your desk or office
    • Limit user access – (e.g. they can create & print, but not delete or change)
    • Upgrade to Enterprise Solutions for its advanced security features –NO comparison between Enterprise and the other Intuit products.  Our video will let you see the difference and we have the lowest Intuit-authorized pricing on Enterprise.

I will be happy to assist in showing how to set up these controls in QuickBooks, discuss Intuit services that might be helpful, and help you with the reports.  Hopefully you will never have to deal with embezzlement.

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Have You Been Hacked? How to Minimize Your Risk

Just about every day, we read in the news that another company has been hacked – including the big companies, like Home Depot and others.  Perhaps you might have had your own social media account, email, website, network, or computer hacked. I know some who have been victims of a ransomware virus.  Worse, many of you have been hacked but don’t even know it.

So how can you minimize the damage and risk of hackers?  Here are several tips, some familiar, some not so familiar.  As you go through the list, check off the ones you’re already doing and make a list of new ideas to implement to protect your business and personal assets.

Signing Your Life Away

Your signature might look great in a graphic in your email signature line, your website, or your newsletter, but it’s a huge risk.  You’re giving away your handwriting, and forgers can easily replicate, master your handwriting, and impersonate you.  To reduce identity theft, don’t publish your real signature anywhere.

Money, Honey

Implement strong passwords on all of your financial accounts:  banks, credit unions, PayPal, credit cards, and your accounting system.  We know it’s painful, but do not use the same password for your financial accounts anywhere else, especially social media!  If possible, use a different password for each account to reduce risk further.

What’s Your Password?

Here are some quick password tips:

  • Do not use your name, your pet’s names or your kid’s names in your passwords. There’s just too much information available publicly to do that safely anymore.
  • Mix up letters, numbers, capital letters, and special characters, if they are allowed.
  • The longer, the more secure; most apps require at least 8 digits.
  • Change passwords quarterly to be on the safe side.

Password Storage

Most apps that help you save time with passwords are NOT safe!  Here’s what we do and don’t recommend:


  • Password-protect your computer, even if you don’t have to.
  • Keep a separate file of your passwords on your computer, but DO password-protect that file and make sure it is not shared with anyone on a network. Also name the file something totally unrelated like bio, letter, or goulash recipe; do not name it “passwords.doc!”
  • You can also keep a record of your passwords offline, but be sure to lock it up in a safe.
  • When you make file and disk backups, be sure those are locked up and password-protected too. They will no longer have your PC password to protect them.


  • Don’t give in to your browser or any website when it asks to remember your user ID and password, especially for your financial accounts or client information. All of the major browsers have been hacked – Internet Explorer, Chrome, Firefox, and even Safari.

If you use password management applications, proceed with caution.  Be sure you have properly vetted their security claims.  Most of these are simply form fillers that are not safe.

Vulnerable Applications

Avoid leaving vulnerable PC ports open and unattended, including chat, messaging, FTP (file transfer protocol), Skype, webinars, Google hangouts, video sharing, and the like. It’s like having all the doors and windows unlocked in your house; an intruder has a lot of choices for easy entry.  When you are on these more vulnerable connections, shut the others down, and close the applications you don’t need.  Then logoff when you are done.

A Plug for Software

As soon as a hacker has found a new exploit, the software companies will learn about it and make an update available within days.  The hacker community is tight; other hackers will look for software that is not updated and exploit the hack.  Avoid the copycat hackers by staying on top of your software updates, not just your anti-virus, but also your Microsoft and other software updates.  Doing this will eliminate a great deal of the risk out there.

New Users

If multiple team members need to access your software, consider setting up additional users rather than having one account.  If one person gets hacked, the others will likely still have access and can react quicker to the intrusion.

Stay Safe Out There

How many of these are you already doing?  Give yourself a reward, and then get busy implementing the rest so you can stay safe.

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Is Your QuickBooks File “Insured”?

Computers and software are great when they work. But if your computer crashed or your QuickBooks file was corrupted and unusable, do you have a recent backup of your QuickBooks data file?

