QuickBooks 2017 For Dummies book cover

QuickBooks 2017 For Dummies

By: Stephen L. Nelson Published: 09-28-2016

If you're like most people involved with a small business, accounting isn't necessarily your strong suit, and certainly isn't the reason you got involved with your venture. Luckily, this bestselling guide shows you just how easy it is to use QuickBooks to keep your ducks in a rowso you can spend less time worrying about finances and more time concentrating on other aspects of your growing business.

Articles From QuickBooks 2017 For Dummies

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25 results
25 results
Paying State Taxes in QuickBooks 2017

Article / Updated 01-10-2017

It would be great to provide detailed, state-specific help to you regarding state taxes and how it applies to QuickBooks 2017. Unfortunately, this would be about 150 pages long and cause you to go stark-raving mad. Sanity and laziness aside, you still need to deal with state payroll taxes. However, that you apply the same basic mechanics to state payroll taxes that you apply to federal payroll taxes. State income tax works the same way as federal income tax; employer-paid state unemployment taxes work like employer-paid federal taxes; and employee-paid state taxes work like employee-paid Social Security and Medicare taxes. If you’re tuned in to how federal payroll taxes work in QuickBooks, you really shouldn’t have a problem with state payroll taxes — at least not in terms of mechanics. Also note that QuickBooks can now print most state forms for most states. Check the QuickBooks Intuit website for more information about this service. The one thing you need to figure out is what your state wants. To do that, you need to get the state’s payroll tax reporting instructions. You may need to call the state. Or with a little luck, you may find online instructions at your state government’s website. If that isn’t much help, you can probably look up the state tax people’s telephone number by searching online, using a search phrase that includes your state’s name and the phrase payroll tax returns.

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Secret “Most Expensive Money You Can Borrow” Formulas in QuickBooks 2017

Article / Updated 12-30-2016

QuickBooks 2017 has some near formulas you may not know about. Here’s something you may not know: The most expensive money that you can borrow is from vendors who offer cash or early-payment discounts that you don’t take. The first “most expensive money you can borrow” formula Perhaps your friendly office-supply store offers a 2 percent discount if you pay cash at the time of purchase instead of paying within the usual 30 days. You don’t pay cash, so you pay the full amount (which is 2 percent more than the cash amount) 30 days later. In effect, you pay a 2 percent monthly interest charge. A 2 percent monthly interest charge works out to a 24 percent annual interest charge — and that’s a great deal of money. Here’s another example that’s only slightly more complicated. Many, many vendors offer a 2 percent discount if you pay within the first 10 days that an invoice is due rather than 30 days later. (These payment terms are often described and printed at the bottom of the invoice as 2/10, Net 30.) In this case, you pay 2 percent more by paying 20 days later. (The 20 days later is the difference between 10 days and 30 days.) Two percent for 20 days is roughly equivalent to 3 percent for 30 days (one month). So a 2 percent, 20-day interest charge works out to a 36 percent annual interest charge. Now you’re talking serious money. This table shows how some common early-payment discounts (including cash discounts) translate into annual interest rates. By the way, the calculations in this table are a bit more precise, so these numbers vary slightly from (and are larger than) those given in the preceding paragraph. Annual Interest Rates for Early-Payment Discounts Early-Payment Discount For Paying 20 Days Early For Paying 30 Days Early 1% 18.43% 12.29% 2% 37.24% 24.83% 3% 56.44% 37.63% 4% 76.04% 50.69% 5% 96.05% 64.04% Do those numbers blow you away? The 2 percent for 20 days early-payment discount that you often see works out (if you do the math precisely) to more than 37 percent annual interest. Man, that hurts. And if you don’t take a 5-percent-for-20-days early-payment discount when it’s offered, you’re effectively borrowing money at an annual rate of 96 percent. You didn’t read that last number wrong. Yes, a 5-percent-for-20-days early-payment discount works out to an annual interest rate of almost 100 percent. Here are a couple of additional observations. Turning down a 1 percent discount for paying 30 days early isn’t actually a bad deal in many cases. Refer to Table 20-1, which shows that the 1 percent discount for paying 30 days early results in 12.29 percent. Sure, that rate is pretty high, but that interest rate is less than the interest on many credit cards and some small-business credit lines. If you have to borrow money some other way to pay 30 days early, making an early-payment may not be cost-effective. The bottom line on all this ranting is that early-payment discounts, if not taken, represent one of the truly expensive ways to borrow money. That doesn’t mean that you won’t need to borrow money this way at times. Your cash flow probably gets pretty tight sometimes (a circumstance that is true in most businesses, as you probably know). However, you should never skip taking an early-payment discount unless borrowing money at outrageous interest rates makes sense. Oh, yes — the secret formula. To figure out the effective annual interest rate that you pay by not taking an early-payment discount, use this formula: Discount % / (1 – Discount %) × (365 / Number of Days of Early-Payment) To calculate the effective annual interest rate that you pay by not taking a 2 percent discount for paying 20 days early, calculate this formula: .02 / (1 – .02) × (365 / 20) Work out the math, and you get 0.3724, which is the same thing as a 37.24 percent interest rate. (Note that the discount percents are entered as their equivalent decimal values.) The Scientific view of the Windows Calculator includes parenthesis keys that you can use to calculate this formula. Choose View → Scientific to switch to the Scientific view of the calculator. The second “most expensive money you can borrow” formula You know that “most expensive money you can borrow” stuff? The very tragic flip side to that story occurs when you offer your customers an early-payment discount, and they take it. In effect, you borrow money from your customers at the same outrageous interest rates. If customer Joe Schmoe gets a 2 percent early-payment discount for paying 20 days early, you in effect pay ol’ Joe roughly 2 percent interest for a 20-day loan. Using the same formula for the first “most expensive money you can borrow” formula, the rate works out to 37.24 percent. In some industries, customers expect early-payment discounts. You may have to offer them, but you should never offer them willingly. You should never offer them just for fun. Borrowing money this way is just too expensive. A rate of 37.24 percent? Yikes! Here’s also a rather dour observation. Any time someone offers big early-payment discounts — they can be as big as 5 percent — he’s either stupid or desperate, and probably both.

