4 Ways to Get Your Estimates Entered Quickly In QuickBooks

Posted on March 14, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

For those who job or project cost, it all starts with the estimate.  When the estimate is simple, then it’s often easy to create in QuickBooks. But for many of you, you most likely have many of the same types of estimates (such as seasonal maintenance jobs) or have more involved estimates such as construction, landscape design/build projects, etc.   So here are 4 ways to get your estimates entered faster.

  1. Use Item Groups – This is a fast way to pull multiple items onto an estimate. While you might select only 1 item (group), you will see all the items in the group listed on your estimate. Examples – items in a display, components of an outdoor fountain, labor and materials for a shed, what’s included in a maintenance contract…   Item Groups are also a way for you to have the detail in QuickBooks for job costing while showing your customer only the summary.  Here are a couple screen captures: 

Figure 1: Setting up Group Item 

Estimating

Figure 2: What your customer sees

Estimating

  1. Duplicate – If you need to create an estimate similar to another one you’ve done, you can duplicate the estimate, change the customer and any other pertinent information. This is also useful when you have a customer wanting to see multiple estimates for pricing or other reasons. Right-click on the document to get the pop-up menu below

Estimating

  1. Memorize Estimate – Need to do this estimate (or type of estimate) frequently? Then memorize the entire estimate. This is especially helpful for install or construction jobs where numerous items/cost codes are used or for special types of project – such as backyard “kitchens”, patios, office/home additions, etc.   You can either click on Memorize on the ribbon bar or right-click to memorize.  Then to use this later, click on Lists>Memorized Transactions.   You might also want to memorize the estimate with $0 and/or 0 quantities so you will have to fill it in.  You don’t want to accidentally think it’s done when it’s not!

Estimating

You might also want to use different Estimate templates for different types of estimates.  For example, seasonal maintenance estimates might have one format, but design/build types of estimates might look different.   So keep that in mind when memorizing your estimates.

  1. Import – Many of you either do your estimating in a spreadsheet or 3rd party software, which often suggests some level of complexity to the Estimate. Some 3rd party estimating/bidding or industry-specific software can integrate with QuickBooks so you can import the Estimate making this easy once it’s setup and a big time-saver.  Even if you use Excel, there are products out there you can use to import the estimate.  Usually the biggest issue is the items.  In Excel, many times people are inconsistent with how they reference their services, materials or subs, so importing could inflate your Items list.  However, if you can be consistent in your terminology, this can be a big timesaver.

You may find you use a combination of these options, but you will definitely save lots of time in entering your estimates.   

If you want help with any of these ideas, let me know.  I would love to hear which method(s) you have found the most effective for you!

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Save Time with Payroll Templates

Posted on March 13, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

For those of you with seasonal businesses, such as landscapers, painters, remodelers and other contractors, you may find this time of year you are doing lots of hiring, depending on the size of your business. And anyone who’s been involved with that process knows that it can be very time consuming! For those of you who are responsible for setting the employee up in QuickBooks, the payroll template could help you save some time.

payroll templateThe simplest way is to go into the Employee Center and click on Manage Employee information >Change New Employee Default Settings (shown on the right). But you can also access the Employee payroll template from the Company Payroll Preferences (below).

payroll template

Once in the the template,

  • payroll templateYou can choose the most common payroll items, such as hourly wage, overtime, holiday pay, health insurance, etc.; it’s up to you whether or not you enter any default rates.
  • You can select the Payroll Schedule or Pay Frequency
  • You can opt to have time data to create paychecks (I recommend that for job costing)
  • You can even set up some of the tax defaults. Some may leave Federal alone but most of you could set up some state defaults (shown below)

payroll template

The payroll template is good only for new employees, not existing or returning, but still very helpful for many of you.

For those of you who have been in QuickBooks for several years, do take a look at these additional fields in case  you haven’t; I think you’ll find them useful.

payroll template

 

 

payroll template

So check out the payroll templates and knock some time off the employee setup process. Let us know if we can be of any assistance.

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Are Your Workers Contractor or Employees

Posted on March 12, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

If you have workers in your business, you likely made a decision when you hired them as to whether they should be an employee or a contractor.  If all you hire is employees, then you have nothing to worry about.  But if you hire contractors, there may be some financial risk you may be taking that you may not know about. 

Any person that runs a business as a sole proprietor that you pay money to for services rendered is considered a contractor.  One difference between an employee and a contractor is that an employee receives a W-2 and a contractor that you have paid more than $600 per year by check receives a 1099.  There are many other paperwork differences, and that’s the major one.