Recreating data is not fun, easy or fast. I can’t emphasize this enough: Losing your financial data can be the beginning of the end of your company. You won’t know what you’re owed, so you’ll be unable to collect. You’ll miss vendor payments. Payroll will be challenging to reconstruct, and you won’t be able to submit payroll taxes. And how will you know what your income tax obligation is?

You definitely want a backup off site; in case of fire, flood, theft or some other problem, you still have your data. But I always like to have one or more quickly accessible (like an external drive or thumb drive). And, when you have more than one backup, you’re still protected. I’ve had backups not work (bad file or bad media) but if you have multiple backups, your chances are much better.

How often do you backup?  How much data entry do you want to recreate???!!  Weekly is good for some, while daily is a must for others – just depends on the amount of activity in your data file.

I recommend that at least monthly you use the regular backup feature in QuickBooks (and use the verified option) for a couple reasons:

  • This traditional (verified) backup method will look for problems with your data file – an offsite backup won’t do that.  This way you can fix the problem before it goes too far.
  • This will reset the log file(*.tlg) QuickBooks creates. When the log file gets really large (and I’ve seen it get larger than the actual data file), you may find your QuickBooks is not so quick!

Note: it’s great to have servers backed up and hosting companies keep backups of your files as well. However, these are NOT verified backups of your QuickBooks data file.

QuickBooks provides two ways (actually, three) to create a copy of your QuickBooks data file. When is each appropriate, and how do you proceed?

The Critical Traditional Backup

 Click File > Backup Company>Create Local Backup… You’ll be asked whether you want to back up locally — to a network folder or thumb drive, for example – or to the cloud, using Intuit Data Protect (fees apply, unless you’re using QuickBooks Enterprise). If you select the local preference, click on Options to designate a location in the window below.

Click OK, then Next. QuickBooks will ask when you want to save your backup copy and offer scheduling options. When you’re done, click Finish.

To schedule a backup, click on New in this screen below and then choose the day(s) time and where you want the backup to be stored.  The stored password is your Windows password, not your QuickBooks password.

Portable Company File

Portable company files are more compact than backup files, so they can be, uploaded faster with file transfer sites or copied onto another computer. But they don’t contain everything that regular backups do. They lack, for example, letters, logos, attachments, images and templates. Don’t use this option if changes will be made, since they can’t be merged back into the file.

To save a portable company file, click on File > Create Copy (you can do this to copy any kind of file, actually). This window opens:

Select Portable company file and click the Next button. In the following window, you’ll browse to a location for your file. QuickBooks will already have entered the name and will save your data in .qbm format. Click Save, then OK when QuickBooks tells you it must close and reopen your file first. Click OK again when you’re told that the file has been created.

Restoring Your Data

Should you need to restore a backup, click File > Open or Restore Company… In the window that opens, select the type of backup you’re using (traditional *.qbb or portable *.qbm).  The Open Company File window opens; make sure that the file’s location is displayed in the Look in: field. Click Open. QuickBooks then asks where you want to restore the file.

The following step is critical. Rename your file unless you want to overwrite your current company file. You can add a date or some other identifying information like a version number.

Click Save. QuickBooks will convert your backup file to a standard company file with a .qbw extension.

QuickBooks makes it easy to create copies of your data, but an error here can threaten your company’s future.  So take the time to “insure” your QuickBooks.  Contact us if you need assistance.

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Are You Prepared If Disaster Hits Your Business

Hurricanes Harvey, Irma and Maria last year, the California fires and flooding in the mid-Atlantic states this year are painful reminders that disasters happen.  And on the East Coast hurricane season is here, albeit no big ones yet, but it’s early.  What would you do if you could no longer get to your office, access your computers, files,…….. Would you have to close your doors or do you have a backup plan so you could get back to work sooner, rather than later?

I personally think you should have both local backup and off-site backups, whether that be cloud-based or flash drives.  The local backup is in case you lose internet access for an extended period (many of us have experienced that) and off-site in case your system gets hacked or fire or flood damage. Good companies who provide hosting solutions also have backups in other locations – just in case of disasters.   There are many reputable cloud-based backup systems and you might find some of you have access to offsite backups but were either unaware or never set it up.