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Owner’s Equity in QuickBooks 2017

Article / Updated 12-30-2016

QuickBooks 2017 makes easy work of tracking owner’s equity. Depending on the structure of your business, you will need to take a different approach. Keep reading for the scoop. Owner’s equity in a sole proprietorship Actually, tracking owner’s equity in a sole proprietorship is easy. You can use the single account that QuickBooks sets up for you, called Opening Bal Equity, to track what you’ve invested in the business. (You may want to rename this account something like Contributed Capital.) To track the money you withdraw from the business, you can set up and use a new owner’s equity account called something like Owner’s Draws. Here's an example of owner’s equity accounts in a sole proprietorship. Note that the numbers inside parentheses are negative values. An Example of Owner’s Equity Accounts in a Sole Proprietorship Account Amount Contributed capital $5,000 Retained earnings $8,000 Owner’s draws ($2,000) Owner’s equity (total) $11,000 Owner’s equity in a partnership To track the equity for each partner in a partnership, you need to create three accounts for each partner: one for the partner’s contributed capital, one for the partner’s draws, and one for the partner’s share of the distributed income. Amounts that a partner withdraws, of course, get tracked with the partner’s draws account. The partner’s share of the partnership’s profits gets allocated to the partner’s profit share account. (Your partnership agreement, by the way, should say how the partnership income is distributed between the partners.) Check out this example of owner’s equity accounts in a partnership. An Example of Owner’s Equity Accounts in a Partnership Account Partner A’s Amount Partner B’s Amount Contributed capital $5,000 $7,000 Profit share $6,000 $6,000 Draws ($3,000) ($4,000) Equity (total) $8,000 $9,000 Owner’s equity in a corporation Yikes! Accounting for the owner’s equity in a corporation can get mighty tricky mighty fast. In fact, college accounting textbooks often use several chapters to describe all the ins and outs of corporation owner’s equity accounting. As long as you keep things simple, however, you can probably use three or four accounts for your owner’s equity: A capital stock par value account, for which you get the par value amount by multiplying the par value per share by the number of shares issued. The par value of the stock is written on the face of the actual stock certificate, and it’s stated in the corporate Articles of Incorporation. A paid-in capital in excess of par value account for the amount investors paid for shares of stock in excess of par value. You get this amount by multiplying the price paid per share less the par value per share by the number of shares issued. A retained earnings account to track the business profits left invested in the business. A dividends paid account to track the amounts distributed to shareholders in the current year. This table shows an example of owner’s equity accounts in a corporation. An Example of Owner’s Equity in a Corporation Account Amount Par value $500 Paid-in capital in excess of par value $4,500 Retained earnings $8,000 Dividends paid ($3,000) Shareholders’ equity $10,000