One of the biggest mistakes when a business owner hires a worker is thinking that they can decide to classify the worker as a contractor if they simply want to.  Unfortunately, it’s the IRS that decides on the classification, not the worker or the business owner.     

What’s the Risk?

There is no risk from an IRS standpoint to classify a worker as an employee instead of a contractor.  There is significant financial risk if you incorrectly classify a worker as a contractor when they should be classified as an employee.  You may be liable for back employment taxes plus penalties and interest if the IRS re-classifies a worker from contractor to employee, and this can go back many years.

To calculate your risk, take roughly 20 percent of the payments you made to contractors.  This amount plus late fees and penalties can add up to what you could owe the IRS if you are mis-classifying workers and the IRS finds out.    

IRS’s Employee vs. Contractor Rules

The IRS focuses on three factors to determine whether a worker should be a contractor or an employee: behavioral control, financial control, and type of relationship. 

If you control both what and how a task is to be done, you should probably classify your worker as an employee.  If you can control only the results you want, you may be able to classify the worker as a contractor.   

There are many other rules about this classification, so be sure to check with your tax accountant for more information.  Also, for those of you that love tax research, here’s a link that gives the full details of the IRS rules: 

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

Having a successful business is all about taking calculated risks; however, you may not have known the risk you’ve been taking with contractors that you’ve employed.  For the IRS, misclassifying workers is a “red flag” area, meaning they are paying extra attention to it.  If you aren’t sure, then contact your accountant or an HR professional or even the IRS to help you decide.

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Two Useful Cash Flow Products

Posted on February 20, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Get paid quickly and easily – A product that you may find very helpful in getting customer payments is Bill and Pay.  Features that I like include:

  • Invoices can be automatically emailed if you choose to have Bill & Pay auto sync with QuickBooks periodically and the invoice is set to Email later
  • Customers can pay you online – with or without an account
  • With customer permission, you can get paid automatically even when the invoice amount varies
  • Customers can pay from a statement (especially useful if you send a statement out instead of multiple invoices)
  • You can have reminders & past due notices AUTOMATICALLY sent out to your customers – for some of you, that would be a huge timesaver
  • Integration with QuickBooks – I don’t even have to have QuickBooks open! It’s nice to see that there’s money to deposit J
  • You can get a report showing the emails sent (I haven’t figured out how to do that in QuickBooks except for 1 at a time)

Click here to see a short demo.  If you’re interested in signing up, be sure to use my invitation code MUIRASSOC.

Need a loan – and quickly?  Try FundBox.  FundBox now works one of two ways. Either by connecting to your bank account or your accounting software and answer a few quick questions. You typically have an answer in about 3 minutes!! When you request a loan, the amount goes into your bank account the next business day (that’s fast!!). Before you click submit, FundBox will tell you the maximum amount this loan will cost, so there are no hidden fees. Then over a period of 12 or 24 weeks (or faster if you want – and with NO prepayment penalty), FundBox will take the 1/12th (or 1/24th) of the $5000 back plus their interest.  It syncs with your QuickBooks and is simple to use.  You can set up FundBox any time – it’s free until you need to borrow money so you just pay the interest on what you borrow and for the length of time you borrow (can’t be longer than 24 weeks).   It’s great for those who sometimes get into cash flow crunches (as so many businesses do) – especially during your slower times of year. 93% of businesses who try FundBox use it again. If you’re interested in taking a closer look, click here.  It’s quick and easy to sign up, and then connect your QuickBooks.  You can see what it would look like, how much you could be advanced, what it would cost without actually committing

If you try either of these, I’d love to hear which one(s) and how it works out for you!

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5 More Ways to Get Paid Faster (Pt 2)

Posted on February 18, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Last time I discussed ways you can get paid faster that centered on invoicing and payments. Today I want to take a closer look at how to bring payments in sooner by using reports and other features in QuickBooks to help get paid faster.