Stop and make a list of what all you would want backed up.  Here’s a list to get you started – some of these are obvious, but some are often overlooked.

  1. Accounting Software

Especially in tough times, you want money to continue to flow in, so that means being able to invoice or at least collect on receivables.  But you also need to keep up with payables. You wouldn’t want to learn the hard way that a vendor cut of or your phone or Internet or would no longer sell materials needed for jobs.  (I know some of the QuickBooks line of products include offsite backup – but it does need to be setup!)

  1. Online Calendar

Do you use an online calendar?  If you use a calendar such as Google Calendar, then it’s a good idea to keep a backup in case something happens to it that’s out of your control.

In Google, go to Settings from the Settings menu, click the Calendars tab, and Export your calendar to get your backup.

  1. Website

It’s common for business owners to rely on their webmaster to have a backup of their website, but this is often not within the scope of the webmaster duties.  Check with your webmaster to get a backup of your website files so that you are protected against hackers, hosting problems, and more.  Fortunately, my webmaster does provide backups. So, when my site was compromised a few years ago, I was back up and running in just a couple of hours.

If your blog is in the same place, make sure you have a backup of it as well.  You may also want to preserve any online profiles you have in the same way.

  1. Your Email

We are so dependent on our email these days that we should consider backing this file up daily, if not hourly.   The location of your email file varies, and some people have more than one.  It’s worth double-checking to see if this file is included in your regular backup routine. I learned one year that my email was not being backed up – you can be sure it is now and with the recent power outage, my backup came in handy.   You may also want to create a separate, more frequent backup routine for this critical file.

If you have an online email account, make sure you have a backup of all those emails in case something goes wrong.

  1. Browser Data

Browser-related data, such as your bookmarks, history, toolbar, and saved passwords are all stored in files, but they can be hard to find and recover.  If something happens to your browser data, it may or may not be a big deal.  If it is, include these files in your regular backup so you can recover what you need more easily.

  1. Online Bank and Vendor Account Information

If you get audited by the IRS, it’s almost always for a year in the distant past.  Digging up invoices you might have had online access to but no longer do can be time-consuming and painful.  Most banks and vendors have made it super-easy to download PDF versions of your invoices and statements, so be sure you do that before your access to them expires or becomes an extra charge.

  1. Local and Cloud Drives

Every business’s technology setup is different.  If you have a server, chances are you’re getting it backed up regularly.  If you have employees, make sure each of their hard drives are backed up so they don’t lose any files that are not on the server.  If you have your files centralized in the cloud, make sure you have a backup of those files.

  1. Desktop

One additional place that may not be backed up is your Desktop.  It depends on your operating system; sometimes desktop files are excluded if you have your backups set to copy only “My Documents” files and subfolders.

Bonus Tip

Periodically check the accuracy and effectiveness of your backups and see if you can recover a file or two.  If not, you’re back to the drawing board, and it’s better to find out in a non-emergency situation that you have some work to do on your backup and recovery strategy.

Reducing Risks 

Being a business owner is all about taking calculated risks.  Having all your important business data backed up helps you reduce your risks and protect what’s perhaps your most important business asset.

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Tracking Use Tax

If you have to collect sales tax, then chances are your report form asks you about use tax.  Use tax is a sales tax on purchases taxable in your state but for which you were not charged. An example would be if you ordered office supplies from Amazon and you weren’t charged sales tax, but if you had purchased from your local office supply store, you would have paid the tax.  You see this more often when you make out of state purchases, but you might find that a local supplier didn’t charge you sales tax, so you need to check.  I’ve had landscape clients go through sales & use tax audits and often the auditor will find taxable purchases with no sales tax so the state wants the use tax.

Tracking Use Tax

Check with your accountant for what’s taxable and what is not. This varies by state, and sometimes by use. For instance,

  • Downloadable software is taxable in some states, but not others
  • Mulch might be taxable when used one way (e.g. for maintenance) but not taxable in design/build projects.