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Tracking Depreciation in QuickBooks 2017

Article / Updated 12-30-2016

To track the depreciation of an asset that you’ve already purchased (and added to the Chart of Accounts), you need two new accounts in QuickBooks 2017: a Fixed Asset type of account called something like Accumulated Depreciation and an Expense type of account called something like Depreciation Expense. If you have a large number of assets, keeping track of the accumulated depreciation associated with specific assets is a good idea. You can do this either outside QuickBooks (such as in a Microsoft Excel spreadsheet or with your tax return) or inside QuickBooks (by using individual accounts for each asset’s original cost and accumulated depreciation). After you set up these two accounts, you can record the asset depreciation with a journal entry such as the following one, which records $500 of depreciation expense: Debit Credit Depreciation expense $500 Accumulated depreciation $500 In recent years, federal tax laws have provided three simplifying tricks for handling fixed assets and fixed assets depreciation — an explicit $2,500 capitalization limit amount, bonus depreciation, and Section 179 depreciation — that together enable you to immediately write off or depreciate the entire cost or most of the cost of many assets. These tricks are big breaks for small businesses. The explicit capitalization limit, for example, which comes from new tangible property regulations that the IRS issued in late 2015, says you can immediately deduct as supplies expense anything that costs less than $2,500. (Just to be extreme, if you purchase ten $2,400 tablet computers, you could write off this purchase as $24,000 of supplies expense.) Section 179 depreciation lets you immediately expense, or write off, up to $500,000 of fixed assets as long as you use the assets more than 50 percent for your business and as long as you have profits. For 2016, 2017, 2018, and 2019, bonus depreciation lets you (after taking into account Section 179 depreciation) immediately expense or write off 50 percent of whatever is left. In any case, these immediate-expensing and -depreciation loopholes can save you tons on taxes. They also mean that you may be able to simplify your fixed assets accounting too by simply calling many of the low-value items you tracked in the past for tax purposes “supplies expenses.”

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How to Repay a Loan in QuickBooks 2017

Article / Updated 12-30-2016

To record loan payments in QuickBooks 2017, you need to split each payment between two accounts: the interest expense account and the loan payable account. Suppose that you make $75 monthly payments on a $5,000 loan. Also suppose that the lender charges 1 percent interest each month. The following journal entry records the first month’s loan payment: Debit Credit Explanation Interest expense $50 Calculated as 1% of $5,000 Loan payable $25 The amount left over and applied to principal Cash $75 The total payment amount The next month, of course, the loan balance is slightly less (because you made a $25 dent in the loan principal, as shown in the preceding loan payment journal entry). The following journal entry records the second month’s loan payment: Debit Credit Explanation Interest expense $49.75 Calculated as 1% of $4,975, the new loan balance Loan payable $25.25 The amount left over and applied to principal Cash $75.00 The total payment amount Get the lender to provide you an amortization schedule that shows the breakdown of each payment into interest expense and loan principal reduction. If this doesn’t work, choose Banking → Loan Manager. QuickBooks displays the Loan Manager window. If you click the Add a Loan button, QuickBooks collects a bit of information about the loan terms and builds an amortization schedule for you. Note, too, that you can tell QuickBooks to remind you of upcoming loan payments and even to schedule the payments. You can record loan payments by using either the Write Checks window or the Enter Bills window. Just use the Expenses tab to specify the interest expense account and the loan liability account. You can check your loan accounting whenever you get a loan statement from the bank. What the bank shows as the ending balance for a particular month should match what QuickBooks says is the balance for that month. To correct discrepancies between the loan balance that the bank shows and the loan balance that QuickBooks shows, make a general journal entry that adjusts both the interest expense and the loan principal at the same time. If the loan balance is too low (say, by $8.76), you need to increase the loan balance and decrease the loan interest expense by using the following journal entry: Debit Credit Explanation Interest expense $8.76 Adjusts the interest expense by the same amount as loan balance changes Loan payable $8.76 Increases the loan principal balance to match the lender’s statement

