Keeping Your 941 Report Accurate
Do not pay your payroll liabilities from the "Write Checks" window. If you use this window, QuickBooks will warn you to use the "Pay Liabilities" window, but will let you write the check. However when you print the 941, it will not reflect any payments that you made using the "Write Checks" window.
Use the "Pay Liabilities" window to create checks for all tax liabilities. Using this window will ensure that the payments are reflected accurately on the 941 report and that your liability accounts are properly reduced.
Recording of Barter Exchanges
If you have customers who are also vendors you may decide to trade some or all of your services / products in exchange for payment.
To record such a barter transaction, invoice the customer for the goods provided or services performed as you normally would. To record the "payment" use the "Receive Payment" function to apply the barter amount against the invoice the same as you would when receiving cash or a check as follows:
Go to Customers: Receive Payment. Payment Amount will be the barter amount (the amount of the invoice you received from your vendor). Pmt. Method will be Barter. Check the radio button for "Group with other undeposited funds". Save this transaction.
Go to Banking: Make Deposits. The payment you just received will come up in the Payments to Deposit screen. If there are also other payments to deposit, make sure you select only the payment(s) being recorded for the barter exchange. When you hit OK the Make Deposits screen will come up with the barter deposit(s) showing. Before recording the deposit make a negative deposit entry on the next blank line below the barter deposit for the amount of the barter as follows:
Deposit To is your normal operating checking account. Date is the date you would have normally paid your vendors invoice. Memo should be changed from Deposit to Barter.
If you have entered the vendors invoice as a bill for payment, Received From is the vendor name and From Account is Accounts Payable.
If you have not entered the vendors invoice as a bill for payment, leave Received From blank. In the From Account column select the expense account you would charge the vendors invoice to, the same as if you were entering it for payment. In the Memo column note the vendors invoice number.
In the Amount column enter the vendors invoice amount with a negative sign first. This negative amount should exactly offset the deposit amount above, resulting in a "Zero" deposit transaction. Save the "deposit" and the transaction is complete.
Recording Infrequent Transactions in QuickBooks
Day-to-day transactions like receiving payments from customers or paying vendors occur so frequently that most QuickBooks users do them automatically. However, from time to time you may encounter an infrequent transaction that will stop you in your tracks. In this article we'll discuss several common tricky transactions and offer advice on how to handle them.
5 Ways To Audit Your QuickBooks Activity
In the past QuickBooks had an optional Audit Trail feature that you could choose whether or not to enable. However, recent versions of the program automatically enable Audit Trail, so every change made to a transaction in QuickBooks is logged automatically. Although this may seem Orwellian, you may find that you sometimes need to carry out forensic research on a particular QuickBooks transaction. In layman's terms, this means looking into who changed or deleted a transaction, determining what date the transaction changed, and how the transaction looked before it changed. In this article we'll discuss five different audit reports that QuickBooks provides, as well as show you some easier ways to mine the data within these reports.
Minimize Your Exposure to Fraud
Do you know how to detect and protect yourself from fraud? Most of us want to naively believe it will never happen to us. In reality, fraud impacts small and mid-size businesses far more often than large corporations. Why? Smaller businesses tend to take fewer precautionary measures to prevent fraudulent behavior.
Also, fraud is often perpetrated by a family member, long time employee, or friend that's been given too much freedom with too few controls. However, you must not be naïve when it comes to your business. Fraud is very much a reality that can happen in your business.
In this article we'll discuss how fraud happens, how to identify if fraud is happening, and what to do if you discover fraud has happened. We'll also discuss some measures that you can take within QuickBooks to limit your exposure.
16 Bank Reconciliation Tips and Tricks
Although it may seem like drudgery, reconciling your bank account is a critical accounting task that you should carry out each month. Doing so helps ensure the integrity of your financial reports, since most of your accounting transactions ultimately affect cash in some fashion.
Further, QuickBooks is a much more powerful tool for your business if you use it to its fullest extent. Most likely you've been reconciling your bank account all along, so in this article we'll discuss the tricks and techniques you need to know to streamline the process.
Ten Overlooked QuickBooks Reports That You Should Use
Just about every QuickBooks user relies on the Report Center and Reports menu, but if you're like most, you have a small handful of reports that you tend to rely on. In this article we'll go off the beaten path and explore ten reports that many users overlook. Even if you are using some of these reports, we're sure you'll find a few more to add to your repertoire.
1. Profit & Loss Summary Prev Year Comparison: To access this report, choose Reports, Company and Financial, and then Profit & Loss Summary Prev Year Comparison. Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting-as well as how fast expenses are rising.