It’s easier to keep up with tracking as you go along, rather than waiting until the end of the report period, especially if you pay quarterly.  So here are the steps to simplify your reporting.

  1. Setup a Use Tax Payable account – this is an Other Current Liability account
  2. When you make a purchase (bill, credit card charge, etc.), review the purchase to see if
    1. The item(s) is taxable
    2. If sales tax was charged (you might be surprised at who charges and who doesn’t!)
  3. If the item is taxable but no tax was charged, then you want to track Use Tax
    1. Calculate the sales tax and add to the cost of the item
    2. On the next line, subtract the new cost from what you paid, and that’s your use tax
    3. In the example below, the company paid $66.50 for office supplies. These would be taxable in this particular state, but no tax was charged.  So $3.99 was added to the cost of the item and the 3.99 “deduction” puts 3.99 in the Use Tax Payable account.
    4. It’s up to you whether or not you want to add a note in the memo field letting you know if you paid sales tax or added use tax for report purposes. Personally, I do b/c it makes it easier for me when reviewing to make sure I have tax on all my taxable purchase.

Just like other balance sheet accounts, the Use Tax Payable account will have a running balance.

At the end of your tax reporting period, you can move the amount in the use tax payable account (for that period) to your sales tax payable account

  • If you create a journal entry,
    • Debit Use Tax Payable and credit Sales Tax Payable (and list your sales tax agency in the Name field)
    • Set the date to the last date in the report period (e.g. 3/31 for a report period that ends in March)
  • Or if you don’t like or understand journal entries, then
    • Go into the Use Tax Payable register
    • Enter your date
    • Put the amount of use tax you owe in the decrease column and save/record.
    • If you right-click on the transaction you just created, you’ll see the journal entry and you can add the tax agency in the Name column.

You can either run a balance sheet report, double-click on Use Tax Payable and change the date range or you can create and memorize a report for Use Tax.

  1. Click on Reports>Custom Reports>Transaction Detail
  2. On the Display tab,
    1. select your date range (e.g. Last Month, Last Fiscal Quarter)
    2. Select the columns you want to see
    3. Total by: you might want to total by Name or by Month (if more than 1 month) or just Total Only
    4. Sort by – You might want date or Name or Memo….
  3. On the Filter tab,
    1. Select Use Tax Payable from Account
    2. Choose your date range if not already done. I recommend using the drop-down dates instead of manually keying in the dates!
  4. On the Header Tab, name your report
  5. Run your report and then tweak as needed.
  6. Once you have the format you like, then Memorize!

Going forward, tracking Use Tax Payable will hopefully be much easier!  Let us know if you need any help with this.

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Cash Flow Tools In Quickbooks

If you have a seasonal business, then you know some months are fabulous and some months – aren’t. You have also noticed (I hope) that your profit from your Profit and Loss doesn’t match your cash balance.  That’s because loan payments, payroll tax liabilities, sales tax and more, don’t show on that report, but they definitely affect your cash balance!

Here are 5 tools in QuickBooks that can help you monitor your cash flow.

  1. Cash Flow Forecast (Reports>Company & Financial) – This assumes your customers pay timely as do you. While that may not always be the case, this is a quick tool.  If you don’t enter your payables, this report will give you a very lopsided projected balance!
  2. Cash Flow Projector (Company>Planning & Budgeting). Most businesses find fluctuations in their cash flow, so this tool lets you account for known income or expenses you expect in the 6 weeks that might be out of the norm (e.g. quarterly insurance payment, big deposit for a new job starting…).