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How to Use a Closing Password in QuickBooks 2017

Article / Updated 12-30-2016

QuickBooks 2017 doesn’t require you to or even let you “close” months and years, the way old manual accounting systems did. (When you “closed” an old accounting period, you actually zeroed-out the revenue and expense accounts and transferred the net amount to the owner’s equity accounts.) QuickBooks does let you use a closing date and password, however. The closing date sort of prevents someone from entering transactions earlier than the specified date. If you set a closing password, for example, someone needs to supply that password before entering a transaction or changing a transaction dated before the closing date. If you don’t set a closing password, someone trying to enter or change a transaction dated before the closing date is warned, but that person can still create or change the entry. To set a closing date, choose Edit → Preferences, click the Accounting icon, click the Company Preferences tab, and then click the Set Date/Password button so that QuickBooks displays the Set Closing Date and Password dialog box. You enter the closing date (probably the end of the most recently completed year) in the Closing Date text box and then enter the password (twice): in the Closing Date Password text box and in the Confirm Password text box. Select the check box titled Exclude Estimates, Sales Orders and Purchase Orders from Closing Date Restrictions so you don’t lose access to these transactions as part of the closing. Don’t set a closing date and password on a QuickBooks file you want to send to your accountant so he or she can prepare your tax return. Your tax accountant will probably need to make changes in your QuickBooks file to sync things between your records and your tax return. You want to “lock” the preceding year only after your tax return is complete.

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Working with Portable Files in QuickBooks 2017

Article / Updated 12-30-2016

QuickBooks 2017 includes a portable-files feature. A portable file is a smaller, condensed version of the QuickBooks data file. The portable file is small enough, in fact, that you can probably email it to your accountant, your sister in Portland, or me. To create a portable file, choose File → Create Copy. When QuickBooks displays the first Save Copy or Backup dialog box, select the Portable Company File option button, click Next, and then follow the onscreen instructions. The process, by the way, resembles the backup process. It’s really easy to save the file on the desktop. Then you can attach it easily to your email and send it out. After the other party receives the file, you can just drag your copy to the Recycle Bin. Your real file remains intact. (A portable file typically must be 10MB or smaller for transmission through most email services.) To open a portable file, a person (this could be your accountant, your sister in Portland, or me) should choose File → Open or Restore Company. When QuickBooks displays the Open or Restore Company dialog box, this other person just specifies the file that she wants to open as a portable file and then follows the onscreen instructions.

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Charging for Actual Time and Costs in QuickBooks 2017