2. Balance Sheet Prev Year Comparison: You'll find this report also within the Company and Financial section of the Reports menu. As with your income statement, it's important to compare where certain balances stand now versus last year:
- Accounts Receivable
- Accounts Payable
- Other Liabilities, such as lines of credit or short term loans
3. Statement of Cash Flows: As with the two preceding reports, you'll find the Statement of Cash Flows in the Company & Financial section of the Reports menu. Profit & Loss reports enable you to see what you earned, while Balance Sheet reports help you determine what you have-as well as what you owe. However, neither report necessarily provides a clear picture of where cash is coming from, or going to. As shown in Figure 1, you'll be able to see:
- How much cash you've taken in from sales and spent on expenses
- Cash inflows or outflows from borrowing, repayment, or investing activities
In short, this report shows you exactly what caused your bank balance to increase or decrease during a given report period.
Use Accounting Ratios to Stave Off Financial Problems
Does the mere mention of accounting ratios may put your teeth on edge, and bring back bad memories of Accounting 101? It shouldn't as ratios can help your quickly determine how your business compares against others.
Banks often use ratios to analyze your financial statements as part of the loan approval process, so it's helpful to know in advance how you'll be measured. Even better, ratios allow you to compare your business against your peers since many trade groups publish lists of average ratios within an industry.
Although ratios may have made you drowsy during accounting class, they can be a fascinating way to measure your company's financial performance.
Gross Profit Margin
Simply put, gross profit margin-sometimes referred to as gross margin-is your revenues less your cost of sales. For some industries, this is a very meaningful metric, while it won't mean as much to others. For instance, manufacturers, restaurants, and retailers often treat gross profit as a key performance indicator.
In such environments, one typically purchases inventory at one price, and ideally sells it to someone else at a higher price. The spread between these two numbers is the gross profit margin.
Let's say that you buy $40 of pine straw (we're trying to avoid the accounting class term widget) and sell it for $60. In this case, $20 of gross margin divided by $60 of sales yields a gross margin percentage of 33%. Thus one-third of your sales are available to put toward overhead items, such as office supplies, payroll, rent, taxes, and so on.
Ideally your gross margin is high enough to cover your overhead and leave you with a profit. With that example in mind, let's see how you can calculate your own gross profit margin.
Caveat: Gross profit margin isn't meaningful to everyone. For instance, if you're a self-employed service provider, you may not have any cost of sales.
Your salary is arguably all or most of your profit. You can certainly count your salary as cost of sales and compute a gross profit margin, but you might not find much value in the result.
QuickBooks Payroll Runs: Easy, Fast, Accurate
It's not just a catchy ad slogan: It's true. Unless you have dozens of employees or numerous exceptions each payday, you can literally process a payroll run in just a few minutes using the employee compensation tools in QuickBooks.
No matter which version of desktop QuickBooks you're using, payday chores are similar. Even if you've subscribed to Full Service Payroll and are having most of the work done by Intuit, you still have to enter the number and type of hours worked for each pay period.
If you're doing payroll manually or through a payroll service, you might be surprised at how quickly and easily your payroll tasks can be completed once you've finished entering information about your company and its employees, taxes and deductions.
Use QuickBooks' Tools to Prevent Financial Fraud
Whether your accounting tasks are done on a single PC or you have multiple users working on different screens, it's critical that you make use of all that QuickBooks offers in terms of internal controls.
First Stop: Audit Trail
An audit trail is a very large report that displays every addition, deletion and modification of every transaction. In older versions of QuickBooks you could turn it on and off, but it's permanently on now.
Because of its size, you'll probably have to use QuickBooks' filtering tools to zero in on the user and/or date(s) you're looking for. Go to Reports | Accountant & Taxes | Audit Trail. Click Customize Report | Filters to set up your search.
Your audit trail won't alert you when someone tries to enter a prohibited area, and it won't detect changes to lists. Setting up permissions will help (Company | Set Up Users and Passwords | Set Up Users), but you need more than that.
10 Tips to Perfect Check-Printing in QuickBooks
If you used small business accounting products in the early days, you know how frustrating it was to print checks correctly from your software. Pre-printed checks weren't cheap, and you probably printed at least a few that didn't line up right or were otherwise unusable.
25 Accounting Terms You Should Know
QuickBooks is intuitive, easy to use, and flexible, but it is not an accounting manual or class or tutorial.
If your business is not particularly complicated, you might get by without knowing a lot about the principles of bookkeeping. Still, it helps to understand the basics, so let's take a look at some terms and phrases that are helpful for you to understand.
Using Statements in QuickBooks: The Basics
Sending invoices to your customers to bill for products and/or services is probably one of the more enjoyable parts of your job--second only to recording payments received. And thanks to the company file you've built in QuickBooks, creating invoices is generally a very simple process that requires no duplicate data entry.