  3. Balance Sheet Ratios – I find many businesses ignore reviewing their balance sheet and think it’s not useful, but it can very helpful in many ways, including warnings about heading into tough financial situations if you’re not careful! You can take a quick look to see how your cash balance and receivables compare to payables and debt.  Here’s a link to two ratios you can easily get from your balance sheet that are worth reviewing.
  4. Trackers – These trackers are meant to give you a quick visual as well as a way to filter and/or take appropriate action..
    1. Income Tracker – What I like about the Income Tracker is the ability to see open Estimates and Sales Orders in addition to Open Invoices and Overdue Invoices – all with total dollar amounts! Starting with 2015, they added unbilled time and expense. Seeing those numbers will get some people moving!
    2. Bill Tracker – New in 2016 was the Bill Tracker. Like the Income Tracker, you can do 1 action on multiple transactions at one time

Click here to see how you can customize the trackers and take action

  1. The Company Snapshot – Still one of my favorite features in QuickBooks. You can check on payables (very important for cash flow), receivables, account balances, reminders, trends in income and expenses and much more – all in one You can choose from 12 possible reports, organize them any way you want and choose the time frame from the drop-down menu (no custom dates). Past due invoices and bills show up in red, making it easy to pick them out.  You can even print the snapshot.  You can also click on the payments tab to see who’s paid you recently.  If you don’t see this on your toolbar, you can find it in the Company menu.

Click here to take a closer look at this feature.

Hopefully your cash flow is in good shape, but these tools can be very useful.  I’d love to hear which one(s) you like best!

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Secrets to Monitoring the Health of Your Business in QuickBooks

How healthy is your business?  Many businesses just look at their profit & loss statement (aka income statement), but you could be missing out on some helpful information.

Have you ever heard of accounting ratios?  The first time I even learned of them was when I somehow stumbled on them in the help in QuickBooks (it’s no longer in there).  But they explained why I was struggling financially even though I had money in my bank account and my P & L showed a profit.

Banks often use ratios to analyze your financial statements as part of the loan approval process, so it’s helpful to know in advance what they’ll see.  Acceptable ratios can vary by industry, so you might find that your accountant or trade association may have those numbers.  This would also let you know how you compare to those in the same line of work.

In my article on the Profit & Loss report,  I discussed 2 key metrics – Gross Profit Margin and Net Profit MarginIn this article we’ll take a look at two ratios that are easy to get, but often ignored – Current Ratio and Debt Ratio. To calculate these ratios, you need to run your Balance Sheet (I know many of you do not), and that the Balance Sheet is in good shape.

Current Ratio – This looks at how easily you can pay your debts. For a true picture, you will want to include the “current portion of long-term debt”.  In other words, if you have 4 years left on a loan, move 12 months of principle from long-term liability to current liability.  (Your accountant or lending institution could help you determine this number if you need assistance.) This can be a substantial dollar amount depending on the number and size of your loans.  But even if you don’t do this, it can still be a good eye opener.  Simply divide your Total Current Assets by your Total Current Liabilities.  In this example (in blue), you would take 302,185 divided by 54,690.  Keep in mind that if you have credit card accounts in your Chart of Accounts, QuickBooks considers these current, which is fine unless you don’t plan on paying the card off within 12 months.

Debt Ratio – What percentage of your business is financed by debt? To get this ratio, divide Total Liabilities (debt) by Total Assets.  For Quality Built Construction, you would take 68,675 divided by 374,142 (highlighted in red).

So take a look at these ratios for your business and see what you get.  If you want to know if they are good or bad, your accountant can help you determine how you are doing for your industry.  I would recommend that you look at these at least quarterly if not monthly.  You may find that for your industry, these ratios will fluctuate seasonally.

And, if you’re not sure if your balance sheet is in good shape, your accountant can give you a quick yes or no – hopefully you’ll get a yes. If it’s no, we’ll be happy to see what may be going wrong in your QuickBooks.

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Have You Checked These Balances Lately?

The Balance Sheet is an important report in your business’s financial statements. Unfortunately, I find that many small businesses never look at this report.  Usually it’s either because they don’t understand the report or they think it has nothing to show them in terms of profitability.

However, this is an important report for several reasons.

  • If you’re the owner, these are your numbers. If you don’t understand them, you want to, so it’s to your benefit to ask someone.
  • This report often shows me some mistakes people are making in QuickBooks.
  • This report shows the overall health of your business and can warn you of problems that may not be apparent in your P & L.  Wouldn’t you like to know?!
  • Lending institutions may take a hard look at this report when determining whether or not they will lend to you and /or how much they will lend.  So it’s beneficial for you to understand what they will be seeing and using to determine your loan.