Article / Updated 12-30-2016

If you charge a customer for actual costs and hours, you need to track the costs and time in QuickBooks 2017 when you incur the charges for them. You assign the cost to the job by entering the customer and job information in the Customer:Job column that’s shown in the window used to record a particular cost or time charge. If you use the Enter Bills window to record a bill for a particular job, you use the Customer:Job column to designate the job. To charge a customer for costs or time that you recorded, follow these steps: Choose Customers → Create Invoices to open the Create Invoices window. Change the name in the Customer:Job drop-down list to the proper customer. This step is easy: Activate the drop-down list, and choose the appropriate customer and job. If you assigned time or costs to this customer, a screen pops up, asking you to click the Time/Costs button to include the charges in your invoice. Click the Add Time/Costs button. QuickBooks displays the Choose Billable Time and Costs dialog box. The dialog box already shows the costs and time charges that you assigned to this customer and job combination. Select the billable time and costs that you want to add to the invoice. Check the time charges and costs that you want to bill for. Note that the Choose Billable Time and Costs dialog box provides different tabs for Items, Expenses, and Mileage. (Optional, Expenses only) Indicate the markup. The Expenses tab has a couple extra fields at the top of the tab to indicate the Markup Amount or % and the Markup Account. If applicable, fill in the fields with the appropriate information. (Optional) Indicate whether you want the charges to appear as a single item on the invoice. If you want to avoid listing the gory details of the charges to your customer, select the Print Selected Time and Costs As One Invoice Item check box located in the bottom-left corner of the invoice. Also, note that you can select the Taxable box to indicate if selected expenses are taxable. Click OK. After you have everything the way you want it, click OK. As if by magic — even if it was by your hard work and the sweat of your own brow — the invoice appears. (Optional) Add anything else you want to include on the invoice. This invoice is a regular QuickBooks invoice, remember? You may want to click the down arrow beside the Print button and choose Preview from the drop-down list to make sure that only the job costs that you want to appear do appear. Click Save & New or Save & Close. That’s how you record the invoice. After you record the invoice, the job costs that have been billed are removed from the Choose Billable Time and Costs window. You’re finished. Breathe easier. You can also track the amount of time that you or other employees spend on clients or customers. To turn on time-tracking, choose Edit → Preferences, scroll down to and click the Time & Expenses icon, and then select the Do You Track Time? option button on the Company Preferences tab. After you do this, you can track the time that you spend on a client or customer by choosing Customers → Enter Time → Use Weekly Timesheet or Customers → Enter Time → Time/Enter Single Activity. Either command displays an easy-to-understand window that lets you record time spent on a particular client or customer. Here’s an important final point: The time-tracker clock keeps ticking as long as the QuickBooks program runs. The program doesn’t need to be the active Windows program to continue working. In some older versions of QuickBooks, the timer stops if you start working with another program, such as your word processor or email program.

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How to Revise an Estimate in QuickBooks 2017

Article / Updated 12-30-2016

To revise an estimate in QuickBooks 2017, display the Create Estimates window. Then click the Previous button until you see the estimate. Make your changes, and QuickBooks recalculates all the totals. Smile. Imagine doing this task by hand — the recalculations, the looking up of prices, the retyping, the inordinate amount of wasted time. Making these changes automatically with QuickBooks doesn’t quite beat a hot dog with sauerkraut in the park on a sunny day, but it’s pretty close. When you revise an estimate, QuickBooks asks whether you want to treat the revision as a change order that appears on the estimate. If you indicate “Yes, that sounds like a solid idea,” QuickBooks adds detail to the estimate to clearly flag and describe whatever bits of the estimate you changed: items, quantities, prices, and so forth. You can keep only one estimate per job. After you click Save & New, any changes that you make automatically take the place of the old estimate. If you make changes in an estimate, though, you can tell QuickBooks to treat the revision as a change order. With a change order, the modifications to an existing estimate get added to the bottom of the estimate. Cool, right?

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How to Turn On Job Costing in QuickBooks 2017

Article / Updated 12-30-2016

To turn on the job costing or estimating feature in QuickBooks 2017, choose Edit → Preferences. Click the Jobs & Estimates icon on the left; click the Company Preferences tab; and then use the Do You Create Estimates? and Do You Do Progress Invoicing? radio buttons to tell QuickBooks whether, in fact, you want to do these things. You get this, right? You select Yes if you do and No if you don’t. Progress invoicing (or progress billing) refers to the practice of billing or invoicing a client or customer as work on a project progresses. In other words, rather than invoice at the very end of a project, you might bill half the agreed-upon amount when work is roughly half done. Then you might bill the remaining half of the agreed-upon amount when the work is finally finished. While you’re looking at the Company Preferences tab, you’ll see that QuickBooks lets you categorize jobs as falling into five different status categories: Pending, Awarded, In Progress, Closed, and Not Awarded. As you might guess, you use these job-status descriptions to categorize your jobs.

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