  1. Monitor Your Accounts Receivable – There are several reports and tools in QuickBooks that can help you.
    • A/R reports – Under Reports>Customers & Receivables, there are several reports. My personal favorites are the A/R Aging Summary and the Open Invoices. What are yours?
    • Snapshot – The Company Snapshot can quickly alert you to those who are past due – they will show in red. (Don’t have that in your Snapshot? Click on Company>Company Snapshot or right-click on the Icon bar, then click Add and select Snapshots.)
    • Income Tracker – The new Income Tracker can quickly let you see how many invoices are past due and who owes.
  1. Customer Center – In the Customer center, you can quickly filter to see who owes, but if you want to see who’s almost due or who’s past due, you can customize the center to include those fields. Simply right-click on the list and select Customize Columns.  Then select the ones you want to see and move them in the desired order. You can choose when an invoice would be considered Almost Due in the Reminders section of the Company Preferences. 

FYI: You can choose what you consider Almost Due in the Reminders section of the Company Preferences

  1. Send out reminders –
    • Before the invoice is due. If you have the Overdue column showing in your QuickBooks, you can quickly see the Almost Due (in yellow) or use your Collection Center to see who’s Almost Due and send reminders from there.  (If you don’t see the Collection Center, click on Edit>Preferences then Enable Collections Center found on the Company Preferences tab.)
    • Send out reminders just after the invoice is due. You can use the Income Tracker or the Collection Center to help you email reminders
    • AUTOMATIC reminders is a great feature in Bill and Pay– it will automatically send out those notices for you – both before and after the invoice is due, saving many of you LOTS of time! (Be sure to use MUIRASSOC if you want to test it out).
  1. Monitor collections. I prefer the Collection Center over the Income Tracker because it shows both Overdue as well as Almost Due, with a section for notes (especially helpful if you have to make more than one call). It also lists all the invoices (number, amount due, days overdue), phone number and has a link to email a notice.   But the Income Tracker is a useful tool – you can filter by overdue invoices, sort and send out.  If you “lost” your Collection Center, you can turn that back on in the Company Preferences under Sales and Customers.
  2. Shift to more fast-paying customers. Use the Average Days to Pay to help you sort through who’s slow and who’s fast. (Reports>Customers & Receivables>Average Days to Pay).  You can export the report out to Excel and sort on the average days to pay – might be a real eye-opener!   Slowly (or maybe not so slowly!) drop your slow pay customers (or change their terms).  If you have prepayments and shorter terms (like due on receipt or net 10 or net 15), that should definitely improve the average days to pay. While it might be somewhat tough to change older customers, your new customers won’t know any different.

Hopefully collections isn’t an issue for your company, but if it is, then these suggestions should help you get paid faster.  Would love to hear which tip(s) you liked best!

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5 Ways to Get Paid Faster (Part 1)

Posted on February 13, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Who doesn’t want to have money coming in sooner – especially this time of year? While there are a few general practices that come with an industry, maybe it’s time to make a few changes.

  1. Invoice quickly. The sooner the invoice goes out the door, the sooner you get paid.  If you can automate your invoicing, you get them out the door even faster.  And emailing invoices will not only get them to your customers faster, but save the time (and money) to print, stuff and stamp envelopes, and getting them to the post office and then being delivered to your customer. Here’s an article that discusses 8 ways to quickly create your invoices.

  2. Track what needs to be invoiced. The last thing you want is for the work to be done but the invoice not going out!
    • If you were invoicing off the estimate, you can use the Estimates vs Progress invoice.
    • If you use the Sales order feature (which can also be used as a work order), you can use the Open Sales Orders to track. This feature is available in Premier & Enterprise
    • Review unbilled time and expenses
      • Reports
        • Unbilled costs (Reports>Jobs, Time & Mileage)
        • Unbilled time (Reports>Contractor)
      • Income Tracker Time & Expenses – shows a total dollar amount (that will get you hustling!)
      • Invoice Time & Expense feature (available in Premier & Enterprise) separates billable time from billable expenses and can be turned on in the Time & Expense company preferences
  1. Change your terms. If your terms are currently net 30, can you change them to net 15? (With the Add/Edit Multiple Lists, you can quickly change the terms for your existing customers.)  Can you make your terms Due on Receipt for your new customers?

  2. Make prepayments a part of your business. Look at all the recurring monthly and annual payments you currently pay in your business.  You may have opted for quarterly or annually so you could get a reduced rate, so it’s definitely more common now. You can do the same thing – offer a reduced rate if your customer prepays you for the contract, or the season, or …   you get the picture.  If you are starting a project, maybe ask for a deposit up front – that helps ensure a commitment at their end in addition to any signed agreement- even if it’s a one-day project. Doesn’t need to be for the full amount, but it does give you cash to offset payroll and other expenses you might have.  Here’s an article I wrote on how to set it up and track it so you don’t see this big sale in one month and then nothing for the other months for which you provide service.

