Setting Up
QuickBooks
Linda Bliley, CMA, EA
Bliley Tax and Accounting LLC
Topics

The QuickBooks Product Line

What is the Goal?

Accounting Briefly

Setting Up – What You Need

Entering Transactions in QuickBooks

Payroll Set Up Key Points
Editions of QuickBooks

Pro

Premier

Accountant

Enterprise

General Business

Online

Contractor

Manufacturing &
Wholesale

Nonprofit, Professional

Services Retailers

Industry Editions
(Premier and
Enterprise)
Snapshots
Snapshots
Snapshots
Topics

Choosing a Start Date – Step 1

Creating the Company File – Step 2

Setting Up the Chart of Accounts and Other
Lists – Step 3

Setting Up Opening Balances – Step 4

Entering Open Items – Step 5

Entering Year-to-Date Income and Expenses –
Step 6

Adjusting Opening Balance for Sales Tax
Payable – Step 7
Topics (cont.)
Adjusting Inventory and Setting up Fixed
Assets – Step 8
 Setup Payroll and YTD Payroll Information
– Step 9
 Verifying your Trial Balance – Step 10
 Closing Opening Bal Equity – Step 11
 Setting the Closing Date - Backing up the
File – Step 12
 Users and Passwords

Choosing a Start Date: Step 1

Best start dates:

Calendar-Year Basis


Fiscal Year basis


December 31
Last day of fiscal year
For a new company

First day of the business
Creating the File: Step 2

Express Start

Detailed Start
Creating the File, Step 2
QBO
Setting Up the Chart of
Accounts: Step 3

To set up the Chart of Accounts, use the default or talk
with your accountant or whoever is going to do your
books.

An example of why this is important
Payroll Item List
Account numbers are typed in the descriptions of the type of pay (not recommended)
Payroll item description and account don’t
match
What Is Double
Entry
Bookkeeping?
Accounting’s Focus


To assess:

The financial position of the organization relative
to its debts (liabilities)

Its capabilities to satisfy those debts and continue
operations (assets), and

The difference between liabilities and assets (net
worth or equity)
The Accounting Equation,
Assets = Liabilities + Equity
Account Types


Assets:
 Bank
 Accounts Receivable
 Other Current Asset
 Fixed Asset
 Other Asset

Equity

Income:
 Income
 Other Income
Liabilities:
 Accounts Payable
 Credit Card
 Loan
 Other Current Liability
 Long Term Liability

Expenses:
 Expense
 Other Expense
 Cost of Goods Sold
Setting Up Opening Balances:
Step 4

Gathering Your Information

Entering the Opening Balances

Understanding Opening Balance Equity
Gathering Your Information

Trial Balance for your start date

Bank Statements (all accounts)

Outstanding Checks and Deposits

Open Invoices

Unpaid Bills

Employee List and W-4 Information

Payroll Liabilities by Item

Year-to-Date Payroll Detail by Employee

Year-to-Date Payroll Tax Deposits

Physical Inventory by Inventory Part
Understanding Opening
Balance Equity

As the opening balances for assets and liabilities are
entered, QuickBooks automatically adds offsetting amounts
in the Opening Bal Equity account

Opening Bal Equity will be “closed” into Retained Earnings
(or Owner’s Equity).
Entering Open Items: Step 5

Outstanding Checks and Deposits

Open Bills (Accounts Payable) *

Open Invoices (Accounts Receivable)

Open Purchase Orders

Open Estimates and Sales Orders

* Why use Bills to enter payments and not just write
checks?
Writing Checks
Entering a Bill
Paying Bills
Cash Flow Forecast
Entering Year-to-Date Income
and Expenses: Step 6

MID-YEAR SET UP ONLY:

General Journal Entry to enter your year-to-date
income and expenses

Summarize the total income and expenses
Sales Tax Adjustment: Step 7

Total Tax Due = Collected Tax + Uncollected Tax

Uncollected Tax = Tax on Open Invoices

Collected Tax = Total Tax Due – Uncollected Tax
Adjusting Inventory: Step 8
Setup Payroll Information:
Step 9

Setting up payroll in QuickBooks is a lengthy and
involved process

See Payroll in later slides
Verifying your Trial Balance: Step 10
Closing Opening Balance:
Step 11
Setting the Closing Date and
Backing up the File: Step 12

Set the start date as the Closing Date to Protect your
Setup Balances

Backup your finished file
Setting Up Users in the
Company File
Summary of Key Points
Choosing a Start Date – Step 1
 Creating the Company File – Step 2
 Setting Up the Chart of Accounts and
Other Lists – Step 3
 Setting Up Opening Balances – Step 4
 Entering Open Items – Step 5
 Entering Year-to-Date Income and
Expenses – Step 6
 Adjusting Opening Balance for Sales Tax
Payable – Step 7

Summary of Key Points
(cont.)
Adjusting Inventory and Setting up Fixed
Assets – Step 8
 Setup Payroll and YTD Payroll Information
– Step 9
 Verifying your Trial Balance – Step 10
 Closing Opening Bal Equity – Step 11
 Setting the Closing Date - Backing up the
File – Step 12
 Users and Passwords