A Summary of Balances

A balance sheet is like a snapshot – it represents one date in time, for example, 7/31/18.  The numbers represent balances, and since the balances change daily, a balance sheet only represents one point in time versus a range (as found in your Profit & Loss report).  There are three parts to your balance sheet

  1. What you own (Assets),
  2. What you owe (Liabilities) and
  3. Your net worth (Equity)


You will most likely find three major types of assets

-Current (usually means 1 year or less)

  • Most balance sheets start off with cash balances, and these typically represent what you have in the bank minux any uncashed checks that could reduce your account once they come in
  • If you invoice customers, but have not been paid, that is considered an asset because it’s owed to you; this is typically known as your Accounts Receivable.
  • Employee advances or other loans payable to your business are also frequently listed here.
  • If you stock and sell products, the cost of those products you haven’t sold yet would be in your Inventory Asset account

-Fixed – If you own equipment, furniture, cars or trucks or something similar that lasts for years, you will have a balance in Fixed Assets. If it’s been a while since you’ve purchased them, you probably have an Accumulated Depreciation (the total you’ve depreciated over the years). When you subtract your accumulated depreciation from your original cost, you get a net value for your Fixed Asset

-Other– Here you may find security deposits, prepaid insurance, etc.

You will also have a total for all your Assets


Liabilities, the second of three major sections of a balance sheet, are monies you owe others, such as taxes, vendors, or employees:

Current (due in one year or less). Here you see

  • Accounts Payable- Day to day money you owe to suppliers, independent contractors, phone bill, etc.
  • Credit Cards – if you set up Credit cards as an account in QuickBooks, they are listed here
  • Line of credit (if you owe)
  • Payroll taxes you owe
  • Sales tax
  • “Short-term” loans (due in less than a year)

Long-term (more than 1 year)

If you have bank loans, they usually each have a separate account like a bank account does.   Each bank loan account represents the principal due on a loan (the interest you pay goes to an expense on your Profit & Loss report).


The final section of the balance sheet is Equity.  It is the section that will vary the most depending on the type of entity your business is set up as.

  • For example, if your business is a corporation, then there will be a common stock account which will represent the original amount of money you put into the business; it will match the Articles of Incorporation that you drew up when you incorporated.  This amount will rarely ever change for the life of the business.
  • If your business is set up as a partnership, the equity section will include an account for each partner that represents their balance in the firm, which is the net amount of money they have put into the business over the years plus or minus the business income or loss through the years
  • There is often an account called Paid-in Capital which is how much additional money you’ve put in or taken out of the company beyond the common stock balance.
  • You will also have a Retained Earnings account.  This reflects accumulated profit (or loss) through the years of operation.
  • The Net Income figure is the bottom line from your Profit and Loss.

Balanced Balance Sheet

If you take a closer look at the balance sheet, here’s another concept. If you take your total assets (what you owN) and subtract your total liabilities (what you owE), you are left with your Equity (or net worth as I sometimes say).  The way it’s presented on the balance sheet is your assets equal your liabilities plus equity – ALWAYS.

If you run this report, and it’s not balanced, then check the following:

  1. Did you run this report on a cash or accrual basis?  A cash-basis balance sheet may not always be balanced, but this article walks you through the steps to correct that.
  2. If this is an accrual-based balance sheet, then there may be issues with your data file and you’ll want to reach out to tech support.

So take a look at your balance sheet and see what observations you notice about your business.

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What Your Profit & Loss Is Really Telling You

When I meet with new clients, I find they all like to look at their Profit & Loss (P & L or Income Statement). After all, who doesn’t like to look at profit?!  But I find many have misconceptions about what this report can/should do for them.  This is usually due to a lack of knowledge when it comes to accounting, which I understand. But whether you are the business owner or the bookkeeper you should understand at least a little bit about accounting and your financial reports.