  3. Make it easy to pay you– eliminate some of their excuses! There are several ways you can do this:
    • ACH – customers can pay you online or give you the check information by phone
    • Accept credit cards – statistically customers will spend more if they can use a credit card – wouldn’t that be great if they spent more with you?!
    • Automate their payments so you can skip collections. If you accept credit cards, you can charge their card each month (or quarter or whatever your payment frequency is).  If you use the Intuit merchant services, you can set this up in QuickBooks so it’s all in one place (which saves time and money). 
      • If you haven’t tried the Intuit merchant services (Intuit Payments), here’s a link with more information. Keep in mind there’s great integration, NO contract and we can get you lower rates than if you go straight through Intuit.

As you can see, most of these are simple to implement. So what are you waiting for?!  Start getting those invoices out the door faster!

I’d love to hear what changes you made and how it’s helped you and the business.

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Working with Customer Deposits (or Prepayments)

Posted on February 11, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Do you take deposits up front from clients? Whether you’re in the construction industry, landscaping, trades or some other type of business, deposits up front help cash flow and enable you to pay employees and purchase materials for the job.  How they can be recorded in QuickBooks varies.

Many simply use Receive Payments to record the deposit.  Unfortunately, this understates your Accounts Receivable. So, if your true outstanding A/R is 75,000, and you enter a $10,000 deposit your A/R account would show $65,000.  With a short time-frame and few invoices, you can do the math in your head, but I don’t recommend this as an ongoing method, even it’s really simple.  From an accounting point of view, your balance sheet would be incorrect – definitely not something you could show a bank or investor.

Another method is to use the Progress Invoicing and invoice for the payment, so at least your receivables is correct. However, this shows income before you’ve done the work, so it’s still technically inaccurate. 

For those of you who offer customers a discounted rate for paying for your work for the season up front, the complaint I hear from business owners is they see this huge number in the early season for income, which really does not reflect the work they’ve done. And in the remaining months of the season or project, your income is understated and can even show a loss for the business which really isn’t true.

I’ve also seen some record the deposit correctly, and then when they invoice, they enter the prepayment on the invoice.  In fact, I used to do to this. In many cases, the resulting amount due is $0, but that’s also what the invoice shows. So when you’re reviewing invoices, you don’t get to see the original amount and then the payment unless you actually open the invoice to see the detail. It may also confuse your customers if you send them a statement.  I found I wanted to see an actual invoice with an amount and then a payment applied separately.

The method I prefer is to invoice for the deposit, then invoice as you do the work, and use a credit memo to apply the deposit/prepayment to the invoice. That way the accounting is correct, you don’t overstate your income, and both you and your customer can easily follow the invoicing and payments.  (For those of you who file taxes on a cash basis, you will need to make an adjustment at year-end to show the money you actually received, which is not shown in this article.)

One-time Setup

  • Create an Other Current Liability Account for deposits (e.g. Unearned Income, Customer Deposits, Prepayments, Retainers)
    • List>Chart of Accounts>New>Other Current Liability
  • Create an Item for Prepayments/Deposits
  1. prepayClick on List > Item> New Item
  2. Type
    1. Service if upfront deposit or retainer for services
    2. Other Charge if up front deposit is for products
  3. Item Name – Prepayment or Upfront deposit… your choice
  4. Account is the Other Current Liability account created above

Handling Prepayment/Deposit

Record upfront deposit

  1. Create an Invoice for the job using the prepayment Item; you may want to use the memo at the bottom of the Invoice to make note of the deposit as well for reporting purposes
  2. Receive the payment against the invoice – this will show in your customer deposit “other liability” account on your balance sheet.

Applying Prepayment to an invoice

  1. Create an invoice for the work being done (this may be a progress invoice if you created an estimate or sales order)
  2. Create a Credit Memo (Customer>Create Credit Memo)
    1. Use your prepayment Item and enter the amount you are applying to the invoice
    2. When saving the credit memo, you’ll be asked if you would like to apply this to an invoice – say yes. If the customer has multiple invoices, be sure you select the correct invoice.
    3. On the memo line at the bottom of the credit memo, I like to make note of the invoice it’s paying – easier to follow in reports and statements.
    4. FYI, if you customize the footer of your invoice to show payment applied, if you choose to send this invoice to your customer, they will see the amount of their prepayment that is applied to the invoice.