Entering Transactions in
QuickBooks

Forms

Lists

Accounts

Registers

Items
The Accounting in QuickBooks

Transactions are entered in forms


Invoices, Bills and Checks
QuickBooks handles the debits and credits
QuickBooks Items and Other
Lists
To help you track more details about your sales, QuickBooks
provides several lists:

The Items List

The Terms List

The Price Levels List
QuickBooks Items

The Item list identifies products and services purchased
and/or sold


Used on the sales forms
QuickBooks automatically handles the behind the scenes
accounting for items
Item Types

There are several different types of items in QuickBooks
Service Item
Subcontracted Services Item
Sales Tax Items
The Terms List

Payment terms for your Invoices and Bills

Terms used to calculate when the Invoice or Bill is due

If the terms specified on the transaction include a
discount for early payment, QuickBooks also calculates
the date on which the discount expires
Payroll Basics
 Types
of Payroll QuickBooks
Offers
 Checklist
for Setting up Payroll
Payroll Options in QuickBooks
Three payroll choices :
1.
Basic Payroll
2.
Enhanced Payroll
3.
Full Service Payroll
Payroll Options
Checklist for Setting up
Payroll
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Gather information about each of your employees
Activate the Payroll function
Set up payroll accounts
Enable your QuickBooks file for payroll processing
Use the Payroll Setup Interview
Add additional payroll items directly into Payroll Item
List
Edit payroll items to modify the vendor information
and the way it affects the Chart of Accounts
If setting up mid-year, enter year-to-date information
for each employee and enter year-to-date liability
payments
Verify payroll item setup, employee setup, and the
vendor list
Proof your setup.
Setting up Year-to-Date
Payroll Amounts

If you are setting up your own payroll in
the middle of the fiscal year, you’ll need
to enter the year-to-date payroll
information for each of your employees
before entering your first paychecks
Other Stuff
You probably don’t need to know
Activating Account Numbers
Adding Accounts
Adding Accounts
Adding Subaccounts
Removing Accounts from the
Chart of Accounts

Deleting Accounts - Option 1

Deactivating Accounts - Option 2

Merging Accounts - Option 3
Deleting Accounts – Option 1
Deactivating Accounts – Option 2
Merging Accounts – Option 3

Select the account you
wish to change

Rename the account to
the account you wish
to keep
Reordering the Account List
Sorted by name without account numbers
Entering the Opening
Balances: Step 4 (cont.)

Two Methods

Directly Editing the Account

Using a General Journal Entry to Record Opening
Balances
Directly Editing the Account
Using a General Journal Entry
Payroll Accounts

Payroll Liability
Accounts

Payroll Expense
Accounts
Payroll Items
The Payroll Setup Interview

This Interview is optional, but very helpful and works
even if you have existing payroll

Starting the Payroll Setup Interview:

Select the Employees menu, select Payroll Setup
Setting up Compensation and
Benefits Payroll Items
Medical Insurance
Three ways to allocate costs between the
company and the employee:
1. The company could pay the entire
expense
2. The company and employee could share
the expense
3. The employee could pay the entire
expense
If the costs are shared between the company
and the employees, or if the employees pay
for the entire cost via payroll deductions, use
a Deduction Item to track the deductions
Medical Insurance Payroll
Deduction
401(k) Employee Deduction and Company
Match Items

If you have a
401(k) plan, you
can set up Payroll
Items to track the
employee
contributions
(salary deferral)
to the plan
Paid Time Off Payroll Items

The Payroll Setup Interview will walk you
through creating items to track and pay
vacation or sick pay

If you have a “Paid Time Off (PTO)” policy
instead of separate sick and vacation time
you can use either Sick or Vacation time
to keep track of PTO.
Setting up Employees

After you have set up your Payroll Items,
you can set up each employee’s payroll
record.
Payroll Tax Item Setup
Vendors for Payroll Tax and Withholding
Items
To set up vendors for payroll liabilities, continue
with the payroll Setup Interview
Setting Up Employee Defaults

Default settings for each new employee
The Employee Contact List
report

To view all employees, including deactivated
employees, display the Employee list and click the
Include inactive box
Accounting’s Focus


To assess:

The financial position of the organization relative to its debts
(liabilities)

Its capabilities to satisfy those debts and continue operations
(assets), and

The difference between liabilities and assets (net worth or
equity)
The Accounting Equation,
Assets = Liabilities + Equity
Accounts and Chart of Accounts

Business transactions are recorded in several types of ledgers,
called accounts

The summary of all transactions is called the General Ledger

A listing of every account is called the Chart of Accounts.

Each account has a type (i.e., asset, liability, equity, income,
or expense)
Double-entry Accounting

Total debits must always equal total credits


Double Entry Accounting


Debits = Credits
Every transaction creates a debit in one or
more accounts and a credit in one or more
accounts.
A debit might increase or decrease an account; the
same is true of credits

Depending on the type of account

Debits are not always “bad” and credits are
not always “good”