If you are the bookkeeper, you’re the one doing the data entry, so it’s important that you understand how the transactions you’re creating are affecting the books. And if you don’t, ask your accountant.  Some mistakes can be huge.  A couple examples I’ve either seen first-hand or heard about:

  • Expensing loan payments
  • Entering vendor invoices (i.e. your bills) as invoices
  • Entering bank transfers as income to the business
  • Assuming that if you use the online banking/bank feeds, you don’t have to reconcile your bank & credit card accounts.

Those mistakes can have a huge incorrect impact on the Profit & Loss report.

If you are the business owner, these are your numbers so you should understand what this report can and cannot tell you.  Don’t be afraid to ask your accountant!!  After all, your business is your area of expertise and accounting is theirs. So, especially in the beginning, I understand this can all seem like Greek!

I know some business owners are hoping this report will help them with their cash flow if they run this report on a cash basis (I had someone contact me one time wanting to know why this didn’t match their bank balance). That’s not the intent of this report.  The focus is on profitability (not cash), so loan payments, sales tax remittance, payroll liabilities, are not to show on your P & L, yet they obviously have a big impact on cash flow. If you see them on this report, then find some help with getting your books corrected.


The purpose of your P & L is to show you Profitability and the factors that affect it.  When you run your Profit and Loss, you’ll first see Income, then many of you will a middle section for Cost Of Goods Sold (COGS) and below you have expenses, with the net income or loss at the bottom. The Profit and Loss covers a period of time, which you choose, such as last month.

The types of expenses classified as Cost of Goods are typically those purchases you made in for a specific job, project, or product. Some examples are:

  • a retailer who had to buy products (inventory) that they could put on a shelf for resale.
  • a manufacturing company who has to purchase raw materials to make a product to sell.
  • contractors or those who are in professional services it would be the materials purchased specifically for the job (like lumber, landscaping, appliances, etc.) and the labor involved for that job. (Note: if you are a contractor and you don’t have labor costs showing in your COGS, you’re not seeing the total costs associated with your jobs.)

Expenses are typically those associated with running your business whether or not you have jobs/projects, such as rent, your phone bill, Internet Access, utilities, and so on

While the bottom line doesn’t change, it’s more helpful to see the direct costs (COGS) separate from the overhead (expenses). For instance, many of you want a particular profit margin for a job.

Helpful Metrics

When setup correctly, you can run a P & L for job, turn on percentages, and the % showing for Gross Profit Margin is your profit margin!  And when you run the P & L for the company, you’ll see your profit margin across all your jobs.  Simply click to customize the P & L report, then check % of Income on the Display tab.

When you have percentages turned on, then you’ll also see your Net Margin as a percent.

Both can be useful for planning purposes and giving you targets you need/want to achieve

Cash vs Accrual

One other aspect to look at when reviewing your financial reports is cash versus accrual basis. Most of my clients operate on a cash basis for tax purposes, but several operate on an accrual basis. If you’re on a cash basis, (in oversimplified terms), you earn the money when you get paid and you spend money when you write the check or pay by credit card. Most of us can understand that, since that’s typically how we treat our personal finances. Technically, cash-basis businesses don’t have an Accounts Payable or Accounts Receivable. But accrual says that you earn the income when you invoice whether or not the client ever pays you! And you spend the money on the date of the bill whether or not you ever pay the bill. Those on an accrual basis can write off bad debt. Those on cash basis cannot write off bad debt because they never originally claimed the income.

I generally recommend that clients look at it reports on an accrual basis because it typically evens out some of your income and expenses and is better for showing trends in your business. On a cash basis, sometimes cash comes in sporadically so you may find you pay several bills at once so you have understated expenses for some months and overstated expanses for other months. So cash basis doesn’t necessarily reflect the work that’s being done in business. The 2018 version of QB makes it easy to switch between cash & accrual – the option is right on your report screen!

So take a closer look at your report and see if problems jump out at you or if you get some new “aha’s”!  If you need help with this, you can contact our office or your accountant.

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