Prepayments for a season

prepayAnother scenario is you have a couple hundred or more customers who receive a discounted price for paying for the season up front. You don’t want to show all the revenue for the winter and the work you do is a fixed amount for a service you would normally invoice on a monthly or quarterly basis.  Rather than having to manually apply the credit memo to each invoice, you can use a memorized sales receipt.

  1. If the sales receipt feature isn’t turned on, go to Edit>Preferences>Desktop>Company Preferences and select Sales Receipt
  2. Invoice for payment for season (item posts to your customer deposit account as described above)
  3. Receive payment & deposit in bank
  4. The first line for the sales receipt would be your service (e.g. monthly maintenance)
    prepay
  5. The second line of your sales receipt would be the portion of the customer deposit that is paying for this service
  6. This can be a memorized transaction (here’s an article if you need help memorizing a transaction)

Prepayment Reports

For a Summary Report of Customer deposits/prepayments:

  • Click on Reports> Customers & Receivables > Customer Balance Summary
  • Click Customize Report
    1. On the Display tab, click on Advanced Options and select Rows = Non-Zero
      prepay
    2. On the Filters tab, click on Account, then select your Deposit/Prepayment liability account
  • If you intend to use this report frequently, click on the Header/Footer tab and name your report.
  • Run the report and then memorize

prepay

For a Detail Report of Customer deposits (this is what I use),

  1. prepayClick on Reports> Customers & Receivables > Customer Balance Detail
  2. Click Customize Report
    1. On the Display tab,
      1. Deselect Account
      2. Click on Debit and Credit
    2. On the Filters tab, click on Account, then select your Deposit/Prepayment liability account
  3. If you intend to use this frequently, click on the Header/Footer tab and name your report.
  4. Run the report and then memorize

You will see the original deposit and then the drawdown of the deposit.

prepay

If prepayments are common for your business, then periodically you will want to reconcile the deposit/prepayment account to clear out finished projects so they don’t stay in your reports, but that’s for another day.

Contact our office if you have any questions or need assistance.

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Profit Planning with QuickBooks Budgeting Tools

Posted on January 25, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Our last article discussed the benefits of using QuickBooks to help you in your “profit planning” by taking advantage of the budget tools in QuickBooks.  So now you’re ready to use create your budget in QuickBooks – great!

Select the type of budget

Start by clicking  on Company > Planning & Budgeting> Set Up Budgets. If you’ve already set up a budget, that one will appear. You’ll be able to edit it or create a new one. If you haven’t created a budget, the window shown in Figure 1 opens.
Budget

Figure 1: You’ll start working on your budget by selecting its year and content.

Select Profit and Loss and click Next.

On the next screen, you’ll see you can have additional criteria, (Customer:Job or Class),so you can budget for individual customers/jobs or classes instead of by account only. I do NOT recommend this for a customer:job – use an estimate instead unless for some reason that can’t work. But for those of you who use QuickBooks Classes, you might want to select Class.  For now, we’ll leave this box unchecked. Click Next.

Budget

Figure 2: You can choose other criteria.

Determine the Content

Indicate whether you want to start from scratch with your own figures or let QuickBooks pre-populate your budget with last year’s numbers.

Budget

Figure 3: Using actual data will use actual amounts to the penny!

When you click Create budget from scratch. then Finish, you see a window similar to the one shown below

Budget

Figure 4: Budgets in QuickBooks are account-based, so yours will be set up that way.

You can decide if you want to have the same amount for each month, such as rent, or if you want to vary the amount by time of year (income and payroll fluctuate seasonally for many contractors). While you can’t enter a total and ask QuickBooks to divide it across the months, there are some fast ways to get some numbers entered and QuickBooks will total for you.

  • If you know the amount you want for the year, but not how that breaks out per month, use QuickBooks pop-up calculator (a favorite of mine!)Budget
    • Simply click in the cell, type in your total, then the “/” so you can divide by 12
  • When you click in the cell that has a number you want to use for each month, use Copy Across  (found in the lower left-hand corner of the budget screen)  Guaranteed to be faster than you!  Perhaps you want to use one amount for the first few months, (e.g. you know you have a rent or insurance increase coming on a renewal month), then you can type in the new amount and copy that number across the rest of the year.
    Budget
  • Perhaps you expect sales to go up a certain amount each month. When you click on Adjust Row Amounts, you can either use the 1st month or click in a specific cell and go from there.  You can adjust up or down, by percent or dollar amount.
    Budget

As you can see, QuickBooks helps you get the numbers in quickly.

For those of you with varying numbers each month, perhaps a faster way would be to import your budget.  You might let QuickBooks give you a start by using last year’s numbers, but you can export your budget out to Excel, put in your desired numbers and then import back into QuickBooks. 

Here’s how

1. Export your last year’s budget to Excel (File>Utilities>Export>Lists to IIF).
2. Open in Excel (you’ll need to use All Files (*.*) to see your exported budget
3. Leave all the “funny-looking” jargon alone – it’s important!
4. Delete the old numbers and enter your desired numbers (maybe you can even use copy & paste your new numbers) then save in the same file format as the one you exported (iif)
5. Import your new budget into QuickBooks (File>Utilities>Import>Lists to IIF) and review!

 

Once the budget is in, you have a great tool to help you monitor your progress during the year.  If you want help working with the QuickBooks budget, let us know!

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Profit Planning for 2019

Posted on January 23, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

In previous articles, I’ve discussed reviewing your existing sales and profitability to see if you wanted to make any changes.  Now it’s time to plan for your new year and profitability. 

Many of you may have already worked on a business budget for 2019.  If you haven’t (and perhaps have not in the past), I encourage you to do so – no matter what size your business is.   If it helps, think of your sales, gross profit (profit after direct/job costs but before overhead expenses) and net profit (bottom line after all expenses) as goals you want to achieve. And I think you’ll agree that it’s much easier to hit a target you can see ;-). 

Once your budget is in QuickBooks, it’s easy to monitor how you’re doing during the year, so you don’t have to do updating in spreadsheet or just wonder.  I find it can also help you pay closer attention to your expenses as well.  After all, you’ll want to keep those down so you achieve your profit goals!

If you’ve never done a budget before, you can have QuickBooks create a budget based on your past year.  If you do that, be prepared for odd numbers because QuickBooks will take your actual numbers and divide by 12 to give you monthly, so you will get actual dollars and cents – rarely even numbers like 500 per month.  But it can be a nice start for some

For those of you who have divisions or departments or services lines or locations (like landscapers, painters, builders etc.) you can also plan for each “profit” center – and QuickBooks can help with that, too. In fact, many of you probably have staff members how work up budgets for their area(s) of responsibility.

If you have multiple people working on the budget, then quite often Excel is where many people work up their numbers.  In fact, I find that’s where many work on their budgets anyhow since you can do more with formulas to help you with some of your numbers. The good news is, we can usually find a way to import those numbers into QuickBooks.

Once the budget is in QuickBooks you can get the following reports:

  • Budget Overview (great way to see your original budget as a whole)
  • Budget vs Actual – the default is by month, but you can do month, quarter, or year

Profit & Loss Budget Performance lets you evaluate where you are the time period you’re evaluating (e.g. month or quarter), and what your budget is for Year-to-Date as well as for the entire year.

You can even get a graph. Let’s face it, sometimes a picture (graph in this case), makes it easier for some aspects to jump out at you.

We have a separate article for “how-to” but if you want help with this, let us know!

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QuickBooks Setup for Success

Posted on January 4, 2019 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

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 still beats the online version Online when it comes to job costing!  (Intuit has not made QB Online’s Projects available to most add-on products yet, you can’t job cost labor, and no job cost reports yet.)
    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 couple resources that might help you more:
      • My feature comparison chart – this makes it easier to compare
      • 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.
      • Videos showing the differences between the products
    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 versus a short-term discount followed by full price later.

  2. 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.
    2. Landscapers, often use maintenance, Installs, Irrigation, Lighting, and Snow (or some variation).
    3. 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).
      • Construction might want New construction, remodel – maybe even historic, if that’s a specialty of yours.
      • For those of you with multiple offices, then you might want to use location – especially if those locations are in different sates
      • Other ideas: Sales rep, partner, crew, program….
      • You can even have sub-classes; just keep in mind that they don’t collapse (i.e. the P & L by Class won’t just show the “parent” classes when you “collapse the report).
    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:
      • 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!
      • 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
      • 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 – There are many different options for payroll. If you want job costed payroll, still the best options 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.  Feel free to reach out directly to our payroll specialist, Amber Burke:  520-848-5649 or  Amber_Burke@intuit.com
      • 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.

  3. 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. 

  4. 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 or want help in addressing your setup, 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! 

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